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PROJECT SUMMARY AND PROPOSAL

1.1. Basic Information

CRIS Number: 2003/005-026.02.01Twinning: EE03-IB-FI-04

Title: Assistance to the Public Service Academy (PSA) to develop taxation trainingcurriculum

1.2. Sector: Public Sector Financial Management

1.3. Location: Estonia, Tallinn

1.4. Direct Beneficiaries: Public Service Academy (PSA)

2. Objectives

2.1. Overall Objective:To ensure the enhanced administrative capacity of the tax administration to enforce the taxlegislation.

2.2. Project Purpose:To develop the capacity of the PSA to train future tax inspectors for the Estonian Tax Boardand provide them with a high degree of qualifications, comparable with those of present EUMember States.

2.3. Accession Partnership and NPAA priority

Accession Partnership 2001

Taxation Strengthen administrative capacity and control procedures and improve administrative co-operation and mutual assistance.

NPAA

At the accession to the EU, Estonia should bring the administrative capacity in the field of taxmanagement into accordance with the need to ensure administrative capacities to ensure theimplementation of the acquis. In the field of taxation the emphasis lies on the strengthening ofthe function of tax collecting, on the approximation of the functions of tax assessment, taxaudit to the EU standards, also on the application of the Central Liaison Office (CLO) andon joining the VAT Information Exchange System (VIES) of the EU. The emphasis lies on

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the development of the functions of tax frauds, including discovering and prevention of valueadded tax frauds.

Action plan for reinforcing Estonia's administrative and judicial capacity 2002

Chapter 10. Taxation• Priority 1Strengthen administrative capacity and control procedures to facilitate and help improveadministrative co-operation and mutual assistance.

Commitments taken in negotiations

As regards VAT, the administrative capacity of the administrations responsible for State taxes, theNational Tax Board, the National Customs Board and their local offices is sufficient to ensure changesand enforcement of legislation. (CONF –EE 39/99)

As regards excise duties, the law implementation capacities of the Tax Board, the Customs Board andpartly also of police structures need some improvement. (CONF-EE 39/99)

As regards excise duties, the law implementation capacities of the Tax Board, the Customs Board andpartly also of police structures need some improvement. (CONF-EE 39/99)

2000 acquis : The administrative capacity of the Tax Board and the Customs Board is in the most partsufficient to ensure implementation of legislation in compliance with the EU requirements. (CONF EE42/01)

Measures for implementation

OngoingThe following measures for strengthening administrative capacity, control procedures and improvingadministrative co-operation and mutual assistance in the area of taxation will be taken by the EstonianTax Administration:

1. Development and implementation of the organisation and management concept of the Tax FraudInvestigation Centre (TAFIC) (start 04.2001, ongoing).2. Revision and implementation of the control strategy (start 07.2001, ongoing).3. Preparations for EU IT integration/establishment of an operational Central Liaison Office (CLO):a) Ensuring that the workgroup has sufficient knowledge and skills for performing the task, includingresearch of EU requirements (start 02.2001, ongoing until the establishment of the CLO in 2003)b) Analysis of relevant legislation (start 2002, ongoing until the establishment of the CLO in 2003)c) Designing of declaration forms and enquiry forms (start 2002, to be completed in 2002)

Planned

d) Implementation of the system (starting from 2003, ongoing).

2.4. Contribution to the National Development PlanN/A

2.5. Cross Border ImpactN/A

3. Description

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3.1. Background and justification:

At the accession to the EU, Estonia should bring the administrative capacity in the field of taxmanagement into accordance with the EU standards. In the field of taxation the emphasis lieson the strengthening of the function of tax collecting, on the approximation of the functions oftax assessment, tax audit to the EU standards, also on the application of the Central LiaisonOffice (CLO) and on joining the VAT Information Exchange System (VIES) of the EU. Theemphasis lies on the development of the functions of tax frauds, including discovering andprevention of value added tax frauds. These requirements are derived from the AccessionPartnership 2001, the Estonian National Programme for the Adoption of the Acquis(NPAA) 2002-2003, Progress Report for the Commission Review Estonia 2002. (Forthe structure and description of the Tax Board (TB) – see Annex 3 and 3a.)

Until now there has been no institution of education to train systematically personnel for theTax Board (TB). The TB has spent internal funds to give elementary knowledge of taxationto new employees. The level of education of the current tax inspectors, tax auditors andinvestigators of tax frauds varies from secondary school certificates to university diplomas ineconomics, public finance, law or any other discipline.

Up to now, complementary training has tried to compensate the limited of professionaltraining available for the officials of the tax administration. This method has not given theexpected results due to the lack of systematic professional basic education of the trainees.

Identifying the needs of tax inspector studiesThe experience of the TB during the 1990’s has led to the conclusion that the lack ofknowledge on tax law is the biggest obstacle in the path of making tax administration moreeffective. The lack of knowledge was caused by the total lack of educational possibilities ofthe specialty studies of tax law in Estonia. This area of study was unknown in the socialistcommand economy and during the phase of transfer to a market economy, the country hasbeen lacking the internal experience and potential for creating the studies.

In order to solve the problem the TB and the Ministry of Finance (MoF) turned towards thePublic Service Academy for help in the beginning of the year 2000 (letter from TB to MoFon October 12th 2000 nr 10-06/5550 – annex 7, letter from the MoF to the MoIA onNovember 8th 2000 nr 20-5-2/10376 – annex 8, letter from the MoIA to PSA on January29th 2001 nr 3-19/935 – annex 9, letter from the MoF to MoIA and Ministry of Educationon November 22nd 2001 nr 20-1/11254 – annex 10, letter from PSA to MoIA onNovember 23rd 2001 nr 2500-12/166-1 – annex 11, letter from the MoF to the MoIA onNovember 27th 2001 nr 20-1/11254 – annex 12). The PSA, under the supervision of theMoIA, is a special establishment of applied higher education training civil servants. The PSAwas charged with the proposal to develop the curriculum for applied higher education for taxinspectors and to start regular training of tax inspectors in the form of day study at theAcademy. This new discipline to be carried out in parallel with all the other specialties ofstate administration currently taught at the Academy (police, corrections, customs, general,court officers, pubic administration and the rescue service - according to the classification ofthe unified education, the programs of the PSA are in correspondence with the level 5A1 ofISCED97).

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In the regulation of higher education in Estonia, PSA is the institution of the level of appliedhigher education for the specialties of public service. PSA is a public university established in1992 functioning in the area of governance of the MoIA. For the structure of the PSA – seeAnnex 2.

In order to identify and specify the needs of applied higher education of tax inspectors, aspecial inter-agency work group was established at the end of the year 2001 on the basis ofthe order of the Minister of Interior pursuant to the joint proposal of the TB and MoF. Thework group consisted of representatives from the MoF, TB, Customs Board, MoIA, PSAand Tartu University. The work group confirmed that the existing system of higher educationdoes not make it possible to cover the real needs of the TB regarding tax specialists. Thereasons identified are the lack of national tax jurisprudence, professional literature,textbooks, curricula, didactics and methodology of teaching, lecturers and other factorsincluding the limitations of the possibilities of internal development stemming from lack ofexperience. In the year 2002, the working group made a proposal to the Minister of InteriorAffairs to begin training tax inspectors with applied higher education in PSA, and develop adraft 3-year curriculum of day study of applied higher education of tax inspectors.

Description of the project

The curriculum was approved by the MoF and the TB, and the government allocated moneyto cover the expenses. The present curriculum is the preliminary version for being able tostart the study process and it does not guarantee obtaining the qualification meeting the EUstandards. The curriculum presupposes that it will be further developed with the help offoreign assistance. This is the objective of the present project.On the basis of the proposal of the MoF and the TB, the admission quota was designated tobe 20 students. In the years 2002 and 2003 20 students will be admitted to the tax inspectorstudies’ day program. Starting from the year 2004 25 students will be admitted to the dayprogram and 30 students will be admitted to the correspondence course (civil servantsworking in the Tax Board; if needed, a complementary correpondence course group will beopened wor the working civil servants). By the year 2008 the total amount of graduates willbe 150 (2005: 20; 2006: 20; 2007: 25 + 30; 2008; 25 + 30). The continuity of taxadministration causes the constant need for both qualified personnel and for the specialeducation.

Starting from the year 2005, the latest, 20 civil servants investigating crimes will be admitted tothe program of continuing studies of investigation.Starting from the year 2005, at least 15 students of the speciality of customs will participate inthe studies of tax subjects developed in the framework of this project.As soon as the lecturers of the Tax Chair of PSA have obtained the qualification of teachingtax subjects developed in the framework of this project the chair will initiate activities ofcontinuing study meeting the needs of the Tax Board for the continuing education of thepracticians of the Tax Board.

Provisions are made for continuity and stability of the admission process. The need for newcivil servants in the group of senior civil servants for the TB, that the curriculum of PSA isoriented towards, is caused both by the high turnover rate of staff as well as of the creationof new positions. As of December 31, 2002, there were 1263 positions in the TB, including

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906 positions of senior officers, inspectors and auditors, and, in 2001 respectively 1249,877). As of December 31, 2001, 21 officers were older than 61 years of age, 133 officersdid not have any higher education, although higher education was one of the requirements forthe position. In 2002, 93 people took up a position as senior officers and 59 officers left. In2001, 115 became senior officers and 83 left. The average turnover of personnel in thegroup of senior officers (incl. age related) is 10%. In 2003, 24 additional positions of seniorofficers were created, mainly in the Tax Fraud Investigation Center).

In order to give more specialized education to tax auditors and the investigators of taxfrauds, the working group made a proposal to develop a 3-year curriculum of continuingstudies of investigation of tax frauds, complementing the applied higher education of taxinspectors. It was decided that the curriculum of continuing studies should cover the needs ofthe MoF as well as the Economic Police for preparing the investigators of economic crimes.

AdditionalityThe above plan requires the existence of the qualified lecturers of the most important(mentioned in the project) tax subjects and the existence of study materials and manual that isnot obtainable without the Phare assistance. Tax law as an independent subject is not taughtin any establishment of higher education in Estonia and therefore there are no lecturers withthe relevant qualifications in the Estonian labour market. For the same reason it is notpossible to train lecturers of tax law in Estonia using our own means only. There are nomanuals of tax law in the Estonian language in Estonia, original or translated. Neither arethere no study materials for training tax inspectors. In the state budget of Estonia there are nomeans for purchasing this know how from Europe. This project will fill the void in theEstonian higher education and will not push aside any private establishment of highereducation.

The training was started in September 2002 (due to a critical need) without full time lecturersof speciality subjects. Only general subjects were taught in the beginning. On the basis oftemporary agreements, authors of tax laws and other specialists of the field of taxation wereinvolved in the program. However, that kind of involvement is sporadic and does not enablefor continuity of the process. In order to solve the problem, the application process for thisPhare project was initiated in February 2002, and this project was the grounds for making apositive decision about opening the tax inspectors’ study program at PSA (the decision wasmade in August 7, 2002). It is not possible to carry out the studies without the assistance ofthe EU.

Conditions for admissionsThe proposal for admissions is created by TB via the MoF, and it is approved of by thecouncil of PSA.

It has been provided by law that all the applicants for the studies must have a certificate ofgeneral education and they should meet the requirements of entering the service on thespecialty of their curriculum (excl. education and age), and they are subjects of the principlesand obligations of civil service recording to the Act of Applied Higher Education Law (RT I1999, 10, 150; 102, 908; 2000, 54, 350; 78, 496; 2001, 65, 375; 2002, 56, 348; 61, 375;90, 521; 2003, 20, 116) § 24. It has been provided by the Act of Civil Service Law that the

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students of the PSA will be appointed to positions carried out in different establishmentsduring their internship as non-staff civil servants. According to the provisions of theGovernment of the Republic, the students are granted scholarships. The graduates of thePSA must take up positions in civil service. It has been provided by the Act of AppliedHigher Education Law § 273 that the expenses of the state should be reimbursed by thestudents if the studies get interrupted without a valid reason and if the period of working incivil service is shorter than twice the nominal period of studies, et cetera.

