Publication: Republic of Kosovo Public Sector Revenues: Tax Policies, Tax Evasion, and Tax Gaps
Loading...
Published
2014-06
ISSN
Date
2015-07-21
Author(s)
Editor(s)
Abstract
Kosovo has a simple tax system and relatively low tax rates. A risky feature of Kosovo’s tax system is the high dependence on border taxes. In 2012, 71 percent of revenue was collected at the border in the form of trade taxes and value added tax (VAT) on imports. Shifting from border to domestic revenue collection is needed. The simple tax system can make it easier for the tax administration of Kosovo (TAK) to adjust direct taxes while encouraging labor market formality. Low domestic revenue collection suggests the presence of large tax gap - the difference between the amount the TAK should collect and the amount it actually does collect. The wider social and economic consequences of tax evasion are high. Finding ways to raise domestic revenue to compensate for the decline in border revenues is going to require actions on a number of fronts. First, strengthening the TAK’s capacity to increase compliance and reduce tax evasion, through judicial means. Second, reducing the informal economy will bring more firms and employees into tax net. Third, efforts can be made to increase revenues through existing taxes. Finally, policies that boost private sector growth, including an improved business climate, will help increase domestic production and therefore tax revenues.
Link to Data Set
Citation
“World Bank. 2014. Republic of Kosovo Public Sector Revenues: Tax Policies, Tax Evasion, and Tax Gaps. © World Bank. http://hdl.handle.net/10986/22269 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Enhancing Non-SACU Revenue in Swaziland : Improving Tax Policy and Administration(Washington, DC, 2010-12)The collapse of Southern African Customs Union (SACU) revenue in 2009 has caused the Government to consider enhancing new sources of revenue in earnest to sustain its development policies. Existing plans that were prepared more than 5 years ago to introduce the Value-Added Tax (VAT) and create a new Revenue Authority (RA) focused on improved compliance are therefore more relevant than ever. This initial preparation provides ample room to rapidly improve both the design of taxes and fees and tax administration to ensure they are in line with both Swaziland's unique policy context and sound economic principles. These principles include: (i) policy and administration harmonization with South Africa so that investors view both countries as offering the same tax benefits and to facilitate the seamless launch of the RA with the benefit of the necessary support from (and partial integration with) South Africa's operations; (ii) the ability to implement reform rapidly given the fiscal emergency; and (iii) the need for simple and resilient policy and administrative designs that are able to cope with limited administrative capacity and a history of out-of-control spending.Publication Czech Republic Report on an Integrated Revenue Administration, Volume 1(Washington, DC, 2008-06)The Czech authorities invited the World Bank to provide an independent evaluation of the Government's draft plan for the merger of the Tax and Customs Administrations, and with an eye on the eventual integration of the collection of social contributions into a newly created revenue authority. In Volume I of this report, we present a preliminary examination of the Government's draft plan for tax and customs merger. Volume II does a preliminary assessment of the issues relating to integrating collection of social contributions within the tax administration.The assessment of the Government's plan in this report is intended to assist the Government in taking a more informed decision on this issue based on lessons learned from international experience. Integration and fundamental reforms are complex processes and require adequate time, financial resources and careful management of the change process itself in order to be successful. In the report, we have pointed out the key challenges and risks and how these can be overcome. We have flagged the major issues that the Government must consider, and highlighted the challenges that the Government must be aware of when designing the establishment of a modern, unified revenue administration. We have recommended a medium term strategy that will take into consideration the key issues and concerns.Publication Undeclared Economic Activity in Central and Eastern Europe : How Taxes Contribute and How Countries Respond to the Problem(2011-12-01)The paper examines the incentives and distortions