Programme Impact

A TIWB Programme – like any other programme – has specific goals and objectives. These goals and objectives must be agreed upon and defined so that the effectiveness and efficiency of the work undertaken during the TIWB Programme can be valued and measured.

Measuring the impact of a TIWB Programme through the use of indicators is useful for evaluation and accountability purposes. Beyond revenue-linked targets, there are important long-term goals of effective of targeted tax audit assistance such as

  • sustainable knowledge transfer
  • improved consistency and fairness in audit processes
  • reduced taxpayer challenges to audit outcomes
  • increases in taxpayer confidence towards the Host Administration

As noted in the 2013 OECD/ITC/BMZ report, Tax and Development Aid Modalities for Strengthening Tax Systems, "Some superficially attractive indicators can be double-edged swords. The tax ratio [tax revenue to GDP] is a prominent case in point in that over-ambitious targets can lead to abusive collection practices at the expense of tax legitimacy."

Indicators chart

The Host Administration will lead the process of establishing objectives for the TIWB Programme and selecting indicators to measure impact. This objective-setting process, including indicator selection, should be finalised in consultation with the Expert, as well as any Donor Partner or Partner Administration. The TIWB Secretariat can provide examples of programme indicators and assist the Host Administration in the objective-setting. All of the parties to a TIWB Programme should have a clear understanding of the objectives and how they will be measured in advance of the Programme. At the end of the TIWB Programme cycle, both the TIWB Expert and the Host Administration are required to submit a Final Programme Report to the TIWB Secretariat.

Recognition that the outcome and success of a TIWB programme is influenced by elements and factors which are both within and sometimes outside the control of the Expert must be considered. Ensuring an appropriate level of support for the TIWB Programme within the Host Administration – in respect to resources, personnel and support for any required changes – is crucial to success. Like the selection of objectives and impact indicators, measuring impact is the responsibility of the Host Administration, but will necessarily involve the Experts themselves.

The following are a selection of potential impact indicators that can be used or adapted to each TIWB Programme to assist in the formulation of indicators by the Host Administration. Furthermore, since impact should be assessed progressively, indicators should be tailored to consider short-, medium- and long-term objectives. It may also be appropriate to establish post-Programme objectives to ensure that measures implemented during the Programme are continued beyond the duration of the TIWB Programme. Clearly, indicators need to be adapted to take into account the scope of the particular TIWB Programme and the context of the Host Administration.

Programme Indicators

Care must be taken when selecting impact metrics, as a narrow focus on easily quantifiable indicators – such as revenue increases – needs to be balanced with more nuanced considerations. Capacity building for better quality administration and sustainability, through the transfer of practical knowledge and skills, remains the over-arching objective of any TIWB Programme. Therefore qualitative indicators are equallyrelevant than quantitative indicators; qualitative indicators bring valuable input for future development, as well as for specific measures to improve current systems and working methods. The outcome after applying qualitative indicators often proves to be more sustainable and useful for future development.

Below is a list of examples of indicators that can be used to assess the impact of TIWB Programmes. Indicators should obviously align with the Programme's stated objective(s). Depending on the situation, scope and goals of the Programme, the Host Administration can incorporate or omit certain indicators.

Some indicators target specific internal organisational measures that could be taken or developed by the Host Administration in order to reach the TIWB Programme goals. The short-term indicators are quite specific and relate more to practical day-to-day situations and issues to be dealt with by the Host Administration. The mid- and long-term indicators are targeted at monitoring the broader effects, progress and development of the Programme activities.

Impact assessment must aim to take these nuances into account while measuring the Programme's effectiveness in a concrete and meaningful way. This often means designing a balanced approach of quantitative and qualitative measures.

