UNITED NATIONS

ST

______________________________________________________________________________ Secretariat Distribution: Limited ST/SG/2000/L.3 13 September 2000 Original: English

Ad Hoc Expert Group Meeting on Strategies for Improving Resource Mobilization in Developing Countries and Countries with Economies in Transition Montreal, 2 - 6 October 2000 Organized by the United Nations in cooperation with Association de Planification Fiscale et FinanciPre (APFF)

Improving Tax Administration in Sub-Saharan Africa: The Potential of Revenue Agencies and Electronic Service Delivery1

This document (ST/SG/2000/L.3) was prepared by Dr. Sandra C. Hadler, Visiting Fellow, International Tax Program, Harvard Law School, consultant to the Department of Economic and Social Affairs. The views expressed are those of the author and do not necessarily reflect those of the United Nations.

Table of Contents Page 1. I. 2. 3. 4. 5. II. 6. 7. 8. 9. 10. 11. 12. Introduction Revenue Agencies Advantages of Establishing an Autonomous Revenue Agency Disadvantages of the Revenue Agency Approach Operational Issues relating to Autonomous Revenue Agencies Conclusions Electronic Service Delivery for Tax Administrations in Africa What is Electronic Commerce? Electronic Service Delivery and Tax Administration The Way Forward Tax Administration Web Sites: Best Practices Conclusions and Recommendations References Appendix I: Box 1. Best Practices: The Singapore Website Box 2. Best Practices: The Canadian Website Box 3. Existing Tax Web Sites in Sub-Saharan Africa Box 4. Additional National Tax and Custom Web Sites of Interest Box 5. Web Sites of Interest to Tax Administrators in Sub-Saharan Africa 1 1 2 4 5 7 8 9 9 12 13 14 16 18 18 19 20 21 23

This paper addresses two developments that are of potentially great importance for the sustained improvement in revenue performance of Tax Administrations in Sub-Saharan Africa B the establishment of autonomous Revenue Agencies and Electronic Service Delivery. It is argued here that, while the autonomous agency model offers considerable potential, the preliminary evidence to date is not encouraging and that a systematic assessment of autonomous agency performance in Sub-Saharan Africa is needed. In contrast, it is argued that Electronic Service Delivery (ESD) B if compared to the cost-savings and efficiency gains realized in Business-to-Business e-commerce and the ESD benefits already realized in a number of OECD and higher income developing countries - offers enormous potential. The electronic service delivery capability of tax administrations in Sub-Saharan Africa, however, is embryonic and in need of immediate consideration and support, if Sub-Saharan Africa is not to fall further behind the developed world. While the focus of this paper is on Sub-Saharan Africa, the findings and recommendations have a broader relevance to the developing and transitional economies. It should also be noted that >Tax Administration= here could more appropriately be termed >Revenue Administration= as customs are included throughout. Secondly, the data on the impact of revenue agencies and the costs of electronic service delivery for tax administrations are inadequate and any additional data from attending experts would be welcome I. Revenue Agencies In recent years, the establishment of autonomous revenue agencies in Sub-Saharan Africa (also called boards1 or authorities) has become attractive as a perceived means to sustained revenue improvement2. First established in Indonesia in the early 1980s, the model was introduced in Ghana in 1985, followed by Uganda in 1991. Five additional autonomous agencies have been established to date and several more are in the process of being established in Sub-Saharan Africa3. Their contribution to revenue performance, however, has been varied and there has been no systematic assessment of their impact. In Ghana, the first country in Africa to establish an autonomous revenue agency, the second Revenue Board is reputedly now in disarray. In Zambia, annual revenue performance of the Zambia Revenue Authority (ZRA) has fluctuated but recently the trend in collections has been markedly downward, while costs as a percentage of revenue have doubled. In Uganda, revenues increased dramatically in the first several years of the Uganda Revenue Authority=s (URA) establishment, but subsequent performance has been less encouraging. In Tanzania, monthly revenues doubled in the first two years of the establishment of the Tanzania Revenue Authority (TRA) but subsequent

Revenue Boards may also be an umbrella agency established with oversight functions for the tax and sometimes, customs departments.
2 3

See S.C. Hadler, 2000

Zambia (1994), Kenya (1995), South African Revenue Services (1996) and Tanzania (1996). Legislation for the Rwanda Revenue Authority was enacted in 1998 and the authority became operational in early 2000. The Malawi Revenue Authority will become operational in 2000. Ethiopia has established in law a revenue authority, but in practice, little has changed. Lesotho, Mauritius and Yemen are in the process of establishing revenue agencies.

performance has been less encouraging. While the outlook and potential of the revenue agencies remains in principle promising, performance will depend on a wide range of issues from political continuity and commitment, to Management and Board performance and, continued donor support. Revenue agencies have their origins in the Executive Agency model for functions that can be hived off into autonomous agencies. The model has frequently been adopted for central banks. The British Government=s Development Agency (DFID) has supported numerous Executive Agency projects in Sub-Saharan Africa, with varying degrees of success. The arguments for the Executive Agency relate primarily to effectiveness and efficiency: an autonomous organization can, in principle, effectively manage its affairs, free from political interference in day-to-day operations and the constraints of civil service personnel systems. In most instances in Sub-Saharan Africa, the need to increase revenues has been the prime reason for establishment of a new revenue agency. However, in at least two instances (Tanzania, Uganda), the disarray of revenue collection and pervasive corruption were motivating factors for the establishment of a new agency. In contrast, in Kenya and South Africa, the objective was less to increase tax revenues (or at least, the tax/GDP ratio) than to improve effectiveness, efficiency and equity of the tax administration. Advantages of Establishing an Autonomous Revenue Agency The establishment of a new, autonomous agency is justified, inter alia, on the basis of the following apparent benefits: 1. Perceived increased effectiveness, efficiency and equity of a new agency by taxpayers In the first few years of its existence, a new agency may benefit from a perception amongst taxpayers that it is more competent than its predecessor, resulting in an increase in compliance and tax revenues. It is therefore important to establish a strong operating base within the first two to three years, otherwise, a return to previous perceptions is likely. 2. Greater flexibility in human resource management: including, inter alia, More competitive salaries to attract and retain staff Greater flexibility over pay structures, particularly for management and scarce skills Greater freedom to hire and fire, in response to staff performance and skills needs Ability to recruit from outside the civil service Open recruitment of top managers

In many developing countries, the civil service system imposes serious constraints on human resource management: for instance, salary scales, hiring, firing, promotion and incentives policies. Public service regulations often protect the incompetent and corrupt, and frequently impose lengthy freezes on hiring, pay increases, or appointments. Autonomy grants agencies, within the constraints of the legal and political environment, greater freedom over human

resource management, and in particular to recruit openly and transparently for specific positions and skills, outside of civil service regulations. ! Greater degree of protection from political interference and autonomy to manage their operations and budget

This may include a greater flexibility in managing the budget to realize agency targets without the constraints of public service regulations; greater insulation from budget cuts (Kenya, although Zambia did not share this benefit); the establishment of an agency-specific tender board (Tanzania, South Africa); and, independence from national public works departments (Tanzania). 3. to integrate tax operations and restructure

