Public Disclosure Authorized SOUTH ASIA Bangladesh Governance Global Practice IBRD/IDA Program-for-Results FY 2014 Seq No: 7 ARCHIVED on 05-Jun-2017 ISR28344 Implementing Agencies: National Board of Revenue, Economic Relations Division Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Program Development Objectives Program Development Objective (from Program-for-Results Appraisal Document) The PDO is to improve revenue mobilization and transparency in the VAT administration. Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Unsatisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions The project has continued delivering critical outputs that will be key for supporting the successful implementation of the new VAT Law as July 1, 2017. In particular, the online registration module of the IVAS system went live on March 23, 2017. By now, more than 20,000 taxpayers have been re-registered and registered getting the new 9-digit Business Identification Number (BIN) which evidences the tax reform process has been gaining significant traction compared with the preliminary modest target of 350 new BINs by June 30, 2017. In addition, the project has completed the first round of the User Acceptance Test (UAT) of the online modules of tax return and tax payment which will go live on July 1, 2017. The preparation of the modules have required the interoperability of other information system such as the ASYCUDA Customs system to enable traders to use the new BIN for future transactions. Also, the project is working out the interoperability of the payment system with the Bangladesh Bank to use its payment platform in order to facilitate the payment of VAT obligations. On the side of taxpayers services, the project has made the outsourced Calling Center (CC) operational to support the ongoing registration process and the further tax return submission and payment process as well. Finally, the project has proposed a new functional organizational structure for the NBR VAT Wing in order to support the new VAT Law implementation on July 1, 2017. Page 1 of 10
Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P129770 IDA-54260 Effective XDR 38.80 38.80 0.00 14.27 24.53 37% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P129770 IDA-54260 Effective 09-May-2014 07-Dec-2014 11-Jan-2015 30-Jun-2020 -- Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Substantial Substantial Page 2 of 10
PHDLIPDOTBL PHDLIPDOTBL Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Moderate Moderate Technical Design of Project or Program -- Substantial Substantial Institutional Capacity for Implementation and Sustainability -- Substantial Substantial Fiduciary -- Substantial Substantial Environment and Social -- Low Low Stakeholders -- Substantial Substantial Other -- -- -- Overall -- Substantial Substantial Disbursement Linked Indicators (DLI) DLI 1.1: VAT Implementation Plan on Track (Text) Value Baseline 2012/13- VAT Implementation Plan approved by Minister of Finance The DLI has been partially met. The DLI has been partially completed. Date -- 27-Aug-2015 27-Aug-2015 Although DLI 1.1.1 has been completed, as agreed with the client, this DLI is expected to be removed from the program during the restructuring. DLI 1.1.2 At least 40,000 active VAT taxpayers have been registered in the COTS VAT database. The registration module went live on March 23, 2017. By the time of this ISR more than 20,000 new VAT reregistered and new registered taxpayers have received the new 9-digit Business Identification Number (BIN). DLI 1.2: VAT Implementation Plan on Track (Text) Value Baseline 2012/13- VAT Implementation Plan approved by Minister of Finance The DLI has not been met. This DLI has not been met completely yet as there are two other DLRs under it - 1.2.3 and 1.2.4-which needs to be fulfilled. Date 17-Jun-2016 27-Aug-2015 27-Aug-2015 Page 3 of 10
PHDLIPDOTBL PHDLIPDOTBL PHDLIPDOTBL DLI 1.2.1 has been completed, confirmed by the independent verification entity, and subsequently disbursed against. DLI 1.2.2 is in progress. The National Board of Revenue (NBR) signed off a Service Level Agreement (SLA) with the Bangladesh Computer Council (BCC) for the Data Center and IT infrastructure. as agreed with the client, this DLI could be removed from the program during the restructuring. DLI 2: Number of registered active VAT taxpayers (thousands) (Number) Value -- -- -- Date -- 27-Aug-2015 27-Aug-2015 Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized. Initial estimates at time of Board approval indicated approximately 30,000 current active taxpayers. This includes branches of the same company. The baseline is to be established through the launch of the online registration module and taken at three-four months after launch. DLI 3: Number of taxpayers who filed on-line (Number) Value -- -- -- Date -- 27-Aug-2015 27-Aug-2015 Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized. This has now been delayed until fiscal year 2017/18 when the 2012 Act is due to be introduced and the online filing system launched on July 1, 2017. DLI 4: Percent of VAT Large Taxpayer Unit taxpayers who paid on-line (Percentage) Value -- -- -- Date -- 27-Aug-2015 27-Aug-2015 Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized. This has now been delayed until fiscal year 2017/18 when the 2012 Act is due to be introduced and the online payment system launched on July 1, 2017. Page 4 of 10
