TADAT REFLECTIONS: Impacts, Lessons and Beyond
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Secretaria de Estado
da Fazenda de Alagoas
TADAT REFLECTIONS: Impacts, Lessons and Beyond
International Monetary Fund Seminar
Panel Discussion 1: The TADAT Assessment Experience
Key Takeaways
Mr. George Santoro
Secretary of State for Finance – Alagoas/Brazil
June 2018
Summary
1. Socioeconomic Indicators: Brazil and Alagoas
2. Fiscal Federalism: Brazil
3. Alagoas Revenue Composition
4. The TADAT Program in Brazil
5. Evaluation of TADAT in Alagoas
6. TADAT and Strategic Planning
7. Conclusion
Secretaria de Estado
da Fazenda de Alagoas
Socioeconomic Indicators: Brazil
International
Comparative
Gross Domestic Product – GDP (2016) Russian GDP
US$ 1.7962 US$ 1.2832
in trillions in trillions
GDP per capita (2016)
US$ 8,649.95
Gini Index (2014) Mexico Gini
51.48 48.21
Population (2016)
207.7 112.33
in millions pop/km²
Source: World Bank Secretaria de Estado
da Fazenda de Alagoas
Socioeconomic Indicators: Alagoas
International
Comparative
Gross Domestic Product – GDP (2015) Nicaragua
GDP
US$ 12.86 20º/27 0.77% US$ 12.75
in billions Brazilian states ranking % Brazil GDP in billions
GDP per capita (2015)
US$ 3,854.70 25º/27
Brazilian states ranking
Human Development Index South Africa
HDI (2014) HDI
0.667 27º/27 0.666
Brazilian states ranking
Source: 1. IBGE –Brazilian Institute of Geography and Statistics. 2. Trading Economics -
https://pt.tradingeconomics.com
Secretaria de Estado
da Fazenda de Alagoas
Socioeconomic Indicators: Alagoas
International Comparative
Uruguay United Arab
Population (2017) Emirates
3.37 112.33 3.46 112.4
in millions pop/km² in millions pop/km²
Economy – GDP by Sector (2017) Highlights
The newest and fastest growing
Services and Public
66.79% Tertiary hotel chain in Brazil
Administration
From 2007/2017 83.1% growth in
hotel units and 74.9% in beds
Chemical, Plastics, Oil,
13.87% Industry Gas,
Sugar and Alcohol
Oil and Gas exploration
(land/sea)
Alagoas is the largest land gas
Sugar cane,
10.49% Primary producer in whole country
rock salt
Source: IBGE –Brazilian Institute of Geography and Statistics.
Secretaria de Estado
da Fazenda de Alagoas
Fiscal Federalism: Brazil
Tax Revenue – Levels of Government Brazil (2016)
Table 01
Brazil has a good level of fiscal Levels of Tax Revenue % of Tax
Government US$ millions Revenue
decentralization and this is a factor that
Federal 365,107.84 68.27%
underscores the importance of state and
135,841.98 25.40%
counties tax administrations and the need to States
33,882.50 6.34%
improve them. Counties
Total 534,832.32 100.00%
Source: Tax Burden in Brazil 2016: Analysis of Taxes and Bases
of Incidence Federal Revenue of Brazil.
Tax Revenue by Tax Relevance - Brazil (2016)
Table 02
Tax Revenue % of Tax
Tax
US$ millions Revenue The main Brazilian tax is ICMS - value added
ICMS - Value Added Tax 108,933.24 20.37% tax on goods and services - is a state tax.
Income Tax 102,055.21 19.08% Table 02 shows the importance of states
Contribution to Social
88,398.98 16.53% administrations, 20.37% of Brazilian tax
Security
revenue is competency of states tax
Cofins 53,170.79 9.94% administrations. In this sense, TADAT is a
Service Time Assurance
32,905.92 6.15%
important tool to improve this level of
Fund
Brazilian government.
Others 149,368.18 27.93%
Source: Tax Burden in Brazil 2016: Analysis of Taxes and Bases
of Incidence Federal Revenue of Brazil.
