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Ricardo Escobar, the Internal Revenue Service Commissioner, announced today that the organization would begin to carry out a 4-year long institutional development plan, which involves the implementation of five strategic projects aimed at reforms that would strengthen and promote the organization before the year 2010.
“The moment has come to give a new impulse to the modernization of the SII and to achieve that, we would like to propose a set of reforms that will be implemented during the next 4 years. The core part of the plan is to provide improved services for taxpayers and a more efficient supervision system that will decrease the number of evasions. To achieve it, we must improve the management of the organization, its internal processes, the control of what has already been done, the transparency of our actions, the strengthening of quality and the integrity of our staff members," Escobar explained.
The root of the projects - the SII Commissioner went on - lies in establishing that the vast majority of taxpayers, some 97.7%, pay their taxes voluntarily.
“In general, our citizens are quite responsible where their tax obligations are concerned, and this is a situation that we should be able to promote and take advantage of, providing assistance and quality services, according to the specific needs of the different taxpayer segments. This situation would allow us to focus our resources and our supervisory actions on those taxpayers who do not comply with their obligations and who decide to opt for tax evasion or those who engage in tax crime," he said.
In short, the five projects are:
- Taxpayer segmentation, according to their specific characteristics and needs, aimed at facilitating high quality service delivery that would support voluntary tax payment compliance, focusing instead on the inspection of deficient taxpayers who opt for non-compliance, evasion and tax fraud;
- Implementation of a set of initiatives that would help the Internal Revenue Service (SII) to adapt to the impact of the new independent legal tax system which will have specialized magistrates and separate courtrooms; additionally, technical support for the implementation of the system;
- Modernization and systematization of the regulatory area aimed at offering transparency and legal security to taxpayers and an improved access to information;
- Development of a new Real Estate Tax administration model, adopting technologies that would allow the inputting and modification of information on real estate on part of property owners, and also the use of satellite geographical information technologies applied to the taxpayers' database.
- A reform of human resources policies, based on the premise that staff members are the organization’s principal assets in order to achieve the targets and to bring about strategic changes in the management and in the quality of assistance and services provided for taxpayers.
2006 Performance Report Achievements
The announcements were made during the presentation of the 2006 Performance Report, highlighting the 14% increase in tax collection last year, totaling more than US$ 25.2 billion. Regarding the 2001 - 2005 Plan Against Tax Evasion, its implementation contributed some US$ 4 billion (77% more than estimated initially, thanks to which the VAT evasion rate fell from 22% to 11% of the potential collection) in the last four years. In respect to the use of tools for the tax obligations compliance through the Internet, we should mention that in 2006 some 97% of all income Tax Return were filed on-line and that 77% (US$ 13 billion) of VAT payments were also filed electronically.
The reading of the Performance Report was attended by Ministry of Finance Under-secretary, Maria Olivia Recard, government authorities, representatives of various political parties, representatives of the Chamber of Deputies and the Senate, business people representing large, medium-sized and small companies, members of the academia, staff members and worker association leaders.
Strategic Projects
- Taxpayer segmentation aimed at offering top-quality services, focusing on the inspection of evaders.
The numbers show that 90% of tax revenue is contributed by only 1.8% of taxpayers. The remaining balance derives from some 600,000 medium-sized and small companies and approximately 3 million individual taxpayers.
This situation indicates that both service delivery aimed at facilitating tax compliance, and SII tax inspection must be differentiated according to taxpayer size and type, since taxpayers’ needs and specific characteristics are clearly different. Although the SII has used in the past some type of taxpayer segmentation, (creation of the Large Taxpayers Division), it is time to delve into this issue in more detail and to create more focused specialization areas.
This way, the SII still faces the following challenges:
- Progressing to a new taxpayers' database administration model, classifying and segmenting it according to size and other variables.
- Adopting inspection strategies by taxpayer type.
- Detecting specific assistance needs inherent to every segment.
- Adjustment to the new independent tax tribunals, the challenges that still await the SII.
The support for the bill that creates a new independent and specialized legal tax system makes it possible to predict that this initiative will be approved. The practicality of this new and demanding stage means that the SII must prepare for what lies ahead. In order to do this, it is still necessary to:
- Speed up and make more efficient the review system of complaints filed by taxpayers dealing with the performance of SII inspectors.
- Encourage conflict resolution through administrative channels, in order to avoid excessive and unnecessary "legal arbitration" of cases.
- Create specialized legal defense areas, which will be responsible for presenting and arguing the cases in the independent tax tribunals in representation of the SII.
- Adjust SII procedures to the law and to due process.
- Provide technical support for the implementation process of the new independent tribunals.
- Modernization of the regulatory function. The law provides the SII with the power to interpret tax legislation, so that by means of issuing rulings, circular letters and reports, these may be fully applied in practice. The modernization of this area, the systemization of the existing regulations, the convenience of making them more transparent, are only some of the necessary measures aimed at better comprehension by the taxpayers. To achieve the above, it is necessary:
- To prepare and efficiently co-ordinate generation mechanisms and the updates of administrative jurisprudence.
- To hold the necessary technological tools that would allow taxpayers a speedy access to regulations in a systematic way.
- To provide the necessary consultation tools to SII members responsible for the application of regulations so that the criteria are uniform and coherent.
- Modernization of the Real Estate Tax administration. There are some 5.3 million urban and rural properties in the country. To continue administering the Real Estate tax, whose revenue goes fully for the financing of municipalities, it is necessary to carry out some important changes to the management model. Some of the areas to work on include:
- Inputting and modifying real estate information, using information technologies on part of the owners.
- Securing information electronically from notary's offices, real estate registration offices, municipalities and others.
- Adopting a Geographical Information System, based on the use of satellite technology applied to the taxpayers' real estate database in Chile.
- Human resources as a central axis of institutional action.
The institutional challenges require a number of pro-active human resources policies related to training, the development of skills, leadership and integrity reinforcement. The actions on this issue include:
- Modernizing performance management.
- Developing leadership skills.
- Improving working conditions.
- Modernizing formation and professional development.
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