created by tax policy and administration structures that motivate individuals to undeclare or under-declare work in the new EU member countries. It analyses the tax level and the tax structure "mix" of tax instruments, the special taxation regimes set up to attract workers and entrepreneurs back into the formal economy and how tax policies such as the introduction of a "flat tax" on income from labor and capital impacted workers and entrepreneurs in terms of formalizing work. It also attempts to gain some insight into the effectiveness of tax administration by comparing some input and output measures As non-tax factors can amplify the adverse effects of taxes on the labor market and reduce the effectiveness of tax reform, some of these other economic framework conditions are also discussed. This paper concludes by refining the main results and possible best practices for tackling undeclared work. The paper argues that the new EU member countries have had mixed success tackling undeclared work. While taxation matters, other underlying conditions for formal sector activity are also important. Addressing the problem of undeclared work therefore requires a broad policy approach with further improvements in tax policies, tax administration, and in general economic framework conditions for formal sector activity.Publication Integration of Revenue Administration : A Comparative Study of International Experience(Washington, DC, 2010)Revenue administration is a major point of contact between government and the people. Good revenue administration thus becomes an important feature of good governance. This fact has made policy makers increasingly mindful of the need to promote voluntary tax compliance by reducing the costs incurred by taxpayers to comply with their tax obligation. Promoting voluntary compliance is achieved through a set of measures that includes: (i) a self-assessment system, (ii) a well-designed compliance strategy based on risk management, (iii) good taxpayer services to help and educate taxpayers to meet their obligations, and (iv) simple and harmonized procedures for collection of different taxes and contributions. In the effort to harmonize procedures and minimize the need for citizens to respond to multiple agencies, many countries have integrated their revenue administrations, either by merging tax and customs administration, or by unifying collection of tax and social security contributions, or by both. Their experiences indicate that integrating collection also entails modernizing the revenue administration so that the contact between the tax office and the taxpayer is no longer physical but virtual, thanks to the extensive use of information and communication technology. The book focuses on how to plan and manage integration successfully and avoid the risks of failure. By examining four successful country cases in depth, and by reviewing selected themes in seven other country cases, the book has drawn attention to the need for a strong, visionary, and pragmatic leadership; a professional project team with strong skills and dedication; consensus building; and public support through effective communications.Publication Czech Republic Report on an Integrated Revenue Administration, Volume 2(Washington, DC, 2008-06)The Czech authorities invited the World Bank to provide an independent evaluation of the Government's draft plan for the merger of the Tax and Customs Administrations, and with an eye on the eventual integration of the collection of social contributions into a newly created revenue authority. In Volume I of this report, we present a preliminary examination of the Government's draft plan for tax and customs merger. Volume II does a preliminary assessment of the issues relating to integrating collection of social contributions within the tax administration.The assessment of the Government's plan in this report is intended to assist the Government in taking a more informed decision on this issue based on lessons learned from international experience. Integration and fundamental reforms are complex processes and require adequate time, financial resources and careful management of the change process itself in order to be successful. In the report, we have pointed out the key challenges and risks and how these can be overcome. We have flagged the major issues that the Government must consider, and highlighted the challenges that the Government must be aware of when designing the establishment of a modern, unified revenue administration. We have recommended a medium term strategy that will take into consideration the key issues and concerns.
