REQUEST FOR APPLICATIONS (RFA)

PARA-FISCAL CHARGES: EVALUATION OF RESULTS AND SUPPORT FOR CONTINUATION OF REFORMS

Issuance Date: JULY 30, 2013
Deadline for Receipt of Questions: AUGUST 26, 2013 by 5 p.m. CET
Closing Date/Time for Submission of Applications: SEPTEMBER 4, 2013 by 2 p.m. CET

SUBJECT:      Request for Applications (RFA) Number: RFA-2013-03

The USAID Business Enabling Program in Serbia (USAID BEP), a United States Agency for International Development (USAID)-funded contract implemented by Cardno Emerging Markets USA, Ltd., is seeking applications from qualified, legally registered US or Serbian non-profit, for-profit, and non-governmental organizations (NGOs) for a grant to evaluate the para-fiscal system reform in Serbia, set direction for its completion and full implementation, and develop a system to monitor para-fiscal system reform.

The Successful Applicant will be responsible for ensuring achievement of specified grant objectives.

This RFA consists of the following sections:

  • Section 1 – Funding Opportunity Description
  • Section 2 – Award Information
  • Section 3 – Eligibility Information
  • Section 4 – Application and Submission Information
  • Section 5 – Application Review Information
  • Section 6 – Award and Administration Information
  • Section 7 – Annexes

Pursuant to 22 CFR 226.81, it is USAID policy not to award profit under assistance instruments. However, all reasonable, allocable and allowable expenses, both direct and indirect, which are related to the grant activity and are in accordance with applicable cost standards (22 CFR 226, OMB Circular A-122 for non-profit organizations, the Federal Acquisition Regulation (FAR) Part 31 for for-profit organizations, and OMB Circular A-21 for educational institutions), may be paid under the Award.

Subject to the availability of funds, USAID BEP intends to provide up to 40,000 (forty thousand US dollars payable in Serbian dinars) in total funding to be allocated over a 12 month period.

USAID BEP reserves the right to fund any or none of the applications submitted. Issuance of this RFA does not constitute an award commitment on the part of USAID BEP, nor does it commit USAID BEP to pay for costs incurred in the preparation and submission of an application. Further, USAID BEP reserves the right to reject any or all applications received if such action is considered to be in the best interest of the US Government. Applications are submitted at the risk of the Applicant; should circumstances prevent making an award, all preparation and submission costs are at the Applicant’s expense.

Applicants should submit any questions concerning this RFA in writing, electronically, via email to grants@bep.rs. The deadline for receipt of requests for clarifications/explanations is August, 26, 2013, by 5 p.m. Local Belgrade Time. No questions will be accepted after this date.

Applicants should submit applications in writing to: Jasmina Debeljak Maljkovic, electronically, via email at grants@bep.rs. The Closing Date for submission of applications is September 4, 2013, and the Closing Time for Submission of Applications is 3 p.m. Local Belgrade Time. Late applications will not be considered.

Section 1 – Funding Opportunity Description

A. Background

The United States Agency for International Development (USAID) has awarded a contract to Cardno Emerging Markets USA, Ltd. (formerly Emerging Markets Group, Ltd.) for the USAID Business Enabling Project in Serbia. The purpose of the Business Enabling Project is to help the Government of Serbia (GoS) improve the competitiveness of the Serbian economy and its private sector businesses. The overall objective is to assist GoS policy makers, business representatives, experts, and others to improve the business enabling environment and macroeconomic framework. The activity provides technical assistance and training to improve the business enabling environment, support macroeconomic stability, further develop financial markets, and improve and increase business and financial management capacities within government and business. The Business Enabling Project is made up of three components:

  1. Component 1 – Business Regulation and Economic Governance: Assist Serbia to improve its business regulation and economic governance, particularly in those areas where it performs poorly in international competitiveness and business environment rankings, so that it can better stimulate private sector growth and development and attract more foreign and domestic investment resources.
  2. Component 2 – Macroeconomic Policy and Public Financial Management: Assist the GoS and the Fiscal Council to improve macroeconomic policy, public financial management, and financial stability. Support efforts to improve GoS capacity to develop and implement fiscal policy.
  3. Component 3 – Financial Market Development: Support means to increase access to finance, including development of non bank financial institutions. Support the development of Serbia’s capital markets through improvements in market governance, accounting and disclosure standards. Support Serbia in its efforts to reform accounting and audit standards and practices and assist it in implementing those reforms.

