Canada – new tax on digital imports?

 

5 March 2014

The Canadian government is considering introducing a sales tax on e-commerce supplies made by foreign businesses to residents of Canada. At the moment, people that import digital services (also known as intangible personal property) are supposed to self-assess GST unless the services are used at least 90% for business purposes. In reality, this often does not take place leading to loss of tax revenue for the Canadian Revenue Agency and putting domestic suppliers at a disadvantage. 

The Canadian government has looked at other countries that have implemented such rules, including the EU and South Africa, and are asking for comments to be made by the relevant stakeholders.
 

Source:  accordance vat

Gov’t To Collect Just Over Half Initial Vat Goal

 

10 March 2014

The Government will realise just over half of its projected Value-Added Tax (VAT) net revenue increase in the first year, the International Monetary Fund (IMF) has warned, with forecast increases in Customs and real property taxes also over-optimistic.
 
The IMF, in its long-awaited Article IV report on the Bahamas, said the likely delays in implementing VAT, and this lack of nation’s inexperience in managing it, given the absence of an already-existing consumption tax, meant first year revenues from the new tax were likely to amount to just 1.3 per cent of GDP. That percentage is almost a full percentage point lower than the 2.2 per cent net revenue gain the Government is forecasting. In dollar terms, assuming an $8 billion Bahamian GDP, the IMF’s 1.3 per cent is equivalent to a $104 million revenue increase – more than $70 million below the Government’s $176 million.
 
The Article IV report also suggested that the Government had over-estimated the revenue boost it would receive from ongoing Customs and real property tax reforms. While the Ministry of Finance has pegged the improvement as equivalent to 0.5 per cent of GDP for Customs, and 1 per cent for real property tax, the IMF’s are 0.3 per cent and 0.6 per cent, respectively. Collectively, the IMF’s projections are for revenue improvements that, in dollar terms, are $48 million below the Government’s for Customs and real property tax reforms.
 
The Fund, meanwhile, placed delays in implementing fiscal consolidation as among the risks likely to have the greatest negative impact on the Bahamian economy, alongside crime, a major hurricane, another US fiscal shock and “disappointing results” from Baha Mar’s operational start.
 
Apart from crime and a natural disaster, the IMF rated a delay in fiscal consolidation as the most likely of these scenarios to happen – something that could “pose risks to long-term debt sustainability and the country’s investment grade credit rating”. This again shows the pressure the Government is under to make meaningful revenue and fiscal reforms, while at the same time doing nothing that would impair economic growth. It also highlights the dilemma facing the Christie administration and private sector, which have agreed that reform must happen but are divided on the ‘what’ and ‘how’. In trying to ensure the Bahamas makes the right decision, neither can delay indefinitely.
 
Touting VAT as providing “a more efficient means to broaden the tax base, increase revenues and improve the effectiveness of tax administration more generally”, the IMF report said the proposed 15 per cent rate, based on experience, was likely to generate gross revenues equivalent to 7 per cent of GDP. This translates into $560 million, in line with the Government’s projections, with the Christie administration’s VAT net revenue gain pegged at 2.2 per cent of GDP.
 
The IMF, though, cast doubt on whether the Government would hit that target in the 2014-2015 fiscal year, if indeed it is introduced in time, due to “capacity limitations in revenue management”.

“Other limiting factors in the initial year of the reform include delays in rolling out the public campaign and securing passage of relevant legislation in Parliament, which could complicate the timely acquisition and testing of IT systems needed in both the public and private sectors,” the Fund added. “The absence of a consumption tax, and the lack of local experience in its management, would contain the initial revenue gains from the VAT as well. Because of these constraints, staff projects the net revenue gain from the VAT at 1.3 per cent of GDP for the initial fiscal year 2014-2015.”

 

The IMF warned, though, that failing to implement VAT would see the Government’s fiscal consolidation plans “veer considerably off track”, with the central government’s debt-to-GDP ratio “already above” 60 per cent by the time the next fiscal year starts.

