Result Based Management Framework - METAC

68
In addition to serious problems of software at the CBOS 6 , some other institutional issues
related to the relationship between the CBOS, Chamber of Accounts, and the Ministry of
Finance and National Economy (MoFNE) are improved as soon as possible.
D. Revenue Administration
Past Activities
Sudan has implemented significant tax reforms since 1999, including introduction of
VAT (2000); removal of income tax exemptions (2002-2003); imposition of excises on
petroleum products; and improvement of the tariff structure (2004-2005). Nevertheless,
tax revenue performance remained very low by regional standards. Given the challenges
and risks ahead, including: trade liberalization, a probable drop in oil prices and revenue,
rising expenditure pressures associated with wealth-sharing arrangements, and
overlapping taxation powers across national and sub-national government, further efforts
are needed to increase domestic tax revenue, notably through improvements in tax and
customs administration performance.
Sudan has engaged in an exhaustive tax reform program since 2006. Following FAD and
METAC recommendations, Sudan has developed a tax administration modernization
strategy focusing on four key components: (1) establishing a function-based HQ structure
and restructuring the network of tax offices for corporate businesses (with separate offices
for large, medium-size, and small taxpayers); (2) integrating administration of VAT and
income tax for large and medium-size taxpayers above the VAT registration threshold;
(3) introducing self-assessment methods for these taxpayers; and (4) simplifying the small
business taxation system.
Since early 2007, METAC has supported the launching of these reforms and has been the
major TA provider to the tax authorities. Good progress has been reported in key areas
including: (i) adoption and on-going implementation of a function-based HQ structure;
(ii) establishment of large, medium-size and small taxpayers’ offices in Khartoum; (iii)
implementation of self-assessment for corporations; and (iv) increase of the VAT
registration threshold.
METAC experts have also provided follow-up advice in designing the new HQ structures
and developing audit methodologies consistent with self-assessment principles. However,
the reform process is being hampered due to persisting weaknesses in taxpayer
registration, business processes and procedures, compliance management, and use of IT
to support operations. Significant challenges remain on both the tax and customs
6 Notably to engineer the zero-balance accounts system and its overnight sweeping for the TSA.