World Bank supports Moldovan tax administration reform

7 Jun 16

The World Bank is to help Moldova overhaul its tax administration to bring in a centralised and unified system that will improve revenue collection, compliance and services.

While the country has seen a big reduction in the amount of time it takes a citizen to pay their taxes thanks to an e-declaration system, collections have declined for three years in a row. In 2014, total tax take reached a five-year low of 30.2% of GDP.

The bank said this poor performance is largely a consequence of structural and capacity constraints in tax administration and is spending $20m to help deliver reforms.

One issue, identified by stakeholders from the business community who were interviewed as part of the World Bank’s project, is a lack of transparency.  

Taxpayers see tax administration as inefficient and corrupt, with 40% of households and 46% of businesses reporting that bribes are frequently needed to solve problems, according to a Transparency International survey. The organisation estimates $2.54m was paid in bribes in 2012.

The bank also flagged a lack of guidance on tax policy and procedures, a lack of clarity on the rules and processes for audits and appeals, and limited access to information on the appeals process as “key issues contributing to increased governance risks in tax administration” in Moldova.

Alexander Kremer, World Bank country director for Moldova, said the bank’s funds will support the country’s goal of forging a “modern, computerised tax service where everybody can see the rules and plays by them”.

He added: “The result will be less hassle for the taxpayer and more tax collected for schools, medicines and roads.”

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