The period of working as the head or a lecturer of the PSA and the period of the studies inPSA will be considered a part of pension able civil service.

The connectedness and the participation of the MoF and the TBThe proposal of the admission quota is made by the TB (via the MoF) and is approved of bythe council of PSA.

The MoF and the TB participate in the process at all stages:• participation in the council and in the work of councilors at making decisions (MoF

and TB)• making proposals regarding the admission quota (MoF, TB)• participation in development of draft curriculum (MoF, TB)• coordination of the curriculum (MoF, TB)• choosing the students in the admission committee (MoF, TB)• approving of the examination tasks of the tax subjects (MoF, TB)• participation in the examination committees of tax subjects, evaluation of the tax

knowledge and skills (MoF, TB)• drawing up, carrying out, supervision and assessment of the internships (MoF, TB)• approval of the tasks of final examination of tax subjects (MoF, TB)• participation in the committee of final (qualification) examination, evaluation of the

knowledge and skills of graduates (MoF, TB)• participation in the committee of electing the director of The College of Finance

(MoF, TB)• participation in the committee of the selection the lecturers of the Tax Chair (MoF,

TB)• participation in the study process as staff and non-staff lecturers (MoF, TB)• coordination of the topics of professional research papers of the students (TB)• supervision of the research papers of the students (TB)• granting special scholarships to the best students of the tax administration (TB)• offering positions to graduates (TB)

general exchange of knowledge in the field of taxation (MoF, TB)With the help of thisproject it has been planned to develop the applied higher education of tax inspectors thatwould be in accordance with the EU analogues and cover the needs of the TB including:• The description of a curriculum of applied higher education (level 5B1) (tax

administration;) together with the list, the capacity and a short description of the subjectsplus the description of the teaching and grading methodology.

• The curriculum of the continuing education of the tax fraud investigators on the basis ofthe 3-year curriculum of the tax inspector studies together with the list, the capacity and ashort description of the subjects plus the description of teaching and gradingmethodology of subjects for specialties tax administration;

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• New professional and teaching skills and knowledge, the lecturers of the most importantprofessional disciplines of the specialties being well informed about the similar studies inthe EU, mastering the didactics of applied higher education and being able to compilestudy materials the most important professional specialties being the following:1) Tax administration law2) Accounting, accounting for taxation purposes and Tax Audit3) VAT Laws4) Taxation of company and personal income and property tax law5) Investigation of tax frauds

• Furthermore 5 textbooks on taxation, tax law, tax auditing and tax frauds will betranslated into Estonian and published

Specialists of the TB and the MoF participated in the compilation of this project.

This project will contribute to the Tax Administration’s administrative capacity and provide along-term basis for stable development of this important organisation.

3.2. Linked activities:

Up to now, there have been no Phare projects in the PSA. Also there has been no projectdirected towards the applied higher education of tax inspectors in Estonia.

The cooperation projects of TB have included the factors of additional training of theworking officials, but none of them have been directed towards the applied higher educationof tax inspectors and none of them have had any contact with the PSA.

Project no Name Amount EUR StatusES0101.03 Assistance to the Estonian Tax

Administration in theDevelopment ActivitiesProceeding from the FiscalBlueprints

1) 1 495 400includingNational Co-financing in theamount of 111400

1) FinancingMemorandumsigned 30November2001

The above projectincludes: TwinningES2001/IB/OT/O3

Structural and QualityAmelioration of the CriminalInvestigation, Collection,Recovery, Audit and TrainingFunction within the EstonianTax Board (According to theCovenant)

Phare 944 919

Co-financing14 562

(According tothe Covenant)

2) SteeringCommitteedecision on 20June 2002Notification on29 July 2002

The twinning will specifically focus on the strengthening of the Tax Fraud Investigation Center(TAFIC). A training component is also included in the activities of the project. This willparticularly concentrate on training the current staff and ensuring that the necessary on-the-job training mechanisms are in place for future needs. The PSA project aims at the appliedhigher education of tax inspectors thus avoiding any possible overlap.

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Project no Name Amount EUR StatusFEU: EST0099 Support to Tax and Customs

Administrations in the Republic ofEstonia to Prepare for EUMembership

In Progress

The Tax Board, benefits also from the Danish FEU project supporting the tax and customsareas. The activities include consultancies, exchanges of officials and some training seminars,but the strengthening of the applied higher education of tax inspectors is not a part of theproject thus avoiding any possible overlap with the PSA assistance programme.

The training components of the projects of the Tax Board have been and are aimed towardsthe internal continuing studies consisting of two day events for the present employees of theTax Board. However, this project of PSA has been directed towards building up the trainingsystem of future tax officers (3-year applied higher education, complementary modules oflong term continuing studies, e.g. continuing studies of investigators).

3.3. Results:

1) PSA capacity to deliver applied higher education in the area of taxation developed: the3-year curriculum of tax inspector studies has been developed, the curriculum ofcontinuing studies of tax fraud investigators created, the didactics of the teaching ofsubjects of taxation covering the disciplines of tax administration law, accounting,accounting for taxation purposes, tax auditing law, value added tax law, income tax lawand the investigation of tax frauds determined.

2) 5 trained lecturers in the area of taxation at PSA; reserve of potential lecturers created atTB and MoF (by letting officials take part in training seminars);

3) 3100 pages of training materials for the speciality subjects of the tax inspector studiesand on didactics at an institution of applied higher education developed, revised andpublished, lecturers and students subsequently trained;

4) Networking by PSA lecturers with similar MS bodies / professionals strengthened;5) 5 textbooks on taxation, tax law, tax auditing and tax frauds translated into Estonian and

published (250 copies each);The translated textbooks will remain in full use at PSA, TB, MoF, Customs Board, in thelibraries of the Public Universities including PSA and in the taxation chair of the PSA;

3.4. Activities:

3.4.1. Contract 1: Twinning (15 months 787 800 EUR)

PAA (12 months over a 15 months time period costs 171 000 EUR)(The PAA is expected to be in Estonia: February 2004 – June 2004, September 2004 –November 2004, January 2005 – April 2005)

Tasks:

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• Assisting the PSA in preparing and compiling the twinning covenant• Coordination of the activities related to the project• Provision of quarterly reports on the evolution of the project; the structure of the reports

has to be approved by PSA• Counselling the Head of the Chair of Taxation in general questions connected to the tax

inspector studies• Cooperation with the short-term experts• Ensuring the quality of the short-term experts by seeking feedback on assistance, advise

and training in order to evaluate the assistance provided• Preparing and organising study trips and internships of local lecturers• To compile the proposals for harmonising the curriculum with the EU standards• Preparation of the in field training and the instructors of the in field training in general

questions• To provide management support to PSA: quality assurance, trainee databases, training

methods etc.• Carrying out lectures and seminars on didactics at an institution of applied higher

education• Compiling of teaching materials on didactics at an institution of applied higher education

and preparing them for publishing• Assessment of individual training needs of the local lecturers and forming the training

process• To review and revise training materials on basis of uniform agreed methodology and an

EU-orientation• To recommend speciality literature for translation into Estonian• To support and consult lecturers at PSA in the preparation of lecture materials• Preparing exchanges of lecturers to create a network between PSA an similar MS

bodies• Preparing and coordinating the implementation of the Technical Assistance contract

Profile:• At least 7 years of practical work experience as a lecturer in the area of tax legislation

according to a 3 or 4-year curriculum in a special institution of applied higher educationfor tax inspectors

• Practical work experience in the main functions of the tax administration of the MS• Scientific work done in the area of didactics at an institution of applied higher education• Fluent English

PAA assistant (12 months costs 11 400 EUR)(The PAA assistant has to work: February 2004 – June 2004, September 2004 –November 2004, January 2005 – April 2005)

Tasks:• Translation of documentation and interpretation• Assisting of PAA with administering the project and with communicating the activities

carried out in the framework of the project

Profile:

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• Fluent English, knowledge of the German language is favourable

MS Project Leader (15 months costs 20 000 EUR)

Task:• Coordination by a MS of the EU, including looking for and recruiting the experts

counselling, supporting

STE 1 in the field of tax administration law (taxation law general part) (5 months costs 76000 EUR)

Tasks:• Counselling the taxation chair in the field of tax administration law and code of ethics• Preparation of the local teachers in the relevant subject• Preparation of the in field training and the instructors of the in field training for tax

inspectors• Compiling of teaching materials and preparing them for publishing• Drafting the course in cooperation with local lecturers• Compiling of the teaching plans in cooperation with local lecturers• Determining the capacity of the subject in the curriculum in cooperation with local

lecturers• Carrying out lectures and seminars for local teachers, reserve of lecturers (officials at TB,

MoF) and students 5-10 days per month; preparing and carrying out lectures togetherwith local lecturers

• To recommend textbooks in the area of tax administration law for translation intoEstonian

Profile:• At least 7 years of practical work experience as a lecturer of the tax administration law in

an institution of applied higher education for tax inspectors according to a 3 or 4-yearcurriculum

• Practical work experience in the field of the main functions of the tax administration ofthe MS

• Fluent English

STE 2 in the field of accounting, accounting for taxation purposes and tax audit law (5months costs 76 000 EUR)

Tasks:• Counselling of the taxation chair in the area of the accounting, accounting for taxation

purposes and tax audit law• Preparation of the local teachers in the relevant subject.• Compiling of teaching materials and preparing them for publishing• Drafting the course in cooperation with local lecturers• Compiling of the teaching plans in cooperation with local lecturers

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• Determining the capacity of the subject in the curriculum in cooperation with locallecturers

• Carrying out lectures and seminars for local lecturers, reserve of lecturers (officials atTB, MoF) and students 5-10 days per month; preparing and carrying out lecturestogether with local lecturers

• To recommend textbooks in the area of accounting, accounting for taxation purposesand tax audit law for translation into Estonian

Profile:• At least 7 years of practical work experience as a lecturer of accounting, accounting for

taxation purposes and Tax Audit in an institution of applied higher education for taxinspectors according to a 3 or 4-year curriculum

• Practical work experience in the field of tax auditing of the tax administration of the MS• Knowledge of electronic accountancy programmes favourable• Fluent English,

STE 3 in the field of the Value Added Tax (VAT) law (3 months costs 45 600 EUR)

Tasks:• Counselling the taxation chair in the area of the VAT law and harmonized EU excise law• Preparation of the local teachers in the relevant subject• Compiling of teaching materials and preparing them for publishing• Drafting the course in cooperation with local lecturers• Compiling of the teaching plans in cooperation with local lecturers• Determining the capacity of the subject in the curriculum in cooperation with local

lecturers• Carrying out lectures and seminars for local lecturers, reserve of lecturers (officials at

TB, MoF) and students 5-10 days per month; preparing and carrying out lecturestogether with local lecturers

• To recommend textbooks in the area of Value Added Tax (VAT) law for translation intoEstonian

Profile:• At least 7 years of practical work experience as a lecturer of the VAT law in an

institution of applied higher education for tax inspectors according to a 3 or 4-yearcurriculum

• Practical work experience in the field of VAT of the tax administration of the MS• Fluent English

STE 4 in the field of taxation of company and personal income and property tax law (2months costs 30 400 EUR)

Tasks:• Counselling the chair in the area of taxation of company and personal income and

property tax law• Preparation of the local teachers in the relevant subject• Compiling of teaching materials and preparing them for publishing

