IMF -发展中国家税收激励的管理 Managing Tax Incentives in Developing Countries

TECHNICAL

NOTES&MANUALS

ManagingTaxIncentivesinDevelopingCountries

MiguelPecho,StoyanMarkov,PhilipWood,RachelAuclair,andFernandoVelayos

TNM/2024/07

TECHNICALNOTESANDMANUALS

ManagingTaxIncentivesin

DevelopingCountries

MiguelPecho,StoyanMarkov,PhilipWood,RachelAuclair,andFernandoVelayos

Thistechnicalnoteaddressesthefollowingquestions:

Whatarethemaincompliancerisksposedbytaxincentives?

Whataretheelementsofanintegratedcompliancestrategytomanagethosecompliancerisks?

Whyshouldthemostbasiccomplianceobligationsneverbewaivedforrecipientsoftaxincentives?

Whatarethekeygovernanceandtransparencyconditionstoeffectivelymanagetaxincentives?

ThisnotewaspreparedunderthesupervisionofDebraAdamsandAndreaLemgruber,andbenefitedfromcommentsprovidedbyDorisAkol,KatherineBaer,BrendanCrowley,RuudDeMooij,MarcoBorgesDeSiqueira,ShafikHebous,MichaelKeen,LiLiu,TadatsuguMatsudaira,AndualemMengistu,GillesMontagnat-Rentier,AndrewOkello,PauloPaz,JuanRedondo,KritiVelji,andGrahamWhyte.

©2024InternationalMonetaryFundCoverDesign:IMFCreativeSolutions

Cataloging-in-PublicationDataIMFLibrary

Names:Pecho,Miguel,author.|Markov,Stoyan,author.|Wood,PhilipRichard,1969-,author.|

Auclair,Rachel,author.|Velayos,Fernando,author.|InternationalMonetaryFund,publisher.

Title:Managingtaxincentivesindevelopingcountries/MiguelPecho,StoyanMarkov,PhilipWood,

RachelAuclair,andFernandoVelayos.

Othertitles:TechnicalNotesandManuals.

Description:Washington,DC:InternationalMonetaryFund,2024.|Nov.2024.|Includesbibliographicalreferences.

Identifiers:ISBN:

9798400289590(paper)

9798400289613(ePub)

9798400289675(webPDF)

Subjects:LCSH:Taxincentives—Developingcountries.|Taxincentives—Lawandlegislation.Classification:LCCHJ2330.P62024

DISCLAIMER:

ThisTechnicalNoteshouldnotbereportedasrepresentingtheviewsoftheIMF.Theviews

expressedinthispaperarethoseoftheauthorsanddonotnecessarilyrepresenttheviewsoftheIMF,itsExecutiveBoard,orIMFmanagement.

Recommendedcitation:

Pecho,Miguel,StoyanMarkov,PhilipRichardWood,RachelAuclair,andFernandoVelayos.2024.

“ManagingTaxIncentivesinDevelopingCountries.”IMFTechnicalNotesandManuals2024/07.

InternationalMonetaryFund,Washington,DC.

Pleasesendordersto:

InternationalMonetaryFund,PublicationServices

POBox92780,Washington,DC20090,USA

Tel:(202)623–7430|Fax:(202)623–7201

publications@IMF.org

eLibrary.IMF.org

bookstore.IMF.org

Contents

I.Introduction 1

II.KeyEnablers 3

A.InstitutionalArrangementsandGovernance 3

B.Transparency,Accountability,andReporting 4

C.PolicyDesignandLegislation 5

D.ComplianceRiskManagement 6

III.DevelopingaRiskDifferentiationFrameworkforManagingTaxIncentivesRisks 9

IV.ConsiderationsforaComplianceProgramonTaxIncentives 11

A.EnrollmentinTaxIncentivesMustBeSubjecttotheApprovalofRevenueAuthorities 11

B.ToEnsureVoluntaryCompliancethroughSelf-Assessment,RevenueAuthoritiesMust

ProvideSupporttoRecipientsofTaxIncentivesandEnsureTaxCertainty 11

C.FilingandReportingObligationsShouldNeverBeWaivedforRecipientsofTaxIncentives 12

