Topic Guide: Tax Administration

A wide range of measures at various levels of the administration can be envisaged to address corruption in tax administration[1]:

Clear and easy-to-follow tax legislation reduces the individual discretion of tax officers and asymmetry of information between the taxpayer and the tax officer.

Strong, independent and well placed management, including the degree of autonomy of the revenue collection service in the government administration and the performance criteria applied. A clear separation between the tax administration that manages taxpayer datasets and revenue bases and the Ministry of Finance, which develops tax policies, is recommended.

Transparent and merit-based recruitment, training and career opportunities are important to prevent nepotism or people buying what is considered a lucrative position. Staff also needs to be paid wages they can live on to reduce incentives for corruption. Ethical standards can be raised through the adoption and enforcement of codes of ethics for tax revenue administration. Staff rotation where tax collectors remain only for short periods of time may prevent the constitution of corrupt networks and reduce patronage.

Wage-based policies are unlikely to have an impact on corruption without effective monitoring systems as well as enforcement of sanctions. It is important to conduct regular audits and have effective and skilled internal investigation teams, with effective links to other law enforcement agencies.

The use of technology for filing and paying tax declarations and bills (e-taxation) can reduce corruption by limiting opportunities for direct interaction between taxpayer and tax official.

Transparency of tax administration is essential to ensure taxpayers have certainty in their dealings with tax agencies and consistent application of tax regulations. Tax laws, regulations and procedures should be made publicly accessible in a user-friendly manner to raise taxpayers awareness and knowledge of their rights and obligations.

International cooperation, exchange of information and harmonisation of legislation will reduce tax evasion, fraud and illicit enrichment with an international, cross-border dimension.