USAID BEP’s activities in Components 1, 2, and 3 are described in more detail on USAID BEP’s website: http://bep.rs/  and www.policycafe.rs

To accomplish reforms in each of these areas USAID BEP helps the Government of Serbia work closely with the private sector and outside experts to make reforms that improve business competitiveness. The purpose of this RFA is to solicit applications to support USAID BEP by providing an evaluation of the para-fiscal system reform in Serbia, set direction for its completion and full implementation, and develop means to monitor para-fiscal system reform.

 

B. Grant Activity Description

Problem Statement

The alleviation of para-fiscal burden to business is considered to be one of the crucial issues in creation of a business-friendly environment in Serbia. Para-fiscal charges include all charges, regardless of their name, that pose a financial and/or administrative burden to businesses and do not confer any rights or result in the provision of services or goods, or do confer rights or result in the provision of services or goods the objective value of which (or the cost incurred by the body in providing such services) is significantly lower than the amount payable. Para-fiscal charges work against the essence of the “no taxation without representation” principle. They obscure public entities spending patterns and directly obstruct interests of transparency in the public budgeting. Moreover, the way such charges are introduced, assessed, collected and administered undermine the business planning and makes businesses' operations constantly vulnerable to arbitrary decisions of dozens of public entities. Special attention should be paid to the para-fiscal charges calculated on the basis of annual income or turnover of a business, which represent “hidden corporate profit tax”. Not many reforms could have such an effect on improving accountability of public entities as limiting their authorities to impose and administer para-fiscal fees and charges.

During 2012, USAID BEP and NALED completed and presented a Study on System of Non-Tax and Para-Fiscal Charges in Serbia. The Study encompassed 370 of the non-tax dues, keeping in mind that this number is not final and the number of para-fiscal charges exceeds this number. According to the findings of this Study, there are at least 179 para-fiscal charges among the 370 non-tax dues. The Study showed that only 77 non-tax dues passed through the State Treasury, and the total amount collected in 2011 under these 77 non-tax dues for which Treasury data exist was in excess of €730 million, which is equal to the amount of 2% of GDP, or 40% of foreign direct investment in that year. USAID BEP supported the Study with the outreach campaign, advocacy and awareness rising.

The strong negative impact of para-fiscal charges is also expressed in USAID BEP’s Business Survey 2012.

Table 1: What is the Impact of Certain Legal and Regulatory Areas on Your Business?
(% of companies surveyed - with opinion)

Legal and Regulatory Issue Area

Negative

Positive

2011

2012

2011

2012

Wage taxes and contributions

96.5%

95%

3.5%

5%

Other obligatory (para-fiscal) charges

96.3%

95%

3.7%

5%

Value-added tax (VAT)

87.1%

85.7%

12.9%

14.3%


Source: USAID BEP Survey of Businesses, December 2012

During 2012, the Government of Serbia (GoS) undertook important steps toward alleviation of para-fiscal burdens on businesses. Within the processes of fiscal consolidation, reform of para-fiscal charges, lowering regulatory, administrative and financial burden to businesses, and de-agencification, a number of laws were enacted, which resulted in abolishment a total of 138 para-fiscal charges, and transference of para-fiscal charges into consolidated system of State Treasury in end-September 2012. According to the Ministry of Finance and Economy, this reform is supposed to bring to the entrepreneurs and small businesses cost savings of up to 200,000 RSD per year. In addition, in mid-December 2012, the tariff for public release of music, performances and phonograms (“musical dinar”) for craft entities was abolished. USAID BEP had significant role in this process by providing technical assistance to the Ministry of Finance and Economy.

The most significant para-fiscal charge which was reformed the business name display fee (Serb. firmarina).

Table 2: Essential elements of business name display fee (firmarina) after reform

Payer
Amount

Entrepreneurs and small legal entities
(except entrepreneurs and legal entities engaged in the following businesses: banking; insurance; production and trade of oil and oil products; production and wholesale of tobacco products; production of cement; postal, telephone and mobile services; electric power; casinos, gambling, betting, bingo halls and gambling services; night clubs and discotheques) with annual income up to 50,000,000 RSD

Exempted

Entrepreneurs and small legal entities with annual income over 50,000,000 RSD, and middle-sized legal entities (except entrepreneurs and legal entities engaged in the aforementioned businesses)

Up to two average salaries per annum

Large legal entities (except legal entities engaged in the aforementioned businesses)

Up to three average salaries per annum

Legal entities engaged in the aforementioned businesses

Up to ten average salaries per annum

After permission of the Ministry in charge of finance, the unit of local self-government may determine higher amount of business name display fee.