“Staff underscored setting the VAT base as broadly as possible, and encouraged the authorities to ensure that adequate efforts and resources are deployed to secure the timely implementation of the reform,” the Fund added.

 

It also disclosed that, combined, the Customs and real property tax departments were generating revenues “below 50 per cent of the potential”.
 
“The Bahamian Customs and real property tax departments rely heavily on manual procedures and outdated information systems. As a result, revenue collection is currently estimated at below 50 per cent of the potential,” the Article IV report said.

“Envisaged reforms aim to bring management of the two revenue agencies up to international standards, involving extensive computerisation of revenue assessment and collection functions, and introduction of risk-based monitoring of operations. Staff concurred with the authorities that reform of the two revenue departments could yield significant revenue gains. However, given pervasive capacity limitations and the record of low tax compliance, staff urged caution in factoring the anticipated revenue improvements into the medium-term fiscal framework.”

 

Elsewhere, the IMF report showed that collective public corporation debt (guaranteed by the Bahamian taxpayer for the likes of Bahamasair, Water & Sewerage etc) had increased from 10.5 per cent of GDP in December 2008 to 16 per cent at end-June 20134.

“The Bahamian public corporations continue to face significant financial challenges, notably stemming from inefficiencies in operations (excessive staffing, aged facilities), but also reflecting these entities’ tacit social duty to provide affordable services to all residents including in remote Family Islands,” the Fund added.

 

The Government’s fiscal plan calls for tax revenue to increase by an average 0.8 percentage points of GDP over the next five years, with the debt-to-GDP ratio falling from a 59.5 per cent peak to 55 per cent by the 2017-2018 fiscal year.
 
The bulk of the revenue increase will come from VAT, with “only moderate savings achieved on government expenditures in view of limited spending flexibility”.

With Baha Mar and other projects set to boost private sector employment prospects, the IMF said “pressure on central government hiring should be manageable beyond 2014, permitting limitation of wage outlays to the last three years’ average of 7.4 per cent of GDP”.

 

But, despite government projections that the existing 1.9 per cent primary budget deficit will be balanced by the next fiscal year, the IMF warned that there were “downside risks” due to over-optimistic fiscal and growth forecasts in the past.

“The forecast track record shows a tendency toward optimism in staff forecasts of real GDP growth and the primary balance, pointing to downside risks to the baseline scenario. This underscores the need for rigorous adherence to the ongoing fiscal consolidation programme,” the IMF said.
 

 

Source: Tribune242

Nigeria: Stepping up tax systems in Africa

 

11 March 2014

Payment of tax is a constitutional responsibility of working class citizens and a source of revenue for the government. Through taxes the government raise revenue to provide social amenities for its citizens and develop infrastructure and also improve the economy of the nation with its attendant impart on standard living of the citizenry. However, it is one of those responsibilities the citizens reluctantly perform especially as many do not understand why they pay the taxes. This is even as there are sometimes issues relating to double taxation.
 
Corruption and vague tax systems have also been identified as factors preventing Nigerians and other Africans from paying taxes. Integrity of tax authorities and officials also thwarts citizens in Africa from paying their taxes.
 
A survey conducted by Afrobarometer, an international network in collaboration with CLEEN Foundation Nigeria has however revealed that from the 29 countries in sub-Saharan Africa comprising Southern, East and West Africa, there was widespread citizen commitment to the principle of taxation. Findings showed that 66% Africans believe that taxes must be paid for their countries to develop, 52% favours paying higher taxes in exchange for better services, compared to just one in three (35%) who would give up services in favour of keeping taxes low.
 
However, perceived corruption among tax officials appears to undermine commitment to the integrity of the tax system and large majorities report that tax systems remain opaque. 62% say it is difficult t find out what taxes they owe while 76% say it is difficult to find out how the government uses tax revenue.
 
