case study examples taxation

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• 15 Dec 2020
• Working Paper Summaries

Designing, Not Checking, for Policy Robustness: An Example with Optimal Taxation

The approach used by most economists to check academic research results is flawed for policymaking and evaluation. The authors propose an alternative method for designing economic policy analyses that might be applied to a wide range of economic policies.

• 31 Aug 2020
• Research & Ideas

State and Local Governments Peer Into the Pandemic Abyss

State and local governments that rely heavily on sales tax revenue face an increasing financial burden absent federal aid, says Daniel Green. Open for comment; 0 Comments.

• 12 May 2020

Elusive Safety: The New Geography of Capital Flows and Risk

Examining motives and incentives behind the growing international flows of US-denominated securities, this study finds that dollar-denominated capital flows are increasingly intermediated by tax haven financial centers and nonbank financial institutions.

• 01 Apr 2019
• What Do You Think?

Does Our Bias Against Federal Deficits Need Rethinking?

SUMMING UP. Readers lined up to comment on James Heskett's question on whether federal deficit spending as supported by Modern Monetary Theory is good or evil. Open for comment; 0 Comments.

• 20 Mar 2019

In the Shadows? Informal Enterprise in Non-Democracies

With the informal economy representing a third of the GDP in an average Middle East and North African country, why do chronically indebted regimes tolerate such a large and untaxed shadow economy? Among this study’s findings, higher rates of public sector employment correlate with greater permissibility of firm informality.

• 30 Jan 2019

Understanding Different Approaches to Benefit-Based Taxation

Benefit-based taxation—where taxes align with benefits from state activities—enjoys popular support and an illustrious history, but scholars are confused over how it should work, and confusion breeds neglect. To clear up this confusion and demonstrate its appeal, we provide novel graphical explanations of the main approaches to it and show its general applicability.

• 02 Jul 2018

Corporate Tax Cuts Don't Increase Middle Class Incomes

New research by Ethan Rouen and colleagues suggests that corporate tax cuts contribute to income inequality. Open for comment; 0 Comments.

• 13 May 2018

Corporate Tax Cuts Increase Income Inequality

This paper examines corporate tax reform by estimating the causal effect of state corporate tax cuts on top income inequality. Results suggest that, while corporate tax cuts increase investment, the gains from this investment are concentrated on top earners, who may also exploit additional strategies to increase the share of total income that accrues to the top 1 percent.

• 08 Feb 2018

What’s Missing From the Debate About Trump’s Tax Plan

At the end of the day, tax policy is more about values than dollars. And it's still not too late to have a real discussion over the Trump tax plan, says Matthew Weinzierl. Open for comment; 0 Comments.

• 24 Oct 2017

Tax Reform is on the Front Burner Again. Here’s Why You Should Care

As debate begins around the Republican tax reform proposal, Mihir Desai and Matt Weinzierl discuss the first significant tax legislation in 30 years. Open for comment; 0 Comments.

• 08 Aug 2017

The Role of Taxes in the Disconnect Between Corporate Performance and Economic Growth

This paper offers evidence of potential issues with the current United States system of taxation on foreign corporate profits. A reduction in the US tax rate and the move to a territorial tax system from a worldwide system could better align economic growth with growth in corporate profits by encouraging firms to invest domestically and repatriate foreign earnings.

• 07 Nov 2016

Corporate Tax Strategies Mirror Personal Returns of Top Execs

Top executives who are inclined to reduce personal taxes might also benefit shareholders in their companies, concludes research by Gerardo Pérez Cavazos and Andreya M. Silva. Open for comment; 0 Comments.

• 18 Apr 2016

Popular Acceptance of Morally Arbitrary Luck and Widespread Support for Classical Benefit-Based Taxation

This paper presents survey evidence that the normative views of most Americans appear to include ambivalence toward the egalitarianism that has been so influential in contemporary political philosophy and implicitly adopted by modern optimal tax theory. Insofar as this finding is valid, optimal tax theorists ought to consider capturing this ambivalence in their work, as well.

• 20 Nov 2015

Impact Evaluation Methods in Public Economics: A Brief Introduction to Randomized Evaluations and Comparison with Other Methods

Dina Pomeranz examines the use by public agencies of rigorous impact evaluations to test the effectiveness of citizen efforts.

• 07 May 2014

How Should Wealth Be Redistributed?

SUMMING UP James Heskett's readers weigh in on Thomas Piketty and how wealth disparity is burdening society. Closed for comment; 0 Comments.

• 08 Sep 2009

The Height Tax, and Other New Ways to Think about Taxation

The notion of levying higher taxes on tall people—an idea offered largely tongue in cheek—presents an ideal way to highlight the shortcomings of current tax policy and how to make it better. Harvard Business School professor Matthew C. Weinzierl looks at modern trends in taxation. Key concepts include: Studies show that each inch of height is associated with about a 2 percent higher wage among white males in the United States. If we as a society are uncomfortable taxing height, maybe we should reconsider our comfort level for taxing ability (as currently happens with the progressive income tax). For Weinzierl, the key to explaining the apparent disconnect between theory and intuition starts with the particular goal for tax policy assumed in the standard framework. That goal is to minimize the total sacrifice borne by those who pay taxes. Behind the scenes, important trends are evolving in tax policy. Value-added taxes, for example, are generally seen as efficient by tax economists, but such taxes can bear heavily on the poor if not balanced with other changes to the system. Closed for comment; 0 Comments.

• 02 Mar 2007

What Is the Government’s Role in US Health Care?

Healthcare will grab ever more headlines in the U.S. in the coming months, says Jim Heskett. Any service that is on track to consume 40 percent of the gross national product of the world's largest economy by the year 2050 will be hard to ignore. But are we addressing healthcare cost issues with the creativity they deserve? What do you think? Closed for comment; 0 Comments.

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Top tax cases practitioners should know

• IRS Practice & Procedure

Pinning down whether an activity is a trade or business for tax purposes, whether a tax penalty should be waived for reasonable cause, or the eternal question of when income is recognized for tax purposes — these issues arise often, and CPAs can benefit from being familiar with the judicial doctrines governing them.

That’s the premise of “Top Ten Federal Tax Cases of All Time,” a presentation by Annette Nellen, Esq., CPA, CGMA, during the AICPA & CIMA ENGAGE 2021 conference. Nellen, a professor at San José State University and director of its Master of Science in Taxation program, is a past chair of the AICPA Tax Executive Committee. Her discussion takes place on July 28, beginning at 3:30 p.m. PDT (6:30 EDT).

Although the issues that will be discussed carry a long legacy of controversy, the discussion is meant to be topically relevant to tax practices’ common concerns and help resolve uncertainties, Nellen said in an interview. Accordingly, her talk won’t focus exclusively on historic bedrock cases or on the cases most often cited in subsequent opinions, although those will both be considerations.

“I want to make this as useful as possible,” Nellen said. “In talking about the most important cases to be aware of in practice today, the focus I want to take is, which are good cases to have in your back pocket that might be able to help solve an issue.”

Often, the broad principles of tax law are best appreciated by their contours around taxpayers’ facts. For example, determining when a trade or business begins might hinge on forces beyond the taxpayer’s control. Certainly, the COVID-19 pandemic has brought such concerns to the fore, she observed.

“One question that has come up a couple of times in the last six months was, a business had planned to put some equipment in service but then got closed down by government order. Could they still take depreciation on it?

“I guess you have to have been in practice or in the tax field for over 30 years, and having a relatively good memory, I can remember, oh, that’s like the Sears Oil case [ Sears Oil Co., Inc. , 359 F.2d 191 (2d Cir. 1966)], where an oil barge was stuck in the ice. Had it been placed in service while it was stuck in the ice?”

To that question, the Second Circuit answered, yes, the taxpayer’s depreciation period for its new barge began when it was ready and available for use in the taxpayer’s business, months before the icy New York state canal in which it had been trapped thawed, releasing it for its first service. In so holding, the court drew on several earlier cases and provided precedent for many more after — the case is cited in 35 subsequent federal cases and four IRS revenue rulings, according to Thomson Reuters’s Citator 2nd Series .

Other cases may not be frequently cited but nonetheless will figure in Nellen’s top 10 because they treat certain commonplace practice issues arising under memorable circumstances.

“One in that category is Woodsum [136 T.C. 585 (2011)]. The taxpayer was a very high-income individual; he had over 160 information return forms,” Nellen said.

The taxpayer’s tax preparer omitted only one of those forms from the taxpayer’s return for 2006; however, that Form 1099-MISC, Miscellaneous Income , reported nearly $3.4 million in income. The omission resulted in an accuracy-related penalty of more than $104,000, which the taxpayer and spouse contested on claimed grounds of reasonable cause and good faith by showing they relied on professional advice that their return was complete.

“But instead, the court said, ‘You're responsible for what’s on your return,’” Nellen said, adding that preparers in turn owe it to their clients to allow sufficient time to review their return. “So it’s to remind practitioners to allow a minimum, I think, of a day for the taxpayer to look at it. And for them to remind clients they’re responsible for what’s on that return.”

Some historic cases, by the fundamental nature of the tax issue they settled, are cited frequently, sometimes in the most novel of contexts. One such is Glenshaw Glass Co. , 348 U.S. 426 (1955) (over 1,000 entries in Citator 2nd ), which is invoked for the principle that income recognition for tax purposes hinges on whether and when taxpayers have “accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.” Nellen noted Glenshaw Glass had figured recently in Chief Counsel Advice 202114020, answering whether a taxpayer who received bitcoin cash as the result of a “hard fork” thereby had gross income.

Sometimes, tax cases can serve as a help when IRS guidance might lead to a less than optimal outcome, Nellen said.

“One I come across frequently is where some practitioners think a rental is not a trade or business for Sec. 199A purposes unless you use that safe harbor in Rev. Proc. 2019-38,” she said. “But there’s a whole body of case law that lays out when a rental could be a trade or business.” (And the revenue procedure itself states that an enterprise that fails to satisfy the safe-harbor requirements might otherwise meet the definition of a trade or business in Regs. Sec. 1.199A-1(b)(14).)

One such recent case is Keefe , 966 F.3d 107 (2d Cir. 2020), aff’g T.C. Memo. 2018-28. In analyzing why the taxpayers did not, as they claimed, engage in a trade or business of renting their historic mansion in Newport, R.I. (and therefore could not claim an ordinary loss), the Second Circuit “laid out very well” the tests taxpayers must meet, Nellen said.

The topics covered in the presentation may indeed be varied, but a touchstone will be preventing difficulties through awareness of both familiar case holdings and others with a lower profile but sound applicability, Nellen said.

“It’s looking at some key cases that can come up, to remind you of how to avoid a problem,” she said.

AICPA & CIMA ENGAGE 2021 , the premier event for accounting and finance professionals, will be a hybrid event this year. Join us at the Aria Resort and Casino in Las Vegas or online, July 26–29, for keynotes and sessions on accounting and auditing; tax; technology; leadership; personal financial planning; diversity, equity, and inclusion; and more.

— Paul Bonner ( [email protected] ) is a JofA senior editor.

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• CAMPUS TO CLIENTS

Lessons learned: Incorporating data analytics in tax curricula

Editor: Annette Nellen, Esq., CPA, CGMA

Data analytics is a valuable tool that is used to gain insights from ever - increasing volumes of data. To help students become familiar with how to apply this method of analysis to tax data, educators should teach data analytics in the classroom. They can do so by mirroring a process currently being used by entry - level accounting professionals called "extract, transform, and load" (ETL) and focusing on developing students' data analysis and visualization skills. These educational experiences will give students a better foundation for a successful career in tax, no matter what career path in the profession they may pursue.

While it is important to incorporate analytics into the tax curriculum, the implementation may seem daunting. To help, this column identifies ways that educators can overcome four major challenges: (1) What specific tools should be taught?; (2) What data analytics processes should be taught?; (3) How can data analytics be incorporated into a course that is already packed?; and (4) How can data analytics cases that are already available be adapted to meet specific needs?

Along the way, this column highlights new tax data analytics cases that can enhance students' learning experiences.

Should you teach A2019, Access, Alteryx, Azure, Blue Prism, Java, C++, Excel, Gephi, Knime, Power BI, Python, R, SAS, SQL, Tableau, and/or UiPath? The anticlimactic answer is that the specific tool you choose to teach is less important than the data analytics process. However, before discussing the data analytics process, this column offers some practical advice for selecting data analytics tools.

First, teach the tools that are used by the firms that hire your students. Your program's advisory board members, firm recruiters, and recent graduates can provide valuable insight as to the needs of your particular job market. It may be useful to inquire if there are tooling transitions underway, particularly with the increasing use of cloud - based analytical applications.

Second, do not underestimate the importance of fundamental Excel skills. Excel remains a staple for employers, partially because clients, managers, and partners commonly feel comfortable with Excel. However, employer feedback continues to indicate that students' Excel skills fall short of expectations. Since the student population is diverse, ranging from tech - dependent to tech - savvy , instructors must be mindful of covering the basics (e.g., file management, copy and paste, formulas, cell labeling, formatting), in addition to identifying projects that allow students to develop advanced skills (e.g., VLOOKUP, conditional formatting, PivotTables, and visualizations). One case that may help with Excel skills is Christine Cheng, Pradeep Sapkota, and Amy J.N. Yurko's "A Case Study of Effective Tax Rates Using Data Analytics," a forthcoming article in Issues in Accounting Education and the winner of the 2019 ATA/Deloitte Teaching Innovation Award. The casefocuses on developing students' data evaluation, PivotTable, and data visualization skills using Excel. The support material for this case includes custom instructional videos that address basic and more advanced Excel skills.

Educators who are ready to introduce a more powerful data analytics tool can quickly move students from Excel to Power BI, since the functions used in Power BI are similar to Excel's. Using an add - on approach (such as beginning with Excel and then introducing Power BI) can ensure that you educate students at all levels along the technology spectrum while helping students understand that they can adapt skills learned in one tool to other tools.

Third, while Excel and Power BI are powerful, these tools are not universally ideal for data analytics. In response to the need for more advanced tools, Alteryx (built around the ETL process) and Tableau (designed for effective data visualization) are increasing in importance in the accounting profession. Further, there is continued convergence among these tools in an effort to become the preferred data analytics tool (for example, Tableau now offers data transformation capabilities, and Alteryx now offers data visualization capabilities). Both programs offer cost - free licenses to students and faculty. The low - code characteristic of these tools is particularly appealing to students. Alteryx's repeatable workflow and ability to track data transformations throughout the ETL process is particularly appealing to employers. Alteryx or other Windows - based data analytics tools can be run on iOS - based operating systems if the student uses VMware, such as Boot Camp.

Lastly, instructors should consider incorporating at least an introduction to a code - based tool, for example, Python, R, or SAS. Code - based software programs are powerful tools that provide comprehensive data cleaning, manipulation, and analysis capabilities. Much of the stress can be reduced by providing students the appropriate code and incorporating class demonstrations. An introduction will not make students fluent in coding, but it may help students overcome their aversion to code - based analysis and be the spark that motivates further development. In introducing coding, the authors' recommendation based on experience is to avoid providing students code in a format that is easy to copy and paste. It is important that the students key in the code to help them learn the process.

Tax and accounting professionals typically use the ETL process to evaluate data. Readers can learn more about the ETL process from James Zhang, Snigdha Porwal, and Tim V. Eaton's article, " Data Preparation for CPAs: Extract, Transform, and Load ," 230 - 6 Journal of Accountancy 50 (December 2020).

Efficient data analysis has a purpose. Before tax professionals can begin the ETL process, they need to have a good question in mind. There are varied approaches to teaching students how to ask a good question. Cases, for example, mimic the process where a client or senior colleague might give an associate a task to investigate. Faculty can also work on advanced critical thinking by having students identify their own research questions to investigate. However, the latter may require that the faculty act as a sounding board, especially if students have limited experience in critical thinking.

The process of extracting data

Once the student has a research question, he or she must extract the appropriate data. Fortunately, there is ample data, particularly in tax, thanks to the plethora of data published by the IRS and state and local governments. For example, Cheng and Anu Varadharajan's "Using Data Analytics to Evaluate Policy Implications of Migration Patterns: Application for Analytics, AIS, and Tax Classes," a forthcoming article in Issues in Accounting Education , presents a case that relies on the migration data from the IRS Statistics of Income department (available at www.irs.gov ).

Faculty can also rely on data obtained from data aggregators, like Compustat or directly from the SEC's XBRL files. Cheng et al.'s "A Case Study of Effective Tax Rates Using Data Analytics," which focuses on effective tax rates (ETRs), has students use either Compustat data or the SEC's XBRL data available at www.sec.gov . While there is an initial learning curve required for using XBRL data, the case study describes the process of gathering tax information using the XBRL tags. Students exposed to the use of XBRL tags will have several valuable opportunities. First, they can gather data in an "as reported" format and better learn the process for financial reporting for tax expenses. Additionally, recent research by Casey Schwab, Bridget Stomberg, and Junwei Xia, "How Well Do Effective Tax Rates Capture Tax Avoidance?" (2020) (working paper available at www.semanticscholar.org ), found that SEC data is more accurate than Compustat for important information like tax footnotes. Finally, instructors can use information published by XBRL US to highlight issues related to data quality by having students consider how the validation rules help ensure data quality (visit xbrl.us ) and investigate recent filing results and quality checks (visit xbrl.us ).

There are distinct data benefits in both "A Case Study of Effective Tax Rates Using Data Analytics" and "Using Data Analytics to Evaluate Policy Implications of Migration Patterns: Application for Analytics, AIS, and Tax Classes" cases, which instructors should consider when selecting a case. One, the cases do not require that the students work with extremely large datasets. An extremely large dataset may create problems for students who lack access to a quality computer and/or reliable internet for remote access or cloud - based applications. You do not need "big data" to teach analytics because the tools and ETL process are the same regardless of the size of the dataset. Two, these cases provide options for free data. Three, the data for these cases changes every year. Therefore, you can reassign the case yearly, and students will get results that differ from the prior year's. Four, the data can be divided so that different students or teams evaluate different data. For the ETR (migration) project, students can be assigned different industries (states). If you develop your own case, these are some of the data factors that you must consider.

You may also obtain data by asking alumni if they would be willing to provide data or to check fictitious data you create for authenticity. Using data provided or validated by alumni comes with a potential additional benefit of promoting real - world interactions between students and businesses.