Equally importantly, the GoS set the grounds to regain the control of the system that had a life of its own, to large degree outside of the mechanisms of the democratic process. Changes to the Budgetary System Law, enacted in late 2012, provided several elements aimed to improve predictability of the different administrative fees and to make their amounts reflect actual costs of the public sector in providing the services that the fees are charged for. Based on this law, GoS put in the Rulebook Methodology with objective criteria for determining amounts of fees for public service. Budgetary System Law amendments 2013, prescribe that the amount of the fee shall be determined in the current year for the following year using the Rulebook Methodology, and cannot be increased during the year for that year. In addition, and in accordance with the new provisions of the Budgetary System Law, the Ministry of Finance and Economy has prepared the Draft Law on Charges for the Use of Public Resources and opened the public discussion on it.

The most important elements of the further reform of para-fiscal charges, following the 2012 reform, that should set the path for legal and economic security in this area, include:

  • the review of the amounts of the fees for public services provided by the subjects authorized by the special law (the Budgetary System Law envisaged March 31, 2013, as deadline). More specifically, based on the provisions of the Law on Budgetary System, the Ministry of Finance and Economy / local finance authority shall review and revise regulations, decisions, price-lists, tariffs and other regulations and acts of various state and local bodies and holders of public powers, governing the amount and method of determination of non-tax revenue for public services they provide, and, if necessary, correct the same until the end of the first quarter of 2013;
  • development, enactment and implementation of the Law governing charges for usage of public and common-pool resources (the Action plan for implementation of recommendations of the European Commission, with legislative timetable, adopted by the Government of Serbia, envisaged deadline for adoption of this Law for July 1, 2013);
  • reform of para-fiscal charges on the local level, including construction land usage fee (under the Law on Planning and Construction, this fee to be integrated into the property tax, by December 31, 2013, at latest), construction land development fee and communal fee in relation with the property tax reform;
  • establishment of a tool for comprehensive monitoring of the level of para-fiscal impositions on businesses.

However, what is unclear is the real impact of these actions on non-fiscal impositions on businesses. Some of 138 abolished charges - such as the business display fee (firmarina) or forest protection fee - had clear and significant impact in terms of financial and administrative burden on wide scope of businesses. Others, such as fee for issuing permits for transport of nuclear materials or fee for registration of facilities for disinfection activities, are much less clear in terms of impact. What complicates the impact question is the fact that some of138 charges have been actually merged into new or other existing charges.

Moreover, there are no reports that the Rulebook provisions have been implemented through any change in amount of an existing fee for administrative (public) services. Further on, regarding the review of the amounts of the fees for public services, set forth by the Budgetary System Law, it is unclear have these legal commands been performed in practice and in what manner, have the all of the subjects to which the Budgetary System Law applies been covered by implementation of these provisions and have these been done within the prescribed deadline.

Also, the Law on Charges for the Use of Public and Common-Pool Resources is still a work in progress and its future impact is anyone's guess. What is clear though it that biggest financial impositions on businesses from the list of 138 para-fiscals, such as construction land development and construction land use charge, are still in place, even though the later on is due to be abolished as of January 2014, and that Law-maker justified the latest amendments to the Property Taxes Law (2013) primarily through need for integration of the construction land fee into the property tax.
In order to answer these questions and light the direction of completion of the reform, USAID Business Enabling Project intends to award a grant to a qualified organization to conduct an evaluation of the para-fiscal system reform in Serbia, and set direction for its completion and full implementation.

Purpose and Objectives

The purpose of the grant is to evaluate and complete the reform of para-fiscal charges system, and develop means to monitor the system. The grant is aimed to reduce the cost and uncertainty of doing business in Serbia, help achieve an increase in the number of businesses seeing improvement in the burden of laws and regulations, increase transparency of public revenues and accountability of public entities. The outcome of this work will contribute to higher competitiveness of Serbian private sector.

The objectives of the grant encompass increasing awareness and strengthening understanding of the importance of para-fiscal charges reform, evaluation of so far conducted reformist activities in this area, identifying bottlenecks for reform implementation, providing recommendations and proposals for full implementation and completion of the reform and a tool for comprehensive monitoring of the level of para-fiscal impositions on businesses.
The continuation of the leadership role of the Ministry of Finance and Economy is of the essence in total completion of the reform of para-fiscal charges. Besides, cooperative role of the other relevant ministries (i.e. the Ministry of Construction and Urban Planning, the Ministry of Regional Development and Local-Self-Government, etc.), and other public entities, as well as the relevant associations, is very important for success of this reform.