Speaking at the presentation of the survey data in Lagos, Rose Aiko, Director of Research on Governance and Delivery at REPOA Policy Research for Development, Tanzania, said that seven in ten people found it difficult to know how the government spends the taxes and that distrust in tax officials increases tolerance for tax avoidance in principle and reported non-compliance with tax obligations in practice.

“A majority of 52% across Africa supports taxation provided it will guarantee more services for the citizens except from Malawi and Lesotho which have minority. Africa region is facing taxation challenge. From the survey, majority of Africans are willing to pay taxes but are frustrated that the way governments spend its money is not accessible. Integrity of tax authorities and officials is very important. To enhance tax payment, integrity is vital. Tax payment will help Africa to have more revenue to develop the continent. Mobilisation of resources through taxation is a top priority on Africa’s development agenda. Many countries have had to rely on foreign donors to fill the gap. As governments face demand for better services and improved living conditions from growing populations, reform of tax and public finance systems to improve domestic revenue collection are likely to remain top development priorities,” she said.

 

The survey highlights that support for taxation is a majority position in all regions, but is substantially higher in West Africa (73%) than East (59%) or Southern Africa (60%). West Africans express the highest levels of support for taxation in principle, but the lowest levels of confidence that everyone complies with tax obligations. East Africans face the greatest information barriers. Southern Africans have better access to information, and perceive far less corruption, but they also report that it is somewhat easier to avoid paying taxes than in other regions.
 
On the legitimacy of taxation, Africans widespread recognition of its value is matched by their support for the role of revenue authorities in collecting taxes from people, and to people’s obligation to pay what they owe. Across the 29 countries fully 70% say tax agencies have a right to collect taxes. Tax departments enjoy the highest levels of legitimacy in Ghana (90%) and Niger (84%). However, many Africans reject deception about paying tax obligations, though not all are willing to fully condemn it. A large majority (84%) find tax evasion wrong; just under half (49%) deem it not only wrong but also punishable, while 35% find it wrong but understandable.
 
While most governments have not succeeded in making information on taxes owed accessible, they nonetheless appear to have established a credible threat of enforcement, 69% of respondents believe that it is difficult or very difficult to avoid paying income or property taxes that is being owed the government. East Africans report the highest levels of frustration with the opaqueness of the tax system, with nearly eight in ten (75%) saying it is difficult to know what taxes to pay and nearly nine in ten (86&) reporting difficulty finding out how the government spends revenue.
 
The findings therefore suggest governments need to improve the transparency and accountability of revenue authorities if they want to strengthen the foundations of a sound revenue system.
 
Consequently, reform of domestic taxation systems has been accorded high priority across the continent over the past two decades. The survey data recommend that Africans are largely on board: people affirm that national development should be built on a foundation of domestic taxation, rather than relying solely on other sources of revenue. But transparency of tax authorities and accountability of public finance systems remain public concerns.
 
The findings stressed that “improving transparency and accountability among revenue authorities must therefore remain a cornerstone of efforts to strengthen domestic revenue generation. Improving popular access to information about taxes people owe and about public spending, while reducing corruption and misuse of public monies will help encourage voluntary compliance and enhance government revenue generation.”
 
On his part, Nengak Daniel Gondyi, Programme Officer, CLEEN said for citizens to participate in taxation, they need to know issues and government also has obligation to return to the citizens.

“Citizens would be the one to contribute to the policy system. Majority of Nigerians are willing to pay taxes. They believe it is wrong when you avoid paying taxes.” While declaring that the survey data revealed a worrying report that 18% citizens made payment to non-state agents he said, “This should be stopped because it will be damaging the image of tax officials. The essence of the presentation is that policy makers can work with and respond to some of these findings.”

 
 
Source: daily independent, Nigeria

VAT Lottery: In Slovakia, Real Lottery Prize Goes to Tax Man

 

19 April 2014

When Jozef Lazarcik, a 35-year-old factory worker, heard his number called on national television here recently, he pumped his fists, hardly believing his luck.

