Special governance arrangements

Background

The Advisory Council was established in the late 1990s with the creation of single agency

(i.e. AFIP) to administer tax customs and social contributions collection

Role

The Council periodically evaluates and verifies the AFIP’s Management Plans that are

submitted to the Chief Cabinet Minister.

Composition

The Council is made up of representatives from the different sectors of society, both public

and private, among which are the Ministry of Economy and Production, the Central Bank of

Argentina, the National House of Representatives and Senate, the National Social Security

Administration, provincial government officials and renowned tax experts.

Canada Revenue Agency (CRA) Board of Management

Background

The CRA’s Board of Management was established in 1998 with the creation of a new,

more independent government agency-then known as the Canada Customs and Revenue

Agency-to administer Canada’s tax and customs laws.

Role

The Board has the responsibility of overseeing the organisation and management of the

CRA, including the development of the Corporate Business Plan, and the management of

policies related to resources, services, property, personnel, and contracts. The Commissioner

of the CRA, who is a member of the Board, is responsible for the CRA’s day-to-day

operations. Unlike the boards of crown corporations, the Board is not involved in all business

activities of the CRA. In particular, the Board has no authority in the administration and

enforcement of legislation, for which the CRA remains fully accountable to the Minister of

National Revenue. The Board is denied access to confidential client information.

Composition

The Board is comprised of 15 members appointed by the Governor in Council, 11 of who

have been nominated by the provinces and territories.

Features of

To help the Board fulfil its governance responsibilities, committees have been established

its operation

to undertake much of the detailed review of items brought before the full Board for its

consideration. The Audit, Governance, Human Resources, and Resources Committees

apprise the Board of the items that fall within their scope and provide advice and make

recommendations to the Board about these items. Each committee establishes an annual

work plan to guide its activities in the upcoming fiscal year.

The Audit Committee reviews the Agency’s accounting framework, financial and performance

information, internal controls and financial risks, and compliance with financial and

environmental legislation. The Governance Committee reviews all aspects of the Board’s

governance framework to ensure that the Board functions in an effective and efficient

manner that successfully supports the operations of the CRA. The Human Resources

Committee reviews the management of human resources within the Agency and provides

recommendations and advice on the Agency’s human resources management strategies,

initiatives, and policies. The Resources Committee reviews the Agency’s operating and

capital budgets and its capital investment plans, along with the development of administrative

management strategies and policies for the management of funds, real property, contracts,

equipment, information, information technology, and environmental obligations.

A Board of Management “Oversight Framework (BoMOF) – Assessment of Performance” is

an assessment of management performance conducted by the Board each year in areas of its

oversight as per the Canada Revenue Agency Act. The Board is responsible for the oversight

of the organisation and administration of the Agency and the management of its resources,

services, property, personnel and contracts. The BoMOF, the results of which are made

public, complements the Treasury Board Secretariat’s (TBS) Management Accountability

Framework (MAF) and together the two assessment tools provide a complete evaluation

of the Agency’s management performance. Both Frameworks are structured around key

elements that establish expectations for good management.

Background

The Management Board of DIAN was created in November 2011.

Role

The Board’s main responsibilities are to: a) advise the General Commissioner on tax,

customs and foreign exchange administration policy matters; b) approve and to monitor

DIAN’s business plan; c) evaluate progress reports presented by the General Commissioner

and to put forth recommendations to improve performance; d) to approve the yearly budget;

e) approve changes to the internal organisational design and staffing levels; and f) request

for impact assessments of the initiatives which implementation require follow up according

to the Board.

Composition

The Board has six members: the Minister of Finance, the General Tax Commissioner

(DIAN), the head of the agency responsible for enforcing regulations regarding Social

Security contributions (UGPP), and three independent members (experts with extensive

experience in the areas of competence of DIAN) appointed by the Finance Minister

Features of

The Board reports to the national government through the Finance Minister. It meets once a

its operation

month. If an additional meeting is necessary, it can take place via Web conference. The decree

that created the Board is posted online at: www.dian.gov.co/descargas/normatividad/2011/

Decreto_4171_03112011.pdf. Board proceedings are confidential and, therefore, not made

public. Since its first official session in December 2011, it has met nine times (up to June 2012).

Finland’s Tax Administration Advisory Board

Background

An Advisory Board was established by government Ordinance in 2002 and commenced

operating in 2003.

Role

The role of the Board is to provide guidance/advice on strategic planning, tax administration

priorities and operational guidelines. The Board convenes around six times per year.

Composition

The Board is comprised of a senior official of the Ministry of Finance, the Director-

General of Tax Administration, and 6 members from local government, union, taxpayer

and commerce bodies.

