Burundi: Selected Issues

This Selected Issues paper highlights three central challenges to ramping up domestic revenue mobilization (DRM): (1) extensive and discretionary tax exemptions; (2) weak value-added tax (VAT) performance; and (3) a large informal economy undermining the tax base and enforcement. Technological improvements like digitization, while helpful, are insufficient to translate modernization into higher compliance and revenue. Complementary reforms are needed in compliance risk management, use of third-party data, taxpayer services and tax policy design. A sequenced medium-term revenue strategy centered on simplifying the system, broadening the VAT base, lowering the threshold where appropriate, rationalizing exemptions, and strengthening administration and legal frameworks will support progress. The paper suggests that sequencing tax reforms should begin with clear goal setting, simplification of tax policy, strengthening of tax administration, and capacity building. There is considerable scope of improvement in Burundi’s tax system integrating tax policy, tax law and revenue administration through structured and systematic reform.