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International Monetary Fund. Fiscal Affairs Dept.
Albania is formulating a Medium-Term Revenue Strategy (MTRS) with IMF support. The decision to commit to the development of an MTRS was taken against the background of revenue persistently falling short of budget projections, revenue continuing to lag behind regional peers in tax to Gross Domestic Product (GDP) ratios and the Government’s assessment that an increase of revenue of 2.2 – 3.0 percent of GDP will be required to finance its additional spending needs over the next five years.
International Monetary Fund. Fiscal Affairs Dept.

Levels of Informality 3. Priority Actions for Compliance Improvement 4. Typical Elements of a Taxpayer Services Strategy 5. GDT Checks Undertaken During Fiscal Verification Visit 6. CRM Approach to Developing Integrated Compliance Improvement Strategies FIGURES 1. Tax to GDP Ratios Against Regional Comparators, Excluding SSC 2. Key Components of the MTRS Approach 3. VAT Compliance Gap by Sector (2009 – 2015) – in percent GDP 4. Policy Approaches and Measures for Tackling Undeclared Work 5. Integrity Framework Model 6. Components of the MTRS

Ruud A. de Mooij

because it impedes opportunities for productive government spending. Therefore, adopting a medium-term approach to raising revenue will be critical to achieving the revenue-level change that Indonesia needs. This chapter outlines a medium-term revenue strategy (MTRS) for Indonesia that aims to raise tax revenue by 5 percentage points of GDP in five years. The MTRS approach was developed for the G20 by the Platform for Collaboration on Tax and frames the tax system reform in a comprehensive and holistic framework of four interdependent components: (1) building broad

International Monetary Fund

reform strategies to achieve medium-term revenue goals encompassing tax policy, tax administration, and tax legislation. The MTRS approach was developed by the Platform for Collaboration on Tax to enhance countries’ revenue mobilization efforts. The Platform recommended the adoption of MTRS in its July 2016 report to G20 Finance Ministers, entitled “Enhancing the Effectiveness of External Support in Building Tax Capacity in Developing Countries.” The MTRS concept was further developed in the July 2017 “Update on Activities of the Platform for Collaboration on Tax

Ms. Dora Benedek, Mr. Edward R Gemayel, Abdelhak S Senhadji, and Alexander F. Tieman

, tax reforms require a holistic perspective, as outlined in the MTRS approach, not least to convince stakeholders that the reform is in the interest of all. 19. Still, raising domestic revenue will have to await a solid recovery. Even as tax revenue has decreased significantly due to the pandemic ( Figure 14 ), in the short term and to the extent their fiscal position allows it, governments will need to focus on supporting the economy by running deficits, thus partially making up for the lack of private demand. Only once a country’s economy is on track for a

International Monetary Fund. Fiscal Affairs Dept.

-equipped workforce. Undertaking a reform program of this scale while continuing to maintain normal business operations is a significant challenge for any revenue administration. It will require strong and sustained political support and significant investment throughout the life of the MTRS, as the third component of the MTRS approach states. While some of the investment in capacity building may be provided by donors, the government will need to play its part in providing the necessary human and financial resources, including a dedicated reform program resource, and support for

International Monetary Fund
Attainment of the Sustainable Development Goals (SDGs) will require that the Association of Southeast Asian Nations (ASEAN) countries continue their considerable past achievements. The Millennium Development Goals—which were to have been met by 2015—helped focus attention on achieving progress towards poverty reduction, better health outcomes, and improvements in education in the ASEAN developing countries. The 17 SDGs—adopted in 2015 and to be met by 2030—cover a wider set of interlinked development objectives, such as inclusion and environmental sustainability, which are important for all countries, including all ASEAN member countries. ASEAN countries have made significant progress in improving incomes and economic opportunities, including for women, and reducing poverty since 2000. Reflecting the economic dynamism of the region, strong income growth, structural transformation, and infrastructure improvements continue to support sustainable development in ASEAN. With continued income growth and strong policy efforts, most ASEAN countries are on track to eradicate absolute poverty by 2030, a major milestone. Also, several ASEAN countries already do relatively well in terms of gender equality. As a result, given support from continued income gains, economic welfare in ASEAN countries is expected to continue converging towards advanced Asia levels. Ensuring more inclusive and environmentally sustainable growth presents a key challenge for ASEAN. Despite some progress, income inequality remains relatively high in several countries and the shift towards manufacturing strains environmental sustainability. These challenges hamper ASEAN welfare convergence relative to advanced Asia. Policies to close these gaps in sustainable development can lead to significant gains. For the lower-middle-income ASEAN countries, in particular, more determined policy efforts are needed to improve infrastructure, as well as health and education outcomes. Remaining sustainable development challenges call for comprehensive, country-specific SDG strategies formulated in the context of national development plans and close monitoring through the voluntary review process. Pursuing sustainable development entails sizeable spending needs. Estimates for Indonesia and Vietnam, the two cases studies considered in this paper, show that reaching the level of best performers in their income group in infrastructure, health, and education by 2030 could entail an additional cost of 5½–6½ percent of GDP per year. While development needs vary across countries, estimates suggest large spending needs for most ASEAN countries. Meeting them will require efforts on multiple fronts, including improvements in spending efficiency, tax capacity, and support from the private sector. For developing ASEAN countries, concessional financing from development partners will be required. The IMF continues to engage ASEAN countries in key areas as they pursue their SDGs. As called for in their mandates, ASEAN and the IMF both strive for economic growth and sustainable development through economic integration and collaboration among their member countries. The IMF has increased its engagement with ASEAN countries to support their policy efforts through its policy diagnostics, advice, and capacity development. ASEAN countries have also received support through IMF initiatives in strengthening revenue mobilization, building state capacity for infrastructure provision, pursuing economic and financial inclusion, addressing the challenges of climate change, strengthening economic institutions for good governance, and building statistical capacity. While fundamental reforms to improve sustainable development take time to bear fruit, there is evidence that efforts have started to pay off.
International Monetary Fund

have developed several toolkits to support countries with international tax issues, including the “Efficient and Effective use of Tax Incentives for Investment in low Income Countries” and “Comparables for Transfer Pricing.” Forthcoming tools focus on: (i) offshore indirect transfers of assets; (ii) tax treaty negotiation; and (iii) transfer pricing. Medium Term-Revenue Strategies (MTRS)— In collaboration with PCT partners, the IMF has developed the MTRS approach to tax system reform, which brings financing and expenditure together to support the SDGs. Discussions

Ms. Dora Benedek, Mr. Edward R Gemayel, Mr. Abdelhak S Senhadji, and Alexander F. Tieman
The COVID-19 pandemic hit countries’ development agendas hard. The ensuing recession has pushed millions into extreme poverty and has shrunk government resources available for spending on achieving the United Nations Sustainable Development Goals (SDGs). This Staff Discussion Note assesses the current state of play on funding SDGs in five key development areas: education, health, roads, electricity, and water and sanitation, using a newly developed dynamic macroeconomic framework.
Mr. Bernardin Akitoby, Mr. Jiro Honda, and Keyra Primus

structured Medium-Term Revenue Strategy (MTRS) 42 approach to tax system reform can be applicable to a fragile state context. Specifically, those states entering a more developed stage of institutional capacity—when the country has emerged from the immediate post-conflict/disaster stage to a more stable (but likely still vulnerable) stage of institutional capacity—can benefit from the MTRS approach, while needing to take into consideration other reforms that are taking place across government and the economy. 69. To sustain tax reform efforts over a long period