The process of transforming the data

After extracting the data, students must transform the data to prepare for evaluation. Data analytics tools continue to advance to deal with unstructured data. However, data transformation will remain a vital part of the ETL process because data is typically not collected or stored perfectly, without any blanks or miscoding issues. Additionally, data transformation can be required because of the lag between the creation and use of the data. The current pandemic provides a perfect example of this. Who would have anticipated that critical information regarding individual location preferences, data that has been collected and reported electronically since the early 1990s, would be important to state and local governments as they project budget shifts arising from the rapid shift to remote - work arrangements during the COVID - 19 pandemic? This location preference data must be transformed and potentially combined with other, imperfect sources of data to provide the best insights in the current business environment. The old adage still rules — "garbage in, garbage out" — so quality transformation is essential.

Tax professionals who have an intimate knowledge of the complex interactions among taxpayers, tax law, and regulators are best positioned to perform the most important parts of data analytics, including asking the right questions, identifying relevant data, understanding how to transform the data to answer current questions, and completing the ETL process by loading the transformed data into the appropriate programs for predictive analytics or for creating effective visualizations. The quality of the analysis for decision - making is intimately tied to the capacity for critical thinking and problem - solving . Fortunately, the latest tools put data analytics into the hands of a group of individuals extremely skilled at critical thinking: tax professionals.

Thus, tax courses should continue to focus on teaching tax first. With major tax reforms and shifting business environments, there is never a shortage of material to cover in tax courses. But it is important to recognize the opportunities afforded by incorporating data analytics tools and processes into tax classes. Teaching the ETL process develops the analytics mindset and analysis skills. Linking tax accounting to analytics develops students' understanding of the core tax concepts explored in the analytics case. A well - designed analytics case that explores an interesting research question will develop students' research, critical - thinking , and communication skills. Further, an interesting tax question will engage students and show them how fascinating tax accounting can be as a profession.

One of the best tips that can be provided for incorporating data analytics into your tax course is to focus on a topic that has always been challenging for students to understand. Several recent tax data analytics cases can help you get started.

Examples of tax data analytics cases

Faye Borthick and Lucia Smeal's case, "Data Analytics in Tax Research: Analyzing Worker Agreements and Compensation Data to Distinguish Between Independent Contractors and Employees Using IRS Factors," 35 Issues in Accounting Education 1-23 (2020), requires students to use Access to evaluate the IRS facts - and - circumstances tests for whether workers should be classified as independent contractors or employees. In the gig economy, where students often drive for ride shares, for instance, this case can help students gain a better understanding of what facts and circumstances mean while connecting to a topic they are already familiar with.

Cheng et al.'s "A Case Study of Effective Tax Rates Using Data Analytics" is an excellent resource to help students learn about ETRs. This is always an important topic for businesses, but it is particularly important at this time of remote working, when businesses may be evaluating the tax laws of alternative jurisdictions. This case is particularly helpful in a corporate tax class because the evaluation firms with outlier ETRs develop students' understanding of book - tax differences. This case primarily uses Excel, but it also includes instructions that introduce Tableau for data visualizations and Alteryx to run predictive analytics so that students can use linear regressions to explore factors that are associated with ETRs.

A basic component of tax planning is to understand how taxes can influence taxpayer decisions. The migration case by Cheng and Varadharajan mentioned earlier can help students see this, by investigating whether taxpayer location decisions are driven by tax law changes. This case allows students to learn the top 10 most used tools in Alteryx to engage in the ETL process and in Tableau to visualize the results.

A related case by Roby Sawyers, Tom Dow, and Lynn Jones titled "Tax Reform: A Case Using Data Analytics," published by Van - Griner Learning in 2020, helps highlight that congressional leaders are concerned about the impact of new tax provisions on their constituents. This case requires students to use Excel and Tableau to analyze how the new state and local tax deduction limitation imposed by the law known as the Tax Cuts and Jobs Act, P.L. 115 - 97 , may affect taxpayers within a metropolitan statistical area.

There are also several cases that help highlight the influence of taxes on small businesses. Cheng, John Eagan, and Yurko's "ChicagoLand Popcorn — Examining Online Retailer Nexus Following Wayfair Using Data Visualization and Robotics Process Automation" (2020), available from the authors upon request, provides students with the opportunity to combine legal tax research with data analytics to help students understand how tax reform may affect small online retailer expansion decisions. In this case, students researched state - specific economic nexus requirements using online tax research tools such as CCH and RIA and used either Tableau exclusively or Automation Anywhere's A2019 robotics process automation tool along with Tableau to evaluate whether an online retailer had established economic nexus in particular states, and the subsequent tax consequences.

Lauren Cooper, Kimberly Key, and Mollie Mathis's "S Corporations and IRC Section 199A: Incorporating Excel Into Tax Planning Scenarios," a forthcoming article in Issues in Accounting Education , discusses how Excel can be used to help students understand the intersection of S corporations and the Sec. 199A deduction. Since the new qualified business income deduction rules are complex, this case may provide an ideal resource for helping students gain a better understanding of the rules and the tax implications of these rules in a small business decision - making context.

Using the cases

Several of these cases come with short ( 5 - to 10 - minute ) videos that demonstrate the data analytics skills. For example, you can check out Cheng's YouTube channel at www.youtube.com . Her custom videos walk faculty and students through the data skills that are required in each of the tools to complete the data analytics cases she co - authored .

It is important to determine how much time to allocate to introducing data analytics into your tax course. The authors have found that the best approach is to provide some in - class time focusing on the tax technical and critical - thinking components of the case. For those instructors who want to ensure individual students are completing their own project, consider requiring students to add their name to a variable. This time does not take away from what you are already teaching, since it is a different approach to teaching the same tax technical process. However, you may also want to allocate some time to demonstrating the tools to help students become comfortable with them.

The authors caution against spending too much time in class on the tools demonstration. It may take too much class time, and the live demonstrations will inevitably be too slow for some students and too fast for others. The authors recommend referring students to videos already created and/or creating your own custom videos. The videos mitigate the problems that arise from having a varied student base, allowing students who are reluctant or unfamiliar to watch the video multiple times, while allowing students who are familiar to skip the videos for steps they can confidently complete.

The authors also recommend that you think about which case might be best introduced in an accounting information systems course, or an introductory tools course. This suggestion serves several purposes. First, in order to help students understand tax careers, your program should introduce a case that demonstrates how data analytics can be used to solve interesting tax problems as early as possible. Second, students benefit from seeing the data analytics tools multiple times to help them maximize their learning and comfort level in working with data analytics tools. Finally, the cases help you work on building the most important skills that will be required of students if they enter careers as tax data analytics professionals: critical thinking, problem - solving , and communication.

It may be the case that none of the data analytics cases highlighted in this column align with topics that you already cover. You might consider adapting an existing case to fit your needs, instead of trying to reinvent the wheel completely. Your adaptations of a case can focus on tailoring the tax topics and critical - thinking components to those topics and level of critical thinking that are best suited to your class. For example, consider the migration case by Cheng and Varadharajan, which was developed prior to the COVID - 19 pandemic. One adaptation is a consideration of how the pandemic might impact these migration patterns and what effect that could potentially have on state or local tax revenues. While the data for 2020 is not yet available, students can evaluate whether current media reports of migration trends are similar to trends that occurred pre - pandemic and/or use predictive analytics to project future trends. Predictive analytics could also be used to evaluate how migration trends are associated with state tax revenues and use these results to predict the expected impact of migration trends occurring in the present on state and local tax revenues. Future students could then compare the actual data, when it becomes available, to the predictions made by prior classes.

Another adaptation of this case is to have students focus on tax liability. For example, adapt the case to an internal audit perspective, where companies are trying to figure out their exposure to income tax reporting requirements. Alternatively, adapt the case to a merger - and - acquisition due diligence perspective where an acquirer is trying to figure out the potential unaccounted tax liability that has developed due to the targets' remote - work arrangements. Finally, this perspective could stem from a state tax audit perspective, either just based on confirming amounts reported for salary apportionment in light of remote - work arrangements or evaluating employment requirements that are often tied to special tax incentives provided to corporations.

There are other opportunities to expose students to data analytics and manipulation in the area of tax compliance. Often, tax practitioners upload client trial balances into tax software for the preparation of partnership or corporate tax returns. This data needs to be coded so the tax software can put each trial balance item on the correct return line. These codes are sometimes referred to as tax return codes (TRCs). The assigning of TRCs can be very time - consuming and repetitive.

Cheng, Shaw, and Luke Watson are in the process of developing a case study that provides students with a trial balance that needs to be coded with TRCs using Alteryx. This project could be expanded to illustrate the benefits of ETL by requiring them to code multiple trial balances. Students would quickly realize the benefits of data tools when they see how much work can be saved over a manual process. Another benefit of this project is that it can be incorporated into an existing tax compliance project. The coded trial balance can be used with tax preparation software to complete a tax return project. The importance of this project as a teaching case that mimics real - world professional experience for tax compliance is underscored by the announcement of a partnership between Alteryx and Thomson Reuters this past summer (see tax.thomsonreuters.com ). The authors expect that the case will be ready for limited distribution by the end of the spring 2021 semester.

While these are just a few examples, hopefully, this helps spur thoughts about how you can adapt the tax topic areas and critical - thinking components to best suit your course. If not, continue to monitor the education journals, as there are several additional tax data analytics cases on the horizon. Whatever case you select, the authors strongly recommend that you complete the project yourself from start to finish. This will develop your technical skills, prepare you for student questions, and potentially inspire ideas for future analytics projects.

The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or commissioner.This article expresses the author's (Christine Cheng's) views and does not necessarily reflect those of the commission, the commissioners, or other members of the staff.

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This series of tax and development case studies in selected countries demonstrates how governments in developing countries are addressing tax avoidance and evasion, assisted by the tools and capacity building services which the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes carry out with the crucial support of their donors and partner organisations.

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The case studies cover different regions, income groups and topics - from tax  base erosion and profit shifting  (BEPS) and  tax transparency  to the joint OECD/UNDP  Tax Inspectors Without Borders  initiative. This series complements OECD's recent reports on tax and development, such as the  Tax Co-operation for Development: Progress Report , and the  Tax Inspectors Without Borders Annual Report .

Learning by doing in Georgia: Building tax audit capacity in the Georgia Revenue Service

Published 27 November 2020

This case study focuses on capacity building work with the Georgia tax authorities. The hands-on, practical approach of support from the joint OECD/UNDP Tax Inspectors Without Borders initiative has improved auditors’ skills and confidence in managing complex transfer pricing audit cases.

• Download the case study ( English  |  Français  |  Español ) PDF

Tackling multinational tax avoidance in Mongolia: From building modern legal frameworks and mining industry expertise to a major audit outcome

Published 8 April 2022

This case study demonstrates the tangible tax collection benefits and skill transfer that Mongolia received as a result of long-term capacity-building programmes that were developed as a part of a collaboration between the OECD, Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development, and the joint OECD/UNDP Tax Inspectors Without Borders initiative.

• Download the case study ( English  |  Español  |  Français  |  Mongolian ) PDF

Building strong tax foundations to enhance domestic resource mobilisation in Peru

Published 27 September 2022

This case study highlights the significant progress made by Peru to enhance domestic resource mobilisation, through the implementation of international standards on transparency and exchange of information, as well as its willingness to address aggressive tax planning in transfer pricing and other BEPS-related issues.

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Fighting international tax avoidance and evasion to finance the emergence of Senegal

Published 21 May 2021

This case study highlights the significant progress made by Senegal to tackle base erosion and profit shifting, as a result of the full commitment of the political and administrative authorities to conducting tax reforms and driving change.

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Strengthening tax capacity to increase domestic resources in Tunisia

Published 22 January 2021

This case study highlights the significant progress made by Tunisia in the fight against tax evasion and avoidance in recent years, which have resulted in its alignment with international tax standards and practices, to mobilise domestic resources for the country's development and growth.

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Strengthening tax transparency to combat tax evasion, illicit financial flows and profit shifting in Uganda

Published 16 April 2021

Strengthened tax transparency has allowed Uganda to identify millions of additional revenues. With the help of a comprehensive technical assistance programme, Uganda is now able to confidently tackle transfer pricing cases, and effectively make use of exchange of information to combat tax evasion, illicit financial flows and profit shifting.

• Read the blog post:  Revenue mobilisation through tax transparency: Lessons from Uganda's transformative journey   ( également disponible en français )

West Africa

Combating tax evasion, avoidance, and illicit financial flows to mobilise domestic resources in west africa.

Published 29 November 2023

This case study highlights the significant progress made by West African States in combating tax fraud, evasion, and illicit financial flows to mobilise domestic resources through an innovative regional programme funded by the European Union and implemented by the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes, in close collaboration with the ECOWAS and UEMOA Commissions.

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Building capacity to prevent profit shifting by large companies in Zambia: From forming a transfer pricing unit to success in a landmark Supreme Court victory

Published 12 November 2020

Building transfer pricing audit capacity in Zambia has enabled authorities to collect millions in additional tax revenues. With the help of partner organisations such as ATAF, IGF and the OECD, the Zambian Revenue Authority is now able to confidently tackle transfer pricing cases, and effectively curb profit shifting by large companies.

• Read the blog post :  Landmark Supreme Court victory in Zambia: collecting millions in tax revenues and sending a message across borders  ( également disponible en français )
• Watch explanatory video ( English )

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• Case Studies
• Subnational

Paying Taxes

Removing obstacles to entrepreneurship

The case study on reforms analyzes prominent regulatory changes implemented by governments since the inception of Doing Business. Among the most common regulatory changes over the past 17 years are simplifying the requirements to start a company, easing tax compliance burdens, increasing access to credit, and ensuring the survival of viable businesses. The case study also discusses the effects of regulatory changes on various dimensions of economic development and investment activity.

Paying Taxes: Assessing postfiling processes

Modern tax systems seek to optimize tax collections while minimizing administrative and taxpayer compliance costs. A low cost of tax compliance and efficient tax-related procedures are advantageous for firms. Overly complicated tax systems are associated with high levels of tax evasion, large informal sectors, more corruption and less investment.2 Tax compliance systems should be designed so as not to discourage businesses from participating in the formal economy.

Paying taxes: Trends before and after the financial crisis

The global financial crisis of 2008–09 had a dramatic impact on national tax revenue and led to a sharp increase in deficits and public debt. Fiscal measures were part of the policy toolkit that governments brought to bear in supporting the recovery. Doing Business has been monitoring how governments tax businesses through its paying taxes indicators for 9 years, looking at both tax administration and tax rates. The data give interesting insights into the tax policies implemented during the financial crisis of 2008–09.

Implementing electronic tax filing and payments in Malaysia

Taxation is essential for sustainable economic development, and tax administration is a basic function of a successful state. Taxation also helps make a government accountable to its citizens. When governments spend taxpayers’ money, they are more accountable to make budget decisions transparent and accessible. By 2012, 76 of the economies measured by Doing Business had implemented electronic tax filing and payment systems.

Rwanda: Fostering prosperity by promoting entrepreneurship

Since 2004 Rwanda has substantially improved access to credit, streamlined procedures for starting a business, reduced the time to register property, simplified cross-border trade and made courts more accessible for resolving commercial disputes.

Latvia: Maintaining a reform state of mind

Despite being substantially affected by the financial crisis starting in 2008, Latvia continued its reform agenda, adapting it to the new challenges the country was facing.  Learn what lessons can be learned about this “reform state of mind” demonstrated by Latvia.

APEC: Sharing goals and experience

The APEC Ease of Doing Business action plan identifies “champion economies” to share information and experience and to assist other members through tailored diagnostic studies. The plan seeks to implement APEC’s view of capacity building as a central part in enhancing cooperation and accelerating progress.

Colombia: Sustaining reforms over time

Colombia’s commitment to regulatory reform has led to substantial improvements in the quality of the business environment and a more solid foundation for private sector development. While the country has more development hurdles to overcome, the measures taken over the past years have greatly improved its competitiveness.

Egypt: Adding a million taxpayers

With 37% of Egypt’s workforce in the informal sector, the government realized reform was the way to broaden its tax base and increase revenues. Tax rates were high, the process of making payments was cumbersome, and tax evasion was the norm. Change was necessary.

Turkey: Giving a facelift to the Turkish tax system

Almost all tax reforms aim at a single goal: to increase revenue. But Turkey’s 2007 reform was different—simplifying and modernizing the tax system were the key goals. The government had been concerned that an antiquated corporate tax law was hindering foreign direct investment. It wanted to align its system with international standards.

Azerbaijan: How to create a world-class taxation system from scratch

The government of Azerbaijan took on the challenge of creating, from scratch, a transparent tax administration system, as was necessary. The country’s tax administration was revolutionized by creating a state-of-the-art online system.

Korea: Better business regulation and improved competitiveness

In Korea the Presidential Council on National Competitiveness, created in 2008, identified regulatory reform as 1 of 4 pillars to improve the economy’s competitiveness, along with public sector innovation, investment promotion, and legal and institutional advancement. Reviewing Korea’s business regulations, the council found that 15% had not been revised since 1998. The council applied sunset clauses to more than 600 regulations and 3,500 administrative rules.

Egypt: Boosting trade

Rachid Mohammed Rachid, Minister of Trade and Industry, describes his experience as a member of the new economic reform team appointed in 2004 by President Mubarak. The team was tasked with reviving the Egyptian economy to achieve economic growth levels of 6 percent, provide employment opportunities to the 650,000 new entrants to the job market and double both the foreign direct investment inflows and total trade through more integration into the world economy.

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Contributor Notes

How can Low-Income Countries (LICs) enhance tax revenue collection to finance their vast development needs? We address this question by analyzing seven tax reform experiences in LICs (Burkina Faso, The Gambia, Maldives, Mauritania, Rwanda, Senegal, and Uganda). Three lessons stand out, although reforms must be tailored to individual circumstances: (i) Tax reforms require first and foremost political commitment and buy-in from key stakeholders; (ii) Countries that pursue both revenue administration and tax policy reforms tend to see much larger and persistent gains; and (iii) A successful strategy often starts with fiscal reform measures with immediate effect to build momentum. These can include: simplifying the tax system; curbing exemptions; reforming indirect taxes on goods and services (e.g., excises); and better managing compliance risks through strengthening taxpayer segmentation (often beginning with strengthening the Large Taxpayers Office). A comprehensive reform strategy (e.g., a medium-term revenue strategy) can help to properly sequence reform measures and facilitate their implementation.