Features of

The Advisory Board met six times in 2012. The meetings addressed issues such as the

its operation

results of the job satisfaction survey and planning documents and monitoring reports related

to operations and finances.

1. INSTITUTIONAL ARRANGEMENTS FOR TAX ADMINISTRATION – 41

Mexico’s Governing Board for the SAT

Background

The creation of the Governing Board coincided with the establishment of a new more

autonomous revenue and custom body in 1996.

Role

The Board’s roles are as follows: 1) assist in the development of fiscal policy and customs

measures necessary for the development and implementation of the National Development

Plan and sectoral programs; 2) provide opinions on draft bills, decrees, resolutions,

administrative and general provisions in tax and customs matters; 3) approve programs

and budgets of the SAT (i.e. the Tax Administration Service); 4) approve the basic

organisational structure of the SAT; 5) consider and approve measures proposed by the

chairman of the SAT to improve operational efficiency and taxpayer orientation; 6) approve

the annual programme of continuous improvement for the SAT, including setting and

monitoring targets for increased efficiency and improved taxpayer service delivery (NB:

Descriptions of measures/performance indicators that must be used are set out in Chapter 3

of this series.); 7) analyse proposals for continuous improvement.

Composition

The Board consists of: 1) the Secretary of the Ministry of Finance and Public Credit, who

will preside; 2) three directors selected by the Secretary of Finance from the employees of

Finance; and 3) three independent directors appointed by the President of the Republic (two

of whom must have been nominated by the national meeting of tax officials in the terms of

the Fiscal Coordination Law). To be appointed, independent directors must not have held a

federal or municipal government appointment in the prior year. Once appointed, they must

not engage in tax or customs related-activities that are incompatible with their role and must

attend 70% of convened meetings.

Features of

The Board is required to hold regular meetings, one at least every three months, and a

its operation

quorum requires at least 50% of members. Board decisions are made by majority vote, with

the Secretary of Finance, as chair, having a casting vote in the event of a tie.

Background

The IRAS Board was established in 1992, as part of legislation authorizing the creation of

a new statutory authority with autonomy in managing its operations to administer the tax

laws.

Role

The Board is responsible for ensuring that the IRAS carries out its functions competently,

and meets three times a year to review major corporate policies and approve financial

statements, the annual budget and major expenditure projects.

Composition

The Board comprises the chairman who is also the Permanent Secretary of the Ministry

of Finance, the Commissioner of Inland Revenue, and seven other members (comprising

public and private sector representatives).

Features of

The Board has established three committees-the Audit Committee, the Staff Committee A

its operation

and the Investment Committee-to assist in carrying out its duties. The Audit Committee

reviews and ensures that IRAS” accounting and financial policies and internal controls

are in place, adequate and adhered to. The Committee works closely with the external

auditor, the Auditor-General, to review the financial statements of IRAS, the scope of

audit plans and the audit results. The Committee also reviews the annual audit plan of the

Internal Audit Branch and the results of its work. The Staff Committee A is the approving

authority for key remuneration policies in IRAS as well as key appointments, promotion

and remuneration of senior executives in IRAS. The Investment Committee sets investment

policies and guidelines and manages surplus funds available for investments.

Background

The South African Revenue Service is an administratively autonomous organ of the state:

it is outside the public service, but within the public administration. So although South

Africa’s tax regime is set by the National Treasury, it is managed by SARS.

The external governance framework is provided for by:

The Public Finance Management Act 1 of 1999;

The South African Revenue Service Act 34 of 1997;

Specialist advisory committees which advise the Commissioner and the Minister of

Finance on any matter concerning the management of SARS resources; and

The Audit Committee which oversees the effectiveness of internal controls.

Role

1. Audit Committee: This committee must, among other things, review the effectiveness of

the internal control systems in SARS; the effectiveness of internal audit; the risk areas of

SARS operations to be covered in the scope of internal and external audits; the adequacy,

reliability and accuracy of financial information provided to management and other

users of such information; any accounting and auditing concerns identified as a result

of internal and external audits; SARS compliance with legal and regulatory provisions,

the activities of the internal audit function (including its annual work programme),

co-ordination with the Auditor-General, the reports of significant investigations and

the responses of management to specific recommendations; and where relevant, the

independence and objectivity of the external auditors (not applicable to SARS). It must

report and make recommendations to the Commissioner, report on the effectiveness of

internal controls in the annual report of SARS and comment on its evaluation of the

financial statements in the annual report.

2. Specialist Advisory Committees: Human Resources, Operations, Customs, Procurement,

Finance, Legal and Policy.

