Public Disclosure Authorized SOUTH ASIA Bangladesh Governance Global Practice IBRD/IDA Program-for-Results FY 2014 Seq No: 3 ARCHIVED on 09-Sep-2015 ISR20285 Implementing Agencies: National Board of Revenue 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 Satisfactory Moderately Unsatisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions The signing ceremony of the Financing Agreement for the VAT Improvement Program took place on December 7, 2014, and the program became effective on January 11, 2015. The VAT Project Implementation team has made good progress in developing a few high-level strategies and plans. However, the VAT Implementation Plan is off track due to significant delay in procurement for the two disbursement linked indicators (DLIs) for Year 1- a customizable off-the-shelf tax administration software and Project Management Consultancy (PMC). The VAT Implementation Plan has been revised in light of the delay in the procurement of the Integrated VAT administration system (and the PMC, leading to a one year delay in the original schedule from the 2013 VAT Implementation Plan. The procurement is now significantly advancing and the new plan has been laid before the Cabinet Subcommittee on Government Purchase on July 22, 2015. Regarding procurement of the Project Management Consultancy, the Expression of Interest) was re-launched on January 11, 2015. Shortlisting of prospective bidders was completed and bids were closed by April 27, 2015. The Project Evaluation Committee (PEC) finalized the report and the Cabinet Sub-Committee on Government Purcahse approved the PMC proposal on June 17, 2015. The contract was signed with the PMC firm on July 14, 2015, marking the completion of the related DLI.. The DLI on greater program transparency has been partially met, and can be achieved if the National Board of Revenue fixes the technical problems with downloading the monthly revenue collection statements. The DLI on strengthening fiduciary capacities has been partially met with the project team reaching the 25 percent target of Nationally Competitive Bids using e-gp in year 1. In year 2, the project team needs to procure 50 percent of contracts using e-gp and this is off-track. Quarterly Utilization Reports were shared with the Bank on June 17, 2015. Page 1 of 10
Data on Financial Performance Disbursements (by loan) Page 2 of 10
PHDLIPDOTBL PHDLIPDOTBL PHDLIPDOTBL Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P129770 IDA-54260 Effective XDR 38.80 38.80 0.00 7.94 30.86 20% 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 -- 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 not been met. The DLI has not been met. Procurement of combined software, hardware and data network package is in process. Signing of the contract with the COTS vendor could be expected by the end of August 2015. The DLI has not been met. 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. The DLI has not been met. Procurement of the PMC is in process and signing of the contract with PMC could be expected by the end of August 2015. DLI 2: Number of registered active VAT taxpayers (thousands) (Number) Value -- -- -- Page 3 of 10
PHDLIPDOTBL PHDLIPDOTBL PHDLIPDOTBL PHDLIPDOTBL Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized. DLI 3: Number of taxpayers who filed on-line (Number) Value -- -- -- Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized. DLI 4: Percent of VAT Large Taxpayer Unit taxpayers who paid on-line (Percentage) Value -- -- -- Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized 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 The DLI on greater transparency has been partially met, with some progress recorded since the November 2014 mission with subsequent missions; DLI 5.1 can be achieved if the NBR fixes the technical problems with downloading the monthly revenue collection statements. Hence, the DLI has not been fully met. DLI 6- Fiduciary Actions (Text) Page 4 of 10
Value 2012/13 The DLI has been partially achieved. With the submission of quarterly fund utilization report, DLI 6.3.2 has been met. The DLI on fiduciary actions has been partially met. The DLI 6.1 has been partially met with the project team reaching the 25 percent target of Nationally Competitive Bids using e-gp in fiscal year 2014/5. In year 2, the project team needs to procure 50 percent of e-gp contracts using e-gp. So far, 10 contracts have been issued and all have used traditional methods. To achieve DLI 6.2.1, 10 contracts will need to be procured using e-gp. This is off-track and will require the attention of the project team. Quarterly Utilization Reports were shared with the Bank on June 17, 2015. The report was submitted to the FD, MOF and funds up to 3rd quarter were released. Results Results Area Intermediate Results Area Project Development Objective Indicators PHINDPDOTBL VAT Tax-GDP Ratio (Percentage, Custom) Value 3.70 4.63 4.63 4.70 Date 12-Mar-2014 22-Jan-2015 27-Aug-2015 30-Jun-2020 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 22-Jan-2015 27-Aug-2015 30-Jun-2020 The PDO on greater transparency has been partially met. While considerable new information has been posted on the VAT Wing website(s), a lot of information required under the Program Appraisal Document (PAD) consistent with the RTI Act remains missing. Moreover, there are issues with the usability of the information, particularly as the NBR operates two separate websites both of which contain significant but not comprehensive information. The RTI Implementation Strategy for the VAT Wing, covering other aspects of the RTI Act 2009, was endorsed by the Project Director, and progress was being made to implement this (including the appointment and Page 5 of 10
