(DTIS) Update, Volume 1 – Main report - Enhanced Integrated ...

Notwithstanding these improvements, the transition is perceived by the private sector astraumatic. Established operators see usual ways of dealing with fiscal authorities not working anymore,and old habits all of a sudden deemed illegitimate. Informal operators, sometimes illiterate, are asked todocument transactions and hold books, all things for which they have no training and which they see asintrusive and unnecessary. Compounding difficulties, business-support services (accounting and the like)are weak, when available at all, in Burundi.Against this sensitive background, fiscal and customs authorities ought to redouble in rigor, actwith moderation, and communicate systematically. But as a matter of fact, they seem to have beenquicker to adopt a new aggressiveness than to shed an entrenched culture of discretionarity, lack ofclarity, and sometimes even plain disregard for the rights of taxpayers. For instance, a duty-drawbacksystem has been in place for a long time in Burundi. However, it was difficult to ascertain whether itapplied to re-exports within the EAC zone, a frequent issue in FTAs. Moreover, in reality drawbacksseem to be rarely if ever refunded. VAT reimbursements also seldom take place except for NGOs,diplomatic missions, and the like. According to the OBR, no demands have been received from theprivate sector. However, some private-sector operators complained about arrears reaching half a milliondollars, and about documented demands that seemed to get lost each time administrative personnelchanged. In some instances brought to the DTIS update team’s attention, disciplinary procedures basedon the reclassification of activities involving higher tax rates have been notified to private-sectoroperators over four years after the facts in order to prevent prescription. Whereas such practices arestandard in stable regulatory environments, during a transition period where the rules of the game arebeing redefined, the OBR might consider refraining from disciplinary actions based on facts thathappened half a decade ago. This might, incidentally, lighten the work load imposed on anadministration with limited capabilities.2.3.2 Ratcheting up the regulatory environmentFollowing Burundi’s accession to the EAC and the bloc’s harmonization efforts, the country’sregulatory environment is also in mutation. The Bureau Burundais des Normes (BBN) is trying todrastically modernize product regulations (SPS and TBT) and their enforcement, by revamping texts andprocedures and recruiting aggressively (the Bureau, which currently has 34 employees, indicated to themission that it was considering hiring 15 more, mostly engineers).Modernization of the country’s regulatory apparatus is an unavoidable byproduct of regionalintegration and is desirable. However, it has the potential to become yet another vehicle for heavyhandedgovernment intervention in the conduct of business, coming on top of the fiscal overhauldiscussed in the previous section. The question is whether the BBN and ministries concerned have theorganizational—not just technical—capability to manage such an ambitious transition in a rationalmanner.Box 4.3: the EAC Standards Review - the need for engagementThe EAC Secretariat is currently launching a large-scale review of the area’s 2,500 standards. The fiveyearreview, which is expected to lead to the confirmation of some existing standards and to theelimination of other, outdated ones, is mandated by the EAC Common Market Protocol and involves aprocess of public consultation. The East African Business Council is pressing for the tightening ofstandards on counterfeit trade in a long list of consumer products that includes, inter alia, such majoritems as textile and apparel, cosmetics, cigarettes, alcoholic and other beverages, pharmaceuticals, soapsand detergents, software, books, batteries, or electrical and electronic equipment.The EAC Secretariat released a schedule of consultative meetings spanning January and February, with ameeting to be held in Bujumbura on February 8, during this mission. According to indications providedex post facto to the mission, the EAC delegation met with representatives of Burundi’s Bureau of82 / 153