D.ItIsImportanttoManageImport-BasedTaxandDutyReliefRequestsattheTimeof

theClearanceofGoods 13

E.TraceabilityMechanismsofTransactions,Assets,andInventories,andCollectionof

Third-PartyDataEnhancetheEffectivenessofComplianceApproaches 13

F.RevenueAuthoritiesMustBuildBroadKnowledgeontheRecipientsofTaxIncentivesBefore

EmbarkingonReviews,Audits,andInvestigations 14

G.AGraduatedEnforcementApproachIsDesirablewhenPlanningReviews,Audits,and

InvestigationsonTaxIncentives 15

H.WeightheConvenienceofAdoptingAssuranceApproachesforThoseRecipientsThat

DemonstrateaSoundLevelofDisclosure,Cooperation,andEngagement 16

I.RevenueAuthoritiesMustFollowaCompleteRecipients’DueDiligenceProcess

whenaTaxIncentiveComestoItsEnd 17

V.Conclusions 18

Appendix1.EnrollingApplicantsinSpecialEconomicZones 19

Appendix2.DigitalAccountingPlatforminBrazil 20

Appendix3.AssuranceApproachesPlannedforTacklingCustomsRisksinFiji 21

References 22

ManagingTaxIncentivesinDevelopingCountries1

I.Introduction

Thisnoteaimstoaddresstheoften-overlookedrevenueadministrationaspectsformanagingtaxincentives

.1

Muchoftheattentionontaxincentiveshasfocusedontheirdesignandeffectivenesstoattractdomesticandforeigninvestmentandpromoteeconomicgrowth.However,taxincentivesposepotentialrisksofrevenueleakagesparticularlyindevelopingcountries,aswellasadditionalcomplianceandadmin-istrativecosts,whichaddtothesizablerevenueforegonetheyrepresent.

Taxincentivesindevelopingcountriesintendtoattractinvestmentbyreducingthetaxburdenofqualifiedinvestmentprojectsandfirms.Theytypicallytrytoincentivizetheeconomicdevelopmentofcertainsectorsandregions,promotejobcreation(inlabor-intensiveindustries),expandexport-orientedactivities,

2

andtransfercutting-edgetechnologies,amongotherobjectives.Theyaremadeavailableeithertoallqualifieddomesticandforeigninvestorsortothosespecificallyapprovedonaprojectbasisbyagrantingauthorityattheexecutivebranch.

Inmostcases,taxincentivesindevelopingcountriesfocusoncorporateincometax,value-addedtax,andexcisesandimporttariffsandfrequentlytakethefollowingforms:

Freezones(forexample,freetradezones,exportprocessingzones,specialeconomiczones,develop-mentzones):freezonesexemptbusinessfromsomeoralltaxesandaim,inprinciple,atseparatingaqualifiedbusinessactivityfromthedomesticmarket

.3

Taxholidays:non-ring-fencedexemptionsfromsomeoralltaxesforselectednewfirmsorprojectsthatmightcarryoutactivitiesinsideoroutsidethedomesticmarket.

Lower-incometaxationforsmall-tomedium-sizedenterprises.

Fullorpartialexemptionfromincomewithholdingtaxes.

Lowerrates,andpartialorfullexemptionfromvalue-addedtaxandexcisesandimporttariffsappli-cabletoeligiblegoodspurchasedorimportedbyqualifiedfirmsorunderqualifiedprojects.

Investmenttaxcreditsorequivalentallowances.

Capitalrecoveryschemeslikeaccelerateddepreciationorinitialcapitalallowances.

