“A fair tax system only works when everyone contributes” — Paulius Majauskas

Interview with Paulius Majauskas, EU4PFM International Key Expert on Tax Reform

Professional Expertise & Connection to Ukraine

My interest in tax policy began during my time studying law. It was a period of transition — both for me and for the country. I entered university at the very beginning of independence and graduated in 1996. In 1995, I needed to find an internship, and I was fortunate to secure a position at the tax inspectorate.

At that time, many sectors were undergoing significant transformations, and tax policy was no exception. It was an area that, while always important, was rapidly evolving, incorporating best practices from abroad with support from donors, especially from Scandinavian countries. This exposure to innovation and new approaches fascinated me, and I quickly became engaged with the field.

Interestingly, during my studies, I hadn’t considered tax law as a career path. Like many law students, I initially envisioned a more traditional legal role — perhaps as a lawyer, judge, or prosecutor. In fact, tax law was the one subject where I didn’t even attend seminars or take it too seriously. However, my professional journey took a different turn.

 I started working in the Lithuanian tax authority (central office), very soon I went to the Ministry of Finance directly contributing to the development of new legislation and policy frameworks. My role was to create regulations, introduce new approaches, and help shape the evolving tax system. The complexity and significance of this work captivated me, and I’ve remained engaged in the field ever since.

Yes, my entire career has been dedicated to this field. I started in 1995, which means I’ve now been in this sphere for 30 years.

Changing public perception about taxes is a long and complex process, and Lithuania went through this transformation over many years. The key is clear, consistent communication that helps people understand where their taxes go. As simple as it may sound, this is a fundamental recommendation given by international experts.

In Lithuania, public perception began to shift when people realised that taxes are not just an obligation but something that benefits society. A significant turning point came around 2009-2010, likely influenced by the financial crisis. The difficulties people faced during that time made them more aware of the importance of a well-functioning tax system.

From the perspective of tax authorities and the Ministry of Finance, the challenge was to balance taxpayers’ rights and obligations. This required a shift to a client-oriented approach, ensuring that taxpayers were treated fairly and that the tax system worked both for the state and its citizens. It wasn’t just about changing laws — it also required a shift in mindset within tax administration itself. Some officials left, while many stayed and adapted to the new approach.

Legislative changes played a crucial role as well. In 2002, we introduced fundamental principles such as equality, neutrality, proportionality, and the protection of taxpayers’ rights. We also adopted best practices from other countries, reinforcing the idea that taxation should be a two-way process. 

A major shift occurred when tax authorities moved away from rigid formalism. Instead of penalising taxpayers for minor technical errors, the focus shifted to the spirit of the law rather than just the letter of the law. This created a fairer and more flexible tax administration system, incorporating elements from civil law and international best practices.

Another point is that you can’t simply force a change in perception — it requires effective communication. Some communication tools are universal, and we’ve learned a great deal from Scandinavian countries, where tax compliance is exceptionally high.

Ukraine is following a similar path, trying to launch various educational campaigns and direct engagement with people. Many willingly pay additional fees for the army because they recognise its necessity during wartime. But beyond that, people must also understand the importance of paying taxes in peacetime — to fund schools for their children, hospitals for themselves, and ensure adequate pensions in the future. Over time, as businesses grow and individuals start thinking long-term, this internal understanding develops naturally.

As we’ve seen, this cultural change tends to spread quickly. As awareness increases, employees begin demanding legally declared wages instead of cash payments under the table.

At the same time, tax administration plays a crucial role. A fair tax system only works when everyone contributes — benefits cannot be sustained if only some people pay taxes while others avoid them. One key approach is simplifying tax compliance, particularly for small business owners and self-employed individuals. When paying taxes is straightforward and cost-effective, people are less likely to seek ways to avoid it.

Lithuania has been through this process and understands the challenges. Now, through the EU4PFM Project, we’re supporting Ukraine’s digitalisation efforts, which should soon bring tangible results.