The establishment of a new agency provides an opportunity to restructure and/or integrate revenue functions within one organization. Within Sub-Saharan Africa, the establishment of autonomous agencies has acted as a catalyst to restructure organizations so as to take advantage of economies of scale and information, and to eliminate duplication of functions. Significant savings and efficiency gains can be realized by integrating both departments (notably customs) and support functions, such as human resource management, accounting and auditing, IT, legal services, taxpayer identification and records. In many developed economies, the tax administration structure appears to be more a matter of historical accident than rational decision-making4. However, for developing countries, with a relatively small tax base and limited skilled resources, the arguments for integration are strong B and especially for integrating customs and tax departments5 4. Independence to take legal action directly against taxpayers

In many Sub-Saharan countries, the legal system is a serious impediment to the tax administration taking action against delinquent taxpayers and, often an incentive for taxpayer non-compliance. In several countries, the ability of an autonomous agency to take timely legal action, without having to depend on an over-burdened national court system, has been cited as a strong advantage of autonomy (Uganda, Zambia, South Africa). It should be noted that as with other cited benefits of autonomous revenue agencies, legal independence does not require establishment of a new agency, but it may be easier to realize in the face of broader changes, especially where there is resistance from the legal authorities. While most of the above benefits can be realized without the establishment of a new agency, the establishment of a new agency appears to act as a catalyst for change. Specifically, by changing established power bases, resistance to change by vested interest groups is weakened.

The outcome of restructuring in the developed world is varied. The US is restructuring according to type of taxpayer, but not integrating. Canada and the Netherlands have moved to integrate. The UK has resisted unification on the grounds that the diseconomies from integrating large organizations outweigh the potential benefits and, that the sharing of information does not require integration. 5 For instance, Mann (2000) cites evidence from Morocco to Sri Lanka.
4

The openness to change that is introduced can provide politicians and officials with a context for broader reform and is attractive to donors. The first two to three years following establishment of a RA, however, are critical in determining future performance. Box 1: Remuneration in Revenue Authorities

In most of Africa, civil service pay scales are extremely low compared to the private sector, making it difficult for government agencies to recruit and retain qualified staff, particularly with key skills such as IS, financing and accountancy. Poorly paid staff are less likely to be productive, more difficult to motivate, and in reality, more likely to be open to corruption. Autonomous agencies have the freedom to surmount these difficulties, and also to introduce salary differentials that can attract and retain top managers, and scarce skills, combined with lesser job security. In some cases the pay increases have been striking. In Tanzania in 1996, the RA pay scale provided across the board an increase of some 250%6. For top managers and some skill streams, the increase was greater. The benefits - in terms of motivation, loyalty and work satisfaction at all staff levels were readily observable two years later. In Uganda in 1991 with the establishment of the URA, there was a similar salary increase. However, as a result of concerns regarding inter-agency salary differentials, there was no further increase until 1998, by which time, inflation had eroded the salary differential, together with productivity and motivational benefits and re-opened the door to corruption. This demonstrates the importance of developing mechanisms to ensure that salaries remain competitive: in Zambia, a formula approach comparing private and public organizations has been effective in maintaining high remuneration levels with limited political controversy. While difficult to condone higher salaries for government employees in tax administration alone, their direct involvement in revenue collection and hence, greater potential exposure to illicit offers, may well justify the salary differential. The revenue gains from a motivated revenue force may also help finance and accelerate the needed civil service salary reforms that would support a livable wage for all civil servants. The establishment of new salary packages in autonomous agencies has also supported the monetization and, hence, taxation of a wide range of allowances, spearheading such developments in other civil service departments (Tanzania). This has the added advantage of also freeing up tax personnel from administration and maintenance of housing, transport and other benefits.

Disadvantages of the Revenue Agency Approach Against the benefits, disadvantages to the establishment of autonomous agencies may include the following: 5. 6. Improved revenues could be realized without the costs of establishing a new agency The establishment of a new agency may be promoted by those who stand to benefit

Tanzania Revenue Authority Organizational Set-up Study, June 1996.

7.

Autonomous agencies have proven more costly than the tax agencies they replace. In some cases, the collection costs to tax revenue ratio have increased

The establishment of a new revenue agency invariably leads to increased costs. Since one of their advantages is the ability to pay a livable wage, this is not surprising. Higher costs may be partly offset if establishment coincides with an exercise to right-size staffs and retain only vetted and productive staff. But, what is relevant is not total costs, but the ratio of collection costs to tax revenue. On this the evidence is scanty. In several countries, information could not be obtained. In Zambia, the costs are believed to have increased from 2% to over 4% of tax revenue, compared to a limit specified in the ZRA Act of 3% and a target of 1.9%. In contrast, in Tanzania, in the first two years the ratio fell significantly, despite a significant increase in its annual budget. The issue of organizational efficiency, however, remains. How many tax inspectors, customs officials are needed in country X; are agency budget outlays (other than salaries) for overheads in line with government norms? For instance, Tanzania has 3600 authorized positions compared to 1500 in Uganda and 250 in Rwanda. What is an appropriate ratio of costs to yield for a revenue agency? A particularly difficult issue is that of funding of an autonomous revenue agency - should it receive a percentage share of tax revenues or be subject to annual budget submission? In the six Sub-Saharan agencies, costs increased with the establishment of autonomous agencies, but the agencies are relatively young and have also encountered significant restructuring costs and investment in infrastructure rehabilitation, equipment, IT and training B thus, judgement on their cost-effectiveness remains premature. 8. Establishment of executive agencies is not an alternative to civil service reform, and may contribute to fragmentation of the civil service and to problems of inter-agency cooperation

As noted earlier, the decision to pay higher salaries to revenue officials may impact negatively on inter-agency coordination and cooperation, and hence on revenue performance. This is especially true with officials that work closely with the revenue agency, for instance, in the Ministry of Finance, police, courts and immigration. The pay differential may also lead to pressure for increased pay in other civil service departments (Uganda). There is also a concern that prior selection of key agencies for pay reform may reduce the incentive for wider civil service reform, or its pace. 9. A clear regulatory and supervisory framework is needed to ensure that autonomy is not abused

There are also risks associated with giving an institution greater autonomy: the Uganda Revenue Authority reportedly abused its autonomy, causing the Minister of Finance to remove the Board and some senior staff in an effort to restore performance. This underscores the need for a sound regulatory framework and accountability.

10. Autonomy does not guarantee an end to political interference 11. Legal and political factors may continue to constrain human resource policies. Operational Issues relating to Autonomous Revenue Agencies Over and above the cited advantages and disadvantages, the following issues are significant and warrant serious consideration in the establishment of a new agency or re-organization of an existing administration. 1. The Board: Reflecting their corporate legal framework, the existing revenue agencies have a governing Board consisting of representatives of the government and, desirably, the private sector, to ensure that the interests of both the government and the taxpayer are represented. Conflict, however, between the Board and management has been frequent7. 2. Relationship with the Ministry of Finance: Relations between the Ministry and the Revenue Authority are also a frequent source of tension. Particular concerns relate to: differential pay scales, political interference (frequently in appointment issues, e.g. Kenya, Uganda), and responsibility for tax policy. 3. Funding: Agency funding is critical to the success of a new agency and has been the subject of considerable discussion. Two main alternatives exist: the first, is to give the agency a share of the revenues collected; the second, is to provide the agency with an annual budgetary allocation, in the same manner as any government department. Difficulties have arisen in determining an appropriate funding level, particularly with the first alternative8. The second approach has the advantage of being easier to adjust than the former. The first approach is claimed to give the agency a greater incentive to perform. Available evidence provides scant support for this hypothesis. The approach also provides greater autonomy since the agency does not have to seek Ministry of Finance approval for its budget. An alternative solution has been to provide an annual budgetary allocation with an additional allocation based on a percentage of collections above an agreed target. In Kenya, the solution has been to have a low percentage of tax collection as the basic budget (1.5%), supplemented by a higher percentage of collections above the agreed target (3%). However, the basic issue remains as to how to set the share to adequately meet organization needs and promote efficient performance. As a rule of thumb, based on OECD and developing countries, 2% appears to be a reasonable level of funding for operational purposes with an even split between customs and tax departments.

