The InterAmerican Development Bank is lending US$50 million to the Tax Agency (DGII) for strengthening tax administration and public spending management. The program is intended to help reduce the fiscal deficit in a sustainable way by raising tax revenues through improvements in administration and an increase in information and resources to help attain efficient cash management practices.
The IDB reports that the program also seeks to boost up the tax administration efficiency of the DGII by implementing a series of steps to improve administration and human resources management, including changes in the organizational structure, operational processes, and information systems and technological infrastructure.
Additionally, the program will seek to reduce tax evasion, strengthen tax surveillance and transparency processes, and help improve services for taxpayers while cutting compliance costs. It will also fund initiatives aimed at improving macro-fiscal planning, cash management and public spending’s budget execution.
“An innovative contribution of the new program to the country’s tax administration is the introduction of electronic invoices for large taxpayers—a feature that will lead to a reduction in both bureaucratic procedures and tax dodging,” said IDB project team leader Belinda Pérez Rincón.
This project is expected to lead to a tax revenue increase of at least 0.5% of the country’s Gross Domestic Product (GDP) by the end of the project’s life, which will be highly beneficial for the country, as it will free up more government resources to push forward public policies.
The IDB loan is for a 24.5-year term, with a 5.5-year grace period and a LIBOR-based interest rate.
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IADB
30 June 2017
