International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Sunday, July 12, 2020

Enhancing Reputational Risk Management for Tax Administrations

The OECD Forum on Tax Administration (FTA) today released a report on reputational risk management, highlighting its importance for protecting and enhancing tax compliance, including in the COVID-19 environment. The report, led by the Canada Revenue Agency and the FTA's Enterprise Risk Management Community of Interest, sets out the key considerations for developing and improving reputational risk management practices within tax administrations. It also introduces a reputational risk management maturity model, allowing administrations to self-assess their current capabilities and facilitating consideration of how and where improvements might be made. 

"Tax administrations more than ever have to ensure that they have the trust and respect of their taxpayer and stakeholder populations to achieve our objectives, something highlighted by the current crisis," said Bob Hamilton, Commissioner at the Canada Revenue Agency. "The joint work done with other FTA administrations on how to think about, measure and proactively address reputational risk will help to provide confidence and trust during the COVID-19 crisis and recovery, and could have long lasting positive impacts on the relationship between tax administrations and taxpayers."

"In the COVID-19 crisis tax administrations have been playing a central role in supporting taxpayers and the wider economy" said Pascal Saint-Amans, the Director of the OECD Centre for Tax Policy and Administration. "While this may have had positive impacts on the reputation of tax administrations and on compliance attitudes, that can easily change, and potentially dramatically, in such a difficult and fluid environment and therefore requires both careful consideration and active management".

This report highlights the importance of reputational risk management in modern tax administration and sets out some key considerations as to how to identify and manage reputational risks. It also contains a set of tools to assist tax administrations in developing their capacity in this area including a maturity model which allows administrations to self-assess their current capacity and to identify areas for possible further development. The report has been produced by the FTA Enterprise Risk Management Community of Interest (COI). It is the first in an intended series of reports by the FTA's Communities of Interest which bring together experts to exchange views and work collaboratively on major themes of modern tax administration.

This work was led within the Enterprise Risk Management COI by colleagues from the Canada Revenue Agency. As noted in the report, managing reputational risk is hugely important in helping to achieve the objectives of tax administration and wider government, something which is particularly true in times of crisis. The key principles driving reputational risk are trust in the administration and its staff and respect towards the organisation. When an administration consistently abides by its ethical duties, it establishes trust in the eyes of taxpayers and other stakeholders. When it fails to meet the standards expected of it, particularly with respect to the fair and equal treatment of taxpayers, public trust and credibility can be quickly eroded.

Download the report (PDF)

Texas A&M International Tax Risk Management programTexas A&M University School of Law has launched its online international tax risk management graduate curricula for industry professionals.

Apply now for courses that begin August 23: International Tax Risk Management, Data, and Analytics; International Tax & Tax Treaties (complete list here

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