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NLC TV spot
National Licensing Center campaign, June-July 2009 |
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| Tax Administration Reform |
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The Tax Component of the Millennium Challenge Corporation Albania Threshold Program II continues the successful work carried out under Stage I towards establishing a modern tax administration that conforms to international best practices and reduces corruption in tax collection, in line with the provisions of the 2008 tax procedures law.
MCCA2’s Tax Component works to achieve the following results:
Functional and geographic reorganization of the Tax Administration completed. Key MCCA2 initiatives, based on the August 2008 reorganization package, include the improvement of strategic planning, reduction of the number of branch tax offices, elimination of tax police, and the consolidation and IT upgrades in audit, collection and processing.
Investigation mechanisms established. The activities supported by MCCA2 include setting-up an anti-corruption internal investigation unit, developing a code of conduct for tax employees, establishing a denunciation system for tax evasion and tax corruption, developing
procedures for the Criminal Investigation Directorate.
Taxpayer assistance programs established. MCCA2-supported initiatives include the creation of a Tax Consultative Council that will strengthen public oversight and consultation with businesses for improving tax procedures, the establishment of the Taxpayers’ Advocate to ensure the respect of taxpayers’ rights, and of regional taxpayers service offices.
E-filing and e-payment expanded to all taxpayers. Continuing the tax eservices roll out begun in Stage I, MCCA2 supports the initiative for making these services available to all taxpayers.
TAX ADMINISTRATION REFORM: MCCA2 GOALS AND TARGETS
 Create a modern tax administration based on Tax Procedures Law
Tax revenues increased to 28 percent of GDP
World Bank ranking on “paying taxes” improved from 118th to 75th
Anti-corruption unit successfully prosecutes tax cases
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TAX ADMINISTRATION REFORM: MCCA2 KEY YEAR 1 ACCOMPLISHMENTS
Supporting GDT reorganization. During year 1, MCCA2 assisted in reorganizing the GDT’s regional operations and reducing the number of regional offices considerably. The Program also worked extensively to establish, equip, automate, and train the new Collection Directorate, including developing a tax account system for stop filers and balance-due taxpayers that can be used to create and deliver casework to the new directorate.
Establish Implementing risk-based audits. In May 2009, GDT launched a completely redesigned audit-selection process developed with MCCA2 support, in which regional offices were stripped of the often abused authority to select audits. Under the new process, the Audit Directorate within GDT headquarters selects most audits using an automated risk analysis formula.
Establishing investigative directorates. During Year 1, MCCA2 helped the Investigation Directorate and the Internal Investigation Directorate establish the workflow design, operating procedures, and investigative standards required to sustain a successful prosecution of tax crimes or corruption. In July, MCCA2 helped the GDT launch a denunciation process for tax evasion and corruption using also an informant toll-free hotline. In addition, the GDT’s director issued an all-employee directive encouraging employees to report misconduct and noting how employee competence and integrity can encourage citizens to comply with tax laws. As a result, the Investigation Directorate made 119 criminal tax referrals (involving 66 business taxpayers) to regional prosecutors.
Expanding e-filing and e-payment. During Stage I, the project put in place an e-filing system in 11 regions (where the GDT had automated operations), which was used by approximately 1,000 business taxpayers, including most of the largest businesses. During the first year of Stage II, the GDT, in cooperation with MCCA2, completed the automation of tax records in the four remaining regional offices, thereby enabling all taxpayers to file their taxes electronically. By the end of 2009, some 2,200 taxpayers were using e-filing, submitting 6,700 declarations per month. Based on this successful experience, the Albanian government announced that all business taxpayers with annual turnover of at least 5 million lekë ($50,000) will be required to e-file their declarations for VAT, payroll tax, health insurance, and corporate income tax starting in 2010. To help inform an estimated 18,000 new e-filers about these requirements, MCCA2 assisted GDT’s Taxpayer Service Directorate in producing an explanatory brochure about how to use the e-filing system. To ensure the GDT can handle the expected increase in the number of users, the program also purchased three high-speed servers for the GDT and upgraded the server room’s electrical, air conditioning, and security systems.
Creating a Taxpayer Advocate and a TaxConsultative Council. In December 2009, MCCA2 proposed an amendment to the Tax Procedures Law to establish a Taxpayer Advocate, which will assist taxpayers in dealing with the tax administration. The program also started working with high-level officials in the GDT and Ministry of Finance to launch a Tax Consultative Council, a group of tax administration and private-sector representatives that will meet regularly to offer recommendations and feedback on matters of tax administration programs and policies.
For more information on the MCCA2 Tax Administration Component progress, please visit our Publications pages:
Newsletter, Fact sheets, Information kits and Success Stories.
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Friday, August 27, 2010
The application process for membership in the Tax Council begins
By September 23, 2010, chambers of commerce and industry, business associations, professional associations of accountants and accounting experts, other professional associations established by special law, as well as other non-profit organizations that represent large taxpayers’ groups would be able to submit at the Ministry of Finance their applications for membership in the Tax Council.
Established based on an April 2010 amendment of the law “On Tax Procedures in the Republic of Albania”, with support by MCCA2, this Council serves as a consultative body and a technical cooperation forum between the Ministry of Finance, General Directorate of Taxation, and taxpayers. Its purpose is to discuss and propose measures to ensure implementation of the tax legislation at a lower administrative cost for the tax administration and lower financial burden for the taxpayers.
For more information on the Tax Council and to download the Application Form for membership in the Council, please visit www.minfin.gov.al and www.tatime.gov.al.
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Millennium Challenge Corporation
Albania Threshold Program II
Rruga "Pjetër Budi"
Classic Construction Building
First floor, No. 10
Tirana 1000, Albania
Tel: +355 4 23 80 400
Fax: +355 4 23 80 424
Email: office@mcata.org.al
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