Notalltaxincentivesindevelopingcountriesarewelldesigned,andthishasanimpactontheiradministra-tion.Somearewelltargetedandprescribedinasinglelaw,whereasothersareill-designed(asitmaybethecaseofsomeprofit-basedtaxincentives)andscatteredinvariouslaws(notnecessarilytaxlaws)orevenapprovedbylower-rankinstrumentssometimeswithnontransparentordiscretionaryclauses,whichopenopportunitiesforlobbyingandrentseeking.

Reformsforstreamliningtaxincentivesusuallytaketimetoreceivepoliticalsupport,sorevenueauthori-tiesindevelopingcountriesmustmanagetaxincentivesriskseffectivelytopreventabusesandrevenueleakages.However,becauserevenueauthoritiesareprimarilyfocusedonrevenuecollection

,4

theycanoftenperceivethatmanagingtaxincentivesriskstakesupmuchoftheirtimewithlimitedrevenueimpact.Asaresult,theyusuallyprioritizeactivitieswithimmediateorsizablerevenueresultsandactionsvisiblyinlinewithprioritiesassignedbygovernments.

Inaddition,managementoftaxincentivesindevelopingcountriesusuallytakesplaceinanoperatingenvironmentcharacterizedbyweakgovernanceandstrategicmanagementpractices.Manytimes,public

1

Taxincentives,asubsetoftaxexpenditures,referinthisnotetoinvestmenttaxincentives.

2

Export-orientedtaxincentivesmightviolateWorldTradeOrganizationagreementsonsubsidiesandcountervailingmeasures.

3

Forinstance,value-addedtaxexemptionusuallyappliestogoodssuppliedandservicesprovidedinsidefreezones.Similarly,importtariffreliefincludesallimportedgoodsusedinsidethezoneasinputforthebusinessactivity.

4

Inthecaseofcustomadministrations,alsomandatedwithfacilitationoflegitimatetradeandnationalsecurity.

2TechnicalNotesandManuals

bodiesinvolvedinmanagingtaxincentiveslackanadequategovernanceframework(forexample,aruled-baseddecisionmaking,moderntransparencyandaccountabilitypractices)toreducevulnerabilitiestoabuseandcorruption,orgiventheirindividualmandatesandcompetences,theytendtoworkinsilos,missingtheopportunitytobemoreeffectivebyworkingtogether.

Thisnoteisorganizedasfollows:Thesecondsectionpresentssomekeyenablersforeffectivelymanagetaxincentives,thethirdsectiondevelopsariskdifferentiationframeworkformanagingtaxincentivesrisks,thefourthoutlinesconsiderationsforacomplianceprogramfocusedontaxincentives,andthefifthsectionpresentssomeconclusions.

ManagingTaxIncentivesinDevelopingCountries3

II.KeyEnablers

Foraneffectivemanagementoftaxincentives,certainkeyenablersmustbeinplace.Thisnotehigh-lightsatleastfourenablingpracticesorapproachesthatallowtheimplementationofadequateresponsesforaddressingtaxincentivesrisks:anintegratedworkbyallpublicbodiesinvolvedinmanagingtaxincentives,publicawarenessabouttheexistenceoftaxincentivesandtheirsocialbenefitsandcosts,clearandsimpletaxincentivespolicydesignandlegislation,andamoderncomplianceriskmanagement(CRM)framework.

A.InstitutionalArrangementsandGovernance

Managementoftaxincentivesisfacilitatedbytakingawhole-of-governmentapproach.Individualmandatesandcompetencesassignedtopublicbodiesinvolvedinmanagingtaxincentives—notablyinvestmentboards,theMinistryofFinanceorequivalent,lineministries,andrevenueauthorities—oftenpreventthemfromadoptingamoreintegratedapproachforaddressingtaxincentivesrisks.Instead,theyshouldpromotedialogueplatformsforidentifyingcommonchallengesandproposecollaborativeresponsesbecauseeachpartyhasrelevantinformationorknowledgeformanagingtaxincentivesrisks.

