Tax Office Operation Transformation
Change Management is the Key for developing countries
Governments of developing countries are constantly scrambling to raise the revenues required to finance higher service demands expected by their citizens and the infrastructure (economic, social and environmental) that will enable them to grow the nation towards being industrialized. And to sustain the all imperative comparative advantage over neighbouring nations. Taxation revenues continue to be the main source of revenue for Government spending. This in turn requires well-designed tax policies (new taxes and tax reform) that are translated into clear legislation and are administratively feasible. Perhaps the greatest challenge facing these countries is to improve the effectiveness of their tax administrations.[1]
Common Challenges
Tax Administrations in developing country contend with the same range of challenges with developed nations, although the significance of typical collection issues may be greater. As a result these countries suffer significant losses in revenue collection. Introducing tax initiatives such as self-assessment and GST does alleviate the revenue leakages to certain extent, however the agencies capacity and capability to administer an effective and efficient taxation system is the ultimate determinant to maximizing collections.
It has longed been realized that the existence of widespread tax evasion as part of the hidden economy is a critical concern to developing countries, as it is with developed nations. Hidden income can be defined to include legitimate earnings which are hidden actively or passively to evade tax, as well as illegal earnings derived from non-lawful operations and services. Without trivializing the complexity in dealing with the later type of evasion, the taxpayer’s perception of the administration influences their obligation behaviour. It’s more so evident in developing countries where the administration may not be seen by taxpayers as service
Governments of developing countries are constantly scrambling to raise the revenues required to finance higher service demands expected by their citizens and the infrastructure (economic, social and environmental) that will enable them to grow the nation towards being industrialized. And to sustain the all imperative comparative advantage over neighbouring nations. Taxation revenues continue to be the main source of revenue for Government spending. This in turn requires well-designed tax policies (new taxes and tax reform) that are translated into clear legislation and are administratively feasible. Perhaps the greatest challenge facing these countries is to improve the effectiveness of their tax administrations.[1]
Common Challenges
Tax Administrations in developing country contend with the same range of challenges with developed nations, although the significance of typical collection issues may be greater. As a result these countries suffer significant losses in revenue collection. Introducing tax initiatives such as self-assessment and GST does alleviate the revenue leakages to certain extent, however the agencies capacity and capability to administer an effective and efficient taxation system is the ultimate determinant to maximizing collections.
It has longed been realized that the existence of widespread tax evasion as part of the hidden economy is a critical concern to developing countries, as it is with developed nations. Hidden income can be defined to include legitimate earnings which are hidden actively or passively to evade tax, as well as illegal earnings derived from non-lawful operations and services. Without trivializing the complexity in dealing with the later type of evasion, the taxpayer’s perception of the administration influences their obligation behaviour. It’s more so evident in developing countries where the administration may not be seen by taxpayers as service