Банкеръ Weekly

Briefs

REVENUE AGENCY MERGES WITH RECEIVABLES COLLECTION BODY

Almost a joke, the merger between the state revenue administrations is going to happen. After one of the last meetings of the leaders of the tripartite coalition between the Bulgarian Socialist Party, the Simeon II National Movement and the Movement for Rights and Freedoms, certain doubts were voiced, but now the procedure has started.
The responsibilities of the State Receivables Collection Agency with regard to all public debts as well as to the keeping and selling of confiscated items and representation of the state's interests in bankruptcy proceedings will be transferred to the National Revenue Agency. The State Receivables Collection Agency manages also the receivables connected with unlawfully absorbed sums from the EU funds. The move is part of the changes to the Tax and Social Security Procedure Code that the Government has submitted to the Parliament.
Most probably, the text will be viewed next week. According to the original plan, the mega-institution had to include Customs Agency, too. Until recently, politicians quarrelled as to which agency should collect excise duties and by mid-2006 this was one of the responsibilities of the National Revenue Agency. From this moment on, their collection has been transferred to the Customs Agency in line with the country's accession to the European Union. This body is most likely to keep its obligations in this respect, if the draft bill passes in Parliament.
The Chairman of the Parliament's Committee on Economic Policy, Yordan Tsonev, told the BANKER weekly that all state authorities responsible for collection of receivables should be under one management, but the Customs Agency will remain separate because of the specifics of its activities. These are fees and landing charges that do not fit into the category state receivables, he added. According to him, everything around the merger has been fixed and it is going to take place very soon.
The changes come in an effort for improving the state budget's revenue side, enhancing the efficiency, reducing the costs and better services for the citizens. It is also aimed at reduction of tax avoidance and tax evasion rates.
If the Parliament passes the bill, the tax employees will also have to collect the private state receivables, such as sums on unserviced credits that have been contracted until December 31, 1990, receivables of the executive agencies under pre-accession financial instruments and some other.
In case the Council of Ministers approves of this, some of the receivables may re-negotiated and the term for payment of the principal and the interests may be prolonged in accordance with the debtor's financial condition, but for not more than 15 years.
In its new position the National Revenue Agency will also keep and sell the items confiscated in favour of the State and will organize and hold public sales and provide current information in INTERNET about the tenders. So far it has been in the hands of the State Receivables Collection Agency. The latter's employees will be transferred to the National Revenue Agency and their length of service will be preserved. After the law enters into effect the tax agency will receive the assets, liabilities, rights, obligations and archives of the State Receivables Collection Agency and its real estates.
It is projected that the National Revenue Agency will keep 25% of all collected money from the enforced deeds for concealed or undeclared taxes, from insurance instalments for public and healthcare insurance and other sums for reimbursement, from fees and property sanctions and the due interest rate on them, as well as 10% of the collected private public and municipal receivables. The same will hold true about receivables collected by the State Agriculture Fund, the money from sale of property after payment of the due public receivables and expenses for tracing, transportation, storage and evaluation. However, nobody has commented in public what these funds will be spent for.
In fact, the idea about the establishment of the mega institution caused diverse opinions both within the opposition and the ruling majority. The UDF is sceptical and according to Martin Dimitrov, Deputy Chair of the parliamentary Budget and Finance Committee, the dropping of customs from the accounts is purposeful in order to avoid the establishment of a unified info system.
Eleonora Nikolova, Deputy Chair of the United People's Party, is adamant that the existence of the State Receivables Collection Agency is completely unnecessary after there are already private bailiffs, who have proven their good quality work and are motivated to work for their clients. She told a reporter of the BANKER weekly that the State Receivables Collection Agency does not service sufficiently the budget's interests because it sells the confiscated items and real estates dirty cheap. She believes that the rulers have at last realized that the centralized collection of all state receivables is the best choice.
There is probably certain logic in such statements after in 2007 the State Receivables Collection Agency collected only BGN281.3MN. However, the State Receivables Collection Agency is adamant that 90% of the due tax payments are bad and almost all of them are under VAT.
The former finance minister and presently municipal councillor from BSP's quota, Georgi Kadiev, is adamant that the merger of the two administrations is a mistake. According to him, that will make more difficult the work of both of them. He believes such a step hides serious risks to the budget and could result in a drop in its revenues, and due to the specifics the collection of receivables could be delayed.

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