Tax Administration

tax

Strong tax administration is critical, not only for collecting government revenue but also for promoting fair private sector competition and minimizing corruption.

When taxpayers are treated unfairly and tax evasion goes unpunished, compliant businesses face a comparative disadvantage and often feel forced to break the law to be competitive. Unfair and burdensome administration, poor communication, and excessive opportunities for corruption compound this problem.

To help Moldova's State Tax Service (STS) to break this cycle and create a system of voluntary compliance, driven by a fair tax regime, efficient administration, and strong enforcement, the BRITE program has been supporting the STS to improve its payment, collection, monitoring, and employee development processes. By streamlining these and other tax administration procedures, BRITE helps reduce compliance costs for the private sector, while increasing revenues for the public sector. Special emphasis has been placed on e-governance solutions that reduce administrative costs, improve service delivery, and reduce opportunities for corruption.

In addition, BRITE has identified several areas where improvements in tax policy and administration could reduce the time and cost to file and pay taxes. The first of these opportunities is the consolidation of reporting for local taxes, which was started under the USAID Business and Tax Administration Reform (BIZTAR) project with the participation of BRITE's Tax Advisor Lilia Tapu. This work was completed in early 2013 with the approval to reduce the number of local tax reports from 15 to 2. Additionally, the implementation of the Single Taxpayer Account, the consolidation of reporting for social taxes, and the simplification of tax depreciation of fixed assets could improve the ranking further. These recommendations have already been made by BRITE and some have since been included in the Government's reform plans.

Overall, BRITE's efforts have dealt with:

Supporting the STS to develop and enhance the Taxpayer Online Current Account to the benefit of taxpayers and the tax authority

Streamlining the tax payment system to reduce the number and frequency of individual tax payments, including social payments

Supporting the STS to advance the adoption of draft legal amendments to streamline voluntary liquidation

Identifying and implementing additional measures to streamline tax administration