The indicator assesses the procedures used to collect and monitor central government revenues. It relates to the entities that administer central government revenues, which may include tax administration, customs administration, and social security contribution administration. It also covers agencies administering revenues from other significant sources such as natural resources extraction. These may include public enterprises that operate as regulators and holding companies for government interests. In such cases the assessment will require information to be collected from entities outside the government sector. The indicator contains the following four dimensions and uses M2 (AV) method for aggregating dimension scores:

• Dimension 19.1. Rights and obligations for revenue measure

s • Dimension 19.2. Revenue risk management

• Dimension 19.3. Revenue audit and investigation

• Dimension 19.4. Revenue arrears monitoring


A government’s ability to collect revenue is an essential component of any PFM system. It is also an area where there is direct interaction between individuals and enterprises on the one hand and the state on the other. The government must provide those responsible for providing revenues with a clear understanding of their rights and obligations as well as the procedures to be followed in seeking redress, while ensuring that mechanisms are in place to enforce compliance.

Taxes and other revenue measures provide the funds to allow governments to achieve reallocation and expenditure policy objectives. They achieve their maximum contribution to better budgetary outcomes when they are collected efficiently and to the extent authorized by laws and regulations.

Revenue payers need to know their obligations so that they can comply with laws and regulations, and are discouraged from evading or delaying revenue contributions that apply to them. If revenue measures are not administered well, collections can be lower than intended, which results in fewer resources for reallocation and less capacity for the provision of services.


19:1. The indicator covers the administration of all types of tax and nontax government revenue for central government. It does not cover grants from development partners. A summary of revenue types is provided in the indicator description for PI-3. In the case of a resource-rich country, it should indicate the level of dependence on natural resource revenue. Assessors should cross-reference PI-3 and PI-20.

19:2. The PEFA assessment report narrative should also identify which entities administer most or the majority of central government revenues—and in the case of resource-rich countries, which agencies administer natural resource revenue. For countries with a high level of dependence on natural resources, the PEFA report narrative should describe the current framework for natural resource administration— across organizations and state entities, including their roles, functions, and responsibilities—with a special focus on the aspects to be measured by this indicator. In this regard, natural resource fiscal regimes typically involve the choice to tax several bases through a combination of tax and nontax instruments, in an effort to address the main features of the natural resource sector and their impact on revenue administration.

19:3. There are variations in the natural resources fiscal regimes across countries as well as in the way countries organize natural resources administration across different agencies, including:

(i) administration of all natural resources revenues by the tax administration, which is less common for petroleum than mining, and more common in countries with higher administrative capacity and more centralized governance structures;

(ii) fragmentation of natural resources revenue


Pillar Five: Predictability and Control in Budget Execution