THE WORLD BAN WORLDBANKGROUP Date: A n10 c.t,u .z His Excellency Mr. Dumitru Budianschi Minister Ministry of Finance Chisinau Republic of Moldova Excellency, Re: Republic of Moldova: Tax Administration Modernization Project (Loan No. 8625-MD) Amendment No. 3 to the Loan Agreement We refer to: (i) the Loan Agreement between the Republic of Moldova (the "Borrower") and the International Bank for Reconstruction and Development (the "Bank") dated June 28, 2016, for the above-mentioned Tax Administration Modernization Project, as amended (the "Loan Agreement"); and to (ii) the Borrower's letter dated May 6, 2022, requesting certain amendments to the Loan Agreement. The capitalized terms used in this amendment letter (the "Amendment Letter") and not defined herein have the meanings ascribed to them in the Loan Agreement. We are pleased to inform you that the Bank agrees to amend the Loan Agreement as follows: 1. Part 3 of the Project Description set forth under Schedule 1 to the Loan Agreement is amended in its entirety to read as follows: "Part 3. IT Infrastructure and System Modernization Provision of support for (i) the purchase and installation of tax administration modernization tools, including the provision of relevant hardware and software, training regarding, its finctions, and (ii) the carrying out of a capability gap assessment to the STS IT and the development of technical specifications for an integrated tax management system". The indicators set out in Annex 1 to this letter shall serve as a basis for the Borrower to monitor and evaluate the progress of the Project and the achievement of the objectives thereof. The indicators set out in Annex 1 of this letter replace any previous version of the same. All the terms and conditions of the Loan Agreement that have not been amended hereby shall remain unchanged and in full force and effect. Please confirm your agreement with the foregoing by signing and dating the confirmation on the enclosed copy of this amendment letter and returning it to us. This Amendment letter shall be executed in two counterparts each of which shall be an original. This Amendment Letter shall become effective upon: (a) receipt by the Bank of: (i) one countersigned original; (ii) evidence that the execution and delivery of the Amendment Letter on behalf of the Borrower has been duly authorized by all necessary governmental action; and (iii) the updated Project Operational Manual acceptable to the Bank; and (b) dispatch by the Bank to the Borrower of the notice of its acceptance of the evidence required herein. Please note that the restructuring paper dated July 27, 2022 has been disclosed on the Bank's external website as per Bank's policy on Access to Information. Sincerely, INTERNATIONAL BANK FOR R ONSTRUCTION AND DEVELOPMENT Ing aDotraja Count Manager pldova The *orld Bank Europe and Central Asia Region CONFIRMED AND AGREED: REPUBLIC OF MOLDOVA By: Authorized Representative Name: - 7 ' . el Title: ol____I___C___ C-_ Date: Lc' LL.1 Annex 1 Results framework COUNTRY: Moldova Tax Administration Modernization Project Project Development Objectives(s) To support business survival and sustain employment in the context of the COVID-19 pandemic, through temporary tax relief, and improve taxpayer services in the Republic of Moldova Project Development Objective Indicators by Objectives/ Outcomes Intermediate Targets Indicator Name BC Baseline End Target 1 2 3 4 5 6 To improve taxpayer services There is no a Manual on All eligible staff The Manual is PBC: Strengthened the Manual on tapyr o h T,implemented and capacity of the STS Taxpayer taxpayer of the STS, all eligible staff of staff to deliver Services, the services is located in all taxpayer services staff had no developed and offices, are ocatdinal (Text) specific adopted by trained (DLR offices was trained trateiic STS (DLR 4.1)4.2). trainings. Pilot of the electronic taxpayer survey mechanism is Eval B t nNo tool for completed and uonou t PBC Itroucd a N tol or training on Roll-out ElCtroc a taxpayers' crses results for six The tool is Surool Text) BC 5 regular feedback ourses for the months of implemented. ElreTo Txayeris in place. designated implementation staff to support (DLR 5.2). the roll-out are conducted, and the roll-out is initiated (DLR 5.1) Intermediate Targets Indicator Name BC Baseline End Target 1 2 3 4 5 6 Single STS website launched with at least the following new features: - support to requirements of people with special needs; - single STS web page There are two which allow websites taxpayers to available (one for submit information only income Use of STS PBC: Improved the and another one statements website by New STS website usability of the STS for the electronicall taxpayers within is used by website (Text) BC 3 submission of tax y through 1 month of its taxpayers declarations by their launch taxpayers); there personal are some gaps in account the functionality created on of both websites. the site; - STS website is synchronize d with the state websites through the automated information exchange (open data); - new searching Intermediate Targets Indicator Name BC Baseline End Target 1 2 3 4 5 6 system which will reflect the final version of the legal documents, specifying all amendments and additions; - feedback mechanism is available through the online (chat). Legal entities - 83,9% and Individuals -Satisfaction Baseline 76,1%. increase - 10% survey Satisfaction (compared to conducted with increase - 10% baseline) data (compared to disaggregated baseline) Mid- Legal entities - by gender, project survey Final survey Taxpayer satisfaction 76,3% and results and conducted with conducted with (Text) Individuals - suggested data data disaggregated 69,2%. actions of the disaggregated by by gender. Results STS to address gender; results and suggested weaknesses are and suggested actions of the STS published on actions of the to address the STS STS to address weaknesses are website. weaknesses are published on the published on the STS website. STS website. Intermediate Targets Indicator Name BC