Movingfromworkinginsilostonetworksrequiresstrongleadershiptoestablishappropriatecollaborationplatforms.Coordinationisenabledwhenpublicbodiesinvolvedinmanagingtaxincentivesadoptformalorinformalinterministerialandinteragencycommitteesandworkinggroupswherestaffcanengagewiththeircounterpartstoexchangeknowledgeandinformation,

5

undertakeprocessredesigntoavoidredundancies(forinstance,implementingasingle-windowserviceapproachforinvestorssuchastheRwanda’sOneStopCentr

e6)

,andformulateholisticstrategiesformanagingtaxincentivesrisks.

Itiskeytohaveaclearunderstandingofthedifferentrolesandresponsibilitiesofallpublicbodiesinvolvedinmanagingtaxincentives.Theremustbeaconsensusaboutthebenefitsofworkingcollabora-tivelyforbothpromotinginvestmentandensuringcompliancewithtaxandcustomsobligations.Investmentboardsandlineministriesplayanimportantroleinmanagingtaxincentives;however,itisaninternationalgoodpracticetogivetheleadingroleinintroducing,amending,designing,andapprovingtaxincentivestotheMinistryofFinancebecauseitisthebodyresponsibleforthecountry’sfiscalframework.Revenueauthoritiesmustfocusonenforcingcompliancewithtaxandcustomsobligations.

Informationsharingisenhancedwheninformationtechnology(IT)systemsofpublicbodiesinvolvedinmanagingtaxincentivescancommunicate.TheinteroperabilityofITsystems(oftendevelopedusingdifferenttechnologies)ensuresaproperflowofinformationbetweenparties(forexample,importandexportdata;taxesandsocialcontributionswithheldtoemployees;governmentcertificatesgrantingreliefsforqualifiedgoods,eitherfordomesticpurchasesorforimports)andthepossibilityofintegratinginforma-tionforhavinganend-to-endviewoftaxincentives

.7

Forrecipientsoftaxincentives,interoperabilityimpliesareductioninburdenbecausedatacanbepotentiallycollectedonlyonce.

Regardlessoftheirinstitutionalsetting,publicbodiesinvolvedinmanagingtaxincentivesneedtohaveinplaceasoundgovernanceframeworktoreducevulnerabilitiestoabuseandcorruption.Someoftheelementstopromotegoodgovernanceareasfollows(IMF2019):

Minimumaccountabilityandtransparencypractices.

Nondiscretionarydecision-makingmanagementstructures.

5

Informationontaxincentivesisnotconfidential,soitshouldbeaccessibletoallparties,withsafeguardstoprotect,retain,anddisposeofprivateandcommercialinformation.

6

Formoreinformation,seetheRwanda’sOneStopCentrewebsite:

https://osc.rdb.rw/en/

7

Barriersforsharinginformationbecauseofheterogeneouslevelsofdigitalizationshouldbeovercome.

4TechnicalNotesandManuals

ModernITsystems(forexample,theAutomatedSystemforCustomsData(ASYCUDA)WorldExemptionModule)andprocesses,whichtranslateintostandardizationinitiatives.

Effectiveinternalcontrols.

Independentexternaloversight.

Professionalcivilservicewithhighintegritystandardsandacodeofconduct.

Graduatedsanctionsforwrongdoings.

Adequateresourcinginvestmentsforpublicbodiesinvolvedinmanagingtaxincentivesareneededforstaffing,training,andinfrastructure.Anappropriateandrationalbudgetproducesareturnoninvestmentforthegovernmentandalevel-playingfieldforthebusinesscommunity.Publicbodiesneedtodevelopinstitutionalcapacitytoanalyzetaxincentivesfromthepolicy,legal,andadministrativeviewpoints.Staffarerequiredtohavebothsoftskillsaswellastechnical,commercial,andinvestigativeskills.

