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OECD Reviews Italian Tax Administration

by Ulrika Lomas,, Brussels

27 July 2016

Italy would gain much from reforming tax administration as the country has a relatively high and stable tax-to-GDP ratio but compliance levels are low, according to the OECD.

The OECD noted that Italy is currently undertaking a series of "critically important reforms," including in the area of taxation, to improve its long-term growth prospects.

However, the OECD said: "The focus of efforts to reduce non-compliance has historically been on audits and control, which result in assessments that reportedly are often uncollectable, with no comprehensive strategy across the entities involved in tax administration to address this issue in a holistic manner. There is a significant opportunity to reform tax administration in a way that rationalizes resources, provides increasingly high-quality services to taxpayers, and secures improved voluntary compliance by taxpayers at large."

A new report from the OECD provided four main recommendations:

  • In line with recent actions such as the preventive communications on taxpayers which did not file their VAT return, reforms should aim at generating significant behavioral change, by both taxpayers and tax administration;
  • Institutional and governance arrangements should be revised to ensure a more strategic political oversight of the tax administration, which should go along with restoring the autonomy of the tax and customs agencies;
  • A more holistic approach should be introduced to support and enhance voluntary compliance by taxpayers while ensuring that those that do not comply are promptly identified and sanctioned; and
  • The collection of tax debt needs to be modernized, building on the positive results achieved since the function was brought into the public sphere. Information technology, data analytics, and related administrative simplifications can and should be at the centre of these reform efforts.

Finally, the OECD said Italy should adopt a strategy that would involve a tougher approach on non-compliant taxpayers with a co-operative compliance approach with generally compliant taxpayers, in particular for multinational enterprises.

TAGS: compliance | Finance | tax | tax compliance | tax avoidance | law | Organisation for Economic Co-operation and Development (OECD) | audit | Italy | tax reform | Economy | Tax | Tax Evasion

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