A Strategy for Restructuring

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Tax Environment The Role of Taxpayers
Associations in Eastern Europe and Central Asia
Almaty, Kazakhstan, August 22-24, 2002
Presented by Nataliya Biletska, Consultant The
World Bank, TPA Group
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Outline
P
1
Introduction What is WBES?
Regulatory Environment
2
Red Tape in Tax Administration
3
4
Laws and Regulations
5
Taxpayer Voice
6
The Role of Taxpayers Associations
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What is WBES?
1. Introduction WBES in brief

• A World Bank Group initiative in partnership with
  other institutions.
• An instrument to assess and compare the
  environment for doing business in countries
  around the world.
• A standard core enterprise survey using a uniform
  methodology.
• The recent survey 2000/2001 covers 80 countries.
• Addresses the issues of local economic policy
  governance regulatory, infrastructural and
  financial impediments and public service quality,
  including tax policy and administration.

World Business Environment Survey
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Why is WBES data is used?
1. Introduction WBES in brief

• Addresses issues of local tax policy and
  administration governance in tax authorities
  legislation policy- and law-making.
• Provides a substantial comparative data for
  Transition Europe and OECD countries.
• Indicates and measures the level of tax policy
  and administration problems in these countries.
• Reveals the situation with the protection of the
  legal taxpayer rights.
• Helps to assess the impact of businesses on
  policy- and law- making.
• Draws lessons and perspectives for strengthening
  the protection of taxpayer rights and the
  development of taxpayers associations.

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Outline
1
Introduction What is WBES?
P
Regulatory Environment
2
Red Tape in Tax Administration
3
4
Laws and Regulations
5
Taxpayer Voice
The Role of Taxpayers Associations
6
6
2. Regulatory Environment
Major barriers in both regions
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Tax Environment as a Major or Moderate Obstacle
for Businessesin OECD Countries ()
2. Regulatory Environment
Countries with the most unfavorable tax
environment
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Tax Environment as a Major or Moderate Obstacle
for Businessesin Countries of Transition Europe
()
2. Regulatory Environment
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Tax Environment as a Major or Moderate Obstacle
for Businessesin Countries of Transition Europe
2. Regulatory Environment
10
Tax Regulations / Administration as a Major or
Moderate Obstacleby Firm Size
2. Regulatory Environment
Transition Europe
OECD
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High Taxes as a Major or Moderate Obstacleby
Firm Size
2. Regulatory Environment
Transition Europe
OECD
The trend in how each group of firms assesses
both tax problems is consistent in both regions.
Small and medium firms view tax environment as a
bigger obstacle than large firms in both regions.
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Outline
1
Introduction What is WBES?
Regulatory Environment
2
P
Red Tape in Tax Administration
3
4
Laws and Regulations
5
Taxpayer Voice
6
The Role of Taxpayers Associations
13
Corruption - Payments to Tax Authoritiesby
Region ()
3. Red Tape in Tax Administration
39 of firms make illegal payments to tax
authorities in countries of Transition Europe as
opposed to 3.14 in OECD countries
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Corruption - Payments to Tax Authoritiesin
Countries of Transition Europe ()
3. Red Tape in Tax Administration
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Corruption - Payments to Tax Authoritiesin
Countries of Transition Europe ()
3. Red Tape in Tax Administration
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Corruption - Payments to Tax Authoritiesin
Countries of Transition Europe ()
3. Red Tape in Tax Administration
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Outline
1
Introduction What is WBES?
Regulatory Environment
2
Red Tape in Tax Administration
3
P
4
Laws and Regulations
5
Taxpayer Voice
6
The Role of Taxpayers Associations
18
Laws and Regulations
4. Laws and Regulations
Countries of Transition Europe ()
OECD Countries ()
Interesting fact The situation with availability
and consistency in interpretation is the same in
both regions.
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Laws and Regulations
4. Laws and Regulations
Advance Information about Changes ()
Predictability of Changes ()
Businesses are more uncertain about changes in
legislation and less frequently informed about
these changes in countries of Transition Europe
than in OECD countries.
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Outline
1
Introduction What is WBES?
Regulatory Environment
2
Red Tape in Tax Administration
3
4
Laws and Regulations
P
5
Taxpayer Voice
6
The Role of Taxpayers Associations
21
Business Voice in Policy- and Law-Making
5. Taxpayer Voice
Transition Europe
OECD
Business voice is taken into account 2.5 times
more frequently in OECD countries than in
countries of Transition Europe.
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Business Voice in Policy- and Law-Makingin
Countries of Transition Europe ()
5. Taxpayer Voice
5
2
1
4
3
23
Firms Influence on the Content of a New
Legislation ()
5. Taxpayer Voice
Considerably high influence in both regions
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Outline
1
Introduction What is WBES?
Regulatory Environment
2
Red Tape in Tax Administration
3
4
Laws and Regulations
5
Taxpayer Voice
P
6
The Role of Taxpayers Associations
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Problems Diagnosed by WBES
6. The Role of Taxpayers Associations
Tax Environment
Laws and Regulations
Taxpayer Voice
Corruption

• Ineffective tax regulations and administration in
  both regions although much higher in countries of
  Eastern Europe and Central Asia (ECA).
• High taxes is a serious obstacle in both regions
  although much higher in ECA countries.
• Small and medium businesses are more concerned
  about the tax problems than large businesses in
  ECA.

• Illegal payments to tax authorities is a frequent
  phenomena in ECA countries (39) comparing to
  OECD countries (3).

• Business voice is taken into account 2.5 more
  frequently in OECD countries than in ECA
  countries.
• The influence on the content of a new legislation
  is relatively high in both regions although lower
  in ECA countries.

• Availability of laws and regulations and the
  consistency in their interpretation is relatively
  insufficient in both regions.
• Businesses are more uncertain about changes in
  legislation and less frequently informed about
  these changes in countries of Transition Europe
  than in OECD countries.

Solution
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Solution Taxpayers
Associations
6. The Role of Taxpayers Associations
Tax Environment
Laws and Regulations
Taxpayer Voice
Corruption

• Promote effective tax regulations and
  administration
• Lobby for an efficient level of taxation
• Target interests of small and medium businesses
  (RECRUIT as members)

• Voice taxpayers interests to government and the
  general public
• Actively participate in tax policy- and law-
  making
• Initiate improvements in tax legislation

• Advocate for availability of laws and regulations
• Provide information on current and new
  legislation affecting businesses
• Fight for consistency/ uniformity in
  interpretation of laws and regulations
• Watch for predictability of changes in new
  legislation

• Protect the legal taxpayer rights in tax
  authorities and courts

Need for Cooperation and Knowledge Sharing