One proven concept is the “lazy taxpayer” model, which makes tax filing effortless. In Lithuania, individuals receive a pre-filled tax declaration once a year, review it, and, if necessary, make adjustments. If everything is correct, they don’t need to do anything — it takes less than a minute to confirm. This approach minimises the burden of accounting, reporting, and filing paperwork. A similar system can be applied to small businesses where feasible.

I’m confident that taxation is not the most challenging aspect of Ukraine’s EU accession — it’s certainly complex, but entirely manageable. In principle, the necessary tax reforms could be completed within two to three years, provided there is strong support from both the government and society.

However, beyond technical implementation, societal readiness is just as important. People need to understand that while EU integration brings changes — some of which may seem difficult at first — these will be balanced by the broader benefits of membership, including financial support from the EU.

For businesses, any potential challenges, such as the loss of certain benefits, can often be offset through EU subsidies and support programmes. The key is ensuring that both policymakers and the public recognise the long-term advantages of alignment with the EU.

All transitions take time — expecting immediate results is unrealistic. Tax authorities need time to adapt, and taxpayers need time to trust and embrace new processes.

A good example is the implementation of e-cash registers, introduced through the EU4PFM Project. These registers can be downloaded onto a mobile phone, making tax compliance seamless. When businesses operate online and issue digital fiscal receipts, their income is automatically recorded. 

This means the tax authority already knows the amount owed and can generate an invoice, eliminating the need for additional calculations or paperwork. Such solutions, particularly for small and medium-sized enterprises, significantly reduce administrative burdens, making tax compliance easier and more efficient.

One of the most rewarding experiences in my career was the successful reforms implemented in Lithuania. We took a unique approach — rather than making incremental changes, we directly adopted the best international practices. I was deeply involved in the legislative overhaul, particularly in rewriting the legal framework for tax administration. This included introducing new procedures, modernising administrative approaches, and embedding key principles into the system.

Another major milestone was aligning Lithuanian tax policy with EU legislation and OECD standards, a crucial step toward EU accession and later OECD membership. 

Beyond national reforms, I was actively engaged in developing European initiatives within the European Council and the European Commission, participating in Working Groups that shaped policy across member states. Contributing to these joint efforts allowed me to play a role in creating instruments that were later adopted across Europe.

Over the past 20 years, my work within the EU, OECD, and other international organisations has been an invaluable learning experience. The best part? Being able to transfer this knowledge and apply these proven strategies to support Ukraine’s reforms today.

I don’t have any difficulties adapting to new environments. Having worked in various countries and professional settings, I’ve seen it all — sometimes things remain unchanged, sometimes they evolve, but fundamentally, the challenges in our field are often very similar.

I suppose my advantage is that I understand the people I work with. I recognise how difficult change can be, how challenging it is to encounter something unfamiliar after years of working a certain way. That’s why my approach is always to offer modern solutions while acknowledging the concerns and uncertainties people might have. 

We have been working in several key areas, including voluntary compliance, an introduction of client-oriented approach, modernisation of the STS Contact Centre, e-cash registers, and other services aimed at improving compliance. At the same time, we are focusing on automating tax processes to minimise human intervention and enhance transparency. Now we have also started to work on European integration, which has become one of the key tasks of the Project.

Over the years, we have gathered best practices and helped structure them effectively, significantly improving the overall quality of tax administration. This progress is crucial, and we are off to a strong start — our efforts have been well-received by the European Commission. Any advancement in this area is a key indicator of success, and both the Ministry of Finance and the Tax Service are making considerable efforts to drive these reforms forward.

One of my long-standing focus areas is the Common Reporting Standard (CRS), which I have been involved with since 2012. In 2013, during Lithuania’s EU presidency, my role was to coordinate initial discussions at the EU Council working group among Member States on the introduction of the corresponding EU directive.

A turning point for global tax transparency came during the financial crisis when societies realised there was no money — taxes were being raised on small and medium-sized businesses, and social programmes were being cut. Meanwhile, offshore wealth remained untouched, allowing those using offshore schemes to continue accumulating wealth. This public frustration sparked change. The earlier versions of CRS introduced in the early 2000s were ineffective, but after the 2009 crisis, the OECD accelerated its efforts, leading to the development of the CRS standard we launched.