Secretaria de Estado
da Fazenda de Alagoas
Alagoas Revenue Composition – US$
2015 2016 2017
Revenue 2,220,222,378.63 2,733,048,006.56 2,639,281,519.96
Tax Revenue 990,162,630.14 1,167,739,943.20 1,220,210,790.53
ICMS – Value Added
828,223,119.25 976,731,784.71 1,016,390,769.52
Tax
IPVA - Property Tax on
54,670,913.55 76,532,578.26 71,492,259.38
Motor Vehicles
ITCD - Transmission
Tax Cause Death and
4,960,384.06 3,005,461.94 2,610,652.17
Donation of Any
Goods or Rights
IRRF - Withholding
90,236,553.30 98,035,174.07 114,211,178.46
Tax
Other Taxes 12,071,659.99 13,434,944.22 15,505,931.00
Transfers of Federal
1,114,756,277.86 1,280,759,442.84 1,199,932,896.27
Government
Other Revenues 115,303,470.63 284,548,620.52 219,137,833.15
Source: SEFAZ/AL - General Balance of the State.
Secretaria de Estado
da Fazenda de Alagoas
The TADAT Program in Brazil
2017: more than 300 trained advisers, moreover
carried out the evaluation in the State of Alagoas
2017: training for auditors from the state of Goiás and
São Paulo
2018: evaluation in the State of Rio de Janeiro and
Partnership of the TADAT Secretariat with planned evaluation in the State of Goiás in July, São
Paulo in August and Brasília in September
the IDB and ENCAT - National Meeting of
State Tax Coordinators and Administrators.
2018: training proposal for "assessment mission
leaders" and risk matrix
Secretaria de Estado
da Fazenda de Alagoas
Evaluation of TADAT in Alagoas
• Training of fifty public
servants from SEFAZ and
the Attorney General of
the State of Alagoas,
public legal body that is
responsible for judicial
collection for the State of
Alagoas.
• Presentation of the
diagnosis.
Secretaria de Estado
da Fazenda de AlagoasEvaluation of TADAT in Alagoas
“The tool provided a big picture of the current situation
of SEFAZ / AL as well as the training provided the
international best practices of tax administrations to
overcome the challenges and problems presented.”
Mr. Leopoldino Mello, Tax Administration Superintendent
“The great challenge of TADAT training was the
adaptation of expertise in income tax to the view of
value added tax (ICMS). This is the big issue of TADAT
for state level in perspective of TADAT for nations.”
Ms. Alexandra Silva, Tax Administration Superintendent
Secretaria de Estado
da Fazenda de AlagoasEvaluation of TADAT in Alagoas: Transparency for Results
TADAT is available
at SEFAZ Alagoas
and TADAT (IMF)
sites
The wide dissemination of the TADAT evaluation gives transparency to its taxpayers, which is a practical value for the fiscal
management of the State of Alagoas
Secretaria de Estado
da Fazenda de AlagoasEvaluation of TADAT in Alagoas: Lessons Learned
TADAT generated greater integration and engagement of
the SEFAZ Team with the current moment of the institution and with its future
It enabled the identification of strengths and weaknesses in the
Tax Administration and Accounting areas of SEFAZ, as well
the judicial collection of the State Attorney General's Office
The wide and unrestricted disclosure of the appraisal report positively exposes the Tax and
Accounting Administration, as it provokes the awareness of responsibility for results and drives the
performance for improvements in management
TADAT can be used as a basis for the formulation of a strategic planning of the Tax
Administration, considerably reducing the time for the preparation of strategic planning, as
well as improving the quality of the planning.
Secretaria de Estado
da Fazenda de AlagoasStrategic Planning: Next steps at the beginning of 2018
Improved Tax Revenue and Strategic Planning started in
Debt Profile February 19
2015 2017 2021
2016 2018
New Management of Secretary of TADAT on October End of Strategic Cycle
State for Finance George Santoro 23 until November 5 SEFAZ/AL 2018-2021
Secretaria de Estado
da Fazenda de AlagoasTADAT and Strategic Planning
Scores
Indicator Summary Explanation of Assessment Strategic Projects Projects/Activities Objectives
2017
POA 1: Integrity of the Registered Taxpayer Base
Information held in the registered taxpayer database
includes all relevant details. There are separate, but linked, 1. Improve taxpayer
P1-1. Accurate and reliable high integrity taxpayer identification numbers (TIN) at the information to analyze
C 1. Big Data -
taxpayer information. federal and state levels. Procedures exist and are regularly and monitor its fiscal
&
applied for identification, suspension and removal of activities, ensuring
Data Mining
inactive taxpayers, but audit reports are not available. effectiveness on tax
collect.
P1-2. Knowledge of the Actions to detect unregistered taxpayers are taken, but only
C -
potential taxpayer base. on an ad hoc basis.
