Revenue Administration Reform Project and Further Revenue Administration Reform Project and Further Restructuring for Higher Efficiency and Effectiveness REPUBLIC OF BULGARIA MINISTRY OF FINANCE NATIONAL REVENUE AGENCY ITD, 4-6 May 2011, Tbilisi, Georgia Nikolay Getov, Bulgaria

2 NRA’s Mission and Vision Modern and Effective Revenue Administration in Service of Society The National Revenue Agency collects effectively taxes and social security contributions, while encouraging voluntary compliance and requiring from everyone their lawful liabilities

3 NRA’s Strategic Goals Collection of taxes and social security contributions at high level of effectiveness and efficiency, and encouraging voluntary compliance NRA – preferred place to work Enhancing the organizational performance NRA – reliable partner in the cooperation with national and international institutions

4 Revenue Administration Reform Project (RARP), Development Objectives Implement an EU-compliant, efficient, and sustainable revenue collection system that facilitates private sector development Reforms and activities focused on: maximizing community voluntary compliance promoting effectiveness and efficiency establishing a professional workforce reducing possibility for corruption improving equity and fairness reducing the taxpayer compliance burden fostering economic growth

5 Further reform objectives and reasons, of the 29 former Territorial Directorates were collecting only 20% of the total revenue Uneven allocation of audit efficiency and workload – need to improve quality of control Need to reduce the corruptions risks Need to reduce the number of mid-level managers Maintaining full capacity of supportive functions in each of the former TDs was expensive Need to strengthen Large Taxpayers (LT) services and the LT Directorate itself

6 The context – 2009 Economic crisis New government was appointed in mid 2009 Government’s requirements for optimization, incl. staff reduction Merger with the State Receivables Collection Agency IMF recommendations

7 The Reform as of 2006: Scope of Work Change Corporate income tax Personal income tax Value added tax Outside NRA: Excise duties Local taxes and fees Corporate income tax Personal income tax Value added tax + Premiums collection: Obligatory Social Security Contributions Obligatory Health Insurance Contributions Premiums collection: Obligatory Social Security Contributions Obligatory Health Insurance Contributions Benefits distribution: Pensions and other Benefits TAX ADMINISTRATION N R A NATIONAL SOCIAL SECURITY INSTITUTE

8  Tax Administration General Tax Directorate 29 TDs 5 Regional Directorates 167 tax bureaus 112 tax offices  NSSI NSSI – HQ 28 Territorial directorates  NRA  NSSI (budget+expenditures)  Before 2006  From Jan’ 2006 NRA – HQ 28 TDs NSSI – HQ 28 territorial directorates The change: Organizational structures 5 Appeals and Performance Management Directorates 1 Large Taxpayers Directorate 1 Medium-Sized Taxpayers Directorate

9  NRA   From Jan’ 2010 The change: Organizational structures  State Receivables Collection Agency (SRCA) NRA – HQ 5 TDs 5 Appeals Directorates 1 Large Taxpayers Directorate 5 Medium-Sized Taxpayers Directorate NRA – HQ 28 TDs 5 Appeals Directorates 1 Large Taxpayers Directorate 1 Medium-Sized Taxpayers Directorate

10 For the government Results and Benefits Higher revenues for the budget NRA made the administration of all obligatory social security and health insurance contributions free of charge Corruption pressure and risks are restrained Introduced efficiency improvements equivalent to 20% staff reduction for the period Decreased tax and social security rates Better exchange of information and joint actions with other authorities

11 For the clients (1) Results and Benefits E-services Call-centre “Customer, not taxpayer” Preserved option for filing documents and receiving services in all 28 major towns where NRA offices are located A single tax and social security account and a single certificate for the presence or absence of liabilities One stop shop Joint audits for taxes and social security contributions

12 For the clients (2) Results and Benefits Faster VAT refund Creating VIP services for large and medium- sized taxpayers Consultative Board of the NRA New integrated Revenue Management System Simplified and unified forms, procedures, and taxpayer services

13 For the control (audit) process Results and Benefits Centralized assignment of audits and selection of cases on larger regional basis Flexibility of the resource distribution between the offices of one TD Optimized and automated selection process Risk management system (non- compliance)

14 Lessons learned from the reform  Need for strategic thinking and planning at senior levels  Project management skills and teams  Involve middle level management and encourage delegation  Keep an eye on motivation, human resource turnover and organizational risks  Provide for budget and resources  On time Communication plan  Ensure and observe Key performance indicators (KPI)