Foreign experience of the tax debtors segmentation and the possibility of its implementation in Ukraine

Abstract

Background An overview of best practice in tax debt management, with a particular emphasis on integration of payment issues in the compliance process. Detail Over the past years, the FTA has done much work in the area of compliance and compliance risk management. The "Working Smarter" report (2012) states: 'Even the most sophisticated strategies for facilitating or enforcing compliance are worth little if the tax owed is not actually collected. Having appropriate strategies in place for debt management is particularly pressing in the present climate of financial crisis, where most revenue bodies face rising levels of tax debt with corresponding resource pressures and risks.' 1 This is confirmed by the recently published "Tax Administration 2013" 2. Research into debt levels indicates that average debt levels for OECD countries were some 26% higher at end-2011, compared with the position at the end of 2007 (pre-GFC). Overall, it is estimated that total undisputed tax debt at end-2011 in OECD countries was in the region of USD 650-700 billion. Consequently the tax debt collection function has probably never been more important than it is today but the FTA has conducted only one study of tax debt collection practices and this dates back to 2006. The Working Smarter report and a preliminary study based on publicly available information undertaken by the Secretariat (covering trends in tax debt and strategies for managing debt in selected FTA countries; attached to this document) confirm the considerable development since 2006 in debt management strategies. 1. Organisation of debt management (for example: segmentation, centralization, digitalization, use of call centres, cooperation with other public sector creditors, outsourcing). 2. Integration of payment obligations in compliance processes (for example: synchronizing tax return and payment obligations, taking payment obligations into account in service and early in the compliance process, compliance risk management in collection, influencing payment behaviour, measuring effectiveness). 3. Information technology in debt management (for example: use of analytics, risk profiling). This will include the use of third party information that would assist the tax administration in making a decision about ability to pay and understanding the overall assets position of the debtor that could inform possible recovery action.