ESTONIAN TAX AND CUSTOMS BOARD 2013–2016

„If we think only of ourselves, we will disengage from the world. If we think only of the world, we will fall apart.” - Arvo Valton

TABLE OF CONTENTS

Printing office: Vaba Maa Design: Velvet Photographer: Aivo Kallas

TABLE OF CONTENTS P 3 FOREWORD P 4 MISSION. VISION. VALUES. OBJECTIVES. P5 SERVICE MANAGEMENT DEPARTMENT P 12 AUDIT DEPARTMENT P 13 CUSTOMS ORGANISATION DEPARTMENT P 14 TAX DEPARTMENT P 15 REVENUE DEPARTMENT P 16 DEVELOPMENT DEPARTMENT P 17 INVESTIGATION DEPARTMENT P 18 LEGAL DEPARTMENT P 19 ADMINISTRATION DEPARTMENT P 20 INTELLIGENCE DEPARTMENT P 21 INTERNAL CONTROL DEPARTMENT P 22 PERSONNEL DEPARTMENT P 23 STRUCTURE P 24 MAIN PERSONNEL INDICATORS P 25 SERVICE OFFICES AND CUSTOMS BORDER CROSSING POINTS P 26

© Estonian Tax and Customs Board 2013

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FOREWORD The mission of the Estonian Tax and Customs Board is to collect the state’s tax revenue, to protect the customs border of Estonia and thus of the European Union, to protect entrepreneurs from unfair competition and to assist people with fulfilling their tax liabilities and customs formalities. We are proud of the fact that, according to public opinion polls, the Estonian Tax and Customs Board is one of the most trustworthy public institutions in the eyes of Estonians – this is a significant recognition that we definitely intend to keep. During the 2013–2016 strategy period, the most important keyword for us is to decrease the share of the black economy in Estonia’s business environment. That is why we pay particular attention to the updating of control measures and to making them more effective. Of course, we must also continue to provide good services to our taxpayers. Consulting and proactive steps in order to avoid possible mistakes must be of a high standard and equally available everywhere across Estonia. The most important asset of every organisation is its people. Our objective is to increase team spirit, cooperation and the desire to achieve all the objectives together.

MISSION. VISION. VALUES. OBJECTIVES. A good strategy is formed when many employees contribute their good ideas and thoughts into its creation. And this is precisely how our development plan was created. Over a period of one and a half years, we have been assessing, thereby also with a critical eye, the results that we have achieved so far. We have considered what our partners and society are expecting of us. We have looked at the changes in the environment around us and at the expectations of our employees regarding motivation and organisation of work. We have also changed our organisational structure by decreasing levels of management and by giving first-level managers more responsibilities than they had previously. A good way to introduce the Estonian Tax and Customs Board is through its objectives. This publication describes the objectives that our various departments have set for themselves. Whether the reader of this text is an employee of the Estonian Tax and Customs Board, our partner or a client, I hope it might set them thinking along the following lines: “What can I do to guarantee that Estonia has tax revenue for providing public services, that economic activities are honest and that working for the state is a matter of honour.”

Our mission Our mission is to collect the state’s tax revenue, to protect our society and the economy, and to facilitate the business environment. Our vision As a public institution with a developing organisational culture we help to increase law-abiding behaviour in the area of taxes and customs. Our main values

»» Trustworthiness »» Cooperation »» Rationality »» Innovation Our objectives for the period 2013–2016:

»» To collect the state’s tax revenue »» To decrease the share of dishonest economic activity »» To build an organisational culture that supports development and efficiency

Marek Helm Director General

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WE COLLECT THE STATE’S TAX REVENUE 7

WE FIGHT THE BLACK ECONOMY 9

WE VALUE AND DEVELOP OUR TEAM

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Helena Karja

Senior Specialist

Jevgeni Shoron Tax Auditor

SERVICE MANAGEMENT DEPARTMENT The task of the Service Management Department is to ensure that fulfilling their tax liabilities and interacting with the Estonian Tax and Customs Board is easy, fast and streamlined for taxpayers – both for those who use electronic services and for those who prefer to organise their tax matters at our service offices. The employees of the Service Management Department instruct and advise clients, develop new contemporary and convenient services and make sure that the taxpayers can get timely and relevant information for declaring and paying their taxes. The objectives of the Service Management Department are:

»» To make fulfilling tax liabilities simple and

quick – for that the quality of the services is constantly being improved and innovative channels to communicate with clients are being taken into use.

