In the new reform cycle, our wish is to create a Tax Administration that’s integrated into the taxpayers’ natural and business environment and for us to become an institution that defines the interests and needs of the business community towards the Ministry of Finance and the Government of the Republic of Serbia
It was in May this year that Serbia’s new Law on Fiscalization began to be fully implemented, which contains solutions that are applied in many advanced economies. “This law differs significantly from the previous one, firstly because it enables the application of more advanced technological solutions and provides for the more efficient control of taxpayers, and thus better results in the area of suppressing the grey economy,” says Dragana Marković, director of the Tax Administration of the Republic of Serbia.
In the new fiscalization system, the Tax Administration has at its disposal a larger volume of data and the possibility to better analyse risk. “This results in a more rational and much more effective system of taxpayer controls. Specifically, controls are only conducted on those taxpayers assessed by risk analysis as not fulfilling their legal obligations in the prescribed manner. Another advantage of the new model is that it reduces taxpayers’ costs, because unnecessary administration is eliminated and a better and more favourable business environment is created,” explains Marković.
What do you see as the next important step in digitalising the work of the Tax Administration?
The Tax Administration has spent years working intensively on the digitalisation of its operations, which can be best seen by taxpayers through the use of the Tax Administration portal, via which they can submit their tax returns, obtain confirmations of tax obligations settled or receive insight into the state of their obligations.
The basic emphasis is on the digitalisation of the most massive key tax procedures. In that sense, we have completely digitalised the determining of income tax on self-employment in a flat rate amount. Digitalisation actually represents the essential foundation for the next step in developing the tax administration, which is the automation of operational processes.
The Tax Administration faces a challenging period. Drafting the document “Redesign of Operational Processes” is expected to be completed this year. This will be followed by the procurement of a tailored commercial solution – software, which will enable the Tax Administration to access all essential information for taxation that’s in the possession of the Tax Administration or other establishments, institutions and businesses. The procuring of a ready-made commercial solution – software – creates conditions for its implementation, which is a very complex process.
The new Tax Administration Control Centre opened recently. To what extent does existing data enable you to more easily identify companies that are more likely not to comply with regulations?
With the opening of the new Control Centre, the Tax Administration gained a powerful, modern tool to effectively combat the grey economy that enables the identifying of all established businesses on the territory of Serbia that issue invoices in accordance with the new fiscalization system. Data from fiscal invoices issued on the basis of the new model of fiscalization flow into the Control Centre in real time. Processing the data received through the applying of analytical models of risk analysis makes it possible to effectively monitor and control taxpayers who are at risk of tax evasion. Simultaneously, thanks to the new fiscalization system, devoted taxpayers are spared from unnecessary controls.
With the help of the IMF, the Tax Administration is working to create a separation of its core and non-core activities, in an effort to increase efficiency. How much progress has been made on this work?
It is common knowledge that the process of reforming the Republic of Serbia’s tax administration began years ago, while it was formally launched with the adoption of the Transformation Programme 2015- 2020. This has been recognised by all key actors in the country and abroad as one of the most important reform activities – not only in the area of public finances, but also in the process of modernising the Republic of Serbia’s entire public administration system. We carried out reform activities during the noted period, the most important of which I will list here: we identified and separated primary and secondary activities, established a new organisational structure of the Tax Administration and reduced the number of branches from 178 to 37, converted all tax returns into electronic form, enabled the issuance of eCertificates and strengthened communication between taxpayers and the Tax Administration significantly.
The Government of the Republic of Serbia adopted the new Tax Administration Transformation Programme for the 2021-2025 period on 20th May 2021, and that document envisages the creation of a modern and efficient institution that safeguards sustainable and predictable public finances, a Tax Administration that is “invisible” to the taxpayer, yet present and available in all places and provides a digital service that’s completely adapted to the taxpayer at all times.
The Control Centre records the issuance of 11 million invoices per day on average. Up to 8,000 checks of the authenticity of fiscal invoices are carried out by consumers on a daily basis
The strategic goals that we’ve defined with the Transformation Programme are: 1. Establishing operational processes and organisation aligned with the best international practice, with the goal of increasing collections of public revenue; 2. Advancing the quality of existing services and introducing new types of services adapted to the needs of taxpayers; 3. Profiling new tax officers with an exceptional level of professionalism and competence, as a result of further developing the human resources function.