• I. Introduction

The ability to collect taxes is central to a country’s capacity to finance social services such as health and education, critical infrastructure such as electricity and roads, and other public goods. Low-income countries (LICs), however, collect about 16 percent of GDP in taxes on average, compared with 18 percent in emerging markets (EMs) and 26 percent in advanced economies (AEs). 2 And many LICs collect substantially less than that. Such low levels of tax collection put aspirations for economic development, including not least attainment of the Sustainable Development Goals (SDGs) at risk. 3 The imperative to mobilize additional domestic revenue is heightened by the uncertain prospects for foreign aid and the recent rising trend of public debt in some LICs. How can LICs enhance tax revenue collection to finance their vast development needs? Building from Akitoby et al. (2018) , we address this question by analyzing seven episodes of large tax revenue mobilization in LICs (Burkina Faso, The Gambia, Maldives, Mauritania, Rwanda, Senegal, and Uganda). The experiences of this diverse set of countries illustrate that, regardless of the constraints they face, countries can strengthen their capacity to collect tax revenue by pursuing reform strategies with certain distinct features. It is, however, important to note that, while these countries enhanced tax collection through tax policy and revenue administration reforms, this does not imply that there remains no scope to further increase tax collection. In fact, some of these countries are making further efforts to increase tax collection.

Recent Tax Increase Episodes in LICs

* The paper focuses on the period through 2015. In some cases, tax revenues continued to improve beyond 2015; and therefore these cases were recorded. Sources: Country authorities and IMF staff estimates.

By analyzing what worked in these countries, we draw broad lessons for what strategies other LICs could consider. Obviously, there is no one-size-fits-all solution, but one can hope to find in these experiences broad and potentially generalizable features that appear to have contributed to substantial revenue increases. The goal of the paper is thus to motivate policymakers to consider substantial tax reforms and support them in doing so, by sharing country experiences in achieving large tax revenue increases. The design and implementation of such reforms evidently require comprehensive, country-specific circumstances (including for instance on distributional impacts). This paper does not attempt to enter the level of granularity this requires in, for example, strengthening taxpayer compliance. 4 For such purposes, policymakers of LICs may benefit from technical assistance (TA) from their international partners, such as the IMF. Indeed, in most of the country cases discussed, IMF TA has been instrumental in helping them to design and implement tax reforms. The paper draws heavily on that experience in understanding and drawing lessons from the cases analyzed here.

The rest of the paper is organized as follows. Section II provides the analysis of the seven case studies, outlining tax reforms and the outcomes, for each case. Section III discusses the key lessons learned from the episodes of large tax revenue mobilization.

II. Case Studies

The case studies for tax revenue mobilization―identified based on Akitoby et al. (2018) ―are examined using information from IMF country reports and IMF staff . The case studies focus on the experiences of noncommodity-related tax revenues during the post global financial crisis period. All of these episodes have been identified as episodes of substantial tax revenue mobilization episodes by Akitoby et al. (2018) . 5 , 6 Based on their dataset of tax reforms in LICs, this paper selects the episodes with two criteria. First, the episodes in fragile states are excluded. Given their rather unique social and economic environments, the lessons learned from those cases may not be applicable for nonfragile states. Second, the paper focuses on the recent episodes for the last ten years in order to collect information through interviews with IMF staff involved with these countries. These episodes are further examined by studying IMF country reports (including staff reports and TA reports), as well as conducting interviews with mission chiefs, country desk economists, and TA experts who engaged with the authorities on tax reforms. The analysis in the paper is mostly based on FAD Tax Policy Revenue Analysis Tool (RAT) 7 database, including the developments after 2015, as needed.

The case studies are structured to provide information on tax policy and revenue administration reforms . First, a short background section gives the political and economic context. Second, the tax reform strategy—with key tax policy and revenue administration measures—is described. Third, the outcomes of the measures implemented are highlighted.

• A. Burkina Faso (2009–2013)— Simplifying the Tax System and Broadening the Tax Base

Burkina Faso achieved a substantial increase in tax revenue by 5 percentage points of GDP between 2008–2013. Supported by IMF TA, the authorities undertook tax policy reforms (including the simplification of the tax system and the broadening of the tax base) .

Burkina Faso: Total Tax Revenues

(Percent of GDP)

Citation: IMF Working Papers 2019, 104; 10.5089/9781498314565.001.A001

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Burkina Faso: Tax Revenues by Item

Burkina Faso managed to achieve robust growth without accumulating excessive debt . Overall economic (5.3 percent between 2007 and 2012) growth stayed above the regional average, largely driven by the private sector (e.g., mining). The debt burden was substantially reduced by relief from the enhanced Highly Indebted Poor Country Initiative (2002) and Multilateral Debt Relief Initiative (2006). Public debt stood at 22 percent of GDP in 2007.

The authorities demonstrated strong ownership for economic reforms under IMF-supported programs . Under two consecutive three-year programs (2007–2010, 2010–2013), the authorities demonstrated strong program ownership and implemented a number of structural reforms. 8 A new tax reform strategy was prepared with TA from the IMF and financial support from Switzerland.

Burkina Faso had suffered from low tax collection, under a complex tax system with many exemptions . Its tax-to-GDP ratio stood at 12.5 percent of GDP in 2007, among the lowest in the West African Economic and Monetary Union (WAEMU). The 2007 IMF TA missions assessed the tax system as one with a low tax base, lack of a coherent structure, too many exemptions and incentives designated to offset the heavy tax burden, too many withholding and prepayment deductions (that made it difficult for enterprises to manage their cash flows), and a complex tax system that was vulnerable to noncompliance.

• Reform Strategy

Increasing domestic revenues was essential to create fiscal space while keeping debt sustainable . Throughout the tax reform period, the authorities continued efforts to enhance revenue collection and build fiscal space for critical infrastructure investment and social spending.

The reform strategy focused mostly on tax policy . A comprehensive tax reform strategy was adopted in early 2010 to streamline tax incentives, simplify income tax legislation and improve indirect tax management.

The tax policy reforms aimed at broadening the tax base and making the tax system simple and transparent . Simplification and transparency measures included: setting up a tax policy unit in the ministry of finance to guide the process of reforms and conducting cost-benefit analysis of tax reforms; creating a single tax code to consolidate the tax legislation (implemented in 2011); and introducing a corporate income tax (CIT) with a rate of 25 percent—the lowest that can be charged in the WAEMU area— to replace the former different schedular taxes applied to companies. With respect to VAT, the new code eliminated the 20 percent withholding tax by the way of advance payment ( accompte ). Furthermore, the application of VAT was broadened by revising the list of exemptions, for example, by eliminating many VAT exemptions for NGOs. Other tax policy reforms included: (i) increasing the excise tax for alcoholic beverages from 25 to 30 percent: 9 (ii) limiting the deductibility of investment spending from profit taxes, (iii) introducing a special tax on transactions related to mining stocks; and (iv) applying VAT on imports of operational mining companies and companies that signed contracts with the government.

Tax administration reforms focused on improving tax compliance . To increase tax compliance, the authorities: (i) diversified the audit types to include issue oriented-audits thereby increasing audit coverage; (ii) implemented a tax census in six urban communes to strengthen management of the taxpayer files and to broaden the tax base; (iii) set up a medium-sized enterprises unit to strengthen the monitoring of this segment and; (iv) implemented communication activities to foster a sense of civic responsibility regarding paying taxes. IT acted as an enabler in the improvement of tax compliance. Key reforms included: (i) the introduction of two management systems to improve information sharing between the tax and customs administrations; (ii) the use of the Computerized Tax Information System—to systematically generate a list of large taxpayer office (LTO) filers and non-filers—enabled better management of taxpayers. In addition, SINTAX was used to notify late-filers and non-filers of their obligations. The use of the Automated System for Customs Data facilitated the connection of five additional border posts to improve customs clearance procedures and limit fraud. 10

Revenue Outcomes

Tax revenue (excluding natural resources) increased by 5 percent of GDP between 2009–2013. In 2011, for the first time, the level of tax-to-GDP ratio reached the average ratio in the WAEMU. During the reform period, income taxes increased by about 2 percent of GDP, and taxes on goods and services increased by about 2½ percent of GDP. The precise impact of the reform measures, however, is difficult to quantify, owing to possible cyclical factors playing a role. An increase in VAT on imports (by 1½ percent of GDP) were partially driven by the increase in imports associated with the boom in the mining sector. 11

• B. The Gambia (2011–2015)—Introducing VAT with Strengthened Tax Administration

The Gambia achieved a sizable increase (by 4½ percentage points of GDP) in tax collection during 2011–2015. During the period, the authorities introduced VAT and reformed excise tax, supported by strengthened tax and customs administration .

The Gambia: Total Tax Revenues

The Gambia: Tax Revenues by Item

The Gambia’s political system was relatively stable, though it did not lead to strong national ownership of economic reforms . Former President Yahya Jammeh had been in office since the 1994 coup (until the 2016 election). During this period, the political system was perceived to be relatively stable. 12 This, however, did not lead to strong political commitment for reforms. Based on the experiences under the IMF programs through early 2000s, the IMF concluded (in Ex Post Assessment of Longer-Term Program Engagement, January 2006) that “ inadequate national ownership of reforms to underpin the program and insufficient commitments to key reforms contributed to the implementation problems .”

After the global financial crisis, the widening of fiscal imbalances raised a serious fiscal sustainability concern . Following a steady erosion of revenues and large spending overruns, the government’s fiscal deficit widened substantially during this period, resulting in a sharp increase in total public debt (reaching 70 percent of GDP by 2011). Because of the large fiscal slippages, the government’s net domestic borrowing rose significantly, leading to increased pressures on inflation, interest rates, and the exchange rate.

Tax reforms were needed to restore fiscal sustainability . The Gambia remained at high risk of debt distress from external debt, and its domestic debt posed high rollover risks (as most of the debt was in the form of T-bills with short-term maturities), while interest on domestic debt was very costly (consuming about 18 percent of the government revenues in 2011). To ensure fiscal sustainability and ease debt burden, enhancing tax revenues—as well as the rationalization of fiscal spending—was critical. Furthermore, as The Gambia’s business tax system was complex and investor unfriendly, comprehensive tax reforms were also intended to enhance the country’s international competitiveness (e.g., through having a relatively simple tax system that spread the burden over a broad base). 13

The Gambia embarked on a gradual process of tax reforms in 2013, with the focus on reforms on indirect taxes .

The authorities introduced a VAT to replace a general sales tax in 2013 with support from the IMF. 14 , 15 The VAT broadened the tax base and lifted revenues by 1–1.5 percent of GDP. The introduction of the VAT was a part of The Gambia’s commitment towards the Economic Community of West African States protocol. The Gambia benefited from technical assistance from the IMF and others to prepare and launch the VAT and also to implement overall revenue administration reforms. 16

The authorities also introduced a simple specific excise on tobacco products . The base of the excise tax on cigarettes was changed from weight to number of packs in 2013. 17 This tax policy change increased the equivalent tax rate on cigarettes by about 25 percent. Further, in 2013, the authorities introduced a weight-based excise on non-cigarette tobacco products. This discourages consumers from switching to a cheaper product when taxes are increased. As a result, excise revenues from tobacco products increased from 0.3 percent of GDP in 2012 to 0.8 percent of GDP in 2014.

Furthermore, the elimination of fuel subsidies allowed the government to collect the full value of fuel taxes . In The Gambia, tax revenues from fuel taxes had been based on operational profits (the difference between the fixed retail price and suppliers’ costs), and thus the revenues were lowered with high fuel import prices. The revenue losses from such fuel subsidy reached 0.8 percent of GDP in 2011. To eliminate fuel subsidies, the authorities reformed the fuel pricing formula, through flexibly changing retail price to reflect the changes in world prices. From 2013, monthly fuel price adjustments were implemented, and fuel subsidies were eliminated in July 2014, which allowed gradual increase in fuel taxes.

The authorities implemented several measures to strengthen tax and customs administration . In the area of tax administration, new tax and customs administrative procedures were implemented for launch of the VAT, a headquarters design and monitoring function was established, and the Gambia Revenue Authority (GRA) strengthened its audit capacity through hiring and training of staff during the period. 18 The GRA also implemented a detailed compliance improvement plan for large taxpayers. As a result, about 86 percent of large taxpayers filed their income tax returns in 2012, up from 79 percent in 2011. Also, a new customs and excise law (which reflects international best practice in customs administration and provides an effective platform for customs modernization) was enacted. Further, the custom department upgraded its IT system to the ASYCUDA++.

These reform measures resulted in sizable increase in tax collection (about 4½ percentage points of GDP) . 19 The tax-to-GDP ratio rose from about 13 percent in 2010 to 17½ percent in 2015. 20 Specifically, taxes on goods and services contributed to the increase by 2 percentage points during the period, while taxes on international trade and transactions increased by 2¼ percentage points. The precise impact of the reform measures, however, is difficult to quantify, owing to possible cyclical factors playing a role. After 2016, revenue collection sharply fell, reflecting a low economic activity, import compression due to foreign exchange scarcity, and a drop-in tourism due to the political turmoil.

• C. Maldives (2011–2017) – Boosting Tax Revenues, Supported by Tourism Industry

Maldives—a tourism-dependent, small island country—achieved a substantial increase in tax revenues (by 12 1 percentage points of GDP over 5 years). The authorities’ reform efforts, including the introduction of new taxes and a newly formed domestic tax authority, contributed to the increase in the revenues. In addition, a strong recovery in tourism helped to boost tax revenue collections .

Maldives: Total Tax Revenues

Maldives: Tax Revenues by Item

The global financial crisis hit Maldives’ tourism industry, adversely affecting fiscal revenues . As in other tourism-based economies (e.g., the Caribbean countries), tourism revenue was badly affected by the global downturn, reducing fiscal and foreign exchange earnings and driving the economy into recession. With the fiscal deficit reaching 20 percent of GDP in 2009, the authorities started fiscal adjustment through enhancing domestic revenues and containing expenditures. Following the global downturn, tourist activity picked up with a rapid expansion from Asian markets and a tepid recovery from Europe (Maldives performed well relative to other tourism-dependent economies).

Political divergence delayed implementation of economic reforms . The tense relations between the former president Nasheed and the opposition-dominated parliament affected the advancement of the economic reform agenda. With rising and unsustainable debt, strong fiscal consolidation was required. Thus, after the local elections in 2011, the President decided to address the deteriorating fiscal situation. Furthermore, following presidential elections in late 2013, President Yameen’s Progressive Party-led coalition strengthened its position with victory in the parliamentary elections.

Enhancing tax revenues was needed to secure fiscal sustainability . The country relied heavily on the issuance of Treasury bills and external borrowings to finance large and sustained fiscal deficits. Unmet financing needs led to monetization of the deficit as well as the accumulation of domestic payments arrears. By 2009, public debt reached about 60 percent of GDP. These developments caused the government to place domestic revenue mobilization high on its agenda, to create fiscal space to support higher spending.

The tax reforms focused on the introduction of a tax system based on a small number of broad based taxes . The government established an autonomous domestic revenue authority to ensure the most efficient and effective introduction of the new tax system.

Tax policy measures focused on the introduction of new indirect taxes and a business profit tax . The tourism sector goods and services tax (TGST) was introduced in January 2011. 21 As a natural progression from the TGST, the general goods and services tax (GGST) was introduced in October 2011 to mobilize revenue. 22 The initial GGST rate of 3.5 percent, was increased to 6 percent in January 2012. Furthermore, a business profit tax (BPT) was introduced in mid-2011. 23 Also, in 2015 the authorities increased import duties on some consumer items.

On tax administration fronts, the key measure was to establish the Maldives Inland Revenue Authority (MIRA) . In 2010, the MIRA was established as a fully autonomous body under the Tax Administration Act. This Act mandated the revenue authority to enforce the Taxation Acts of the country and administer tax procedures (such as registration of taxpayers, recovery of tax, taxpayer identification numbers). Following the establishment of the MIRA, a common Taxpayer Identification Number was implemented to be used by all importers and exporters, as well as the MIRA. Also, core IT systems were installed, and e-filing/e-payment was implemented and used for TGST, withholding tax, green tax, and the remittance of tax returns. The authorities also progressively established fundamental elements of a compliance management system and launched an audit program.

The human resource strategy was implemented in 2011 . MIRA’s human capital comprised a relatively young cadre of highly educated, professional, and motivated staff. Under the strategy, the government invested in improving the technical skills and quality of staff through ongoing training and an increase in staff complement.

The establishment of the MIRA provided the necessary structure to undertake administrative and tax policy reforms . MIRA’s achievements included a larger than anticipated tax registration base (created across the newly implemented taxes). In addition, the audit capacity increased significantly (undertaking more than 850 audits within two years after implementing the audit program). Further, the TGST, GST, and BPT were administered using the online platforms, including for registration and tax filing.

Maldives achieved a substantial and consistent increase in tax revenue after 2011 . The tax-to-GDP ratio increased by 12.1 percent between 2011 and 2017. Over the period, revenue from the goods and services taxes (both the GGST and the TGST) increased while revenues from BPT grew even as a proportion of total revenue. After 2015, the revenue increase was sustained, on the back of improved collection from goods and services taxes.

• D. Mauritania (2010–2014)—Shifting Toward Noncommodity Tax Revenues

Mauritania’s impressive tax performance—from 11.1 percent of GDP in 2009 to 17.2 percent of GDP in 2014—was achieved while implementing a range of tax reforms. Tax policy measures included simplification in the tax system, the removal of exemptions, and differential taxation on nonresidents to limit profit-shifting by multinational companies .

Mauritania: Total Tax Revenues

Mauritania: Tax Revenues by Item

On the back of both domestic and external shocks, the fiscal position significantly deteriorated . The global food and fuel price increases weakened the fiscal and external positions and pushed up inflation. The domestic political crisis—the August 2008 coup d’état staged by a military junta—led to a significant reduction in external assistance. The global economic slowdown contributed to further fiscal and balance of payments pressures mainly through the decline in the prices of and the demand for Mauritania’s main export commodities (iron, copper, and fish). As a result, the basic non-oil fiscal deficit increased to 7.7 percent of non-oil GDP in 2008 up from 2.2 percent in 2007.

The July 2009 presidential election led to a stable reform-minded government coalition . There was a military coup in August 2008 that triggered a domestic political crisis prompting the discontinuation of support and assistance by several bilateral and multilateral donors. In mid-2009, with the new presidential election, Mauritania returned to a constitutional order. The government launched a process of inclusive dialogue with civil society and the opposition. Following the election, the international community, including the Fund, resumed normal relations with Mauritania. 24

A tax reform was needed to put public finances on a sustainable footing and to create space for social and infrastructure spending . Mauritania’s fiscal position sharply deteriorated owing to domestic and external shocks. At end-2008, net total public debt (gross external and domestic debt net of oil fund reserves) amounted to roughly 90 percent of GDP. In the meantime, the authorities acknowledged the need to raise the standard of living of the population and to further reduce poverty. In this context, the government prepared a wide-ranging program of reforms covering the period 2010–2012, to enhance efforts toward the Millennium Development Goals.

With a strong political initiative, a set of tax policy measures were undertaken , supported by a series of TA provided by the IMF.

