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EMBARGOED: Not for newswire transmission, posting on websites, or any other media use until October 25, 2016, 12pm EDT (4pm GMT) 36 DOING BUSINESS 2017 associated with high levels of tax evasion, large informal sectors, more corruption and less investment. 24 Tax compliance systems should be designed so as not to discourage businesses from participating in the formal economy. Modern tax administrations seek to optimize tax collections while minimizing administration costs and taxpayer compliance costs. Of the 46 reforms captured by the paying taxes indicators, 26 economies either implemented new online systems for filing and paying taxes or improved the already existing online platforms in 2015 (figure 3.6). Italy, for example, introduced two improvements to its online system used by business taxpayers for filing labor taxes and mandatory contributions. Employers are now only required to enter personal information about employees once—at the beginning of employment and then it is carried forward automatically to future periods—and the payment process for labor taxes and mandatory contributions has been upgraded. The system now allows the previous period’s payment request to be copied into the current one—it retains all relevant information such as taxpayer identification and the purpose and destination of the payment. FIGURE 3.6 Time (hours per year) 600 500 400 300 200 100 0 Latin America & Caribbean Singapore was one of the first economies to introduce an electronic system for public administration. In 1992 the Inland Revenue Authority of Singapore developed an integrated and computerized tax administration system, making internal processes more efficient by freeing staff from unproductive bureaucratic tasks. As a result, between 1992 and 2000 the time needed to issue tax assessments decreased from 12–18 months to 3–5 months. 25 Singapore continues to improve its tax compliance system even though it is among the best performers on the paying taxes indicators. In 2015 the online system underwent further upgrades, allowing for fewer delays in filing returns for corporate income tax and value added tax. Other reforms were enacted to lower tax costs for businesses. Profit tax rates were reduced in nine economies while seven economies—Angola, Hungary, Italy, Jamaica, Jordan, Kosovo and Spain— either allowed more corporate expense deductions or higher fixed asset tax depreciation. The Dominican Republic decreased its corporate income tax rate while Jordan increased the depreciation rates for certain fixed assets. And eight economies abolished certain Electronic systems for filing and paying taxes save compliance time worldwide Europe & Central Asia Source: Doing Business database. East Asia & Pacific DB2006 Sub-Saharan Africa South Asia DB2017 OECD high income Middle East & North Africa taxes. Azerbaijan, for instance, abolished vehicle tax for residents. Facilitating international trade through electronic solutions Largely because of the progress made in tariff reduction over the last several decades, the focus of global trade policy and reforms has now shifted from trade tariffs to trade facilitation. A better logistics performance in the trade sector is strongly associated with trade growth, export diversification and economic growth. 26 In 2013, World Trade Organization (WTO) member countries signed the Trade Facilitation Agreement (TFA) committing to implement border management policies that make it easier to export and import goods across borders. A recent study suggests that, if the TFA is fully implemented by all member countries, the time spent in customs would be reduced by an average of 1.6 days for imports and 2 days for exports. By the time of the TFA’s full implementation the estimated global welfare gain is expected to be $210 billion per year, with estimates ranging from $16 to $33 annually for each resident of WTO member countries. 27 Among trade reformers, many economies made trading across borders easier by improving their existing electronic systems for both imports and exports, reducing the cost and time of documentary and border compliance (figure 3.7). Argentina, for example, introduced a new Import Monitoring System for products qualified for automatic licenses which is less restrictive and faster than the one previously used. Georgia reduced document processing times by enhancing its electronic document processing system as well as introducing an advanced electronic document submission option. The latter allows electronic registration of containers shipped by sea, eliminating the outdated process of manual registration of containers. Kosovo reduced the time and cost of documentary and border compliance for exporting by advancing its automated customs data management
EMBARGOED: Not for newswire transmission, posting on websites, or any other media use until October 25, 2016, 12pm EDT (4pm GMT) REFORMING THE BUSINESS ENVIRONMENT IN 2015/16 37 FIGURE 3.7 Implementation of electronic systems had the most significant impact on time reduction among those economies reforming in trade in 2015/16 Total reduction in time (hours) 0 -100 -200 -300 -400 -500 -600 Electronic systems system, streamlining customs clearance processes and implementing the Albania- Kosovo Transit Corridor. Another common feature of trade reforms in 2015/16 is the introduction of—and for some economies, the advancement of—the ASYCUDA (Automated System for Customs Data) World system, an automated customs data management system that facilitates both export and import processes. In Afghanistan the customs department introduced a series of technical improvements to the online document processing system. Both Grenada and Jamaica made significant upgrades to their electronic platforms, resulting in a substantial decrease in the time required for international trade processes. Their systems allow for the electronic submission of customs declarations and supporting trade documents. As a result, customs brokers no longer need to go to several customs clearance officers or government agencies to validate documents. Kosovo, Nepal and St. Lucia also eliminated the use of paper documents by upgrading their ASYCUDA World systems, allowing for payments and submissions of export declarations to be done electronically. Customs administration Inspection Infrastructure Source: Doing Business database. Note: The time reduction captures reforms that were implemented and had a positive impact on time for the trading across borders indicators from from June 2015 to June 2016. The reforms recorded during this period can be aggregated into four wide-ranging categories: electronic systems, customs administration, inspections and infrastructure. Enhancing judicial efficiency Efficient contract enforcement is essential to economic development and sustainable growth. 28 Economies with an efficient judiciary in which courts can effectively enforce contractual obligations have more developed credit markets and a higher level of overall development. 29 A stronger judiciary is also associated with more rapid growth of small firms 30 and enhanced judicial system efficiency can improve the business climate, foster innovation, attract foreign direct investment and secure tax revenues. 31 Conscious of the important role played by judicial efficiency, governments have been active in reforming different aspects measured by the Doing Business enforcing contracts indicators. Worldwide, revisions of alternative dispute resolution legislation and applicable civil procedure rules was the most common reform feature in 2015/16. However, none of the lowincome economies made reforms in this area (figure 3.8). Low-income and middle-income economies, predominantly in Sub-Saharan Africa and East Asia, have focused their reform efforts on strengthening judicial infrastructure. Côte d’Ivoire and Indonesia, for example, introduced dedicated simplified procedures for the resolution of small claims. Similarly, India and Niger strengthened their institutions by introducing dedicated venues to resolve commercial disputes. The presence of specialized commercial courts or divisions can make a significant difference in the effectiveness of a judiciary. Specialized courts can reduce the number of cases pending before main first-instance courts, leading to shorter resolution times within the main trial court. Commercial courts and divisions also tend to promote consistency in the application of the law, increasing predictability for court users. Other economies, mainly high-income economies, have focused their reform efforts on attaining a higher level of court automation. Brunei Darussalam, Hungary, Norway and Spain have introduced an electronic system to file initial complaints with the competent court. Electronic filing streamlines and accelerates the process of commencing a lawsuit. Reducing in-person interactions with court officers also minimizes potential opportunities for corruption and results in speedier trials, better access to courts and more reliable service of process. These features also reduce the cost to enforce a contract—court users save in reproduction costs and courthouse visits while courts save in storage, archiving and court officers’ costs. Some economies have pushed their automation efforts even further by introducing sophisticated and comprehensive electronic case management systems. In January 2016, for example, Rwanda implemented the Integrated Electronic Case Management System, a web-based application that integrates five main institutions of the justice sector, throughout Kigali’s courts. 32 Among other features, the system allows for the automatic registration of lawsuits, electronic organization and scheduling of cases and automated claims processing. Rwandan authorities expect the system to result in considerable cost and time savings along with
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49709doing-worldbank

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