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1. Improving domestic revenue mobilization has been a key challenge in Haiti. At about 11 percent of GDP in FY2009, Haiti's revenue level remains relatively low, in part due to the complex tax system with many exemptions, and a weak revenue administration. The authorities indicated their determination to raise revenue by improving the equity of the tax system and actively combating tax evasion. Prior to the January 12 earthquake, the authorities' objective was to raise revenue to close to 13 percent of GDP by FY 2012 through a revision of the tax system and improvements in tax administration. Revenue collection during the first quarter of FY2010 (3.5 percent of GDP) was fully in line with these revenue targets. 2. The January 12 earthquake was a major setback on Haiti's revenue mobilization strategy. The main buildings --both tax administration and customs headquarters, the large taxpayer office (LTO), and others operational units -- have collapsed or are seriously damaged. For the tax administration, 1300 people out of 1920 are now without office. Twenty-five people are confirmed dead, including the head and four other senior managers. For both the tax and custom administration, only 60 percent of pre-earthquake employees are accounted for. There is no information about the others. Revenue administration employees are still traumatized. Many have lost their homes, and sometimes family members. Many still lieave in the streets, sleeping in tents or in their cars. After each tremor, employees become fearful and anxious and leave offices to go home. 3. Both tax and customs administrations have restarted operations and are progressively recovering their capacity to collect revenue despite very difficult working conditions. Since February, the tax administration restarted basic operational functions for the LTO -- it has only registered the tax forms of 84 taxpayers out of 500. The tax authorities are trying to identify large taxpayers that are still in business. Revenue collection has increased from January to March from 25 percent to almost 50 percent of pre-earthquake targets. For the entire fiscal year, revenue collection could well exceed 50 percent the budgeted level. Audits have been delayed for many months, as the administration is still operating in the context of an emergency situation. Exemptions have increased with the jump in humanitarian assistance. A large part of imports arrives through the Dominican Republic and the inability to control the border has contributed to the increase in fraud. The main challenges are on the management infrastructure, including office space with the adequate information systems and human resources. II. TAX AND CUSTOMS ADMINISTRATIONS 4. The authorities have requested technical assistance (TA) from the IMF to help design a strategy to rebuild a more modern and efficient revenue administration. An initial assessment of the situation has been done and key areas of the reform strategy identified. Priority is to restore basic functions and modernize them. . The main objective of our strategy is to reorganize the revenue administration focusing on fiscal missions, segmentation of taxpayers, computerization, rationalization of local and regional networks, tighter controls, especially at the
Ministère de l'Économie et des Finances (MEF)
5, Ave. Charles Sumner - Immeuble 2 • Tél.: (509) 2946-4041 / 2946-4040 / 2244-4141 email@example.com /www.mefhaiti.gouv.ht
More than a third of tariff lines were raised on October 1. They focused on increasing the transparency of fiscal procedures through the adoption of a tax procedures code. which will also enhance the transparency of the tax system.gouv. and broadening the tax base. Publication of performance indicators will enhance accountability and ensure that revenue administration efforts result in significant increases in revenue collection. of which 60 percent were brought to the CARICOM common external tariff and 40 percent brought closer to this level. Charles Sumner . IV. increasing cooperation and data exchange between the tax and customs administrations to help reduce tax evasion. Many ongoing efforts were launched before the earthquake and the underlying strategy may have to be revised.gouv. III. a better coordination is necessary with other TA partners. POSSIBLE REVENUE ENHANCING MEASURES 8. rationalizing exemptions and privileges in line with the authorities' reconstruction strategy. For the success of this strategy. The reform would focus on simplifying the tax system.: (509) 2946-4041 / 2946-4040 / 2244-4141 mefinfo@mefhaiti.Haiti—Key Elements of the Post-Earthquake Strategy for Revenue Administration and Fiscal Policy border with the Dominican Republic. which was prepared before the earthquake. Selected tax policy measures have been taken recently or are under serious consideration.ht Ministère de l'Économie et des Finances (MEF) 2 . 5. Efforts to strengthening the customs and tax administrations will continue in the coming months. TAX POLICY 6. Adoption of the tax administration organic law and the resumption of the above-mentioned Canadian-led project will further strengthen revenue administration. A tax on incoming international phone calls is still under consideration as well as a car registration fee. ADMINISTRATIVE MEASURES Reinforcement of the Tax authority (Direction Générale des Impôts) 5. Ave. The authorities and IMF staff already agreed on an initial set of basic performance indicators that will have to be published regularly to better monitor the performance of the revenue administration (see Tables 3 and 4). These reforms initiatives would culminate in the approval of a new tax code in the coming years. raising a limited amount of revenue.7 percent of GDP for the whole year. 7.ht /www. The authorities are currently discussing possible revenue-enhancing measures for the next two years mentioned below: I. including Canada.Immeuble 2 • Tél. Implementation of the new customs code will streamline procedures and provide flexibility in the creation of customs control posts. and greater monitoring and accountability through a design and publication of performance indicators.mefhaiti. which had launched prior to the earthquake a significant TA project to modernize revenue administration. The authorities will request IMF TA to help design a comprehensive tax reform. A passport fee was introduced in FY2009. This contributed to strong revenue performances in the first quarter of FY 2010 as pre-earthquake estimates suggested that this measure could have yielded 0. and despite the lack of office space.
