Impact assessment of the tax reform in Moldova

The Embassy of Sweden is implementing a tax administration project consisting of the bilateral cooperation between the Swedish Tax Agency (STA) and the Moldovan Tax Service (STS). The project aims at assiting the Moldovan authorities to implement the voluntary tax compliance principle through improving the capacity of the STS to communicate with the taxpayers and through enhancing the auditing capacity of STS. The project has achieved promissing results materialized in fewer but more targeted tax controls and higher tax collection. Nevertheless, there are several concerns viv-a-vis the sustainability of the mentioned achievements. The Embassy's assessment is that the process is not yet irreversible and there are possibilities to shift from the voluntary compliance model to the one based on tax enforcement. The new Government officials, the recently appointed STS management as well as the large public have to be demonstrated the benefits of the new model and the link between the activities implemented by the project and the positive trends in the tax administration. This would ensure support to the reform process and ownership from the Moldovan side. In order to assess the effects of implementing the new approach in the Moldovan tax administration, e.g the voluntary compliance, with the support of the blateral project between the STA and STS, the Embassy of Sweden decided to carry out an impact assessment. The assessment will be based on econometric, statistical, as well as qualitative analysis of the evolution of the tax administration system in the last couple of years and will take the form of a study that will be disseminated to the public in general and the policy makers in particular. The main goals of this exercise will be: • to provide a robust evidence about the net impact of reforms in the tax administration supported by Sweden;• to communicate and widely promote the assessment conclusions in media and among relevant stakeholders;• to raise awareness about the importance of continuity of recent reforms in the tax administration. The results of the assessment will also be an important factor for a potential decision on a new phase of the project, to be taken before November 2016.