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• Drafting the course in cooperation with local lecturers• Compiling of the teaching plans in cooperation with local lecturers• Determining the capacity of the subject in the curriculum in cooperation with local

lecturers• Carrying out lectures and seminars for local lecturers, reserve of lecturers (officials at

TB, MoF) and students 5-10 days per month; preparing and carrying out lecturestogether with local lecturers

• To recommend textbooks in the area of taxation of company and personal income andproperty tax law for translation into Estonian

Profile:• At least 7 years of practical work experience as a lecturer of the income tax law

(recommended also an experience in property tax law) in an institution of applied highereducation for tax inspectors according to a 3 or 4-year curriculum

• Practical work experience in the field of taxation of company and personal income in thetax administration of the MS

• Fluent English

STE 5 in the area of tax fraud investigation law (3 months 45 600 EUR)

Tasks:• Assisting and counselling in drafting the curriculum of the continuing education of tax

fraud investigation studies on the basis of the 3 year curriculum of the tax inspectorstudies

• Counseling the chair of taxation in the area tax crimes and misdemeanors• Preparation of the local teachers in the relevant subject• Compiling of teaching materials and preparing them for publishing in cooperation with

local lecturers• Determining the capacity of the subject in the curriculum• Drafting the course in cooperation with local lecturers• Introduce the experience of the system of the training of the investigator of tax fraud in

the MS• Compiling of the teaching plans in cooperation with local lecturers• Carrying out lectures and seminars for local lecturers, reserve of lecturers (officials at

TB, MoF) and students 5-10 days per month; preparing and carrying out lecturestogether with local lecturers

• To recommend textbooks in the area of tax fraud investigation law for translation intoEstonian

Profile:• Experience of at least 7 years of practical work in the area of investigation of tax frauds

in the tax board of the member state. The experience of the STE must come from apractical activity in a member state where the investigation of tax frauds belongs to thejurisdiction of the tax administration and where special subordinate establishments havebeen created under the area of government of the tax administration in order to carry outthe above mentioned function.

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• Practical experience as a lecturer of tax law in an institution of applied higher educationfor tax inspectors according to the 3 or 4-year curriculum of an applied higher educationof the tax inspector studies.

• Expertise in the areas of the penal law and the criminal procedure law.• Fluent English

Internships 5 months for 5 persons, 103 800 EUR

• For full time employees of the taxation chairs for acquiring further professionalknowledge and getting the experience of the methodology of teaching specific to theinstitution of applied higher education.

The aim of the internship is to eliminate the gaps of knowledge of the full time lecturersand to acquire the systematic knowledge and skills of the basic studies of tax inspectorstudies and the developing of the study materials at the disciplines and specific topics nothaving been dealt with in the project.

In the course of internship, the interns pass the first stage of the studies (basic studies) ofthe tax inspector studies in an establishment of higher education training tax inspectors ofa EU member state. In the first stage of their studies, the interns participate in the regularstudy procedures on the basis of the general curriculum of the students of the memberstate.

While compiling the internship plan, each intern will be designated a specific topic theywill deal with a specialty subject or a specific topic from the curriculum of the taxinspector studies not yet covered in the project. The aim of the research project is to usethe respective research of a topic or a subject in the study process. On the designatedtopic, the interns will carry out a written paper or a research project under thesupervision of specialty lecturers, using the local specialty library and the new knowledgeobtained in the lectures. The research project will be submitted together with the finalinternship report. The research project will be used as a study material of the respectivesubject or topic in the tax inspector studies and the PSA.

The lecturers of the following speciality subjects will participate in the internship:

September 2004 – January 2005• Tax administration law• Accounting, accounting for taxation purposes and Tax Audit Law• VAT law• Income tax law and property tax law• Tax fraud investigation law

Meetings, 10 000 EUR

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• March 2004: A “kick-off” meeting with the participation of all the experts, the MSproject leader, the Estonian co-operation partners and MS co-operation partners will beorganized. The purpose of the meeting is to introduce the aims and the procedure of theproject to the participants and to the public.

• April 2005: At the conclusion of the project, a meeting with the participation of all theexperts, the MS project leader, the Estonian co-operation partners and MS co-operation partners will be organised. The aim of the meeting is to discuss the results ofthe projects and the experience obtained in the course of the projects, and to introducethem to the public.

Translation and interpretation, 116 000 EUR

Up to now there is no literature whatsoever on the tax subject, including the study literaturethat is necessary for teaching the disciplines of taxation law. One of the tasks of the STE is tocompile the study material, which will be used in the study process. . Each expert willcompile ca 160 pages of study materials a month. PAA will compile ca 200 pages of studymaterials on the didactics of an applied higher education. During the 18 expert months, ca2900 pages will be compiled by STE’s, 200 pages will be compiled by PAA; it will total to3100 pages. These study materials will have to be translated into the Estonian languagebecause the studies are carried out in the Estonian language at PSA and it is not possible todo it successfully only on the basis of materials that are in foreign languages. 62 000 EURhas been designated for translating the study materials. The translation cost per page inEstonia is approximately 20 EUR.

Another task of the STE’s is to carry out lectures, which the full time lecturers of the PSA,the reserve lecturers and the students will participate in. In order to guarantee that everybodyunderstands the lectures they will need to be interpreted into the Estonian language.Approximately 10 days of lectures with interpretation have been planned per an expert amonth; the cost of a day of an interpreter is 300 EUR. The total cost of the interpretation of18 expert months will be 54 000 EUR.

All the materials of the lectures and seminars of STE and PAA will be translated intoEstonian and issued as lecture portfolios. These will remain in the permanent use of thestudents of tax inspector studies.

Publication of training materials, 31 000 EUR

In order to be able to use the study materials compiled by the experts in the study processthey will have to be translated and published. Publishing of 100 copies of a 100-page bookcosts 1000 EUR.

3.4.2. Contract 2: Technical assistance for translating textbooks in the area of taxation lawinto Estonian and publishing ( 145 000 EUR)

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According to the constitution § 6 the official language of Estonia is Estonian, according to the§ 3 of the Language Act the language of public administration is Estonian and the studies arecarried out in Estonian at the PSA. The manuals of other branches of legislation have beentranslated into Estonian and they are being effectively used in the study process. As there areno professional textbooks on taxes, foreign language textbooks will have to be translated. Inthe framework of the project 5 textbooks are foreseen to be translated on the followingtopics to cover the speciality subject of the tax inspector studies:1) General tax theory and Tax administration law

2) Accounting, accounting for taxation purposes and Tax Audit Law3) VAT law4) Taxation of personal and company income and property tax law5) Investigation of tax frauds

The average capacity of the textbooks will be approximately 425 pages, the amount ofcopies will be 250 per each title. The textbooks will become the basic reference material forthe students of the tax inspector study programme throughout the 3 years of their studies.The textbooks will be given for free to all the lecturers of the tax subjects, as well as to theinstructors of the in-the-field training, who are doing their studies during the period of theproject. A number of textbooks will be given to officials at TB (50), MoF (5), CustomsBoard (5) for their free professional use. A number of textbooks will be given to the librariesof Estonia (30). The rest of the textbooks (160) will remain in the library of PSA at thedisposal of students, lecturers and trainees of the TB. The textbooks can also be used whenteaching tax related subjects to students of other specialities (e.g. the customs inspectorstudies). The textbooks to be translated will be selected on the basis of the recommendationsof the PAA and the STE’s. The Technical Assistance contract will be totally covered bynational co-financing.

3.5. Lessons learned

During the preparation phase of this project proposal Ministry of Finance has taken intoaccount the experiences from previous twinning projects. This project has been plannedthoroughly for quite a long time and in close co-operation with different parties – MoF, PSAand Tax Board. The Estonian project leader at PSA was appointed already in the beginningof the preparation phase of this project and she will manage the project throughout theimplementation phase till the end. The implementation chart has been planned according tothe real situation at PSA, which is why the twinning starts in February 2004 and not earlier.

The PSA, while preparing senior civil servants for all the civil services, has conductedresearch on the experience of the EU member states during its 10 years of activity and hascome to the conclusion that in the Estonian circumstances, the 3-year model of appliedhigher education is the most appropriate one. However, it has been noted that in the PSAcurricula speciality subjects are underestimated and the volume of general subjects isminimized. The deeper theoretical and ethical basis of the speciality subjects will remain outof reach because of the poor and non-systematic preparation of the lecturers.

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16PSA 15.04.03

The PSA has some experiences in sending young lecturers to acquire knowledge in foreignstates and in the agreements of required work time after the studies. For financial causesthese cases will remain exceptions.

As for the projects of Tax Board, PSA can use the outcome when TB has developed thecompetency models of an inspector and an auditor in the framework of their project, theycan be applied to developing the curriculum of PSA.

4. Institutional Framework

PSA is an institution of applied higher education under the Ministry of Internal Affairs(MoIA). In the MoIA the Personnel Department is responsible for PSA. The MoF isconnected to this project and PSA because the Tax Board is under MoF. Also the TaxPolicy Department in the MoF has been involved in creating the tax inspector studies at PSAas already described in 3.1.

Total number of stuff at PSA is 207. Please see Annex 2 for structure of PSA and Annex2A for the statutes of PSA.

PSA trains civil servants for different areas of public service, including for the governmentinstitutions in the governing area of the MoIA, the MoJ, and the MoF. For the institutionsworking in the governing area of the MoF the PSA trains tax inspectors and customsinspectors.

After the curricula of these specialities are accorded with the MoF, the MoIA has to confirmthem: The curriculum of the tax inspector studies was confirmed September 2, 2002. Thenominal length of the studies is 3 years. The amount of the in-the-field training makes up atleast 20% of the total amount of the training and takes place in the respective state institution,i.e. in the subordinate establishment of the TB at a local level.

Deriving from the start of the tax inspector studies in 2002 the structure and staff of the PSAwas changed: a college for the specialities of the MoF (the College of Finance) wasestablished. The government made the respective change in the statue of the PSA onFebruary 28th 2003 with the regulation nr 60 (RT I 2004, 24,149). Also the tax inspectorstudies belong now to the activities of PSA listed in its statue. In the competency of theCollege of Finance are the tax inspector studies and the customs inspector studies. Thechairs of customs and taxation were transferred from the Public Administration College tothe College of Finance.

The new college is a structural unit of the PSA (see annex 2). It is financed from the statebudget through the budget of the PSA. 13 new jobs will be created in the College of Financeby January 1, 2004, including the jobs of lecturers and assistants, that of the college directorand of two secretaries.

The Minister of Internal affaires has approved the staff of the chair of taxation (directive nr61 on February 17th 2003), which will soon have in addition to the head of the chair (who isalso a lecturer) 4 more lecturers and the competition is in process. A secretary has already

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17PSA 15.04.03

been hired. The College of Finance will be a basic unit managing study process of the taxinspector and the customs inspector studies, the chair of taxation will be responsible forteaching all the speciality subjects of the tax inspector studies and for managing the in-the-field training of future tax inspectors.

Before the commencement of the project, the lecturers must familiarize themselves with theprinciples of tax administration in the EU. In addition to that, the lecturers will be required tomaster the working language of the project in the amount that will enable them to effectivelycommunicate with the experts. The lecturers have to master the general language bythemselves and on their own costs. PSA will support the lecturers in learning the technicalterminology working language of the project by organising special language courses. Thecosts of these courses will be financed by the PSA as a part of the national co-financing.

In the course of the project, the lecturers will fulfil their daily work tasks, including preparingand carrying out of the lectures, compilation of study materials, doing research work,preparing and carrying out of the continuing education etc. The lecturers are required toparticipate in the training carried out in the framework of the project, and at the same time todevelop themselves regarding both their specialty and the general principles of teaching (incl.didactics, methodology of teaching). Officials at TB and MoF will also be invited to take partin the training to create a reserve of lecturers. The lecturers will prepare for and carry out thelectures together with the experts. They will also participate in the elaboration of thedocumentation and in preparation of the instructors of the in-the-field training. Within thelimits of their expertise, the lecturers will assist the experts at the preparation of trainingseminars.