Tax policy measures focused on broadening the tax base . The Mauritanian authorities eliminated the global income tax in 2012 and switched to a dual tax system, with a proportional tax on capital income and progressive taxation of wages. In 2012, the authorities removed the CIT exemption of the main gold company, contributing in the increase in CIT by 1.3 percentage points of GDP. Other tax policy reforms included an increase in excise taxes on tobacco from 10 percent to 30 percent. 25 Furthermore, in 2013, the government implemented a withholding tax of 15 percent on payments to nonresidents to protect its tax base against aggressive tax planning by multinational companies.

VAT reforms also helped to broaden the tax base . 26 The VAT was extended to cover the mining sector, and mining companies receive reimbursement only if they can prove that their purchases have been acquired from formal domestic suppliers. This provided an incentive for local supplier to register and become formal. The tax identification numbers increased from 1,789 in 2011 to 5,860 in 2013 and allowed to broaden the tax base.

During the tax reform period, some redistributive spending measures were introduced . While some of the tax measures (e.g., excises) were regressive, fuel subsidy reforms were undertaken during this period. To offset any undesired effects on income distribution, mitigating measures targeted to lower-income groups were introduced. With the assistance of World Food Program, the government completed the vulnerability and poverty survey and introduced a cash transfer program for targeted households in 2012.

Noncommodity tax revenues increased significantly during the reform period . Total tax revenues increased from 11.1 percent of GDP in 2009 to 17.2 percent of GDP in 2014. It is notable that, despite the booms of commodity prices, Mauritania enhanced noncommodity tax revenues, avoiding the resource curse regarding taxation.

Between 2009–2013, the collection of VAT—net of refunds—increased by 2.5 percentage points of GDP inducing an improvement in the VAT C-efficiency ( Figure 9 ). 27 Mauritania’s C-efficiency ratio increased significantly by about 35 percentage points during the reform period. Noncommodity tax revenues performed well thanks to the formalization of the economy encouraged by the VAT liability of the mining sector.

Mauritania: VAT C-Efficiency

(Percent) 2002–2012

• E. Rwanda (2010–2015)—Comprehensive Reform with Gradual but Sustained Gains

Rwanda achieved a steady and sustained increase in tax collection (by 3 % percent of GDP) during 2010–2015. Tax policy measures included indirect tax reforms and the removal of exemptions, while tax administration measures improved tax compliance. Aid dependence was significantly reduced during the reform period, as originally intended .

Rwanda is a country with inadequate basic infrastructure and heavy dependence on donor aid . It achieved high growth and macroeconomic stability over the decade, but poverty remained high, with 57 percent of the population living below the national poverty line in 2006. Rwanda had long been relying heavily on donor aid (with total external grants exceeding 40 percent of the total fiscal revenues in 2008), while domestic revenues stood only at 12.5 percent of GDP. Nevertheless, spending needs for basic infrastructure—covering both communication and transportation networks—were high, and the government’s strategic investment plan aimed to alleviate critical infrastructure constraints, consistent with the objectives of the government’s Economic Development and Poverty Reduction Strategy.

Rwanda: Total Tax Revenues

Rwanda: Tax Revenues by Item

There was a need to address a prospective decline in official donor assistance and trade tax revenue . The authorities were certain that official assistance would be declining slightly over the medium term. In addition, taxes from trade were also expected to decline after 2010 when the East African Community (EAC) Common Market became effective, and Rwanda implemented the EAC Common External Tariff Framework. Thus, against the backdrop of increasing aid uncertainties and an expected decline in trade revenue, the government decided to increase domestic revenue mobilization and prioritize spending in support of development.

Enhanced revenue efforts were needed to reduce Rwanda’s aid dependency and to provide fiscal space for critical development spending . These efforts were supported under two three-year Policy Support Instrument (PSI) programs with the IMF (approved in June 2010 and in December 2013). Under the program, the authorities agreed on revenue measures to achieve the PSI medium-term revenue targets and planned fiscal consolidation to reduce aid dependence and create fiscal space for development spending. The authorities agreed on the importance of increasing domestic revenues—by 2 percent of GDP—over the PSI period, backed up by significant revenue administration reforms. The authorities maintained the momentum to improve revenue collection with a successor PSI program, which also focused on domestic revenue mobilization.

The revenue reform strategy focused on strengthening revenue administration, complemented by tax policy reform measures.

Key tax administration measures included better utilizing information management systems and improving tax compliance . Specifically, electronic filing and payment systems were introduced (2010–2011), and electronic tax registration was implemented. Furthermore, a headquarters design and monitoring function was established and staff was trained, basic risk management approaches were implemented as well as systems and procedures based on self-assessment, direct bank payment of tax was introduced in order to reduce leakages, the tax and business registration process was integrated to ease cost of doing business, and collection of social security contributions was transferred to the Rwanda Revenue Authority (RRA). 28 Other administration measures include automating tax and custom operations and implementing a customs Single Window for trade facilitation. The RRA also enforced VAT compliance, by introducing electronic transactions device (ETD) and withholding VAT at source by government departments, and increased collection of tax arrears.

On the tax policy front, the key measures focused on raising the rates for several indirect taxes . From July 2012, the tax rate for imported construction materials increased from 5 percent to 10 percent. For excise taxes, there was an increase in excise duty on airtime of mobile phones from 5 to 8 percent, then to 10 percent between 2011 and 2014. On direct taxes, the personal income tax (PIT) for micro enterprises was revised by introducing a schedular tax on turnover below 12 million in September 2012. The authorities reduced the turnover tax for small enterprises from 4 to 3 percent and raised the ceiling for this regime from 20 to 50 million, also in September 2012. In 2015, the authorities increased tariffs for water and electricity by 19 and 35 percent, respectively. Furthermore, the FY15/16 budget included an excise tax on petroleum, higher excise tax on tobacco and import tax on non-EAC products.

The authorities also removed some tax exemptions through changes in the tax code. The investment code was revised to streamline exemptions. Incentives granting VAT exemptions on imports for investment certificate holders were also removed.

Rwanda’s tax-to-GDP ratio increased by 3¾ percent of GDP between 2010 and 2015 . The decline in trade revenue (from adopting the EAC common external tariff) was offset by increasing revenue from taxes on individuals and consumption. Furthermore, measures such as increasing excise rates, and removing tax exemptions on specific items contributed to the increase in tax revenues.

With these reforms, the collection of VAT (net of refunds) increased by 1¾ percentage points of GDP during the reform period, reflected in an increase in the VAT C-efficiency ratio ( Figure 12 ). Though Rwanda’s C-efficiency ratio stayed below its peers following the tax reforms, it has been moving closer towards the regional and LIC averages. The improvement is likely associated with strengthened tax compliance (through tax administration reforms) and the removal of some VAT exemptions.

Rwanda: VAT C-Efficiency

• F. Senegal (2010–2017)—Undertaking Policy and Administration Reforms

Senegal recorded an increase in its tax revenue from 18 percent of GDP in 2009 to 20.9 percent of GDP in 2017 after a revenue shortfaii in 2008. 29 This improved performance was likely associated with vast revenue administration reforms combined with a simplification and a recentralization of the tax system .

Senegal: Total Tax Revenues

Senegal: Tax Revenues by Item

Senegal’s economy was hit by external and domestic shocks in the mid-2000s . First, the sharp run-up in international food and energy prices during 2006–2008 increased the import bill. Second, partly related to the high budgetary costs of untargeted subsidies, the government accumulated sizable payment delays to the private sector. This affected the economy, with non-agriculture GDP growth declining from 6¼ percent in 2007 to 1 percent in 2009. The overall fiscal deficit widened to 5.1 percent of GDP in 2009 from 3.7 percent of GDP 2 years earlier because of lower tax revenues and higher expenditures.

The reform agenda was initiated by the authorities—particularly by the General Directorate of Taxes (DGI)—with support from the IMF . During the period, the two IMF programs under the PSI (2008–2010, and 2011–2014) were arranged with a view to achieving prudent fiscal policy through the rationalization of expenditure and various tax reforms. Senegal benefited from considerable TA from the IMF on tax policy and revenue administration. Through the reforms, the authorities aimed at raising tax revenue beyond 20 percent of GDP by making the tax system more efficient.

Despite a change in administration, the new administration pursued planned reforms with the support of the international community . Mr. Macky Sall, a former prime minister, won the presidential election in 2012, and a coalition government was appointed with a new prime minister and finance minister. The new authorities reaffirmed their intention to reform the state, improve governance, preserve fiscal sustainability, and continue with IMF support under the PSI. They proceeded with the planned ambitious reform of the tax code, publicly stating their intention to make the tax system simpler, more transparent, and more efficient.

While Senegal’s tax collection was already high in a regional perspective, the authorities aimed to enhance tax collection to create fiscal space for critical infrastructure and social spending . Prior to the tax reform, Senegal collected taxes of 18–20 percent of GDP and performed relatively well compared to other countries in the region. Higher revenues (supported by further strengthening tax administrations and implementing other tax reform measures) were expected to increase the fiscal space for critical infrastructure and social spending.

The strategy focused on major tax policy and administration reforms.

Tax policy measures focused on consolidating the tax code and simplifying some major taxes . To recentralize the tax system, the authorities included all legislation governing domestic taxation into the Tax Code in 2012. The 2012 reforms allowed the ministry of finance to regain full control over the country’s tax policy by streamlining some tax expenditures that were outside of the previous tax code. In addition, the authorities expanded the scope of the tax expenditure assessment. Some major taxes were simplified, for example, with the elimination of (i) the proportional PIT and the tax shield ( bouclier fiscal ) to make the PIT simple and progressive, and (ii) the “ quotient familial ”, an income splitting scheme based on the number of dependents which was highly regressive (because it benefited mostly to high-income individuals with large families). In 2017, The ‘‘ Patente ’’, a tax levied on the basis of the productive assets of companies, was reformed (to avoid taxing capital) and replaced with the ‘ ‘Contribution économique local (CEL).’’ The CEL is based on the rental value of the premises and the value added of companies. Furthermore, on VAT, the authorities significantly diminished the occurrence of the refunds by limiting the VAT withholding ( précomptes ). 30

Revenue administration reforms focused on strengthening taxpayer segmentation and improving the tax collection function . Segmentation was extended to medium-sized taxpayers in 2012 by creating the Center for Medium-Sized Enterprises (CMZE) covering businesses with turnover of FCFA 200 million to FCFA 1 billion. Measures to improve the compliance management of this segment included: (i) identifying and delineating new taxpayers to be administered under the CMZE; (ii) updating the taxpayer file in SIGTAS; (iii) launching an awareness campaign for new taxpayers under the CMZE for the effective fulfillment of their tax operations; and (iv) implementing case management, monitoring the execution of tax audit and systemic use of e-filling and e-payment. With these measures (implemented with TA by the IMF and AFRITAC West), the authorities achieved: (i) a better targeted tax control that allowed an increase in the number of firms covered under the CMZE by 35 percent within one year, (ii) a reduction in filing and payment noncompliance rates under the CMZE (less than 10 percent in 2013 compared to more than 50 percent previously), and (iii) a 60 percent increase in tax collection for this segment (from 25 to 40 billion FCFA). The function of the revenue authority was strengthened through the institutional restructuring of the DGI headquarters. 31 and the transferring of the direct tax collection function from the treasury to the tax administration (which enabled the latter to improve monitoring of taxpayers’ compliance with their payment obligations).

Senegal’s approach for tax reforms was inclusive with consultations with employers and labor unions . The authorities proposed tax reform measures that were prepared in consultation with employers and labor unions. These had the opportunity to provide inputs and comments on the draft version of the new tax code. This inclusive approach created a greater acceptance of the reforms.

Senegal achieved gradual improvement in tax revenues . The tax-to-GDP ratio increased from 18 percent of GDP in 2009 to 20.9 percent of GDP in 2017. 32 . Among tax items, though trade taxes and indirect taxes did not improve much during the period, income taxes increased significantly, likely reflecting reform efforts described above. A notable feature of Senegal’s tax reform is that it achieved modest but long-lasting impacts on tax revenues, with tax-to-GDP ratio improving for seven consecutive years.

• G. Uganda (2013–2017)—Removing Tax Exemptions Through Strong Political Will

To secure fiscal space for infrastructure investment, Uganda undertook tax reforms between 2013–2017. During the period, and supported by political will, tax revenues increased by 3.5 percentage points of GDP, largely through removing tax exemptions .

Uganda: Total Tax Revenues

Uganda: Tax Revenues by Item

Uganda had maintained prudent macroeconomic management for decades . Through 2010, per capita income grew at about 4 percent per annum over a decade, and inflation remained in single-digit territory. Fiscal deficits had been modest and public debt stood at 25 percent of GDP. Against this background, the main thrust of the 2011/12 budget was to address the challenges of rising inflation and inadequate infrastructure development, as well as improving social infrastructure and service delivery.

Uganda’s tax revenue performance was weak . Uganda had suffered from the lowest tax-to-GDP ratio (about 10 percent of GDP) in the East African Community (EAC), despite its tax rates being in line with regional standards. A VAT gap analysis estimated a gap of about 60 percent (equivalent to 6 percent of GDP), of which 40 percent was related to compliance issues and 20 percent was attributable to tax policy issues. 33

Under the stable political environment, the National Development Plan (NDP) (2010/11– 2014/15)—covering domestic revenue mobilization—was implemented . President Museveni has been in office since 1986 and was re-elected by a wide margin (68 percent) in February 2011. Under the NDP, the Ugandan government aimed at strengthening domestic revenue mobilization to build fiscal space for investments and to reduce their reliance on donor funds. By the end of the NDP, the government targeted to raise the revenue to GDP ratio by about 0.5 percent per year over the medium term through a combination of broadening the tax base and improving tax administration.

Enhancing tax revenues was essential to secure fiscal space and ensure fiscal sustainability . The authorities recognized the need for tax reforms, in view of Uganda’s poor tax performance, and the declining trend of foreign aid.

The tax reforms covered mostly tax policy measures.

On the tax policy front, the focus was on eliminating tax exemptions and reforming excise taxes . 34 The VAT system was reformed by submitting a new tax code (‘revenue package’) to reduce many exemptions (e.g., eliminating VAT exemptions on sales of motor vehicles or trailers, extending VAT to computers), terminate VAT exemptions on hotels, and increase the VAT threshold. Other tax policy reforms include: (i) increasing by 10 percentage point the marginal rate (from 30 to 40 percent) in the top bracket of the PIT, (ii) increasing excise duty on locally produced spirits from 45 percent to 60 percent, (iii) increasing excise duty on cigarettes by almost 60 percent in 2014 35 (iv) imposing excise duty on imported fresh juices and, (v) increasing excise taxes on a variety of products: fuel, sugar, mobile money transfers, and international calls . In 2016, the authorities implemented the Tax Procedures Code. It provides a single regulation on all procedural aspects relating to taxes and aims to streamline and clarify tax procedures. In 2017, URA implemented the Regional Electronic Cargo Tracking System (RECTS), a web-based system to monitor transit cargo in the EAC and improve revenue collection.

Tax administration reforms focused mostly on better segmentation of taxpayers . The authorities established a high net worth individuals (HNWI) unit 36 as part of the LTO and strengthened the medium-sized taxpayer office (MTO) to improve taxation of these segments. URA established a list of potential HNWI taxpayers and conducted outreach to educate them on their rights and obligations to pay taxes. Following the establishment of the unit, both the number of taxpayers and the tax collection of this segment increased substantially. 37 IMF and AFRITAC East consistently supported URA to establish and strengthen the MTO. 38 The creation of the MTO was necessary to emulate the already existed LTO and to secure and improve compliance of a segment that accounts 20–25 percent of domestic tax collection. The headquarters design and monitoring function was refined to address emerging challenges, business processes were redesigned and automated, risk management concepts were further developed, and intensive recruitment exercises led to significant expansion of the taxpayer register. In addition, URA improved the quality of its taxpayer services by, for example, using e-tax services to facilitate taxpayers’ registration, filing and payments. 39

These tax reforms were implemented with strong initiatives by the head of state . The NDP clearly recognized that domestic revenue mobilization was “the hindrance to fiscal policy,” with the revenue-to-GDP ratio being largely stagnant over the decade (since the tax reforms in mid-1990s). 40

With these reforms, Uganda increased tax revenues from 10½ percent of GDP in 2012 to 14 percent of GDP in 2017 . In five years, Uganda almost closed its tax revenue collection gap with respect to the average in the EAC. Taxes on goods and services account for half of the increase in tax revenue reflecting reforms described above. More recently, URA benefited from a Tax Administration Diagnostic Tool (TADAT) to determine its reform priorities. In addition, Uganda initiated a process to adopt a Medium-Term Revenue Strategy (MTRS), involving the coherent and structured reforms of its tax system (tax policy, customs administration, and legal measures) to achieve its medium-target objective of raising tax revenues to 16 percent of GDP.

III. Lessons Learned from the Case Studies

Although reforms must be tailored to individual circumstances, three lessons stand out: (i) As is widely recognized, tax reforms require first and foremost political commitment and buy-in from key stakeholders; 41 (ii) Countries that pursue both revenue administration and tax policy reforms tend to see much larger and persistent gains; and (iii) A successful strategy often starts with fiscal reform measures with immediate effect to build momentum. The main directions of reform include: simplifying the tax system; curbing exemptions; reforming indirect taxes on goods and services (e.g., excises); and better managing compliance risks through strengthening taxpayer segmentation (often beginning with strengthening the LTO). A comprehensive reform strategy (e.g., MTRS) can help to properly sequence reform measures and facilitate their implementation. The broad lessons about the “how” of revenue mobilization could be grouped into the following categories: 42

• Political Economy and Social Dialogue with Stakeholders

Political commitment facilitates coordination by all relevant agencies and encourages implementation of tax reforms . Notably, in LICs where institutions are weak and large taxpayers could use their political connections to avoid compliance, high-level political commitment is critical to help contain resistance of vested interests. 43 Among the case studies, tax reform was apparently driven by high-level political commitment in some cases (e.g., Burkina Faso and Uganda). It is important to note, however, that political commitment is a necessary but not a sufficient condition for successful tax reform. Political commitment alone—without a properly designed reform strategy or reform measures matching institutional capacity—does not necessarily lead to successful outcomes. Country cases show that conditionality in IMF-supported programs helps promote national ownership of strong policies. In most country cases, the presence of an IMF-supported program often plays an important role in accelerating tax reforms, by helping overcome resistance, supporting discussions with key stakeholders, and facilitating implementation of reform measures.

Political commitment can still be secured in a weak institutional environment . Many of the country cases started their revenue reforms with weak administrative capacity/institutions (e.g., Burkina Faso). With political commitment, these countries stepped up tax reform efforts, often assisted by TA.