training of Designated Officers under the RTI Act). Several implementation steps were agreed with the Project Implementation Unit to ensure full compliance with DLI 5 Year 1 targets by June 2015 but as of August 2015 not all of these have been carried out.. Overall Intermediate Results Indicators Intermediate Results Indicator 1: VAT Implementation Plan on Track (Text, Custom) Value VAT Implementation Plan approved by Minister of Finance Target has not been met. Target has not been met. At least 60,000 VAT returns are processed per month Date 01-Jul-2013 22-Jan-2015 27-Aug-2015 30-Jun-2020 Procurement of combined software, hardware and data network package is in process as well as procurement of PMC. Signing of the contract with the COTS and PMC vendors could be expected by the end of August 2015. Intermediate Results Indicator 2: New registered active VAT taxpayers (Number, Custom) Actual (Current)- Year 3 target; not yet due. End Target- Baseline established for number of VAT active tax payers plus 30,000 in the last year. Baseline to be established once the VAT online system is operationalized. Intermediate Results Indicator 3: Value of VAT e-payments (Amount(USD), Custom) Page 6 of 10
Actual (Current)- Year 3 target; not yet due. End Target- Baseline: for value of VAT e-payment plus 20 percent in the last year. Baseline to be established once the VAT online system is operationalized. Intermediate Results Indicator 4: Reduced VAT stop filers (Number, Custom) Actual (Current)- Year 3 target; not yet due. End Target- Baseline for number of VAT stop filers minus 20 percent in the last year. Baseline to be established once the VAT online system is operationalized. Intermediate Results Indicator 5: Taxpayers file on-line (Number, Custom) Actual (current)- Year 3 target; not yet due. End target- Baseline for number of VAT active on-line filers plus 10,000 in the last year. Baseline to be established once the VAT online system is operationalized. Intermediate Results Indicator 6: VAT Large Taxpayers who pay on-line (Percentage, Custom) Value -- -- -- 50.00 Actual (current)- Year 3 target; not yet due. End Target- Baseline for number of VAT active on-line filers plus 10,000 in the last year. Baseline to be established once the VAT online system is operationalized. Page 7 of 10
Intermediate Results Indicator 7: Average time to process and issue tax refunds (Days, Custom) Actual (current)- Year 3 target; not yet due. End Target- Baseline for number of VAT active on-line filers plus 10,000 in the last year. Baseline to be established once the VAT online system is operationalized. Intermediate Results Indicator 8: Hit rate of tax audits percentage of tax audits resulting in additional tax assessments (in a year) (Percentage, Custom) Actual (current)- Year 3 target; not yet due. End Target- Baseline for percentage of tax audits resulting in additional tax assessments plus 15 percent. Baseline to be established once the VAT online system is operationalized. Intermediate Results Indicator 9: Lower taxpayer costs for complying with VAT (Amount(USD), Custom) Actual (current)- Year 3 target; not yet due. End Target- Baseline for compliance cost minus 15 percent. Baseline to be established in 2015-16. Intermediate results Indicator 10. Greater transparency (Text, Custom) Value Information disclosed The tax collected and the taxpayer satisfaction survey have both been The target has not been fully met. Tax collected disclosed; Taxpayer satisfaction Page 8 of 10
disclosed. Much of the information required under the RTI Act is disclosed. But the website needs to be reorganized to make the information easier to find. The two websites need to be merged to one. survey disclosed; Processing and Contact center performance disclosed Date 12-Mar-2014 22-Jan-2015 27-Aug-2015 30-Jun-2020 Some additional information has been placed on the website(s) but more required under the RTI Act remains missing. The target has not been fully met. Intermediate results Indicator 11. Greater taxpayer satisfaction with services (Percentage, Custom) Value -- -- -- 75.00 Date 30-Jun-2014 22-Jan-2015 27-Aug-2015 30-Jun-2020 Baseline to be established based on 2015 taxpayer perception and compliance cost survey. Intermediate Results Indicator 12. Improved fiduciary management (Text, Custom) Value -- 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 quarterly fund utilization report to FD & complete fund release processes after each quarter. Date 12-Mar-2014 22-Jan-2015 27-Aug-2015 30-Jun-2020 Page 9 of 10
Overall The project team reached the 25 percent target of Nationally Competitive Bids using e-gp in fiscal year 2014/15. In year 2, the project team needs to procure 50 percent of e-gp contracts using e-gp. So far 10 contracts have been issued and all have used traditional methods. To achieve DLI, the targeted 10 contracts will need to be procured using e-gp. This is off-track and will require the attention of the project team. Quarterly Utilization Reports were shared with the Bank on June 17, 2015. Page 10 of 10