As a result of the project, the lecturers will have to be able to develop and teach the subjectand to co-ordinate the teaching of the subject in accordance with the requirements and thebest practice of the European Union. Their skills will have to enable the lecturers to carry outcontinuing education and to educate new lecturers.

Between the PSA, the MoF and the TB formal and informal co-operation takes place. Asregards formal co-operation:• The Chancellor of the MoF, the Director General of the TB belong to the council of

PSA;• The representatives of MoF and TB belong to the inter-agency working group preparing

the tax inspector studies;

• The representatives of the TB belong to the commission of the evaluation of the in-the-field training of the students and to the commission of the final examination of thespeciality of tax inspector studies

etc.

18PSA 15.04.03

5. Detailed Budget

Phare support (EUR)

Investmentsupport

Institutionbuilding

Total Phare(=I+IB)

Nationalco-financing

IFI Total

Contract 1: Twinningpackage

732300 732300 55500 787800

Twinning covenantpreparation1 20000 20000

7000 27000

PAA for 12 months 171000 171000 171000PAA assistant 11400 11400 11400MS project leader 20000 20000 20000STE 1 (tax administrationlaw)

76000 76000 76000

STE 2 (accounting,accounting for taxationpurposes and tax audit)

76000 76000 76000

STE 3 (VAT law) 45600 45600 45600STE 4 (taxation ofcompany and personalincome and property taxlaw)

30400 30400 30400

STE 5 (investigation of taxfrauds)

45600 45600 45600

Internships2 77800 77800 26000 103800Meetings3 6900 6900 3100 10000Translation of trainingmaterials andinterpretation of lectures4

104400 104400 11600 116000

Publication of trainingmaterials5 23200 23200 7800 31000

Audit 5000 5000 5000Contingecies 19000 19000 19000Contract 2: Technicalassistance fortranslating 6 manualsinto estonian andpublishing6

0 0145000 145000

Total 732300 732300

200500

9328001 Phare support will cover the expenses coming up in connection with the preparation of the PAA, the MSproject leader etc. National co-financing on Twinning covenant preparation covers the salary of theEstonian Project Leader after the FM has been signed and before the project activities start and the specificlanguage course.

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19PSA 15.04.03

2 The costs of internship have been calculated according to the Phare manual:• all the 5 full time lecturers of the Chair of Taxation will have the internship of 5 months• the international flight costs per person – 750 EUR, costs for 5 people – ca 3800 EUR• daily allowance per person 159 EUR a day during the first two months, for 5 people total ca 48500 EURdaily allowance starting from the 3rd month 111 EUR a day, 5 people total ca 51500 EUR

3 Three experts are not in Estonia during either meeting. 4500 EUR of the cost of the meetings is made up byinternational flight costs of the experts coming to Estonia (six flights a 750 EUR) and their daily allowance2400 EUR (the first meeting: 3 experts a 2 days; the second meeting: 3 experts a 3 days, daily allowance 159EUR a day per person. Phare support will cover these expenses.

4 One of the tasks of the experts is compiling study materials. Each expert will compile ca 160 pages of studymaterials a month. During the 18 expert months, ca 2900 pages will be compiled by STE’s, 200 pages will becompiled by PAA; it will total to 3100 pages. The translation cost per page in Estonia is approximately 20EUR, the total amount of the translation costs will be 62 000 EUR.Approximately 10 days of lectures with interpretation have been planned per an expert a month; the cost ofa day of an interpreter is 300 EUR. The total cost of the interpretation of 18 expert months will be 54 000EUR.

5 Publishing of 100 copies of a 100-page book costs 1000 EUR.

6 The cost of one copy is 116 EUR, the publishing cost of one printed page is ca 0,27 EUR.

National co-financing

Narional co-financing 2004 2005Total

State Budget 134300 66200 200500Salary of the estonian projectleader during the preparation

3000 3000

Specific language courses 4000 4000Internships 20300 5700 26000

Co-finacing of the meetings 1200 1900 3100Publication of training

materials5800 2000 7800

Translation costs 6200 6200Intepretation costs 3800 1600 5400

Co-finacing of TA 90000 55000 145000

Total national co-financing 134300 66200 200500

National co-financing under the twinning covenant will be used to cover the followingexpenses:• the salary of the Estonian project leader during the preparation of the project• to support the lecturers at PSA to get acquainted with the technical terminology of

the working language of the project (specific language courses)

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20PSA 15.04.03

• the international flight costs for staff-members of the PSA, who will participate inthe study visit

• 25 % of the costs of the internships, which includes the international flight costs• the costs of the meetings, except the international flight costs and per diems of

STE’s• 25 % of the publication costs of the training materials• 10 % of the translation and interpretation costs

The Technical Assistance contract will be totally covered by national co-financing.

The amounts for co-financing indicated in the table correspond to cash co-financing. Inaddition, in-kind contributions from the Estonian administration for effectiveimplementation of the twinning may be further detailed in the twinning covenant.

The co-financing expenses will be monitored by the beneficiary and the NAO. For theearmarked co-finance, a clear and verifiable set of costs will be provided. Co-financingfunds will be financed from the budget of the PSA. Flow and stock data on co-financewill be submitted quarterly for steering committees, twice a year to the SectorMonitoring Working Group.

The beneficiary together with the NAO commits to sound financial management andfinancial control.

6. Implementation Arrangements

6.1. Implementing Agency

The Implementing Agency is the Central Financing and Contracting Unit (CFCU) withinthe MoF. The CFCU will be responsible for tendering, contracting and payments. Theresponsibility for project preparation, implementation and control will remain in therecipient institution – PSA.

The Programme Authorising Officer/PAO is:Mr. Renaldo MändmetsDeputy Secretary General of the Ministry of FinanceTel: (+372) 6 113 545Fax: (+372) 6 966 810e-mail: renaldo.mandmets@fin.ee

The Programme Officer is Ms. Marge LaastHead of International Relations Department in the Ministry of FinanceTel: (+372) 6 113 640Fax: (+372) 6 966 810e-mail: marge.laast@fin.ee

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21PSA 15.04.03

The Estonian Project Leader in the Public Service Academy:

Name: Ms. Õnneli VarendHead of the Chair of TaxationPublic Service AcademyAddress: Kase 6112012 TallinnEstoniaPhone: (372) 696 5520Fax: (372) 696 5343E-mail: onneli.varend@sisekaitse.eeInternet homepage: http//: www.sisekaitse.ee

A Steering Committee will be set up to oversee the project implementation. TheSteering Committee will meet once in a quarter and it will include the representatives ofthe MoF, PSA (incl. the speciality leader of the tax inspector studies, the head of thetaxation chair), TB (incl. TAFIC), CB, MoIA and the European CommissionDelegation in Tallinn. The steering committee will confirm the detailed plan of theinternships.

6.2. Twinning

The beneficiary institution of the Twinning Covenant is the Public Service Academy.

The contact person for PAA is:

Name: Ms. Kaire Troll Head of the Chair of Customs Public Service Academy Address: Kase 61 12012 Tallinn Estonia Phone: (372) 696 5421 Fax: (372) 696 5343 E-mail: kaire.troll@sisekaitse.ee Internet homepage: http//www.sisekaitse.ee

The twinning covenant will be contracted according to the European Commission rules;the Twinning Manual will be strictly followed.

6.3. Non-standard aspects

No non-standard aspects are foreseen. The DIS Manual and Practical Guide willstrictly be followed

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22PSA 15.04.03

6.4. Contracts

Twinning Contract 787 800 EUR

Technical Assistance Contract 205 300 EUR

7. Implementation Schedule1

7.1. Start of tendering/call for proposals• July 2003

7.2. Start of project activity• February 2004

7.3. Project Completion• April 2005

8. Equal Opportunity

During the implementation of the project there will be no discrimination on the groundsof race, sex, sexual orientation, mother tongue, religion, political or other opinion,national or social origin, birth or other status. Equal opportunities for women, men andminorities will be ensured by the Steering Committee during the implementation of theproject. The Estonian laws and regulations concerning the equal opportunities forwomen, men and minorities will strictly be followed. Equal opportunity for men andwomen to participate in the project will be measured by recording the experts andconsultants employed.

9. EnvironmentN/A

1 The time schedule of this project is based on the dependence of the activities and takes place on thebases of academic calendar of PSA. Above all, the presence of the experts makes it possible for us to get themaximum results during the study process, i.e. from September to July. The cooperation between the expertsand lecturers, sample lecturers, training and practicing of the lecturers and the studying of the students canbe best united when all the lecturers and students are present.

In order to balance the workload that the project will bring about, the presence of the experts has beenplanned to take place during two consecutive years. This will make it possible for us to avoid a workoverload deriving from the project, to effectively use the resources and to better take into account thetopical sequence of the subjects.In order for the project to timewise cover all the activities depending on the academic calendar, the projectshould commence in February 2004 and end in April 2005.

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23PSA 15.04.03

10. Rates of returnN/A

11. Investment criteriaN/A

12. Conditionality and sequencing

Conditionalities• Special agreements are made that will oblige that staff lecturers of the Tax Chair

participating in the project, to work in the Tax Chair during the period of 5 yearsafter the completion of the project. They will have to pass on the knowledgeacquired during the project to future lecturers. Special agreements regarding theconveyance of the knowledge are concluded with the reserve lecturers that work inthe MoF and TB as civil servants.

• All 5 lecturer are recruited in PSA before the start of the project.

Sequencing• In order to develop the tax inspector studies, the College of Finance, consisting of

the chair of taxation (and the customs chair), was created in the structure of PSAwith the regulation nr 60 of the government on February 28th. The Minister ofInternal Affairs approved on February 17th 2003 with the directive nr 61 the staff ofthe chair of taxation, which will have 5 lecturers not later than January the 1st 2004.

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24PSA 15.04.03

ANNEXES TO PROJECT FICHE

1. Logical framework matrix in standard format.2. Organizational structure of the Public Service Academy2A. Statutes of PSA3. Organizational structure of the National Tax Board3. A Description of the National Tax Board4. Time implementation chart5. A Cumulative contracting schedule5. B Cumulative disbursement schedule6. The existing curriculum of the tax inspector studies7. Letter from TB to MoF on October 12th 2000 nr 10-06/55508. Letter from the MoF to the MoIA on November 8th 2000 nr 20-5-2/103769. Letter from the MoIA to PSA on January 29th 2001 nr 3-19/93510. Letter from the MoF to MoIA and Ministry of Education on November 22nd 2001nr 20-1/1125411. Letter from PSA to MoIA on November 23rd 2001 nr 2500-12/166-112. Letter from MoF to MoIA on November 27th 2001 nr 20-1/11254

Annex 1 Logical framework matrix in standard format

25PSA 15.04.03

Phare log frame

Project number:

Contracting period expires: 30/11/2005 Disbursement period expires: 30/11/2006 Assistance to the Public Service Academy (PSA) todevelop taxation training curriculum

Total budget:932 800 EUR

Phare budget: 732 300 EUR

Overall Objective Objectively Verifiable Indicators Sources of VerificationTo ensure the enhanced administrative capacity of thetax administration to enforce the tax legislation

- The provision of applied highereducation to tax inspectors based oncurricula and training materials takingafter the EU “best practice”- The administrative capacity of TBstrengthened

- Approved curriculum, trainingmaterials etc.

