administration, instead of a direct relationship of Local Fiscal Authority organization structure. Tax offices cannot follow taxpayers because of the large numbers of taxpayers. In addition, tax legislation is far too complex for the existing tax office structure. Service training is not enough for government officials in the General Directorate of Revenues. Some of the most important problem addressed above illustrate that re-organization is necessary in tax administration.

2. The Increase of Tax Inspection Effectiveness:

The mass of taxpayers is not a homogenous mass and it must be segmented by several different criteria such as; income taxpayers, corporate taxpayers, taxpayers active in the automotive sector, large companies, small and medium companies and taxpayers. Different levels of the taxpayer segmentation base o

The Albanian General Taxation Directorate (AGDT) has more than 3 years that has been working on new inspection strategies, the core of which is to develop strategies by building an adequate audit system. This makes it possible to improve the idea of “taxation tools of economic policy”. Economy is observed and carefully evaluated within the various sectors and companies respectively.

The structural perspective is constituted by observation and evaluation of the acquired result. Sector analysis provides one of the best evaluation tools. Economical variables are received by the AGTD and policy alternatives and solutions are produced immediately. Sector working system analysis is not only necessary in order to produce fiscal policy alternative, but also in order to acquire specialized information from complicated companies. Company inspections are complicated today because of such influences as globalization, technological advancements, and legislation developments.

The Tax Audit Directory (TAD) , that is part of AGDT observes the improvements of inspection strategies and adapts them to conditions in Albania. These new strategies are also aimed in aiding tax administration transitions into the EU. Some of their requirements are mentioned in the moment of assignment of Stabilization Association Agreement on June 12, 2006 and are summarized below:
o Revenue management’s effectiveness should be strengthened.
o External and internal inspections are too dispersed. This situation should be eliminated and increased effectiveness implemented.
o External inspection should have independent organization structure as often as possible.
o The legislation and infrastructure problems should be eliminated and inspection systems should be centrally planned.
o The authority and responsibility problems among inspection units should be eliminated with centralization and the coordination among inspection units increased.

These matters are both short-term and long-term based basic goals of the AGDT. The TAD’s approach can be summarized in two main topics:

1. The Increase of Effectiveness of Tax Administration: The main cause of the decrease in effectiveness of Tax Administration is the structural weakness of organization. All of the socio-economic approaches, which analyze the success factors of associations, conclude “organizational performance is created by the continual and mutual interaction between human behaviors and structural factors of organization”.

The main problem of Tax Administration’s non-effectiveness is the lack of comprehension of the relationship between organizational performance and structural and managerial malfunction. The performance problem of tax administration is caused by undefined and non-grouped factors of organizational structure. This is not a temporary problem; it is permanent factor. Tax administration should be revised and re-organized according to groups of functional and geographical differences. General Taxation Directorate has in 2007 1,200 personnel, 36 tax offices, 300 tax police, and 330 tax audit staff.

It is very difficult to be productive and produce effective tax policy with present “General Directorate” type of organization. There is an indirect relationship between the centralized and the decentralized organizations of the tax administration, instead of a direct relationship of Local Fiscal Authority organization structure. Tax offices cannot follow taxpayers because of the large numbers of taxpayers. In addition, tax legislation is far too complex for the existing tax office structure. Service training is not enough for government officials in the General Directorate of Revenues. Some of the most important problem addressed above illustrate that re-organization is necessary in tax administration.

2. The Increase of Tax Inspection Effectiveness:

The mass of taxpayers is not a homogenous mass and it must be segmented by several different criteria such as; income taxpayers, corporate taxpayers, taxpayers active in the automotive sector, large companies, small and medium companies and taxpayers. Different levels of the taxpayer segmentation base or

ny inspections are complicated today because of such influences as globalization, technological advancements, and legislation developments.