Baseline End Target 1 2 3 4 5 6 Support business survival and sustain employment in the context of COVID-19 through temporary tax re At least 75%Atlat7%o beeficiary At least 75% of At least 75% of At least 75% of of beneficiary beneficiary firms beneficiary firms beneficiary firms firms that that received that received At least .75% of that received 75% of beneficiary received beneficiary firms subsidies based ssivds f subsidies based subsidies based teeived on eaed companies that subsidies for that received on expanded on expanded on expanded received subsidies Maintained No government the payment of VAT refund VAT refund subsidies for the VAT refund under the payroll employment and programs to allowances / m up to payment of mechanism from and expanded business survival in the support business salaries until August 31, 2020 September 1-30 allowances / October 1 to VAT refund context of the COVID- continuity and August 1, 2020 Auto 2 202 eptebe to salaries continue November 30, cnetothCOI- ssancniuto continue to 2020 continue to to operate in 2020 continue to mechanisms 19 pandemic, by BC 6 sustain continue to operate in operate in toer ind2020aconin continued temporarily providing employment in operate in Spebr20Ocor220 October 2020 andoperate in operation and tax relief (PBC 6) the context of August 2020 September 2020 October 2020 maintain reported December 2020 mainand (Text) COVID-19 and maintain and maintain and maintain employment on and maintain mploymen pandemic reported reported reported at least 60% level reported employment at employment employmentcompared to employment on on at least 60% at least 60% level at least 60% level April 2020 (DLR at least 60% level compared to April l compared to compared to 2020 level compared April 2020 (DLR April 2020 (DLR 6.4) compared to to April 2020 6.2) 6.3) April 2020 (DLR (DLR 6.1) 6.5) Intermediate Results Indicators by Components Intermediate Targets Indicator Name BC Baseline End Target 1 2 3 4 5 6 Institutional development Seven training Ten training Twelve training Training courses All identified courses to dsac Terining ystan support the courses to courses to with topics and distance learning Leaning distance learning support for the support the content of major courses to support the most important training training distance training distance training importance for for the most workflows developed programs is not programs programs programs STS placed on important (Text) identified programs identified by identified by the platform and workflows are (Text) identified by domains are domains are available for developed and domains are developed developed training. updated. developed. Initermediate Targets Indicator Name BC Baseline End Target 1 2 3 4 5 6 Number of hits to the STS web-site (Number 3,570,004.00 3,900,000.00 6,900,000.00 7,000,000.00 7,050,000.00 7,100,000.00 7,150,000.00 (Thousand)) IT Infrastructure and System Modernization Completion of IT Technical Set foundation for No evidence ComplnTax Gap Specifications for future STS digital inform antayi IT Capability a new IT system modernization strategy iormfutureit Assessment for for the tax (Text) strategy the tax administration are administration prepared RBF: Support in tax policy and tax administration reforms Decrease in tax arrears (Percentage) 8.50 6.68 6.67 6.48 6.48 6.48 The Government of Moldova submitted to the Parliament a draft Law on Changes to the Increased nominal Specific rates Tax Code aimed value of the specific and minimum at increasing the and minimal excise for rates by types of specific rate and The Parliament Increased B 1 bccprdcsthe minimum ratespcfcrtsSeicras all tobacco products tobacco products th approved the specific rates under tariff position BC 1 as set up in the for both Law (DLR 1.2) came into effect came into effect 240220 (PBC/DLI 1) Tax Code of cigarettes with (DLR 1.3) (Text) Moldova in 2017 filter and without filters on minimum 15% each for the year 2021 comparing to the excise rates from 2020 (DLR 1.1) Intermediate Targets Indicator Name BC Baseline End Target 1 2 3 4 5 6 Due to the legal gap in provisions The Government which stipulates submitted to the Ensured that supplies the process of Parliament a The Parliament of goods by insolvent debt cancellation'Draft Law on adopted the The adopted subjects are taxed with at the time Changes to the Changes to the changes to the Tax VAT on the reverse BC 2 transfer of Tax Code of Tax Code and Code came into charge principle collected VAT Moldova (Title 3 they come into effect (PBC/DLI 2) (Text) insolvent subject art 'effect. (DLR does not have 2.2.) (PBCDLI ) (Txt)doesnot ave 93,94,102,115) liquidity and this creates budget (DLR 2.1) losses. Support Maintaining Employment and Business Survival in the Context of COVID-19 Pandemic Regulation on Regulation on implementation implementation Established legal Legal of subsidies for of subsidies frameworks and frameworks for the payment of based on Public awareness Report on VAT transparent mechanisms to allowances/ expanded VAT campaign and Completion refund program Legal frameworks mechanisms for sustain tax salares is refund support to report on the Interim report on covering are established and menim foe revenue alarie is mechanism is taxpayers in i VAT Refund payments made reports on implementing the revenue approved and implementation temporary tax relief to collection amongprogram for applications implementation of businesses to mitigate BC 7 through support includes among others subsidies and Subsidies implementation received from Payroll Subsidies for the negative fiscal to business measures of includes VAT refunds are p is published start of program and VAT refund impact of the COVID- continuity that eligibility measures of introduced and program is L7. (DLR 7.5) until December programs are 19 pandemic (PBC 7) ensured efictio and eligibility ongoing (DLR public (DLR 74) 2020 is published available transparency are . verification and 7.3) (DLR 7.6.) (Text) not available grievance grievance mechanisms mechanisms (DLR 7. 1) (DLR 7.2)