On 8 December 2020 the OECD’s Forum on Tax Administration (FTA) released a report on Strategic Planning as part of a planned series called Supporting SMEs to Get Tax Right. The report aims to support tax administrations in the development and implementation of approaches that will help them with their tax compliance and identify areas where the compliance burden could be reduced. As part of the report some country examples are included on how such strategies can be carried out, including two case studies of measures taken by tax administrations.

Reducing the compliance burden

Tax administrations are well placed to identify the aspects of the tax system that put pressure on SMEs in terms of compliance time and costs. They can liaise with policy makers and other government agencies to devise ways to reduce the overall compliance burden on SMEs, for example through whole of government approaches. The tax administration can also ensure fair competition by reducing the compliance burden on taxpayers that keep up to date with their tax affairs while enforcing penalties on non‑compliant SMEs.

Strategic approach

By adopting a strategic approach the tax administration can initially focus on the immediate concerns of SMEs while also planning further changes to the system which may require more time to implement. Those further changes may include the use of new digital tools and processes, backed up by better coordination between government departments.

To carry out these improvements tax administrations will need to engage with SMEs to gain a better understanding of the environment in which they do business and the constraints under which they operate, allowing identification of opportunities to supporting the SMEs with their tax compliance.

Monitoring the effectiveness of the approach

To ensure that the strategic approach is helping SMEs as intended the tax administration must find ways to measure the effectiveness of the SME strategy, identifying appropriate indicators and data sources, collecting and analysing relevant data, and gaining an understanding of the outcomes.

The results of the analysis can be used by the tax administration to identify areas of the approach that need adjustment and to understand the causes of the underlying issues. The results should be presented to SMEs, business representatives and tax administration staff dealing with their tax affairs and any necessary modifications to the strategy can be discussed with them. As a result of these discussions the tax administration can update the strategy or implement a new strategy, in line with their objectives.

Future reports

Future reports to be issued in the series will consider tax administration engagement with SMEs; the provision of digital services; building up trust and co-operation; and integration of tax affairs in the normal business software (seamless tax solutions).