- Estonian Progress Reports

Project Purpose Objectively Verifiable Indicators Sources of Verification Assumptions To develop the capacity of the PSA to train future tax

inspectors for the Estonian Tax Board and provide themwith an high degree of qualifications comparable withthose of present EU Member States

-Min. of 150 students finish the taxinspector studies in 2005-2008 afterhaving passed the qualification exam,which responds the EU standards- A Min. of 60 officials are trained afterthe curriculum for the further studies ofinvestigation of fiscal frauds 2005-2008- During the years 2005 through 2008,60 students of customs inspectorstudies whose studies have includedsubjects developed in the framework ifthis project (tax administration law,accounting and tax accounting, valueadded tax law, investigation of fiscalfrauds) will graduate

- From 2005 to 2008 TB order 50% of

-PSA; MoIA

-TB;

-TB,

-Technological capacity ofTax Board to effectively &efficiently carry out activitiesensured

PSA 15.04.03 26

their short-term specialist courses atPSA

-Over 1000 participants take part inshort-term specialist courses 2005-2008

Results Objectively Verifiable Indicators Sources of Verification Assumptions1. PSA capacity to deliver applied higher education and

to support continuous education in area taxationdeveloped

-The curriculum including the finalqualification exam of the tax inspectorstudies and of the further studies ofinvestigation of tax frauds has beenapproved by stakeholders

PSA; MoIA; Twinning team, Teamof Estonian and EU experts

2. Trained lecturers of speciality subjects at PSA;reserve of potential lecturers created at TB and MoF

-A min. of 5 qualified lecturers at thechair of taxation chair by 2005

-A reserve of min. 10 potential lecturersat tax board by 2005

- A min. of 30 instructors of the in-the-field training at TB by 2005

PSA; MoIA; Twinning team

-Reviewed and approved trainingmaterials in 5 speciality subjects and ondidactics at an institution of appliedhigher education by 2005;

PSA; MoIA; Twinning team3. Over 3100 pages training materials for the specialitysubjects of two areas and didactics at an institutionof applied higher education developed, revised andpublished; lecturers & students subsequently trained

-5 special topics researched and trainingmaterials compiled by PSA lecturersduring the internships

-PSA

-Effective co-operation &exchange of informationbetween PSA, MoF, TaxBoard, , MoIA (e.g. re.FISCALIS)

-Trained lecturers remainavailable to the PSA

4. Networking by PSA lecturers with similar MS bodies/ professionals strengthened

-Agreement for further co-operation witha institution of applied education of a MS

PSA; MoIA; Twinning team

5. 5 textbooks translated into Estonian and published - 5 textbooks translated and publishedby 2005- 250 copies of each manual in use atPSA, MoF, TB and several Estonianlibraries by 2005

PSA

PSA 15.04.03 27

Activities Means Cost (EUR) AssumptionsTwinning covenant Phare Estonia

• PAA for 12 months 171 000

• 5 STEs in the areas of taxadministration law, accounting andaccounting for taxation purposes andtax audit, VAT law, taxation ofcompany and personal income andproperty tax law, investigation of taxfrauds

273 600

• Internships for members of the chairof taxation (5 people for 5 months)

77 800 26 000

• Publication of the training materialscreated by the experts

23 200 7 800

Result 1:-Management support to PSA: quality assurance; traineedatabases; training methods etc.

-Harmonisation of the Estonian curriculum with EUstandards

-Compilation of the teaching plans for the specialitysubjects by the experts

-Preparation of the in-field training and the instructors ofthe in-field training

-Lectures carried out by the experts

-Officials at tax board take part in training seminarsResult 2:- Preparation of lecturers of by experts in their specialitysubject

- and internships for getting the overview of theadministration and of the teaching process at an EUmember state institution of applied higher education andto acquire further professional knowledgeResult 3:- Compilation of training materials by the experts- Publication of the compiled training materials- Reviewing and revising training materials on basis ofuniform agreed methodology & an EU-orientation- Result 4:

- Exchange of lecturers via internshipsResult 5:- Translation and publication of 5 textbooks

• A meeting at the beginning of theproject and a meeting at theconclusion of the project with theparticipation of all the experts, theMS project leader, the Estonian co-operation partners and MS co-operation partners

6 900 3 100

-New organisational structureat PSA to include specificfocus for tax inspectorstudies

Precondition-Co-operation agreementbetween PSA, MoF, TaxBoard, Customs Board,MoIA signed

PSA 15.04.03 28

Technical assistance contract fortranslating 6 textbooks into Estonianand publishing

-Translation and publication of textbookson the topics of general tax theory andTax administration law, Accounting,accounting for taxation purposes and taxaudit law, VAT law, Taxation of personaland company income & property taxlaw, Investigation of tax frauds; 250copies each

0

145000

29PSA 15.04.03

ANNEX 2: STRUCTURE OF THE PUBLIC SERVICE ACADEMY

Communications Director Councelor of Master Studies

Personnel Department (3)

Center of Continuing Studies (5)

Library (6) Department of Curriculum and Development (7)

Publishing Centre (1) Sports Centre (7)

Institute of Local Goverments (3) Computer Centre (5)

Language Centre (11) Chair of Court Specialties (1)

Chair of Criminalistics (3)

Chair of Police Studies (3)

Chair of Criminal Procedure Law (2)

Chair of Criminology and Sociology (2)

Chair of Penalty Law (2)

Center of Weapons and Special Devices (1)

Police College (14)

Chair of Mathematics (2)

Chair of Engineering (1)

Chair of Rescue Technology (2)

Chair of Fire Security Watch (1)

Chair of Applied Chemistry (1)

Chair of Crisis Management (1)

Rescue College (4)

Chair of EU Institutions and Law (1)

Chair of Economy and Finance (3)

Chair of Public Law (7)

Chair of Private Law (3)

Chair of Public Administration Studies (4)

Chair of Psychology (2)

Public Administration College (6) Corrections College (8)

Chair of Taxation (6) Chair of Customs (1)

College of Finance

Vice Rector of Curriculum

General Department (4)

Division of Transport and Renovation (20)

Division of Economics (28)

IT and Communications Department (5)

Financial Department (5)

Division of Security (8)

Vice Rector of Management

Rector

Management board

Department of General Administration

30PSA 15.04.03

ANNEX 2A

RENAMING OF THE ESTONIAN STATE DEFENSE AGENCY TO THE PUBLIC SERVICEACADEMY AND CONFIRMATION OF THE STATUTES OF THE PUBLIC SERVICE

ACADEMY

Accepted with the regulations No 125 (RT I 1998, 51, 770), of the Government of the Republic,entered into force on 10. 07. 1998

Changed with the following regulations of the Government of the Republic (date of theacceptance, No, publication in Riigi Teataja, date of entry into force):

16. 06. 1998 nr 134 (RT I 1998, 56, 843) 19. 06. 1998

5. 02. 2002 nr 72 (RT I 2002, 18, 104) 16. 02. 2002

17. 12. 2002 nr 393 (RT I 2002, 105, 626) 1. 01. 2003

28. 02. 2003 nr 60 (RT I 2003, 24, 149) 10.03.2003

According to paragraph 5 of section 43 of the Act (RT I 1995, 94, 1628; 1996, 49, 953; 88, 1560; 1997,29, 447; 40, 622; 52, 833; 73, 1200; 81, 1361 and 1362; 87, 1468; 1998, 28, 356; 36/37, 552; 40,614) of the Government of the Republic and of clause 2 of section 2 of the paragraph 5 of the EducationAct (RT 1992, 12, 192; RT I 1993, 35, 547; 40, 593; 63, 892; 1994, 12, 200; 1995, 12, 119; 16, 228;23, 333; 58, 1003; 1996, 49, 953; 51, 965; 1997, 42, 678; 81, 1365) of the Republic of Estonia, theGovernment of the Republic is hereby designating:

1. In order to bring the legal status of the Estonian State Defence Academy into harmony with the Actof the Government of the Republic and with the Education Act of the Republic of Estonia torename the Estonian State Defence Academy into the Public Service Academy and to confirm theStatutes of the Public Service Academy (enclosed).

2. The powers of the collegial decision-making boards elected in the Estonian State DefenceAcademy before the entry into force of this regulation will end on the day of the entry into force ofthis regulation.

2.1. To allow the Public Service Academy to use the seals and letterheads, including the diplomaforms, of the Estonian State Defence Academy until August 31, 1998.

3. [Omitted from this text]

PSA 15.04.03 31

Confirmed with the regulation No 125 of June, 4, 1998, of the Government of the Republic

Statutes of the Public Service Academy

1. GENERAL PROVISIONS

1. The Public Service Academy (henceforth the Academy) is a state establishment of applied highereducation where students can obtain a higher education on the basis of the curriculum of diplomastudies.

2. The academy is a state establishment under the government of the Ministry of Interior. Theacademy is located at Kase 61, Tallinn.

The fields of activity of the Academy are:

1) preparation of police officers, customs officers, fire and rescue officers, correctionsofficers, tax officers and public administration officers with a higher education;

2) enabling continuing studies, distance studies, retraining and external studies, alsopreparation of lecturers for the Academy in the form of academic studies;

3) carrying out applied scientific research and development in its fields.

[RT I 2003, 24, 149 – entered into force in 10.03.2003]

In its fields of activity the Academy organizes:1) The compilation of curricula and subject programs in cooperation with relevant government

agencies;2) The constant development of the professions and specialties that are taught at the Academy,

improving of the ways and the methods of teaching, compilation and publication of study andscientific literature;

3) Counseling of the professions being taught;4) Elaboration of the directions and the subject matter of the research work;5) In case of need and possibility, providing the students with education in their sphere of interest;6) Establishing cooperation with other establishments of education both in Estonia and abroad and

concluding cooperation agreements in order to develop the principal activity of the Academy;7) Organizing continuing education in the related establishments of education of the European Union

countries.

II. MANAGEMENT OF THE ACADEMY

PSA 15.04.03 32

5. The Academy is managed by the Rector. The Rector is responsible for the general stateand the development of the Academy and of the legal and purposeful use of the financialmeans.

6. The Rector of the Academy:1) Practices administrative and disciplinary power within the limits of his/her competence;2) Represents the Academy and disposes the financial means of the budget of the Academy in

accordance with the legal acts of the Republic of Estonia and within the limits of theauthorization given by these statutes;

3) Confirms the internal procedure rules and the operations procedure of the Academy withhis/her directive and takes measures for their implementation;

4) Confirms the statutes of the structural units of the Academy on the proposal of the councilof the Academy;

5) Possesses a single veto right regarding the decisions of the council of the Academy;6) Takes care and bears the responsibility of the purposeful organization of the study and

development activity;7) Guarantees the compilation of the draft budget and the financing application of the

Academy and is responsible for the execution of the budget of the Academy;8) Matriculates and expulses the students and concludes, suspends, changes and terminates

work agreements with the tenured lecturers elected by the council of the Academy; he/shealso hires and releases other employees of the Academy;

9) Decides upon other issues given to his/her competency by legal acts and these statutes.

7. The Rector issues directives within the limits of his competence. The Rector is subject toreporting requirements to the Minister of Interior and the council of the Academy.

8. The rector is elected by way of public competition by a committee established by theMinister of Interior. The Rector elected by the committee will be authorized to hold officefor period of five years by the Government of the Republic on the proposal of the Ministerof Interior. The employment contract with the authorized rector will be concluded,suspended, changed and terminated by the Minister of Interior.

9. A candidate for the Rector’s position can be an Estonian citizen who has been employedas a higher state public servant or as a professor of an establishment of higher education.

10. If the Rector is released from his/her position due to the expiry of the five year term he/shehas the right to occupy the same position where he worked before taking the post of theRector, or a position equivalent to that.

11. Until completing the post of the Rector, the Minister of Interior designates the deputyrector.

12. At the Academy, there are the positions of a vice rector of academics, a vice rector ofdistance studies and research, and an administrative vice rector.