»» To inform the clients on time and proactively

– for that end the options for providing infor-

mation are being developed and communicating with clients takes place in a simple and easily understandable language.

»» To make the service processes faster and

more effective – to achieve that the routine hand labour is replaced with solutions for fast data collection and analysis.

The success in reaching these objectives can be measured by increased client satisfaction, an increase in the number of clients who are using self-service channels and who have become more observant regarding reporting and following the law, as well as decreased cost of work processes.

„ The Service Management Department is the face of

the Estonian Tax and Customs Board.”

“My wish is to always be a great customer service representative and to offer the quickest, highest quality and most pleasant service available in the public sector. My goal is not to reprimand but to work together with clients and to find the solutions best suited for them. Besides, there is something about working at the Estonian Tax and Customs Board that you cannot find anywhere else – the season when we accept income tax returns.” - Helena

AUDIT DEPARTMENT The Audit Department plays an important role in collecting taxes, as well as in assuring honest competition. In order to do so, the employees of the Audit Department deal on a daily basis with the prevention and fighting of violations of the law – they assess the tax risks of individuals, perform audits and help to improve and modernise the legislative environment in order to assure honest competition and to make tax evasion more difficult. The Audit Department has set the following objectives:

»» To decrease the tax gap in the construction

sector, where the tax revenue that the state has failed to receive for a long time has been among the three areas of activity that are the cause of the biggest tax losses above all by fighting envelope salaries and VAT fraud.

»» To deal consistently with the businesses that

»» To decrease the submitting of incorrect claims for refund for VAT.

How successful the Audit Department has been in achieving its objectives can be seen by a decrease in the amount of social tax and VAT that is left undeclared in the construction sector, by a decrease in the damage caused by the three hundred persons causing the biggest tax losses, and by the number of persons with decreased risk and the sum of VAT that they claim.

„ Trust, but make sure!”

“My task is to check the declaring and paying of taxes and to influence taxpayers to be more law-abiding. When working at the Audit Department, you get a better understanding of Estonia’s business environment in general, but also of the particularities and tricks of each different field of activity.” - Jevgeni

cause the biggest tax losses, who are distorting competition and gain an advantage on the market through tax evasion.

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Ivika Aigro

Leading Specialist

Raido Roostalu Senior Inspector

CUSTOMS ORGANISATION DEPARTMENT Besides assisting customers with customs formalities, one of the main objectives of the Customs Organisation Department is to protect the customs frontier of Estonia and thus of the European Union. In order to do so, customs organisation employees deal on a daily basis with the prevention and stopping of customs violations by working together with other authorities and organisations in Estonia as well as abroad. They also help in preparation of legislation related to the field of customs. The employees at the Customs Organisation Department have established the following objectives for themselves:

»» Fast customs clearance by providing law-

abiding clients with advantages and privileges, with the acceleration of customs operations being the most important of these.

»» To decrease by 2016 the illicit market for

tobacco products by half compared to 2012, because out of all the excise goods, tobacco products have the largest share on the illicit market and they constitute the biggest tax loss.

The achievement of the objectives can be assessed by the time it takes to release customs declarations for trustworthy clients and by the percentage of such clients in the total number of customs clearances; by the share of the illicit market and the number of illegal cigarettes discovered during random border checks, as well as the price difference between an illegal cigarette and a legal cigarette.

„ Customs sees more than you do.”

“My daily work is the inspection and supervision of excise goods. The common objective of our department is the facilitation of legal trade and the prevention of illicit trade.” - Raido

TAX DEPARTMENT Work at the Tax Department is centred on everything relating to tax law. People at the Tax Department work out how to apply different tax-related legislation in practice, they also assist in the preparation of such legislation and, more importantly, they advise people in questions relating to taxation. The Tax Department has set the following objectives:

»» High quality tax-related consulting and train-

ing, so that taxpayers are able to pay their taxes correctly and on time. This is facilitated by the development of e-services, new training options and previously unused means of communication.

»» Fast and clear declaring of taxes, for which

new developments are created and existing ones improved in order to make tax calculations the responsibility of the tax authority and not of the client.

