The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P163673) Tax Administration Modernization Project (P163673) EUROPE AND CENTRAL ASIA | Serbia | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2019 | Seq No: 6 | ARCHIVED on 24-Jun-2022 | ISR50137 | Implementing Agencies: Republic of Serbia, Serbian Tax Administration Key Dates Key Project Dates Bank Approval Date: 24-Apr-2019 Effectiveness Date: 03-Jul-2019 Planned Mid Term Review Date: 01-Dec-2022 Actual Mid-Term Review Date: Original Closing Date: 31-Oct-2024 Revised Closing Date: 31-Oct-2024 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) To improve effectiveness of tax collection and lower the compliance burden for taxpayers. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Legal Environment:(Cost $0.81 M) STA Organization and Operations:(Cost $8.20 M) ICT System and Records Management Modernization:(Cost $40.67 M) Project Management and Change Management:(Cost $2.32 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status and Key Decisions Implementation progress continues to improve. All pre-requisites to prepare the bid documents for the Integrated Tax Management System are now in place. Work on records management was initiated in January 2022 while the work on the HR and Training Strategy is expected to commence in July 2022. 6/24/2022 Page 1 of 7 The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P163673) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Moderate Moderate Macroeconomic Moderate Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Substantial Substantial Moderate Institutional Capacity for Implementation and Substantial Moderate Moderate Sustainability Fiduciary Substantial Substantial Moderate Environment and Social Low Moderate Low Stakeholders Low Low Low Other Low Substantial Low Overall Substantial Moderate Moderate Results PDO Indicators by Objectives / Outcomes Improve effectiveness of tax collection IN01098603 ►Reduction of VAT gap (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.20 10.20 10.20 8.00 Date 21-Jan-2019 18-Nov-2021 08-Jun-2022 31-Dec-2024 No change from baseline. This indicator is designed to be measured at mid-term and end-of-project. The indicator measures improvement in the effectiveness of tax collection. The reduction of the value added tax (VAT) gap would serve as an indicator of improved tax compliance through higher effectiveness of tax administration as a result of modernization of the STA. Comments: The baseline has been calculated in January 2019 using the latest reliable national accounts statistics (for the year 2015). Update of the VAT gap calculation using latest available data is under discussion between STA and the Bank. Conduct of a VAT gap analysis is also under discussion with the International Monetary Fund (IMF). IN01098605 ►Increase in additional net taxes assessed per audit (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value RSD882,823 RSD 1,056,502 RSD 1,555,743 Increase by 10% 6/24/2022 Page 2 of 7 The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P163673) Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 The indicator measures improvement in the effectiveness of tax collection. Increased additional net taxes assessed as a result of audit will measure improved effectiveness of audit planning process and quality of audit. The indicator will measure additional net tax assessed per audit calculated by adjusting additional Comments: tax assessed for the amount of the reduction of assessed tax due to administrative or court appeals. The BPR contract was signed on May 24, 2021 and is the foundation for further improvements in this indicator. Lower the compliance burden for taxpayers IN01098604 ►Time required to comply with taxes - WB Doing Business Paying Taxes subindicator (Hours, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 225.50 225.50 225.50 202.90 Date 29-Dec-2017 08-Jun-2021 08-Jun-2022 31-Dec-2024 This indicator will be replaced following the discontinuation of the Doing Business reports. A replacement Comments: will be discussed during the mid-term review of the Project in end-2022. IN01098641 ►Percentage of taxpayers reporting that the experience of taxpayer services: i) STA website; ii) STA call center, has improved (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Website: 57; call center: 49; survey results are posted on Website: 48; call center: Website: 50.6; call Website: 69.4 Call the STA website and Value 41 center: 48.4 center: 73.8 an Action Plan in response to survey results is developed and implemented. Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 Data from Source: Tax Payer Survey in Serbia – Wave IX, December 2021, Taxpayer satisfaction and experience with STA (not funded by TAMP). Comments: Intermediate Results Indicators by Components Component 2: STA Organization and Operations IN01098642 ►Separation of core and non-core tax administration activities (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Separate work streams Achieved - Separate Separate work Identification of core and for core and non-core tax work streams for core streams for core and non-core tax Value administration activities and non-core tax non-core tax administration activities within STA established administration administration completed and operational activities within STA activities within STA 6/24/2022 Page 3 of 7 The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P163673) established and established and operational operational Date 30-Sep-2018 18-Nov-2021 08-Jun-2022 31-Dec-2024 The indicator will measure implementation of a crucial