USAID'S FISCAL SECTOR REFORM ACTIVITY ANNUAL REPORT

The activity was designed to drive overall improvement of the fiscal system in BiH and support the country's future economic development. Key objectives of the activity included the implementation of online payment and verification processes, creation of registers of fees, and elimination of "para-fiscal" fees. The activity also focused on reducing tax evasion through improvement of the gaming industry taxation and establishment of the FBiH register of business bank accounts. Significant events during the reporting period included the recognition of the successful first year of operations of the FBiH single register of business bank accounts, donation of laptops to the Brcko District to boost enforcement of fiscal tax receipts, and presentation of a Certificate of Appreciation to the Senior Economic Advisor for her extensive contribution towards microsimulation work. Major steps were taken towards the reform of fees and charges across Bosnia and Herzegovina. Consultative meetings were held with Ministers of Finance of all ten Cantons and the Association of Cities and Municipalities of the Federation of Bosnia and Herzegovina to discuss regulation of fees and charges. The approach to reform in the FBiH was amended based on comments received, and a draft law on the Register of Fees and Charges in the FBiH was submitted to the Ministry of Finance. In the RS, implementation of the RS Law on the Fiscal System gathered pace, and further fees and charges were abolished. In Brcko, a law regulating its register of fees, charges, and taxes was established, and the manner by which fees and charges may be introduced and amended was defined. The activity also made significant progress in microsimulation and revenue forecasting work, enabling Ministries of Finance to produce accurate projections of the potential impact of fiscal policy on citizens and businesses. This work has boosted the capacity of Finance Ministries across BiH to generate their own fiscal policy projections for domestic policy needs and when dealing with International Financial Institutions. The activity's successful implementation will drive the overall improvement of the fiscal system in BiH and support the country's future economic development. Reducing the high compliance burden for employers and improving coordination between different levels of government will play a significant role in supporting Bosnia and Herzegovina's future economic development.