and management program for tax arrears.ht /www. implementation of assistance mechanisms to taxpayers. economic growth using a simple. • Implementation of a unit for processing and management of customs statistics. monitoring of performance indicators). • Fitting out of customs offices around the provinces and / or facilitate establishments of entrepot sous douane II. DR). simplified forms. Reinforcement of mechanisms for control and monitoring of tax administrations Rationalization of allowance and management of exemptions and privileges. Reinforcement of autonomous capacity to analyze tax and customs data by DEE and DIF with the appointment of a macro fiscal expert. Implementation of optimization programs (tax recovery …). online filing.gouv. evaluation and follow-up). ii) facilitation of voluntary payment through awareness and information programs. investigation and information) from operational functions (creation of tax collection centers). payment by bank transfer. Modernization of customs code and tariff (facilitation and generalization of procedures).ht .Haiti—Key Elements of the Post-Earthquake Strategy for Revenue Administration and Fiscal Policy • • • • • Implementation of a data management system (fiscal files for taxpayers). MCI) (agreement with partner customs agencies USA. to broaden the tax base (Linking data DGI/AGD/ONA/MCI) .Immeuble 2 • Tél. Charles Sumner . (DGI. Reorganization of the Tax Authority will strive to enhance efficiency :i) separate central functions (liquidation. equitable and profitable fiscal system to achieve fiscal pressure of at least 15%.gouv. Rationalization of Tax Authority personnel: implementation of customized training to facilitate application of proposed models. • • • Ministère de l'Économie et des Finances (MEF) 3 5. Reinforcement of mechanisms for control and monitoring of the Fiscal Inspection Department (joint auditing.mefhaiti.: (509) 2946-4041 / 2946-4040 / 2244-4141 mefinfo@mefhaiti. (performance indicators. Ave. • III. • Modernization of fiscal system Drafting the fiscal legislation reform taking into account objectives for reconstruction. Implementation of monitoring and follow-up processes. verification. • Continuation of Sydonia++ implementation program. • Rationalization of Customs Administration (AGD) personnel: implementation of customized training to facilitate application of proposed models. Reinforcement of Customs Administrations • Implementation of procedure management and data management systems.
: (509) 2946-4041 / 2946-4040 / 2244-4141 firstname.lastname@example.org /www. Ave.mefhaiti.gouv.ht .Haiti—Key Elements of the Post-Earthquake Strategy for Revenue Administration and Fiscal Policy USE FOR BUDGET SUPPORT EXERCISE 2009-2010 Ministère de l'Économie et des Finances (MEF) 4 5. Charles Sumner .Immeuble 2 • Tél.gouv.
mefhaiti.: (509) 2946-4041 / 2946-4040 / 2244-4141 email@example.com /www.gouv.Immeuble 2 • Tél. Charles Sumner .ht . Ave.gouv.Haiti—Key Elements of the Post-Earthquake Strategy for Revenue Administration and Fiscal Policy Ministère de l'Économie et des Finances (MEF) 5 5.
Immeuble 2 • Tél.mefhaiti.ht .Haiti—Key Elements of the Post-Earthquake Strategy for Revenue Administration and Fiscal Policy Ministère de l'Économie et des Finances (MEF) 6 5. Ave. Charles Sumner .gouv.gouv.ht /www.: (509) 2946-4041 / 2946-4040 / 2244-4141 mefinfo@mefhaiti.
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