The paper discusses the organizational structure of ASEAN revenue authorities. It provides information on the comparative institutional arrangement and degree of autonomy of revenue authorities with their respective Ministry/Department of Finance (MOF), internal organization design, and human resources management which contribute to their overall revenue performance.
A. Institutional Arrangements for Revenue Authorities
1. Relationship with the Ministry/Department of Finance
ASEAN revenue authorities are either traditional departments (directorate) within the Ministry/Department of Finance or semi-autonomous agencies (affiliate) placed within the broader umbrella of the Ministry/Department.
A traditional department is a division/unit within the MOF and generally possesses little or no autonomy as it is subject to the Ministry’s direct supervising authority. A semi-autonomous agency, on the other hand, is placed as an attached agency within the broader umbrella of a ministry and granted moderate to fair degree of autonomy in its management and operation.
The advantages of being a semi-autonomous revenue authority are as follows: (a) It can be free from political interference in its day-to-day operations; (b) It can implement human resources policies differently from the MOF according to its needs so as to recruit and retain highly motivated and skilled staff members; (c) It can implement organizational reforms such as establishing specialized audit functions more conveniently compared to a directorate type of organization; and (c) Its budget arrangements offer more flexibility to invest in information and communication technology (ICT).
Among ASEAN member-countries, only Malaysia, Philippines, and Singapore have semi-autonomous revenue authorities.
On the other hand, revenue authorities in Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Myanmar, and Thailand are functioning as directorates in the MOF. The conservative institutional arrangement of these revenue authorities may be attributed to the centralized form of government, either as a monarchical type of government (Brunei, Cambodia, and Thailand) or a communist/socialist state (Lao PDR).
2. Delegated Authorities
Authorizing revenue bodies to design internal structure allows them to devise network size and geographical location of revenue offices, and permits them to set up, modify, and organize the revenue districts and tax offices in the country. This authority can lead to better performance as the bureaus are able to adjust to changes in the needs and demands of the taxpayers and are able to formulate an internal organizational structure that will best accommodate their operations.
Among ASEAN tax bureaus, the Philippines, Lao PDR, Malaysia and Singapore have the highest degree of flexibility or delegated authority.
B. Internal Organization of Revenue Bodies
1. Models of International Organization Plan
The internal organization design of a tax bureau is a factor to its overall effectiveness and efficiency. The effectiveness of reforms instituted in a revenue authority is anchored mainly on an effective organization.
There are three (3) broad models for tax administrations’ internal organization design, namely: (a) tax item-based wherein the structure is based on by type of taxes; (b) function-based wherein the structure is based according to business functions;
and (c) taxpayer segment-based which is organized according to the taxpayer group or segment.
All ASEAN tax bureaus adopt the function-based internal organization design. Singapore adopts a hybrid of function-based and tax-item based while Thailand, a hybrid of function-based and taxpayer segment-based. The Philippines tax bureau, although generally function-based also includes divisions to manage the compliance of large taxpayers.
2. Office Network
Generally, tax bureaus adopt a three-tier structure of office network; headquarters or national offices, regional offices, and district offices. Headquarters or national offices are commonly located in the country’s capital or its key cities. Under the headquarters or national offices are regional offices that are situated across the country, which supervise the district offices that usually deal with frontline tax administration services.
Five (5) ASEAN tax bureaus (Cambodia, Indonesia, Myanmar, Philippines, and Thailand) adopt a three-tier structure of office network. It may be observed that the countries which have the most number of offices including headquarters are the countries with the largest land area (Thailand, Indonesia, and Myanmar). On the other hand, Brunei Darussalam and Singapore have their headquarters and all tax operations performed in one office.
The population to offices ratio gives a measure of the density of tax office networks. Thailand has the most number of tax offices with 862 or a ratio of 80,000 people per office; followed by Indonesia with 570 offices with a ratio of 420,000 people per office in 2013. In the Philippines, the ratio is 680,000 people per office.
Recent reforms in tax administration include the reduction of the number of tax offices by reconfiguring them into smaller number of large offices in order to achieve economies of scale. Additionally, finding alternative ways in delivering services to taxpayers (i.e., use of internet in service delivery) is also viewed as a way to attend to growing number of taxpayers.
C. Human Resources Management
1. Aspects of Human Resources Management
All ASEAN revenue authorities have staff development initiatives to enhance risk management skills and staff training. These trainings and developments are beneficial as they increase the workers’ productivity and reduce staff turnover. It is also crucial so that the staff will be able to cope with rapid changes that take place in the tax bureaus’ service delivery.
They also have performance management system in place which is important to enable the tax bureaus to monitor the performance of their staff and the organization as a whole.
The most autonomous tax bureaus in terms of human resources management are those of Malaysia and Singapore, while Cambodia tax bureau remains to be the least autonomous. The Philippines tax bureau, on the other hand, also has all the indicators of an autonomous human resources management except for the flexibility to set its own pay levels.
2. Staff Turnover Rate
Aside from low compensation, high turnover rate may be attributed to a number of factors like staff dissatisfaction, and macroeconomic factors like recession or even good economic condition. Recession may cause revenue authorities to cut their costs by downsizing, leading to high turnover rate.
Among the ASEAN tax bureaus, Singapore has the highest turnover rate (6.6%) followed by Brunei Darussalam (5.8%). The Philippines has a turnover rate of 4% while Indonesia and Malaysia both enjoy lower turnover rates of 2.7% and 1.3%, respectively.
