2016-04-14
STI system for selecting taxpayers for inspection: measuring productiveness is also important
A public audit conducted by the National Audit Office of the State Tax Inspectorate's (STI) system for selecting taxpayers for inspection has revealed that the selection measures applied ensure a sufficiently high level of productiveness in the area of internal control, however, the Inspectorate also carries out a large share of tasks based not only on the system, but on compulsory obligations as well.
One of the most important tools for selecting taxpayers for checking is the Audit Information System (IS) developed specially for this purpose. According to the data produced by the audit, in 2012–2014, the productiveness of the system's selection control actions reached 53%. However, on average, it was used to select only 6% of taxpayers included in inspection plans, thus the STI has not taken full advantage of the system's capabilities.
Auditors observed that the STI incorporates about 60% of taxpayers selected by way of analysis and various selection measures in the taxpayer inspection plan, and only 40% are identified based on procedures established by law: based on assignments issued by law enforcement institutions and other institutions, as part of repeat inspections, etc. However, the effectiveness of inspections of taxpayers selected in this manner is not always high, for example, the productiveness of the collection of information for cross-referencing, which makes up a tenth of the STI's control actions, only reaches 10%.
"The audit showed that the productiveness of the inspections of taxpayers incorporated into inspection plans based on different methods differs significantly. An analysis of the effectiveness of internal control actions could be a practice that the STI uses on a regular basis in order to help find more effective means to optimise actions and achieve better results", proposed Sigita Rojutė, Head of Audit Department 6 of the National Audit Office.
Auditors concluded that the selection process conducted with the Audit IS should also be improved: automatising as many manually performed procedures, thus ensuring objectiveness in the selection process, introducing traceability for taxpayers selected for initial inspection, etc. The supreme audit institution issued recommendations to the STI. If these recommendations are implemented, the STI's system of selection would become more advanced, the institution could ensure the more transparent and objective execution of the selection process, and this would have a direct effect on the collection of income in the budget.
The STI notes that the observations and recommendations issued by the auditors will help the institution improve its performance processes, making the process of controlling the selection of risky taxpayers more productive.
"The STI concurs with the idea that it should use the Audit IS more frequently and pay more attention to the risky taxpayers identified by this system. Therefore, the observations about the fact that inspections carried out based on assignments from other institutions are not productive will perhaps encourage discussion at the national level regarding cooperation and the distribution of functions between law enforcement institutions and the STI", said Virginijus Narvilas, Deputy Head of the State Tax Inspectorate under the Ministry of Finance, adding that the STI has already started to implement the recommendations received.