Now, implementing CRS in Ukraine is a major step forward. There are high expectations, especially given the number of individuals who may have used offshore schemes. The automatic exchange of tax information will not target Ukrainian refugees but will reveal unpaid taxes from other sources. Our next focus is to establish a clear methodology for handling this data, ensuring it is used effectively. 

Looking ahead, our cooperation with the EU in the field of taxation will align with both OECD standards and European directives, including the regulation of cryptocurrencies. Another key priority for Ukraine’s EU accession is legislative and technical preparation — ensuring compliance with technical regulations and implementing necessary IT solutions.

Additionally, an essential focus is adopting laws that not only meet EU accession requirements but also prevent capital outflow from Ukraine. The ATAD directive is particularly important in this regard, as it provides long-term benefits by strengthening Ukraine’s tax framework.

A great deal of work has already been done, and the progress achieved so far is irreversible. These reforms have already taken root, and I cannot imagine what could possibly happen to undo them.

Work-Life Balance

I have a small household with a greenhouse near my house, and whenever I have the time, I dedicate myself to it. Of course, there are periods when I have to step away, and then I find myself restoring everything again. Whenever I’m in Kyiv, I love visiting local markets and buying seeds. I bring them back as little curiosities — tomato seeds, watermelon seeds — I even managed to grow them back home in Lithuania.

I also love animals, especially my cat. To keep her entertained, I built a bird feeder for her to watch. However, I love the small creatures itself as well, so now I have a growing collection of seed bags for all the birds that come by.

My first visit to Kyiv was during the Soviet era. I remember the old Olimpiyskiy Stadium, which held over 100,000 spectators. We would go there as football fans to watch Kyiv Dynamo and Vilnius Zalgiris. Back then, we had a great camaraderie with the people of Kyiv, in fact, united by our shared experience of standing together against soviet regime.

Nowadays, I don’t read as much — I prefer to listen to audiobooks, saving my eyes for work (Joking). However, books have always played an important role in my life. I started reading very early, and books have always been an important part of my life. In my childhood, good Lithuanian books were often sold out immediately, while ‘trophy’ books in russian were widely available. Unfortunately, some of the best literature was still in russian at that time.  

Classics like Dickens, Hugo, Kafka and many others are essential, but I believe fiction doesn’t entirely shape you the way philosophical or spiritual works do. It’s important to remember that every author writes through the lens of their own experiences and struggles.

Poetry is like music for the soul. However, it can be difficult to fully appreciate poetry in translation. I’ve read ‘Kobzar’ by Taras Shevchenko and the works of Lesya Ukrainka, and I found their themes deeply familiar. Shevchenko has a strong historical connection to Lithuania — he studied in Vilnius, and there is even a street, a university department and a trolleybus stop named after him. When I first read Ukrainian authors, I remember the emotions it evoked, especially during the discussions about our independence — it was a powerful feeling, as if some of my own thoughts and values were being reflected on the page.  

Beyond literature, I have always been fascinated by Greek and more recent fundamental philosophy, works of Kant, for example. For contemporary reading, I prefer authors , whose writing has a unique, immersive quality.

I have the tasks in my work contract, and I follow it. (Joking). But in all seriousness, I believe in responsibility, transparency, and delivering results. Clear goals, and a structured approach are key to any successful project.

I believe now is the perfect time for young professionals, especially in Ukraine, to seize the opportunities emerging from the European Union and OECD. New ways of growing and developing are opened up, creating a real space for professional fulfilment. There are two paths: some people are comfortable working for a paycheck, while others may find more value in contributing to something greater, even if the rewards aren’t immediately material.

It all comes down to your values. The tax sector often acts as a hub for innovation, where you can be part of shaping significant state policies and reforms. It’s a field that has the potential to drive change, and that’s a powerful opportunity.