Functionally Organized Tax Administration

Maureen Kidd

July 16, 2010

Posted by Maureen Kidd

What is meant by the term function-based organization? What are the key components of a function-based organization in tax administration, and what are its advantages? What is the current experience in the use of function-based organizational structures?

TNM/10/10 provides guidance on the development of the organizational approach to tax administration. It describes the use of a function-based organization structure rather than an organization based on business product or type of customer. This kind of structure is predicated on the idea that efficiency can be optimized by grouping together similar activities executed by employees with related skills and specialties. It discusses the importance of distinguishing between the headquarters policy responsibilities and field operational activities.

The technical note sets out the components of a typical function-based organization for tax administration and lists a number of advantages in implementing this approach: greater uniformity; improved compliance; simpler administration; better resource management; and improved integrity.

The note also describes how the function-based organization works in practice and how management direction is provided in a function-based administration.

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