Global Tax Structuring Issues

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Global Tax Structuring Issues
PerspectiveTax Administration Approach

• Presented by
• Dr. Prabodh Seth
• Director, Research, Policy Planning
• Mauritius Revenue Authority

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Contents
1. Essence of the Strategy
2. Implementing the Strategy
3. Outcome
4. Future Plan of Action
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Essence of the Strategy

• Optimising revenue collections by improving
  taxpayer awareness, matching of third party
  information, reinforcing audit investigation,
  boosting arrears collection and promoting
  research
• Providing quality service to taxpayers through
  timely service to customers and customer
  education and communication
• Facilitating trade and business by ensuring quick
  clearance of goods, minimising physical
  inspection of goods and promoting e-payment

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Essence of the Strategy

• 4) Tackling corruption in tax administration
  through integrity checks and auditing of revenue
  systems
• 5) Developing human capital through focused
  training and inculcating a performance culture
  within the organisation
• 6) Implementing an effective management
  information system by modernising IT systems and
  developing an effective monitoring evaluation
  mechanism

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Implementing the Strategy

• Three Pronged Approach
• 1. Institutional Revamping - Setting up of the
  Mauritius Revenue Authority (MRA)
• 2. Tax Policy Measures
• 3. Tax Administration Measures

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Implementing the Strategy

• 1. Institutional Revamping - Setting up of the
  Mauritius Revenue Authority (MRA)
• MRA Legal Framework
• MRA Governance Framework
• Overhauling Tax Administration
• MRA New Organisational Structure

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MRA Legal Framework

• A body corporate, a Revenue Authority established
  for the purpose of
• Managing and operating an effective and efficient
  revenue raising organisation.
• Agent of the state for
• Assessment of liability to, the collection of and
  accountability for, tax
• The management, operation and enforcement of the
  revenue laws

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MRA Governance Framework

• MRA Board Chairperson, two official members
  four unofficial members
• Main Functions of Board - select appoint
  management team and lay down terms conditions
  of service of MRA employees
• Director- General - Chief Executive Officer of
  MRA, appointed by MRA Board
• Functions of Director General - Implements the
  policy of the Authority Administers Revenue Laws

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Overhauling Tax Administration
Basic Principles
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MRA New Organisational Structure

• Finance Administration
• Human Resources Training
• Taxpayer Education Communication
• Research, Policy Planning

• Legal Services
• Information Systems
• Internal Affairs
• Internal Audit

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2. Tax Policy Measures

• A single income tax (corporate personal) VAT
  rate of 15
• Consolidating numerous reliefs, allowances and
  deductions into higher income exemption
  thresholds
• Reducing the number of tax bands and rates from 4
  to 1 in a phased manner
• Overhauling the complex system of exemptions

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3. Tax Administration Measures

• Optimising Revenue Collections
• Providing Quality Service to Taxpayers
• Facilitating Trade and Business
• Tackling Corruption
• Developing human capital
• Implementing an effective Management Information
  System

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Optimising Revenue Collections

• Introducing Tax Deduction at Source (TDS)
• Interest (on deposits gtRs 2 Million) 15
• Royalties.. 10
• Rent.. 15
• Payments to-
• Contractors Sub-Contractors 0.75
• Providers of specified services 3
• Introducing Quarterly Advance Payment System
  (APS) for Companies
• Requiring self-employed to submit Current Payment
  System (CPS) statements quarterly instead of
  semi-annually

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Optimising Revenue Collections

• Conducting Audits Investigation
• Collecting, collating and disseminating third
  party information
• Carrying out research in specified sectors

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Optimising Revenue Collections

• Voluntary Disclosure Incentive Scheme (VDIS)
• VDIS covered non-reporting/under reporting of
  income tax and VAT
• Scheme opened for 6 months (July December 2007)
• Amount of tax payment agreed Rs 1.05 billion
• Amount collected by end June 2008 Rs 515.4
  million
• Tax Arrears Payment Incentive Scheme (TAPIS)
• Provided a 75 waiver on interest/penalty as
  incentive for tax debtors to settle their tax
  liability
• Scheme opened for 6 months (July Dec 2007)
• Amount of tax payments agreed Rs 219 million
• Amount collected by end June 2008 Rs 114 million

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Providing Quality Service to taxpayers

• Introducing cumulative PAYE system
• Issuing refunds within 3 months provided all
  information is submitted
• Simplifying individual corporate income tax
  forms
• Setting up a Taxpayer Education and Communication
  Department
• Operationalising New Taxpayer Service Centre
• Conducting educational seminars/ awareness
  campaigns regularly
• Publishing taxpayer information leaflets

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Facilitating trade and business

• Issuing VAT repayment for fast-track cases within
  7 days
• Issuing Tax Residence Certificates within 7 days
• Promoting e-filing of Income Tax returns for
  companies individuals Turnover criterion
  reduced for e-filing of income tax and VAT
  returns
• Facilitating e-payment of Income Tax through
  internet banking for companies. This facility
  extended to individuals from this year

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Facilitating trade and business

• Launching Fast-Track Cargo initiative (Blue
  Channel)
• Issuing Tariff Rulings expeditiously within 3
  days
• Subjecting 80 of cargo to green channel
• Limiting physical inspection to 20 of cargo
• Acceding to WCO Revised Kyoto Convention
• Introducing excise stamps on Tobacco Products
• Installing x-ray scanners at Port and Airport

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Tackling corruption in tax administration

• MRA Act provides for an Internal Affairs Division
  (IAD) to deal with and investigate internal
  malpractices and acts of corruption.
• Every MRA employee should
• - submit a Declaration of Assets which is
  processed and verified by the IAD
• - comply with the MRA Code of Conduct and
  Ethics, otherwise he/she may face disciplinary
  action

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Developing human capital

• Introducing
• - Key Performance Indicators (KPIs) for staff
  with clearly defined targets/benchmarks
• - an open interactive performance appraisal
  system
• Providing fixed term performance contracts for
  senior management
• Basing all promotions and pay progression on
  performance
• Laying down the training and development strategy

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Effective Management Information System

• Implementing an effective management information
  system by
• - Establishing an Integrated Tax
  Administration Solution (ITAS)
• - Increasing the degree of automation

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Outcome - Revenues
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Outcome - Efficiency and Effectiveness
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Outcome - Efficiency and Effectiveness
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Other Outcomes

• Preparing
• Code of Conduct and Ethics
• Prevention of Malpractice Manual
• Conducting Public Perception Survey of Integrity
• Inculcating performance culture by laying down
  KPIs for every department and cascading it down
  to every employee of MRA

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Future Plan of Action
Meeting 2008/09 Budget Revenue Targets
Information Management System
Promoting E-filing of tax returns
Customs Projects
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2008/09 Budget Revenue Targets
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Information Management System

• Future plans
• Implementing ITAS
• Upgrading Customs Management System on new oracle
  platform
• Enabling e-payment as a trade facilitator
• Implementing self-service on the FIN/HRMS system

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Promoting e-filing of tax returns

• The future plan includes
• Promoting electronic filing by companies
• Receiving all Return of Employees and TDS yearly
  statements electronically
• Appointing E-filing Service Centres for on-line
  filing by the general public
• Providing e-filing and e-payment facilities on
  MRA portal for individuals companies

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Customs Reforms

• Moving into the New Customs House in 2009
• Extending Tax Stamps to alcoholic products
• Promoting Electronic filing of excise
  declarations
• Setting up Cargo Community System
  implementation in progress
• Extending the Fast Track cargo (Blue Channel) to
  more compliant importers

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THANK YOU