4.
7 8

Integrating Departments: Tax departments tend to develop a particular culture, and

In Zambia until recently the Commissioner General did not sit on the Board. In the case of Tanzania, the Board of the Tanzania Revenue Authority apparently proposed that TRA should receive 5% of tax revenues, but this figure was not based on a sound estimate of resources actually required (Coopers and Lybrand: Inception Report, April 1996).

customs in particular. Thus, integrating departments has proven to be a difficult management task. Recognition is needed that institutional change requires both time and sensitivity of senior management. The role and position of supporting departments (IT, ID numbers, human resources, finance, legal, audit, administration) in the new agencies also generates problems. This is especially the case where previously tax departments had their own systems. There is a risk that staff will be unwilling to give these up, and continue to try to maintain their systems 5. Appointment of Staff: Two approaches to the appointment of staff to newly established revenue agencies have been used: the first is to advertise all jobs, and require staff of existing tax departments to apply for their jobs (Uganda); the second, and more common, is to transfer all staff to the new organization (Kenya). A variant on this was used in Tanzania, where all staff were vetted, approximately 1400 (out of 4500) were rejected, and the remainder hired on one year probation. While the first approach offers the greatest potential for a fresh start, a balance is needed to ensure that a core staff remains in position to ensure continued adequate revenue performance during the transition. 6. Corporate Plan: The preparation of a corporate plan with a mission statement and 3-5 year program is important for any agency, whether newly established or undergoing restructuring. In particular, they can be helpful in encouraging change towards a corporate culture. Without a corporate plan, there tends to be an absence of management strategy and/or ownership of the programs and a focus on short-term collection targets. Examples of sound corporate plans are Tanzania and Uganda. 7. Regulatory Framework and Accountability: Autonomy has to be balanced by a sound regulatory framework and accountability, that provide management with the freedom to manage but have also the means to prevent or promptly redress serious problems. Simultaneously, this calls for clearly defined relationships between the Government, Board and Management and their responsibilities. Specifically, there should be clear guidelines to prevent political interference by the Board or Government; simultaneously, the representation of the Ministry of Finance on the Board should not be permitted to compromise the Minister=s role in regulating the agency. 8. Allowing for Institutional Change: While agencies may be established, and strategies and programs drawn up in months, their implementation and consolidation takes time. All too frequently, however, inadequate allowance for "adjustment" is built into government/agency plans or donor programs. Motivated by political need for results and also, frequently by donor budget timetables, programs have called for institutional change to be completed within a 6 month project frame. In many cases (Uganda, Zambia, South Africa) B programs initiated by bilateral donors were still being supported 7 years or more after commencement. For Governments embarking on tax administration reform, a 5-7 year time frame should be assumed de minimus, with exploitation of >quick wins= in the first several years. It should be noted that some aspects of change appear more quickly than others. For instance, the benefits from changing civil service personnel policies are realized more quickly than departmental restructuring. In preparing tax administration reform, separating and sequencing reforms in this manner may offer more concrete results within political/donor time frames. Careful

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sequencing and prioritizing of change initiatives is also essential. Too often, too many changes are initiated at once and quickly exceed institutional capacity. In situations where the tax administration is severely dysfunctional, there may be no alternative but to commence many radical changes simultaneously, providing there is adequate funding and expertise lined up to implement. Donors frequently contribute to the overload problem; by offering support in different areas simultaneously, management capacity to oversee the numerous sub-projects leads to donors managing in their national or corporate interest. Tanzania, as the success agency of the mid-1990s, is a case in point9. Conclusions In instances where tax administration is seriously dysfunctional and revenues relative to GDP are extremely low (Uganda in 1991, Tanzania in 1995), there is a case for establishing a new agency rather than rehabilitating an existing one. In other instances, where tax administration is reasonably effective and efficient (Malawi, Kenya), the case is less clear. In Kenya, where the revenue/GDP ratio averages 25%, the rationale for establishing an autonomous revenue agency was to make tax administration more efficient and effective. If, however, costs increase and tax revenues are not intended to increase, then efficiency falls (unless non-agency compliance costs fall or there is improved equity). In Lesotho, the case appears to be based on the need for greater independence in hiring and firing, which may arguably be better realized through general civil service reform. The capital costs of autonomous agencies, however, have been high. Although largely borne by donors, their social opportunity costs are high. In both Uganda (1991-98) and Tanzania (1995-present), the donor support in each country exceeds $70 million B exceedingly high when compared to donor support to the parent Ministry of Finance. All these costs, however, are not simply new agency costs, but represent necessary costs of rehabilitating and updating existing infrastructure and equipment, computerization, training and technical assistance. As the autonomous agency approach becomes the "model", there is a danger that countries with adequately functioning tax administrations are tempted to follow the trend (Malawi). Those with a vested interest in increased remuneration may push for establishment or there may be a concern that governments will not be seen as reform-minded if they do not follow suit. There is a danger that donors push them as a global solution because of the perception that they raise revenues. Overall, the advantages of establishing autonomous agencies appear to outweigh the disadvantages in situations where a radical change in administration is needed. However, close scrutiny of the direct establishment costs/yields and operating budgets are necessary. Experience to date, suggests that the following factors, regardless of organizational type, are critical to a sustained improvement in tax administration.
At one point, there were 5 international agencies and 7 bilateral donors involved (several of whom had more than one on-going project in different TRA departments) and with other donors wanting in, the TRA quickly found its management capacity overwhelmed by donor initiatives.
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Box 2. Factors Critical to Sustained Improvement in Tax Administration

Committed, dynamic and honest leadership: the CEO or Commissioner should be an outstanding manager (rather than a tax expert), capable of building a corporate identity and motivating change The Board should have clear terms of reference that prevent interference in day-to-day management and should include both representatives of the private sector and government The Ministry of Finance needs to fulfill its Board responsibilities without compromising its ability to regulate the agency. There needs also to be a clear division of responsibility between the agency and the Ministry of Finance over tax policy. Good working relationships between the Board, Ministry of Finance and CEO/Commissioner General are essential A clear strategy and timeframe are needed for successful operationalization of the agency: A medium-term strategy (Corporate Plan) based on an agreed agency mission is vital in ensuring continued strong agency performance. Careful prioritization and sequencing of change initiatives (for instance, autonomy, integration, systems modernization, computerization) is essential, as too many changes at the same time can create management overload and failure. The first three years are critical in establishing solid performance base Sound HR management policies are essential: These should reward good performance and deal with poor performance, inter alia: - Changing staff attitudes towards one of customer service rather than policing is vital in realizing longer-run objectives of increased compliance. This also entails changing to a proactive, corporate outlook from a traditional, reactive civil service mentality - Early action is necessary to ensure that all staff are vetted for competence and integrity before being brought into the agency. It is easier if all staff have to apply for their jobs at the outset. This, however, requires political support - Integrity systems and ethics courses are important in ensuring that corruption does not re-emerge 1. 2. 3. Funding which provides for an annually approved basic budget plus an incentive amount based on a percentage of tax revenues above an agreed target may provide the best balance between autonomy, accountability and incentives Sound framework for regulation and accountability of an autonomous agency to counterbalance its autonomy The roles and functions of the supporting departments and regional offices need to be clear, as does the relationship to the center. Clear criteria are needed to judge performance.

