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REVENUE ADMINISTRATION REFORM PROJECT

REVENUE ADMINISTRATION REFORM PROJECT
Published date: 25.12.2019 10:39 | Author: Tax Administration

Ispis Print


Project Objective
The development objective of the Project is to improve the efficiency of the operational functions of the Tax Administration of Montenegro and reduce taxpayer (legal entities) compliance costs.
Montenegro's long-term vision is a tax administration with modernized risk-based business processes that contribute to the efficient collection of taxes and social security contributions from all sources of economic activity. Tan increase in tax compliance will generate a greater inflow of revenues for funding the provision of basic public services. Improvements in tax administration capacity will also contribute to achieving the country's goal of EU accession and economic integration with EU Member States.

Project Components
The project seeks to improve institutional arrangements and management systems of the Montenegro Tax Administration to take full advantage of a highly automated, low-discretion, risk-based system. The project entails an investment of Euro 14 million, in addition to Euro 4.8 million for financing the fourth component of the project (electronic fiscal invoicing). The project is planned to last until March 2023. The project includes financial and technical support for: revenue collection methodologies and procedures; a new Integrated Revenue Management System (IRMS) and other information technology infrastructure; development and implementation of a system for electronic fiscal invoicing. The project has four components.

Component 1: Institutional Development. This component will help enhance the strategic focus of management, increase attention to integrity, strengthen staff management and training, development of the analytical capacity required to support strategic management within the Montenegro Tax Administration, improve the legal framework and the appeals function and to institute a modern revenue administration. Subcomponent one will focus on institutional and organizational development, enhancing strategic focus and planning capacity; strengthening executive, managerial, technical and operational capacity. Subcomponent two will focus on strengthening the capacity for managing the change process. This sub-component will support the change process to build commitment of all staff and will facilitate the institutional development of the Montenegro Tax Administration. Subcomponent three will strengthen the Montenegro Tax Administration’s capacity to coordinate project implementation. This subcomponent will finance the recruitment of project management and administrative support to ensure the necessary expertise for the management of the project during implementation. This subcomponent will also finance fiduciary activities that will be undertaken for the project.

Component 2: Business Processes. This component supports modernization of business processes and improvements in operational effectiveness of the Montenegro Tax Administration. This component has three sub-components. Subcomponent one will introduce international best practices into the operational functions of the Montenegro Tax Administration, strengthen registration and return processing, formalize risk analysis in audit selection and enforcement activities, improve business analytics to identify where limited resources of the Montenegro Tax Administration should be deployed to return the best results or meet specific objectives of the Montenegro Tax Administration, and strengthen anti-fraud and criminal investigation capacity of the Montenegro Tax Administration. Subcomponent two will cleanse and rationalize data from the existing system and enhance the IT infrastructure. Subcomponent three will develop the specifications for the new IRMS system, procure, localize and implement a commercial IRMS system to replace the current system.

Component 3: Taxpayer Services. This component will finance activities to: modernize taxpayer services and increase understanding of revenue laws, procedures, and rights and obligations of taxpayers and thereby reduce the compliance burden to taxpayers. This component will review current taxpayer services and identify recommendations for improvements.

Component 4: Electronic Fiscal Invoicing. The electronic fiscal invoicing system will contribute to improving the efficiency of the Montenegro Tax Administration through real-time data collection, enabling better taxpayer control and improving statistical reporting and analysis. In addition, electronic fiscal invoicing will limit the possibilities for VAT evasion and manipulation of fiscal receipts, bearing in mind that the Montenegro Tax Administration will register and approve each fiscal receipt before the completion of the fiscal transaction. This component will support the requirements of the Montenegro Tax Administration regarding the development and implementation of a system for electronic fiscal invoicing, which will include software, hardware and necessary training/workshop

Project Management Organization

The Montenegro Tax Administration is responsible for the implementation of the project, with the support of the World Bank's Technical Support Unit (Ministry of Finance). The Tax Administration Modernization Advisory Board is set up to consult with the private sector and other stakeholders. The Project Implementation Committee is established and responsible for monitoring project implementation activities and ensures coordination of all activities. The Project Management Unit is in charge of the day-to-day management of the project. The Project Steering Committee monitors the implementation of the project and makes recommendations regarding the strategic orientations of the project as well as the coordination of the relevant authorities.

Project Implementation Arrangements

Project Steering Committee

Chaired by Minister of Finance and consisting of MTA Director, Director of Customs Administration, heads of the social funds (pension and health) 

Strategic guidance and inter-agency coordination

Project Implementation Committee

(Project Coordinator, MTA Director and MTA Management)

Revenue Modernization Advisory Board

Representatives of the business community, taxpayers, accountants and auditors.

Coordination with private sector stakeholders

Working Groups

(Officials of the respective MTA department and regional managers concerned with the specific activities)

 

Project Management Unit

(led by Project Manager)