Social dialogue enhances buy-in from stakeholders . A buy-in from stakeholders would help secure political and social support for tax reform, as well as potentially improve design. Effective communication with stakeholders that emphasizes the intended benefits of reforms—or the cost of maintaining the status quo— can help mitigate resistance to reforms ( IMF, 2015a ). For instance, in Senegal, the government enhanced the likelihood of the tax reform being implemented and sustained by undertaking consultation with employers and labor unions.

• Tax Policy Reforms

What do these seven country cases teach us about how best to undertake tax policy reforms? While there is no one-size-fits-all solution, four lessons emerge that are generally in line with FAD advice.

Remove/reduce tax exemptions . Removing or curbing exemptions would enhance the tax base and increase tax revenues, while reducing the tax system’s complexity (to enable more efficient tax administration). Many countries incur a sizable loss of revenue through ill-designed exemptions, such as costly tax holidays and other incentives to attract investment. 44 Additionally, discretionary granting of exemptions provides opportunities for corruption. Five of the seven countries removed or reduced tax exemptions. Uganda reduced many exemptions for the VAT (several goods were removed from zero-rating). In the case of Mauritania, the exemptions on CIT were removed to enhance revenue by 1.3 percentage points of GDP. Rwanda revised the investment code to eliminate some exemptions and removed incentives granting VAT exemptions on imports for investment certificate holders. It should also be noted that, although removal of tax exemptions can be a done quickly (with support from key stakeholders), it is easy to reverse the reform.

Simplify the tax system . A simpler tax system, that is easy to understand, can be important in fostering taxpayer compliance, as seen in the reform examples in Burkina Faso and Senegal. Notably, simplicity of the tax system and legislation could improve tax administration in weak states that lack such basic institutions, such as security, and a well-functioning judicial system.

Reform indirect taxes on VAT and general (other) goods and services taxes . The VAT—though it would require thorough preparation—has proved to be an efficient and strong revenue booster: countries that introduce a VAT tend to raise more revenue than those without one ( Keen and Lockwood, 2010 ). The Gambia replaced a general sales tax with a VAT in 2013 to broaden the tax base and lift indirect tax revenues by 1–1.5 percent of GDP. Mauritania implemented VAT reforms (e.g., covering the mining sector, broadening the tax base, increasing the VAT registries) and improved VAT C-efficiency from 37 percent in 2009 to 72 percent in 2012. Maldives introduced the tourism sector goods and services tax (TGST) and the general goods and services tax (GGST) in 2011 to achieve a sizable increase in indirect taxes.

Reform indirect taxes on excises. Increasing excise taxes for specific goods (e.g., cigarettes, alcoholic beverages, and motor fuels) This could be an effective measure because such taxes can raise revenue rather quickly without fundamental changes to the tax system. 45 The fact that their relative inelasticity is heavier than normal taxation is also a rationale for reforming excise taxes. Furthermore, excises on these specific goods could work as corrective tools to alter individual behavior in a way that is socially desirable. For example, The Gambia introduced an excise tax on cigarettes, which increased tax revenue by 0.5 percent of GDP. Burkina Faso increased the excise tax for alcoholic beverages, as did Mauritania on tobacco.

• Revenue Administration Reforms

Successful revenue mobilization rests on broad-based strategies that recognize that what and whom to tax (tax policy) should go hand in hand with how to tax (revenue administration). It should be developed with the longer view in mind, as institutional changes happen only gradually.

In most case studies, revenue administration reforms featured prominently and covered a broad spectrum of legal, technical, and administrative measures, such as:

Enhancing management, governance, and human resources . Six of the seven countries implemented some management and governance changes. For example, headquarters design and monitoring functions were set up or refined in The Gambia, Rwanda, Senegal, and Uganda which improved capacity to design and monitor delivery of administrative programs. HR reforms, in Maldives and The Gambia for example, helped to support tax collection, including by hiring more qualified staff and investing in strengthening the technical skills of staff of revenue agencies.

Establishing or strengthening the segmentation of taxpayers . To properly manage tax compliance risk, the segmentation of taxpayers—taking into account different characteristics and compliance risks—is critical. Taxpayer segmentation improves the organization and operations of tax administration, beginning with the establishment and/or strengthening of the LTOs and MTOs. In Burkina Faso, Senegal, and Uganda, taxpayer segmentation approaches were expanded to the medium taxpayer segment through setting up of MTOs, initially in their capitals (Ouagadougou, Dakar and Kampala, respectively) and implementing appropriate compliance programs for this segment. As a result, filing and payment compliance was facilitated across this segment.

Enhancing compliance risk management . Identifying, assessing and mitigating compliance risks is important to support the functioning of the tax administration. Reforms should be comprehensive by targeting all segments and covering all domain of compliance risk management (registration, filing, payment, and reporting). Senegal, Rwanda, and Uganda established fundamental elements of a compliance management system, while Maldives launched an audit program to enhance tax compliance.

Introducing more modern business procedures leveraging on IT . Successful revenue mobilization hinges on managing information and leveraging the power of data to improve compliance and fight tax fraud. All seven countries studied have taken advantage of IT systems to advance their revenue mobilization reforms. Uganda, for instance, redesigned business processes and automated them using e-tax. Also, Maldives installed core IT systems, and e-filing/e-payment was implemented and used by large businesses for TGST, withholding tax, green tax, and remittance tax returns. Rwanda automated tax and customs administration, which facilitated an improvement in coordination between the tax and customs offices. In addition, Rwanda introduced electronic filing and implemented electronic registration which help to improve the registration process. In this context, IMF (2018a) also discusses the role of new technologies (that is, digitalization) to empower policymakers with quicker access to more reliable information and to enhance the tax base. It is important to stress, however, that IT alone is not enough. IT improvements will need to go hand in hand with advances in other administrative procedures to realize the full benefits ( IMF 2015b ).

Most country cases also tackle the challenge to reforming customs administration . Improving compliance and strengthening the customs clearance process can help to boost tax revenue. For instance, Burkina Faso used the Automated System for Customs Data to connect five additional border posts to improve customs clearance procedures and limit fraud. Customs reforms were also implemented in other cases such as, The Gambia and Rwanda.

A properly designed tax reform strategy can facilitate reform implementation, with tangible results . Such a strategy will help to identify the areas of reform needs, harmonize reforms among three tax system components (tax policy, administration, and legal framework), properly sequence reform measures, and facilitate the implementation. In Burkina Faso, a comprehensive tax reform strategy was adopted in early 2010 to streamline tax incentives and simplify income tax legislation. More recently, Uganda initiated a process to adopt a MTRS, involving the reforms of its tax system (tax policy, customs administration, and legal measures) to achieve its medium-target objective of raising tax revenues to 16 percent of GDP. 46

Identifying appropriate measures under such a strategy is essential . Revenue is not all that matters: it can be increased in ways that damage economic efficiency or the fairness of (and hence support for) the tax system. Denying VAT refunds, for instance, can increase tax collection and increase the VAT C-efficiency, but lead to distortive results, 47 turning the VAT in part into a tax on productive inputs. When tax reform is considered, more comprehensive analysis (e.g., country-specific circumstances, distributional impacts) would be warranted to identify a set of appropriate reform measures.

Comprehensive assessments will strengthen identification and prioritization of reform needs . Specifically, as an effective approach to assessing the relative strengths and weaknesses of a tax administration, TADAT has been established since 2014. 48 This helps to provide an objective assessment of the health of key components of a country’s system of tax administration. Rwanda and Uganda both benefitted from TADAT country assessments in 2015. Furthermore, a carefully-designed MTRS can be a useful guide to increasing revenue, and if effectively implemented, it would help to improve revenue performance in a relatively short period. An MTRS lays out a comprehensive medium-term revenue reform strategy, covering its policy, administration, and legal components. An increasing number of LICs are currently adopting (or considering to adopt) MTRSs.

Akitoby , Bernardin , Anja Baum , Clay Hackney , Olamide Harrison , Keyra Primus , and Veronique Salins , 2018 , “ Large Tax Revenue Mobilization Episodes in Emerging Markets Low-Income Countries: Lessons from a New Dataset ”, IMF Working Paper 18/234 , Washington, D.C. : International Monetary Fund .

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For the case studies, we have read through IMF country reports, while undertaking interviews with IMF staff who engaged with the country authorities on tax reforms. We greatly appreciate the information received during interviews with Debra Adams, Katherine Baer, Ana Lucia Coronel, Margaret Cotton, Yves De Santis, Ricardo Fenochietto, Eric Hutton, Herve Joly, Tetsuya Konuki, Boileau Loko, Mario Mansour, Amine Mati, Andrew Okello, Rene Ossa, Geremia Palomba, Patrick Petit, Laure Redifer, Stephane Schlotterbeck, and Olaf Unteroberdoerster. We are also grateful for helpful comments and suggestions from Hua Chai, Mark De Broeck, Nikolay Gueorguiev, Suhaib Kebhaj, Michael Keen, Vinette Keene, Roland Kpodar, Michel Lazare, Mario Mansour, Giovanni Melina, Muyangwa Muyangwa, Chris Papageorgiou, Saad Quayyum, Alex Segura-Ubiergo, Wei Shi, and Mousse Sow.

In 2016, non-tax revenues and grants were estimated at 2 percent of GDP and 3.7 percent of GDP, respectively in LICs.

SDGs target 17.1; strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection. In LICs, an average tax-to-GDP ratio of 16 percent is not sufficient to support the additional spending required to deliver on the SDG agenda ( IMF, 2019 ). Many countries, including LICs, would need to increase tax revenue by 5 percentage points of GDP in the next decade to fund the SDGs (see IMF, 2015c ; IMF, 2019 ).

For a flavor of the considerations that arise at the next level of detail, see for instance IMF (2012) and IMF (2015d) a series of ‘how to’ notes produced by the IMF, available at https://www.imf.org/en/Publications/SPROLLs/How-To-Notes .

In identifying the episodes of large tax revenue mobilization, Akitoby et al. (2018) focused on countries with more tangible tax revenue mobilization results; (i) countries that have increased their tax-to-GDP ratios by a minimum of 0.5 percent each year for at least three consecutive years (or 1.5 percent within three years); (ii) countries with beyond average increases in their tax-to-GDP ratios; and/or (iii) countries with better tax performance compared with peers in the same income group (utilizing the approach used in von Haldenwang and Ivanyna (2012) ).

The paper also uses updated data and includes developments up to 2017 for some countries.

See Mylonas, Victor, 2019 . “Revenue Analysis Tool (RAT)” IMF Technical Notes and Manuals (Forthcoming), International Monetary Fund.

Burkina Faso—Ex Post Assessment of Longer-Term Program Engagement (June 2013).

The excise tax rate for alcoholic beverage of 30 percent stayed below the maximum rate set under the directive of the WAEMU and the minimum rates in the WAEMU countries were set at a low level ( Mansour and Rota-Graziosi (2013) ).

The ministry of finance implemented measures to recover tax arrears. Between 2009–12, a performance contract (‘ ‘approche unité de recouvrement, AUR’’ ) with the tax administration—with providing additional resources and financial incentives to staff—was introduced to improve the collection of tax arrears and reduce them. This performance management contract was ended in 2012. Indeed, this type of measure is not consistent with modern approaches to strengthen revenue administration. A broader HR reform, including a review of remuneration levels is preferred.

Tax revenue declined sharply after 2013 owing to the political crisis in 2014. The political uncertainty leading up to resignation of the President caused a slowdown in growth (from 6.6 percent in 2013 to 4 percent in 2014). Lower growth and political uncertainty induced lower tax receipts. Following the general elections in late 2015, the political stability has resumed, and tax collection has been brought back to the pre-crisis level.

As of 2010, The Gambia ranked 14 out of 53 African countries in the World Bank’s Governance Indicators (political stability and absence of violence/terrorism).

The Gambia ranked 176 out of 183 countries in the World Bank’s 2011 Doing Business Report for ease of paying taxes.

A major difference between the VAT and the former sales tax was that under the VAT all supplies are considered taxable unless otherwise specified, while under the sales tax only those supplies specified were considered taxable. In addition to the broadening of the tax base, in general, a VAT gives firms, especially for those selling to other registered taxpayers, some incentive to become registered taxpayers VAT (in order to qualify to claim their credits for VAT paid), while the taxpayers do not face cumulative taxation (so they do not have to be concerned about whether or not to shift hidden and cumulative taxes forward to customers).

The introduction of the VAT was required for ECOWAS member states under the ECOWAS protocol. The VAT replaced the sales tax at the same rate of 15 percent.

IMF TA played an important role in the preparations for the VAT since 2009. In addition, a long-term resident advisor—financed by the European Union and back-stopped by the Fund—was placed around mid-2012 .

Many governments tie tobacco excise policy to revenue-raising and health objectives (IMF, 2016,”How to Note”), and The Gambia is no exception. The price per pack of cigarettes in The Gambia was well below the regional average of sub-Saharan Africa. As the low price encourages high rate of smoking which has negative health and economic consequences, the authorities decided to raise the price of cigarettes to the regional average level. The authorities consulted their international partners (e.g., WHO and the World Bank) to introduce a specific excise rate per pack (Note that basing taxes on weight of tobacco encourages the industry to produce lighter but not less harmful cigarettes to pay less taxes ( WHO, 2014 )).

For more details, see IMF country reports No.12/129 and No. 13/139.

The strong increase in fuel tax revenues played an important role in boosting the tax-to-GDP ratio during 2013–14. Administered retail prices were gradually raised, while international fuel price declined during the period. This led to a gradual increase in operational profits in the oil company and thus boosted tax revenues.

The tax-to-GDP ratio declined by almost 1 percentage point of GDP in 2016, reflecting import compression due to foreign exchange scarcity and low economic activity in the latter part of the year (in part reflecting the political turmoil).

The TGST levied an ad valorem tax on sales of tourism operators, mainly resorts, but also tourist vessels, services such as diving shops, spas, water sports facilities, and other similar items. It was initially set at 3.5 percent and subsequently raised to 6 percent in January 2012, 8 percent in January 2013, and 12 percent in November 2014. Maldives is often recognized as natural amenities of premium tourist destinations.

A broad-based tax on consumption expenditures was needed in the Maldives to offset the adverse revenue impact from trade liberalization. In light of this, a GST in the form of a broad-based, multi-stage, credit-invoice VAT was introduced. A multistage invoice-and-credit system of value-added taxation is a common method for implementing approximately uniform taxation of consumption, as increasing the standard VAT rate would lead to an equiproportionate increase in the ratio of VAT revenues relative to consumption (see Ebrill et al. 2001 ).

The BPT Act imposed a tax at the rate of 15 percent on profits exceeding MVR 500,000 (approx. USD 32,425) in a tax year. A lower rate of 5 percent is applicable to income generated outside of Maldives (that is, offshore operations of Maldivian companies).

The PRGF arrangement with the IMF was interrupted in October 2008 after the third review was completed in May 2008.

In 2006, Mauritania abolished all major excises (tobacco, nonalcoholic beverages, and cars) in anticipation of oil revenue by 2010. But revenues from oil turned out to be significantly lower than expected, and Mauritania started reintroducing these excises, initially at very low rates ( Mansour (2015) ).

Based on notes by O. Luca and; Dell’Erba and Gregoire Rota-Graziosi (Fiscal Affairs Department, IMF (2014))

C-efficiency is defined as the ratio of actual VAT collection to potential VAT if all final consumption were taxed at the current standard rate (14 percent), and so is an indicator of how far the VAT differs from a uniform tax, with full compliance, levied on all consumption.

According to IMF (2018b) on “The IMF and Fragile States: Eight African Country Cases”, IMF TA was instrumental in creating the Rwanda Revenue Authority, a key institution.

A hike in tax revenues in 2007 was largely driven by an increase in VAT on imports associated with some large FDI projects.

The tax rate on real estate transaction value was reduced significantly from 15 percent to 10 percent in December 2012 and to 5 percent in March 2015 to: (i) facilitate access to land; (ii) increase the mobilization of revenue by reducing cases of concealment or markdown in real estate transactions; and (iii) reduce transaction costs for both domestic and foreign investors.

The authorities strengthened the General Directorate of Taxes headquarters function by creating three sub-directorates: (i) case management service to plan and monitor field delivery services, (ii) enforce collection service to manage and monitor tax arrears, and (iii) audit service to carry out tax information management and to plan and monitor the execution of tax audits by the field delivery services.

Tax revenue decreased in 2013. This is due to the overall impact of the PIT reform (the elimination of the proportional PIT and the tax shield). This induced a decrease in revenue of about FCFA 30 billion. The adverse impact was temporary and tax revenue bounce back in 2014.

The analysis was undertaken by IMF TA in 2013 using the Revenue Administration—Gap Analysis Program (RA-GAP). The VAT gap is the difference between revenue actually collected and the potential revenues that could have been collected by perfectly enforcing the standard VAT rate applied to various classes of taxable items. The report is available at: https://www.ura.go.ug/Resources/…/INLB/Uganda%20RA-GAP%20RPT%20(2).pdf

The tax policy framework in Uganda was characterized by many exemptions and special treatments. In 2012, 21 items were subject to domestic zero-rating, and the VAT law included 73 exemptions.

In 2015, members of the EAC further increased excise duty on cigarettes to comply with the World Health Organization tobacco control regulations ( WHO, 2014 ).

For more details see Kangave et al . (2017) , ‘‘Taxing High Net Worth Individuals: Lessons from the Uganda Revenue Authority’s Experience’’, International Centre for Tax and Development.

The number of HNWI increased from 17 to 117; the numbers of filing in this segment increased from 13 to 78 percent and; and total taxes collected from this segment increased from USD 0.39 million to USD 5.5 million within a year. The share of revenue from HNWI in total tax revenue increased from 0.01 percent in 2015 to 0.2 percent in 2016.

Key areas of intervention focused on: (i) the definition and the characteristics of the MTO, (ii) the organizational structure and functions of the MTO and; (iii) defining compliance strategies for the MTO.

In light of potential scope to further raise tax revenues, Uganda has recently initiated a process that focuses on a comprehensive strategy—as opposed to a piecemeal approach— by adopting a Medium-Term Revenue Strategy (MTRS) in 2017. The MTRS involves the formulation and implementation of the tax reforms—tax policy, tax and customs administration and legal measures—to achieve its medium-target objective of raising tax revenues to 16 percent of GDP.

The Republic of Uganda, ‘‘National Development Plan – 2010/11–2014-15’’, April 2010.

It is important to note that all the countries had IMF programs during the reform period. As outlined in Crivelli and Gupta (2014) , IMF programs tend to have a positive effect on tax revenue, particularly in cases where revenue conditionality applies. This is because an increase in the use of revenue conditionality reflects greater reliance on IMF’s TA and the desire of countries to implement technical advice. Also, in some countries revenue mobilization efforts were in response to deteriorating fiscal conditions (e.g. Maldives, Mauritania, and Senegal).

