Nature and Purpose of the “Area Groups”

Area Groups differ fundamentally from the other technical activities offered by IOTA in that there is a focus on facilitating regular contact between the same individuals from a wide group of the Member tax administrations. This regular contact takes three main forms:

• Possibility for regular meetings;
  
• Ongoing liaison and communication via telephone, email and using the IOTA website;
  
• Important work and outputs of the various associated Task Teams.

Area Groups meet twice yearly and the meetings are usually hosted by Member tax administrations. There are currently three Area Groups whose meetings are included in our Work Programme for 2012, they are:

• Prevention and Detection of VAT Fraud (PDVF)
• Strategic Management: Benchmarking (SMB)
• Debt Management (DM)

Task Teams

A vital part of the Area Groups’ activities is the formation of Task Teams comprising of members of the group and national experts, their ”task” being the study of a specific topic with the objective of producing a report or good practice guide either as a published product, an e-document or more recently, as a maintainable knowledge database on the IOTA website.

Prevention and Detection of VAT Fraud (PDVF)

A substantial issue in many countries is VAT fraud, which has become an established and innovative industry, leading tax administrations to adapt their strategies to better fight against this threat. The focus of the Area Group is to develop the means within tax administrations to remove or restrict the opportunity for VAT fraud, to detect at the earliest stage possible fraudulent behaviour and to take appropriate action in co-ordination with their investigation bodies.

The scope of activity of the group covers a variety of key issues related to VAT fraud. Particular focus in 2011 was placed on new trends in VAT fraud in the car trade; identification of new types of frauds in traditional environments, continued discussions on carbon credit and the gas and electricity market frauds which have netted criminals millions of Euros. Other topics that have been explored by the Area Group include:

• Risk management related to VAT frauds;
  
• Enhancing international co-operation within Europe;
  
• VAT fraud and e-commerce;
  
• Fraud in the telecommunications industry;
  
• VAT refund claims.

Currently 36 tax administrations participate in the group and two meetings will be held in 2012. The topics for these meetings will be selected by Area Group members several months before the group assembles.

Strategic Management: Benchmarking (SMB)

Strategic management is the art, science and craft of formulating, implementing and evaluating crossfunctional decisions that will enable an organisation to achieve its long-term objectives. It is the process of specifying the organisation’s mission, vision and objectives, developing policies and plans, often in terms of projects and programmes, which are designed to achieve these objectives and then allocating resources to implement the policies and plans, projects and programs. Benchmarking is one of the most effective means to identify improvements which can make a significant difference to an organisation and is the process of identifying “best practice” in the processes created and used by tax administrations. The objective of benchmarking is to understand and evaluate the current position of a business or organisation in relation to “best practice” and to identify areas and means of performance improvement.

In order to assist Member administrations in identifying and implementing strategic objectives the Area Group was formed to collect, review, discuss and report on strategic decision-making and to facilitate business process improvements through, amongst other things, benchmarking. To this end the Area Group has so far produced a Benchmarking Code of Conduct, a Best Practice Guide and a Country Profile Database to assist Members in finding suitable benchmarking partners and is currently evaluating these products through pilot benchmarking exercises with Member administrations.

The present participation in the Area Group extends to 24 tax administrations and the Area Group meets twice a year to address the issues of strategic management.

Debt Management (DM)

Taxpayer compliance is an issue that has been tackled by tax administrations for a considerable time. What influences one trader to be compliant and another to flaunt the regulations has been an area studied by virtually all countries who have then adopted policies which have met their needs. However, with the effects of the financial crisis still hitting even the most compliant of taxpayers the rules have changed. Those individuals or companies who have previously tried to satisfy all their creditors now find themselves unable to meet all their obligations. As a consequence, one of the first organisations to suffer is the tax administration with either delayed, postponed or non-payment of debts. This problem amplifies the effects of the crisis by bringing in lower revenues and distorting the true picture.

To counter these effects countries are again turning to their risk models and debt management systems to try and lessen the effect by identifying those taxpayers likely to default on payment earlier. This new Area Group is being established to address those issues and to share good practice in managing these problems.

Two meetings of this new Area Group will be held in 2012.

Terminated Area Groups

The following Area Groups were terminated: