#1Guinea Bissau - Tax Performance Romao Varela#2Context • Introduction • Measures taken • Going Forward • Conclusion GB-Tax Performance#3Introduction 2 GB-Tax Performance#43 GB-Tax Performance My name is Romao Varela, I am from Guinea Bissau, working at Ministry of Finance as General Director of Budget. Guinea-Bissau has gone through a very difficult period since a civil war in 1998-99; • Main source of income: • Customs o Tax • Fishing#5Where our revenue comes from? Revenue (Tax and non tax) 53% Nontax Revenue GB-Tax Performance Grants and Project Loans 47% 11% Direct tax 26% UN/UND P/UNICE F Indirect tax 63% 15% CHINA 6%- OUTROS WB 6% 4% AFDB/F AD 2% BOAD 27% PAM 6% NIGERIA 10% ECOWA S/WAM U#6Where's the revenues goes? S Interest 1% 5 GB-Tax Performance Other current expenditure Wages and salaries 41% Transfers 25% S 13% Goods and services 20%#76 GB-Tax Performance Since 2004, tax revenue performance in Guinea-Bissau in terms of GDP ratio has been gradually improving; 20 20 Figure 1. Guinea-Bissau: Tax Revenue (Percent of GDP) 20 SSA1 15 15 WAEMU1 10 10 5 5 Guinea-Bissau 0 0 2001 2003 2005 2007 2009 2011 1. Simple average of each countries' tax revenue-GDP-ratio.#810 8 6 7 GB-Tax Performance Figure 2. Guinea-Bissau: Tax Revenue Composition (Percent of GDP) السلا 2005 2003 4 2 0 2001 ■Direct tax 2007 ■ Indirect tax 2009 2011#98 GB-Tax Performance MEASURES TAKEN#109 GB-Tax Performance Measures Taken Implementing revenue measures o Introduction of large taxpayers units (LTU); • Update taxpayer databases to improve compliance of large taxpayers' tax declaration; • Streamline and tracking of tax and customs exemptions; • Abolish tax compensation system for customs and corporate tax payers, and allowing only the Treasury to grant tax compensations; • Control revenue by centralizing collections at the tax department (DGCI);#1110 GB-Tax Performance Measures Taken Implementing revenue measures o completing the audit of large importers' tax liabilities which determines the gap between declared revenue and what should have been paid. o increase in reference prices used by customs administrations to calculate import duties on rice, sugar, and wheat flour, and export taxes on cashew nuts; o revisiting revenue-sharing agreements ("restitutions") to eliminate de facto earmarking of resources; and o tackling tax evasion by enhancing controls on taxpayers that stopped filing.#12|| GB-Tax Performance Measures Taken: Finance management, and improving revenue collection capacities: reintroducing taxes on alcoholic beverages; putting into operation the Automated System for Customs Data (ASYCUDA ++) and its harmonization with tax return systems for large importers; rolling out an integrated management information system, linking data flows between the customs (DGA) and DGCI, the budget office, and the Treasury; and starting operation of pre-shipment inspection with a reputable international agency.#1312 GB-Tax Performance Effectiveness of the measures • The measures implemented helped increase tax revenue: • Back in 2008, tax revenue cover only wage and salaries, around a third of current expenditure. In 2011, tax revenue was able to cover three quarters of current expenditure.#1412 10 Revenue 13 GB-Tax Performance 8 6 Nontax revenue 4 2 Tax revenue LLL 0 2007 2008 2009 2010 2011 2012#1512 9 6 3 14 GB-Tax Performance Figure 3. Guinea-Bissau: Tax Revenue Performance under IMF-Supported Program (percent of GDP) 0 2006 2007 2008 2009 2010 2011 2012 ■Program Actual#1615 GB-Tax Performance GOING FORWARD#1716 GB-Tax Performance Going Forward Although measures taken between 2008-2012 assisted in rising tax revenues, still GB tax revenue are low compare to SSA countries; • We need stability; New investment code will contribute to better revenue collection in medium term, in the short-term will rationalize the provision of expenditure; • Better investment climate; O Introduction of VAT (IGV-TVA); Improvement of tax payer registries through NIF, will provide new source of revenue, survey to identify business that don't contribute; Better control of customs tax on import of fuel and other goods with Swiss company;#18CONCLUSION 17 GB-Tax Performance#19Revenue 12 10 8 6 2007 2008 2009 2010 2011 2012 18 GB-Tax Performance Facts shown that if we don't have: Social, Political and Economical Stability: We can take all measures, but will not succeed unless these facts are present; In crisis revenue goes down, unemployment goes up; Need for support - IMF TA (Topical Trust Fund) is assisting GB on tax policy and administration.#2019 Thanks for your attention!