13. The vice rectors of the Academy manage the individual spheres of the activity of theAcademy and replace the Rector in the case of his/her absence. The regulation ofreplacement is established by the Rector. The vice rectors are subject to reportingrequirements to the Rector.

14. The vice rector of the Academy is employed and released from office by the Minister ofInterior on the proposal of the Rector. The employment contracts with the placed vicerector are concluded, suspended, changed and terminated by the Rector.

15. The council of the Academy is the highest collegial decision-making body.

PSA 15.04.03 33

The membership of the council of the Academy is confirmed for three years by the Minister ofInterior on the proposal of the Rector.The chairman of the council of the Academy is the Rector.

16. There are 28 members in the council of the Academy. The members are:1) The Rector, the vice-rectors, the secretary of the Academy, directors of the colleges and

representatives of the faculty;2) Four representatives of the student body (one from each college) who are elected by the

students of the respective college;3) Chancellors of the Ministry of Justice, the Ministry of Finance and the Ministry of Interior

and the heads of the boards directly connected with the study directions of the colleges.

17. The council of the Academy:1) Makes proposals to the Minister of Interior about initiating changes and amendments to the

statutes of the Academy;2) Reviews the curricula and the admission quota of the academy and the conditions and the

rules of matriculation and expulsion of the students and submits them to the Minister ofInterior for approval;

3) Confirms the conditions and the rules of carrying out final examinations and the defendingof the graduation theses of the Academy;

4) Confirms the development plan compiled once in every three years;5) Reviews the draft budget of the Academy and confirms the report on the execution of the

budget with a resolution;6) Lays down the rules regarding the management and the study and development activity of

the Academy;7) Elects tenured lecturers and confirms the election procedures;8) Hears the rector’s report and evaluates it;9) Establishes the insignia of the Academy and the rules of its usage;91) Establishes the procedures of granting scholarships and the amounts of the scholarships;10) Establishes special scholarships and the procedure of granting special scholarships;11) Deals with other issues in the sphere of its competency.

[RT I 2002, 18, 104 – entered into force 16.02.2002]

18. The regular sessions of the council of the Academy are called by the rector or by the vice rectorreplacing the rector according to the need, but not more rarely than twice during a semester.19. Special meetings of the council of the Academy are called on the occasion of a written request of atleast 10 members of the council.20. The council of the Academy has a quorum if more than half of the members of the council, including theRector and a vice rector replacing the Rector participate in the session.21. The council of the Academy makes decisions within the limits of its competency.22. The decisions of the council of the Academy are made with the majority of votes of the participants inthe session, except when deciding sub-items 1 and 4 of the clause 17 of the statutes of the Academy,where two thirds of the votes of the participants of the session are needed.23. The decisions of the council of the Academy are signed by the Rector; in the case of his/her absence,they are signed by the vice rector replacing the Rector.

PSA 15.04.03 34

III. THE STRUCTURE OF THE ACADEMY

24. The Academy consists of colleges and of other structural units that are necessary for research and forservicing the Academy.

25. A college of the Academy is the basic unit organizing the study process of one specialty or of severalrelated specialties.

26. The colleges of the Academy include the following:1) The Police College2) The Rescue College3) The Corrections College4) The Public Administration College5) The Financial College[RT I 2003, 24, 149 – entered into force in 10.03.2003]

27) The head of a college is the Director whose tasks are:1) Direct organization of the study process, development of the curricula and the assessment of the studyresults;2) Providing the college with the necessary study literature, teaching aids and methodological material;3) Organizing the admission of new students;4) Carrying out checks of the organization of the study and work and of the internal regulations of theAcademy in their college.

The more exact tasks of the Director of a college are determined by the statutes of the college.28. The structure of the Academy and the staff are approved of by a directive of the Minister of Interior.29. The statutes of a structural unit of the Academy are approved by the directive of the Rector on theproposal of the council of the Academy.

IV. ORGANISATION OF STUDIES

30. The conditions and the rules of matriculation and the expulsion of the students are established by theMinister of Interior.31. The curricula and the admission quotas that have been approved by relevant ministries are confirmedby a directive of the Minister of Interior on the proposal of the council of the Academy.32. The study process at the Academy is carried out according to the curriculum of diploma studies thatmeets the requirements of the Standard of Higher Education.33. The rules of opening and closing of specialties is confirmed by the Minister of Interior in cooperationwith the relevant minister.34. The curriculum of the Academy is confirmed by the Minister of Interior in cooperation with the relevantminister.

PSA 15.04.03 35

35. The study process is carried out in the form of daytime study as well as in that of continuing, distanceand external studies and retraining. The language of instruction is the Estonian language. The issue of usingother languages as the languages of instruction is decided upon by the Minister of Interior on the proposalof the council of the Academy.36. The student who has successfully passed the compulsory exams, assessments and internships providedby the curriculum is allowed to take the final exams and defend his/her graduation thesis. The final examsand the defending of the graduation thesis are carried out in front of the committee of the final exam, thechairman and at least half of the members of the committee are from outside the Academy. Themembership of the committee of the final exam is approved of by the Minister of Interior.37. After passing the final exams and defending the graduation thesis, the student is granted the standarddiploma designating their graduation from the Academy on their respective specialty.38. The legal organization and financing of professional training is carried out according to the AdultEducation Act (RT I 1993, 74, 1054; 1996, 49, 953).39. Auditors of the courses of continuing studies, distance studies and retraining and external students donot belong to the student body.40. The legal status of the auditors of the courses of continuing studies, distance studies and of theretraining and external students is determined by the Adult Education Act. The legal status of the externalstudents is determined by the agreement concluded with the Academy. The legal rules applied on thestudents extend to the students of distance studies only during the period of exams.41. Once a year, the rector submits a report analyzing the work of the Academy to the council.

V. MEMBERSHIP

42. The membership of the academy is formed of the Rector, the vice rectors, the lecturers and otheremployees and the students of the Academy.43. The tenured lecturers of the Academy are the professors, assistant professors, lecturers, assistants andteachers who have been elected for up to five years by way of competition and with whom the Rectorconcludes an employment agreement for a fixed term.44. Specialty lecturers of the colleges can be civil servants who have a relevant education, a professionalexperience and an experience at teaching.45. The tenured lecturers have the right to get a semester free of official duties for creative work or forimprovement of professional skills, with full salary.46. For carrying out government programs or performing contract development work, the Academy mayemploy researchers on the basis of a fixed term employment contract.47. The students of the Academy form a student body.48. The student has the right:1) While carrying out studies on their specialty, to audit additional extracurricular lectures according to therules established at the Academy;2) To use the lecture halls, laboratories, computer labs, libraries, equipment, devices and other means ofstudy free of charge in accordance with the rules established at the Academy;3) Elect their representatives and to be elected to the student representation of the Academy;4) Through the student representation, to submit a reasoned proposal to the Rector about unsuitability of alecturer for teaching his/her subject;5) [repealed – RT I 2002, 18, 104 – entered into force 16.02.2002]6) To receive state scholarships under the rules established by the Government of the Republic;

PSA 15.04.03 36

7) In the case of making exceptional progress in their studies, to receive a scholarship appointed by theRector on the basis of the methodology provided by the sub-item 91 of the clause 17, from the means inthe state budget designated for scholarships;8) To receive at least an 8-week-long vacation in each academic year;9) To take an academic leave within the rules established by the decision of the council of the Academy;10) To require forming a commission for an exam or an assessment;11) To be given a student ticket;12) To use other rights provided to the students by the statutes of the Academy, the internal regulations andother legislative documents.

[RT I 2002, 18, 104 – entered into force 16.02.2002]

48 1. According to clause 17, sub-item 91, the average grade of the student and their performance at thestudies are taken into account when granting a scholarship to the student. Additional scholarships can bepaid to the student if he/she has successfully passed all the exams and assessments during two semestersprior to the granting of the scholarship, also taking into account his/her weighed average grade.

(R o t GR 05.02.2002 No 72 entered into force 16.02.2002 – RT I 2002, 18, 104).

49. The student is obliged:1) To follow the curriculum and pass the exams, assessments and internships at the due time;2) To fulfill the requirements of the law, these statutes, internal regulations and other legal acts;3) To prudently manage the property of the Academy.

50. The student representation is the right of the students to independently make decisions and manage theissues of student life based on the best interest, the needs, the rights and the obligations of the students.51. The student body elects the student representation who represents them. The members of the studentrepresentation are elected in the course of free, general, uniform and direct elections. The studentrepresentation is elected for one academic year. The elections of the student representation are organizedby the student representation that is in the office during the elections. The rules of electing the studentrepresentation are provided by the statutes of the student body.[RT I 2002, 18, 104 – entered into force 16.02.2002]

52. The student body operates under statutes which provide the rules of formation of representative andexecutive bodies of the student body, their rights, obligations, liability and the rules of procedure. The draftstatutes of the student body are prepared by the first student representation who publicizes the draftstatutes at the Academy at least one month before the day of acceptance of the draft statutes of the studentbody. Each student of the Academy has the right to express their opinion about the draft statutes of thestudent body. The student representation reviews all the submitted opinions and proposals at least oneweek before the acceptance of the statutes of the student body and submits the final draft of the statutes ofthe student body to the student body for their acceptance. The statutes of the student body are acceptedby the student body with the majority of two thirds of the votes of those present. The studentrepresentation will then submit the accepted statutes to the council of the Academy for approval. Thecouncil approves the statutes of the student body with the majority of two thirds of the votes of thosepresent, if the statutes are in accordance with the law, with the legal acts issued on the basis of the law, andwith the internationally recognized principles. The statutes of the student body are changed in the wayprovided for the acceptance of the statutes.

PSA 15.04.03 37

[RT I 2002, 18, 104 – entered into force 16.02.2002]

VI. THE PROPERTY AND THE BUDGET OF THE ACADEMY

53. The Academy administers exploits and disposes the property needed for the fulfillment of the tasksstemming from its statutes. The property of the Academy is state property and its administration,exploitation and disposal takes place according to the provisions of the State Assets Act (RT I 1995, 22,327; 1996, 36, 738; 40, 773; 48, 924; 81, 1446; 1997, 45, 724; 1998, 30, 409).54. The Academy has the right to provide paid services based on its principal activity (continuing andexternal studies, retraining, contract development work, professional counseling etc) and paid supportservices (catering, accommodation, copying and printing work, communication services etc), the profit ofwhich goes to the budget of the Academy and will be distributed though it. The costs of the supportservices (except catering) are confirmed by the council of the Academy.[RT I 2002, 18, 104 – entered into force 16.02.2002]

55. The Academy is financed from the state budget in the scope of the state education order.56. The financing of the research and development activities is carried out according to the Organization ofResearch and Development Act (RT I 1997, 30, 471).

57. A balanced budget of the revenue and expenditure of the Academy is compiled that will be approvedof by the Rector after the draft budget being reviewed in the council of the Academy.

VII. REPORTING, INSPECTION AND SURVEILLANCE

58. The Academy keeps the accounting of its finances, statistics and bookkeeping according to theestablished rules and reports its activities to the Minister of Interior.

The Academy submits the report about the expenditures of the foundation financing to the financier at thedemand of the latter.

59. The Ministry of Interior and the State Audit Office inspect the economic activities of the Academy.60. The Minister of Interior carries out supervisory control over the acts and activities of the Rector of theacademy and the council of the Academy in the way regulated by the law.

61. The Ministry of Education and Research carries out state control over the study process of theAcademy in the cases provided by the law.

[RT I 2002, 105, 626 – entered into force 1.01.2003]

VIII. REORGANISATION OF THE ACADEMY AND TERMINATION OF ITS ACTIVITY.

62. The Government of the Republic reorganizes any activity of the Academy or terminates it on theproposal of the Minister of Interior.

