Opportunities abound for tax administrations to become more resilient and flexible as they take on new responsibilities to help their governments in response to the COVID-19 pandemic, a new OECD report says.
In a July 30 report, the OECD’s Forum on Tax Administration (FTA) identified the new responsibilities that tax administrations have as they support their respective governments more broadly in response to the coronavirus crisis. Those responsibilities include providing financial assistance to individuals and businesses, providing tax staff to aid in the broader government responses, and offering data assistance to support other government functions.
Some governments have asked their tax administrations to handle direct government financial aid programs, such as employer subsidies to retain or rehire employees or otherwise prevent staff from losing their jobs. Tax administrations are also overseeing types of financial support, such as unemployment benefits and income support to individuals, and company subsidies to minimize cash flow problems, according to the report.
Tax administrations may be asked to take on these new responsibilities because of their close relationships with taxpayers, with several goals in mind, the report says. Those goals include ensuring that payments are made quickly, the application process is simple, and the aid actually gets to those who qualify for it, all while guarding against fraud, the report adds.
However, new responsibilities come with new challenges, such as the need to quickly develop IT systems to provide swift, large-scale support during the crisis, the FTA said. Tax administrations should also consider measures to curb fraud risks, such as implementing robust prepayment verification measures and efficient post-payment compliance checks , according to the report.
Data protection is a key concern for tax administrations adjusting to their new responsibilities, according to the FTA. As a result, “administrations would be well advised to carry out a data protection impact assessment and to consult with the relevant data protection authorities,” the report says.
It is also crucial for a tax administration to keep track of its decisions in response to the crisis and glean some insight for its future development, according to the report.
“It may be useful to begin capturing lessons learnt while everything remains relatively fresh and relevant personnel are still in place,” the FTA notes. “This may be useful for the future resilience and agility of tax administrations both in general and for future crisis management, including the possibility of future waves of the virus.”
The FTA, established in 2002 and hosted at the OECD, comprises tax commissioners and tax administration officials from 53 OECD and non-OECD countries. The report is the latest in a string of documents that the OECD and the FTA have published in the past few months to help support tax administrations as they respond to the unprecedented coronavirus crisis.
In April, the FTA published a reference document about business continuity considerations during the pandemic, followed by a pair of May reports with advice about business restoration plans and addressing privacy, disclosure, and fraud risks. Earlier in July, the FTA released a report about tax administrations’ management of reputational risk, especially during the COVID-19 environment.
In addition to those reports, the FTA released a new e-learning course on the issues that tax administrations must consider during the COVID-19 recovery period, following up on a recent e-learning course on business continuity.
The OECD has also announced that FTA Chair Hans Christian Holte, director general of the Norwegian Tax Administration, will step down from his post, which he had held since September 2017. Bob Hamilton, commissioner of the Canada Revenue Agency, will take over as chair on August 3.