Proposing a Model for Taxpayer Credit Scoring

Abstract

The present study proposes a hybrid model for taxpayer credit scoring. In this regard, after examining taxpayer behavior, and in order to present a taxpayer credit scoring model, the steps of the Compliance Risk Management Program of the Organization for Economic Co-operation and Development (OECD, 2004) were applied to the Iranian tax system. This program includes the stages of determining the operational context of the compliance risk management program (internal and external), identifying the risks of taxpayer non-compliance, ranking, prioritizing, and assessing risks, as well as implementing strategies to address and mitigate risks. Accordingly, in this stage, 44 non-compliance risks were identified and classified into four categories: non-registration and identification, non-submission, failure to provide accurate information (income concealment), untimely tax payment, and the availability of skilled and competent human resources. The identified risks were then validated through a fuzzy Delphi approach and expert consultation in the field. The proposed model consists of two main phases: pre-registration analysis and post-registration analysis. In the pre-registration phase, it is necessary to implement controls regarding the legal grounds for applicants’ registration. As part of the registration process, the tax authority can cross-check the information provided in the taxpayer’s application form with other registrations using the same postal code, residential addresses, mobile phone numbers, bank accounts, suspicious databases, and data from other governmental agencies. Moreover, making initial contact with taxpayers to verify the accuracy and authenticity of the submitted information constitutes an effort to prevent fraud. In the post-registration analysis phase, in addition to providing education and counseling services regarding the risks of tax filing, payment, and declaration, the involvement of the tax authority occurs only when risks are realized, and this takes place after the registration process. Overall, the findings of this study highlight the need for special attention by tax authorities to improve processes and increase transparency within the tax system.