PSA 15.04.03 38

63. Termination of any activity of the Academy takes place after the end of an academic year.

Annex 3 Organizational structure of the Tax Board

39PSA 15.04.03

Advisers to the DG2

PR Adviser 1Executive Secretaries 2

Tallinn Tax Officefor

Legal Entities272

Tallinn Tax Officefor

Natural Persons78

Tartu CityTax Office

71

Tartu CountyTax Office

43

HarjuTax Office

78

PärnuTax Office

74

Ida-ViruTax Office

65

Lääne-ViruTax Office

47

LääneTax Office

36

KaguTax Office

55

RaplaTax Office

29

JõgevaTax Office

26

JärvaTax Office

29

ValgaTax Office

26

NarvaTax Office

36

SaareTax Office

34

ViljandiTax Office

42

Tax FraudInvestigation

Centre58

Local Offices of theTax Board

1099

aaaaaaaaaaaaaaaa

Data Processingand Registration

Division6

ReceiptsDivision

9

RevenueAccountingDepartment

2

SoftwareDivision

5

SystemsMaintenance

Division10

IT Department2

Deputy DirectorGeneral

1

PersonnelDivision

2

LegalDepartment

8

EnforcementDepartment

4

Tax FraudCombating

Division5

AuditDivision

7

SupervisionDepartment

2

Deputy DirectorGeneral

1

Direct TaxesDivision

15

Indirect TaxesDivision

6

TaxDepartment

3

Service andPublic Relations

Department3

Developmentand TrainingDepartment

5

Deputy DirectorGeneral

1

AccountingDepartment

7v7

Internal AuditDepartment

6

Clerical Division5

AdministrativeDepartment

9

Director General

3 A Description of the National Tax Board

40PSA 15.04.03

The Tax Administration founded in 1990 is a state institution in the governing area of the MoF.The primary obligation of the Tax Administration is the collection of state taxes and its task is tocontrol the revenue accruing from state taxes and the correctness of the payment of the taxamounts payable. In order to keep account of the taxpayers, the Tax Administration maintains theRegister of Persons Liable to Taxation.

The Tax Administration consists of a central administration, the National Tax Board (NTB) (forthe organisational structure see Annex 5), and 17 Local Tax Offices (LTO).

Annex 4

41PSA 15.04.03

TIME IMPLEMENTATION CHART

Project No:Project Title: Assistance to the PSA to develop taxation training curriculum

2003 2004 2005 A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N DContract 1: Twinning package T T T T T T T T T C I I I I I I I I I I I I I I IPAA for 12 months I I I I I I I I I I I IPAA assistant I I I I I I I I I I I IMS project leader I I I I I STE 1 I I I I I STE 2 I I I I ISTE 3 I I I STE 4 I I STE 5 I I IInternships I I I I IMeetings I I Contract 2: Technical assistance T C I I I I I I I I I I I I I

Annex 5A

42PSA 15.04.03

CUMULATIVE CONTRACTING SCHEDULE (by quarters)

Project No:Project Title: Assistance to the PSA to develop taxation training curriculum

2004 2005 I II III IV I IIContract 1: Twinning package 732300 732300 732300 732300 732300 732300Contract 2: Technical assistance 0 0 0 0 0Total 732300 732300 732300 732300 732300 732300

Annex 5B

43PSA 15.04.03

CUMULATIVE DISBURSEMENT SCHEDULE (by quarters)

Project No:Project Title: Assistance to the Public Service Academy (PSA) to develop taxation training curriculum

2004 2005 I II III IV I II

Contract 1: Twinning 95200 336680 401920 513480 654720 732300Contract 2: Technical Assistance 0 0 0 0 0Total 95200 336680 401920 513480 654720 732300

44PSA 15.04.03

Subject Credit points Exam,Preliminaryexam

1. Introduction to Public Administration 1,0 E2. State 2,5

2.1. History of Estonian Statehood 0,5 P2.2. Political Science 0,5 P2.3. State Law 1,5 E

3. European Union 1,03.1. The EU Institutions and Law 1,0 E

4. Law 8,04.1. Introduction to Law 1,0 E4.2. General Part of Public Administration Law 2,0 E4.3. Law of Public Service and Labor 1,0 E4.4. Private law I, II 4,0 E, E

5. Economy and Finance 4,05.1. Microeconomics and Macroeconomics 2,0 E5.2. Public Sector Economics 2,0 E

6. Public Management Studies 4,06.1. Organization and Leadership 2,0 E6.2. Personnel Work in a Public Institution 1,0 E6.3. Office Management 1,0 E

7. Information Technology 2,57.1. Computer Studies and Office Technology 1,5 P7.2. State Information Systems and Data Collections 1,0 E

8. Economical Mathematics and Statistics 3,0 E8.1. Economical Mathematics and Statistics 3,0 E, E

9. Social and Behavioral Studies 3,59.1. Sociology 1,0 E9.2. Basics of Psychology 0,5 P9.3. Organizational Behavior 1,0 E9.4. Communication Psychology 1,0 E

10. Logics 2,0 E11. Languages 7,0

11.1. Estonian Language I, II, III 3,0 E, E, E11.2. Foreign Language (Russian) 2,0 E11.3. Foreign Language (English or German) 2,0 E

12. Learning Studies 1,0 P13. Taxes, Tax Administration, Taxation Law 44,5

13.1. Tax Administration and Taxation Law - I, II, III 7,0 E, P, P, E13.2. Income and Revenue Taxes, Income Tax Law - I, II, III 5,0 E, P, P, E13.3. Social Taxes, Social Tax Law. Unemployment Insurance -I, II, III

3,0 E, P, P, E

13.4. VAT, VAT Law. Excises, Excise Law -I, II, III 7,0 E, P, P, E

PSA 15.04.03 45

13.5. Enterprise Accounting, Accounting law and Law ofaccounting for taxation purposes, Audit - I, II, III

12,0 E, P, P, E

13.6. Property Taxes. Land Tax Law. Motor Vehicle Tax law.Gambling Tax Law. Customs Tax. Local Taxes. Fees. Environment Taxes - I,II

4,0 P, E

13.7. International Taxation Law 1,5 E13.8. Penalty Law on Taxes, Tax Violations, Procedure Law ofTax Fellons and Tax Crimes

4,0 P, E

13.9. Servicing of Tax Payers 0,5 P13.10. Professional Ethics of a Tax Officer 0,5 P

14. Internship 24,014.1 Internship I 6,014.2 Internship II 18,0

15. Research Projects 12,015.1. Research Project 2,015.2. Graduation Project 10,0

16. Interim Exam17. Final exam

Total 120,0

Annex 7

PSA 15.04.03 46

The TAX BOARDMinistry of Finance

12.10.2000. No 10-06/5500

RE: The necessity and the possibility of training auditors and investigators dealing with tax frauds atthe Public Service Academy

In October 03, 2000, a meeting with the authorities of Public Service Academy including the rector

Heiki Loot was held in the Tax Department. The issues of training and continuous education of tax

officers, auditors and investigators dealing with tax frauds were discussed and the conclusion was

drawn that the present poor situation in the pre-court investigation of tax frauds has been caused by

the absence of specialized training on taxation. Pre-court investigation of tax and customs frauds

requires a lot more elaborate preparation and training than pre-court investigation of regular crimes.

Several police authorities have admitted the lack of knowledge and skills in the area of investigation

of economic crimes in the preparation of relevant police investigators. This is definitely one of the

reasons why a judicial decision has been reached in very few cases as far as tax frauds are

concerned. According to the information received from the management of the Academy, the

Customs Board is in a more favorable position compared to the Tax Board, because the Public

Service Academy has been training customs officers for years. Hence the Tax Board has turned to

the Academy with the similar problem of continuing and specialized education. Regardless of the

above mentioned, the Customs Board has also raised the question of the necessity of more

continuing education for officials dealing with preliminary investigation of customs frauds. Due to this

necessity the Academy has already decided to open a complementary direction of studies in the

Customs College that is preparing to train customs investigators.

This decision and the continuing cooperation between the Academy and the Customs Board are

undoubtedly positive and progressive steps, but the Academy is also convinced that the problem

should be dealt with in a broader and deeper way. In fact, customs and tax frauds are quite similar in

their character and outline, and it would be much more profitable for the state to prepare the

specialists and the personnel of the specialties tightly connected with each other in the same school.

That will enable the Academy, in addition to substantial economy, to also utilize some existing faculty.

The present students will be provided with an internship position during their studies as well as with a

Annex 7

PSA 15.04.03 47

position after graduation. Such specialization would make it possible to put a specific emphasis on

teaching taxation law, business law and other disciplines the knowledge of which is a prerequisite of

successfully coping with their every day work.

Several opportunities for organizing continuing studies that the Tax Board will badly need

immediately after obtaining the rights for the establishment of pre-court investigation at the beginning

of the year 2001 were also discussed at the meeting. Finding skilled taxation specialists will surely be

the main problem in the future when the Academy is trying to start the work of the department

dealing with the investigation of tax frauds. For the initial phase the plan is to organize the continuing

studies on criminal procedures for auditors with some experience and to employ some investigators

who have earlier been in touch with the investigation of tax frauds.

As a result of the meeting, it was agreed to form a joint work group of the Academy and the Tax

Board where the future plan of action and the curricula of relevant specialty subjects will have to be

worked out. It was also agreed that the Tax Board will inform the Ministry of Finance of these plans

as the Public Service Academy needs the permission and support of both the Ministry of Finance

and the Ministry of Internal Affairs.

In order to start the process and begin to develop the curricula we are hereby asking the Ministry of

Finance to turn to the Ministry of Internal Affairs with the application on the necessity of specialty

training on taxation.

Sincerely,

Aivar Sõerd,

General Director

M. Erik

6 934 608

Annex 8

PSA 15.04.03 48

MINISTRY OF FINANCE

Ministry of Internal Affairs

We 08.11.2000no 20-5-2/10376

RE: Necessity of training officials for investigating tax frauds

Draft legislation under the Code of Criminal Procedure in the form of draft surveillance law (431 SE)pending in the Parliament, has a primary goal to grant the status of an establishment of preliminaryinvestigation and surveillance to the Tax Board. The Tax Board has turned to the Public ServiceAcademy with the problem of training the officials who will in the future deal with the investigation oftax frauds.

In October 03, 2000, the unanimous conclusion was reached in the course of negotiations with themanagement of the Academy, held with the Tax Board that the relevant officials need specializedprofessional training and it would not be too difficult to establish the required curriculum at the PublicService Academy. This conclusion took into account the experience of the school in training customsofficers and police investigators; it would also be economically prudent and more practical to trainthe investigators of the Tax Board and the Customs Board in the same school.

The Ministry of Finance supports the move of the Tax Board and Public Service Academy fordeveloping the curricula of specialty subjects and claims that it would be necessary to providespecialized training on taxation law even if tax frauds were still dealt with by the economical police.

Sincerely yours

/signature/

Aare JärvanChancellor

K. Lahesoo 6113659

Annex: copy of letter by Tax Board 2 pgs.

Annex 9

PSA 15.04.03 49

MINISTERY OF INTERNAL AFFAIRS

Mr Heiki LootPublic Service AcademyRector

We 29.01.2001 no 3-19/935

RE: The need for training officials investigating tax frauds

Herewith I am assigning the Public Service Academy the task of immediately establishing a workgroup with the participation of employees from the Ministry of Internal Affairs, the Ministry ofFinance, the Customs Board, the Tax Board and Public Service Academy in order to discuss issuesregarding training.

The objective of the work group is also to find out if there is a need for a specialty for the training ofofficials dealing with tax fraud investigation, auditors and investigators or is it possible to carry out theabove mentioned training in the framework of the specialty of customs.

