Fighting VAT fraud: the Bulgarian experience

This paper draws on the experience of Bulgaria in identifying the types and modus operandi of VAT frauds with a focus on the abuse of tax credit. It analyses the elements of tax design permissive of such abuses and discusses the possible solutions in the light of the international and domestic experience and the capacity of the tax dministration. It offers a critical analysis of the Bulgarian anti-fraud device the VAT account, as well as the various alternative policy and administrative measures proposed or applied as barriers to abuse of VAT credit, including those pertaining to the domain of commercial registration, or those related to indicative “market” prices of commercial transactions. The study concludes that the possible solutions should be sought along the lines of optimizing risk management and the principle of joint liability rather than through tighter controls at entry and on the conduct of business

Understanding Tax Corruption in Transition Economies: Evidence from Bulgaria

Measures of corruption are based on the concept of bribes as extra business costs. Drawing evidence from corruption surveys of business and tax service in Bulgaria, this paper looks at the bribe as a price paid by the taxpayer in exchange for income-maximizing services supplied by corrupt tax officials. It distinguishes between corruption for tax evasion and corruption related to excessive voluntary compliance costs. The latter is closer to the concept of bribes as costs imposed on business, but is limited in scale relative to the former. It is in this framework that the study analyses the drivers of the demand and supply of corruption “services” and proposes an indicator framework for “sizing up” the problem, evaluating the strength of the underlying factors and formulating anti-corruption policies whose effect can be monitored and evaluated using that framework.tax corruption

Healthcare Reforms in Bulgaria: Towards Diagnosis and Prescription

The paper studies the policy response to the market failures and challenges of healthcare in transition. Bulgaria chose a halfway shift from healthcare services provided entirely by the state to a system with private providers of outpatient services and public providers of inpatient services, both sectors financed mainly by state-run compulsory payroll insurance system. The paper shows the evolution of this reform path to low compliance by both customers (contributors) and service-providers (contractors with the National Health Insurance Fund), which leads to excessive regulations and control, and crowding out of the private sector. The outcome is a system that is increasingly driven by administrative controls at the expense of market incentives. Based on this analysis it identifies the relevant policy implications and opportunities for moving the stalled health reforms out of the institutional impasse.healthcare reform

Fighting VAT Fraud: The Bulgarian Experience

This paper draws on the experience of Bulgaria in identifying the types and modus operandi of VAT frauds with a focus on the abuse of tax credit. It analyses the elements of tax design permissive of such abuses and discusses the possible solutions in the light of the international and domestic experience and the capacity of the tax dministration. It offers a critical analysis of the Bulgarian anti-fraud device the VAT account, as well as the various alternative policy and administrative measures proposed or applied as barriers to abuse of VAT credit, including those pertaining to the domain of commercial registration, or those related to indicative “market” prices of commercial transactions. The study concludes that the possible solutions should be sought along the lines of optimizing risk management and the principle of joint liability rather than through tighter controls at entry and on the conduct of business.VAT fraud VAT account

Understanding Tax Corruption in Transition Economies: Evidence from Bulgaria

Measures of corruption are based on the concept of bribes as extra business costs. Drawing evidence from corruption surveys of business and tax service in Bulgaria, this paper looks at the bribe as a price paid by the taxpayer in exchange for income-maximizing services supplied by corrupt tax officials. It distinguishes between corruption for tax evasion and corruption related to excessive voluntary compliance costs. The latter is closer to the concept of bribes as costs imposed on business, but is limited in scale relative to the former. It is in this framework that the study analyses the drivers of the demand and supply of corruption “services” and proposes an indicator framework for “sizing up” the problem, evaluating the strength of the underlying factors and formulating anti-corruption policies whose effect can be monitored and evaluated using that framework

Healthcare Reforms in Bulgaria: Towards Diagnosis and Prescription

The paper studies the policy response to the market failures and challenges of healthcare in transition. Bulgaria chose a halfway shift from healthcare services provided entirely by the state to a system with private providers of outpatient services and public providers of inpatient services, both sectors financed mainly by state-run compulsory payroll insurance system. The paper shows the evolution of this reform path to low compliance by both customers (contributors) and service-providers (contractors with the National Health Insurance Fund), which leads to excessive regulations and control, and crowding out of the private sector. The outcome is a system that is increasingly driven by administrative controls at the expense of market incentives. Based on this analysis it identifies the relevant policy implications and opportunities for moving the stalled health reforms out of the institutional impasse

Understanding Tax Corruption in Transition Economies: Evidence from Bulgaria

Measures of corruption are based on the concept of bribes as extra business costs. Drawing evidence from corruption surveys of business and tax service in Bulgaria, this paper looks at the bribe as a price paid by the taxpayer in exchange for income-maximizing services supplied by corrupt tax officials. It distinguishes between corruption for tax evasion and corruption related to excessive voluntary compliance costs. The latter is closer to the concept of bribes as costs imposed on business, but is limited in scale relative to the former. It is in this framework that the study analyses the drivers of the demand and supply of corruption “services” and proposes an indicator framework for “sizing up” the problem, evaluating the strength of the underlying factors and formulating anti-corruption policies whose effect can be monitored and evaluated using that framework