On 7 September 2022 the OECD published a report on Tax Capacity Building: A Practical Guide to Developing and Advancing Tax Capacity Building Programmes. The report looks at considerations to be taken into account in formulating a tax capacity building strategy and analyses the need for monitoring and evaluation of programs to ensure their effectiveness. The need for capacity building is receiving greater recognition as countries see the importance of domestic revenue mobilisation in raising the revenue needed to achieve the Sustainable Development Goals.

The recommendations have been put together by the Capacity Building Network (CBN) of the OECD’s Forum on Tax Administration (FTA). The CBN was launched in 2016 to coordinate capacity building efforts in a cost-effective manner. With the increasing demand for capacity building and the greater inclusiveness of developing countries in the process of international tax reform, the CBN and other international partners have been increasingly engaged with countries requiring assistance with building tax administration capacity.

The guidance outlines the considerations to be borne in mind when drawing up a capacity building strategy, in relation to a mission statement, capacity building principles, objectives, partners, resourcing and governance. The report emphasises the need to understand the circumstances within the partner jurisdiction, and any work already performed by other development partners, and to assess the level of maturity within the jurisdiction and the needs and requirements remaining.

Planning a capacity building mission

The report sets out various elements to be considered when planning capacity building missions. The development partner needs to reach agreement with the host tax administration on how the assistance is to be delivered. Capacity building could be done through short-term missions involving on-site assistance or remote desk-based assistance by a relevant specialist, or through longer-term missions providing assistance on specific targeted issues with experts working full time in the host tax administration.

Monitoring, evaluation and learning

The use of monitoring and evaluation can ensure optimum value for money from the capacity building projects. To ensure the success of the monitoring and evaluation the parties to the project need to have a common understanding of the objectives of the project and will need to draw up specific indicators that can measure the extent to which the objectives have been achieved.

This will then help to determine the timeframe, resources and commitment from the parties to the project. The experience gained from a project will need to be understood and incorporated into future activity so that current and future projects can be improved. There should ideally be continuous monitoring and evaluation through the life of a project, leading to a continuous learning process. When the agreed outputs from a project are delivered their impact should be evaluated and lessons should be learned from the experience of the project.