Designing a Tax Administration Reform Strategy : Experiences and Guidelines

Building on previous FAD work in the tax administration field, this paper defines broad criteria for diagnosing the problems in a country`s tax administration and formulating an appropriate reform strategy. To be effective, this strategy should be based on the size of the tax gap and the country`s particular circumstances. This paper discusses some guiding principles which have provided the basis for successful reforms, including: reducing the tax system`s complexity, encouraging taxpayers` voluntary compliance, differentiating the treatment of taxpayers by their revenue potential, and ensuring the reform`s effective management. Also discussed are specific bottlenecks that hinder the effectiveness of the tax administration`s operations