A Comparative Analysis on Tax Administration in Asia and the Pacific. Satoru Araki

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      The majority of revenue bodies surveyed (16 out of 22) has a large taxpayer unit focusing on the tax affairs of large enterprises. Myanmar and Papua New Guinea currently do not have such units, but each is considering setting up one. A substantial portion of tax revenue is raised from large corporations, and having a team dedicated to large taxpayers can help improve the efficiency and effectiveness of tax administrations. A small number of revenue bodies also have a unit specializing in high net worth individuals (HNWIs), who tend to have complex tax affairs and the tools and means for tax planning. Personal income tax collection remains low in some of the economies surveyed despite a rapidly rising number of HNWIs in the region. Tax administrations could consider setting up a HNWI unit to help with the collection of personal income taxes if they currently do not have such a unit.

      Information and communication technology (ICT) is another important aspect for tax administrations. It is a significant component of the overall expenditure budget for several revenue bodies, but ICT costs as a percent of total expenditures are relatively low in some countries (e.g., Indonesia, the Kyrgyz Republic, and Malaysia). ICT offers electronic taxpayer services, which can significantly reduce administration costs and taxpayer compliance costs. Availability and penetration rates of electronic filing systems vary among jurisdictions. In developing countries, while there are challenges to expand the usage of electronic filing, for example, because of the limited availability of internet access for individuals, there probably is scope for expanding electronic filing by companies for corporate income and value-added taxes.

      Regarding tax payments, either internet banking or direct debit via bank accounts is available in 16 jurisdictions. Some revenue bodies still offer traditional payment methods such as in-person payment at tax offices, which are costly to provide. A shift to electronic tax payment methods would help reduce tax administration costs and the scope for bribery and corruption, which is substantially higher with in-person payments at tax offices. Moreover, some revenue bodies (12 out of 22) have started to use social media platforms such as Facebook, Twitter, and YouTube to provide information and interact with taxpayers. While the use of social media platforms is still limited, they could become an effective communication tool for tax administrations, and future developments are expected in this area.

      With respect to the protection of taxpayer rights, administrative review processes are generally available in the jurisdictions surveyed, but the details of the review structure and the division of labor between the administrative branch and the judicial branch vary across jurisdictions. Ten out of the 22 revenue bodies surveyed have a second administrative review system where an objection once examined by the tax administration section can be reviewed again at the administrative level. A key direction for better dispute resolution systems is to strengthen the independence of review institutions from the tax authorities.

      Compared with OECD countries, where there has been a growing trend toward integrating various government services and functions, revenue bodies in Asia and the Pacific have limited nontax functions, such as the collection of customs and social security contributions. Given economies’ limited fiscal resources and tax administrations’ know-how, office network, and human resources dedicated to collection operations, a similar trend is expected to emerge in Asia and the Pacific.

      Finally, many factors influence the functioning of tax administrations, and the next step is to use the data collected from the surveys of revenue bodies in the region and OECD countries to determine which factors have a statistically significant influence on revenue bodies’ performance.