The IMF department for tax and budget affairs, jointly with the Ministry of Finance of Ukraine and the State Fiscal Service (SFS), has prepared a number of recommendations on the comprehensive reform of the State Fiscal Service. Representatives of the IMF mission elaborated their recommendations based on the results of their work in Ukraine in the period from July 19 till August 1, 2017. Representatives of the Ministry of Finance participated in the work of the IMF mission as well.
What’s it about?
Jointly with the Ministry of Finance and the SFS, the IMF prepared a plan of priority tasks for the next 18 months as well as steps for coming years.
The goal is to transform the SFS in an up-to-date service oriented tax administration authority. There are five key objectives on the way to this goal:
• Transformation of the SFS into a single legal entity and the functional set-up of the organizational structure establishing effective processes for tax administration and streamlining the administrative and economic functions of the SFS;
• Personnel changes at the SFS – the new personnel must be smaller, more qualified, better paid and free from corruption;
• Changes of business processes within the SFS. They will be implemented through technical innovations, simpler administration and cancellation of excessive procedures as well as risk-oriented approach;
• Better tax discipline and higher trust of taxpayers for the system thanks to the automation of tax administration processes;
• Transformed corporate culture of the SFS and more transparency in its operation shall contribute to reducing pressure on business and transforming the SFS into a service-oriented organization.
The IMF representatives mentioned the progress already achieved in the SFS reform implementation (especially the new VAT refund procedure), but the overall reform is hampered by a number of factors like corruption and a slow pace in the implementation of the recommendations. Hence, fast action is required and the implementation of the recommendations must be speeded up.
What comes next?
The IMF recommends to consolidate the efforts of all interested parties and to follow the recommendations on the comprehensive reform of the SFS. To make it happen, the implementation plan for the recommendations needs to be revised and approved. This plan is needed to set goals and priorities for the reform, to identify and overcome hurdles for their implementation as well as to consolidate the necessary resources.
The IMF experts also said that the reform progress is impossible without setting up a project management structure and building a team of managers within the SFS who believe in the reform and are keen to implement it.
The Ministry of Finance and the SFS have already started the build-up of the project management structure for the comprehensive SFS reform with the support of the Prime Minister, an international consulting company as well as representatives of the EU, the USA, Canada, the EBRD and the IMF.
The project management structure for the SFS reform has three levels:
• The overall goals shall be set by the Supervisory Board including representatives of the UA Treasury Office, the Government of Canada, the Ministry of Finance of Germany as well as representatives of the EU, IMF and the European Bank for Reconstruction and Development (EBRD);
• At the second level, the Steering Committee uniting the senior officials of the Ministry of Finance and the SFS shall set priorities and tasks and coordinate the work of the Reform Implementation Group;
• The Reform Implementation Group shall ensure the practical implementation of changes in various areas like audit, services, legal compliance, set-up of internal processes at the SFS etc. The Group includes representatives of the Ministry of Finance, SFS, the Reform Support Team at the Ministry of Finance and SFS as well as international advisors and experts.