'TADAT' evaluation

• Nine major areas of performance are evaluated, broken down into 28 indicators, of which the AEAT has obtained the highest scores in more than 78%
• The 'TADAT' method allows for an examination of the performance of tax administrations so that they can assess the extent to which they comply with what the IMF considers to be good international practices in the matter.
• The Agency will develop an action plan based on the evaluation, with proposals for improvement in matters such as streamlining VAT refunds and the resolution time for replacement resources. 

March 22, 2021 .- The Tax Agency has good tax risk management and census control, consistently promotes voluntary compliance and achieves adequate filing and payment of the taxes it manages, in accordance with the Tax Administration Diagnostic and Assessment Tool ('TADAT', for its acronym in English), an examination of the performance of tax administrations that the International Monetary Fund, in collaboration with other international organizations, offers to countries so that they can assess the extent to which they comply with what the IMF considers good international practices in the matter. 

The Tax Agency has been subjected to the TADAT examination under the modality of self-assessment assisted by IMF officials, in the period between September 2019 and November 2020. The AEAT is one of the first European tax authorities to carry out the TADAT assessment, which is already used by more than 80 countries and a number of subnational jurisdictions on five continents to identify the strengths and weaknesses of their administrations and define possible improvements.

In accordance with the provisions of the 2020-2023 Strategic Plan, the Agency has carried out the TADAT analysis and will now take into account the results of the evaluation for the updating and development of its strategic planning instruments.

The TADAT tool evaluates nine major areas of performance, broken down into 28 indicators, of which the AEAT has obtained the highest scores ('A' or 'B') in more than 78%.

Database integrity and risk control

In the section on the degree of accuracy and reliability of the information available on taxpayers, and the knowledge of the potential taxpayer database, the TADAT assessment certifies that the AEAT database has updated information that allows control of access and actions taken. It also highlights that secure access is offered to companies and individuals, and that all persons and entities are registered in the census of taxpayers through a single NIF.

As regards effective risk management, the review highlights the existence of tax compliance risk mitigation programmes, which are continuously reviewed by management, and also highly values the existing system for risk control in the areas of labour and infrastructure, among others.

Promoting voluntary compliance

Information on taxpayer rights and obligations is adequately segmented and updated, the level and speed of information and assistance available to the public is appreciated, as is the existence of civic-tax education programs. The report also assesses the tax and accounting simplifications in force for certain segments of taxpayers, highlighting the Agency's ongoing contact with taxpayers, groups and tax intermediaries to obtain feedback on the services provided.

Filing, payment and tax control

In the TADAT assessment for the Tax Agency, the degree of punctuality (filing on time) in tax returns is considered high, which is linked to the efforts made both in the census and fiscal control area, as well as in the promotion of voluntary compliance. In addition, it is appreciated that all declarations and payments of the main taxes are made electronically.

TADAT also considers the degree of punctuality in payments to be positive and appreciates the clear improvement in outstanding debt in recent years, highlighting the data on the degree of collection of debt older than one year.

In the section on the accuracy of the declared information, the scope of the measures taken to detect and discourage what TADAT calls 'inaccurate declarations' is positively valued, and both the existence of the system of tax consultations and binding resolutions for the Agency, as well as the creation of cooperative compliance forums are highlighted.

In terms of effective dispute resolution, the dispute resolution process is seen as very positive, highlighting its gradual nature, the information on the right to appeal offered to the taxpayer and the analysis and monitoring that the Agency carries out on the outcome of the disputes for the purposes of modifying procedures and possible proposals for regulatory changes.

Efficient administration and accountability

Furthermore, the TADAT assessment assesses the contribution of the tax administration to the budgetary process with forecasts and monitoring of revenue collection. It also appreciates that the accounting system is fully automated and subject to internal and external audits. At the same time, it considers the design and verification of the VAT refund system to be appropriate, as well as the differentiated treatment offered to taxpayers included in the Immediate Supply of Information (SII) and the Monthly Refund Regime.

In terms of accountability, the assessment found that the Tax Agency has robust internal audit and information security tools. The Agency also welcomes the existence of external oversight bodies and stresses that it takes into account surveys that measure public confidence in the Tax Administration. Likewise, the model of management by objectives based on strategic planning instruments, the periodic accountability of the Director General to Parliament and the annual publication of control guidelines, results and the Agency's report are highlighted.

Action plan

There are other indicators of the TADAT methodology that lead the AEAT, depending on each case, to establish an action plan with improvement measures, or to support the suitability of its actions if it considers that the current situation represents a benefit for the taxpayer.

As regards the action plan, the TADAT model warns about the time taken to resolve appeals, although it recognises the dismissive effect that occurs within one month if there is no express resolution. In any case, the Agency includes in its action plan the monitoring of resolution times using the TADAT methodology to reduce these times.

In terms of VAT refunds, and based on the TADAT diagnosis, the Agency commits in the action plan to accelerate checks and risk studies, and with it also refunds, while underlining the effort already made in recent years. years to expedite returns to SII taxpayers.

Regarding the outstanding debt, the action plan indicates that action will continue along the lines established by the 2020-2023 Strategic Plan on the causes of litigation and on average resolution times, without prejudice to continuing with improvements in collection procedures to speed up collection.

In relation to the degree of accuracy of the information declared by taxpayers, the Agency highlights in the action plan its commitment to measuring voluntary compliance based on the comparison of related fiscal and economic magnitudes, but also points out that it has supported the recent decision by European tax administrations to extend current studies on the VAT tax gap to other taxes.

In the analysis of the suitability of the revenue accounting system, the TADAT methodology requires immediate accounting entry, while the Spanish system historically accounts on a fortnightly basis. This payment is made into restricted accounts that are not available, but the action plan indicates that the procedure will be re-evaluated.

In the field of training, the TADAT assessment calls for specific tax training programmes for entrepreneurs, a line in which the Tax Agency undertakes to analyse with the Institute of Fiscal Studies the preparation of training material and possible virtual courses for taxpayers starting an economic activity. The action plan also highlights other initiatives that the Agency is already developing in the context of the OECD's 'Right from the start' strategy to improve the services provided to these taxpayers, in the case of census assistants.

Maintaining measures for the benefit of the taxpayer

However, there are other matters highlighted by the TADAT assessment that the Agency considers appropriate not to review as the current situation offers a greater benefit to the taxpayer. An example of this is the lower rating given in the exam due to the fact that the amount of payments made on time does not reach 90%. This ratio is determined by the existence of the system of unsecured deferrals for debts of up to 30,000 euros, an important liquidity instrument for many individuals and SMEs that should be preserved.

This is also the case for the different reporting period for companies with a split financial year (not coinciding with the calendar year). If they had the same filing deadline as the rest of the companies, these entities would have compliance problems, given that the accounting – the Spanish corporate tax is an accounting-based tax – can only be closed at the end of the fiscal year and, therefore, the accounting year and fiscal year must coincide.