In conclusion, the revenue agency model is seemingly attractive, particularly in situations where civil service personnel policies inhibit effective human resource recruitment and management. Autonomy can provide managers with needed freedom and flexibility to perform. They also can provide greater autonomy to prosecute tax evaders. However, revenue agencies are not a universal solution for tax administrations, nor can they be guaranteed insulation from political interference. Furthermore, establishment of a new agency is not always necessary, and care needs to be given to the establishment costs in relation to revenue gains. Nevertheless, the urgency of the need to increase revenues in some countries makes the model an attractive one. But, after 15 years of experience with revenue agencies in Sub-Saharan Africa, and with several more agencies in preparation, and with uncertain revenue yield and cost/revenue gains, there is an urgent need to assess their performance. To this end, a cooperative, cross-country review is recommended.

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II. Electronic Service Delivery for Tax Administrations in Africa This section could usefully be sub-titled "Major Changes on Major Changes". With many of the Sub-Saharan tax administrations facing difficulties in reliably obtaining basic utilities, over and above their needs for effective systems and equipment, they need now also to address the introduction of electronic commerce. Revolutionary advances and innovations in information and computer technologies, combined with growing domestic and international trade have transformed the global environment. Electronic commerce is the cornerstone of this transformation - a change that is widely regarded as second only to the Industrial Revolution. Simultaneously, development of governments= own electronic service capacity offers a real opportunity for reinventing governments worldwide. While the private sector in most parts of the globe is quickly internalizing the potential advantages to their businesses, governments almost everywhere are falling behind in incorporating and developing regulatory systems for electronic commerce and taxation. It is the view of this study that revenue agencies in Sub-Saharan Africa need urgently to begin a process of reviewing their tax and customs laws and administration to ascertain their adequacy in the face of electronic commerce and to remedy as required. During this process, the revenue administrations can effectively begin developing their electronic delivery capability, starting with the establishment of a national revenue web site. Recognizing that change is a fact of life, the site will inevitably need continuing restructuring and development, in line with changing technologies. However, the process is a useful learning tool for all parties involved and a low-cost opportunity to reduce operating costs, improve efficiency, accessibility, transparency and client service, and to simultaneously utilize the PR and training capabilities of the web site. What is Electronic Commerce? Electronic commerce can be loosely defined as the delivery of information, products, services or payments by telephone, computer or other automated media. It includes many kinds of business activities that are being conducted electronically B much more just than the purchase of goods and services electronically. For instance: 1. 2. 3. 4. 5. 6. Electronic banking Electronic monies Electronic purchasing and inventory systems Electronic payment systems All commercial transactions conducted by the internet, telephone and fax All forms of trade in digitized goods and services

Electronic commerce has been extremely effective in strengthening businesses and stimulating growth in new areas10. Recent studies (Brookes and Wahhaj, 2000) show that the

10

For instance, in the US over 2.5 million jobs have been generated in the past 5 years as a result of the internet

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cost-savings from Business-to-Business (B2B) e-commerce alone in five large, industrial countries translate into a significantly lower rate of inflation (the index of GDP prices for each of the five countries is projected to fall by 3% to 5%). The study also projects efficiency gains to translate into higher GDP growth in each of the five countries: specifically, GDP is on average 5% higher in the five countries after 10 years, or equivalently, GDP growth is 0.25% higher annually.11 12 Similarly, electronic service delivery (ESD) offers Governments new opportunities and ways of doing business. Governments in the developed world have been addressing these issues for the best part of a decade, and yet, new technological developments continue to overwhelm their efforts. The knowledge gap between the first and third worlds is probably nowhere, or at any time, greater than here. Fortunately, the systems and approaches formulated by the developed world can provide a base from which other countries can begin to coordinate their own approaches. The speed of change is such that Sub-Saharan African governments in general, and tax administrations in particular, cannot afford to further delay addressing electronic commerce. Electronic Service Delivery and Tax Administration Experience to date suggests that electronic service delivery can provide enormous gains in effectiveness and efficiency for all branches of tax administration. While revenue administrations in Sub-Saharan Africa have been grappling with major change initiatives, rapid growth in private sector internet capacity in the region has occurred in the past few years, supported by the privatization and strengthening of telecommunications systems. This growth means that administrations need also to begin to address the impact of electronic commerce and potential of ESD. Box 3. The Internet in Africa
In late 1996, 11 of Sub-Saharan Africa=s 48 countries had local internet access. By early 2000, all of these countries had some access. Estimates of the number of users are approximate but suggest about 500,000 subscribers compared to 300 million globally. With approximately 3 users per computer, this puts the number of users at 1.5 million, of whom about 1 million are in South Africa, leaving about 500,000 users in the remaining 734 million people on the continent. This implies approximately 1 internet connection per 1500 people in Africa, compared to a global average of 38 and an average of 1 to 4 in North America and Western Europe. Across Sub-Saharan Africa, there are an estimated 300+ internet service providers (ISPs). In 20 countries there are only one provider and in two, Ethiopia and Mauritius, private companies are not permitted by the public sector telecommunication companies to resell internet services.

boom. 11 A similar study (UNCTAD 2000) for developing regions projects a considerably lower impact, in large part because of the existing inefficiency in the comparable sectors. Assuming, comparable starting efficiency, B2B gains would likely be comparable in the developing regions.