He had registered only nine receipts with Slovakia’s new tax lottery, and yet he had just won a new car. Over the last 10 years, Slovakia’s revenue from value-added taxes, a type of sales tax, has declined. But hiring auditors and pursuing individual merchants and service providers in court is expensive and slow. So last fall, the government decided to put a lottery in the mix. The idea is to enlist average citizens to collect receipts from their purchases and register them with the government, creating a paper trail for transactions and forcing restaurant and shop owners to pay the sales taxes they owe.
 
As Slovakians register their receipts for the lottery, a computer will also tell them if a merchant has issued a receipt with a fake tax identification number, so they can report suspected fraud. For any purchase worth more than 1 euro, or about $1.38, Slovakians can enter their receipts in a monthly lottery to win €10,000, a car or a chance to be a contestant on the Slovakian version of “The Price Is Right.” Tax officials say the lottery is already having a big impact, and other European countries that are also struggling with the collection of value-added taxes have considered it — including Portugal, which started its own tax lottery on Thursday.
 
In Slovakia, about 450,000 people have taken part, registering about 60 million receipts, officials said. Complaints about merchants who will not give receipts have skyrocketed. In the six months before the lottery began, the government received about 300 such complaints, officials said. In the first few months after it started, that number rose to 7,000. Value-added taxes are an important source of income for European countries, but collecting them has grown more and more difficult during the economic crisis.
 
A recent report for the European Commission found that uncollected value-added taxes in the European Union — a measure known as the value-added tax gap — amounted to about $267 billion in 2011. Across the bloc, that gap increased by five percentage points on average since the onset of the debt crisis in 2008. But for some countries — especially Greece, Ireland, Latvia, Portugal, Slovakia and Spain — the problem has been particularly acute.
 
A decade ago, Slovakia was able to collect about 80 percent of taxes due, said Peter Golias, the director of Ineko, a nonprofit economic research group here. That figure is now about 60 percent, putting Slovakia in a league with Greece for the poorest record on the collection of value-added taxes.
 
Tax collection began to increase early in 2013 and rose more sharply after the lottery began. Officials say they collected about $512 million more in 2013 than in 2012. How much of that is a result of the lottery may never be clear. But Mr. Kazimir said that it was surely a big factor, and that it had cost only about $276,000 to get the lottery going. He said the new influx of complaints had already proved that it was not just small businesses that were cheating: Chain stores have also been caught giving fake receipts.
 
In Portugal, too, the value-added tax gap has grown since the start of the economic crisis. Having asked for a bailout of about $108 billion in 2011, it is under pressure from its creditors to do better. 

Portuguese officials believe their tax lottery will be especially effective because gambling is popular among Portugal’s 10 million inhabitants, who are already among the biggest participants, in terms of spending per capita, in the EuroMillions lottery shared by nine European countries. Over the past decade, the Portuguese have spent an average of about $1.2 billion a year on EuroMillions.
 
Paulo Núncio, the Portuguese secretary of state for tax affairs, said the government was counting on the new lottery to raise its tax revenue by about $830 million to $1.1 billion. Even before the start of the Portuguese tax lottery, it was generating excitement. In the food court of the Amoreiras shopping mall in Lisbon recently, customers ordering hamburgers joked that their lunch order could result in a new car.
 
The lottery project has drawn criticism from some Portuguese opposition politicians who say it is a capitalist tool to turn citizens into tax inspectors.
 
Diogo Ortigão Ramos, a partner at the law firm Cuatrecasas, Gonçalves Pereira in Lisbon, said the lottery also raised “questions of compatibility with E.U. law.” For the time being, though, the European Commission has not addressed this issue. Portuguese merchants say they have already seen a change. João Raposo, a restaurant owner, said customers were increasingly asking for a full tax receipt, when “five years ago nobody would have bothered.”
 
 
Source: nytimes

 

Slovakia has found the solution to increase the VAT collection

 

22 April 2014

Slovakia has found the solution to increase the VAT collection: a lottery tax receipts and prize of 10,000 euros per month. Other countries want to follow suit.

