COVID-19, the importance of Tax Administrations to foster recovery, and the virtues of a unified Customs and Taxation Administration

Chapter 8. Merging Customs and tax administrations: a reflection on ICT systems governance – the Portugal experience

ICT as a Strategic Tool to Leapfrog the Efficiency of Tax Administrations

When we got together last year in Morocco as representatives of our Tax Administrations to discuss the role of our organizations in the fostering of Development, we were so far away from imagining the situation our countries are now facing due to COVID-19. Márcio Verdi’s seminal intervention in Marrakesh could not continue, though, to be timelier. As he wisely noted, the role of Tax Administrations is not limited to collecting tax revenues. Our Administrations can also be an important agent of change to foster economic growth. And we will surely need a lot of it after the damage that the paralysis of economic activity will inflict to our economies. I am confident that our Administrations will have a determinant role in helping our countries to overcome this crisis and get our economies and fellow citizens back into the path of growth and economic development.

As we noted in our article, Merging Customs & Taxation Administrations: A Reflection on the Recent Portuguese Experience from the Lenses of IT Systems Governance, a unified Customs and Taxation Administration, has the potential, provided an adequate strategy is put in place, to offer added strength to this effort. On our article, we focused on the important synergies that may result from such a merger at the level of IT systems governance, based on our own learning experience. After analyzing our merger, and the associated setbacks and progresses that characterize learning processes, from the perspective of the integrated governance of IT systems, we came to the conclusion that the following elements should reveal critical for success:

  • the creation of an Architecture of Reference of IT Systems, capable of consolidating the different needs of the organization, minimizing the dispersion of installed technology, and allowing for an efficient management of the technological and human resources that support the IT Systems;

  • the firm commitment of the top management of the organization to the promotion of the convergence of the different existing technological solutions that support the organization within the Architecture of Reference;

  • the stabilization of the Architecture of Reference of the organization, in order to allow for a strategic management of skills, capable of providing an adequate answer to the challenges that the organization faces;

  • the integration and interoperability between the different technological solutions of the organization, so as to promote a true transversal operational character of its IT Systems;

  • the alignment between the strategic needs of the organization and the evolution of its IT Systems;

  • the optimization of the transversal sharing of information, maximizing the value of data to the organization; and

  • the definition of processes and methodologies that are common to the whole organization, as an essential step towards the transversal adoption of best practices.

On our article, and on our presentation in Morocco, we gave some practical examples of how this close interconnection between Customs and Taxation and the associated integrated governance of the overall IT architecture, has allowed for significant efficiencies and optimization of resources. Allowing for the payment of import VAT directly on the VAT tax return, thereby improving the cash-flow of companies and the competitiveness of national ports, and dematerializing the refund of VAT to foreign tourists, are good examples of what can be achieved more easily.

Looking ahead, the quick introduction of exceptional VAT and import duties measures regarding the supplies of goods needed to combat the COVID-19 outbreak, and the refinement of the VAT rules for taxing e-commerce, which is booming in the new COVID-19 context, are two additional examples at hand of areas where a very close coordination is and will continue to be required from our Customs and Taxation teams.

The challenges that are ahead of us have gained a new stature with COVID-19. Reinforced unity, within our organizations and among ourselves, through institutions as CIAT, remain an excellent antidote to face these amplified challenges, and, recalling Márcio, fulfil our natural role of agents of change to foster economic growth.

Disclaimer. Readers are informed that the views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group the author might be associated with, nor to the Executive Secretariat of CIAT. The author is also responsible for the precision and accuracy of data and sources.

1 comment

  1. Darnell Reply

    My relatives every time say that I am wasting
    my time here at net, but I know I am getting knowledge
    every day by reading such nice posts.

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