Grant Activities

To facilitate continuation of streamlining of para-fiscals whose impact is measured in billions of dinars, USAID BEP intends to provide a grant to an organization that will:

  • Reach out to businesses and report on their perception of the achievements of reform of para-fiscal charges, with the emphasis on most important remaining grievances;
  • Conduct a financial analysis to assess impact of implemented reforms of para-fiscal charges on at least seven different types of business entities, ranging from a sole proprietor to a big company;
  • Provide report on effects of implementation of the 2012 and 2013 changes to the Budgetary System Law and on challenges for achieving its goals;
  • Assess impact of the Rulebook on methodology for determining amounts of fees for administrative procedures (the Rulebook), if any at the moment;
  • Assess the potential impact of the Rulebook if implemented as legally required;
  • Report on actual and potential challenges in implementing the Rulebook;
  • Assess impact and challenges in implementation of the Draft Law on Charges if adopted in the text similar to the one submitted for the public discussion;
  • Develop a tool for comprehensive monitoring of the level of para-fiscal impositions on businesses;
  • Prepare proposals for improvements of the Draft Law on Charges and recommendations for completion of para-fiscal charges reform, including other legislative and regulatory changes, backed-up with rationale and explanations, in order to enable policymakers to implement reforms in quick and comprehensive manner;
  • Conduct outreach activities, to support contribution and completion of the reform of para-fiscal charges;
  • Carry out the public discussion in respect to the recommendations and proposals for completion of para-fiscal charges reform, created within the grant activities.

Within the application should be proposed the details of the grant activities.

Deliverables

  • Detailed report on findings from implementation of the grant activities in formats  suitable for presentations to policy makers, academia and other stakeholders;
  • Concrete recommendations and proposals for improvement of the legal framework for non-tax impositions on businesses, particularly of the Rulebook and the Draft Law on Charges for Use of Public Goods, and to the extent needed of the Budgetary System Law and other laws and regulations;
  • Public presentation of the Report and Recommendations produced as a part of the grant;
  • Outreach and public discussion activities;
  • Web-based tool for comprehensive monitoring of the level of para-fiscal impositions on businesses.

The application should include a list of all deliverables and milestones with the expected timetable for their delivery.
Deliverables (points 1-3) must be submitted in English and Serbian languages, while technical progress and final reporting is to be produced in English language.

Section 2 – Award Information

Subject to the availability of funds, USAID BEP intends to provide up to 40,000 (US dollars payable in Serbian dinars) in the total funding to be allocated over a 12 month period. The anticipated period of performance of the grant is expected to start in October 2013. USAID BEP anticipates awarding one Fixed Obligation Grant under this RFA. Under a Fixed-Obligation Grant, all payments will be a fixed-sum payable upon completion of deliverables, which will be defined in detail during grant agreement negotiations.

Section 3 – Eligibility Information

Eligible organizations shall be able to comply with and achieve the proposed Program Description, Tasks, and Results and have a satisfactory performance record and record of integrity and business ethics.

Eligible organizations include legally registered US or Serbian non-for-profit, for-profit, and non-governmental organizations (NGOs).

Prior to the award of grant under this RFA, successful Applicants will be required to sign a Certification Regarding Terrorist Financing certifying that the Applicant’s organization does not provide and has never provided assistance to terrorists for terrorist activities. Successful Applicants may also be required to sign other Certifications as applicable to the award. The Certifications are attached as Annex 2 of this RFA.
Ineligible organizations include:

  • Public International Organizations;
  • Entities that have misused USAID funds in the past, organizations that advocate, promote or espouse anti-democratic policies or illegal activities;
  • Political parties or institutions;
  • Organizations that intend to use the grant for religious objectives;
  • Organizations that are on the list of parties excluded from federal procurement and non-procurement programs or the United Nations Security Sanctions Committee.

Section 4 – Application and Submission Information

Applicants should submit applications in writing to: Jasmina Debeljak Maljkovic electronically, via email at grants@bep.rs. The Closing Date for submission of applications is September 4, 2013, and the Closing Time for Submission of Applications is 3 p.m. Local Belgrade Time. Late applications will not be considered.

