World Bank to provide Moldova with loan worth 20 million dollars to modernise fiscal administration system

Chisinau, 7 June /MOLDPRES/ - The World Bank’s Board of Executive Directors on 6 June approved a loan worth 20 million dollars (7.42 million dollars lent by the International Development Association (IDA) and 12.58 million dollars – loan by the International Bank for Reconstruction and Development), provided to Moldova for the project on fiscal administration modernization. This project will back the fundamental reorganization of the fiscal administration system through implementation of a centralized and unified fiscal system, in order to improve the collection of taxes, fiscal compliance and the services for tax payers.   

According to a press release by the WB Office in Moldova, over the last years, Moldova has made substantial progress in shortening the time needed for paying taxes. Under the Doing Business 2016 report, 185 hours are necessary in order to prepare, file and pay taxes (about 21 payments), as compared to an average of 234.5 hours in the region of Europe and Central Asia (20.5 payments per year) and 175.4 hours in the Organisation for Economic Cooperation and Development (OECD) (11.8 payments per year).     

This reduction of the volume of work for tax payers was carried out by introducing the system of electronic declarations, online payments for some taxes and cut in the number of declarations. Nevertheless, the collections of fiscal revenues showed a less positive tendency. Thus, the collections of revenues as part of the Gross Domestic Product (GDP) has been decreasing during three years in a row, reaching the lowest value in 2014 of the a five-year period – 30.2 per cent of GDP. The bad performance is, to a great extent, a consequence of the structural and capacity constraints within the fiscal administration.   

Moreover, the communiqué reads, the services for tax payers are complicated by the lack of transparency as concerns the rules and procedures. The tax payers deem the fiscal administration as inefficient and corrupt. As much as 46 per cent of the business companies and 40 per cent of the households, which participated in an opinion poll of Transparency International from 2015, reported that often unofficial payments were necessary in order to settle diverse problems with fiscal inspectorates and estimated that the overall sum of bribes paid to the fiscal inspectorate by business companies in 2012 amounted to 32.4 million lei (2.54 million dollars).    

Representatives of the business environment, interviewed at the stage of project’s identification, complained about the lack of transparency in terms of fiscal issues, lack of clear-cut guidance as for the fiscal policies and procedures, lack of clarity as regards the rules and procedures referring to audits and appeals, as well as about the limited access to information on the process of appeal as the main problems which triggered high risks concerning the governance in Moldova’s fiscal administration.      

“Moldova’s goal is a computerized modern fiscal service, where everyone can see the rules and acts in line with the latter,” World Bank Country Director for Moldova Alexander Kremer said. “The result consists in less complications for tax payer and more taxes collected for schools, medicines and roads.”  

The State Fiscal Inspectorate of Moldova will be the agency due to implement the project. 

Since Moldova’s accession to the World Bank Group in 1992, more than one billion dollars has been earmarked for about 60 country projects. Presently, the World Bank’s portfolio includes nine active projects with an overall commitment of 335.5 million dollars. The support fields include the regulation reform and business development, education, social assistance, electronic government, health, agriculture, local roads, environment, etc.  

The assumed portfolio of the International Finance Corporation in Moldova is 63.6 million dollars (60.2 million unfulfilled). The portfolio is made up of 83 per cent loans and 17 percent of equity and quasi-equity. The Multilateral Investment Guarantee Agency provided guarantees worth 95 million dollars. Both institutions are members of the World Bank Group.   

(Reporter A. Mardare, editor M. Jantovan)