POA 2: Effective Risk Management
P2-3. Identification,
The extent of intelligence gathering and research to identify 2. Artificial Intelligence
assessment, ranking, and
D compliance risks is not comprehensive and mostly limited to (AI) for Collection Tax 2. Ensure
quantification of compliance
internal data sources. Gap comprehensiveness in
risks.
the identification,
P2-4. Mitigation of risks assessment and
There is no structured process to identify, assess, rank and 3. Monitoring of the
through a compliance D 4. Compliance quantification of risks
quantity tax non-compliance risks and to manage them. largest taxpayers
improvement plan. of non-compliance
with taxes.
P2-5. Monitoring and 2. Artificial Intelligence 3. Encourage self-
There is no monitoring and evaluation of the impact on and regulation.
evaluation of compliance risk D (AI) for Collection Tax
changes in taxpayers’ compliance behavior.
mitigation activities. Gap
P2-6. Identification, 4. Mitigating risks
There is no structured and formalized process to identify,
assessment, and mitigation of D 4. Compliance - through a compliance
assess and mitigate institutional risks.
institutional risks. improvement plan.
Secretaria de Estado
da Fazenda de AlagoasTADAT and Strategic Planning
Indicator Scores 2017 Summary Explanation of Assesment Strategic Projects Projects/Activities Objectives
POA 3: Supporting Voluntary Compliance
Although there is a range of information on the main rights
5. Establishing best
and obligations of taxpayers, but these are not adapted to the
5. Best Practices in practices for
needs of disadvantaged groups.
Public Sector communication and a
P3-7. Scope, currency, and Information is kept current, although there is no written 6. Sefaz
C Communications: governance policy.
accessibility of information. procedures to ensure this. SEFAZ website, and other service Interconnected
Digital and 6. Providing
channels are provided to taxpayers at no cost. 62 percent of
Governance Strategies communication
the calls from the taxpayers were answered in less than six
services at no cost.
minutes.
7. Reducing taxpayer
compliance costs and
to give more
P3-8. Scope of initiatives to There is a simplified system of taxation for small taxpayers
7. Artificial Intelligence 8. Simplification of confidence to the tax
reduce taxpayer compliance B called Simples Nacional, and misconceptions of law and rules
for tax calculation Tax Legislation calculation.
costs. are analyzed to improve information products.
8. Improving the
business environment
of the state.
5. Public Sector
P3-9. Obtaining taxpayer
No survey is conducted to monitor taxpayers’ perception of Communications: 6. Sefaz
feedback on products and D -
taxpayer services and products. Digital and Interconnected
services.
Governance Strategies
POA 4: Timely Filing of Tax Declarations
9. Monitoring
72 percent of all taxpayers and 91 percent of large taxpayers 9. Artificial
P4-10. On-time filing rate. C - compliance with
filed their declaration for ICMS Normal on time. Intelligence
obligations.
P4-11. Use of electronic filing All taxpayers use electronic means to file declarations during
A - - -
facilities. the three years examined (2014, 2015 and 2016).
Secretaria de Estado
da Fazenda de AlagoasTADAT and Strategic Planning
Indicator Scores 2017 Summary Explanation of Assesment Strategic Projects Projects/Activities Objectives
POA 5: Timely Payment of Taxes
P5-12. Use of electronic payment All payments (ICMS) are made by the taxpayers by electronic
A - - -
methods. means.
P5-13. Use of efficient collection Advance payment system is used, and there is withholding at
A - - -
systems. source (reverse charge) of ICMS in specific cases.
10. Creating a new
10. New Accounts Receivable accounts receivable to
The number of ICMS payments made on time in 2016 was 29.29
improve fiscal information.
P5-14. Timeliness of payments. D percent of payments due, while the amount of payments was -
11. A New Framework for 11. Ensuring the
76.21 percent of payments due.
Supporting Tax Collection effectiveness of tax
collection.
P5-15. Stock and flow of tax SEFAZ does not have accurate data of tax arrears by age of
D 10. New Accounts Receivable -
arrears. arrears or by collectability of arrears.
POA 6: Accurate Reporting in Declarations
1. Improve taxpayer
The tax audit plan covers the core tax (ICMS) and all taxpayer
P6-16. Scope of verification actions 1. Big Data information to analyze and
segments but does not select audit cases based on identified
taken to detect and deter D & - monitor its fiscal activities,
risks. Additionally, there is limited use of large-scale automatic
inaccurate reporting. Data Mining ensuring effectiveness on
cross-checking to verify information provided in tax returns.
tax collect.
P6-17. Extent of proactive initiatives SEFAZ provides a system of binding public and private decisions
B - - -
to encourage accurate reporting. to guide taxpayers.
9. Monitoring compliance
with obligations.