B.Transparency,Accountability,andReporting

Toobtainanaccuratepictureofpublicfinances,theIMFFiscalTransparencyCod

e8

advisestoregularlydiscloseandmanagerevenueforegonefromtaxincentives.Taxincentivesareaformofspendingdeliveredthroughthetaxsystem(ahiddenspendinginsteadofadirectspending),sotheyrequirethesamelevelofscrutinyduringbudgetdiscussions.Reportingontaxincentivesandtheirfiscalcosthelpsenhancefiscalmanagementandaccountability.Internationalgoodpracticesrequirereportingperiodically(atleast,annually)ontaxincentivestothelegislativebranch.

Agoodpracticeistopublishacomprehensivereportcomprisingastocktakingofalltaxincentivesapprovedbylawsandotherinstruments,withanestimationoftherevenueforegone.Revenueforegoneestimationsaregenerallyobtainedbycomparingtaxincentiveswithabenchmarktaxsystem,forexample,asingle-ratevalue-addedtaxorcorporateincometaxwithoutreliefs,andanimporttariffwithastandardrateforagroupofsimilargoods.Thiskindofestimationonlytakesintoconsiderationstaticeffects.Ifasenseofthepotentialrevenuegainsfromstreamliningtaxincentivesisdesired,estimationsmusttakeintoconsid-erationbehavioralresponsefromtaxpayersandtheinterdependencebetweendifferenttaxincentives

.9

Incasethefiscalframeworkconsiderstaxincentivescaps,revenueforegoneestimationshelpverifycompli-ancewiththethresholds.

Disseminationofmoregranularinformation,forinstance,aboutpolicyobjectivesortargetedrecipientsisalsorecommendedforadditionalpublicscrutiny.Redonda,vonHaldenwang,andAliu(2023)pointthatinformationonpolicyobjectivesandtargetedrecipientsisfrequentlyhighlyaggregatedormissedfromtaxincentivesreportsproducedbydevelopingcountries.Recipient-specificinformationisscarcebecauseoftheconfidentialityoftaxinformation.Whenavailable,itisfrequentlylimitedtotaxincentivesapprovedonaprojectbasis.Informationontargetedrecipients(eithertheirnumberorprofile)isparticularlyrelevantbecauseitwouldbringtolightdataabouttheexpectedbenefitsoftaxincentives.

Tailoredtodifferentlevelsofdataavailabilityandanalyticalcapacity,systematicdevelopmentofcost–benefitanalysisisdesirableforverifyingthattaxincentivesaccomplishtheireconomicandsocialgoalsandareaffordable.Inanutshell,theseevaluationsverifythattaxincentives’socialbenefits(forexample,netinvestment,employmentcreation,spillovereffects,efficiencygains)outweighsocialcost(forexample,revenuelosses,complianceandadministrativecost,distortiveresourceallocation).Beerandothers(2022)pointthatasmallnumberofcountriesproducetheseevaluationsregularly,thoughtheyaregrowing.CanadaandGermanyhavearobustevaluationframeworkinplaceincluding,amongothers,transparentreportingonbeneficiariesanddisseminationofevaluations.

8

FortheIMF

FiscalTransparencyCode,visit/external/np/fad/trans/Code2019.pdf

9

Forfurtherdiscussion,seeHeadyandMansour(2019).

ManagingTaxIncentivesinDevelopingCountries5

Whentaxincentivesareapprovedonaprojectbasis,negotiationsbetweeninvestorsandthegrantingauthoritymustbeconductedwiththehighestdegreeoftransparencyandaccountability.Negotiationsshouldbeframedintoaclear,standardized,andruled-basedproceduretoavoidunder-the-tablenegotia-tionsbetweenpublicofficialsandinvestors.Itisadvisablethatrevenueauthoritiesbeconsultedaboutthetaximplicationsofthenegotiatedtermsandconditions.Oncesigned,theagreementsandallthesupportingdocumentation(project-specificinformation)shouldbedisclosedforpublicscrutiny.Whenarobusttrans-parencyandaccountabilityframeworkisnotinplace,countriesshouldconsideravoidinggrantingtaxincentivesonaprojectbasis.Instead,taxincentivesshouldbemadeavailabletoallqualifieddomesticandforeigninvestorswhocomplywithaclearandobjectiveeligibilitycriterion(self-assessmentprinciple).Expost,revenueauthoritiescanalwaysexercisetheirpowerstoverifyifeligibilitycriteriaweremet.

