9377777 POA5 : TADAT

1. Tax Administration Diagnostic Assessment Tool
POA 5: TIMELY PAYMENT OF TAXES

2. Desired Outcome of POA 5
Taxpayers pay their taxes in full on time.
• Taxpayers are expected to pay taxes on time according to the law and procedure laid out
• Tax laws and administrative rules specify payment requirements, including due dates,
payment methods and who is required to pay.
• Failure to pay on time may result in penalties, interest or prosecution, as well as follow
up action for debt recovery.
• The aim of the tax administration is to attain high rates of voluntary on-time payment
and low incidence of tax arrears.
• This requires monitoring of amounts owed and quick follow up actions when payment is
delayed

3. POA 5: Good Practice in Timely Payment of Taxes
International
Good
Practices in
POA 5
Extensive use of
tax withholding
at source – from
salary, interest
and dividend
incomes
Use of advance
payment regimes
to ensure that
taxes are paid
during the year in
which income is
earned
Wide use of
electronic
payment
methods
Appropriate
levels of interest
and penalties
for late payment
and non-
payment
Specialized
enforcement unit
with power of
enforced collection,
including from third
party, and obtaining
liens over assets
Use of call
centers and e-
mails to contact
debtors
Effective
arrears/debt
management
approaches,
including arrears
management IT
system
Prompt write off
of uncollectible
debts
Use of tax
clearance to
access
government
contracts, grants
and subsidies

4. Performance Indicators for P5: Timely Payment of Taxes
Dimensions
High Level Indicator
P5-14: Timeliness of
payment [M1]
Number of VAT
payments
made by the
due date in
percent of total
number of VAT
payments due
Value of VAT
payments
made by due
date in
percent of the
total value of
VAT payment
due
Value of total
core tax
arrears in FY
end in percent
of total core
tax revenue
collection for
FY
Value of
collectible core
tax arrears in
FY end in
percent of
total core tax
revenue
collection for
FY
Value of core tax
arrears more
than 12 months
old in percent of
value of all core
tax arrears
P5-15: Stock and flow of tax
arrears [M2]
The extent
to which
withholding
at source
and advance
payments
are used
The extent to
which core
taxes are paid
electronically
P5-13: Use of
efficient
collection systems
P5-12: Use of
electronic
payments

5. Definitions
VAT payments due: All payments required to be made by the entire population of active VAT
taxpayer, both in terms of self assessment, or administratively assessed as a result of audit,
and includes penalties and interest that may become due.
Number of payments due: Number of payments required to be made by the entire population
of active VAT taxpayer. If, for instance, all active taxpayers are required to make 12 payments
in a year, the number of payments due is 12 times the number of active taxpayers.
Value of payments due: Amount of payment due from all active taxpayers , both from self
assessment and as a result of audit, interest and penalties
Value of total tax arrears include all amounts of tax, penalties and accumulated interest.
Value of collectible tax arrears include total amount of tax, interest and penalties which are
not subject to collection impediments, such as where: (i) collection has been stayed due to
appeal ; (ii) amount is not legally recoverable due to bankruptcy; or (iii) arrears are otherwise
uncollectible.

6. Scoring P5-12: Use of electronic payment
methods
• Electronic payments account for more than 75 percent of the
total value of collection for each of CIT, PIT, VAT and PAYEA
• Electronic payments account for more than 50 percent of the
total value of collection for each of CIT, PIT, VAT and PAYEB
• Electronic payments facilities are used for at least one of the
4 core taxesC
D The requirements for a C rating are not met or
information insufficient

7. Scoring P5-13: Use of Efficient Collection Systems
A
Withholding at
source is in
place for
employment
income (PIT)
Withholding or
mandatory
reporting
/disclosure
requirements in
place for interest
and dividend
incomes
Advance payment
arrangements are
in place for all
business income
(CIT and PIT)

8. Scoring P5-13: Use of Efficient Collection Systems
B
Withholding at
source is in
place for
employment
income (PIT)
Withholding or
mandatory
reporting
/disclosure
requirements in
place for interest
and dividend
incomes
Advance payment
arrangements are
in place for all
business income
(CIT and PIT)

9. Scoring P5-13: Use of Efficient Collection Systems
C
Withholding at
source is in
place for
employment
income (PIT)
Withholding or
mandatory
reporting
/disclosure
requirements in
place for interest
and dividend
incomes
Advance payment
arrangements are
in place for all
business income
(CIT only)

10. Scoring P5-14-1: Number of Timely VAT Payments
The number of VAT payments made by the statutory due date in percent of the
total number of VAT payments due over a recent 12-month period
Number of VAT payments made by the due date x 100
Number of VAT payments due
A
Ratio is above
90 percent
B
Ratio is above75
percent and up
to 90 percent
C
Ratio is above
50 percent and
up to 75 percent
D
Requirements of
a C rating are
not met
OR information
insufficient

11. Scoring P5-14-2: Value of Timely VAT Payment
The value of VAT payments made by the statutory due date in percent of the total
value of VAT payments due over a recent 12-month period
Value of VAT payments made by the due date x 100
Total value of VAT payments due
A
Ratio is above 90
percent
B
Ratio is above75
percent and up to
90 percent
C
Ratio is above 50
percent and up to
o 75 percent
D
Requirements of a
C rating are not
OR information
insufficient

12. Scoring P5-15-1: Stock of Total Arrears
Value of total core tax arrears at fiscal year end in percent of total core tax revenue
collection for the fiscal year
Value of total core tax arrears at the end of FY x 100
Total core tax collected for FY
A
Ratio is below
10 percent
B
Ratio is at least
10 percent and
up to 20 percent
C
Ratio is at least
20 percent and
up to 40 percent
D
Requirements of
a C rating are
not met OR
information
insufficient

13. Scoring P5-12-2: Stock of Collectible Arrears
Value of collectible core tax arrears at fiscal year end in percent of total core tax
revenue collection for the fiscal year
Value of collectible core tax arrears at the end of FY x 100
Total core tax collected for FY
A
Ratio is below 5
percent
B
Ratio is at least
5 percent and
up to 10 percent
C
Ratio is at least
10 percent and
up to 20 percent
D
Requirements of
a C rating are not
met OR
information
insufficient

14. Scoring P5-12-3: Value of Old Tax Arrears
Value of core tax arrears more than 12 months old in percent of value of all core tax
arrears
Value of core tax arrears more than 12 months old x 100
Value of all core tax arrears
A
Ratio is below
25 percent
B
Ratio is at least
25 percent and
up to 50 percent
C
Ratio is at least
50 percent and
up to 75 percent
D
Requirements of
a C rating are
not met OR
information
insufficient

15. Table 17
of the Field
Guide
Checklist of Questions and Evidence for POA 5