Republic of Armenia: Technical Assistance Report-Strategic Choices for Tax Administration to Enhance Tax Compliance

IMF Staff Country Reports, February 14, 2020

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This technical assistance report on Republic of Armenia advices on advises on strategic choices for tax administration and compliance risk management.
It complements the March 2018 tax administration mission, which provided the State Revenue Committee (SRC) with general guidance to develop and implement a compliance improvement framework.

Armenia’s tax policy setting creates challenges for the SRC to effectively manage tax compliance.
The Government’s tax policy framework is likely to create new noncompliance opportunities and result in revenue leakages.
Strengthened fundamental functions and processes are needed for the delivery of effective tax administration.
Two issues raised in the 2018 tax administration mission report are highlighted again:
- The mission provided an analysis of SRC case selection and advised on the adoption of analytical tools to achieve better results.
- The SRC’s current additive risk rule scoring approaches need to be supplemented by predictive modeling giving better predictions and prioritization of the likelihood and potential consequences of noncompliance—the use of such model is envisaged in the SRC’s draft strategic plan.

Supplement current additive risk rule scoring approaches with predictive modeling to:
- Give better predictions of noncompliance.
- Prioritize cases by likelihood and potential consequences of noncompliance.
Strengthen fundamental tax administration functions and processes to reduce revenue leakages and address new noncompliance opportunities arising from the tax policy framework.
Continue implementation of a compliance improvement framework as guided by the March 2018 tax administration mission.

Subjects: Auditing, Corporate income tax, Public financial management (PFM), Revenue administration, Tax administration core functions, Tax return filing compliance, Taxes
Keywords: administration, Auditing, compliance management approach, core tax administration function, Corporate income tax, CR, governance arrangement, increase taxpayer confidence, ISCR, mission report need, tax administration, Tax administration core functions, Tax return filing compliance, taxpayer, taxpayer register