Short-Term Indicators

  • Attention to understanding the concept, ideas and principles of Compliance Risk Management in practice (general principles, practical "tools" to be used in practice and how to select and use those "tools" and behavioural aspects)
  • Audit approach developed regarding the actions to be undertaken in the TIWB Programme (strategic document)
  • Description of audit approach available (more general outline of goals to be reached and how to get there; practical document)
  • Description of audit techniques to be used during the TIWB Programme are available (specific description, also for practical use)
  • Charts of work flow procedures available (essential for developing IT support regarding the audit processes in the future)
  • Specific risk analysis and risk selection methods and criteria for the branches/industries to be audited are identified.
  • Risk selection and risk analysis methodology developed and implemented (supported by IT)
  • Internal guidelines for selection of audit cases set up and available (based on principles of Compliance Risk Management and picking the right "tools")
  • Information available on "understanding" of branch and businesses to be audited (branch information, "knowing the business")
  • Audit planning mechanism in place (including monitoring aspects)
  • Specified, targeted and clearly stated standardised audit assignments available and used (necessary for consistent audit practice with clear objectives)
  • Standardised layout of audit reports available and used (necessary for consistent audit practice)
  • Training/education programme developed for involved employees regarding audit approach and audit techniques to be used (to be documented)
  • Internal manuals and guidelines regarding audit procedures and techniques for employees developed and in place (manuals should describe working procedures and containing relevant back ground information on the working processes)
  • Monitoring system in place regarding progress of audits to be performed, and containing elements of hours spent on audit as well as quality of audit measures performed (Could be divided by hours spent on preparing the audit, doing the audit, meetings/discussions with the taxpayer/company completing reports, etc.)
  • Taxpayer Education Programme designed and undertaken (general or sector-specific) on tax obligations or specific risk areas

Mid-Term Indicators

  • Information on audits, conducted and finalised under TIWB Programme:
    • number of audits;
    • improved consistency in audit outcomes*;
    • effects on capacity building*
      *specific criteria to be determined
  • Increased tax revenues from the performed audits (divided into assessments, penalties, interest)
  • Staff is capable of applying the newly obtained knowledge and skills on audit approach and audit techniques in practice (e.g. effects to be measured by quality and content of audit files and audit reports)
  • Staff is capable of applying principles of Compliance Risk Management in practice (reflected in behaviour of staff, e.g. being accessible and available for companies, staff and approaches the companies on the basis of “trust”)
  • Audits have been performed and finalised within the time frames, set out in internal procedures (monitoring system in place)
  • Quality and content of audit reports meet standards set in internal manuals and regulations
  • Improved accessibility to taxpayers who were audited regarding tax matters (contacts with CEOs, CFOs, etc.; practical use and understanding of Compliance Risk Management principles)
  • Measures in place to monitor (increases in) level of compliance of taxpayers who were audited (e.g. filing obligations, giving easier access to company data and information, timely payments of taxes)
  • Further development (and implementation) of specific audit approach and client treatment for various types of companies
  • Increase in international requests for exchange of tax information to other tax administrations (quantitative and qualitative; information available as to tax administrations that are approached more frequently and on which topics)
  • Availability of and accessibility to foreign experts involved in TIWB Programme (onsite or through other channels, like e-mail, etc.)
  • Demonstrate added value from quality of work and efforts of foreign experts involved in TIWB Programme
  • Increase in-depth audit activity, based on outcome of performed audits (third-party investigations, requests for exchange of information, etc.)
  • Synergy effects of TIWB Programme and other international/bilateral tax audit programmes.
  • Mid-term evaluation of effects of TIWB Programme (covering various and multiple aspects)

Long-Term Indicators

  • Changes in fulfilling tax obligations by companies that were audited, e.g. filing obligations, timely payments etc.; demonstrable effects of applying principles of Compliance Risk Management in practice.
  • Improved access to the tax administration for CEOs, CFOs and other key players of the company taxpayers
  • Increased willingness to provide data and information to tax administration ("voluntary disclosure of data and information")
  • Company taxpayers behave as "equal business partners" in relations with tax administration
  • Company taxpayers are open to discussions with tax administration regarding preliminary agreements
  • Staff of tax administration acts and works according to principles and ideas of Compliance Risk Management
  • Decrease in number of litigations, objections and appeals made by taxpayer companies
  • Increase in number of preliminary agreements on various tax matters made with taxpayer companies, along with improved quality of these agreements
  • Reduction in length of time for tax dispute resolution
  • Increase in service usage by taxpayer companies with tax administration
  • Taxpayer risks identified by sector and branch, and percentage of those risks quantified and modelled