FAR Annual Performance Report: USAID'S FISCAL SECTOR REFORM ACTIVITY

The activity aims to reduce the compliance burden on taxpayers through targeted assistance, including the implementation of the payment simplification process in the Federation of Bosnia and Herzegovina (FBiH), creation of a register of fees, and elimination of nuisance fees. Significant progress was made in compiling registers of fees and charges during the reporting period. In the FBiH, a register of all fees at the FBiH, Cantonal, and Municipal level was officially submitted to the Federal Ministry of Finance (FMoF) on July 1, 2016. The register of fees will be published on the FMF website once technical issues are resolved. In the Republic of Srpska (RS), a draft register covering all taxes, fees, and charges at the RS entity level was prepared and published on the MoF RS website for public consultation. The activity has also seen increased liaison, communication, and cooperation with the International Monetary Fund (IMF) Resident Representative and IMF Missions to BiH. Technical missions have allocated meetings with the FAR team to assess program progress and provide ad-hoc technical assistance. The signed IMF Letter of Intent refers to FAR's activities, including reform to parafiscal fees, introduction of treasury into the RS health sector, improved collection of tax debtors, and microsimulation and economic modeling training. Microsimulation economic models have been set up to allow for policy forecasting, such as that required by the IMF. In the FBiH, the model allows for future policy forecasting in the area of Personal Income Tax (PIT) and Social Security Contributions (SSC), which should assist with the IMF requirement for reducing labor taxation. Similar models have been developed in the RS and Brcko, with staff training underway in the RS and Brcko. Meetings and liaison with the Public Administration Reform Coordination (PARCO) have led to significant progress concerning the introduction of UNCTAD's DMFAS public debt management software at the BiH, Entity, and BD level. PARCO's management board has approved expenditure on this, subject to resolving public procurement issues. The activity has also cooperated with PARCO to approve allocating resources to finance the introduction of Treasury Systems (TS) in FBiH municipalities that do not currently have any form of TS in place. The activity has made progress in implementing the payment simplification process in the FBiH, creating a register of fees, and eliminating nuisance fees. The activity has also seen increased liaison, communication, and cooperation with the IMF and PARCO, leading to significant progress in introducing public debt management software and Treasury Systems in FBiH municipalities.