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IMF Country Report No. 23/109
REPUBLIC OF SLOVENIA
TECHNICAL ASSISTANCE REPORT––REVENUE ADMINISTRATION GAP ANALYSIS PROGRAM—CORPORATE INCOME TAX GAP
March 2023
This technical assistance report on Republic of Slovenia was prepared by a staff team of the International Monetary Fund. It is based on the information available at the time it was completed in February 2023.
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Title page
FISCAL AFFAIRS DEPARTMENT
Republic of Slovenia
Revenue Administration Gap Analysis Program Corporate Income Tax Gap
Eric Hutton
Technical Assistance Report
February 2023
The contents of this report constitute technical advice provided by the staff of the International Monetary Fund (IMF) to the authorities of Slovenia (the “TA recipient”) in response to their request for technical assistance. This report (in whole or in part) or summaries thereof may be disclosed by the IMF to IMF Executive Directors and members of their staff, as well as to other agencies or instrumentalities of the TA recipient, and upon their request, to World Bank staff and other technical assistance providers and donors with legitimate interest, unless the TA recipient specifically objects to such disclosure (see Operational Guidelines for the Dissemination of Technical Assistance Information—
Staff Operational Guidance on Dissemination of CD Information). Disclosure of this report (in whole or in part) or summaries thereof to parties outside the IMF other than agencies or instrumentalities of the TA recipient, World Bank staff, other technical assistance providers and donors with legitimate interest shall require the explicit consent of the TA recipient and the IMF’s Fiscal Affairs Department.
DM 7329258
This technical assistance (TA) was provided with financial support from the European Union.
Contents
ABBREVIATIONS AND ACRONYMS
GLOSSARY
PREFACE
EXECUTIVE SUMMARY
I. BACKGROUND
A. Main Features of CIT in Slovenia
B. Revenue Performance of CIT
II. THE ESTIMATES
A. The GOS Gap
B. Actual vs Potential CIT
C. The Compliance Gap
III. OBSERVATIONS AND NEXT STEPS
A Observations
B. Next Steps
FIGURES
1. Assessed vs Potential CIT, 2012–2016
2. The Assessment Gap, 2012–2017
3. The Assessment Gap by Sector, 2012–2017
4. CIT Revenue to GDP Ratio in Finland, with Comparison to Regional Average
5. CIT Productivity in Sweden, with Comparison to Regional Average
6. GOS, and the GOS Gap 20122017
7. The GOS Gap by Sector, 2012–2017
8. Assessed vs Potential CIT, 2012–2017
9. Assessed and Potential CIT by Sector, 2012–2017
10. The Assessment Gap, 2012–2017
11. The Assessment Gap by Sector, 2012–2017
12. Theoretical Relationship between GOS and CIT Tax Base
APPENDICES
I. Data Tables for Included Figures
II. The Model and Methodology used to
Abbreviations and Acronyms
| BEPS | Base Erosion and Profit Shifting |
| CIT | Corporate Income Tax |
| EU | European Union |
| FAD | Fiscal Affairs Department |
| GDP | Gross Domestic Product |
| GOS | Gross Operating Surplus |
| IMF | International Monetary Fund |
| RA-GAP | Revenue Administration Gap Analysis Program |
Glossary
Terminology and model specific acronyms used in the CIT gap analysis
| Actual CIT | The net amount of CIT payments made by taxpayers, net of any refunds due to taxpayers, measured on an accrual basis |
| Assessed CIT | The amount of CIT self-assessed by taxpayers as being due, plus any additional amounts deemed by the tax authority to be due from taxpayers |
| CIT assessment gap | Difference between assessed CIT and potential CIT |
| CIT base gap | Difference between potential C-TB and declared C-TB, presenting how much taxpayers underreport their tax base, before considering deduction for carried-over losses and tax credits/additions |
| CIT collection gap | Difference between actual CIT and assessed CIT |
| CIT compliance gap | Difference between potential CIT liabilities and actual CIT liabilities |
| CIT-efficiency ratio | Ratio of actually declared CIT liability to gross operating surplus multiplied by the statutory rate. It indicates the overall efficiency of the CIT system. |
| CIT productivity | Ratio of actually declared CIT liability to GDP multiplied by the CIT statutory rate. |
| C-NTB | Current-year net tax base, showing taxable income before considering deductions for carried-over losses, netting out current year losses calculated for tax purpose |
| C-TB | Current-year tax base, showing taxable income before considering deductions for carried-over losses |
| FAP | Financial accounting profit/loss |
| S11 | Non-financial corporation sector |
| S12 | Financial corporation sector |
| S13 | General government sector |
| S14 | Households sector |
| S15 | Non-profit institutions serving households |
| TB | tax base, showing taxable income after deducting carried-over losses |
Preface
In response to a request from the Slovenian Ministry of Finance (MOF), a capacity development (CD) mission from the IMF’s Fiscal Affairs Department (FAD) began work with the authorities in January 2022 and visited Ljubljana in October 2022. The mission’s main purpose was to assist in the construction of a tax gap estimate for the Corporate Income Tax (CIT). The October 2022 mission was led by Mr. Eric Hutton of FAD.
During the course of this engagement, Mr. Hutton had productive meetings, virtual and in person, with a number of officials of the Republic of Slovenia Financial Administration (SFA), in particular Peter Grum, Danuška Bobek Gospodarič, Peter Jenko, Darija Šinkovec, Tomaž Perše, Tomaž Lešnik, Marjan Macek, Dušan Šafarič, Jurij Meze, and Dominik Kuzma. The mission also had useful discussions with officials from the Slovenia National Accounts office.
Mr. Hutton expresses his sincere appreciation for the excellent cooperation and kind hospitality that he received from MOF officials throughout his visit. Mr. Hutton also thanks the Slovenian National Accounts office for providing data necessary for implementing the analysis in this report. Finally, Mr. Hutton thanks the support provided under the EC’s DG REFORM, and the coordination and cooperation provided by Ms. Elka Ilyova.
The report consists of an Executive Summary and the following three sections: (I) Background; (II) The Estimates; and (III) Observations and Next Steps.