After a campaign of “shame” against those who do not pay taxes, wages increased tax inspectors and tax administrations stop political appointments, Slovakia has started a lottery taxes which relies on increased revenue from value added tax (VAT) and evasion of public support. Slovak authorities said the lottery tax is a real success and has already contributed to increased tax collection and the number of complaints on neemiterea tax bills. Such a lottery would be a solution for other states with acute problems of tax collection rate, Portugal recently adopting the model.
 
Last fall the Slovak government, whose tax revenues have declined in the past decade, decided to create a lottery taxes to encourage consumers to retain receipts when shopping and to record them in a set of government and designed to monitor transactions and to force restaurants and shop owners to pay the VAT rate that due to The New York Times.
 
Program created by the government indicates those who register receipts if the issuer used a false identification number, and consumers can report any fraud. In return for the aid given to the IRS, the Slovaks can win the lottery taxes 10,000 per month, a car or a chance to participate in the “right price”.
 
The Slovak authorities say that the system has already applied remarkable results, which led to several European countries facing problems in collecting VAT to consider its application. Portugal has implemented the program last week. Portuguese authorities say charges will be successful lottery because gambling is popular among the 10 million inhabitants of the country.
 
Countries with acute problems in collecting VAT include Greece, Ireland, Latvia and Spain, countries affected by the crisis. Around 450,000 Slovaks played the lottery before tax and registered about 60 million tax bills, according to officials in Bratislava.
 
Number of complaints on traders not issue tax receipts increased considerably. Six months before the start of the program, authorities received 300 such complaints, and the number increased to 7,000 in the first months of operation of the lottery.
 
“So far the program has been a success,” said Slovak Finance Minister Peter Kazimir.
 
Ten years ago, Slovakia collect about 80% of the fees payable and the collection rate dropped to 60%, said Peter Golias, director of research Ineko quoted by The New York Times.
 
Lottery is not the only attempt Slovak authorities to increase tax revenues collected. In recent years, the government in Bratislava initiated a campaign of “shame” against those who do not pay taxes, wages increased tax inspectors and tax offices closed political appointments.
 
Amounts collected from VAT began to rise at the beginning of last year and the trend was accentuated after the start of the lottery tax. The Slovak authorities say last year they collected 512 million dollars (370 million euros) more than in 2012.
 
Finance Minister said that the lottery tax that was placed on the feet with just $ 276,000 (200,000 euros), was an important factor in increasing tax collection. He pointed out that the number of complaints registered on neemiterea tax receipts showed that not only do fraud boutiques but chain stores.

Macedonia: 5th drawing for the fiscal receipts lottery 28 April

 

22 April 2014

Macedonia/5th drawing for the fiscal receipts lottery 28 April. Citizens, except by post, can also submit the envelopes with fiscal receipts in the point of the State Lottery at the City Square in Skopje. 

State Lottery of the Republic of Macedonia said that a car, 30 pecuniary prizes from MKD 3.000 to MKD 60.000 and 120 pecuniary prizes for food products from MKD 1.000 will be drawn.
 
Fiscal receipts lottery started on December 1 and the first drawing was held on December 30 when and apartment and a shop in Skopje were the main prize.
 
State Lottery of the Republic of Macedonia organizes the fiscal receipts lottery ”Fiscal receipts in hand, prize without pain,” under the auspices of the Ministry of Finance.
 
 
Source: republika

Uganda: URA to Train MPs in Tax Collection

 

1 May 2014

The Commissioner General of Uganda Revenue Authority Allen Kagina has offered to train MPs in tax collection methods, if Parliament gives her the nod of approval. Appearing before Parliament’s committee on Finance, Planning and Economic Development on April 22, Kagina said some MPs lack expertise in some areas of taxation. She offered to organise a half-day training session.

“Please honourable members, allow me to give you a half-day training course on matters of domestic revenues, and I am ready to do this myself and my staff. We don’t measure tax revenues the same way other countries do, but there is room for growth,” a jolly Kagina explained.

