Attachment4_Predecessor activities.doc

PREDECESSOR ACTIVITIES

Current and past USAID-financed activities that have dealt with some of the issues related to this activity include the following:

Completed USAID programs

· For over a decade USAID has been providing technical assistance to support reforms in fiscal policy and tax administration areas. These activities have included technical assistance, training, and capacity building. Until recently, the results were at best mixed. The recent effort USAID decided to focus its assistance on selected binding constraints that affect the business climate and the competitiveness of Armenian enterprises, in particular those in the export and SME sectors. Recent assistance has therefore been highly targeted to address three well-defined weaknesses in the area of tax administration, highlighted in part by World Bank and IMF conditionalities—automating the refund of VAT for exporters, moving to a risk-based audit selection process, and improving the quality of taxpayer services.

· Technical Assistance to Support Tax Administration Reforms (TASTAR): As part of its Technical Assistance to Support Tax Administration (TASTAR) project (a 18 month 1.5 million project), the USG provided technical assistance to the State Revenue Committee (SRC) focusing on a limited number of high priority reforms that will have an immediate impact on businesses. The three main tasks were: (i) instituting a risk-based system for audit selection, (ii) improving the system for VAT refunds, and (iii) improving taxpayer services. As a result of the project the following has been achieved: Risk-based Audit Selection System (RBASS) and Value Added Tax refund automated systems were developed , the audit guidebooks for three industries (real estate, tourism, and transportation) and cash registries were developed, and a number of specialized trainings were conducted for the SRC tax auditors to and taxpayer service center workers to develop professional skills and abilities. The project ended in April 2011 and was implemented by Deloitte Consulting LLC.

· Armenia Tax Improvement Project (ATIP) was a three year (2005-2008) $10 million project implemented by Booz Allen Hamilton. The project was aimed at providing technical assistance to the SRC in order to help reform the tax administration systems and tax policies, which in turn would help raise the Tax/GDP ratio. In particular, the ATIP project provided training and capacity building for the SRC to help foster greater transparency to the operations of the tax service. Over the lifetime of the program, ATIP succeeded in supporting the SRC to begin the process that will enable it to transform and modernize. This accomplishment was a result of ATIP’s application of change management principles throughout the organization, working with change agents within the SRC, and collaborating with key stakeholders such as the IMF, the World Bank, other international organizations, and the local business community.