C.PolicyDesignandLegislation

Ill-designedtaxincentiveschallengetaxprinciples,creatingspacesforamorevulnerablerevenuesystem.Soundpolicydesignprinciplesareneededtomakeaneconomicandsocialcasefortaxincentives,particularlyindevelopingcountries.Forinstance,previousIMF,WorldBank,OrganizationforEconomicCo-operationDevelopment(OECD),andUnitedNationsadvice(IMF,OECD,UN,andWB2015)hasstressedthesuperiorityoftargetedcost-basedtaxincentives(forexample,investmenttaxcredits,accelerateddepre-ciation)overactivityorprofit-basedones(forexample,taxholidays,incometaxexemptions).Thisisbecausetaxincentivesarewastefulwhenunexpectedorunanticipatedevents,orlocation-specificorfirm-specificfactors(forexample,naturalresources,monopolisticpowers)leadtoexcessprofits(oreconomicrents)

.10

TheOECD/G20BaseErosionandProfitShifting(BEPS)projectemphasizedthepotentialdamagingroleoftaxincentiveswhentheyincludefeaturesthatfacilitatebaseerosionandprofitshifting,causingspillovereffectsontaxbasesofotherjurisdictions(OECD2013).ThehistoricagreementforintroducingaminimumtaxunderthePillarTwooftheOECD/G20InclusiveFrameworkAgreementcallsforadjustmentsontaxincentiveregimes.Becausetheminimumtaxwillreducetheoverallbenefitoftaxincentives,thewholedesignofvariousveryadvantageoustaxincentivesindevelopingcountriesneedstobereviewed(seeHebousandMengistu2024;OECD2015,2022).

Itisbesttoprescribetaxincentivesinthenationallegalframework(preferablyasingletaxlaw),ensuringpublicscrutinybyparliaments.Taxincentivesapprovedbylower-rankinstruments(forexample,decrees,executiveorders)mayescapepublicoversightandcanbecomepronetorentseeking,abuseofpower,andcorruption.Fromaninvestor’spointofview,itisbesttohaveallprovisionsregardingtaxincentivesconsoli-datedinasinglelegalinstrumentfortaxcertainty(uniformityandtransparencygenerallyenableabetterbusinessenvironment).

Soundlegislationenablesaneffectivemanagementoftaxincentives.Inthisregard,amongothers,thelegislativeframeworkshould:

Narrow/specifythepurposeoftaxincentives.

Clearlyestablisheligibilitycriteriaforgrantingtaxincentives,thatis,typeoffirms,scopeoftargetedactivities/sectors(forexample,usingtheInternationalStandardIndustrialClassification)orregions.

Specifyinvestmenttargets/commitments(forexample,minimumcapitalinvestment,jobstobecreated,technologytobetransferred).

Describeenrollmentprotocols(byapplicationonly,deemed)andrequisites

.11

Definetimelimitsfortaxincentiveseitherwithsunsetprovisions(anexpirationatagivendate)orwithlimitingorrulingoutrenewalperiods.

10

SeeataxonomyofexcessprofitsinHebous,Prihardini,andVernon(2022).

11

Detailsmaybeissuedbyregulationsoradministrativedocuments.

6TechnicalNotesandManuals

Establishrecaptureprovisions(thatis,theobligationtorepaythetaxincentive)whentherecipientfailstosatisfyinvestmenttargets/commitmentsorwhenrevenueauthoritiesdetectamisuseofthetaxincentive.

Usecurrentcustomstariffnomenclature—thatis,thenationalclassificationcodingbasedonharmo-nizedsystemforvalue-addedtaxandexcisesandimporttariffreliefs.