In addition to the above, the Ministry of Internal Affairs considers it necessary to solve the questionof financing the studies.

Sincerely yours,

Märt KraftChancellor

Terje Kross 6125071

Annex 10

PSA 15.04.03 50

MINISTRY OF FINANCE

Ministry of Internal AffairsMinistry of Education

We 22.11.2001 no 20-1/11254

RE: Opening diploma studies of taxation at Public Service Academy

Herewith the Ministry of Finance is turning to the Ministry of Internal Affairs with the request to openthe diploma studies on taxation at the Public Service Academy

The Public Service Academy has a year-long experience of training customs officers, and the logicalcontinuation of it would be to open diploma studies on taxation. The inter-agency work groupestablished at the Public Service Academy has confirmed the necessity to open the above mentionedspecialty.The similar idea has been expressed in the enclosed letter of the Tax Board to the Ministry ofFinance.We are also hereby asking the Ministry of Education to take into consideration the need of the TaxBoard for the senior officials graduated from the above specialty when compiling the state trainingorder of the academic year 2002/2003, naturally with the prerequisite that the decision has beenmade by the Ministry of Internal Affairs to open the specialty of taxation at the Public ServiceAcademy and that the new curriculum is completely ready by the relevant moment.

We are counting on your understanding and your cooperation in the above question.

Sincerely

Aare JärvanChancellor

Enclosed: the letter of Tax Board to the Ministry of Finance

Copy: Public Service Academy

Ivo Vanasaun 6 113 401

Annex 11

PSA 15.04.03 51

PUBLIC SERVICE ACADEMY

Mr Tarmo Loodus

Minister of Internal Affairs You 29.01.2001 nr 3-19/935

We 23.11.2001 nr 2500-12/166-1

Opening of the specialty of taxation at Public Service Academy

Dear Mr Loodus:

On the basis of the letter dated January 29, 2001, of the Minister of Internal Affairs, the Rector of

the Public Service Academy established with his decree, the work group for discussing the issues of

training and financing of the officials, auditors and investigators dealing with investigation of tax frauds

and for compiling the curriculum of the diploma studies on taxation with his decree no 54. The above

work group consists of representatives of the Public Service Academy, the Tax Board, the Customs

Board and the Ministry of Internal Affairs.

As of now, the work group has discussed the issues and needs caused by the application for training

of senior officials of the Tax Board, including auditors and investigators, the expected goals of the

training, the concept of the training of senior tax officers, the curriculum of taxation and its

intersection with the curriculum of customs, the possible ways of financing and other issues

connected with opening of the specialty. The work group concluded to propose to the Minister of

Internal Affairs to approve the opening of the specialty of taxation on the basis of an independent

curriculum of diploma studies starting from the academic year 2002/2003.

According to sections 13 and 32 subsection 2 of the Institutions of Applied Higher Education Act

and to the regulation no 11 of July 14, 1998 of the Minister of Education, opening of a new specialty

at the Public Service Academy is carried out by the Minister of Internal Affairs. According to the

clause 33 of the statutes of Public Service Academy, the Minister of Internal Affairs confirms the

Annex 11

PSA 15.04.03 52

opening of the specialty in conformity with the minister applying for the opening of the relevant

specialty.

Please find below the positions and proposals of the work group about training and financing of the

officials, auditors and investigators dealing with the investigation of tax frauds and about the

compilation of the curriculum of diploma studies of taxation and opening the specialty at Public

Service Academy.

In the course of discussions held in the working group it was admitted that the need for senior

officials, auditors and investigators dealing with tax frauds that induced the Tax Board to turn to the

Ministry of Finance in October 12, 2000, with the application to find a possibility to train

investigators of tax frauds at Public Service Academy is still burning. In the course of the discussions

it was found out that in addition to the need for senior officials with a higher education for the

positions of auditors and investigators, also inspectors are needed. Though the issue became

especially burning when the Tax Board was granted the rights of an investigator, the lack of senior

tax officers with higher education has been a problem for years. The work group came to the

conclusion that in spite of the complicity of the area of tax administration there is no higher education

on taxation directed towards training of senior officials in Estonia. Although the specialty of taxation

does exist in Tallinn School of Economy it was found out on the basis of the information obtained

from the Tax Board that the graduates of that specialty meet the requirements of a junior official and

sometimes those of an inspector. At the same time the Tax Board has for years been lacking the

possibility to fill the positions of auditors, investigators and other positions of senior officials with

employees having professional higher education. The higher education on economy provided by

Universities is considered compatible with the requirements of the positions but the lack of systematic

legal knowledge and skills has become more and more obvious.

One of the important aspects pointed out by the work group was the necessity to direct the training

on taxation not only on teaching economic and legal subjects but also on familiarizing the students

with the essence of maintenance of law and order of tax administration and on teaching disciplines

Annex 11

PSA 15.04.03 53

connected with the afore mentioned. This aspect is considered important in fulfilling the tasks of

investigators, auditors as well as of inspectors.

Based on the amount of the positions belonging to the category of senior officials and requiring

professional higher education (as of January 1, 2001, 751 senior officials) and all the other indicators

forming the need for personnel (age structure, turnover, correspondence of professional knowledge

and skills etc) the need for applied higher education on taxation of a permanent character. In the

course of discussions it was found that in addition to the diploma studies in the form of day courses,

there is a significant need for the correspondence course. There is also a need for continuing

education.

The work group reached the conclusion that the diploma studies on taxation (3 years) have to be

started in order to successfully train processors of tax frauds - auditors and investigators; as of

training the investigators, it has to be carried out gradually, i.e. after completion of the diploma

studies, preferably also after having obtained a 1-2 year working experience in the position of an

inspector and of an auditor. The second phase of training the investigators of tax frauds is continuing

education on investigation (1 year).

The work group sees the benefits of the gradual training of the investigators of tax frauds being

linking the theoretical training with experience; it also gives the possibility to evaluate professional

contribution of the candidate for the investigator studies and the analyze their personal characteristics

between admission to the continuing studies’ program.

Taking into account the relative similarity of tax frauds, customs frauds etc and the simultaneous

occurrence and twining of the features of all the above crimes, and also the necessity to train the

investigators of customs and economic frauds, the work group reached the conclusion to unite the

training on the investigation of tax frauds, custom frauds and economic frauds and to carry it out on

the basis of the joint curriculum of continuing studies. The prerequisite for using this model is training

of all the three specialties at the Public Service Academy on the basis of the curriculum of diploma

studies and reciprocal harmonizing the curricula of the relevant diploma studies. The second

Annex 11

PSA 15.04.03 54

prerequisite is successful graduation from the diploma studies’ program of the Public Service

academy. The third prerequisite – developing and implementing of the curriculum of the continuing

studies of the investigation of tax frauds, economic frauds and customs frauds.

According to the assessment of the work group, this model meets the requirements of the objectives

of the training both economically and substantially and takes into account the specific Estonian

circumstances. Considering the needs of the three administrations will enable to guarantee the optimal

fulfillment of the group of the continuing studies on the investigation of tax, customs and economic

frauds, thus guaranteeing the regularity of the studies under the economically optimal conditions. In

addition to solving the problems of training the investigators of economic frauds of the three

administrations and to the economic benefits, it will also enable to better understand the neighboring

areas and will create a synergy effect.

The work group approved of the draft curriculum of the diploma studies in the capacity of 120 credit

points based on the needs of tax administration. In order to find out if the training could be carried

out in the framework of the customs studies the draft curriculum was compared with the curriculum

of the specialty of customs. Having realised that the essence of the knowledge and skills required in

the position of a senior official of the Tax Board and the curriculum meeting the requirements are

very different (in the amount of 1/3 of the curriculum) from the knowledge and skills required in the

specialty of customs and from the curriculum of customs, the work group came to the conclusion that

it is not possible to carry out the diploma studies on taxation within the framework of the specialty of

customs. Based on the essence of the studies and on the curriculum, the work group came to the

conclusion to call the new specialty ’tax administration’.

The work group came, however, to the conclusion that it is possible and practical to join the

continuing studies on the investigation of economic frauds following the diploma studies. And not only

when training the investigators of tax frauds and customs frauds but also when training the

investigators of economic frauds. The work group made a proposal to the management of the

Academy to harmonize the curricula of the tax administration, customs and police of the Public

Service Academy in a way that would be possible to apply the curriculum of the continuing studies of

investigation on the joint training of investigators of tax frauds, customs frauds and economic frauds

following to the graduation from the diploma studies.

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PSA 15.04.03 55

In the course of the discussions, the necessity of financing the training was admitted. The work group

decided to apply for the financing of the diploma studies of the specialty of tax administration in the

framework of the state commissioned education. Taking into account the fact that starting of the

continuing studies of investigation requires, similarly to the diploma studies, the achieving of a specific

state objective and a curriculum based on this objective, the working group is of the opinion that the

state commissioned education can be considered as one possible source of financing. Another

source for financing the continuing education could be financing in the framework of the budgets of

the relevant administrations.

In the course of the discussion, the work group recognised the unique experience of the Public

Service Academy in training senior officials in the specialties of customs, police, investigation etc.,

and in applied training of disciplines concerning law, violence of law, processing of crimes etc.

Taking into account the preliminary negotiations regarding finding the specialty lecturers, the work

group has come to the conclusion that under the Estonian circumstances, the Public Service

Academy has the highest capacity to start the diploma studies of senior officials of the Tax Board,

incl. the diploma studies of the investigators of tax frauds and of the auditors starting from the

academic year 2002/2003.

The work group assessed the opening of the diploma studies on taxation at Public Service Academy

in order to train senior officials for the Tax Board as an effective and economic solution that will

enable more widely use the know how of the Public Service Academy and the knowledge of the

lecturers for the benefit of the nation and to more effectively implement and develop the material

resources. The work group considers it to be especially important, that opening of the diploma

studies on taxation at the Academy will create the prerequisites for developing the post-diploma

continuing studies for the joint training of the investigators of tax frauds, customs frauds and

economic frauds. At the appraisal of the work group, it will make it possible to more effectively use

the resources and to optimize public expense.

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PSA 15.04.03 56

As an additional effect, the creation of prerequisites for developing the system of continuing

education both in the area of tax administration and investigation of economic frauds was

appreciated.

In order to guarantee the timely spreading of the information, the work group considered it necessary

to inform the youth about opening a new specialty at the Information Fair ’Guidepost’ (29.11-

02.12.2001). The work group decided that an early message would create better prerequisites for

obtaining a high level student body. On the other hand it will help to avoid the expenses brought

about by late special advertising. The work group realised that the decision of the Minister of Inferior

about opening the new specialty would give both the work group and the Academy a stronger

assurance for planning and carrying out further activities.

On the basis of the proposals of the work group I am hereby requesting:

1) to open the diploma studies of the specialty of tax administration as an independent specialty

of the academy for year 2002/2003;

2) to apply to the Ministry of Education for financing of the diploma studies of the specialty of

tax administration in the framework of state commissioned education;

3) to make the decision about opening the specialty of tax administration before the youth

information fair ’Guidepost’;

4) to support the gradual development of the integrated continuing education of the investigators

of tax frauds, customs frauds and economic frauds.

Sincerely,

Heiki Loot

Rector

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PSA 15.04.03 57

MINISTRY OF FINANCE

Ministry of Internal AffairsWe: 27.11.2001 no 20-1/11254

RE: Opening of diploma studies of taxation at Public Service Academy

In addition to our letter of November 22, 2001 no20-1/11254 please be advised that we willharmonize the decision of the Minister of Internal Affairs to open the specialty of taxation at thePublic Service Academy.

Sincerely

Siim KallasMinister Margus Uudam

Deputy Chancellor acting in the position of the chancellor

Ivo Vanasaun 6113 401