| Tetovo and Brvenica joint administration of local taxes and fees | |
|---|---|
| Service Areas: | Administrative Services and Tasks |
| Country: | Macedonia |
| Municipalities: | Tetovo, Brvenica |
| Contact persons: | Abdula Musai, Ibrahim Ajdari |
| Legal form: | Contractual |
IMC is due to the lack of capacity of the Municipality of Brvenica in the administration of local tax and fees, specifically:
The main aim of the IMC is to compensate for the lack of capacity of the Municipality of Brvenica in the administration and collection of local taxes and fees.
The legal basis for the cooperation is the agreement for the provision of services in local taxes and fees administration. The Municipality of Tetovo provides intellectual services to the Municipality of Brvenica on local taxes and fees administration by: preparing and issuing property tax bills, and inheritance and communal tax bills, as well as tax accounting. The seat of the Tax Administration Unit is located in the Municipality of Tetovo as a separate organizational unit of the Finance Department. There are five local officers involved in the IMC, who are employed in the Tax Administration Unit: the Head of the Unit, the Tax Registration Adviser, the Taxes and Municipal Revenues Senior Adviser, the Taxes and Communal Fees Adviser and the Enforced Tax Collection, Fines and Interest Adviser. The Tax Administration Unit has five employees (associates and independent officers).
The compensation for the delivered services is MKD2 per capita of the total number of citizens of the Municipality of Brvenica, for total of MKD32,000 (about EUR500) monthly. The amount is paid against an invoice prepared and sent by the Municipality of Tetovo. This municipality finances the activities of the Tax Administration Unit with its own resources and the reimbursement fee from the Municipality of Brvenica. The costs include: office space, services, office procurement, computers, equipment and operational expenses, including the employee salaries. The basic sustainability factors are the updated taxpayers’ database of the Municipality of Brvenica and timely payment of the service fees by the Municipality of Brvenica. As concerns accountability to citizens, the Municipality of Tetovo Finance Department prepares the quarterly report and the annual account and report on budget execution, which is publicly available. The Municipality of Brvenica prepares the same documents. These documents are reviewed and adopted by the Councils of both municipalities.
The Municipality of Brvenica pays for the services received against the invoice received from the Municipality of Tetovo which has specifications attached on the delivered services, signed and sealed by the service provider (Municipality of Tetovo) and endorsed by the service beneficiary. The performance of the Tetovo Tax Administration Unit is regularly audited by the Internal Audit. The deadline for service provision is established in separate requests for service delivery issued by the Municipality of Brvenica. The service contract specifically provides that the quality of the delivered services must match the established criteria of the legislation and by-laws, as well as other regulations on local taxes and fees. The Municipality of Brvenica accepts the generated data (property register, communal taxpayers’ database, and other databases including tax accounting) after checking their quality and receiving the official records signed by both municipalities. The Municipality of Brvenica can file a written complaint on the quality of delivered services by the Municipality of Tetovo with a mutually determined deadline.
The initiative for the IMC was a common idea of the municipalities. The initial steps included:
There are five characteristic phases of the establishment of the IMC:
It should be noted that the political affiliation positively influenced the establishment of the IMC. Assistance from UNDP was requested in the process of establishing the IMC, which it provided, particularly in the preparation of:
The IMC was faced with several difficulties during the establishment process, the most important of which are: lack of financial resources in the Municipality of Brvenica for updating the tax register and for establishing the WAN; setbacks with updating the database (unknown personal identification numbers; the Public Revenue Office and the Ministry of Interior have not yet submitted them to the Municipality); still incomplete data on taxpayers; and lack of data from the Central Government Register on the new enterprises.
The most important success factors in the establishment of the IMC are:
Benefits
The main benefits for the partner municipalities are:
In addition, the main benefits for the Municipality of Brvenica are the reduced expenditures, i.e. lower costs for service delivery. In general, there is increased efficiency in the preparation and delivery of the services.
From the citizens’ perspective, the main benefit is that the administration of the Municipality of Brvenica delivers quality services for the legal entities and citizens.
The Municipality of Brvenica pays indemnification of about EUR6,000 annually to the Municipality of Tetovo, but saves on financial resources for the salaries and contributions for at least three persons, which amount to approximately EUR30,000 annually. Therefore, the total savings are approximately EUR24,000 annually; US$50,000, as initial costs for establishing of the IMC have been covered by UNDP technical assistance.
In terms of the initial costs to establish the IMC, they have been covered by the savings from the 18th month of IMC operations.
Shortcomings
To date, no shortcomings of the established form of the IMC have been identified either by the partner municipalities or by citizens.
At present, no consideration has been given to expanding the area of cooperation between the two Municipalities, except for the possible use of the server in the Municipality of Tetovo by the Municipality of Brvenica, for publishing the website. No considerations have been given to expanding cooperation with other municipalities or converting to another legal form.
Both municipalities consider that the established practice could be replicated in other municipalities.
Both municipalities recommend that the Central Government should pass the Law on Inter-Municipal Cooperation at its earliest convenience, and the Association of the Units of Local Governments of Macedonia (ZELS) should assist the rural municipalities by illustrating the modalities for establishing IMC.
Both municipalities are willing to support other municipalities to establish identical IMC by sharing knowledge and experiences, and making available all relevant documentation.
The information about this practice was collected and presented by Toni Popovski.