The World Bank’s Board of Executive Directors approved a 70-million-euro Revenue Administration Modernisation project for Romania, the bank reports in a press release.
Under this project, managed by Romania’s National Tax Administration Agency (ANAF), the World Bank is partnering with Romania to increase effectiveness and efficiency in the collection of taxes and social contributions, increase tax compliance, and reduce the administrative burden on taxpayers to comply with their responsibilities under the tax laws.
The loan approved for the project a LIBOR-linked Euro single currency IBRD Flexible Loan plus fixed spread, with 12-year maturity, including a five-year grace period, with level repayment pattern. The expected effectiveness date is October 2013.
The World Bank’s Doing Business Report 2013 shows that in Romania there is still much to be done to improve the ease of paying taxes and reduce the high number of tax payments. Also, Romania has a large number of small taxpayers facing a complex tax regime.
The World Bank underscores that revenue performance gains during the boom years of 2004-07 were modest with the revenue-GDP ratio rising from 27.2 to 29.0 percent; while revenue losses during the recession were severe, with tax-GDP ratio dropping back to 27.2 percent in 2010. Romania’s tax efficiency index is one of the lowest in EU countries, at 54 percent and 61 percent for VAT and social contributions respectively.
‘ANAF has laid a solid foundation for the next generation of revenue administration reforms that will span the next five years,’ says Bernard Myers, task team leader and senior public sector management. ‘ANAF has decided that the next reforms will focus on fighting tax evasion, reducing the administrative burden on taxpayers, and increasing collection efficiency and the project is contributing to these goals,’ Myers also says.
A modernised ANAF means one that is more efficient and effective. In general, a modern tax administration will seek to minimise direct contact with the taxpayer, and taxpayer service is provided through the use of a robust self-service website, through an accessible call centre, and other means available. Reduced physical contact also minimizes opportunities for corrupt behaviour. The World Bank project will implement an improved taxpayer service function to meet these challenges.
According to the World Bank, once the project has been completed, ANAF staff will be properly trained and distributed across the organisation, with a focus on staff re-assignment to key areas such as audit and debt collection.