Choosing between Centralized and Decentralized Models of Tax Administration
International experience has shown a variety of approaches to the organization and degree of decentralization in tax administration. It is quite common to observe, even in countries that are otherwise signiﬁcantly decentralized, as is the case in the Scandinavian countries, a highly centralized organization of tax administration. Nevertheless, there are other countries, in small number, where tax administration is highly decentralized; in some cases, as in Germany, even central government taxes are administered by the decentralized sub-national governments. The fundamental questions addressed in this article are the following: what is the most appropriate approach to organizing the vertical structure of tax administration, and what are the determinant factors that may make an approach more or less optimal in any particular country?