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Report item 8 - Data on tax inspections are misleading

Apr 10, 2019

General Fiscal Administration
(Departmental budget No. 60)

The tax authorities conduct tax inspections to gather information needed for adequate taxation on the spot. The federal states communicate the data collected to the Federal Ministry of Finance. The Ministry relies on such communications to prepare and publish its annual statistics. The statistics provide information on the additional tax yield (tax revenues as a result of inspecting a tax case) and the inspection ratio (rate of businesses inspected against the total number of businesses in place).

The data the Ministry holds on the additional amount of tax received as a result of tax inspections is neither good for tax planning or steering the tax administration nor for providing information to the general public. The data statistics contain erroneous data and other shortcomings that add to providing a distorted picture of tax revenues. Tax inspections serve to gather information needed for adequate taxation on the spot. The federal states communicate the data collected to the Ministry. The Ministry uses the data to compile annual statistics and publishes them. We found that the data recorded in the Ministry’s statistics deviated largely from the data on the actual data yield. In the cases we checked, the tax administration had actually collected less than half of the additional amount stated in the data. Also the number of tax inspections recorded exceeded the tax inspections actually conducted by up to a third. On the one hand, the cause for the shortcomings we stated was that the Ministry set inadequate requirements for the annual statistics. On the other hand, tax authorities did not even comply with other clear and applicable requirements. We have demanded that the Ministry fully revise the requirements and the procedures for collecting reliable data on the tax yield.

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