  Sofia, November 12, 2009 – In preparation for EU accession, Bulgaria initiated a major institutional overhaul of its revenue administration system, supported by the World Bank’s Revenue Administration Reform Project. The comprehensive reform program was centered on the integration of collection and enforcement functions of the old tax administration and the social security collection into a new agency, the National Revenue Agency (NRA) and putting in place a modern legal framework for the agency, the collection procedures, and the material tax laws. In addition, the collection of municipal taxes and fees was gradually divested to municipalities. Making the NRA operational meant the development of new policies, new work arrangements, procedures and technology, the integration of staff and resources of the two agencies into the NRA and implementing a true self-assessment culture based on respect for and collaboration with the taxpaying community.
Key results from the reform include improved voluntary compliance, increased revenue collection and reduced taxpayer compliance burden, and better efficiency of revenue collection. Voluntary compliance has improved steadily—by 15 percentage points for VAT, by 13 percentage points for corporate income taxes, and by 7 percentage points for personal income taxes between 2002 and 2008
Tax and social contribution revenues increased by 4.6 percentage points of GDP between 2002 and 2008, the highest revenue gain among the New Member States
Compliance gains allowed the government to reduce tax rates to levels that are the lowest among the New Member States—firms allocate 31.4 percent of their profits on taxes and social contributions according to Doing Business 2010 report
Field offices were consolidated from 340 in 2002 to 29 currently, and further consolidation is planned
Revenue per revenue staff tripled in 2008 compared to 2002
Revenues are collected by 25% less staff in 2008 compared to 2002
Collection costs in Bulgaria at 0.8 percent of revenues are much lower than in the other New Member States
Efficiency of audits improved—less audits but more enforced revenue per audit
These achievements of the revenue administration reform in Bulgaria and the next stage of reforms in the NRA were discussed today during the closing workshop of the World Bank Revenue Administration Reform Project for Bulgaria. Government officials, including Deputy Minister of Finance Anna Mihailova, and the Executive Director of the National Revenue Agency, Krasimir Stefanov, World Bank team, representatives of taxpayers’ community, researchers, and NGOs took part in the discussion. The Revenue Administration and Reform Project for Bulgaria, with original World Bank financing of €31.9 million (€21 million actually disbursed), started in 2003. Project development objectives were fully achieved—Bulgaria now has an efficient, EU-compliant, and sustainable revenue collection system that facilitates private sector development. A complementary objective of the project was the separation of central and municipal revenue collection, which was achieved in 2004. Bulgaria has put in place an institutionally strong and capable revenue administration that continuously improves itself to face the challenges of collecting the revenue needed for the government to deliver its programs. The process of modernizing and seeking efficiency and effectiveness gains, in the NRA in particular and in the public sector in general, is endless. The workshop recognized that Bulgaria has made impressive progress in revenue collection, which has been internationally recognized. However, there are several areas which will benefit from further reforms like improving the physical infrastructure, including the office upgrading and consolidation in Sofia, as well as the development of some more sophisticated IT applications for the Revenue Management System that will all contribute to NRA’s efficiency and will strengthen the existing good governance systems.  According to Florian Fichtl, the World Bank’s representative in Bulgaria, these impressive results must be protected, preserved and furthered. “The World Bank as a committed partner to Bulgaria was privileged to help country setting up a modernized, efficient and in line with EU standards revenue administration. The success of the revenue administration reform in Bulgaria shows that enhancing the effectiveness and efficiency of public administration can be achieved if there is commitment and clear vision of reform outcomes. We stand ready to provide future support to Government efforts to modernize Bulgaria’s revenue administration and public administration as a wholе”, Fichtl said.
“Three years after the establishment of the National Revenue Agency we can say that due to the implementation of the Revenue Administration Reform Project the Agency has become an effective institution, responsible for the collection of state revenues from taxes and social contributions. We learned a lot of lessons during Project implementation but the key outcome for us was the creation of a team of professionals, which is especially important now when we face new challenges. One of the NRA future priorities is to guarantee the continuity and sustainability of objectives and outcomes of the Project", emphasized Krasimir Stefanov, the NRA Executive Director. For more information, please contact
Ivelina Taushanova (+3592) 9697 239
E-mail: itaushanova@worldbank.org |
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