Analysis of the administrative capacity of the institutions in charge of overseeing the operations of business entities

Abstract

In addition to excessive taxation and over-regulation, a key reason for the spread of the shadow economy is the poor performance of government bodies. This chapter analyses the administrative and institutional capacity, and inter-institutional co-ordination of the key institutions in charge of overseeing the operations of business entities: the Tax Administration, the Labour Inspectorate, and the Market Inspectorate. The Labour and Market Inspectorates are responsible for tackling informal employment ('working in the shadow') and undeclared transactions, while the Tax Administration is responsible for preventing tax evasion. The most important problems that these institutions face are a lack of appropriately qualified staff and equipment and the absence of sufficient co-ordination and integration with other inspection and oversight services. In addition to data contained in studies assessing the operation of and issues facing these institutions, in this chapter we use data from the Survey on Conditions for Doing Business in Serbia, which reveal how respondents rate the efficiency of the operation of these institutions and other features pertaining to them.