Background

Legislation to create HMRC in 2005 included provision for the creation of a Board, to be

comprised of members of HMRC’s internal Executive Committee and (four) non-executive

(external) board members. In 2008, HMRC implemented a new governance structure

appointing a non-executive Chairman and a new Chief Executive. The Chairman and the

Board are responsible for the effective governance of HMRC. The Chief Executive and

Executive Committee are responsible for running HMRC.

Role

The Board sits for a minimum of ten times a year and is chaired by the HMRC Chairman.

The Board is supported by the Audit and Risk, Ethics and Responsibilities and People sub-

committees and has the following responsibilities: 1) Development and final approval of

HMRC’s overall strategy; 2) Development and final approval of HMRC’s communications

strategy and sign off of significant HMRC communications identified within it;

3) Development and final approval of the culture and values objectives and strategies;

4) Approval of the final sub-strategies of lines of business and functions; 5) Approval of

final business plans (incl. the annual financial plan); and 6) Advise the Chief Executive on

the appointment of senior executives.

Ensuring the strength of the top team by participating in the appointment of and advising

on the ongoing competence of Board members, Executive Committee members and other

key appointments.

Composition

The Board’s membership currently comprises the Chair, the Chief Executive, the Permanent

Secretary of Tax, eight executive HMRC officials and six non-executive directors. Non-

executive directors are senior business figures from outside the department who bring

a diverse mix of expertise and skills from across both public and private sector. HMRC

looks to its Non-Executive Directors to bring guidance and advice, support and challenge

management about the department’s strategic direction, and provide support in monitoring

and reviewing progress.

Features of

In approving the strategies and plans, the Board ensures that the views of HMRC’s

its operation

stakeholders are taken into account. It also periodically reviews the work of the three sub-

committees to assure the highest standards of corporate governance are in place. Brief

minutes of the Board’s proceedings are published regularly on HMRC’s website.

There are very clear accountabilities for the Chairman and the Chief Executive. Setting

the strategic direction and ensuring the highest standards of governance lies with the

Chairman. The responsibility for delivery and expenditure lies with the Chief Executive.

The top team is further strengthened by the appointment of a Permanent Secretary for Tax

who is the senior tax professional in HMRC and also the Deputy Chief Executive.

Australia: Inspector-General of Taxation

Background

The Inspector-General of Taxation (IGT) was established as an independent statutory

agency in 2003.

Role

The IGT’s role is to review: 1) systems established by the Australian Taxation Office (ATO)

to administer the tax laws; and 2) systems established by tax laws in relation to administrative

matters; for the purpose of reporting and making recommendations to Government on how

those systems could be improved. The Act precludes the IGT from reviewing the imposition

of taxes and tax rates, and the eligibility criteria for, or levels of, any rebates or grants

administered by the ATO.

The IGT seeks to improve the administration of the tax laws for the benefit of all taxpayers.

Individuals and/or groups of taxpayers, professional associations and businesses are welcome

to bring systemic administration issues to the attention of the IGT. The IGT endeavours to

address taxpayers’ concerns on defective administration while ensuring resources of the

agency are directed to those areas of most benefit to taxpayers overall. The overall aim

is to identify how to reduce the administrative burden for taxpayers in meeting their tax

obligations.

Features of

While a number of Commonwealth Government agencies examine systemic taxation

operation

administration matters, the IGT is the only agency with sole responsibility for such reviews. To

ensure that reviews undertaken reflect areas of key concern, and to avoid duplication with other

agencies, the Inspector-General develops the work programme following consultation with:

1) taxpayers and their representatives; 2) Ombudsman; 3) Auditor-General; 4) Commissioner

of Taxation; and 5) The Secretary of the Commonwealth Treasury. In conducting reviews the

IGT may invite submissions and/or request/require the tax officials to provide information and

documentation. The Act contains specific provisions on the confidentiality of submissions

made to the Inspector-General. On completion of a review the Inspector-General reports

directly to Government. All reports are subsequently made available within the timeframe

outlined in the Act. The IGT provides an annual report to parliament on its operations.

Examples of

Review into the ATO’s administration of class rulings.

studies in 2012

Review into the ATO’s small and medium enterprise audit and risk review policies,

procedures and practices.

Review into the Australian Taxation Office’s use of early and Alternative Dispute Resolution.

Background

The Treasury Inspector General for Tax Administration (TIGTA) was established in January

1999 in accordance with the Internal Revenue Service Restructuring and Reform Act of 1998

(RRA 98). As mandated by RRA 98, TIGTA assumed most of the responsibilities of the

IRS” former Inspection Service.

Role

Its role is to provide independent oversight of Internal Revenue Service (IRS) activities.