1
Jan 04, 2016
1
2
Project Development Objective
Implement an EU-compliant, efficient, and sustainable revenue collection system that facilitates private sector development
Complementary objective: separation of central and municipal revenue collection
3
Basic Facts
Original project cost:€58.8 million, o.w. €31.9 million Bank financing
Duration: close to 6 years (August 2003-June 2009)
World Bank actual disbursements: €21 millionout of an original allocation of €32 million
58 contracts signed and completed under the project
Project development objectives fully achieved. Highly satisfactory performance maintained throughout project implementation
4
Basic Facts: Cost of Project ComponentsActual Costs per Component, million euro
Policy Support, 0.74 Organization Development, 0.35
Increasing Operational Efficiency,
20.9
Outreach and Participation, 2.1
Office Upgrading, 17.1
Project Management, 0.85
5
Key results: Significant Revenue IncreaseTax and Social Contribution Revenues, BGN billion
Source: NRA
2002 2003 2004 2005 2006 2007 20080.0
5.0
10.0
15.0
20.0
25.0
Taxes Social contributions Municipal fees
6
Key results: Highest Revenue Gains Among the New Member States
Slovakia
Slovenia
Estonia
Lithuania
Romania
Poland
Hungary
Czech Republic
Latvia
Bulgaria
-5 -4 -3 -2 -1 0 1 2 3 4 5
Hungary
Poland
Czech Republic
Slovenia
Bulgaria
Romania
Slovakia
Estonia
Lithuania
Latvia
0 1 2 3 4 5 6 7 8 9 10
Tax and SC Revenues Increase, 2007-2002, % of GDP
Annual GDP Growth Rate, 2002-2007, %
Source: Eurostat and World Bank staff calculations
7
Key results: Lowest Tax Burden
HungaryEstonia
Slovak Republic
Czech Republic
Romania
LithuaniaPoland
SloveniaLatvia
Bulgaria
0 10 20 30 40 50 60 70
NMS: Total Tax Rate, % of Profit
Source: Doing Business 2010
CIT Dividend income tax
PIT (max rate)
Social Con-tributions
0
5
10
15
20
25
30
35
402002 2008
Bulgaria: Tax and Social Contribution Rates, 2002 and 2008, %
8
Key results: Lower Compliance Costs
2002 20080%
10%20%30%40%50%60%70%80%90%
100%Online Filing
Online and Diskettes
48.7%
1.4%
Online filing, % declarations filed online
Simplified laws and procedures
Stable tax legislation
Integrated revenue collection for taxes and social contributions
Improved taxpayer/contributor services promoting understanding of laws and procedures
Increased use of e-filing and e-payment
Special focus on large and medium-sized taxpayers and contributors
Source: NRA
Still more work is needed to further reduce taxpayer compliance costs
9
Key results: Efficiency of Revenue Collection Improved
2002 2003 2004 2005 2006 2007 20080.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%Collection cost, % of Revenues
Source: NRA
Field offices were consolidated from 340 in 2002 to 29 currently and 7 offices soon
Revenue per revenue staff tripled in 2008 compared to 2002
Revenues are collected by 25% less staff in 2008 compared to 2002
Collection costs in Bulgaria much lower than in NMS—0.8 percent of revenues
Efficiency of audits improved—less audits but more enforced revenue per audit
Consolidating Sofia operations would further increase efficiency of NRA and taxpayers
10
Key results: Voluntary Compliance Increased for All Tax Types
VAT compli-
ance
CIT com-pliance
PIT com-pliance
0102030405060708090
10020022008
Compliance rates, %
Source: NRA
VAT compliance now one of the highest in the EU
CIT compliance increased by 13 percentage points
PIT and social contribution compliance increased by 7 percentage points
Additional tax policy and administration measures needed to improve PIT and CIT compliance
11
But Some Unfinished Business• Consolidate Sofia office network
• Implement second phase of Revenue Management System
• Increase use of e-filing
• Decrease taxpayer compliance costs
Refurbished Building of NRA in Varna
Design of Sofia Building of NRA
12
Key Revenue Administration Reforms
Implemented institutional arrangements able to manage evolving revenue collection challenges of the country
Implemented capacity to conduct compliance studies, analyze proposed bills, policies and regulations
Implemented strategic focus to management, strong HR and integrity management capacity
Streamlined, optimized, and automated business processes Implemented ICT infrastructure and core functions of integrated
revenue management system Improved taxpayer services and external and internal
communications Absorbed capacity for project management and change management Upgraded field and headquarters office facilities
13
Key Factors Affecting Outcomes
Strong political commitment and support from MOF Active management board representative of key stakeholders Competent, committed, dynamic and high integrity NRA leadership Clear vision of organization’s mission and future from the outset Use of strategic management Evidence of early success—transfer of municipal fee collection Timely implementation of modern legislative framework High level of accountability of management and staff Excellent project and change management Continuous feedback from staff, taxpayers and stakeholders
14
Lessons Learned
Revenue administration reform is a multi-year effort that need to be understood and sustained by successive governments
Ownership by top government ministries and implementing agency are key
Integration of revenue collection involves multiple stakeholders with varying concerns and interests. This can be addressed by stakeholders actively participating in the management of the process
Performance standards for revenue administration must be set and continuously measured and evaluated
Continuity of positive leadership is another key factor
e-Tax systems are essential to reduce compliance costs but implementation may be complicated by legal obstacles
Early changes to legal framework are crucial to provide clear and sufficient legal basis for the reform
Early wins are crucial to build confidence in the reform
15
Bulgarian Revenue Administration Reform
A success that needs to be replicated to other parts of public administration