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The average cost of internet service is significantly higher in Africa than in North America or Western Europe. In Africa, costs average US$60 per month for five hours access (not including telephone line rental) compared to an average of US$29 in the US (unlimited access), US$65 in England, US$52 in France and US$74 in Germany for 20 hours access. In some 15 Sub-Saharan countries, the local telephone companies have provided local-call internet access facilities across the country by establishing a special area code for internet access. This allows ISPs to immediately provide nationwide service and significantly reduces the internet telephone costs. In the interests of encouraging internet use, this is a system that could usefully be replicated. Reflecting the high cost of full internet services and slow-access speeds, many ISPs in Africa have launched email-only services. Similarly, because of the costs, a large proportion of users use free web-based services such as Yahoo and Hotmail. Although email-only and free web-based services can be more costly because of the need to maintain the on-line connection, the web-based services provide the advantage of anonymity and greater stability than a local ISP that may not survive. A recent internet survey carried out by the UN Economic Commission for Africa (ECA), showed that the greatest number of users belong to NGOs, private companies and universities. The majority of users are male, and well-educated and that use of the internet is primarily for email and not the web. The African web space is, nonetheless expanding rapidly and almost all countries have some form of local or internationally hosted web server representing the country B whether officially or unofficially. However, few countries are using the web to deliver significant amounts of information. In fact, the major users are frequently the tourism sector. Many of the web sites are hosted by international development agency sites. The French-speaking African countries have a relatively higher profile on the web and more internet connections than the non-French-speaking countries. This reflects the priority attached by the various Francophone development agencies to developing internet access, in part because of their concern about the dominance of English on the web. Besides the official government web sites, little use of the internet is made by governments for administrative purposes, although this can be expected to change quickly. Business use is expected to grow rapidly in the next few years, as the availability of web-site developers proliferates. Distance learning is also growing rapidly. The World Bank=s Africa Virtual University Project (AVU) is linking 24 university campuses across Africa to global classrooms and libraries through satellite. Soon, students will be able to obtain degrees from the AVU in several areas of computer sciences and electrical engineering. Many other universities are also experimenting with distance learning, particularly in South Africa. The internet is also beginning to play a role in health care. A growing number of countries (for instance, Namibia, Mozambique) are using telemedicine to transmit X-ray images and other data through email to the major teaching hospitals. With the growing worldwide recognition of the importance of information and communication technologies, numerous development assistance initiatives have emerged. Donors and agencies involved have formed the Partnership for Information and Communication Technologies in Africa (PICTA) as a forum for exchanging information on projects. One of the most significant of initiatives is the USAID Leland Initiative, which has the objective of establishing internet projects in 20 African countries in exchange for liberalizing the establishment of ISPs and information exchange. The project also includes the provision of 1 million PCs in Africa, and 1000 schools and 100 universities connected. A number of UN agencies and UN-sponsored programs have been launched, such as the UN Special Initiative for Africa=s Harnessing Information Technology for Development (US$11.5 million, 5-year program). UNESCO has initiated the Creating Learning Networks for African Teachers Project to help teacher-training colleges develop computer literacy. UNDP=s Africa Bureau has a US$6 million fund to improve internet connectivity. UNDP=s Sustainable Network Program (SDNP) also has 10 country projects on-going. The internet can significantly help sustain and further growth across the continent, but its development is at a critical stage. Strengthening of the telecommunications infrastructure and growth in available technical skills are essential to meeting the growing internet needs. Strong commitment of African leadership to opening up the telecommunications sector to competition and recognition of the potential of internet services will be critical.

ESD can help simplify and streamline operations, create more cost-effective administrations13, improve compliance and reduce taxpayer=s compliance costs, improve accuracy

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and timeliness, and provide improved and convenient service. Simultaneously, ESD provides an open, transparent system, once security concerns are overcome. It is also an effective PR channel and has enormous potential as a training tool. Direct cost savings for government and taxpayers also arise from the availability on-line of updated amendments, laws, regulations and forms, increasing accessibility and reducing the need for printing and distribution. Amongst the tax departments, the potential for ESD is perhaps greatest in customs, where technological change is at the heart of business process re-engineering (for instance, risk management techniques, artificial intelligence, bar coding and document imaging, to name a few). Globalization has contributed to increased activity for tax administrations worldwide and ESD offers the means to deliver expanded and improved services at constant or declining real costs. In Canada, for instance, during the past five years there has been an increase of more than 1 million returns processed, an increase in corporate filers of around 123,000 and an increase in cross-border commercial shipments of over 50%. These increased activity levels have been realized with stable costs and improved service (reduced turnaround time), in large part because of the development of electronic services. Thus, ESD can be an extremely important means to supporting the basic strategic objectives of a tax administration: simplification, efficiency, equity and accessibility. In many countries, taxpayers can already from their businesses or homes electronically: Receive information and assistance File tax returns Register imports or exports Register a business Complete financial transactions.

In most countries, plans are underway to extend these services, for instance to enable one-stop access to information; customize information and services; and offer a secure on-line alternative to paper. Canada (the Canadian Customs and Revenue Administration, CCRA) is perhaps the world leader currently, with its on-going program through which all revenue services are to be delivered electronically by 2004. Depicted as the seamless government, Canada=s >electronic office= will provide client-focused, fully interactive services conveniently integrated with related services provided by other federal and provincial agencies, and foreign government agencies, accessible anywhere at anytime. The objective of ESD in tax administrations can be defined as enabling taxpayers to choose from a variety of secure, automated, self-service channels to meet their tax and custom obligations, with services packaged to meet the needs of different client groups. Where there is a natural link, services would be integrated, often with services from other government agencies.
13

While no data are yet publicly available on the comparative costs of on-line as opposed to traditional filing, a survey of US electronic banking transactions costs suggest that the cost ratio of an on-line transaction compared to a traditional branch transaction is in the range of 1:100 (Economist, Survey on Electronic Banking, May 20, 2000, Booz Allen, (1997) and Arthur Andersen (2000) .

16

Taxpayers should be able to interact directly with the tax administration or via other portals (such as the central government, local government service kiosks, embassies, integrated call-centers and private-sector service points). The Way Forward While electronic commerce can help increase the effectiveness of tax administrations, it also raises major new issues and challenges established tax systems and laws. The potential with electronic commerce for avoidance and evasion is major and necessitates that countries= review their tax policies and administration to ensure that tax laws are applied appropriately. For instance, it is difficult to determine where a commercial activity occurs: since there is no paper trail, problems arise similar to that raised by an underground economy. It also becomes difficult to determine which jurisdiction has the authority to tax incomes and transactions in the case of electronic commerce. Since 1995, most developed countries have established Advisory Committees on Electronic Commerce under the Minister of Finance to determine the implications of electronic commerce on tax administration.14 Consistent with the OECD approaches and recognizing that the private sector should lead the way, these Committees= recommendations have tended to focus on: 1. 2. 3. 4. 5. 6. Developing a strategy for electronic commerce Developing and adopting guiding principles for electronic commerce Facilitating universal access Building trust in the electronic marketplace Defining a legal framework for electronic commerce Playing an active role in international fora on electronic commerce, in particular, to promote consistency in national policies around the world

With respect to the tax and regulatory environment, these committees recommend that: 1. Governments should create a favorable policy and legal environment for electronic commerce and ensure that the network and physical infrastructure for electronic commerce figure prominently in their policies and programs 2. Governments should ensure a tax neutral position with regard to electronic commerce transactions so as to avoid new or additional taxes driving business elsewhere. Any new taxes should be based on detailed impact studies 3. All levels of Government and key private sector players should work cooperatively towards building trust in the electronic market place, and in particular, work together to establish clear policies in a number of technical areas (for instance,
14

The 1999 report of the Canadian Advisory Committee is an informative one. The report contains 72 recommendations relating to income tax, commodity taxes, customs duties and tariffs, and measures to make the revenue agency an electronic office.

