This exploratory study has been conducted in Kabul, Afghanistan to study and evaluate taxpayers as well as, employees of small taxpayer office (STO) insights towards impact of SIGTAS system on collecting tax revenue at STO in Kabul, and to further explore the challenges and bottlenecks in the tax administration system.
In recent years, the small taxpayer office (STO) in close collaboration with Afghanistan Revenue Department and DFID procured and installed a new computer-based tax administration system in the office which is called (SIGTAS). This study intends to study efficiency and effectiveness of this newly installed system, and what bottlenecks still exist in the tax administration system of STO.
This research is qualitative descriptive study, and considering type of the study, the following methods and techniques are used to further develop the study and achieve the expected results:Desk review, Structured questionnaires, Brainstorming sessions, Meeting with STO office and Case-studies.
After due findings and analysis, it is observed that employees of STO were satisfied with the computerizing the tax administration system, and expressed that efficiency and effectiveness of tax administration system at STO is increased due to installation of SIGTAS. Meanwhile, the clients/taxpayers, were less satisfied with changes in tax administration system, and expressed that level of support and behavior of STO staff is not satisfactory. Overall, some gaps related efficiency and effectiveness of tax administration system were found during the interview with clients as well as employees of STO, and are explained thoroughly in the up-coming chapters.
The tax administration concept is the delivery of services for taxpayer citizens to clear withholding tax in return of revenue they earn. The tax administration system plays quite important role in economy of a country, which almost fully contributes to a national budget, economic growth & development, public expenditures, etc.
Nowadays, focus of every government is to reform its tax administration system through automating and computerizing to easily collect the tax revenues as well as avoid corruption and unnecessary costs in collection of tax revenues. In recent years, new technologies have been introduced to administer tax revenues more accurately, effectively and efficiently, such as SIGTAS; which in the past years, it was not possible. Therefore; form economic point of view, the new computerized system will help a country to boost its economy; and avoid paper-based system which costs much more.
To expand this study, there are few literatures and research articles on tax administration system of Afghanistan, considering the time and location. This chapter will contain some theories which will cover the problem of tax administration system of Afghanistan, and new technologies introduced, such as SIGTAS in major. Also, some of literatures below will help the study to figure out what other researchers, scholars have found and recommended concerning this subject.
Phase II: 2008-12
We focused on further refinements to the legal system, consolidating and expanding reforms to the tax administration along functional lines, and continuing revenue forecasting and analysis support. With the tax base and the number of taxpayer cases expanding dramatically, both the international community and the Afghan Government set increasingly ambitious revenue collection targets, and it was our job to support the Revenue Department to meet these targets while also continuing to lay the foundations for its sustainable future development as an organization that could operate effectively without international support. Phase II also took forward new areas of modernization, such as the rolling out of our reforms to major economic centers like Herat, Balkh, Nangarhar, Kunduz and Kandahar, and the automation of tax administration processes.
In November 2009 the project was awarded Major Consultancy Project of the Year Award by British Expertise. DFID evaluations of Phase II awarded the highest marks possible, culminating in a project completion score of A+ in March 2012.
The Revenue Department reported revenue collection of $2.04 billion for the 2011/12 fiscal year, a 16% increase year-on-year and more than nine times the level of revenue collected in 2002. Revenue as a proportion of GDP was more than 11.6% in 2011/12, up from 11.3% in 2010/11, it was only 3% in 2002.
Phase III: 2012-16
We are continuing to support the Afghanistan Revenue Department to become a modern tax administration which raises sufficient revenue, and which treats its taxpayers as valued customers by keeping administration and compliance costs as low as possible.
We are working across five workstreams: provincial reform, training and capacity building, improving compliance, VAT implementation and support to Kabul’s Small Taxpayer Office. A major theme of the technical assistance continues to be automation of tax administration processes to improve efficiency and transparency. “Adam Smith International, Reforming Afghanistan’s Tax System: 2016″
The Tax Administration Project is a £18.9 million programme over four financial years (2011-12 to 2014-15), to ensure domestic revenue collections increase in a sustainable manner and improve fiscal sustainability for Afghanistan. The project builds on the work of the Strengthening Tax Administration Project (STAP), which established a working base for tax administration reforms and improved revenue collection, with the aim of contributing towards a sustainable platform for long-term revenue mobilisation. The project is consistent with priorities expressed in DFID’s Operational Plan, namely, to help the Government of Afghanistan (GoA) raise and manage its own revenue, reducing its dependence on aid over time.
The Impact of the project is a fiscally sustainable Afghan state by 2021/22. Its Outcome will be sustainable increase in domestic tax revenue. The four Outputs of the project will contribute to the Outcome as follows:
· Output 1: Fully operational zonal Large and Medium Taxpayer Offices established and operational in all priority provinces.
· Output 2: Strengthened and embedded management and technical capacity in the Afghanistan Revenue Department (ARD).
· Output 3: Increased taxpayer compliance with tax obligations.
· Output 4: Preparations completed for implementation of Value Added Tax (VAT).
The project will be implemented through a management contract for the provision of technical assistance input procured through the Official Journal of the European Union (OJEU).
Tax administration reform directly supports the implementation of the Afghanistan National Development Strategy (ANDS) by increasing revenue available for Government expenditure. This is a key objective of the GoA’s Public Financial Management (PFM) Road Map endorsed and supported by the donor community.
This project supports DFID Afghanistan’s three development pillar approach, contributing to: Peace, security and political stability; Economic stability, growth and jobs; and Getting the State to deliver improved services. It also supports the UK objective of ensuring a viable Afghan State that provides increasing levels of key basic services within the context of a stable and growing economy. The reforms contribute indirectly to the achievement of Millennium Development Goals (MDGs) 1, 2, 3, 4.
DFID will be sole funder of the project. USAID and the World Bank will fund complementary inputs in support of the PFM Roadmap. Interventions will be managed at two levels:
DFID Afghanistan: DFID’s Growth and Livelihoods Team (GLT) will manage the project; the lead adviser will be GLT’s Economic Adviser. DFID will appoint an implementing agent to provide technical assistance. The contractor will support the ARD with project monitoring and communications work, including assisting the Steering Committee as required.
Steering Committee: Project direction and monitoring will be shaped by a new Steering Committee chaired by the Deputy Minister of Revenue and including the Director-General of the ARD, plus a DFID representative. Other participants may be co-opted from time to time. The steering committee will meet quarterly. “Tax Administration Project, DFID, 2011”
Timing and Funding
DFID will commit £18.9 million over three years to the implementation of the project. The breakdown of spending by year and Output is given in Table 2 below.
You can access the research contents through The Kabul Times Webpage.
The author is Monitoring and Evaluation Expert at CEO’s Office of the Islamic Republic of Afghanistan.