Prepared by Katherine Baer.
The reform resulted in a reduction of the VAT base, however, because it exempted some products (e.g., tobacco).
In principle, this unification implied that both the administrative and major functional areas of the tax and customs administration were merged into single offices. For example, collection enforcement for domestic and foreign trade taxes was carried out by a single department. In practice, however, the process of unification was not fully completed.
There are several methods which a tax administration can use to pay the banks for tax collection services—banks may charge a fixed fee for processing each tax form, they may charge a percentage of the tax collected, they may keep the totality of taxes paid for a short time period (“float period”), or they may opt for a combination of these options.
The volume of exports increased around 30 percent between 1991 and 1994, and around 9 percent in 1995. The volume of imports doubled between 1991 and 1993, and increased by 10 percent between 1994 and 1996.
The project team is financed by a World Bank loan (Modernization of the Public Financial Administration, MAFP). It is expected that the second phase of this loan, MAFP II, will include a large component for institutional strengthening of customs administration.