Major Developments & Results

Mexican Tax Administration Service

Major Developments & Results

Major Developments & ResultsMajor Developments & Results

September, 2006




Tax Administration Model

Internet Portal Access

Authentication Methods

Billing

Electronic Filing

Compliance Cost

Integrated Solution

Overview


Major Developments & ResultsO

RG

AN

IZA

TIO

NP

RO

CE

SS

ES

CU

ST

OM

ER

SR

ES

ULT

S

HUMAN RESOURCES

EFFICIENCY

CONTROLSERVICE

SERVICE CONTROL

To define organization

models

To select employees

with suitable profile

To promote principles and values

To implement Change

Management

To improve organizationa

l culture

To improve organizationa

l communicatio

n

TECHNOLOGY AND COMMUNICATIONQuality

technological developments for operations

support

Information Management Deployment

Management Cycle

Deployment

To simplify services and procedures

To improve service quality

MISSION

VISION

To collect tax payments and control the inbound and outbound of products in the country, assuring correct tax law application and promoting voluntary and timely compliance.

I.- To ease and motivate voluntary compliance

II.- To fight against tax evasion, smuggling and out of law business

III.- To improve Tax Administration efficiency

IV.- To consolidate an integrated organization, recognized by its ethics, capacity and commitment

To increase taxpayers

compliance

To extend compliance

culture

To improve SAT image

and perception

To decrease compliance

cost

To be an efficient and effective institution orientated to taxpayer, with integrated processes, honest, professional and compromised employees, at the service of Mexican citizen.

To increase the taxpayers

base

To increase risk perception

To improve service given in contact points to taxpayers

To inform in an integral way to

the different sectors

To improve the preventive

actions

To identify taxpayer bad

behavior

To improve fighting of

illegal products in the country

To update and increase the

quality of taxpayer data

base

To improve collection efficiency

To add Risk administration technologies in

control and taxation

To assure rational use of

resources

To simplify internal rules and tax legislation



Integrated ServicesIntegrated ServicesISO 9000 CertificationISO 9000 Certification

Taxpayer CultureTaxpayer Culture

Information / Data AdministrationInformation / Data AdministrationTaxpayer Registration ProgramsTaxpayer Registration Programs

Risk ManagementRisk Management

Process ReengineeringProcess ReengineeringCustoms ModelCustoms Model

Digital Signature/ Invoicing ModelsDigital Signature/ Invoicing Models

Quality / Timely InformationQuality / Timely InformationIntegrated Government IndicatorsIntegrated Government Indicators

Government Private Network Government Private Network

Human resources / Human resources / Institutional Principles / FacilitiesInstitutional Principles / Facilities

Process Simplification / Good Practices StandardizationProcess Simplification / Good Practices Standardization

Organization TI ProgramsOrganization TI Programs



Internet Portal Access

Time

Internet

1.1 2.5 6.6

27.7

93.2

115.5

165.5*

113.1

2006 (August)

Co

st /

Be

ne

fits

InteractionInformation TransactionEvolution

Virtual

Office

2000 2001 2002 2003 2004 2005

Millions of visitors /

Transactions

* Estimated



Authentication: Personal Identification Number (PIN)

1’702,887

939,923

1,165,865

793,221

191,2070

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2002 2003 2004 2005 2006 (june)

Accumulated (previous year) Current year

1’894,094

2’834,017

3’999,882

4,793,103

Taxpayers



Digital certificates

2004 2005 2006

4th Quarter

1’004,159

63,90763,907

414,857414,857

266,744266,744

525,395525,395478,764

258,651258,651

Authentication: Advanced Electronic Signature



Paper vs Electronic Billing

More than 1 million invoices issued

Number of taxpayers who adopted electronic billing

2005 2006 (Sep)

1400

1200

1000

800

600

400

200

0

1,070

200

1,270Taxpayers using paper invoices

Authorized printing establishments

Invoices / Tax bills printed

1.5 millions

8,500

4 billions



2%

Income revenue by electronic returns vs. traditional methods

2003 2004 2005

Internet Traditional methods (paper & Bank)

2006 (June)

52%

48%

98%

2%

98%

2%

98%

2%

Electronic filing



Total operations

Paper

2006 (June)

2003 2004 2005

Electronic filing

Internet Bank

October 2006

59%

35%

6%

55%

40%

5%

52%

40%

8%

40%

10%

50%



Tax Return

* At the end of the compliance term

2001 2002 2003 2004

0

2005

0

100%

100%

94.9%

5.1%33%

46%67% 54%

2006

32%

68%

*0

100%

2000

Paper Internet

October 2006

Individual Tax Return Total operations *



Average cost return

complianceFor Individuals *

1,000

* Includes all expenses like professional tax assistance, transportation, Internet, tax forms, etc.

Telephone survey to measure perception of compliance cost

Compliance Cost Model

US Dollars

0

200

400

600

800

1000

1200

1400

1600

1800

Nov-0

3

Dec-0

3

Jan-

04

Fer-0

4

May

-04

Aug-0

4

Oct-04

Dec-0

4

Feb-0

5

Jun-

05

Sep-0

5

Dec-0

5

Mar

-06

Jun-

06


Major Developments & ResultsTaxp

ayer’

s lia

bilit

ies

(Fed

era

l Tax L

aw

s)

Compliance Cost in Mexico

Tax AdministrationABC Internal Cost Method

Taxpayer Direct Cost Method

Lia

bilit

ies a

dm

inis

trati

on

In

form

ati

on

/ C

on

trol

Com

mu

nic

ati

on

Serv

ice d

elivery

ch

an

nels

an

d o

pera

tion

Taxp

ayer’s

liab

ilities

(taxp

ayer ty

pe)

Com

plia

nce th

rou

gh

an

y

ch

an

nel

Lia

bility

Com

plia

nce

Services under analysis

1. Taxpayer Register2. Advanced Electronic Signature3. Tax and Informative Returns4. Tax refunds5. Tax Credit6. Invoices, tax bills7. Audits

Service delivery channels

1 2 3 4 3 2 1

Electronic

DesignDevelopmentImplantationMaintenance Operation

Paper

Face to face

Remote channelsInternetChatPhone (person to person)Phone, automated (person – IVR interaction)

First output:December ´2006



Integrated Solution Release

Major Developments & Results

Documents

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