ocp192_en

3. Programme implementation3.2.3. Revenue administration reforms43. The revenue administration reform continues, showing mixed results so far. While the bulk of thereform actions since the previous review has been completed and results are relatively encouraging,some key actions are delayed.44. The organization of the Secretariat general for public revenue is improving. The advisory boardand the strategic planning and financial control directorate of the semi-autonomous public revenueadministration are in place. The final structure of the Secretariat General has been adopted in April andwill be progressively implemented with staff transfers throughout 2014 and beginning 2015. The newgrading and promotion system was approved and will be implemented in the second half of 2014. Theauthorities have lifted the remaining constraints to the delegation of powers to the Secretary General ofthe public revenue administration. The Secretary General has approved the business plan for the publicrevenue administration. Other key organizational reforms have also been implemented. The merger oftax offices reduced the number of tax office to 120, while debt collection is consolidated in large taxoffices. The internal review unit was put in place and staffed, and it has started to review the taxdecisions as is now compulsory for the taxpayers before they can go to court.45. Capacity has been increased. The Secretariat general for public revenue is to receive more than 1700new staff in the course of 2014 and 2015. This, in addition to the re-certification of 2000 auditors andthe basic training plans in place, should allow limiting staff shortages, especially in the specialised unitfor high wealth individuals and large taxpayers. An adequate number of supervisors are now assigned inthese units. Staff has been assigned in the large debtor unit to deal with fresh debt. The replacement ofmanagers who did not meet performance targets or who have been in place for three years has started totake place on a regular basis.46. New methods and tools are being put in place. The indirect account register has been adopted, andthe authorities enhanced targeted auditing based on risk assessment techniques. Payments in tax officeshave been reduced and replaced by checks and transfers. Revised instalment schemes have beenintroduced as of July 2013 (see Box 8).47. The main focus must remain on improving tax collection, as this is the most cost-effective way toincrease public revenue. Tax debt collection is progressing although still falling short of KeyPerformance Indicator targets. The collection of "new" tax debt increased by 23% compared to 2012and the collection of "old" debt increased by 38% (see Graphs 17 and 18). The total amount of debtcollected increased from EUR 2.5 billion to EUR 3.2 billion. This was still below the – ambitious - KeyPerformance Indicator target for tax debt collection for 2013. This increase in collection is confirmedby the budget numbers where debt collection over-performed compared to targets. Furthermore, the taxadministration managed to collect on time an unprecedented amount of property taxes (totalling morethan 1% of GDP) over the past 6 months. This required a large number of tax bills to be sent out as wellas careful follow-up with non-compliant tax payers. However, even though revised rules for writing offdebt have been put in place, the stock of debt is still increasing.48. Efforts must also be made to increase compliance, and this goes through a more determined fightagainst tax evasion and increased efforts on audit. But this cannot bring fast increase of publicrevenue. Efforts to tackle tax evasion need to be stepped up. The implementation of indirect auditmethods is delayed until May 2014. The legal powers necessary to the much needed stronginvestigation unit have been transferred from the Corps for prosecution of the financial crime (SDOE)to the Secretariat General for public administration. However the investigation unit will not be fullyoperational before it receives the full staffing. Only 200 SDOE of the 1,000 or so SDOE staff have beentransferred to the revenue administration, which was just enough to deal with the "temporary audit"function. Until the arrival of new staff in the course of 2014 and 2015 the tax administration will not beable to effectively fight major tax evasion.49. The social-security debt collection-centre KEAO started operations on 1 October 2013. IKA andOAEE transferred in late 2013 more than EUR 7 billion of debt to KEAO for collection. It immediatelybegan collecting debt from the first 5,335 debtors in the database. However, the amount of collectabledebt is uncertain, because most debt dates back to 2009 or before. The staffing of KEAO proceededwith delays and will not be achieved before end of the first semester 2014. This is translating intodelays in social security debt collection. The authorities will need completing a comprehensive reviewof the weaknesses in SSC collection, including enforcement. They will take steps to reinforce thefunctioning of KEAO by establishing an advisory board, while the IKA and OAEE funds developed anIT system for social security instalment schemes. Furthermore, the authorities will improve collectiontools by creating a single social security contribution database. To increase compliance on contribution33