17

digital signatures, encryption, privacy and protection of consumer rights). The experience of various developed countries and international organisations, such as the OECD as well as the EU, provides a useful base for the developing world. Establishing an Advisory Committee and preparing an ESD Strategy are important first steps. For many Sub-Saharan countries this will be at least as all encompassing as the organisational changes undertaken by many tax administrations in the mid-1990s. Aside from benefits and challenges, ESD also introduces some inherent risks for clients, government and officials. These can be summarised as follows: Risks for Taxpayers: - privacy and confidentiality on line - security - cost (affordable access) - equity (literacy and accessibility) - burden of change. Risks for Government: - risks to program delivery and continuity (changing technology) - increased costs from infrastructure overhead, training and updating for technological change - fraud and misuse. Risks for Officials: - changing work environment - changes in volumes of work - changes in skill needs (back-office versus front-office). While there are clear risks associated with ESD, so there are potential risks from failing to innovate. For instance,emerging electronic services from the private sector and/or other government sectors will necessitate change in the tax administration. 1. 2. the cost of maintaining non-electronic services will become prohibitive as will the delivery of traditional labor intensive services (paper and mail-based processes) will become prohibitive. It is the view here, that the risks of not innovating easily outweigh the risks of innovating. Tax Administration Web Sites: Best Practices A survey of existing web sites undertaken here revealed that currently approximately 112 countries worldwide have tax administration web sites (see Appendix I). These range from comprehensive, all-incorporating systems such as those of the USA15, to countries, whose web page consists of a photograph of the Ministry of Finance. The survey reveals a number of strengths and weaknesses of existing web sites: key characteristics include being user-friendly,

18

fast, easy to maintain, bilingual where necessary, readily downloadable, integrated with the overall government web site, and especially with the other tax departments. Interactivity, and connection to large data bases are also useful characteristics. Some are extremely detailed and complex, designed with the tax practitioner in mind (USA). Some have useful links with local or state government (Canada and USA). Many are poorly designed: for instance they fail to return to a home page, do not permit information to be downloaded, or may only be available in the national language (e.g.Taiwan). Perhaps not surprisingly, there is a tendency for countries to develop a web site for customs before their internal tax administration (Indonesia, Man, Jersey and other island tax havens). Several web sites provide inter-active surveys on-line for taxpayers/practitioners/businesses while others solicit user reactions to developments or new tax proposals by email. Almost all of the larger web sites provide information on employment opportunities B a low cost advertising vehicle B and use them as PR channels. Of the approximately 48 countries in Sub-Saharan Africa, 11 currently (June 2000) have web sites for the Ministry of Finance and/or tax authorities. Of these, 3 are under development or are otherwise not operational, and 3 provide only a list of officials and/or functions of the Ministry of Finance (see Appendix I below, Box 3). Botswana=s Ministry of Finance web site provides limited information on the agency=s functions and tax rates. Only four B Mauritius, South Africa, Uganda and Zambia provide more detail. Mauritius= site is primarily a repository for downloading its tax treaties. South Africa=s web site provides a useful description of the organization and its goals B and especially its mission, including a useful "Code of Ethics" for staff. Zambia provides a workmanlike and well-functioning web providing basic information on the organization, its functions and the various taxes, their rates and incentives. Uganda is the only inter-active system, providing an on-line tariff data base and useful links to other organizations both within Uganda and without. Much can be done to improve the effectiveness and usefulness of the African web sites, at relatively low cost, and simultaneously, provide an effective vehicle for the interchange of tax information between countries. Little information on costs is available, but for Singapore the cost of establishing the e-filing system in 1998 is estimated at less than US$1.3 million. Similarly, the establishment of a comprehensive city portal for Valencia in Spain is quoted as costing the equivalent of constructing one kilometer of road. The survey of tax administration web sites revealed two outstanding systems that could be quickly and relatively inexpensively adapted for Sub-Saharan Africa: Singapore and Canada (see Appendix I below, Boxes 2 and 3). Both are extremely user-friendly, fast, and effectively provide information for travelers, taxpayers and detailed information for tax officials (especially customs), and tax practitioners. In addition, both sites simply permit the downloading of most tax/customs forms that could be needed. Both are outstanding in meeting the needs of importers and exporters on-line. The Canadian system, in particular, has a prototype >Customs Virtual Office= that is a pleasure to use. Both provide information on recent developments, and go to

15

In 1998, the IRS web site received some 600 million hits and 40 million forms and publications were downloaded.

19

lengths to inform users of changes and improvements that are being made Conclusions and Recommendations It is the conclusion of this paper that ESD offers considerable potential to Tax Authorities to reduce costs, improve efficiency, accessibility, transparency and client orientation, while simultaneously being an effective training and PR tool. The change demands already placed on Tax Authorities in Sub-Saharan Africa are well-recognized, but the costs of not moving forward on ESD B and e-commerce more generally - are considered too high to warrant delay. Already, the work of OECD, the EU and USA in formulating frameworks and setting standards provides a sound base from which Sub-Saharan countries can begin. On the part of Governments it is recommended that: 1. An e-commerce czar be appointed - a Government point-man to maintain momentum, coordinate involved players, spearhead the formulation of Government standards and act as the voice of the Government internationally 2. An Advisory Committee on Electronic Commerce be established to determine the implications of e-commerce for Government and on tax administration in particular 3. Prepare an ESD strategy for tax administration, including launching a national tax and customs web site. On the part of the international community, it would be extremely helpful: 1. To prepare a hands on "Best Practices Manual on E-commerce for Developing and Transitional Economies" over the next 6 months, and 2. For the international community (a partnership between the international agencies, OECD Governments and the private sector) to fund intensive courses and technical assistance on e-commerce and ESD for tax administrators, so as to help bridge the human capital needs and jumpstart the developing and transitional economies use of the internet.

20

References Bird, R. and M. Casanegra de Jantscher (Editors) (1992) Improving Tax Administration in Developing Countries, IMF, Washington DC Brooks, M and Z. Wahhaj, "The Shocking Economic Effect of B2B", Goldman Sachs Global Economics Paper No. 37, 3 February, 2000 Byrne, P., "Privatization of Tax and Customs Administration", Bulletin for International Fiscal Documentation, IBFD, Amsterdam, Vol. 49, No. 1, 1995 Canada, Electronic Service Delivery Strategy, Dec. 1999 Casanegra de Jantscher, M; Silvani, C and Vehorn, C (1992) "Modernizing Tax Administration" in Tanzi (ed.) (1992) Casanegra de Jantscher, M; Silvani, C and G. Holland, "The Audit of VAT", in VAT: Administrative and Policy Issues, ed. Alan A. Tait, IMF, Washington DC, 1991 Chand, S and Moene, K (1997) Controlling Fiscal Corruption, IMF, Washington DC Coady, D. (1997) "Fiscal Reform in Developing Countries" in Kant Patel (ed.) (1997) Datta-Mitra, J. (1997) Fiscal Management in Adjustment Lending, World Bank Operations Evaluation Study, World Bank, Washington DC DFID, Zambia Revenue Authority Consolidated Project, Evaluation of Revenue Projects, EC Commission, "A European Initiative in Electronic Commerce" (Green paper), Com (97), April 1997 EC Commission Communication, "E-commerce and Indirect Taxation", Com (98) 374 final, June 1998 Frieden, K., Cybertaxation: The Taxation of E-commerce, CCH Incorporated, Chicago, 2000 Gill, J.B.S. (1998) "Modernization of Revenue Administration: A Framework for Diagnosis, Project Design and Implementation Planning", processed, World Bank, Washington DC Gore, A., and R.E. Rubin, "Reinventing Service at the IRS", 98 Tax Notes Today 54-39, March 20, 1998 Government of Australia, Australian Tax Office, "Tax and the Internet", Electronic Commerce Project, August 1997 Government of Canada, Canadian Customs and Revenue Administration, "A Strategy for Electronic Service Delivery", March 2000 Government of Ireland, Electronic Commerce and the Irish State Tax System, 2000 Government of Tanzania, TRA, Organizational Set-up Study, April 1996 Government of Tanzania, TRA, Information Systems Strategy, May 1998 Government of Tanzania, TRA, Taxpayer Identification Number Project, Final Report, August 1998 Government of Tanzania, TRA, Corporate Plan, October 1998 Government of Tanzania, TRA, Training Strategy, January 1999 Government of Zambia, ZRA, Corporate Plan, January 1999 Hadler, S. C., "Best Practices in Tax Administration in Sub-Saharan Africa: A Handbook for Officials", International Tax Program, Harvard University, June 2000 IMF, "Technical Assistance on Tax Policy: A Review", IMF Working Paper, August Jenkins, G (1994) "Modernization of Tax Administrations: Revenue Boards and Privatization as Instruments for Change" in Bulletin for International Bureau of Fiscal