»» Better quality legislative drafting by incorpo-

sector, because the more the laws meet the expectations and the feeling of justice of the taxpayers, the more law-abiding they are.

How successful the Tax Department has been in reaching their goals can be measured by client satisfaction regarding consulting and training, as well as by how convenient it is to file tax returns. Another important indicator is the fact that an analysis has been carried out regarding the amendments to the most important tax laws.

„ The work that I do can only be done at the Estonian Tax and Customs Board.”

“My duty is to advise those dealing with excise goods, to issue permits and to provide subsequent supervision. I am helpful and friendly when I am dealing with clients, and thorough and impartial when I am processing applications. I try to be competent in my field so that my skills and behaviour will generate trust in the Board and keep its reputation high. I like it that my job is so varied and does not allow me to fall into a routine.” - Ivika

rating cooperation partners from the private

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Marika Lume

Financial Specialist

Andres Jermošin Lawyer

REVENUE DEPARTMENT The people who work at the Revenue Department are the people who organise the payment of state taxes and other financial liabilities and who keep records of it all. Since, inevitably, there are always those who, for some reason, owe the state some tax or other duty, the employees at the Revenue Department also have to deal with the negative side of tax collecting, which is the collection of arrears. The Revenue Department has established the following objectives:

»» To improve discipline in regards to the pay-

ment of taxes, by offering better services and more effective recovery – timely payment also helps clients to prevent an increase in tax liability as a result of interest.

»» To decrease tax arrears by dealing more

thoroughly with persons who have solvency problems and also with more complicated cases.

DEVELOPMENT DEPARTMENT

Whether or not the objectives have been reached can be seen by the percentage of claims paid during the accounting period, by the percentage of timely paid liabilities, by the backlog of payment of tax arrears in instalments and, of course, by the size of the tax arrears.

„ We find solutions to even the most difficult cases.”

“I represent the Estonian Tax and Customs Board in civil and bankruptcy proceedings, I help to uncover tax evasion schemes and to determine in these cases the tax liability of the persons responsible in responsibility and devolution proceedings. The objective of our department is to assure compliance with tax liability, to react swiftly to its deliberate neglect and to find solutions in even the most difficult cases.” - Andres

It is namely the people at the Development Department who ensure that the objectives for each period are set and that there are long-term plans in place. They also take care of putting together the budget and organise the reporting for the strategy. Their duties also include the development of the management system of the Board, the management and carrying out of development projects, and filing. The Development Department has set for themselves the following objectives:

»» Effective strategic management of the Estonian Tax and Customs Board.

»» Effective budget management, in which the updated cost management system plays an important role.

»» The use of external funding that enables

additional investments and helps to achieve the objectives.

»» Cost saving and simple management, mean-

ing that operations will be made faster and more comfortable and, if possible, automated.

The following indicators help the Development Department to measure how well the objectives have been achieved: a simple and convenient reporting system, annual review of the development plan, simple financial reports, an updated cost management system, external funding per calendar year is at least EUR 1 million, employees are satisfied with document management, the cost of preparing and posting documents.

„

There are big numbers and there are small numbers. On the bank notes, we like the big ones!” “My duty is to organise the budget, to analyse its implementation and to put together expenditure plans. The activities of the department cover the strategy of the Board, management plans, the budget, and document management.” - Marika

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Ardi Mitt

Head of Division

INVESTIGATION DEPARTMENT The people from the Investigation Department intervene when it is necessary to prevent, to stop or to detect crimes in the field of customs or taxes. Their task is the pretrial investigation of violations of tax law and customs regulations, whereby they are also authorised by law to use surveillance. The objectives of the Investigation Department are as follows:

»» Effective criminal proceedings to win any

illegally gained profit back for the state and to influence the general level of tax-related crime by suppressing the activities of criminal groups.

»» Better choice of criminal proceeding objects,

that is, concentrating on criminal proceedings that affect the collection of taxes the most in a specific area or region, or which suppress the corresponding type of crime the most.

Pille Lehis

Chief Lawyer

LEGAL DEPARTMENT

How efficiently the objectives have been achieved can be measured by the percentage of successfully solved criminal cases, the effectiveness of prevention in a specific area or on the size of the tax gap, and the percentage of initiated criminal proceedings resulting from a danger assessment or a priority area of the Board.