Allowforexchangeofinformationbetweenallpublicbodiesinvolvedinmanagingtaxincentives,andprovideadequateinformationgatheringpowerstoobtaininformationfromthirdparties.

Grantsufficientmonitoringandenforcementpowerstorevenueauthorities,forexample,forunder-takingreviewsandaudits,foraccessingfreezones’premisesandtraders’records,forconductingon-siteexaminationsandinspections,forterminatingorrevokingataxincentivewhentherecipientfailstosatisfyinvestmenttargets/commitmentsorwhenrevenueauthoritiesdetectamisuseofthetaxincentive(includingfraudulentschemes),andsoon.

Establishspecificanti-avoidancerulesinconnectiontotaxincentives—suchaslimitationstotaxdeductionofcertainpaymentsmadetofirmsoperatingwithtaxincentives(forexample,excessiveinterestpayments,excessivefeesformanagementservices)orevenestablishageneralanti-avoidancerule.

Establishclearadministrativeandcriminalpenaltyregimes

.12

Publicbodiesinvolvedinmanagingtaxincentivesmustworkcollaborativelytoensuretheapprovalofsecondarylegislation.Thisincludesregulationandotheradministrativeinstruments(circulars,directives,instructions,bindingpublicrulings,andothersubsidiaryandancillarylegislation)neededforfurtherclari-fyingtheapplicationoftaxincentives.Voluntarycomplianceisencouraged,andadministrationfacilitated,whenthewholelegalframeworkisclearandsimple.

D.ComplianceRiskManagement

TaxauthoritiesusevariousformsofCRMtosystematicallyidentify,assess,andprioritizecompliancerisksanddeterminehowtotreatthem.

Figure1

illustratestheessentialelementsofamodernCRMframework.ApartfromtheCRMprocessitself,arobustCRMframeworkrequirespropergovernance(forexample,aRiskManagementCommittee),planning,andperformanceevaluationprotocols,aswellasarangeofnecessaryinputsandresultingoutputs,affectingvirtuallyeverypartofataxadministration

.13

Function-basedapproachesfollowedbymanytaxauthoritiesindevelopingcountries,sometimesinhibitthemfromhavinganend-to-endviewoftaxpayers.This,inturn,preventsthedevelopmentofintegratedcompliancestrategiesforaddressingtherootcausesofnoncompliantbehaviors,apracticethatCRMaimstoovercome.Envisioningtomaximizevoluntarycompliance,CRMhelpstaxauthoritiesinadoptingdifferen-tiatedapproaches(services,assurance,andenforcement)formanagingtaxpayers’populationsaccordingtotheirlevelsofrisk.CRMcanprovideanend-to-endviewofrecipientsoftaxincentivesandsupportthedevelopmentofmoreholistictaxincentivecompliancestrategies,includingformulationoflegislativereformproposalsandcapacitydevelopmentprograms.

ThecornerstoneofCRMisthedevelopmentofariskdifferentiationframework(RDF).Notaxauthorityisresourcedsufficientlytolookatalltaxpayersindepth.TheRDFmaybeviewedasaninformeddeci-sion-makingprocesstoallocateavailable(scarce)resourcestomanagethemostcriticalcompliancerisks.Assigningdifferenttreatmentstomanageriskpopulations(orscalethemfromlesstomoreintrusive)isjust

12

SeeWaerzeggers,Hillier,andAw(2019)foradditionalguidance.

13

Formoreinformation,seethe“ComplianceRiskManagement”moduleofVirtualTrainingtoAdvanceRevenueAdministration.VirtualTrainingtoAdvanceRevenueAdministrationisajointinitiativeoffourinternationalorganizations:theInter-AmericanCenterofTaxAdministrations,theIntra-EuropeanOrganizationofTaxAdministrations,theIMF,andtheOrganizationforEconomicCo-operationandDevelopment.

ManagingTaxIncentivesinDevelo