These lessons need some cautions. We look at only successful cases, which limits how much one can conclude. Also, all cases except Senegal started from very low tax levels, which may have made revenues easier to raise. Furthermore, as not all of the measures adopted in these case studies would be seen as good practice for others, reform measures need to be tailored to country circumstances.

IMF (2016) notes that, for developing countries, an indispensable prerequisite to improving tax capacity is commitment from country authorities. More specifically, in view of “not entirely successful” experiences of early LTO initiatives in Anglophone African countries from the late 1990s, Kloeden (2011) points to weak political commitment, backlash from large taxpayers, and most commonly, internal tensions (caused by separate VAT and income tax departments) as causes of such outcomes.

For options for LICs’ effective and efficient use of tax incentives for investment, see IMF (2015b) .

While selective excise and broad-based consumption taxes are efficient sources of revenues, it is important to ensure that countries have access to strong safety nets that adequately protect vulnerable from associated price increases. However, discussing this issue is beyond the scope of this paper.

The importance of an MTRS is highlighted in the recent report prepared by the IMF, OECD, United Nations and World Bank Group (“ Enhancing the Effectiveness of External Support in Building Tax Capacity in Developing Countries ”, July 2016). ( http://www.oecd.org/ctp/enhancing-the-effectiveness-of-external-support-in-building-tax-capacity-in-developing-countries.pdf ).

The VAT C-efficiency can be improved by denying VAT refunds to exporters ( Keen, 2013 ).

See TADAT website ( http://www.tadat.org/index.html ) for details.

Same Series

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Case Study: Global Tax Deal

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What is the OECD Global Tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Deal and what impact will it have on U.S. and foreign multinationals?

Global taxation.

Global taxes in this case study refer to taxes levied on U.S. and foreign multinational companies. These companies my be headquartered in one country (and tax jurisdiction) but have operations such as manufacturing or sales in other countries and tax jurisdictions.

Some multinationals strategically place their operations in a way that minimizes their tax burden, or how much they owe in corporate income taxes (CIT) to the countries they operate in. Oftentimes, low-tax jurisdictions are part of these strategies to minimize CIT liability. This is what the term tax haven refers to.

The Base Erosion and Profit Shifting (BEPS) project in 2015 and later Digital Services Tax (DST) proposals which came on the scene in 2018 were attempts to change tax rules for multinational corporations and address cross-border tax avoidance.

Cross-border tax avoidance occurs when multinational companies seek low-tax jurisdictions or exploit mismatches between tax systems to reduce their overall tax burden. Countries that are reliant on the CIT suffer more from this type of avoidance, and the issue can only be fully addressed by countries working together to close gaps in their tax codes and limit the use of tax havens.

The OECD and G20 countries worked together to adopt an action plan to combat BEPS, with a focus on limiting the ability to avoid taxation. The 15-point plan also sought to avoid introducing double taxation Double taxation is when taxes are paid twice on the same dollar of income, regardless of whether that’s corporate or individual income. as a remedy to the tax avoidance.

DSTs were meant as temporary policies targeted at large, digitalized business models. By targeting the digital presence of a multinational tech company instead of the location of its physical offices (think streaming services, social media, or online retailers), governments saw an opportunity to catch lost global corporate income tax A corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses , with income reportable under the individual income tax . revenue generated by companies that operate worldwide but only technically owe taxes in a home country.

These tactics proved to fall short in targeting global taxation and instead created new trade conflicts.

In the last few years, the Organisation for Economic Co-operation and Development (OECD) has discussed a more permanent and effective plan to change tax rules for large companies and continue to limit targeted tax planning by multinationals. This plan was broken into two pillars: Pillar 1 is focused on changing where companies pay taxes, and Pillar 2 would establish a global minimum tax .

The OECD Global Tax Deal

In October 2021, more than 130 countries (over 90 percent of the global economy) agreed to set a minimum global corporate tax rate of 15 percent starting in 2023.

The Global Tax Deal is a significant shift in international tax rules. The OECD’s plan aims to reduce incentives for tax planning and avoidance by U.S. and foreign multinational companies by limiting tax competition and changing where companies pay taxes.

To achieve this, the proposal is divided into two independent plans: Pillar 1 and Pillar 2 .

OECD Pillar 1

Pillar 1 would expand a country’s taxing power to include a share of profits from companies that make sales in the country regardless of a company’s physical location. This would result in some companies paying more taxes in the countries where their customers or digital users are, even if the company has no permanent local establishment in that country.

For companies with global revenues of more than €20 billion (US $26.4 billion) and profitability above 10 percent, 25 percent of profits above 10 percent would be taxed according to a new formula based on where a company’s customers are located.

Pillar 1 would also include dispute resolution processes meant to improve tax certainty for companies.

OECD Pillar 2 – Global Minimum Tax

Pillar 2 of the Global Tax Deal would limit tax competition and the so-called “race to the bottom” on corporate tax rates. It would establish a minimum percentage for effective tax rates applied to cross-border investment by large multinational corporations that have a “significant economic footprint” across the world, or a global minimum tax . The proposed global minimum tax is 15 percent.

Pillar 2 includes three rules that apply to companies with more than €750 million ($991.9 million) in revenues.

• Income inclusion rule: determines when a company’s foreign income should be included in the parent (main) company’s taxable income Taxable income is the amount of income subject to tax , after deductions and exemptions . For both individuals and corporations, taxable income differs from—and is less than—gross income. .
• Under-taxed payments rule : allows a country to reject a deduction on cross-border payments to the parent company.
• Subject to tax rule: makes it possible for countries to tax inter-company payments that would be under-taxed.

According to initial analysis of the original proposals, Pillar 1 and Pillar 2 would increase the effective average tax rate The average tax rate is the total tax paid divided by taxable income . While marginal tax rates show the amount of tax paid on the next dollar earned, average tax rates show the overall share of income paid in taxes. by around 0.7 percent across all jurisdictions. Pillar 2, the global minimum tax, is responsible for the majority of this increase, accounting for 0.6 percent.

Pillar 2 also includes some carveouts. Companies would be able to exclude 5 percent of the value of their tangible assets (like buildings and machinery) and 5 percent of their salaries and wages from the minimum tax calculations.

Impact on U.S. & Foreign Multinationals

The plan would impact U.S. and foreign multinationals by:

• Limiting tax planning
• Increasing effective tax rates on cross-border investment
• Increasing taxes on earnings in low-tax jurisdictions
• Discouraging foreign direct investment (FDI)
• Impacting where companies hire and invest globally and domestically
• Slowing global economic growth
• Introducing additional tax complexity

Further Reading

Below are some resources regarding the global tax deal from Tax Foundation and other sources. Please conduct additional research on the case prior to discussion.

• International community strikes a ground-breaking tax deal for the digital age
• Over 130 countries clinch a deal that could radically reshape how companies are taxed
• What’s in the New Global Tax Agreement?
• What Do Global Minimum Tax Rules Mean for Corporate Tax Policies?
• BEPS Project Explanatory Statement

Reflect on the following questions:

• What is the problem(s)?
• How do these policies meet (or not meet) the Principles of Sound Tax Policy ?
• What general options are available to develop more sound policy that targets the issue at hand?
• Who are the stakeholders and what are their interests?
• How and why did previous attempts to address profit shifting fall short?

Home » Blog » 25 Key Income-tax Case Laws of the Year 2021 | Taxmann.com

25 Key Income-tax Case Laws of the Year 2021 | Taxmann.com

• Blog | Top Rulings 2021 | Income Tax |
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• Last Updated on 11 July, 2022

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The year 2021 was loaded with several significant Income-tax rulings a taxpayer and revenue will need to remember. Our editorial board has meticulously analysed all the judgments/orders throughout the year and reported over 1,400 judgments at taxmann.com. Every year we bring the list of top 25 cases reported at taxmann.com. The list for the year 2021 is given below.

1. Automatic vacation of stay granted by ITAT after the expiry of 365 days is unconstitutional: SC

Case Details: DCIT v. Pepsi Foods Ltd. Citation: [2021] 126 taxmann.com 69 (SC)

The Supreme Court has held that the object of the third proviso to Section 254(2A) is an automatic vacation of a stay that has been granted on the completion of 365 days. This automatic vacation is granted even if the assessee is not responsible for the delay caused in hearing the appeal. Such object is being discriminatory and is liable to be struck down as violating Article 14 of the Constitution of India.

Also, the said proviso would result in the automatic vacation even if the Appellate Tribunal could not take up the appeal in time for no fault of the assessee. Further, the vacation of stay in favour of the revenue would ensue even if it is responsible for the delay in hearing the appeal. In this sense, the said proviso is also manifestly arbitrary as capricious, irrational and disproportionate so far as the assessee is concerned.

Thus, the third proviso to Section 254(2A) will now be read without the word “even” and the words “is not” added after the words “delay in disposing of the appeal”. Any order of stay shall stand vacated after the expiry of the period mentioned in the Section only if the delay in disposing of the appeal is attributable to the assessee.

2. Supreme Court rules that ITAT has no power to recall its order even if submissions were filed on merits

Case Details: CIT v. Reliance Telecom Ltd. Citation: [2021] 133 taxmann.com 41 (SC)

The Supreme Court held that the order passed by the ITAT recalling its earlier order is beyond the scope and ambit of the powers under Section 254(2). In exercise of powers under Section 254(2), the ITAT may amend any order passed by it to rectify any mistake apparent from the record only. The Tribunal cannot revisit its earlier order and go into detail on merits.

The powers under Section 254(2) are only to correct and/or rectify the mistake apparent from the record. Merely because the assessee might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2). In the instant case, a detailed order was already passed by the ITAT, which was held in favour of the revenue. Therefore, the said order could not have been recalled by ITAT in the exercise of powers under Section 254(2). If the assessee believed that the order passed by the ITAT was erroneous, either on facts or in law, the only remedy available was to prefer the appeal before the High Court.

3. BCCI isn’t engaged in commercial activities as funds generated from IPL are used for promoting cricket: ITAT

Case Details: Board of Control for Cricket in India v. PCIT Citation: [2021] 132 taxmann.com 132 (Mumbai – Trib.)

The Mumbai Tribunal has allowed relief to BCCI and directed CIT to grant registration under Section 12A citing that BCCI is still promoting the game of cricket. The Court has ruled that the prime character of popularising cricket is not lost just because a sports tournament is structured to make it more popular, resulting in more paying sponsorship and greater mobilisation of resources.

The Court rules that the basic character of popularising cricket is not lost just because a sports tournament is structured in such a manner to make it more popular, resulting in more paying sponsorship and greater mobilisation of resources.

It is indeed possible that the predominant object remains the promotion of cricket but that activity is done in a more effective and financially optimal manner. There is no conflict in the cricket becoming more popular and the cricket becoming more entertaining after the introduction of the IPL tournament.

As long as the object of promoting cricket remains intact, the assessee cannot be said to be not following the object of promoting cricket. It will not impact the eligibility of the assessee just because the operational model of a cricket tournament, whether IPL or any other tournament, is more entertaining, more economically viable, and provides economic opportunities to all those associated with that tournament.

All the funds available at the disposal of BCCI, including the additional funds generated by holding IPL tournaments, are employed for promoting cricket, and that matters. Improvising the game’s rules, adding entertainment value, and making it economically attractive may be a purist’s nightmare. Still, the same factors can also be viewed as radical and innovative ideas to popularise a game.

Therefore, the assessee is entitled to the continuance of its registration under Section 12A, and the order passed by the CIT stands quashed.

4. The Delhi High Court quashes all re-assessment notices issued under the old provision

Case Details: Mon Mohan Kohli v. ACIT Citation: [2021] 133 taxmann.com 166 (Delhi)

The Delhi High Court has quashed more than 1,300 writ petitions challenging re-assessment notice issued by the Income-tax Dept. after 31-03-2021, under the old regime. The Court held that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 doesn’t empower the Government to extend the applicability of erstwhile provisions of re-assessment.

The legislature has introduced new provisions of Sections 147 to 151 by the Finance Act, 2021 with effect from 01-04-2021. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TLA 2020) empowers the Government to extend only the time limits. It does not delegate the power to legislate on provisions to be followed for initiation of re-assessment proceedings. The TLA 2020 does not give power to Government to extend the erstwhile Sections 147 to 151 beyond 31-03-2021 or defer the operation of substituted provisions enacted by the Finance Act, 2021.

Consequently, the impugned Explanations in the Notifications dated 31-03-2021 and 27-04-2021 are not conditional legislation and are beyond the power delegated to the Government and ultra vires the TLA 2020.

Revenue cannot rely on Covid-19 for contending that the new provisions Sections 147 to 151 should not operate between 01-04-2020 to 30-06-2021 as Parliament was fully aware of Covid-19 Pandemic when it passed the Finance Act, 2021. Thus, Explanations A(a)(ii)/A(b) to the Notifications dated 31-03-2021 and 27-04-2021 are declared to be ultra vires the TLA 2020 and are therefore bad in law, null and void. Thus, all re-assessment notices issued under old provisions of Section 148 are quashed.

5. ‘iPad’ may have some computing functions, but it isn’t a computer for higher depreciation: ITAT

Case Details: Kohinoor Indian (P.) Ltd. v. ACIT Citation: [2021] 129 taxmann.com 396 (Amritsar – Trib.)

The Amritsar Tribunal has ruled that the predominant purpose of the iPad is communication, and it is not a computing device. Its main features are email, WhatsApp, Facetime calls, music, films, etc. Though the iPad may discharge some of the functions of computers, it is not a substitution for computers or laptops. In common parlance, the iPad is considered as communicating device with some additional features of a computer. Further, apple stores do not sell the iPad as a computer device, but rather, it is selling it as communicating/entertainment device. Another reason the iPad can be held as a communication device is it has an IMEI number. Though the assessee had denied having an IMEI number, no concrete records have been produced on record in this regard. Accordingly, ITAT held that the iPad is not a computer. Hence, depreciation is applicable at a lower rate.

6. ITAT defines the meaning of ‘set aside’ and directs that AO can’t do fresh assessment if assessment order was set aside by ITAT

Case Details: Jaya Prakash v. ITO Citation: [2021] 133 taxmann.com 189 (Bangalore – Trib.)

The Tribunal had set aside the assessment framed by AO on the basis of Form 26AS. After that, Assessing Officer (AO) initiated a fresh assessment considering the remarks made by Tribunal in its order. The assessee filed appeal contended that the AO misunderstood the order of the Tribunal.

The AO believed that the disputed issue was remitted to him to do a fresh assessment. However, there was no such direction issued by the Tribunal. The Tribunal held that it is essential to clarify the meaning of the word ‘set aside’. As per Black’s Law Dictionary, Sixth Edition at page 1372, the words “set aside” means: ‘To reverse, vacate, cancel, annul or revoke a judgment, order, etc.’ Further, the meaning of the word ‘annul’ on page 90 of the Black’s Law Dictionary has given as under:

“To reduce to nothing; annihilate; obliterate; to make void or of no effect; to nullify; to abolish; to do away with. To cancel; destroy; abrogate. To annul a judgment or judicial proceeding is to deprive it of all force and operation, either ab initio or prospectively as to future transaction.”

Furthermore, the meaning of the word ‘annulment’ is given on page 91 as under: “To nullify, to abolish, to make void by the competent authority. An “annulment” defers from a divorce in that a divorce terminates a legal status, whereas an annulment establishes that a marital status never existed. Whealton v. Whealton, 67 Cal. 2 d 656, 63 Cal Rptr. 291, 294, 432 P. 2 d 979. Grounds and procedures for annulment of marriage are governed by State Statutes.”

Thus, the word ‘set aside’ means that the earlier assessment order has been quashed, and there was no direction by the Tribunal to do any fresh assessment on the same issue. When there is no direction to do the fresh assessment and the earlier assessment year has been set aside, the AO cannot take advantage of passing remark/observation on the Tribunal order to frame fresh asst. on the same issue.

7. Non-deduction of tax on the purchase of assets cannot take away the right to claim depreciation

Case Details: PCIT v. Tally Solutions (P.) Ltd. Citation: [2021] 123 taxmann.com 21 (Karnataka)

The Karnataka High Court held that Section 40(a)(i) and 40(a)(ia) provide for disallowance only in respect of expenditure, which is revenue in nature. Therefore, the provision does not apply to the assessee claiming depreciation, which is not an expenditure but an allowance.

The depreciation is not an outgoing expenditure, and therefore, provisions of Section 40(a)(i) and 40(a)(ia) are not applicable. In the absence of any requirement of law for making a deduction of tax out of expenditure, which has been capitalised and no amount was claimed as revenue expenditure, no disallowance would be made.

It is also pertinent to note that depreciation is a statutory deduction available to the assessee on an asset, which is wholly or partly owned by it and used for business or profession. The depreciation is an allowance and not an expenditure, loss or trading liability.

8. Section 50C is not applicable on the transfer of leasehold rights in land and building

Case Details: Noida Cyber Park (P.) Ltd. v. ITO Citation: [2021] 123 taxmann.com 213 (Delhi – Trib.)

The Delhi ITAT held that the expression ‘land or building’ in its coverage is quite distinct from the expression ‘any right in land or building’. The legislature, in its wisdom, has used the expression ‘land or building or both’ in Section 50C, and not the expression ‘any right in land or building’. Therefore, the express use of one expression would exclude the other. The Hon’ble Supreme Court has supported these legal premises in the case of GVK Industries Ltd. v. ITO [2011] 197 Taxman 337 (SC). Thus, transfer of leasehold rights does not warrant invoking Section 50C as the said property is not of the nature covered by Section 50C.

9. No denial of LTC exemption even if travel is not undertaken through shortest route: Mumbai ITAT

Case Details: State Bank of India v. ACIT Citation: [2021] 123 taxmann.com 447 (Mumbai – Trib.)

The Mumbai ITAT held that a plain reading of Section 10(5) read with Rule 2B does not indicate any requirement of taking the shortest route for travelling to any place in India. It does not restrict the route to be adopted for going to such a destination. However, the statutory provisions do envisage the possibility of someone taking a route other than the shortest route. It is implicit in the restriction that only an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination is eligible for exemption under section 10(5).

There is no specific bar in the law on the travel, eligible for exemption under Section 10(5), involving a sector of overseas travel. In the absence of such a bar, the assessee couldn’t be faulted for not inferring such a bar. The reimbursement was restricted to airfare, on the national carrier, by the shortest route, as was the mandate of Rule 2B. As part of that composite itinerary involving a foreign sector as well, the employee had travelled to the destination in India.