„ Crime does not pay.”

“My duty is to provide a working environment that supports the investigation of crimes and to provide internal, as well as external informing regarding the prevention of crime. The objective of the department is to detect crime that endangers the economy and society, to investigate these cases and to find the persons responsible.” - Ardi

The employees of the Legal Department represent the Estonian Tax and Customs Board in court when dealing with administrative and misdemeanour matters and, when necessary, also with civil and criminal cases. They deal with objections and settle complaints, they contribute to the development of legislation pertaining to the Board, they advise, train and assist colleagues when it comes to misdemeanour proceedings and tax proceedings, and they give legal advice to the other departments when it is required. The Legal Department has set itself the following objectives:

»» Misdemeanour proceedings are carried out

promptly, so that sentencing is as immediate as possible.

»» Motions to amend legislation are justified and contain an impact analysis, which accelerates the decision-making process.

The Legal Department assesses the achieving of these objectives based on the percentage of successful court cases and decisions on objections that prevail in court, as well as on the speed of misdemeanour proceedings. Another important indicator is the percentage of motions to amend legislation that contain an impact analysis.

»» To be represented in administrative court pro- „ We unravel knots and tie up loose ends.” ceedings in a competent and effective way, in order to protect the interests of the state and the taxpayers.

»» To ensure, through sound objection pro-

ceedings, the legality of the administrative proceedings of the Estonian Tax and Customs Board and thus the credibility of the Board in the eyes of taxpayers and partners.

“I head one of the legal proceedings teams at the Legal Department. The litigation lawyers make sure that justice and fairness are on the side of the Estonian Tax and Customs Board.” - Pille

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Kristel Karussaar

Personal Equipment Manager

Ivar Laur

Chief Specialist

ADMINISTRATION DEPARTMENT The Administration Department guarantees that the people at the Estonian Tax and Customs Board have everything they need to do their work and that it is aptly organised. The employees of the Administration Department are responsible for procuring and maintaining the resources of the Board, for organising travel and accommodation services for official travel, and for assuring that internal logistics at the Board work smoothly and quickly. The objectives of the Administration Department are as follows:

»» To make sure that the real estate used by the Esto-

nian Tax and Customs Board is of optimal size, that spending is as low as possible and to work towards making the management of border crossing points more efficient.

»» To make sure that employees have the uniforms and personal protective equipment that meet their needs.

»» To ensure the management of public property and the preservation of historic objects.

The following indicators help to measure how successful the Administration Department has been in achieving its objectives: the size of office space and the car pool and the corresponding costs, the percentage of successful procurements and e-procurements, the cost of state property and storage spaces, employee satisfaction with uniforms and personal protective equipment, the National Audit Office’s assessment of procurements, and the collection and preservation of historic objects.

»» To use the car pool in a way that keeps the number „ WO – Well Organised.” of vehicles at an optimal level.

»» To guarantee professional and effective procure-

ments, meaning that they are successful on the first try and that the product or service being procured meets the needs of the Estonian Tax and Customs Board.

“My responsibility is to provide the employees with the correct attire that meets current requirements. A proper uniform supports and motivates the employees in performing their duties.” - Kristel

INTELLIGENCE DEPARTMENT The prerequisite for getting good work results is to always have high quality data and adequate information on which to plan further steps and organise activities. The employees of the Intelligence Department are responsible for providing a risk assessment system that allows for effective supervision, for keeping the exchange of information between different administrative agencies in Estonia as well as on the international level fast and smooth, and for assuring that every plan, activity and conclusion is based on data that has been thoroughly analysed. The Intelligence Department has the following objectives:

»» To increase the capability of risk analysis by

using new methods of analysis and a methodology of extended impact assessment.

»» To assess the impact of supervision and to

provide feedback on it, in order to determine the effectiveness of different measures and actions.

»» To guarantee fast and effective international exchange of information, in order to prevent cross-border fraud and to collect various evidence for proceedings.

The success in achieving the objectives by the Intelligence Department can be assessed by measuring the impact of supervision, inquiries answered in a timely manner and by the use of the electronic risk management environment in the organising of all campaigns aimed at influencing the behaviour of people.

„ Yet another problem again!”

