The International Monetary Fund (IMF) has released a new technical report emphasizing the importance of building modern, balanced tax collection systems that are both fair and efficient. Titled «Legislating for Fair and Effective Tax Collection», the report highlights best practices and policy recommendations aimed at improving tax compliance and protecting public revenues - an issue with global relevance as many countries grapple with fiscal pressures and public trust challenges.
The report is authored by a team of IMF experts, including Greek legal scholar Lydia Sofrona, a former official with Greece’s Independent Authority for Public Revenue. Drawing on international experience, the report argues that an effective tax system must be underpinned by voluntary compliance, which it calls the optimal foundation for long-term success. This means making it easier for taxpayers to pay what they owe, through tools such as installment plans based on income, user-friendly digital payment systems, and mechanisms that allow taxpayers to offset their debts with refunds or other credits they are owed by the state.
Equally important, the IMF stresses the need for a transparent and predictable legal framework, which helps foster trust between citizens and tax authorities. When people believe the system is fair and consistently applied, they are more likely to comply voluntarily.
However, the report does not shy away from the issue of enforcement. It warns against the risks posed by strategic tax evasion and suggests safeguards to prevent abuse, especially in cases where individuals or businesses are suspected of hiding assets or engaging in fraudulent transfers. Recommended measures include the ability to register tax liens, temporarily freeze assets even before a debt is formally established, and require tax clearance certificates for activities such as bidding on public contracts or dissolving business partnerships.
In more extreme cases- such as persistent refusal to pay taxes - the IMF suggests stronger enforcement tools, including mandatory collection via third parties like employers or banks, and even the seizure and auction of assets. These steps, however, must always respect the taxpayer’s right to a dignified standard of living. The report also calls for holding company executives personally accountable for certain types of unpaid taxes, such as VAT or payroll deductions, to discourage negligent or evasive practices at the corporate level.
Throughout the report, the IMF references examples from around the world. Singapore, for example, encourages electronic payments by offering interest-free installment plans, while countries like Canada and South Africa allow longer timeframes for tax collection through extended statutes of limitation. Greece is also mentioned for its approach to legal challenges over tax bills. Unlike in many countries where taxpayers must pay the full amount before filing an appeal, in Greece one can contest a tax assessment by paying only the undisputed portion or a smaller percentage of the full amount. The IMF views this as a model of balance, enabling access to justice while still protecting the public purse.
Finally, the report acknowledges the need for flexibility during times of crisis. In line with measures adopted globally during the COVID-19 pandemic, it recommends temporary relief options such as payment deferrals, interest-free repayment arrangements, faster processing of tax refunds, and suspension of aggressive collection actions - tools that can help protect both public revenue and economic stability during turbulent periods.