12. Monitoring of the
P6-18. Monitoring the extent of No monitoring of the extent of inaccurate reporting in tax 12. Assesment Tax
D 9. Artificial Intelligence extent of inaccurate
inaccurate reporting. declarations using tax gap analysis is performed. Gap
reporting in tax
declarations using tax gap
analysis is performed.
Secretaria de Estado
da Fazenda de AlagoasTADAT and Strategic Planning
Indicator Scores 2017 Summary Explanation of Assesment Strategic Projects Projects/Activities Objectives
POA 7: Effective Tax Dispute Resolution
P7-19. Existence of an An appropriately tiered mechanism of administrative and
independent, workable, and judicial review is available to taxpayers. The dispute
A - - -
graduated dispute resolution mechanism is widely used and the administrative review
process. mechanism is independent of the audit process.
13. Virtualizing manual
P7-20. Time taken to resolve
D None of the disputes are resolved within 90 days. processes that have a
disputes.
direct impact on the
13. Digital
- relationship with the
Government
The tax administration undertakes some analysis of tax tax payer, i.e., improve
P7-21. Degree to which dispute
C disputes, but not regularly. The analyses often result in productivity of tax
outcomes are acted upon.
issuance of amendment to rules, procedures or notifications. administration.
POA 8: Efficient Revenue Management
SEFAZ actively participates in the preparation of revenue
P8-22. Contribution to 15. Artificial
forecasts for the budget, monitors results and estimates tax
government tax revenue C - Intelligence to forecast -
expenditures, but does not make projections on the level of
forecasting process. (under studies)
ICMS refunds.
14. Integrated
The tax accounting system is not yet fully automated and
P8-23. Adequacy of the tax Financial and 14. Automating
D taxpayer accounts updated manually at the end of the -
revenue accounting system. Accounting accounting processes.
month.
Administration System
Procedures for processing ICMS refunds do not use risk 10. Creating a new
P8-24. Adequacy of tax refund criteria or pre-refund audits for the most sensitive cases. 10. New Accounts accounts receivable to
D -
processing. Only an insignificant number of ICMS reimbursement claims Receivable improve fiscal
are paid or compensated within 30 days. information.
Secretaria de Estado
da Fazenda de AlagoasTADAT and Strategic Planning
Indicator Scores 2017 Summary Explanation of Assesment Strategic Projects Projects/Activities Objectives
POA 9: Accountability and Transparency
There is no internal audit unit within the SEFAZ to provide
internal assurance to the senior management of the soundness 4. Mitigating risks
P9-25. Internal assurance
C+ and adherence to internal controls. 4. Compliance - through a compliance
mechanisms.
SEFAZ has a well-developed and organizationally independent improvement plan.
internal affairs unit that has adequate investigative powers.
The external oversight of the tax administration’s financial
performance is solid, but oversight of its operational
P9-26. External oversight of
B performance is weak. - - -
the tax administration.
The external investigation process for suspected wrongdoing is
well developed and recommendations are acted upon routinely.
P9-27. Public perception of There is no mechanism to monitor public confidence in the tax
D 4. Compliance - -
integrity. administration.
5. Best Practices in
The annual report on the financial and operational performance 5. Establishing best
Public Sector
P9-28. Publication of of SEFAZ is elaborate and made public within three months of practices for
C+ Communications: -
activities, results, and plans. the end of the financial year. However, SEFAZ does not publish communication and a
Digital and Governance
their strategic corporate plan nor the annual operational plan. governance policy.
Strategies
Secretaria de Estado
da Fazenda de AlagoasConclusion
Problem Suggestions
Mechanisms of Verification of compliance methodology more
specific to the case of subnational entities -
internal controls in subnational inclusion of Tax Compliance Proposal or
entities something similar
Involvement in training between the treasury and
revenue areas and evaluation aiming at
Integration between Treasury and involvement and interdependence between
Revenue Administration in financial / accounting areas with the tax / fiscal
area, due to the need for interface of the
subnational entities accounting records.
Ex: Restitution, Compensation and Active Debt
Secretaria de Estado
da Fazenda de AlagoasSecretaria de Estado
da Fazenda de Alagoas
Governo do Estado de Alagoas
2018
gasantoro@sefaz.al.gov.br
Rua General Hermes, 80,
Centro, CEP: 57020-904
Maceió, AlagoasAppendix A – GDP in current U.S. dollars
Secretaria de Estado
da Fazenda de AlagoasAppendix B – GDP per capita in current U.S. dollars
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da Fazenda de AlagoasYou can also read