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Documentation, Vol. 48, No. 2, pp. 75-81. Jensen, M., "Africa and the Internet", Current History, May 2000, http://www3.sn.apc.org/africa Kant Patel, C (ed.) (1997) Fiscal Reforms in the Least Developed Countries Khalilzadeh, S.J. and A. Shah (Editors) (1991) Tax Policy in Developing Countries, A World Bank Symposium, World Bank, Washington DC Mann, C.L., et al, Global Electronic Commerce: A Policy Primer, International Institute of Economics, Washington DC, July 2000 National Tax Association, Communications and Electronic Commerce Tax Project: Final Report, Sept, 7, 1999, Washington DC,1999 OECD, Committee on Fiscal Affairs, "Electronic Commerce: The Challenges to Tax Authorities and Taxpayers", Informal Round Table Discussion between Business and Government, November 1997, Finland Rossotti, C.O., "Modernizing America=s Tax Agency", IRS, Dept of the Treasury, Publication No. 3349, Washington DC, Feb. 1999 Silvani, C. and Baer, K (1997) Designing a Tax Administration Strategy: Experience and Guidelines, IMF, Washington DC Surrey, S.S., "Tax Policy and Tax Administration", in W.E. Hellmuth and O. Oldman (eds.) Tax Policy and Tax Reform: 1961-69 B Selected Speeches of Stanley S. Surrey, Chicago, 1973 Tanzi, V and Pellechio, A (1995) "The Reform of Tax Administration", IMF Working Paper (WP/95/22), Fiscal Affairs Department, February 1995 The Economist, "The Disappearing Taxpayer", May 31, 1997, pp.15-23 The Economist, "A Survey of Globalization and Tax", January 29, 2000 The Economist, " A Survey of E-Commerce", February 26, 2000 The Economist, "A Survey on On-line Banking", May 20, 2000 The Economist, "A Survey of Government and the Internet", June 24, 2000 Terkper, S (1995) "Ghana: Tax Administration Reforms (1985-93)", International Tax Program, Harvard University Terkper, S., "Revenue Authorities B A comparison of the Experience of Ghana and East African Countries, Bulletin for International Fiscal Documentation, IBFD, Amsterdam, Vol. 53,No. 4, 1999 UK, Inland Revenue, Electronic Commerce: The UK=s Agenda, November 1999. UNCTAD, Building Confidence: Electronic Commerce and Development, UNCTAD/SDTE/MISC.11, 2000 USA, Office of the President of the United States, "A Framework of Global Electronic Commerce", July 1997 USAID, USAID Leland Initiative: Africa Global Information Infrastructure Project, www.info.usaid.gov/regions/afr/leland/project.htm, 27 June 2000 US Treasury, "Selected Tax Policy Implications of Global Electronic Commerce", Discussion Paper, November 1996, www. ustreas.gov/taxpolicy/internet.html World Bank, Operations Policy Department (1991), Lessons of Tax Reform, World Bank, Washington DC World Bank, PREM Note NO. 37, "Reforming Tax Systems: Lessons from the 1990s",

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April 2000 World Bank, World Development Report, 2000, Washington DC, August 1999 Yudkin, L, "Organization", Ch.6, Tax Techniques Handbook: A Legal Structure for Effective Income Tax Administration, International Tax Program, Harvard, Cambridge, MA.,1971, pp.92-99

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Appendix I BOX 1. BEST PRACTICES: THE SINGAPORE WEB SITE

Singapore has separate web sites for inland revenue and customs, accessible directly and through the ministry of finance web site. Both web sites represent best practices for developing countries to emulate. They are comprehensive, user-friendly and speedy. Technological progress has brought sweeping changes to business processes and organizational structure of Inland Revenue and Customs in recent years. Virtually all information needed by taxpayers and traders is on line and downloadable. E-filing is available for income tax and goods and services tax. Initiated in 1998, use of e-filing has grown rapidly and in 2000, 30% of income taxpayers filed electronically. E-payment is also available. A 12-month installment system is available whereby taxes are deducted automatically from taxpayers bank accounts. Revisions to tax liability are automatically incorporated in the installment plan. Payment can also be made through ATM cards. Additional on-line services available include E-stamping, E-Valuation of property, an Interactive Voice Response System for information and a Fax Request system for forms and copies of accounts. Additional services under development include personalized electronic mailboxes for each taxpayer; expansion of e-filing to other taxes; WAP applications on mobile phones, and several others. Inland Revenue Authority of Singapore (IRAS): www.iras.gov.sg The Home Page provides the following options: About Us Tax Information IRAS Services Downloadable Forms Career Opportunities (This also provides detail for staff and clients on agency ethics and staff expectations) Customs and Excise Department (CED): www.gov.sg/customs The Home Page provides the following options: Information for Travelers Information for Traders: this is comprehensive; all forms are downloadable; a HStariff data base search is available E-forms Notices Directory Courses Careers Exchange Rates for Customs Amendments (for past two years)

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Appendix I Box 2. Best Practices: The Canadian Web Site

Canadian Customs and Revenue Authority (CCRA) ccra-adrc.gc.ca The CCRA web site is a model for almost all countries. The merged authority has one integrated web page, which has already set the standards for user-friendliness, ease of access of an enormous information base and is scheduled to become a fully electronic authority by 2004. The system is, in addition, bilingual. Computers are also available in easily-accessed public places for public use. The following services are already available on-line, broken down by type of taxpayer: - information and assistance - e-filing, tele-filing - business registration - direct deposit to taxpayers -Business Information Center (BIC) provides alphabetically a comprehensive information system on all matters relating to customs and taxation - Seminars for small businesses and traders - Training Modules for Revenue Agents (for instance, Basic Customs) The Home Page provides the following options: Information and Assistance E-filing TIPS Direct Deposits Business Registration The Customs has now introduced a prototype >Virtual Customs Office= (VCO) which will shortly, undoubtedly, become the global standard. Broken down by types of users, the VCO simply and easily provides details on most customs issues, ranging from a tariff wizard for HS tariff data search, bonded warehouse program, duty drawback program, duty relief program, objections and appeals.

