In Buenos Aires, the fulfillment of tax obligations of the Large Taxpayer is checked by the Special Control System (SCE), a guide that is dependent on the General Directorate of Revenue. But the Buenos Aires City Audit (AGCBA, for its acronym in Spanish) found that the list does not include real estate or cars of those who have greater activity and their license plate and Property tax debts are governed by rules made for small taxpayers.
The watchdog arrived at this conclusion after analyzing about 95 large taxpayers over a total of 6,325 enrolled in Revenue. The report, adopted this year on 2008 data, adding that the same applies in the case of debts by the Advertising Contribution, as "100% of the ads belonging (to the sample) had not been incorporated by Revenue to the SCE.”
The AGCBA further notes that in the real estate and advertising examples a "breach of legal rules, losing the ability to impose fines in cases where affidavits in the respective maturities are not present" is recorded. Thus, the large taxpayers registered are monitored only if they meet the payment of Gross Receipts Tax. "This means, the report says, that companies with valuations or significant quantities of vehicles, buildings or advertisements, are not considered within the Special Control System.”
Regarding the vehicles, 27% of the large taxpayers selected in the sample owed license plate tax, “they owned individually between 68 and 251 vehicles”. The debt, verified by the Audit, was for 100 railcars and amounted at the time of the report to $80,189.64. The audit found a property tax debt between four properties that summed up $38,069.70.
Who to control
According to the AGCBA, "normatively objective parameters to determine which taxpayers must be incorporated into the Special Control System to check their fulfillment of tax obligations have not been established." That means that there is no specific way to know who to control. The agency adds that, while there is a resolution of Revenue, the 4191 of 2007, which contains a list of large taxpayers and the need to make a list, just by the prosecutor representing interest for the state, highlights the "absence of patterns that enable the adoption of subjective criteria that might not be the most appropriate to optimize revenue levels."
Another fact that caught the attention of the auditors was that from the upper levels of the city property tax structure no one asks the Revenue Collection Control Department for monthly reports that would help make decisions. The research makes clear that this office does do internal reports; the problem is that the documents "do not present the evolution of indicators for months or years, which does not allow management to analyze whether the management is better or worse."
Also, assessments of debt and collection do not consider the amounts involved, which means that there is no way of knowing how high the debts actually are from large taxpayers. “Simply”, the AGCBA’s report explains they only know how many people from those enrolled in the system have paid.
The City Audit found that behind closed doors the Directorate has not formalized administrative or flow of information on the process control of both the collection and the compliance of submission of affidavits by the Large Taxpayers circuits. "While various monthly audit routines are applied, the lack of formality increases the chances of committing mistakes, fraud, or omissions that weaken the internal control system," the report says.
While doors out another flaw stood out: despite a 2002 ruling that said one of the functions of collection management sector of the Revenue Department was contrasting data with agencies of national, provincial and municipal control, the City Audit said "no crossing of the information contained in the affidavits tax databases with AFIP is done."