Levels of Informality 3. Priority Actions for Compliance Improvement 4. Typical Elements of a Taxpayer Services Strategy 5. GDT Checks Undertaken During Fiscal Verification Visit 6. CRM Approach to Developing Integrated Compliance Improvement Strategies FIGURES 1. Tax to GDP Ratios Against Regional Comparators, Excluding SSC 2. Key Components of the MTRS Approach 3. VAT Compliance Gap by Sector (2009 – 2015) – in percent GDP 4. Policy Approaches and Measures for Tackling Undeclared Work 5. Integrity Framework Model 6. Components of the MTRS
because it impedes opportunities for productive government spending. Therefore, adopting a medium-term approach to raising revenue will be critical to achieving the revenue-level change that Indonesia needs. This chapter outlines a medium-term revenue strategy (MTRS) for Indonesia that aims to raise tax revenue by 5 percentage points of GDP in five years. The MTRS approach was developed for the G20 by the Platform for Collaboration on Tax and frames the tax system reform in a comprehensive and holistic framework of four interdependent components: (1) building broad
reform strategies to achieve medium-term revenue goals encompassing tax policy, tax administration, and tax legislation. The MTRS approach was developed by the Platform for Collaboration on Tax to enhance countries’ revenue mobilization efforts. The Platform recommended the adoption of MTRS in its July 2016 report to G20 Finance Ministers, entitled “Enhancing the Effectiveness of External Support in Building Tax Capacity in Developing Countries.” The MTRS concept was further developed in the July 2017 “Update on Activities of the Platform for Collaboration on Tax
, tax reforms require a holistic perspective, as outlined in the MTRS approach, not least to convince stakeholders that the reform is in the interest of all. 19. Still, raising domestic revenue will have to await a solid recovery. Even as tax revenue has decreased significantly due to the pandemic ( Figure 14 ), in the short term and to the extent their fiscal position allows it, governments will need to focus on supporting the economy by running deficits, thus partially making up for the lack of private demand. Only once a country’s economy is on track for a
-equipped workforce. Undertaking a reform program of this scale while continuing to maintain normal business operations is a significant challenge for any revenue administration. It will require strong and sustained political support and significant investment throughout the life of the MTRS, as the third component of the MTRS approach states. While some of the investment in capacity building may be provided by donors, the government will need to play its part in providing the necessary human and financial resources, including a dedicated reform program resource, and support for
have developed several toolkits to support countries with international tax issues, including the “Efficient and Effective use of Tax Incentives for Investment in low Income Countries” and “Comparables for Transfer Pricing.” Forthcoming tools focus on: (i) offshore indirect transfers of assets; (ii) tax treaty negotiation; and (iii) transfer pricing. Medium Term-Revenue Strategies (MTRS)— In collaboration with PCT partners, the IMF has developed the MTRS approach to tax system reform, which brings financing and expenditure together to support the SDGs. Discussions
structured Medium-Term Revenue Strategy (MTRS) 42 approach to tax system reform can be applicable to a fragile state context. Specifically, those states entering a more developed stage of institutional capacity—when the country has emerged from the immediate post-conflict/disaster stage to a more stable (but likely still vulnerable) stage of institutional capacity—can benefit from the MTRS approach, while needing to take into consideration other reforms that are taking place across government and the economy. 69. To sustain tax reform efforts over a long period