“My job is to develop and advance risk analysis. The work of the entire department consists of the collection, preservation and analysis of information, in order to create new risk knowledge and to realise it in all the main areas. There are lots of very different and very interesting problems. Actually, every new problem helps us earn our bread, will not let work become routine and allows us to evolve constantly. It also gives us the possibility to take part in processes that shape the society. “We know what you did last summer” is our current situation. ”We know what you will do next summer” is our aim. - Ivar

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Ines Ehavald

Chief Specialist

Mari Seemer

Training Specialist

INTERNAL CONTROL DEPARTMENT

PERSONNEL DEPARTMENT

The employees of the Internal Control Department make sure that the workrelated activities of all employees are legitimate and they also carry out disciplinary proceeding when violations have been discovered. Their job is also to organise corruption prevention activities at the Estonian Tax and Customs Board and to mitigate the human risks arising from the particular nature of work at the Board.

Whether or not the objectives have been achieved is shown, amongst other things, by the adoption of a control system for using new anti-corruption measures and databases, and by the fact that the management of access permissions for the databases of the Estonian Tax and Customs Board takes place in a common system.

Good and committed employees are a must in order to put into practice all the important activities and to achieve all the goals mentioned above. The job of the Personnel Department is to make sure that the Estonian Tax and Customs Board employs well-trained and motivated people who form a unified team.

„ Feeling safe is the basis of security.”

The Internal Control Department has set itself the following objectives:

“My job is to coordinate data protection at the Board and to check that data protection requirements are being followed. In our changing times, data protection is becoming increasingly important and it cannot be underestimated. Through our activities, we want to give people the feeling of certainty that the data being handled at the Board is protected and that our employees do their job reliably.” - Ines

The Personnel Department has the following objectives:

»» To guarantee the reliability of the Estonian Tax and Customs Board in terms of data protection.

»» To prevent professional violations of the law.

»» To assure that each position is held by a

person who has the most experience and is best suited for that job; to achieve that, systematic work is carried out in terms of assessing employment needs as well as finding new people.

»» Development of the team with the help

of development and assessment interviews, competency models and training programmes.

»» Retention and motivation of employees,

because it is only possible to be successful when key employees of the Board are motivated and amongst the top talent in their respective field.

How successfully the Personnel Department’s objectives have been reached, is shown by successful recruitment competitions, by keeping the fluctuation of personnel within the prescribed limits and by the competency models in use, which are also the basis for the development of training programmes at work.

„

We find the right people, we develop and retain them.” “My main task is to plan, organise and assess training. But, certainly, also to support the trainers in creating the training programmes and in carrying out the training.” - Mari

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STRUCTURE As of March 1, 2013

MAIN PERSONNEL INDICATORS As of March 1, 2013 Number of employees per department Percentage of men and women women men

Distribution based on the length of service at the ETCB less than 1 year 1-5 years 5-10 years 10-15 years 15-20 years over 20 years

Department

Number of active employees

Customs Organisation Department Audit Department

461

Service Management Department Investigation Department Revenue Department

254

362

119 76

Intelligence Department 71 Legal Department

67

Tax Department

50

Development Department Administration Department Personnel Department

31

Internal Control Department Direct subordination of the management Top management

8

TOTAL

1545

Distribution based on education higher education applied higher education other education

22 16

5 3

The Estonian Tax and Customs Board operates in the administrative area of the Ministry of Finance. 25

SERVICE OFFICES AND CUSTOMS BORDER CROSSING POINTS 16 service offices 10 customs border crossing points

Muuga

Tallinn

Sillamäe Narva

Rakvere

Paldiski

Jõhvi

Rapla

Kärdla

Haapsalu

Paide Jõgeva

Pärnu

Kuressaare

Tartu Viljandi Koidula

Põlva

Valga

Võru

Luhamaa

OTHER IMPORTANT NUMBERS In 2012, Estonia’s gross domestic product (GDP) was EUR 17 billion (EUR 16,998,188,740).

EUR 17 billion

In 2012, tax income into the national budget was EUR 4.7 billion (EUR 4,775,268,000).

EUR 4.7 billion GDP 2012

Tax revenue 2012

In 2013, the budget of the Estonian Tax and Customs Board is EUR 40.1 million (EUR 40,103,411). EUR 40.1 million ETCB budget 2013

ESTONIAN TAX AND CUSTOMS BOARD General information +372 676 1002 www.emta.ee