1. CIAT Technical Conference1
CIAT Technical Conference
Improving the effectiveness of tax administration through new organizational models
Paris, France
October, 2010
Key aspects in implementing the merger of competencies in the Tax Administrations
Marcio F. Verdi
Executive Secretary 1

2. 2
Introduction
The Tax Policy in Latin American countries reflects their Tax Administrations;
The tax systems are what the TAs may execute with their Human, Material, and Technological resources and with their Enforcement Powers and Autonomy under the legal framework in effect. 2 2

3. Introduction Key Objectives of the TAs3
Introduction
Key Objectives of the TAs
Voluntary Compliance: tax presence and social acceptance of taxes
Latin American scenario
Integration is not an objective per se and it is not the only objective 3 3

4. Merger models from the perspective of Internal Taxes4
Merger models from the perspective of Internal Taxes
Internal Taxes;
Internal Taxes + Customs;
Internal Taxes + Social Security;
Internal Taxes + Customs + Social Security;
Previous options with or without Enforced Collection and Criminal Prosecution;
Previous options and Non-Fiscal Functions, such as the payment of benefits, treasury and other non-tax services, such as tax education. 4 4

5. 5 5 5

6. Countries in the Americas6
Countries in the Americas
Internal Taxes, Customs and Social Security
Argentina, Brazil and Peru
Internal Taxes and Customs
Argentina, Brazil, Colombia, Guatemala, Honduras, Mexico, Peru and Venezuela 6 6

7. Organizational Integration: Single Agency7
Organizational Integration: Single Agency
Centralizes and optimizes tax control and collection powers;
Applies the Single Taxpayer principle;
Applies the one-stop shopping window, synergies, integral public service, taxpayer assistance and procedure simplification;
Promotes professional development of officials and efficient development of material and human resources;
Saves costs to the State and maximizes the use of resources – data networks, payments and systems, etc. 7 7

8. Functional Integration8
Functional Integration
Information Collection and Processing Systems;
Taxpayer Information and Assistance Services;
Taxpayer Registry;
Payment processing;
Current account control;
Collection and payment agreements;
Services to Manage Material and Personal Resources;
Training Services. 8 8

9. Indirect Advantages of Integration9
Indirect Advantages of Integration
Risk management
Risk assessment may be significantly improved with the supplementation of elements from different sources.
Defining notions of noncompliance and inconsistencies.
Imports, exports and sales.
Salaries, income and payments to social security.
Foreign trade transactions, inventory, purchases and sales.
Appraisal processes and transfer pricing in transactions among related parties. 9 9

10. Risks of the integration
1010
Risks of the integration
Two organizations sharing one head:
Process differences are maintained.
Shared support structures.
Technology, planning and internal control may also be separated.
One organization absorbing the other.
Organizational environment issues.
Two specific business areas, and a common control area.
Feasibility of the model structures in a merger scenario.
By tax?
By function?
By type of taxpayer?
Highly hierarchical or flat structures. 10 10

11. 1111
Challenges of Tax Administration Unification, Merger and Incorporation processes.
Government policy
The decisions go beyond the responsibility of the officials of the relevant organizations.
It constitutes a strategic government development.
Legal aspects
Adjustments shall not affect the operating continuity at the time of transition.
The merger shall not overrule any of the powers in the organizations.
Defining functions and institutional relations.
Process management committee and project manager. 11 11

12. 1212
Challenges of Tax Administration Unification, Merger and Incorporation processes.
Ensuring service continuity;
Maintaining two simultaneous systems;
Facing reactions to change; 12 12

13. The greatest challenge: the implementation strategy.
1313
The greatest challenge: the implementation strategy.
Design the process according to phases, identifying the preliminary merger stage, the transition and the start of the new phase.
Early risk detection and mitigation steps in each phase are decisive.
Each phase shall identify priority actions.
Each phase shall also identify the minimum control requirements to be met.
Logistics
The merger shall require adapting the physical infrastructure to the material and equipment supply processes, and human resource management and development.
Careers, powers, remuneration, unions
Training
Skills’ development 13 13

14. Action Plan Focused on merger objectives Process improvement
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Action Plan
Focused on merger objectives
Process improvement
Generation and use of synergies
Efficiency improvement
Aspects and phases
Incorporated services
Merged services
Specialized services
Areas
Regulations
Management
Technology
Internal services
Contingency
May or may not require a regional specific treatment. 14 14

15. Action Plan (2) 15 Human Resources Leadership
1515
Action Plan (2)
Human Resources
Leadership
Identifying the process champions from early stages.
Associations and unions.
Internal and external opinion managers.
Identifying managers as change agents.
Incorporate middle managers as promoters of a shared strategy.
Communication project.
Strategic communication plan
Internal.
External.
Disseminating the grounds and advantages of the change. 15 15