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ATAF Workshop: Tax Administration of Large Business Taxpayers. Andrew Okello – IMF Fiscal Affairs Department. Identification and selection of large business and main criteria. Identifying large business. A critical task is to identify precisely which taxpayers are to be administered by the LBU - PowerPoint PPT Presentation
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Andrew Okello – IMF Fiscal Affairs Department
Identification and selection of large business and main criteria
A critical task is to identify precisely which taxpayers are to be administered by the LBU
The LBU should be responsible for managing all major domestic taxes
Within this context, an analysis must be conducted to stratify the taxpayer population in order to identify the large taxpayers
Tax administrations use varying techniques to identify large taxpayers
Problems Tax minimization/holidays
Non labor intensive sectors
Undervalues service sector
Small companies and big non-corporates
Many small players in open exporting economies
Large competitive markets
Criteria Tax paid or tax
liability Employee numbers Capital base Entity type
International transactions
Industry type
Turnover, the best measure of size Simple concept Easily understood Easily measured Basis for VAT Correlation to actual/potential tax liability Thresholds to delineate segments
All economic activity should be included in the turnover calculation whether it is subject to tax or not
The intention is to find the point in the taxpayer stratification that optimizes the revenue leverage compared with the number of taxpayers included in the net
Amount of annual income (HNWI) Value of assets Level of imports/experts Type of economic activity Treating formal groupings as a single entity The small number of domestic excise
taxpayers
If the LBU is allowed to grow too large in terms of taxpayer numbers, its effectiveness will be diluted because it will be unable to maintain the intensive and concentrated compliance activities required in this market segment
Potential new entries to the large taxpayer segment should be monitored and only transferred to the LBU when they exceeded the turnover limits for several consecutive years
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