The Tax Audit Directory (TAD) , that is part of AGDT observes the improvements of inspection strategies and adapts them to conditions in Albania. These new strategies are also aimed in aiding tax administration transitions into the EU. Some of their requirements are mentioned in the moment of assignment of Stabilization Association Agreement on June 12, 2006 and are summarized below:
o Revenue management’s effectiveness should be strengthened.
o External and internal inspections are too dispersed. This situation should be eliminated and increased effectiveness implemented.
o External inspection should have independent organization structure as often as possible.
o The legislation and infrastructure problems should be eliminated and inspection systems should be centrally planned.
o The authority and responsibility problems among inspection units should be eliminated with centralization and the coordination among inspection units increased.

These matters are both short-term and long-term based basic goals of the AGDT. The TAD’s approach can be summarized in two main topics:

1. The Increase of Effectiveness of Tax Administration: The main cause of the decrease in effectiveness of Tax Administration is the structural weakness of organization. All of the socio-economic approaches, which analyze the success factors of associations, conclude “organizational performance is created by the continual and mutual interaction between human behaviors and structural factors of organization”.

The main problem of Tax Administration’s non-effectiveness is the lack of comprehension of the relationship between organizational performance and structural and managerial malfunction. The performance problem of tax administration is caused by undefined and non-grouped factors of organizational structure. This is not a temporary problem; it is permanent factor. Tax administration should be revised and re-organized according to groups of functional and geographical differences. General Taxation Directorate has in 2007 1,200 personnel, 36 tax offices, 300 tax police, and 330 tax audit staff.

It is very difficult to be productive and produce effective tax policy with present “General Directorate” type of organization. There is an indirect relationship between the centralized and the decentralized organizations of the tax administration, instead of a direct relationship of Local Fiscal Authority organization structure. Tax offices cannot follow taxpayers because of the large numbers of taxpayers. In addition, tax legislation is far too complex for the existing tax office structure. Service training is not enough for government officials in the General Directorate of Revenues. Some of the most important problem addressed above illustrate that re-organization is necessary in tax administration.

2. The Increase of Tax Inspection Effectiveness:

The mass of taxpayers is not a homogenous mass and it must be segmented by several different criteria such as; income taxpayers, corporate taxpayers, taxpayers active in the automotive sector, large companies, small and medium companies and taxpayers. Different levels of the taxpayer segmentation base o

legislation and infrastructure problems should be eliminated and inspection systems should be centrally planned.
o The authority and responsibility problems among inspection units should be eliminated with centralization and the coordination among inspection units increased.

These matters are both short-term and long-term based basic goals of the AGDT. The TAD’s approach can be summarized in two main topics:

1. The Increase of Effectiveness of Tax Administration: The main cause of the decrease in effectiveness of Tax Administration is the structural weakness of organization. All of the socio-economic approaches, which analyze the success factors of associations, conclude “organizational performance is created by the continual and mutual interaction between human behaviors and structural factors of organization”.

The main problem of Tax Administration’s non-effectiveness is the lack of comprehension of the relationship between organizational performance and structural and managerial malfunction. The performance problem of tax administration is caused by undefined and non-grouped factors of organizational structure. This is not a temporary problem; it is permanent factor. Tax administration should be revised and re-organized according to groups of functional and geographical differences. General Taxation Directorate has in 2007 1,200 personnel, 36 tax offices, 300 tax police, and 330 tax audit staff.

It is very difficult to be productive and produce effective tax policy with present “General Directorate” type of organization. There is an indirect relationship between the centralized and the decentralized organizations of the tax administration, instead of a direct relationship of Local Fiscal Authority organization structure. Tax offices cannot follow taxpayers because of the large numbers of taxpayers. In addition, tax legislation is far too complex for the existing tax office structure. Service training is not enough for government officials in the General Directorate of Revenues. Some of the most important problem addressed above illustrate that re-organization is necessary in tax administration.

2. The Increase of Tax Inspection Effectiveness:

The mass of taxpayers is not a homogenous mass and it must be segmented by several different criteria such as; income taxpayers, corporate taxpayers, taxpayers active in the automotive sector, large companies, small and medium companies and taxpayers. Different levels of the taxpayer segmentation base o

.

