What does the term ‘Big Data’ actually mean? There is no single agreed definition, but in today’s world, the volume, variety and velocity of data creation has recently exploded, and tax and customs administrations are part of that story. Examples of these data include registration details, tax returns, payments, debt management, intervention results (e.g., audit) and service channel data. Harnessing the use of Big Data analytics brings challenges but also great opportunities. The broad objective of the Big Data initiative is to leverage the power of analytics to improve the efficiency and effectiveness of tax and customs administration, with a particular emphasis on developing capacity within organizations to extract value from their data.
The benefits of the initiative are numerous. They include better use of data in tax and customs administration, the development of methodologies that can be shared across administrations in different countries, and a framework for improving data quality and analysis that supports performance measurement through tools such as the International Survey on Revenue Administration (ISORA) and the Tax Administration Diagnostic Assessment Tool (TADAT). The initiative also creates opportunities for collaboration with other international institutions, as well as raising the profile of FAD as an advocate for using Big Data and analytics through its technical assistance and research activities.
The benefits of the initiative can be seen at a number of levels: strategic, tactical and operational. At the strategic level, over the medium- to long-term, the initiative aims to develop the capacity of countries’ tax and customs administrations in the use of analytics to improve their performance. At the tactical level, the initiative should lead to measurable benefits such as improved data quality, more efficient case selection for audits and other interventions, reduced levels of debt and arrears, and better services to taxpayers and other stakeholders.
Initially the focus will be on an operational level target, namely how analytics can be used in some “proof of value” exercises to address specific risks that are common to many tax administrations. These risks include VAT refund fraud, identity theft, illicit trade, and tax evasion. A wide range of analytical methods[3] could be used to address these types of risk.
The “proof of value” aspect of this proposal is now in preparation. Countries that are considered suitable for the work will be selected on a range of criteria including expert input from the management and staff of FAD, the availability of data and resources in the country’s tax and customs administration, and senior sponsorship by the administration. Shortlisted countries could then be invited to participate in testing the proposal’s “proof of value”.
For further information, see https://imf.brightidea.com/bigdata or contact Duncan Cleary, FAD (R2), dcleary@imf.org.
[1] Technical Assistance Advisor, Revenue Administration 2 Division, Fiscal Affairs Department, IMF.
[2] http://en.wikipedia.org/wiki/Analytics and https://en.wikipedia.org/wiki/Big_data.
[3] For example, data quality for analytics; data preparation for analytics; data visualization; exploratory analysis at the univariate, bivariate and multivariate level; cluster analyses; principal components analysis; factor analysis; network analyses; and spatial analyses/ GIS (Geographic Information Systems).
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