IV.3.5 Informing taxpayers of high risk areas
Letters advising taxpayers that the authority is aware of a
specific risk and inviting a specific response should be sent to high risk
taxpayers. Such letters have dual utility - they prompt compliant behaviour
from the potentially non-compliant (deterrence) and they support the perception
among the compliant that their compliance is not in vain, that is, wrongdoers
are being pursued (reinforcement). The tax administration should also publish
the entire programme of compliance activities on the on the website. This
programme will serve to raise the awareness of taxation compliance.
IV.3.6 Educating taxpayers to seek invoices from
suppliers
To help improve the quality of the audit trail, the tax
administration should conduct educational campaigns to encourage taxpayers to
seek invoices/receipts from businesses/suppliers. The main argument being used
to sell the idea to taxpayers is consumer protection - consumers will be
informed that they have very little recourse if they pay cash for the goods and
services when the goods and services turn out to be unsatisfactory. They should
be encouraged to ask for invoices and receipts which are important evidence for
the purchase and after-sale service. «Get it in Writing!» campaign is
a good example of such an initiative. «Get it in Writing!» is a
campaign to warn consumers of the risks involved in dealing with contractors
who offer `under-the-table' cash deals and to explain why it is important to
insist on a written contract and get receipts.
IV.3.7 Publicising prosecution cases and penalties
Not only can publicity be used to heighten the perception that
the likelihood of detection is high and hence encourage voluntary compliance,
it also helps to improve the credibility of the tax administration by showing
taxpayers that it can and will actively pursue those who choose to evade/avoid
the law. Even company boards will realise that publicity, namely `naming and
shaming' attacks on alleged tax avoiders will damage their reputations in the
eyes of important stakeholders, which can lead to sharp short-term share price
falls and the unwelcome attention of tax authority.
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