Mr. Banks, besides Customs you are already advising the revenue administration. Do you have some know-how in unveiling tax frauds?

CA have engaged a number of advisors with specific expertise in areas of tax fraud particularly VAT.eg Inter EU tax fraud, or carousel fraud involving the movement of goods across internal EU borders and businesses which suddenly go missing.  They are also experienced in identifying potential false registrations often created with phantom businesses. A significant part of our work under this contract is to help the NRA to develop systems and methodologies to better detect and prevent such activities.

Could you explain why a type of business is more risky in terms of tax frauds?

Many EU countries face similar tax fraud. For example, any trade sector that is predominantly cash based, or is export/import driven and has large work forces means there is a higher risk to the revenue.  Historically the hospitality sectors have been considered high risk due to the opportunity for under declaration of cash takings. This is particularly relevant to Bulgaria in light of its booming tourist industry. In fact, the National Revenue Agency has already undertaken a compliance campaign on the Black sea Coast

Similarly in the construction sector there is the possibility for large sums of undeclared cash to be paid to non-registered employees, and building materials can be over ordered and sold off record with no tax being paid.

Excise duty evasion on alcohol, cigarettes and fuel will all be increasing risk areas especially misdescription and under valuation of goods. The VAT zero rating and under valuing of high value export goods/dispatches also gives rise to the temptation to misdirect consumer goods back into the domestic market at VAT free prices.

Are you familiar with the character of the Bulgarian “Andreshko” and how can this character be left in the past?

I’m afraid that my knowledge of Bulgarian literature is quite limited but I know, from my Bulgarian colleagues, that this character is used as a symbol of cheating the tax collectors. Our job as advisors is to look not only at the systems for preventing large-scale frauds but also the ways for eliminating any factors leading to loss of national revenue. I am confident that the ongoing process of enhancing controls at all levels would make the life of all kind of fraudsters, large-scale or small, much more difficult and that state revenues will consequently go up.

What should be the salaries and the bonuses of the tax inspectors because, without being an advisor, I think it is hard to expect effective combat against frauds from someone whose monthly salary is 300 BGN?

It is a problem in any rapidly expanding economy when private income rises faster than the public sector.  However, what is important is to create a climate for the businesses so they can all operate on equal terms and understand what their obligations are as well as the revenue authorities.  The revenue services must be transparent in their dealings with the public and there needs to be consistency of treatment so that businesses know what to expect whatever customs or tax office they are dealing with.

Does your contract with the MoF contain quantitative parameters for evaluation of your work? I ask you this question because one of the main reproaches towards you, about your work in the Customs, was that it was very difficult to determine your contribution for the undoubtedly increased revenues?

Our contract contains a number of specific deliverables in the key work areas.  Following completion of our inception report, we have now identified a total of 72 areas of activity where we believe we can support the Ministry and their Revenue Agencies.  These proposals have been accepted and will be subject to regular scrutiny by the Ministry and the Management Council which has been established

What does the 5.8 million euro, which we will pay you for consulting our tax administration, include? Does this sum include the accommodation costs of your experts and their families or these costs will be covered separately?

Тhe major part of the payment under our contract with the Ministry is for the fees of consultants. The contract also includes all the costs associated with deploying our experts.  This includes the necessary standard travel and subsistence costs for the experts to allow them to undertake their work effectively and efficiently. Additional accommodation and living costs for family members are entirely a matter for the consultants to pay from their pockets.

The NRA works with quite a lot of confidential information. Does your contract contain some special clauses for not divulging it?

Yes.  The contract specifically provides that we should comply with all relevant laws related to the handling of classified information.

Would you advise the NRA to continue the implementation of an operation which was applauded a lot but, seemingly, it did not produce any significant results - check-ups of people possessing expensive cars and houses, it seems that many of them do not declare their incomes?

CA advisors are already assisting the NRA to develop well focused campaigns with clear aims and objectives which will provide revenue staff with the opportunity to develop knowledge and skills in particular trade areas. In conjunction with the NRA we will be reviewing the legislation to confirm that it effectively supports collection of the right taxes.

Do you think that the Customs has a new face now? Is the Customs capable of being an outer border of the EU?

The Bulgarian Customs Agency has made huge progress over the last 6 years.  Some of this is apparent, such as the enormously increased levels of revenue collection, some is less obvious to an outsider, but is nevertheless crucial to ensuring their capacity to effectively control the EU external border.  The Customs Chapter of the Acquis Communautaire was closed well before accession, demonstrating the European Commission’s opinion that the Bulgarian Customs Agency had the capacity to fulfill the obligations of a Member State Customs Administration.  This does not mean that everything then stands still however and that further modernisation and enhancement of systems, procedures and controls is not needed – it always is, not just in Bulgaria, but everywhere.

Do read the public register of our customs officers? Do you notice differences between what it reads and the real standard of living of some of them? Are you worried about this?

In common with many EU member states, Customs officers and other revenue officers are required to make an annual declaration of property and assets.  Whilst any unexplained additional income can be a cause for concern, CA’s role is not to examine individual cases but to assist the NCA, where required, to develop methodologies to help focus on the most serious cases and to enhance the overall strategy for reducing corruption and promoting integrity throughout the financial administration.

Don’t you think that it would be better if it is made public for the society, not only the customs heads to be entitled to read it?

A balance must be found between what is in the public interest and respecting the privacy of individuals.  Providing there is a clear and transparent system for recording the assets of customs officers, which is consistent with similar systems in other government and law enforcement agencies, so that individual cases can be examined if considered necessary, it should not be necessary to make everything public.

I learn there are some changes in your management in Bulgaria. What are they?

John Brown, who was our very successful Team Leader during the major part of the previous programmes, and who left Bulgaria in late 2005, has been brought back to strengthen the present team. He has a wealth of relevant experience, a wide knowledge of Bulgarian issues and his expertise will be of significant benefit to the Crown Agents modernisation programme. He is known to many Bulgarians and already took up his new appointment