IFC, IMF, and State Tax Committee of Tajikistan Host Conference on Tax Administration

IFC, the private sector arm of the World Bank Group, the International Monetary Fund, and the State Tax Committee of Tajikistan last week hosted a conference on “Tax Administration Development during the Independence Period of the Republic of Tajikistan.” The objective was to increase entrepreneurs’ awareness of the 2005 tax code and discuss further improvements in tax administration.

The State Tax Committee of Tajikistan expressed its readiness to consider suggestions from entrepreneurs and other interested parties to improve tax administration.

“Tajikistan’s tax system needs to help achieve goals such as increasing tax collection, promoting and developing small and medium entreprises, and attracting foreign and domestic investments to develop industrial potential and create new jobs,” said Bakhtiyor Sultonov, Deputy Chairman of the State Tax Committee of Tajikistan.

IFC’s Andrea Dall’Olio described the current situation in small and medium enterprise taxation based on the results of the business-environment survey conducted by IFC in Tajikistan in 2006. According to the survey, tax administration in the country is cumbersome, while the overall burden is high, especially for growing businesses. The survey also revealed that the patent system of taxation, preferred by most individual entrepreneurs, is complicated due to the need to pay social and retail taxes separately.

“Creating a super patent, which would include the cost, social tax, and retail trade tax would make the taxation process for individual entrepreneurs simpler. We believe a simplified and more transparent system would have a significant impact on improving the country’s business environment,” said Dall’Olio, IFC Operations Officer.

Luc Moers, IMF Resident Representative, supported IFC’s recommendations on SME taxation, noting that careful assessment of the impact on tax revenues was needed. He also stressed that more attention should be given to reducing tax arrears, which have increased in recent years, particularly those of state-owned enterprises. Moers argued that tax committee resources should be concentrated where the largest revenue gains can be achieved and that resources allocated to inspectorates that generate minimal revenue should be reduced. “Most of the difficulties we are discussing are caused by the confusion about implementing the tax code and not by the code per se. The top priority should be to develop the required supporting regulations for proper implementation of the existing code,” he noted.

Additional recommendations from participants included consolidating taxes to simplify process, combining the social and tax registration numbers, conducting awareness campaigns about tax inspections, and increasing the quality of such inspections.