 
Her suggestion followed submission by Ntenjeru North MP, Amos Lugoloobi [NRM], who asked her to explain why Uganda’s domestic revenue projection was nearly the lowest on the continent.

“I think there is a serious problem with our domestic revenue resource mobilization because we are being left behind by other countries. For example, the projection of our domestic growth is 13.4% when it is 20% in Rwanda, 20% in Nigeria and 20% in Ethiopia. Is it the funding problem or is it your weakness as URA?” asked Lugoloobi.

 

Tororo County MP Geoffrey Ekanya [FDC] added: “What Honourable Amos has raised is a serious problem because other countries are growing economically, leaving us behind. So, the commissioner general should explain to us this low development in domestic revenue.”
 
Kagina was also asked how much telecom companies contribute to the country’s economy. Many MPs accused the telecommunication companies of conniving with some agencies to rip off people by providing unsolicited services such as text messages and dropped calls.

“How much do you get from telecom companies in form of revenues and why don’t you impose heavy taxes for the charges they always take from us through unsolicited messages and dropped calls?” Kabula MP James Kakooza [NRM] asked.

Kagina answered: “It is a serious problem because I have often got unsolicited messages and calls, and I always ask these telecom companies who gave them my number, but in vain. So I think it’s the regulator’s problem because it must be the one to intervene to solve this problem.”

 

Source: The Observer (Kampala)

Zimbabwe: Fiscalisation project stalls

 

4 May 2014

Business Editor
 
Ten days from now Tanzania’s taxman, Tanzania Revenue Authority (TRA), expects consumers to demand fiscal receipts for everything they buy “even if it is beer, a soda or a needle”, as the second phase of fiscalisation kicks in. Already, the first phase has been completed. Unfortunately, the project has remained largely abortive in Zimbabwe despite Government making fiscalisation legally enforceable by gazetting Statutory Instrument 104 of 2010 on June 8, 2010. In particular, the legal instrument requires all companies whose annual turnover is more than US$240 000 (Value Added Tax category C), to record their sales using electronic fiscal devices.

 
Fiscalisation essentially entails introducing electronic fiscal devices (EFDs) — machines designed for use in businesses for efficient management controls in areas of sales analysis and stock control system — such as electronic tax registers (ETRs), electronic fiscal printers (EFPs) and electronic signature devices (ESDs). In essence, these devices are designed to capture all sales information and automatically re-route it to the tax authorities who in turn are able to see how much they are owed by companies.
 
TRA is generating much of the oomph needed to drive the project to its logical conclusion from the encouraging increase in revenue generation since it began the policy in 2010 — ironically the same time that Zimbabwe began its own fiscalisation project. The Authority observes that tax collection improved by 9,6 percent between 2010 and 2011 and 23 percent for 2011 to 2012. Due to the expanding use of the electronic tax register, TRA now expects to collect US$370 million (600 billion shillings) a month, up from the current US$250 million (400 million shillings).
 
The Zimbabwean Government believed that local revenue collection would inevitably improve by configuring fiscal devices to enable them to record sales and other tax information on the read-only fiscal memory at the time of sale for use by the tax authorities in Value Added Tax (VAT) administration. However, market watchers say that the Zimbabwe Revenue Authority (Zimra), which is the lead agent in implementing the process, has been lethargic, a development that has stagnated the process.
 
Last week, a Harare-based tax consultant, who preferred to remain anonymous, said that although the project was launched four years ago, currently there is no system to connect organisations to the proposed Zimra database.

“There is no system to connect organisations to the proposed Zimra database in line with Clause 4(d) of SI 104 / 2010. The project has stagnated and not all registered VAT operators have complied with fiscalisation. This is against the backdrop of massive Government spending estimated at around US$10 million in VAT rebates for companies that complied with the law. Small to Medium Enterprises, which have been cited as not contributing to the fiscus, should naturally be included in the next phase of fiscalisation. However, this is not possible due to the current pedestrian state of the project. Zimra does not appear to be too keen to move to the next phase,” said the expert.