The guidance available to the assessee indicates that, in such a situation, the exemption under section 10(5) was available to the employee. Such exemption shall be available only to the extent of farthest Indian destination by the shortest route, and that was what assessee had allowed. In the light of this analysis of the legal position and the factual backdrop, whatever may be the position with respect to taxability of such a leave travel concession in the hands of the employee, the assessee could not be faulted for not deducting tax at source from LTC allowed by it to employees.

10. AO can’t import the definition of ‘Relative’ from Section 56 to invoke Section 40A(2)

Case Details: Rajesh Bajaj v. DCIT Citation: [2021] 124 taxmann.com 69 (Allahabad – Trib.)

The Allahabad ITAT held that the definition of the term ‘relative’ provided under section 2(41) does not cover the sister-in-law of the assessee. However, the sister-in-law of the assessee is covered within the definition of the term ‘relative’ as provided under Section 56(2). Since the said definition is only for the relevant clause provided under Section 56(2), therefore, the same couldn’t be applied in respect of provisions of Section 40A(2) when a general definition of the term ‘relative’ is provided under Section 2(41). Hence, the provisions of Section 40A(2) couldn’t be invoked in respect of a transaction of payment of rent to persons who are not falling in the definition in term of ‘relative’ provided under Section 2(41).

11. Gain received on personal loan due to forex fluctuation is a capital receipt not liable to tax: ITAT

Case Details: Aditya Balkrishna Shroff v. ITO Citation: [2021] 127 taxmann.com 343 (Mumbai – Trib.)

The Mumbai ITAT held that even before deciding whether the gain was of income nature, AO had proceeded to put the cart before the horse by deciding the head under which the income is to be taxed. He mixed up the concept of income with the concept of gains. In the case of Shaw Wallace & Co Ltd v. DCIT [2001] 117 Taxman 192 (Calcutta), the ITAT held that a capital receipt, in principle, is outside the scope of income chargeable to tax. A receipt cannot be taxed as income unless it is in the nature of a revenue receipt or is specifically brought within the ambit of income by way of specific provisions of the Income-tax Act. AO had accepted that the transaction was in the capital field and proceeded to hold that income arising out of the loan transaction was required to be treated as interest or income from other sources. If the transaction is in the capital field, the question of its taxability does not arise unless there is a specific provision of bringing such a receipt to tax. In any case, where the loan was foreign currency-denominated and the amount advanced as loan, as also received back as repayment, was precisely the same, there was no question of interest component at all.

The benefit or gain received by the assessee was on account of foreign exchange fluctuation. Since the foreign exchange fluctuation was with respect to a transaction in the capital field, the foreign exchange fluctuation receipt itself turned out to be a capital receipt.

12. AO rightly taxed fake agricultural income disclosed by a student in ITR to get an education loan: ITAT

Case Details: Talluri Vijay Rahul v. ITO Citation: [2021] 127 taxmann.com 697 (Hyderabad – Trib.)

The assessee filed an appeal before the CIT(A) and said that he was a student during the relevant year and did not derive any income. The ITR was filed under the guidance and advice of a tax practitioner who advised that if agricultural income were offered in ITR, he would get an educational loan from the bank. Since he did not have any source of income, additions made by AO were without any basis and should be deleted. However, the CIT(A) did not accept the assessee’s contention and upheld the order of AO. Aggrieved-assessee filed the appeal before the Tribunal.

The Tribunal held that assessee’s contention that he had been misguided by his tax practitioner year after year to declare agricultural income based on false documents couldn’t be accepted. The returns of income were not filed at one point but were filed year after year; therefore, the assessee’s bona fides were not proved. Therefore, AO had rightly treated fake agricultural income shown in ITR as ‘income from other sources’ and brought it to tax. Assessee’s grounds of appeal were liable to be rejected.

13. Amendment by the Finance Act, 2021 disallowing employee’s contribution to ESI/PF is applicable prospectively

Case Details: Salzgitter Hydraulics (P.) Ltd. v. ITO Citation: [2021] 128 taxmann.com 192 (Hyderabad – Trib.)

The assessee filed the appeal against the order of the Commissioner of Income-tax (Appeals) [CIT(A)]. Assessee-company had contended that the CIT(A) erred in sustaining the addition on account of employees’ contribution to PF & ESI without considering that they were paid before the due date of filing the return of income (ITR). In contrast, AO’s stand was that the sum paid after the due date prescribed in the corresponding statutes should not be allowed as a deduction.

It should be noted that the legislature has incorporated necessary amendments in Sections 36(va) and Section 43B, vide Finance Act, 2021. Thus, after the amendment, the deduction of an employee’s contributions to ESI/PF is allowed only if the same is paid within the due date prescribed in corresponding statutes.

The memorandum explaining the Finance Bill, 2021 has stated that the given amendments are effective from 01-04-2021. Thus, it can be concluded that amendments are clarificatory and are applicable only with prospective effect from 1-4-2021.

14. Assessee can raise contention before ITAT without filing cross-objections on issues related to question of law: HC

Case Details: Peter Vaz v. CIT Citation: [2021] 128 taxmann.com 180 (Bombay)

The Bombay High Court held that the Tribunal should not have stopped the assessee from raising the issue in appeals instituted by revenue without the necessity of filing any cross objections when it concluded that issues raised in cross-objection were legal issues. Tribunal had not focused on the issue of whether there was sufficient cause for explaining 248 days delay in instituting cross-objections but rather had faulted assessees for not raising the issue of non-compliance with jurisdictional parameters. These were not relevant considerations when deciding whether sufficient cause was shown to explain 248 days delay in instituting cross-objections.

Therefore, the matter was to be remanded to Tribunal for fresh consideration of appeals instituted by revenue after permitting assessees to raise the issue of non-compliance within jurisdictional parameters of Section 153C.

15. AO can’t recover taxes from assessee if tax deducted on his income wasn’t deposited by deductor

Case Details: Ashok Kumar B. Chowatia v. JCIT Citation: [2021] 128 taxmann.com 230 (Madras)

The Madras High Court held that to the extent tax was deducted by the deductor and not remitted by him to the Income-tax Department, recovery can be only directed against deductor as he was the assessee-in-default. Deductee couldn’t be made to pay tax two times on same income, and recovery of such tax deducted but not remitted by deductor has to be recovered from him only.

Accordingly, the Madras High Court quashed the demand notices issued against the assessee. Further, it was made clear that to the extent tax was deducted but not remitted, no demand shall be made against the assessee. If the deductor had failed to remit the tax so deducted, it was open to the department to recover the same from the deductor in the manner known to law. Balance of tax, if any, which had escaped payment alone could be recovered from the assessee by issuing a suitable notice under the provisions of the Income-tax Act, 1961.

16. Section 24(b) does not mandate possession of the property to claim a deduction of interest on housing loan: ITAT

Case Details: Abeezar Faizullabhoy v. CIT Citation: [2021] 130 taxmann.com 156 (Mumbai – Trib.)

The Mumbai Tribunal has held that as far as the determination of the annual lettable value of a property is concerned, Section 22 read with Section 23 depends on the ownership of the property, irrespective of whether the assessee has taken possession of the same or not.

Further, as per the literal interpretation of Section 24(b), there is no bar on claiming a deduction of interest payable on a loan taken for purchasing a residential property, even if the possession of the same might not have been vested with him. Thus, the interest that was admittedly paid on the capital borrowed for acquiring the property will be allowed under Section 24(b) even if the assessee has not yet acquired possession of the property.

17. CSR expenses incurred by making donations are eligible for deduction under Section 80G: ITAT

Case Details: JMS Mining (P.) Ltd. v. PCIT Citation: [2021] 130 taxmann.com 118 (Kolkata – Trib.)

The Tribunal held that from a plain reading of the Explanation 2 to Section 37(1), expenditure incurred towards CSR activities shall not be allowed as ‘business expenditure’ and shall be deemed to have not been incurred for business. The embargo created by this Explanation 2 inserted in Section 37 by the Finance (No. 2) Act, 2014 was to deny the deduction for CSR expenses incurred by companies, as and by way of regular business expenditure while computing’ income under the head of business and profession. It can be seen that this Explanation 2 to Section 37(1), which denies a deduction for CSR expenses by way of business expenditure, applies only to the extent of computing business income under Chapter IV-D. The said Explanation cannot be extended or imported to CSR contributions which are otherwise eligible for deduction under any other provision or Chapter, to say donations made by a charitable trust registered under Section 80G. Further, the Parliament intended certain restrictions to only CSR expenditure regarding two donations included by an assessee as CSR expenditure, i.e., Swachh Bharat Kosh and Clean Ganga Fund. It has impliedly not made any prohibition/restriction in respect of the claim of CSR expenses in other cases if it is otherwise eligible under Section 80G. In this context, it was found that the assessee had donated by RTGS through the bank, which was received by Shree Charity Trust, which was approved under Section 80G(5)(vi). Further, the assessee had made payment to Pt. Jashraj Music Academy Trust, which was also approved under Section 80G(5)(vi). Therefore, the assessee’s claim for deduction of CSR expenses/contribution under Section 80G was to be allowed.

18. Set-off of losses couldn’t be denied just because assessment of year in which loss was suffered is pending

Case Details: Shelf Drilling Ron Tappmeyer Ltd. v. DCIT Citation: [2021] 123 taxmann.com 49 (Mumbai – Trib.)

The assessee claimed set-off of unabsorbed business losses pertaining to a year in subsequent years. AO declined the claim for set off on the ground that the assessment of the year in which such loss was suffered was still pending. It was contended that the scheme of the Income-tax Act does not visualise any action of declining set off on the part of AO till the assessment is finalised. No matter how desirable such a provision could theoretically be justified, it does not exist in the law. The action of AO in declining the set-off of the carried forward losses was thus without the authority of law and must be vacated.

On the other hand, revenue contended that if the assessee were allowed to set off of this loss in the subsequent years, the assessee would become eligible for a refund of taxes. Consequently, legitimate interests of revenue will be prejudiced by allowing such refunds. Thus revenue urges to defer a decision on this matter till the time the remanded assessment is finalised.

The Mumbai Tribunal held that the assessee’s claim for set-off of losses, if otherwise admissible, could not be denied on the mere fact that the assessment for the year in which such loss was suffered is pending.

19. AO can’t disregard a transaction just because it results in tax advantage to the assessee

Case Details: Michael E Desa v ITO Citation: [2021] 130 taxmann.com 314 (Mumbai – Trib.)

The Mumbai Tribunal has justified the action of the assessee in booking loss in the year in which he had earned profit from another transaction to enable him to set-off the losses. The Tribunal held that it is legitimate tax planning without using colourable devices. It was held that the benefit of long-term capital loss could not be declined to the assessee, only on the ground that if the assessee had not taken these proactive measures, he would have paid more taxes. The assessee may end up saving taxes, but that is perfectly legitimate.

The AO cannot disregard a transaction just because it results in a tax advantage to the assessee. Just as much as we cannot legitimise and glorify tax evasion through colorable devices and tax shelters, we cannot also deprecate and disapprove genuine tax planning within the framework of the law. The line of demarcation between what is permissible tax planning and what turns into impermissible tax avoidance may be somewhat thin, but that cannot be excuse enough for the tax authorities to err on the side of excessive caution. Thus, the AO was directed to allow set-off of this long-term capital loss on the sale of shares in VCAM against the long-term capital gains on the sale of the property.

20. Sum reflected in Form 26AS can’t be taxed unless it was established that the assessee was the actual beneficiary

Case Details: Dr Swati Mahesh Vinchurkar v. DCIT Citation: [2021] 130 taxmann.com 320 (Surat-Trib.)

The Surat Tribunal has ruled that a payment reflected in Form-26AS could not be brought to tax if it could not be established that the assessee was the actual beneficiary of said payment. Once the assessee denied the transaction reflected in Form 26AS, the onus was on the revenue to establish that the assessee had entered into any such transactions. It was held that the assessee had no concern or casual connection or any relation with the alleged deductor. The entry of TDS in the Form-26AS issued to the assessee was wrong. The assessee submitted her response to CPC Bangalore, and before CIT(A), she specifically denied having earned such income. Further, it was submitted by the assessee that it is far from the imagination that the assessee served such organisation, which is 1,000 KM away from the residence of the assessee.

Once the assessee denied such transaction, the onus was on the revenue to establish that the assessee had entered into any such transactions. The CIT(A) had not made any verification or tried to verify such transactions. There was the possibility of entering the wrong PAN, which belonged to the assessee, and the assessee had been unnecessarily put under mental pressure by making such additions despite denying such income. Thus, addition merely based on TDS reflected in the Form-26AS, ignoring the submissions of the assessee, was liable to be deleted.

21. CBDT considering modification in faceless appeal scheme, 2020

Case Details: Central Board Of Direct Taxes v. Lakshya Budhiraja Citation: [2021] 131 taxmann.com 51 (SC)

The assessee challenged the Faceless Appeal Scheme, 2020, alleging that the scheme was discriminatory, arbitrary, and illegal to the extent it provided a virtual hearing as per circumstances to be approved by administrative authorities under Income-tax Act, 1961. The instant petition was filed to transfer cases challenging Faceless Appeal Scheme, 2020, from High Courts to the instant Supreme Court.

The Additional Solicitor General submitted before the Supreme Court that the department is having a second look at the matter on the issue of Faceless Appeal Scheme, 2020. He may be granted a period of three months as it may require changing the law. Considering the submission, the Supreme Court has deferred the matter for three months as sought by the learned Additional Solicitor General.

Editor’s Note: The Central Board of Direct Taxes (CBDT) has notified the Faceless Appeal Scheme 2021, effective from 28-12-2021. The new scheme is notified in supersession of the earlier Faceless Appeal Scheme, 2020. The new scheme has replaced the word ‘may’ with ‘shall’ with respect to allowing requests for a personal hearing. Thus, it would be mandatory for the Commissioner (Appeals) to allow a personal hearing if the taxpayer requests it during e-proceedings.

22. Furnishing of written submissions cannot be interpreted that assessee has waived off his right to be heard

Case Details: Sukhvinder Pal Singh v. ITO Citation: [2021] 131 taxmann.com 203 (Delhi – Trib.)

The Delhi Tribunal has quashed the argument of revenue that it should be treated that assessee had waived off right to be heard if he has made available written submissions to First Appellate Authority.

The Delhi Tribunal held that if an adjudicating authority finds the written submissions are not sufficient and complete, it should put this deficiency to the notice of the assessee. Without any specific communication to this effect, it cannot be said that an adequate opportunity of being heard has been granted to the assessee.

Once it is seen that the submissions were without supporting documentary evidence, then in an adequate representation, such an opportunity necessarily needs to be provided. In the instant case, no such effort appeared to have been made. It is well settled that mere making available of the written submissions by an assessee cannot be unitedly so interpreted to mean that right to be heard has been waived off.

The onus to ensure that the waiver was made with full and conscious knowledge of the existence of this sacrosanct right rests on the shoulders of the adjudicating authority to ensure that the assessee stays informed of his rights and consequent duties. There is nothing on record to show that the First Appellate Authority can be justifiably held to form the view in the facts of the present case that the assessee was so informed of its rights and still chose to waive them.

23. Interest paid by a builder on failure to construct a flat is compensatory in nature which is out of the preview of Sec. 194A: High Court

Case Details: Sainath Rajkumar Sarode v. State of Maharashtra Citation: [2021] 131 taxmann.com 332 (Bombay)

The Bombay High Court has given an important ruling on the applicability of TDS provisions on the interest received by the buyer as compensation from the builder. The Court has ruled that no tax shall be deducted under Section 194A from interest paid by the builder while refunding the advance to the buyer on its failure to hand over possession of the flat.

It was held that the term ‘interest’ is defined under Section 2(28A) of the Income-tax Act. From such definition, it appears that the term ‘interest’ has been made entirely relatable to money borrowed or debt incurred and various gradations of rights and obligations arising from either of the two.

In the instant case, the assessee had not given the money to the builder by way of deposit, nor had the builder borrowed the amount from the assessee. The sum paid to the assessee was a refund of the advance given to the builder. The interest was paid for damages suffered by the assessee on failure in delivering the flats. Since the payment couldn’t establish a debtor-creditor relationship between the assessee and the builder, the said sum or any part thereof cannot be liable for tax deduction under the relevant provisions of the Act. Therefore, the provisions of Section 194A were not applicable, and the builder was wrong in deducting the TDS from the interest payable to the assessee.

24. ITAT quashes revisionary order initiated on the basis of Cyrus Mistry’s allegations against ‘Tata Trust’

Case Details: Sir Dorabji Tata Trust v. DCIT Citation: [2020] 122 taxmann.com 274 (Mumbai – Trib.)

The Mumbai Tribunal held that a receipt of some inputs at the last minute from a third party could not extend the time limit for completion of assessment under section 143(3). AO received additional material just six working days before completing the assessment, and these six days were less than sufficient for the basic exercise of investigation. Thus, it was clear that AO was not in a position to examine the correctness or otherwise of the contents of material received from Cyrus Mistry in the course of completion of the scrutiny assessment proceedings.

It must be noted that it was always open to the AO to examine the material so coming into his possession and take action later. For example, AO can initiate re-assessment proceedings under Section 147 in the event of his concluding that income has escaped assessment.

Therefore, a prima facie view taken by AO cannot be enough to decline the assessee certain tax treatment which has been given to the assessee all along for decades. Still, it can indeed be a reason enough to leave a window for appropriate action being taken against the assessee, if so warranted- and that is exactly what the Assessing Officer has done.

25. No Section 68 additions if accounts are manipulated by bogus entries without any actual flow of cash

Case Details: Rich Paints Ltd. v. ITO Citation: [2021] 123 taxmann.com 40 (Ahmedabad – Trib.)

The ITAT eld that section 68 creates a legal fiction based on which an entry in the books of account is deemed to be the income of the assessee chargeable to tax in the event the assessee fails to discharge the onus imposed upon under said provision. However, such legal fiction can be applied in the case of actual transactions incorporated in the books and not be applied to the transactions that are merely book entries and represent the fake transactions, having no substance.

In the instant case, there was no cash inflow to enhance the share capital. Such enhancement in the share capital represents merely a book entry based on manipulating the accounts with the collaboration of bank staff. Thus, such cash credit was nothing but represented the bogus/fictitious entries after manipulation in the accounts. The assessee had used a fraudulent device to show the share capital in the books of account in order to comply with the SEBI Guidelines for bringing the public issue. Thus, when the transaction was not based on substance, the question of discharging the onus imposed under section 68 does not arise, and the assessee cannot be held a defaulter.

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When engaging with new clients we have found that they are commonly missing substantial tax saving opportunities because their previous the tax preparer’s approach can be too simple.

