On 26 May 2020 the OECD’s Forum on Tax Administration (FTA) issued a document entitled Tax Administration Responses to COVID-19: Recovery Period Planning. This looks at issues that are relevant for tax administrations in planning for the recovery period after the pandemic.

Business restoration governance

The recovery period is likely to be long and will involve managing restoration of tax administration functions, with a need to prioritise and to coordinate activities. There will be ongoing safety considerations and strategies need to be flexible to adapt to changes resulting from government measures in the course of the pandemic.

The OECD suggests that the tax administration should set up a Business Restoration Committee (BRC) as an advisory group to prepare recovery plans and scrutinise the implications of major decisions during the crisis. The BRC can identify system changes and maintenance required; develop strategies for restoration of tax administration functions; oversee plans for employees to return to the office; keep the business continuity plan updated for developments; ensure accountability and effectiveness of measures taken; and finalise a strategy for communication of measures.

The tax administration should plan flexibly for different scenarios such as a relatively quick return to normal work; a slower return where some restrictions continue; a return that is faster for some sectors than others; or further tightening of measures during further waves of the pandemic. Plans would take into account the availability and safety of staff; additional services that may be implemented to support taxpayers; and the impact on government revenue from the impact of the crisis on major sectors.

Analysis and Monitoring

Monitoring is required to track the impact of the crisis on tax revenues and on taxpayer segments. As tax reporting has been deferred in many countries tax returns may not be available, and the information in the returns will relate to periods before the crisis.

Early information will however be available from VAT reporting; payroll reporting; direct contact with taxpayers; tax audits when they re-commence; statistics on requests for deferral of tax payments or debt repayment plans; and numbers of insolvencies. Tax administrations could also arrange for regular reporting of core metrics such as numbers of staff available; ability to maintain IT systems; use of tax administration services; problems experienced by taxpayers using taxpayer services; the continued impact of the pandemic; and feedback on staff welfare concerns.

Business Restoration Planning

Planning the recovery involves agreement on the priorities and risks; understanding the available options for maintaining tax administration operations; and planning how resumption of the functions will be implemented. A resumption strategy may be required for each major tax administration function.

Opening of offices and staff welfare

The tax administration must have a clear view on the benefits of working in the office in relation to the health risks involved. Policies must be developed on whether the return to the office is compulsory or voluntary at first and any categories of staff that may be exempted. Available options for travel to the office must be taken into account. Safety measures within the office such as social distancing will be important.

Reputation Management

Measures to support taxpayers such as deferral of tax returns or tax payments may have positive reputational effects but these positive changes must be managed during the recovery period when the priority becomes tax collection. Communication strategies to protect the reputation of the tax administration may involve monitoring taxpayer perceptions of the administration; changing the culture within the tax administration as it affects relations with taxpayers; and a positive narrative in relation to compliance and enforcement that emphasises the need for fairness and responsibility.

Longer Term Implications

In the longer term there may be opportunities for greater flexibility in deployment of staff involving different ways of working, relevant training and support and quicker redeployment when required. More of the routine functions can be automated and artificial intelligence and machine learning can assist decision making. Government departments could work together to enhance services through single portals to government services.