In 2016, FSVC received a USAID grant from the Volunteers for Economic Growth Alliance (VEGA) to improve tax collection in Albania by strengthening the General Directorate of Taxation (GDT).
Tax collection and public financial management have been weak in Albania since the country transitioned from a centrally planned economy to a free market system. As a result, public debt has been continuously increasing. To address these issues, over the past two years the Albanian government has made significant efforts to overhaul public financial management with a special focus on modernizing its tax administration. In September 2015, the Albanian government requested assistance from the U.S. Government to support its efforts. In response, USAID initiated a one year technical assistance program to be implemented by FSVC, aiming to strengthen the General Directorate of Taxation’s (GDT) capabilities in key areas of tax collection. Based on a diagnostic of key deficiencies present in the Albanian tax administration, FSVC developed a roadmap and delivered a series of targeted technical assistance missions to tackle weaknesses in major functional areas of the GDT.
Improving Taxpayer Services
- Based on FSVC expert recommendations, the GDT has undertaken key steps in the area of taxpayer services, including the establishment of a Call Center, and improving the efficiency of online services. A new redesigned website has been launched, while more services have shifted from physical outlets to the online platform.
Improving Tax Audits of Large Businesses
- FSVC experts helped build the capacity of GDT staff according to international best practices recommended improvements to the Large Taxpayers Office (LTO)’s structure and work. The GDT has piloted and started to implement an innovative approach to large business audits, and is now better prepared to deal with complex tax avoidance and transfer pricing techniques.
Enhancing the Tax Investigation Process
- FSVC has assisted the GDT’s Tax Investigation Department to restructure workflows and processes in order to deploy effectively its limited staff. As a result, the detection rate of tax offenses is expected to improve, enabling the successful prosecution of criminal tax offenses. The GDT is now in a better position to enforce fiscal discipline in Albania.
Establishing a Call Center for GDT
- Thanks to FSVC’s assistance, the GDT is able to improve the service standards of its newly established call center, as well as better integrate the new unit with other GDT structures. By responding to taxpayer queries efficiently, the GDT has started to reduce the number of taxpayer visits to its offices, and its Taxpayer Services Department will be able to focus on taxpayer education and compliance. Overall, a better functioning call center has enhanced the GDT’s taxpayer services, improving the institution’s public image and ultimately supporting voluntary compliance.
Increasing the Capacity of GDT for Debt Collection
- Based on recommendations made by FSVC experts, the GDT is now in a position to undertake reforms to improve debt collection in Albania. Strengthening debt enforcement structures and implementation of effective procedures will enable the GDT to focus its resources on those segments of the debt that maximize cash flow for the budget. Implementation of new management techniques will also reduce bureaucracy. As a result, the GDT will be able to reduce the debt significantly, increasing overall revenues for the public budget and strengthening the credibility of the Albanian tax administration.