European Commission and IMF Boost Support for Diagnostic Assessments of Tax Administrations
IMF News, October 8, 2016
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- Published: October 8, 2016
Agreement details
- The European Commission and the International Monetary Fund (IMF) signed a €2 million (about US$2.2 million) agreement to support assessments of tax administrations using the Tax Administration Diagnostic Assessment Tool (TADAT).
- The signing took place in Washington, D.C., during a meeting between Stefano Manservisi, Director General for the European Commission’s Directorate General for International Cooperation and Development (EuropeAid), and IMF Deputy Managing Director Carla Grasso.
Purpose and function of TADAT
- TADAT provides standardized, comprehensive baseline diagnostic assessments of tax administration functions.
- TADAT aims to:
- Assess the health of key components of a country’s tax administration system and its level of maturity in the context of international good practice.
- Identify relative strengths and weaknesses in a tax administration system.
- Facilitate a shared view among stakeholders (country authorities, international organizations, donor partners, technical assistance providers).
- Define a comprehensive reform agenda, including objectives, priorities, and sequencing of implementation.
- TADAT is a collaborative effort of the following partners: The European Union, Germany, Japan, the Netherlands, Norway, Switzerland, the United Kingdom, the World Bank, and the IMF.
Statements and perspectives
- Carla Grasso (IMF Deputy Managing Director) noted:
- She was pleased to see the European Commission’s support for TADAT.
- TADAT assessments form the basis for developing prioritized and well-sequenced reform plans to boost revenue mobilization in developing countries.
- The agreement was an important step in strengthening cooperation between the two institutions in a core area of IMF expertise.
- She looked forward to concluding shortly the Strategic Partnership Framework that will guide cooperation between the two institutions.
- Stefano Manservisi (Director General, EuropeAid) stated:
- “Working with the IMF in the area of capacity development, including through TADAT, greatly supports the European Commission’s own 2015 ‘Collect More–Spend Better’ agenda and the broader development objectives of the European Union.”
- He expressed confidence that the forthcoming Strategic Partnership Framework would lead to great results in terms of better economic outcomes for beneficiary countries.
Background on EU–IMF cooperation in capacity development
- Cooperation on capacity development has been a core component of the European Commission–IMF Partnership.
- Areas covered include good economic governance, economic institution building, and related human capacity development needs.
- The European Commission has supported IMF multi-partner vehicles and capacity development mechanisms including:
- IMF’s network of ten regional technical assistance centers.
- IMF global thematic trust funds.
- IMF fragile states funds.
- IMF capacity development in specific countries through bilateral programs.
- Under the 2009 EU–IMF Framework Administrative Agreement, collaboration intensified through:
- Regular staff consultations.
- Staff exchanges.
- Development of a European Commission exogenous shocks facility and complementarities of EU budget support in the context of IMF lending programs.
- Continued cooperation on capacity development.
Key facts and statistics
- Financial support amount: €2 million (about US$2.2 million).
- Relevant year referenced for EU agenda: 2015 (“Collect More–Spend Better” agenda).
- Relevant year for framework agreement: 2009.
- IMF network referenced: ten regional technical assistance centers.
Implications and policy relevance
- The agreement strengthens cooperation between the European Commission and the IMF on tax administration diagnostics and capacity development.
- TADAT assessments are positioned as foundational inputs for:
- Prioritized and well-sequenced reform plans.
- Revenue mobilization efforts in developing countries.
- Shared stakeholder engagement on tax administration reform objectives and sequencing.
- The forthcoming Strategic Partnership Framework between the European Commission and the IMF is expected to guide and enhance joint capacity development efforts and yield improved economic outcomes for beneficiary countries.
Press Release No. 16/452 — European Commission and IMF Boost Support for Diagnostic Assessments of Tax Administrations (October 8, 2016), IMF Communications Department