Clearstead is able to review a client’s portfolio: drilling down and picking apart every aspect of a client’s finances to find ways to leverage and build income. As part of our process, Clearstead’s tax specialists look at prior tax returns to determine whether a more comprehensive planning and compliance plan could benefit a client. By untangling prior filings, Clearstead could identify undetected savings.

IN SOME CASES WE HAVE OPPORTUNITIES TO EXCLUDE INCOME FROM TAXES IMPOSED BY THE AFFORDABLE CARE ACT.  THIS CAN BE AN AREA WHERE PRIVATE EQUITY CLIENTS FREQUENTLY PAY SIGNIFICANT TAXES ON INCOME GENERATED FROM THEIR FIRMS.

By implementing filing strategies that minimize taxes, our clients can potentially keep more assets in their accounts and reduce the amount investments they have to sell to pay taxes. It’s an example of how our firm’s comprehensive, service-focused approach can benefit clients and captures opportunities that can go undetected when different financial planning functions – especially taxes – are outsourced.

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Other hidden opportunities might include the small business stock capital gains exclusion. In these situations, a client might invest in a small C corporation, hold it for a period of time, and then sell the stock. The IRS code allows for exclusions of 50 to 100 percent of that gain depending on when it was bought and when it was sold. This type of analysis could create savings worth thousands of dollars by amending tax returns.

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We are also looking at itemized deductions that will be lost under the new tax code and creating strategies to help offset those losses.

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Human Rights Explained: Case Studies

Case studies: complaints about australia to the human rights committee, sexuality under the iccpr  , human rights committee communication no. 488/1992 (toonen v australia).

In 1991, Nicholas Toonen, a homosexual man from Tasmania, sent a communication to the Human Rights Committee. At that time homosexual sex was criminalized in Tasmania. Toonen argued that this violated his right to privacy under Article 17 of the International Covenant on Civil and Political Rights (ICCPR). He also argued that because the law discriminated against homosexuals on the basis of their sexuality, it violated Article 26. As a result of his complaint to the Human Rights Committee, Toonen lost his job as General Manager of the Tasmanian AIDS Council (Inc), because the Tasmanian Government threatened to withdraw the Council’s funding unless Toonen was fired. The Human Rights Committee did not consider Toonen’s communication until 1994, but it ultimately agreed that because of Tasmania’s law, Australia was in breach of the obligations under the treaty. In response to the Commission’s view, the Commonwealth Government passed a law overriding Tasmania’s criminalization of homosexual sex.

Human Rights Committee Communication No. 941/2000 (Young v Australia)

In 1999, Mr Edward Young took a complaint against Australia to the Human Rights Committee. Under the current Australian veterans’ entitlements laws, same-sex couples are not entitled to the same veterans pensions as opposite-sex couples. The Committee found that Mr Young had been discriminated against under Article 26 of the ICCPR and was entitled to an effective remedy, including the reconsideration of his pension application. The Committee noted that the State party [Australia] is obliged to ensure that similar violations of the Covenant do not occur in the future.

Human Rights Committee Communication No. 560/1993 (A v Australia)

In 1993 a Cambodian asylum seeker, identified only as A, complained to the Human Rights Committee that Australia had violated his rights under the ICCPR by detaining him in immigration detention for more than four years. The Human Rights Committee agreed that Australia had violated Article 9 of the Convention because A had been subject to arbitrary detention and denied an effective opportunity to have the lawfulness of his detention reviewed by a court. The Committee stated that Australia should pay compensation to A, but unlike in the Toonen case, the Australian Government rejected the Human Rights Committee’s view and refused to pay compensation to A. In most subsequent cases where the Human Rights Committee has found that Australia has violated the ICCPR, the Australian Government has rejected those views. [1]

Human Rights Committee Communication No. 1050/2002 (D & E v Australia)

In 2002 an Iranian family, including two young children, made a complaint to the Human Rights Committee that Australia had violated their right to be protected from arbitrary detention under the ICCPR by detaining them for three years and two months in Curtin Detention Centre. Their application for asylum had been refused twice and the Minister had declined to exercise his discretion to grant a favourable outcome under s 417 of the Migration Act 1958 (Cth).

In its submissions to the Committee; Australia argued that the complaint was inadmissible because, inter alia , the family had not exhausted all possible domestic avenues, in particular those available to it in the form of judicial review to the Federal Court or the High Court of Australia. The Committee did not accept this submission, noting that because Australia's High Court has held the policy of mandatory detention constitutional, this remedy would not have been effective. As a result it was not necessary for the family to have pursued a judicial review claim in the Courts before the Committee could hear the family’s claim.

The Committee agreed that the family's detention was in breach of Article 9(1) of the ICCPR, reaffirming its previous jurisprudence that detention will become arbitrary if it continues beyond the period for which a state party can provide appropriate justification. The Committee observed that in this particular case 'whatever justification there may have been for an initial detention' Australia had failed to demonstrate that the detention was justified for such an extended period or that compliance with Australia's immigration policies could not have been achieved by less intrusive measures.

The Committee further found that the allegation that the prolonged detention of children breached Article 24(1) of the ICCPR was insufficiently substantiated in light of Australia's efforts to provide educational and recreational programs for children in immigration detention.

The Rights of the Child under the ICCPR

Human rights committee communication no: 1069/2002 (bakhtiyari v australia).

In 2003 the Bakhtiyari family lodged a complaint with the Committee on the basis inter alia that the Australian Government had violated the rights of the child as enunciated in Article 24(1) of the ICCPR as a result of the Bakhtiyari children being kept in immigration detention for two years and eight months.

The Committee agreed with the applicant. It held that that the principle - that in all decisions affecting a child his/her best interests shall be a primary consideration - forms an integral part of every child's right to such measures of protection as required by his or her status as a minor, on the part of his or her family, society and the State - as required by Article 24(1) of the ICCPR.

The Committee observed that in this case the children had suffered demonstrable, documented and on-going adverse effects of detention up until the point of release on 25 August 2003. It also noted that detention was arbitrary and thus violated Article 9, paragraph 1, of the ICCPR.

As a result, the Committee considered that the measures taken by the State Party had not been guided by the best interests of the children, and thus revealed a violation of Article 24(1) of the Covenant, namely the children's right to such measures of protection as required by their status as minors up that point in time.

Case studies: Complaints about Australia to the CAT Committee

Committee against torture communication no: 120/1998 (elmi v australia).

In 1998 Mr Sadiq Shek Elmi, a failed asylum seeker, lodged a complaint with the Committee against Torture. He claimed that his deportation to Somalia would constitute a violation of Article 3 of the Convention against Torture, because he was a member of a member of a minority clan which had a well-documented history of persecution in Mogadishu. There was evidence that other members of his family had been targeted by that clan.

The Committee determined that Australia had an obligation to refrain from forcibly returning Mr Elmi to Somalia or to any other country where he runs a risk of being expelled or returned to Somalia because of the danger of him being subjected to torture in Somalia. The Committee noted that the majority clan in Mogadishu could be regarded as exercising de facto control, and was therefore responsible for any acts of torture for the purposes of the Convention. Mr Elmi was subsequently permitted to stay in Australia.

Return to Human Rights Explained Fact Sheets Menu.

• Fact Sheet: Case Studies PDF (125 KB)
• Fact Sheet 8: Case Studies Word (45 KB)

Further Reading

• Explore an Introduction to Human Rights .
• Find out more about how the Australian Human Rights Commission was established .
• Review the latest News from the Australian Human Rights Commission.
• Have Your Say on the current inquiries, projects and conversations about human rights in Australia.
• Explore statistics relating to key areas of human rights in Australia.

Training Industry

The impact of case studies on safety training.

Experience is the greatest teacher of all and there is nothing like learning from our mistakes. But, in many critical industries, making a mistake can lead to grave injuries — or possibly even death. Whatever your industry, safety should be at the heart of everything you do. By committing to innovation and new, more effective ways to approach online training, your people will be more prepared to make safer, smarter and better decisions on the job.

Making Compliance Training Engaging

Learning from the mistakes of someone else — without actually having to make that mistake yourself — is an invaluable tool when it comes to adult learning. In fact, eLearning courses developed from real-life scenarios that highlight to learners what went wrong can help prevent similar injuries from occurring in the future.

In this article, we’ll review some top tips on integrating case studies into your health and safety training programs, and how this can help save lives in the workplace.

3 tips for designing (or selecting) case study courses.

Select case studies with care..

Not all examples of workplace incidents are relevant for all trainees. That’s why you should start by identifying any employee skills gaps and training needs. You’ll also want to ensure you’re selecting or designing case studies that grab the attention of those who engage with the narrative.

Here are just a few questions to consider while developing safety training for employees:

• Is there a particularly compelling voice that can share this story?
• Is there a clear lesson that can be learned from this experience?
• How can this particular case study help develop problem-solving skills in learners?
• Is there an interactive element that can be included in a training based on this case study?

Ensure to choose topics that are relevant to employees and the work environment, and that learners can connect with personally. The importance is to ensure that the training content is memorable.

Structure training for engagement.

As you are designing or selecting case studies for training courses, you’ll need to consider the best way to communicate a real-life narrative. This is not the same as storytelling or explaining what not to do. Instead, you will need to structure the training so that it immerses learners into the experience. Combine different features to create a blended learning experience, like interviews and/or a 3D recreation of the incident with explanations by an expert on how the incident could’ve been prevented. This can drive home the point of occupational safety and hazard association (OSHA) training.

Include interactive elements.

Interactive multimedia elements are also imperative to creating an immersive learning experience. You can also structure the content so learners can problem-solve their way through the experience while you narrate it. For example, add scenarios like “branching” or choose-your-own-adventure activities so they can see how the situation plays out based on their selection.  Don’t overdo it with the entertaining elements. The point of adding immersive features is to make an authentic impact on your learners.

3 key benefits of using case studies in training.

Better buy-in..

When it comes to safety training, buy-in from stakeholders is a must and completing online courses should be more than checking boxes for compliance requirements. The best way to do that is explain the value of the training. Most adults have a higher sense of self-direction and motivation, which is why many adult learners learn because they need it and/or recognize the benefit. We know that humans learn better when they connect their training to a narrative. Case studies have the power to make what may otherwise feel like a series of do’s and don’ts come to life with a compelling story based on real-life events.

Learners can better understand the importance of safety training when its personable and relevant to their role. Transforming mandatory compliance health and safety training from abstract concepts into lessons grounded in the real-world can not only maximize the impact of training, but also help safeguard lives.

• #adult learning
• #case studies in training
• #compliance training
• #engaging eLearning
• #health and safety programs
• #interactive safety training.
• #OSHA training
• #prevent workplace injuries
• #safety training
• #workplace safety

Michael Ojdana

Michael Ojdana is the chief learning officer at Vector Solutions. He leads the content team and has a rich background in all aspects of content development. In his role, Ojdana strives to guide his team to create engaging, innovative courses that meet customer needs, positively change behaviors and help make employees safer.

This topic is proudly sponsored by

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Case studies for safe working in general practice

Case study: a realistic rota, how it works.

• We limit consultations to 13 per session. 
• Have a number of appointments that are pre-bookable either by the GP or by patients with different timeframes from when they are available. 
• The duty doctor then calculates how many on the day appointments are available that day.  The duty list is then capped at this number.   
• This includes the duty doctor doing 10 consultations as well as the triage, but these are for simple things like med3s rather than complex care 
• Comments are added to the duty list in the morning of when to move to the pm duty list 
• The pm duty list has a comment adding at what point to turn off online consulting and another comment added, typically about 10 slots further down, stating 'emergencies only discuss with duty doctor prior to booking'.  Typically we have 10-15 of these slots. 
• The 111 list sits separate to this with 2 appts in the morning and 2 in afternoon but the duty doctor will move these to the triage list if they are going to need a consultation so that they are included in the capacity count. 
• When we move over to emergencies only, the telephone message changes to make the patient aware that we only have emergency appointments that day so that they are not on hold for 30+ minutes to be told we have nothing left for that day. 
• We don't hold a waiting list, if we are at the points of emergencies only, the patient doesn't need an emergency appointment and there are no pre-bookable appointments available, the patient has the option to put in an econsult the next day, call for an appointment the next day or if they feel it can't wait contact 111, IUC etc. This is the one bit of our system that I don't like as I would like a solution that doesn't require a patient to call back. The reason we don't add them to the list for the next day is that a sig proportion never call back and we can't fill up the following days capacity as the system fails. 
• We do use apex Edenbridge to monitor our appointments, as I think it would be hard to challenge our approach if we are also demonstrating that we are offering more than the average number of appointments per 1000 patients per week than the other practices in our ICB. 

This has made a huge difference to our clinicians. We spend longer with patients but it is based on a realistic rota which also enables us to do the clinical administrative work and complete all tasks in the allotted time so I no longer work 2 sessions in a day which actually take 11 hours to complete, this use to be the case. 

Case study: Standard and on-call days

Standard gp day.

Morning 

• 12 x 15mins consultations (face-to-face or phone) - split between advance and on-the-day. 
• 2 x 15mins consultations for GPs to book into (eg. Telcon with DN or task necessitating them to initiate call to patient). 

Lunch 

• 1x visit maximum (unless at care home, where may be 2x).

Afternoon 

• 12 x 15mins consultations, as per morning.  

On-call GP day

• As per standard day. 
• As per standard day but ONLY visits if all others have a visit already (duty triages requests). 
• 6x 15mins advance-booked consultations. 
• 3x 15mins 111-bookable slots. 
• Rest of afternoon for admin, answering queries from reception and urgent (EOL/hot kids/DN calls), also reviews and actions any abnormal bloods/urgent scripts coming in after 5pm. 

Case study: Practice example using triage

This practice serves 20,000 patients in a deprived, multi-cultural population using a GP led total clinical triage called CAS (clinical assessment screen) GPs. 

• Patients access appointments via reception, telcon or accuRx. 
• GP appointments default to telephone: 11 telcons and 3 face-to-face per session. If more face-to-face sessions are needed, telcons are blocked.
• Slot types are either red (same day), amber (1 week), amber (2 weeks), or routine.
• AHPs such as ANPs/paramedics/MHP are used for face-to-face appointments only.
• CAS GPs have no booked appointments - they make clinical decisions on RAG rating of clinical triage and use F12 protocol to communicate this. Routine patients may go on a waiting list if there are not enough appointments.
• CAS screen is capped at either 3:30pm or when each CAS GP has clinically triaged 50 patients per session (which may happen earlier at 2pm). When the cap is reached, all on-line access is closed and patients are told it's urgent only, which are first triaged by care navigators and then CAS GP.  
• GPs much happier 
• Continuity much higher 
•  Complaints have gone up as patients don't like waiting when it's not urgent.

Case study: Fully online triage

Breakdown by day .

• 12 patient consultations every 4 hours (counted as one session). 
• Face-to-face majority, couple of phonically, and 2 GP Follow ups (mainly MH and continuity of care). 
• 13-minute appointments.  
• One third protected admin time. 
• 15-minute break per session worked.  

System was fully online triage:  

• initially Egerton and then switch to Accurx
• clinical triage by GP in the morning (previously did two sets of triage, am and pm, but this proved difficult to manage workload and demand, as too open ended and labour intensive in terms of GP time and resource)
• window for online triage forms open from 7.30am to 11.00am - clear communication to patients re timings (used to be open over the weekend and all day, but risky in terms of safety if people ignore the red flags, and demand management)
• closed earlier if capacity reached, or if staff sickness etc.

Capacity is mapped out, and a RAG (Red/Amber/Green) rating approach taken according to clinical prioritisation, patients with specific needs and vulnerabilities have alerts on system:  

• on the day urgent: red
• less urgent but not routine: amber (48 hours)
• routine - next available: green (safe to wait, no clinical urgency). 

Appointments capacity mapped out in terms of:

• clinicians 
• practice - in house 
• enhanced access - GP Fed - on the day evening and any the weekend (routine) 
• PCN: mole clinic, women's health, minor surgery, social prescriber, physio (this is in addition to the city wide FPOC physio)
• straight to physio (FPOC city wide offer) 
• external services eg Pharmacy first, minor ailments.  

We stopped the PCN MHPs, and reverted to direct practice ones as the MH trust offer didn't really address our needs.

Booking of appointments

• Patients are sent booking links to self-book face to face on the day via Accurx (this helps reduce DNAs as patients can pick the most convenient time). 
• Appointments can be booked in via telephone for nurse and bloods/smears etc (helps prevent inappropriate booking). 
• If patients are unable to use online triage, the forms are completed on their behalf by reception or direct booking into an appointment.  

In tandem with the above, we use an Oncall GP:  

• they have a lighter clinic in place, with empty slots for ad hoc queries  
• their capacity would be used only if the on the day capacity had been reached, and for those patients that could not wait  
• they would also deal with urgent docman (usually mental health or safe guarding. cases), third party queries and review urgent bloods that needed to be actioned for those clinicians that were not in  
• the workload of the on call has greatly reduced since the introduction of total triage ( I used to do the Mondays and art times would have 26 urgent consultations in addition to usual workload, from the morning!)
• if the urgent, moderately urgent and routine appointments are all used up patients are either signposted to other services or, if not appropriate, informed that they will be allocated an appointment once this becomes available
• all text messages including failed contacted have safety netting advice included with NHS111 contact information.  

Case study: A new system for patients

This example is from a practice that services 23.5k patients, semi-rural, deprived population with no UCC locally.

We are not quite down to 25 contacts a day yet but at 28 on routine days and 15 per session for on call clinicians (mix of GPs and ANPs).  

Some routine appointments are pre-bookable, some embargoed for on the day use (more embargoed on Mondays). 14 appointments per session, about half face to face although many of us convert telephone/online slots to face-to-face if needed. All appointments are fifteen minutes.

Triage hub 

2-3 clinicians per session in a triage hub with receptionists. 2 clinicians ‘on call’ seeing the urgent face to face appointments booked by the hub clinicians - 15-minute appointments.  

Can flex clinicians if needed to/from triage/on call.  

We switch off incoming electronic forms when the hub clinicians judge that we have no more slots to book into. Usually they go off around three pm but can be earlier or later depending on demand and clinical capacity. Patients can then ring in and will be triaged if emergency/directed to 111 if absolutely no capacity left.  

Recently we’ve changed so that if we are on maximum clinicians off for leave we load more on the day appointments.  

Separate appointments

We have separate twenty-minute appointments for coils, implants, first menopause appointments and joint injections. We have a GP with an hour blocked for visits (and visiting matrons) and one with an hour blocked to deal with the blood results of any clinician not in that day.  

Clinicians are generally happier than when we had unending duty demand. Patients objected at first but now seem to be mostly okay with the system.