organizational change within the STA which will be Comments: supported by the project. Target value has been achieved as a commitment under the IMF Program. IN01098644 ►Increase in on-time e-filing rate for PAYE witholding tax (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 86.94 89.79 92.38 95.60 Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 Data for CY2021. The indicator will measure increase in on-time e-filing rate of PAYE withholding tax by employers. The Comments: BPR contract was signed of May 24, 2021 and is the foundation for further improvements in this indicator. IN01098646 ►Decrease in tax arrears (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 61.00 68.24 38.26 40.00 Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 Data for CY2021. Share of tax arrears at the end of the year in tax revenues collected during the year. The BPR contract Comments: was signed on May 24, 2021 and is the foundation for further improvements in this indicator. The CY2021 data demonstrates that the end-target value is achieved. IN01098648 ►Decrease in uncollectable tax arrears (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 31.00 38.99 19.49 27.00 Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 Data for CY2021. Share of uncollectable tax arrears in total tax revenue. The BPR was signed on May 24, 2021 and is the Comments: foundation for improvements in this indicator. The CY2021 data demonstrates that the end-target value is achieved. IN01098650 ►Improvement in taxpayer satisfaction with the appeals process in terms of impartiality and efficiency (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Not available. Taxpayer survey to be conducted Impartiality 38.1 Impartiality: 39.3 Value in the first year of the Improvement by 10% Efficiency 31.0 Efficiency: 35.2 project implementation to provide baseline. 6/24/2022 Page 4 of 7 The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P163673) Date 23-Jan-2019 18-Nov-2021 08-Jun-2022 31-Dec-2024 Data from Tax Payer Survey in Serbia – Wave IX, December 2021, Appeal procedure for first instance decision of tax authorities (funded outside of TAMP). Comments: IN01098651 ►Percentage of taxpayers reporting satisfaction with their interaction with the tax administration (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 71.3 (survey results 70.8 (survey results are 79 (survey results are 85 (survey results are are disaggregated by disaggregated by gender disaggregated by gender disaggregated by Value gender and not and not published on the and not published on the gender and published published on the STA STA website) STA website) on the STA website) website) Date 30-Sep-2018 18-Nov-2021 08-Jun-2022 31-Dec-2024 Data from the Tax Payer Survey in Serbia – Wave IX, December 2021, Appeal procedure for first instance decision of tax authorities (not funded by TAMP). The deterioration needs further analysis including the Comments: potential impact of COVID-19. Component 3: ICT Tools System Modernization IN01098643 ►Increase in number of STA staff trained in National Archives processes (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 75.00 Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 The indicator measures number of STA staff that will be trained in National Archives processes. Related Comments: project activity has yet to be initiated. IN01098645 ►Increase in on-time e-filing rate for PAYE withholding tax (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 86.94 89.79 92.38 95.60 Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 Data for CY2021. The indicator measures an increase in on-time e-filing rate of PAYE withholding tax by employers. The Comments: BPR contract was signed on May 24, 2021 and is the foundation for further improvements in this indicator. IN01098647 ►Increase in the number of offices with duly cleared paper records (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 18.00 6/24/2022 Page 5 of 7 The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P163673) Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 The indicator will measure number of offices with paper records either destroyed or transferred to the National Archives under an officially approved retention schedule. Relevant project activity has yet to be Comments: initiated. IN01098649 ►Improved case management process for enforcement and tax collections (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target No change from No change from The new automated case baseline. The new baseline. The new The majority of routine management system is automated case automated case enforcement activities Value used to direct actions in management system is management system are conducted using enforcement and used to direct actions in is used to direct the case management collections. enforcement and actions in enforcement system. collections. and collections. Date 31-Dec-2017 18-Nov-2021 08-Jun-2022 31-Dec-2024 This indicator measures the establishment of a comprehensive case management process for enforcement and tax collections. The BPR contract was signed on May 24, 2021 and is the foundation for Comments: improvements in this indicator. Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P163673 IBRD-89360 Effective USD 52.00 52.00 0.00 5.31 46.59 10% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P163673 IBRD-89360 Effective 24-Apr-2019 07-May-2019 03-Jul-2019 31-Oct-2024 31-Oct-2024 Cumulative Disbursements 6/24/2022 Page 6 of 7 The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P163673) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 6/24/2022 Page 7 of 7