 

There are suspicions in the market that some Zimra bosses might have been “influenced” to maintain the status quo by a powerful clique of business lobbyists that is benefitting from evasions. This has, however, never been proved. Some sections question why there has been lethargy in implementing the project especially after Zimra’s board chairman Mr Sternford Moyo confirmed that fiscalisation had improved compliance and contributed to the good performance of VAT collections for the year ending December 31, 2012. In fact, he noted that, “to some extent, fiscalisation levelled the playing field for large operators thereby improving compliance”.
 
Zimra Commissioner-General Mr Gershem Pasi conceded last week that the Authority’s system is yet to be connected to retailers.
He said the project will resume during the third quarter (between July and September) of the year.

“The technology that we had identified was not really appropriate and was costing more to convert it to be compliant with the computerised system, so we are reviewing that and we will be coming up with a more user friendly system soon. We are almost through the scoping. . . When we started the project, the authority had not been enabled to receive data from the machines, we did not have the capacity and that is the capacity which we are now putting in place.
 

 

Source: Sunday Mail

Rwanda races for revenue targets

 

11 May 2014

KIGALI, Rwanda – The Rwanda Revenue Authority (RRA) is finding ways improving efficiencies in revenue collection so that it reach its fiscal year target.

He said RRA will continue to undertake various initiatives aimed at improving service delivery, including expanding usage of electronic services for filing and payment of taxes, implementing the electronic single window system and gold card scheme at customs, increasing collection of non-tax revenues using electronic payment methods, following up the construction of One-Stop-Border Posts and fully implementing the Single Customs Territory across the northern and central corridors.

 
RRA collections form a large chunk of Rwanda’s annual budget as it strives to depend less on donors and become self-reliant. According to Tusabe, the suspension in donor aid last year directly affected the demand of goods and services in the country which led to lower taxes being collected against the set target. Rwanda’s Gross Domestic Product shrank to 4.6 per cent last year from an average of eight per cent in 2012 as government reduced spending thus affecting private sector growth.
 
In spite of that, Rwanda remains the most tax compliant country in East Africa according to the 2014 World Bank Doing Business Report.
 
 
Source: EA Business Week

World Bank To Help Bangladesh On VAT

 

15 May 2014

The World Bank Board has approved USD60m in interest-free credit to modernize the administration of Bangladesh’s value-added tax regime and to boost the tax take.

The VAT Improvement Program Project will introduce automation, including the launch of online VAT taxpayer services, and improve transparency in VAT administration. The project aims to increase the ratio of VAT to gross domestic product (GDP) by at least one percentage point of GDP by 2019, from just 3.7 percent of GDP in 2012-13.
 
The project will support the government to implement the new VAT law, which comes into effect in 2015, and aims to provide better services and reduced administrative costs for taxpayers. A campaign will be launched to raise awareness of the need to register and file for VAT, and target an increase in VAT-registered businesses from 35,000 to 85,000 within the next five years.

“Improving Bangladesh’s ability to raise tax revenue is critical for faster economic growth and overcoming poverty because the country needs more resources to invest in infrastructure and human development,” said Johannes Zutt, World Bank Country Director for Bangladesh.“Compared to other countries in South Asia, Bangladesh’s tax collection remains low. This project will improve taxpayer services, encourage better compliance and increase tax revenue by automating the VAT system.”

The project will introduce modern business processes and Information Technology systems as well as a more transparent service-oriented tax administration. Registration, return processing, and tax payment will become possible online, reducing compliance costs for taxpayers.

The project will also support the VAT administration system to become fully compliant with Bangladesh’s Right to Information Act. It will also introduce new business processes and a centralized processing center for efficiency gains, as well as improve the approach to tax audit and refunds.
 
The credits from the International Development Association (IDA) – the arm of the World Bank Group that helps the world’s poorest countries – have a 40-year maturity period with a 10-year grace period, and carry a service charge of 0.75 percent.
 
 
Source: Tax News