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Revenue Administration Reform Project and Further Restructuring for Higher Efficiency and Effectiveness

The Revenue Administration Reform Project aims to implement an EU-compliant and efficient revenue collection system in Bulgaria. The project focuses on maximizing voluntary compliance, promoting effectiveness and efficiency, reducing corruption, improving equity and fairness, reducing the taxpayer compliance burden, and fostering economic growth.

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Revenue Administration Reform Project and Further Restructuring for Higher Efficiency and Effectiveness

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  1. REPUBLIC OF BULGARIA MINISTRY OF FINANCE NATIONAL REVENUE AGENCY Revenue Administration Reform Project and Further Restructuring for Higher Efficiency and Effectiveness ITD, 4-6 May 2011, Tbilisi, Georgia Nikolay Getov, Bulgaria

  2. NRA’s Mission and Vision The National Revenue Agency collects effectively taxes and social security contributions, while encouraging voluntary compliance and requiring from everyone their lawful liabilities Modern and Effective Revenue Administration in Service of Society

  3. NRA’s Strategic Goals Collection of taxes and social security contributions at high level of effectivenessand efficiency, and encouraging voluntary compliance NRA – reliable partner in the cooperation with national and international institutions NRA – preferred place to work Enhancing the organizational performance

  4. Revenue Administration Reform Project (RARP),2003-2009 Development Objectives Implement an EU-compliant, efficient, and sustainable revenue collection system that facilitates private sector development Reforms and activities focused on: • maximizing community voluntary compliance • promoting effectiveness and efficiency • establishing a professional workforce • reducing possibility for corruption • improving equity and fairness • reducing the taxpayer compliance burden • fostering economic growth

  5. Further reform objectives and reasons, 2010 • 22 of the 29 former Territorial Directorates were collecting only 20% of the total revenue • Uneven allocation of audit efficiency and workload – need to improve quality of control • Need to reduce the corruptions risks • Need to reduce the number of mid-level managers • Maintaining full capacity of supportive functions in each of the former TDs was expensive • Need to strengthen Large Taxpayers (LT) services and the LT Directorate itself

  6. The context – 2009 • Economic crisis • New government was appointed in mid 2009 • Government’s requirements for optimization, incl. staff reduction • Merger with the State Receivables Collection Agency • IMF recommendations

  7. The Reform as of 2006: Scope of Work Change NRA TAX ADMINISTRATION NATIONAL SOCIAL SECURITY INSTITUTE Corporate income tax Personal income tax Value added tax Corporate income tax Personal income tax Value added tax + Premiums collection: Obligatory Social Security Contributions Obligatory Health Insurance Contributions Benefits distribution: Pensions and other Benefits Premiums collection: Obligatory Social Security Contributions Obligatory Health Insurance Contributions • Outside NRA: • Excise duties • Local taxes and fees

  8. The change: Organizational structures • Before 2006 • From Jan’ 2006 • NSSI (budget+expenditures) • NSSI NSSI – HQ NSSI – HQ 28 Territorial directorates 28 territorial directorates • NRA • Tax Administration General Tax Directorate NRA – HQ 5 Appeals and Performance Management Directorates 29 TDs 5 Regional Directorates 28 TDs 112 tax offices 1 Medium-Sized Taxpayers Directorate 167 tax bureaus 1 Large Taxpayers Directorate

  9. The change: Organizational structures • 2006-2009 • From Jan’ 2010 • NRA • NRA NRA – HQ NRA – HQ 5 Appeals Directorates 5 Appeals Directorates 28 TDs 5 TDs 1 Medium-Sized Taxpayers Directorate 5 Medium-Sized Taxpayers Directorate 1 Large Taxpayers Directorate 1 Large Taxpayers Directorate • State Receivables Collection Agency (SRCA)

  10. Results and Benefits For the government Higher revenues for the budget Corruption pressure and risks are restrained Decreased tax and social security rates Introduced efficiency improvements equivalent to 20% staff reduction for the period 2006-2009 NRA made the administration of all obligatory social security and health insurance contributions free of charge Better exchange of information and joint actions with other authorities

  11. Results and Benefits For the clients (1) One stop shop Preserved option for filing documents and receiving services in all 28 major towns where NRA offices are located E-services A single tax and social securityaccount and a single certificate for the presence or absence of liabilities Call-centre Joint audits for taxes and social security contributions “Customer, not taxpayer”

  12. Results and Benefits For the clients (2) Faster VAT refund New integrated Revenue Management System Creating VIP services for large and medium-sized taxpayers Simplified and unified forms, procedures, and taxpayer services Consultative Board of the NRA

  13. Results and Benefits For the control (audit) process Centralized assignment of audits and selection of cases on larger regional basis Optimized and automated selection process Flexibility of the resource distribution between the offices of one TD Risk management system (non-compliance)

  14. Lessons learned from the reform • Need for strategic thinking and planning at senior levels • Project management skills and teams • Involve middle level management and encourage delegation • Keep an eye on motivation, human resource turnover and organizational risks • Provide for budget and resources • On time Communication plan • Ensure and observe Key performance indicators (KPI)

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