Users also downloaded
Showing related downloaded files
Publication Data Transparency and GDP Growth Forecast Errors(World Bank, Washington, DC, 2023-04-19)This paper examines the role of a country’s data transparency in explaining gross domestic product growth forecast errors. It reports four sets of results that have not been previously reported in the existing literature. First, forecast errors—the difference between forecasted and realized gross domestic product growth—are large. Globally, between 2010 and 2020, the average same-year forecast error was 1.3 percentage points for the World Bank’s forecasts published in January of each year, and 1.5 percentage points for the International Monetary Fund’s January forecasts. Second, the Middle East and North Africa region has the largest forecast errors compared to other regions. Third, data capacity and transparency significantly explain forecast errors. On average, an improvement in a country’s Statistical Capacity Index, a measure of data capacity and transparency, is associated with a decline in absolute forecast errors. A one standard deviation increase in the log of the Statistical Capacity Index is associated with a decline in absolute forecast errors by 0.44 percentage point for World Bank forecasts and 0.49 percentage point for International Monetary Fund forecasts. The results are robust to a battery of control variables and robustness checks. Fourth, the role of the overall data ecosystem, not just those elements related to gross domestic product growth forecasting, is important for the accuracy of gross domestic product growth forecasts. Finally, gross domestic product growth forecasts from the World Bank are more accurate and less optimistic than those from the International Monetary Fund and the private sector.Publication Empowering Migrant Women(World Bank, Washington, DC, 2021-11)Do undocumented forced migrants change their propensity to report or commit a crime when they are granted proper documentation, a job permit, and access to social services? This paper examines the impacts of a regularization program that granted temporary economic rights to over 281,000 undocumented Venezuelan forced migrants in Colombia. The program resulted in a general reduction in crimes committed by forced migrants, also while increasing the number of domestic abuse and sex crimes female migrants reported. These findings suggest that empowerment and greater trust in local authorities are key mechanisms driving the behavioral changes for females, while proper enforcement facilitated by adequate documentation and the positive income effects of the program reduced the general propensity for migrants to commit crimes.Publication Addressing the Enforcement Gap to Counter Crime(World Bank, Washington, DC, 2016-03)Crime and violence impede development and disproportionally impact poor people in many countries across the world. Though crime and violence represent serious problems in many countries, less-developed countries experience particular concentrations, especially those that are characterized by fragile or less-trusted government institutions and pervasive insecurity. Under such circumstances, human, social, political, and economic development suffers. Research across the globe has shown that holistic approaches that focus on the entire spectrum of a government's crime response chain, ranging from crime prevention to enforcement, tend to have better outcomes than isolated interventions involving only the police or other individual government agency. To date, most of the Bank's investment in efforts to reduce crime have focused on crime prevention in the form of urban and social development programs. Investment and policy lending that support the improvement of police operations to reduce crime and develop stronger neighborhoods are more limited. To assist country teams and client counterparts in their efforts to develop effective, holistic responses against crime that include the police, justice reform staff in the Governance Global Practice teamed up with internationally recognized experts to compile evidence-based good practice information for developing effective police responses to crime. The resulting three part publication, titled Addressing the Enforcement Gap to Counter Crime: Investing in Public Safety, the Rule of Law and Local Development in Poor Neighborhoods outlines the impact of crime and violence on development and the poor in particular and explains a proven three-pronged approach to creating police agencies that work in collaboration with communities and other government and private service providers to identify crime problems, develop holistic and inclusive solutions the apply a restorative justice approach. The publication also outlines how such approach can be integrated into Bank projects and client country reform plans.Publication Sri Lanka Education Sector Assessment(Washington, DC: World Bank, 2017-06-08)A country’s education system plays a pivotal role in promoting economic growth and shared prosperity. Sri Lanka has enjoyed high school-attainment and enrollment rates for several decades. However, it still faces major challenges in the education sector, and these challenges undermine the country’s inclusivegrowth goal and its ambition to become a competitive upper-middle-income country. The authors of Sri Lanka Education Sector Assessment: Achievements, Challenges, and Policy Options offer a thorough review of Sri Lanka’s education sector—from early childhood education through higher education. With this book, they attempt to answer three questions: • How is Sri Lanka’s education system performing, especially with respect to participation rates, learning outcomes, and labor market outcomes? • How can the country address the challenges at each stage of the education process, taking into account both country and international experience and also best practices? • Which policy actions should Sri Lanka make a priority for the short and medium term? The authors identify the most critical constraints on performance and present strategic priorities and policy options to address them. To attain inclusive growth and become globally competitive, Sri Lanka needs to embark on integrated reforms across all levels of education. These reforms must address both short-term skill shortages and long-term productivity. As Sri Lanka moves up the development ladder, the priorities of primary, secondary, and postsecondary education must be aligned to meet the increasingly complex education and skill requirements.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.