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Appendix I Box 3. Existing Tax Web Sites in Sub-Saharan Africa

Botswana info.bw Ministry of Finance bw/government/ministry_of_finance_and_development_planning.html Gabon B not functioning rbmt.fr Ghana finance.gov.gh Provides a list of officials in Ministry of Finance and their contacts Kenya kenyaweb.com/kenyagov Provides a list of officials in Ministry of Finance and their contacts Madagascar, Customs only madagascar-contacts.com/douanes Mauritius, dual language (French and English) Income Tax ncb.intnet.mu/finance/inctax/incomtax.html Customs ncb.intnet.mu/finance/custodep/custintro.html Good site, very detailed on tax treaties, all of which are downloadable. Niger, Customs only, under construction douanes.ne South Africa finance.gov.za South African Revenue Services sars.gov.za Comprehensive web site, but not very useful in terms of content, except for human resource content (for instance on SARS mission, vision, and code of ethics, sars.gov.za_code_of_conduct). Minimal information on customs. Swaziland home.swazi.com/government/ministries/min-fin/html Provides a list of MOF officials only Uganda uganda.co.ug URA ugrevenue.com Customs ura.go.ug/customs/html The most useful and extensive of existing Sub-Saharan web sites. Although customs is an integral department of the URA, its web site has been developed separately. Contains detailed provision of customs regulations and an on-line tariff data base. As yet, however, there is no provision for the downloading of forms. Unlike most SSA sites, the Uganda site provides useful links with other agencies, both inside Uganda and outside and will shortly be expanded to include tenders, jobs and business and financial markets. Zambia zra.org.zm Provides practical information on the structure of the ZRA and existing taxes and incentives, and their rates and schedules. Although providing a list of existing tax forms, these are not

26

downloadable. The web site provides minimal information on customs. required to access the site. Appendix I

More recently, a password is

Box 4. Additional National Tax and Custom Web Sites of Interest

USA: ustreas.gov Inland Revenue Services (IRS) customs.ustreas.gov Customs irs.ustreas.gov All States xs4allmn/ The IRS site is probably the most comprehensive tax web site, providing a full range of on-line services for taxpayers, although the proportion of e-filers remains lower than in many third world countries. The site also provides detailed information for practitioners. The customs web site is similarly comprehensive. Of particular note, is the Custom=s International Training and Advisory Programs (see above, Chapter 6 on Customs) which provides free short-term training programs and longer-term technical assistance to third world countries. While an excellent site, the US site is probably more complex than most developing tax administrations would need or could maintain. UK: Inland Revenue inlandrevenue.gov.uk Customs hmce.gov.uk Like the US system the UK system is one of technical excellence, but not a particularly relevant model for third world administrations. More so than the US, the UK sites are user-friendly, and provide useful information on an interactive basis regarding on-going pilot programs (for instance, the electronic VAT), such that the Government is able to receive immediate feed-back. E-filing has become available in 2000: a GBP10 discount is offered to taxpayers filing and paying taxes electronically. Australia Tax Office ato.gov.au Customs Service customs.gov.au Hong Kong (e-filing not yet available) Internal Revenue Department info.gov.hk/ird/index.html Customs info.gov.hk/customs Indonesia DG of Customs and Excise beacukai.go.id Very large, but not especially user-friendly site. The Ministry of Finance and tax administrations do not have web sites. Ireland revenue.ie Excellent web site and a good model for developing countries. Comprehensive, with useful links to other Government sites and related info for users (eg. transition to EURO). On-line filing to be available in late 2000.

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Israel Ministry of Finance mof.gov.il/hachnasot/ This web has a short-coming shared with several countries: the web design only permits the downloading of relevant information by means of a colored printer. Like Taiwan, Israel has a delightful Museum of Taxes with a very informative web site (mof.gov.il/museum) Japan National Tax Authority nta.go.ip Customs mof.go.ip/~customs.conte_e.html Cont.d The web site provides a mass of detail in a businesslike but not very user-friendly manner. In particular, it lacks a capacity to download forms. The overall presentation raises concerns as to the substance New Zealand treasury.govt.nz A surprisingly limited web site, primarily for the Regulatory and Tax Policy Branch, providing mostly a list of very senior officials. Also, an extensive catalogue of downloadable working papers. Philippines: Board of Inland Revenue bir.gov.ph Board of Customs (not available) boc.gov.ph User friendly, but limited coverage; relatively little information is downloadable; e-filing not available. Taiwan Tax Administration ntas.gov.tw (In Chinese only) Customs eng.dgoc.gov.tw (Dual language) The Customs provides reasonably comprehensive system including a tariff database search facility. Of greater interest, however, is the Tax Museum Web site at this address. Within LAC, Chile=s web site is considered to be amongst the best in LAC, and has moved extensively into e-filing, together with Brazil, which is one of the few countries worldwide permitting electronic payment of taxes through the banking system. Chile (In Spanish) Inland Revenue sii.cl Customs aduana.co.cl Brazil (in Portuguese) receita.fazenda.gov.br

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Appendix I BOX 5. WEB SITES OF INTEREST TO TAX ADMINISTRATORS IN SUB-SAHARAN AFRICA

African Virtual University avu.org African Development Bank afdb.org IMF imf.org World Bank worldbank.org World Customs Organization (WCO), Geneva wcoomd.org (151 countries) World Trade Organization (WTO), Geneva wto.org International Trade Center (ITC), Geneva Joint Integrated Technical Assistance Program for jitap.org Least Developed and Other African Countries (JITAP), Geneva Joint undertaking of the WTO, Unctad and ITC to provide support to these countries to conform to WTO agreements; currently assistance being provided to 6 countries, including Tanzania and Uganda. OECD oecd.org OAS South African Development Community (under construction) sadc.org UNDP undp.org UNECA un.org/Depts.eca Center for Inter-American Tax Administrators (CIAT) ciat.org Center for International Development (CID),Harvard University cid.harvard.edu Commonwealth Association of Tax Administrators(CATA) cata@commonwealth.int Economist economist.com, eiu.com International Bureau for Fiscal Documentation ibfd.nl International Tax Program (ITP), Harvard Law School law.harvard.edu/programs/itp International Taxman xs4all.nl/~edvisser/taxman/html National Tax Association, Washington DC. ntanet.org Tax Institute of Australia taxia.asn.au Taxes around the World paradine.com/worldorg/mainframe.html World Tax taxworld.org

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Economics Dept. Institutes and Research Centers ideas.uqam.ca/EDIRC/index.html EDIRC (Quebec) provides a global web site listing economics institutes and centers African Center for Public Study, Nigeria (ACPS), Lagos acps-NG.org African Economic Research Consortium (AERC), Nairobi Center for Public Policy Priorities, Lagos Botswana Institute for Development and Policy Analysis bidpa.bw Economic Policy Research Center (EPRC), Kampala Economic and Social Research Foundation (ESRF), Dar es Salaam CIA cia/gov/cia/publications/factbook.sf.html Africa-on-line africaonline.co.ke.ughagnd.html Data base and government information for 6 Africa-on-line countries Ernst & Young, "A Guide to Investing in Africa mbendi.c.za/ernsty/cykeeyip.html Information on tax and company laws for 57 countries KPMG tax.kpmg.org