Source: OECD (2020), Tax Administration 3.0: The Digital Transformation of Tax Administration, OECD, Paris. http://www.oecd.org/tax/forum-on-tax-administration/publications-and-products/tax-administration-3-0-the-digital-transformation-of-tax-administration.htm Building Block 6: Governance frameworks: guiding the development, implementation and connectivity of the other building blocks both within the tax administration and in co-operation with other actors, both domestically and internationally. Core added value The way in which tax administration is governed depends on political, cultural, societal and technological factors. This does not just regard the organisation and control of the tax administration itself, but also includes co-operation with businesses, other governmental organisations and non-governmental organisations, including taxpayer representative groups. In many countries, businesses have become important partners, ‘agents’ of taxation, administrating VAT and salary taxes. Along with societal changes, new tax governance frameworks, including formal consultative processes, taxpayer rights mechanisms, offices for tax simplification and co-operative compliance programmes, have enhanced transparency and accountability. The nature of the transformation to Tax Administration 3.0, requires the joining-up of systems and processes across the public and private sector, as well as internationally. This calls for a structured form of governance if it is to succeed, bringing organisations together to partner in the management of change. Building block architecture The building block on governance frameworks needs to perform the following core functions to enable Tax Administration 3.0: • Providing governance structures that bring together public and private sector representatives, including internationally, to ensure that the objectives of high compliance and minimal burdens are achieved in a way which balances other concerns, including data protection, security, accessibility and fairness. This would include clarity about the role of tax administrations in whole of government approaches. • Agreeing on the key priorities for collective work and delivering the high quality resources needed to support that work. • Providing reassurance on the effectiveness and efficiency of the overall tax administration system as well as its resilience and agility for handling change and for responding to undesirable outcomes and behaviours. • Providing mutual reassurance as to the security and protection of data by all actors in the system. At an established level, tax administration is embedded within a societal network of checks and balances, and communication and data exchange relationships with stakeholders. Compliance strategies and the administrability of tax laws are discussed with political and policy stakeholders. Digital exchange of information is the backbone of public-private compliance arrangements. The established maturity level of the implemented governance framework is characterised by: • A clear distinction between the setting of tax policy and the role of the administration in administering tax policy in a fair and independent way Legal frameworks governing data privacy, accountability, taxpayer rights and formal dispute resolution and appeals. • Internal and external accountability frameworks, including complaints mechanisms, consultative arrangements, standing stakeholder groups, taxpayer charters and performance management measurement and reporting. • Cooperative arrangements with other tax administrations governed by tax treaties for the exchange of information, prevention of double taxation and dispute resolution. The digital transformation of tax administration will offer new possibilities for allocating activities, responsibilities and accountability among public and private sectors stakeholders, allowing more seamless tax administration by embedding many tax administration processes within taxpayers’ natural systems. In the end, tax administration is a transparent part of a wider system which includes taxpayers’ natural systems, where its networked nature is resilient to external shock waves and crises and flexible enough to swiftly respond to societal needs. This will require new governance arrangements to ensure the smooth development, implementation and oversight of the building blocks of Tax Administration 3.0. To begin this journey, tax administrations may wish to consider: • Taking a leading role in explaining the need for Tax Administration 3.0 and bringing together stakeholders to flesh out the vision for their jurisdiction. • Developing strategic toolkits to support the prioritisation of activities, enhanced co-operation between stakeholders and to help reach agreement on forms of co-operation and next steps. • Articulating strategies and accountability frameworks regarding public/private co-operation on the digital transformation of tax administration, including sustainable engagement models and consultation arrangements with societal stakeholders. • Piloting projects on digital identity and e-invoicing to help develop effective models of co-operation in practice, including internationally.