PHDLIPDOTBL PHDLIPDOTBL DLI 5- Greater transparency (Text) Value 75 The DLI has not been fully met. The DLI has not been fully met. Date 12-Mar-2014 27-Aug-2015 27-Aug-2015 This DLI has been completed, confirmed by the independent verification entity, and subsequently disbursed against. DLI 6- Fiduciary Actions (Text) Value 2012/13 With the submission of quarterly fund utilization report, DLI 6.3.2 has been met. With the submission of quarterly fund utilization report, DLI 6.3.2 has been met. Date -- 27-Aug-2015 27-Aug-2015 This DLIs has been completed, confirmed by the independent verification entity, and subsequently disbursed against. Results Results Area Intermediate Results Area Project Development Objective Indicators PHINDPDOTBL VAT Tax-GDP Ratio (Percentage, Custom) Value 3.70 3.63 4.72 4.70 Date 12-Mar-2014 31-Aug-2016 30-Jun-2016 30-Jun-2020 Page 5 of 10
The actual VAT Tax-GDP Ratio comprises collected domestic VAT and imports VAT. The ratio was measured during the Tax Administration Diagnostic Assessment Tool (TADAT) field mission of February 2017. PHINDPDOTBL Compliance with the availability of information listed in the RTI rules and regulations (Percentage, Custom) Value 75.00 75.00 75.00 100.00 Date 12-Mar-2014 31-Aug-2016 31-Mar-2017 30-Jun-2020 Overall Intermediate Results Indicators Intermediate Results Indicator 1: VAT Implementation Plan on Track (Text, Custom) Value VAT Implementation Plan endorsed by Minister of Finance PIP Updated and linked to DLIs PIP Updated and linked to DLIs At least 60,000 VAT returns are processed per month Date 01-Jul-2013 30-Nov-2016 30-Nov-2016 30-Jun-2020 Intermediate Results Indicator 2: New registered active VAT taxpayers (Number, Custom) Value 20,000.00 -- 20,000.00 40,000.00 Date 01-Jul-2016 30-Nov-2016 30-May-2017 30-Jun-2020 Intermediate Results Indicator 3: Value of VAT e-payments (Percentage, Custom) Page 6 of 10
Value 0.00 -- -- 40.00 Intermediate Results Indicator 4: Reduced VAT stop filers (Percentage, Custom) Value 0.00 -- -- 20.00 Intermediate Results Indicator 5: Taxpayers file on-line (Percentage, Custom) Value 0.00 -- -- 50.00 Intermediate Results Indicator 6: VAT Large Taxpayers who pay on-line (Percentage, Custom) Value 0.00 -- -- 50.00 Intermediate Results Indicator 7: Average time to process and issue tax refunds (Days, Custom) Value 100.00 -- 30.00 30.00 Date 01-Jul-2016 30-Nov-2016 28-Feb-2017 30-Jun-2020 Intermediate Results Indicator 8: Hit rate of tax audits percentage of tax audits resulting in additional tax assessments (in a year) (Percentage, Custom) Value 0.00 -- -- 5.00 Page 7 of 10
Intermediate Results Indicator 9: Lower taxpayer costs for complying with VAT (Percentage, Custom) Value 0.00 -- -- -15.00 Intermediate results Indicator 10. Greater transparency (Text, Custom) Value Information disclosed The target has not been fully met. The target has not been fully met. Tax collected disclosed; Taxpayer satisfaction survey disclosed; Processing and Contact center performance disclosed Date 12-Mar-2014 30-Nov-2016 30-Nov-2016 30-Jun-2020 Intermediate results Indicator 11. Greater taxpayer satisfaction with services (Percentage, Custom) Value 0.00 -- -- 50.00 Date 30-Jun-2014 30-Nov-2016 30-Nov-2016 30-Jun-2020 Intermediate Results Indicator 12. Improved fiduciary management (Text, Custom) Value NCB contracts are not done through e-gp. All significant audit objections resolved in more than 6 months. Non systematic submission quarterly fund utilization report to FD & complete fund release processes The target has been partially met. The target has been partially met. 75 percent of NCB contracts are done through e-gp. All significant audit objections resolved in 6 months. Submit Page 8 of 10
after each quarter. quarterly fund utilization report to FD & complete fund release processes after each quarter. Date 12-Mar-2014 30-Nov-2016 30-Nov-2016 30-Jun-2020 Overall Results Intermediate Indicator Measured (Y/N) Observation 1 Intermediate Results Indicator 1: VAT Implementation Plan on Track. 2 Intermediate Results Indicator 2: New registered active VAT taxpayers. 3 Intermediate Results Indicator 3: Value of VAT e- payments. 4 Intermediate Results Indicator 4: Reduced VAT stop filers 5 Intermediate Results Indicator 5: Taxpayers file online. Yes, in the MTR Yes. The Online registration module went live on March 23, 2017. The PIP is now linked to the DLIs. The weekly Project Coordination Committee (PCC) assesses progress on the PIP and recommends further actions 6 Intermediate Results Indicator 6: VAT Large Taxpayers who pay on-line 7 Intermediate Results Indicator 7: Average time to process and issue tax refunds 8 Intermediate Results Indicator 8: Hit rate of tax audits percentage of tax audits resulting in additional tax assessments (in a year) Yes. In the TADAT mission of February 2017. VAT refunds are not assessed against risk criteria. A very small percent of refunds is paid within 30 days. 9 Intermediate Results Indicator 9: Lower taxpayer costs for complying with VAT 10 Intermediate results Indicator 10. Greater transparency Yes. 11 Intermediate results Indicator 11. Greater taxpayer satisfaction with services Yes. 12 Intermediate Results Indicator 12. Improved fiduciary management Yes. Page 9 of 10
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