All applications in response to this RFA shall consist of a technical proposal and a budget proposal. The technical proposal must not be longer than 15 pages in length. Pages submitted in excess of 15 pages will not be reviewed. Supporting documents and CV of the proposed key staff members, which the Applicants are required to submit (please see the Application Form), will not be counted toward the 15 pages limit. The technical proposal must be submitted in English, while the supporting documents can be provided in original language (Serbian) or English. The cost proposal shall be submitted as a separate file from the technical proposal. Applicants are advised to fill in the budget form as detailed as possible. Lump sums will not be accepted. Applicants are allowed to add new lines and modify the budget lines (not Budget Headings) according to the needs of the proposal’s activities. The required format for applications is included as Annex 1 - Full Application Form and Annex 1A – Budget Form.

Note: USAID BEP's grants Inbox has a 10MB limitation, thus be advise to send files exceeding this limit in several separate emails.

Section 5 – Application Review Information

Applications will be evaluated in accordance with the criteria set forth below. The criteria have been tailored to the requirements of this RFA. Applications should note that these criteria serve to: (a) identify the significant matters which Applicants should address in their applications; and (b) set the standard against which all applications will be evaluated.

To the extent necessary, USAID BEP may request clarification and supplemental materials from Applicants whose applications have a reasonable chance of being selected for Award. The entry into discussion is to be viewed as part of the evaluation process and shall not be deemed as indicative of a decision or commitment upon the part of USAID BEP to make an award to the Applicants with whom discussions are being held.

Applications will be evaluated by the Grants Selection Committee on the basis of 100 possible points. The weighting of various sections will be as follows:

Category

Maximum Precentages
(100 Total)

Understanding of Key Issues
Grant Activity Goals, Objectives and Methodology
Outcomes / Expected Results 
Proposed Tasks and Activities   
Staffing/Management Plan  
Relevant Past Experience and Performance
Cost Effectiveness
Total Possible Points

15
15
20
15
15
10
10
100

  • Understanding of the Key Issues (15 points): Does the applicant demonstrate a clear understanding of the problems/key issues that the proposed grant activity will address?
  • Grant Activity Goals, Objectives and Methodology (15 points): Is the overall goal of the proposed grant activity clearly stated and achievable? Does the applicant list specific objectives that will contribute to achieving the grant’s goal? Is the proposed methodology clear and suitable for this kind of analysis and recommendations?
  • Outcomes / Expected Results (20 points): Do the expected results of the proposed grant activities relate to the key issues and overall grant objective? Are anticipated results directly linked to a specific objective? Are the results verifiable?
  • Proposed Tasks and Activities (15 points): Does the applicant propose specific activities that are logical, realistic, and relevant to the grant activity’s goal?
  • Staffing/Management Plan (15 points): Does the proposed staffing/management plan reflect the personnel/management needs of the grant activity? Does the applicant propose personnel with experience and skills necessary to successfully implement the proposed activities?
  • Past Experience (10 points): Does the organization have relevant past experience successfully implementing similar activities?
  • Cost Effectiveness (10 points): What resources are provided for the proposed costs? Is the proposed budget realistic, well-though out, and in-line with the proposed activities? Are the proposed costs reasonable, allowable and allocable to the grant? Is the grantee contributing cost-share or providing in-kind support?

The selection of the Applicant for award will be made by the USAID BEP’s Grant Selection Committee. Prior to the award of any resultant grant agreement, USAID BEP must obtain prior approval from USAID.

Section 6 – Award and Administration Information

Before the applications’ specified expiration date, successful applicant(s) will receive written notice from the Grants Manager informing the applicant(s) that USAID BEP either intends to award a grant to the applicant without negotiation, or that USAID BEP intends to engage the applicant(s) in further negotiations with respect to a potential grant award. Negotiations conducted after the receipt of an application do not constitute an obligation on the part of USAID BEP to award a grant. Unsuccessful applicants will be notified in writing by the Grants Manager.

Any resultant award will be subject to the terms and conditions of the Prime Contract for the USAID Business Enabling Project (for US organizations: 22 CFR 226, OMB Circulars, and the Standard Provisions for U.S. Non-governmental Recipients; for non-US organizations: Standard Provisions for Non-U.S. Non-governmental Recipients).

Section 7: Annexes

Annex 1: Full Grant Application Form and Budget Form
Annex 2: Certifications

 

 

 

 

 







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