The main problem of Tax Administration’s non-effectiveness is the lack of comprehension of the relationship between organizational performance and structural and managerial malfunction. The performance problem of tax administration is caused by undefined and non-grouped factors of organizational structure. This is not a temporary problem; it is permanent factor. Tax administration should be revised and re-organized according to groups of functional and geographical differences. General Taxation Directorate has in 2007 1,200 personnel, 36 tax offices, 300 tax police, and 330 tax audit staff.

It is very difficult to be productive and produce effective tax policy with present “General Directorate” type of organization. There is an indirect relationship between the centralized and the decentralized organizations of the tax administration, instead of a direct relationship of Local Fiscal Authority organization structure. Tax offices cannot follow taxpayers because of the large numbers of taxpayers. In addition, tax legislation is far too complex for the existing tax office structure. Service training is not enough for government officials in the General Directorate of Revenues. Some of the most important problem addressed above illustrate that re-organization is necessary in tax administration.

2. The Increase of Tax Inspection Effectiveness:

The mass of taxpayers is not a homogenous mass and it must be segmented by several different criteria such as; income taxpayers, corporate taxpayers, taxpayers active in the automotive sector, large companies, small and medium companies and taxpayers. Different levels of the taxpayer segmentation base o

administration, instead of a direct relationship of Local Fiscal Authority organization structure. Tax offices cannot follow taxpayers because of the large numbers of taxpayers. In addition, tax legislation is far too complex for the existing tax office structure. Service training is not enough for government officials in the General Directorate of Revenues. Some of the most important problem addressed above illustrate that re-organization is necessary in tax administration.

2. The Increase of Tax Inspection Effectiveness:

The mass of taxpayers is not a homogenous mass and it must be segmented by several different criteria such as; income taxpayers, corporate taxpayers, taxpayers active in the automotive sector, large companies, small and medium companies and taxpayers. Different levels of the taxpayer segmentation base organize the tax inspection units in Albania. With this manner, there is a pyramid structure in the TAD. This structure is composed from small companies and taxpayer inspection to large and complex companies and taxpayer inspection. Other developed countries use this system. The TAD directs the upper level government external inspection. However, the increased effectiveness of tax inspection is dependent upon every unit’s individual performance in their selective areas of activity.

The individual unit’s performance and results should be declared, evaluated with standardized criteria, and responsibilities determined clearly for inspection coordination control within the tax inspection units. Therefore, increasing effectiveness of tax inspections is dependent upon all the units as a total quality management system.

The largest problem with this kind of a solution are that, with the exception of the TAD functioning as an individual unit, all units are undertaking both external and internal inspections at the same time and are responsible for their own inspections. These units are responsible from the same administrative personnel for all the investigative inspections from the AGTD. If the central planning, coordination, direction, and strategic decision responsibilities are given to the tax audit sections in tax offices, it will be possible to make all units a part of a whole system. Currently, all units are working individually and using different standards and measurement mechanisms, here are some possible solutions:

 Tax inspection will be planned activity with its systematic working and standards reorganized by district, local organizations and centrality in order to make it possible for more efficient tax inspections by the use of planning and organizational techniques.
 The inspections standards, planning, and evaluation methods of the Tax Inspectors Board be adopted by the other units personnel.
 The contemporary human resources management strategies of the tax audit are provided in order to compromise the other inspection units. Many applications would then act more thoroughly like new member employment, employee education, professional development, performance evaluation, and career management. Other units would greatly benefit and successful officers could be promoted to a higher level unit, with the highest level being the Tax Inspector level providing motivation to all officers.
 The establishment Manual of the Tax Audit is a best point of referent for the audit authorities to apply as well as they could. Tax auditors are protected from every kind of external intervention and political pressure.

Other units can benefit from the TAD’s specific information, archives, tax inspection guides, and the information systems, which provide contemporary inspection techniques by the organic tie between the Board and its