Public Disclosure Authorized Public Disclosure Authorized The World Bank Implementation Status & Results Philippines National Program Support for Tax Administration Reform. (P101964) Operation Name: National Program Support for Tax Administration Reform. Project Stage: Implementation Seq.No: 9 Status: ARCHIVED Archive : 14-Oct-2012 (P101964) Country: Philippines Approval FY: 2007 Product Line: IBRD/IDA Region: EAST ASIA AND PACIFIC Lending Instrument: Technical Assistance Loan Implementing Agency(ies): Bureau of Internal Revenue Key s Board Approval 13-Mar-2007 Original Closing 31-Dec-2011 Planned Mid Term Review Last Archived ISR 13-Dec-2011 Effectiveness 25-Jun-2007 Revised Closing 30-Jun-2013 Actual Mid Term Review Project Development Objectives Project Development Objective (from Project Appraisal Document) To increase taxpayer compliance by increasing the efficiency and effectiveness of the BIR, and to prepare the BIR for a sustainable and long-term reform. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) losure Authorized Public Disclosure Authorized Component Name Component Cost tax compliance 3.59 tax enforcement and control 1.72 HR development and management 2.33 BIR management 3.36 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Unsatisfactory Overall Implementation Progress (IP) Satisfactory Moderately Satisfactory Overall Risk Rating Implementation Status Overview The first supervision mission since the extension took place on February 27th to March 1st 2012. An Aide-Memoire was drafted in March, cleared by CMU management in May and 2011 baseline data information on the new set of NPSTAR performance indicators from BIR was received in June. The main findings of the February-March mission were as follows. BIR is finalizing the elaboration of the 2011 baseline data for its agency-level key performance indicators (KPIs), but needs to step up use of performance indicators. It is also working Page 1 of 5
on the alignment of its operational indicators with the new KPIs. However, BIR needs to now shift its focus on operational indicators away from individual towards system performance. System weaknesses need to be properly analyzed while overcoming staff resistance to the adoption of indicators that are not fully within the control of their unit even if they would be of great use to assess system performance. Progress is being made to enhance taxpayer compliance. A challenge remains the elaboration of an effective taxpayer services strategy. Progress includes the creation of e-lounges at BIR offices and the ongoing elaboration of a 2012 compliance audit program to assess BIR performance. More follow-up needs to be pursued to the promising directions proposed by BIR staff in workshops co-sponsored by the Tax Administration Reform Group (TRAG) and the Bank in 2011 in the areas of taxpayer services. BIR has outlined a number of key elements of its human resource management strategy, but the implementation of the rationalization plan lags. BIR plans to use NPSTAR funds to develop a manpower plan and an overall strategy that will allow the Bureau to select and maintain qualified and highly skilled personnel in key areas. However, the rationalization plan for some BIR units awaits DBM's approval (e.g. Taxpayer Services), while hiring has not taken place in some units for which it has been approved (e.g. Internal Audit Division). Overall, reform efforts need to be stepped up so the envisaged business process re-engineering and IT solutions can deliver on improved tax administration. Progress in BIR institutional reforms (e.g. management and staff turnover, strengthening internal audit and taking on corruption) and in the elaboration of reform strategies in key issue areas (e.g. taxpayer services, but also core tax administration processes) needs further impetus. TRAG (renamed Project Management and Implementation Service) should be further empowered, while BIR s Management Committee (MANCOM) is focused on the day-to-day task of meeting collection targets and on enforcement activities. Similarly, the Steering Committee for Tax Reform created in December 2011 could meet more frequently. Tax administration reforms, including new IT systems and staff-owned business process reengineering (BPR), need a continued push to yield sustainable improvements in governance and collections. Locations No Location data has been entered Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target A unified and integrated/comprehensive registration system with improved up-to-date taxpayer information Increase in the use of performance management system for office and staff appraisal and development Text Value 385,000 corporate and 6.3 million individuals 18.34 million A single database for all taxpayers 30-Mar-2007 30-Mar-2012 Text Value PMS developed and piloted in LTS and some office 30-Mar-2007 29-Jul-2011 31-Dec-2011 Revenue issuance on the BIR operational indicators for approval of MANCOM (as of June 2012). This revenue issuance covers 2012 operational KPIs, performance monitoring and performance evaluation for Revenue Regions, Revenue District Offices, Large Institutionalization of a PMS for all offices and individuals Institutionalization of a PMS for all offices and individuals Page 2 of 5
Increase in the number of new registered taxpayers Use of operational indicators in BIR quarterly reports and of agency-level KPIs in BIR annual report Percentage of CIT filers over total CIT registered taxpayers Percentage of PIT filers over total PIT registered taxpayers Increase in the number of accounts receivable settled and improved settlement process Amount of arrears collected in year n as % of potentially recoverable arrears in year n-1 Taxpayers Service and LT District Offices. Poor use of operational indicators for management purposes; plans to use individual performance information for salary reviews. Number Value 1.30 130864.00 30-Dec-2005 30-Dec-2011 1.3 million over 2004-2005 End 2010 number: 2,097,654 End 2011 number: 2,228,518 Annual increase: 6.2% Annual increase of at least 5% Text Value Limited use Routine use by management Still limited use Percentage Value 35.00 37.89 85.00 11-Jun-2012 Returns filed no.: 85% of TPs in database file 172,391 returns the following year Registered tp.: 454,963 (previous year) Percentage Value 29.00 31.94 85.00 11-Jun-2012 Amount(USD) Value 4.50 P 4.5 billion from 2003 to August 2006 Amount(USD) Value Returns filed no.: 541,561 Registered tp.: 1,695,347 (previous year) Not available Not available 85% of TPs in database file returns the following year 10 percent annual reduction in outstanding accounts receivable 10 percent annual reduction in outstanding accounts receivable Page 3 of 5
Registered taxpayers as a percentage of the labor force Intermediate Results Indicators Percentage Value 44.40 48.30 47.00 31-Jan-2012 28-Dec-2012 Indicator Name Core Unit of Measure Baseline Current End Target Percent of respondents who said that BIR Percentage Value 85.20 87.00 services have met their expectations in 15-Jun-2012 generating satisfying results The data is from 2010; actual Finalization of Terms of date within 2010 not known Reference for Taxpayers Percent of BIR staff awareness of the projects Percentage Value 81.00 90.00 involved in tax reform Percent of respondents who said that BIR services have met their expectations in the ease of conducting transactions Data on Financial Performance (as of 04-Jul-2012) Financial Agreement(s) Key s The data is from 2010; actual date within 2010 not known Finalization of Terms of Reference for Taxpayers Percentage Value 79.50 82.00 The data is from 2010; actual date within 2010 not known Finalization of Terms of Reference for Taxpayers Project Ln/Cr/Tf Status Approval Signing Effectiveness Original Closing Revised Closing P101964 IBRD-74310 Effective 13-Mar-2007 30-Mar-2007 25-Jun-2007 31-Dec-2011 30-Jun-2013 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed Page 4 of 5
P101964 IBRD-74310 Effective USD 11.00 11.00 0.00 3.75 7.25 34.00 Disbursement Graph Key Decisions Regarding Implementation The project was extended in December 2011 for six months to end-june 2013. Restructuring History Level two Approved on 22-Dec-2011 Related Projects There are no related projects. Page 5 of 5