Today, the Cabinet of Ministers has adopted the Concept of the Reform of the State Fiscal Service prepared by the Ministry of Finance which took into account recommendations of the international partners of Ukraine including the IMF, the US Customs, the US Treasury and the European Commission. Also, a number of international documents were used like benchmarks including the consolidated EU customs standards (Customs Blueprints) as well as the consolidated EU fiscal standards (Fiscal Blueprints).
Why is it important?
To gain more trust from taxpayers, the Ministry of Finance is striving to make the reforms of the State Fiscal Service as open and effective as possible. For this purpose, a comprehensive document was prepared reflecting the long-term comprehensive view of the development of the State Fiscal Service. The Concept is a basis for the preparation of a detailed action plan for the reform implementation. The Concept stipulates reforms in the key operation areas of the State Fiscal Service:
· Structure optimization;
· Information technologies;
· Tackling corruption;
· Staff development and remuneration policy;
· Transparency of the reform and communication.
Also, the Concept contains concrete steps to be made in the customs and taxation areas of responsibility of the State Fiscal Service including:
• Іmplementation of authorized economic operators;
• Іmplementation of unified standards for the calculation of the customs value and classification of goods;
• Information exchange with the customs authorities of other countries;
• Elaboration of automated solutions for blocking risky customs transactions;
• Proper balance of procedures in customs clearance and post-clearance customs control;
• Ensuring compliance with the Tax Code and implementation of the full-scale “electronic taxpayer’s office”;
• Improvement of the work of Service Centers for Taxpayers;
• Full-scale implementation of the risk-oriented audit approach;
• Expansion of governmental electronic accounting checks and reduction of documentary checks;
• Signing an agreement on the automated exchange of financial information;
• Enhancement of the FTP control by increasing the number of staff in charge and improving their qualification;
• Monitoring of the performance of courts which examine disputes which have gone through the administrative appeals procedure;
• Regular evaluation of the attitude of business to the performance of the State Fiscal Service;
• Establishing the image of the State Fiscal Service as a professional and service-oriented state agency.
What is the advantage?
The Concept provides the framework for the reform of the State Fiscal Service and is aimed to make the changes more systemic. The Concept offering the complex vision of the reform will contribute to the better coordination between the Government and the Parliament in its implementation as well as help receive international technical assistance. Also, the Concept is a basis for the preparation of detailed plans for the SFS reform.
Also, today the first step towards the implementation of this Concept has been made which refers to the re-organization of the State Fiscal Service in two stages. At the first stage of the reform, the organizational structure of the customs shall be changed through the liquidation (starting from May 1) of regional customs offices meant to centralize the functions. Thus, one central customs office shall be established instead of the 27 existing customs offices. At the oblast level, representative units of the central customs shall be established to facilitate administrative procedures and to ensure supervision. At the rayon level, customs points shall remain directly reporting to the central customs office.
As far as the State Fiscal Service is concerned, rayon tax inspections shall be liquidated as legal entities and shall operate as service centers for taxpayers focused on service functions only. At the second stage (starting from January 1, 2018), tax authorities at the regional (oblast) level shall be liquidated. Instead, the Interregional Head Department of the State Fiscal Service shall be established.
This optimization of the organizational structure shall make it possible to:
- create functional customs and tax service structures;
- reduce the administrative functions (accounting, personnel, material supply) and re-distribute resources in favor of the core operational functions;
- transfer the audit and debt processing units from the district to the regional level;
- organize the effective work of district tax inspections as service centers;
- centralize the core functions and implement unified standards for them.
What comes next?
Within the next two weeks, the new organizational structure of the State Fiscal Service shall be adopted, which is being prepared by the State Fiscal Service and the Ministry of Finance in coordination with the IMF;
New personnel shall be hired to the central office of the State Fiscal Service and new senior officials shall be selected for the local units;
This week, the joint office of the Ministry of Finance and the State Fiscal Service for the coordination of the reform shall be created;
The Ministry of Finance shall elaborate and adopt the action plan for the implementation of the Concept.
The reform shall be implemented in a consistent way using international technical assistance.