A Survey conducted by International Monetary Fund (IMF) has shed new light on the functioning of revenue administration in different countries.

Conducted under IMF's project named Revenue Administration Fiscal Information Tool (RA-FIT), the Survey says: “VAT's relative importance, as a share of total revenue, has increased over the past decade for all income groupings but particularly for low-income countries (LICs). However, from RA-FIT data, it is evident that LICs have a much higher number of credit VAT returns (essentially refund requests) on average than the other income groupings-42 percent of total returns received. Yet of all the income groupings, LICs make the least refunds as a percentage of total gross VAT-7 percent as opposed to a 36-country mean of 18 percent.”

The Survey Report/Paper captioned ‘Understanding Revenue Administration-An Initial Data Analysis Using the Revenue Administration Fiscal Information Tool' noted that corporate income tax (CIT) arrears as a percentage of total CIT annual collections are much greater than for other taxes such as personal income tax and VAT. While the overall sample size for all income groupings was much smaller than for other aspects examined, total tax arrears as a percentage of total domestic revenue was lower for LICs than for low middle-income countries (LMICs) and upper middle-income countries (UMICs).

It adds: “This finding may be linked to poor overall return filing rates, meaning that taxes due and payable have not yet been recorded by the administration as outstanding, and as such have also not been subjected to any recovery action. Further, many administrations were unable to answer all questions in RA-FIT relating to arrears, particularly with respect to their age. Many administrations need to ensure more accurate reporting on this important category.”

Tax and customs administrations have traditionally been organized as separate administrations within the structures of the Ministry of Finance (MoF). Forty percent of surveyed respondents have now adopted an institutional arrangement outside of the Ministry, mainly as semi-autonomous bodies. This model predominates in Anglophone Africa, where 85 percent (17/20) of surveyed respondents indicated they have a revenue authority, with tax and customs administrations combined into a single organization.

RA-FIT is a data-gathering initiative designed to collect tax and customs information. The data gathered include both quantitative and qualitative information and encompass a mixture of tax administration baseline and profile data, inputs, and performance-related data. Information is provided directly by IMF member countries. These data have multiple purposes and multiple users, including the countries themselves.

The first round of RA-FIT was piloted in 2012 with a survey questionnaire sent to some 120 IMF member countries. Round 1 was the beginning of an iterative process designed to continuously improve the RA-FIT product over time. As a result of the Round 1 experience, many improvements have been incorporated into Round 2, which commenced in May 2014.

The study report/paper analyzed the results of the first round of RA-FIT 1 country survey in an aggregated manner, for the most part by income group, but on occasion also by IMF region.