To what extent are the positive effects of the digitalisation and automation of the Tax Administration’s work sufficient to respond to the lack of capacity that you face?
The all-encompassing process of digitalising and automating work has contributed to certain tax administration activities being performed faster and more efficiently. However, alongside this, it is essential for the Tax Administration to employ additional staff, primarily law graduates, economists and IT experts. The need for new staff can be illustrated by the fact that more than 10,000 officers worked at the Tax Administration in 2005, while today the Tax Administration employs 4,638 tax officers. Likewise, according to statistics at our disposal, the Republic of Serbia has in excess of 1,400 inhabitants per tax officer, while that ratio is significantly lower in neighbouring countries. In an attempt to successfully resolve the chronic staff shortage, the Tax Administration recently announced a public competition to hire 262 highly educated trainees.
The grey economy has been identified as one of the biggest challenges confronting our country’s economy. How satisfied are you with the results achieved over the previous two years?
The Tax Administration of the Republic of Serbia confirms the crucial role it plays in the fight against Serbia’s grey economy with its activities. Over the last two and a half years, the Tax Police have filed 1,263 criminal charges for illegal sales of excise goods and seized excise goods with a value exceeding 300 million dinars. The Tax Police’s activities within the scope of combating the grey economy are also directed towards making early detections of enterprises that help companies avoid paying public revenues and are among the main drivers of the grey economy, so-called “laundering” and “phantom” enterprises. A total of 680 such companies were identified during the previous two and a half years.
When it comes to the control function, almost 62 billion dinars of newly discovered public revenues were calculated during the previous two and a half years. In controls of the recording of turnover via fiscal cash registers or devices, over 10,000 controls were carried during the last two and a half years, which also included checks on the employment and legal status of workers. As a consequence of the confirming of irregularities, the measure of temporarily banning the carrying out of activities was applied in 38.3% of cases, primarily in commerce, hospitality and other service activities. We must also note that almost 300 controls were carried out in cooperation with other inspection services – market, sanitary, metrological, communal and labour inspections – as well as with the Interior Ministry of the Republic of Serbia.
Both local and foreign companies continuously point out the need to improve the transparency of the Tax Administration’s work. What are you doing on your part to introduce greater consistency in the work of the Tax Administration?
With the aim of improving client-like and fair relations with taxpayers, in order for them to voluntarily service their tax obligations, the Tax Administration works constantly to improve the transparency of its operations.
Taxpayers have all necessary information at their disposal through numerous channels of communication, including the Tax Administration website, contact centre, media, social media and “Your tax officer” counters. The website is tailored to taxpayers, i.e., it is client-oriented. Taxpayers can also receive information under the jurisdiction of the Tax Administration via telephone (0700-700-007 and 011-33-10-111) or by completing an electronic form on the Tax Administration website. Special counters have also been opened at 37 branches, at which taxpayers can receive, in direct communication with tax officials, all required information with the aim of encouraging them to voluntarily settle their tax obligations, such as information regarding the application of tax regulations, assistance in completing their tax returns and requests to exercise their rights in the tax procedure, information on case progress, clarification of adopted decisions, as well as insight into the state of tax liabilities and claims on public revenue accounts.
You signed a memorandum in the area of tax policy on behalf of Serbia at the Open Balkan Summit. How important is this area when it comes to removing barriers to doing business on the Western Balkans’ future single market?
The Memorandum of Understanding and Cooperation among the tax administrations of the Republic of Serbia, the Republic of North Macedonia and the Republic of Albania, within the framework of the Open Balkan initiative, will contribute significantly to deepening regional cooperation in the field of tax policy. The signing of this memorandum confirmed the intention to continue and develop cooperation aimed at improving the overall efficiency of the work of tax administrations, the joint fight against organised crime and the combating of the grey economy. With the advancing of mutual cooperation, through the providing of assistance and actively exchanging knowledge and experience in the implementation of projects and activities of mutual interest, we can expect myriad benefits, particularly in the area of adopting advanced tax collection methods and in the overall modernisation of the operations of tax administrations.
The Tax Administration of the Republic of Serbia confirms the crucial role it plays in the fight against Serbia’s grey economy with its activities
According to statistics at our disposal, the Republic of Serbia has in excess of 1,400 inhabitants per tax officer, while that ratio is significantly lower in neighbouring countries
Digitalisation represents the essential foundation for the next step in developing the tax administration, which is the automation of operational processes