Republic of Tajikistan PROGRAM-FOR-RESULTS Tajikistan Tax Reform (P171892) Environmental and Social Systems Assessment (ESSA) World Bank March 2021 P171892 – Tax Reform Program in Tajikistan Environment and Social Systems Assessment (ESSA) ACRONYMS AND ABBREVIATIONS ADB Asian Development Bank BFRs Brominathd Flame Retardants CEP The Committee for Environmental Protection under the Government of the Republic of Tajikistan CIT Corporate income tax DLI Disbursement Linked Indicator EBRD European Bank for Reconstruction and Development EIA Environmental Impact Assessment ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan ESSA Environmental and Social Systems Assessment GBV Gender-based violence GDP Gross Domestic Product GoT Government of the Republic of Tajikistan HRMIS Human Resources Management Information System IFIs International Financial Institutions IPF Investment Project Financing IR Intermediate Result ITMIS Integrated Tax Management Information System M&E Monitoring and Evaluation MOF Ministry of Finance NGOs Non-governmental organizations OECD Organization for Economic Co-operation and Development PAP Program Action Plan PDO Program Development Objective PforR Program for Results PIT Personal Income Tax PIG Project Implementation Group POM Project Operational Manual PVC Polymerizing vinyl chloride SEA Sexual Exploitation and Abuse SIGI Social Institutions and Gender Index SSSHCSP Service of state supervision of health care and social protection of the population TARP Tax Administration Reform Project TC Tax Committee VAT Value Added Tax WB World Bank ii Table of Contents EXECUTIVE SUMMARY ............................................................................................................... 2 SECTION I - INTRODUCTION........................................................................................................ 9 Country and Sector Context......................................................................................................... 9 Program for Results Description and Boundary Setting ...................................................................10 SECTION II - ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT – ESSA .....................................14 ESSA Objectives ........................................................................................................................14 Excluded Activities ....................................................................................................................16 Consultations and Disclosure of ESSA...........................................................................................16 SECTION III - LEGAL AND REGULATORY FRAMEWORK APPLICABLE TO ENVIRONMENTAL ASPECTS OF THE PROGRAM FOR RESULTS .....................................................................................................17 SECTION IV – LEGAL AND REGULATORY FRAMEWORK APPLICABLE TO SOCIAL ASPECTS OF THE PROGRAM FOR RESULTS ...........................................................................................................17 SECTION V – ENVIRONMENT MANAGEMENT SYSTEM...................................................................18 General Assessment of the PforR Environmental Benefits and Risks .................................................18 Environmental Management System in Program ...........................................................................19 Institutional Capacities to Manage Environmental Aspects of the PforR ............................................21 Gaps/Risks of Environmental Management Systems ......................................................................21 SECTION VI – SOCIAL MANAGEMENT SYSTEMS ............................................................................23 Overview of the Social Management System.................................................................................23 Overview of Social Risks and Benefits ..........................................................................................23 Stakeholder Mapping ................................................................................................................24 Gender Aspects ........................................................................................................................26 Implementation of Social Management System: Institutional Capacity .............................................28 Citizen Engagement and GRM.....................................................................................................29 Social System Assessment and Identification of Gaps .....................................................................30 SECTION VII – ASSESSMENT OF PROGRAM CONSISTENCY WITH CORE PRINCIPLES OF PROGRAM FOR RESULTS ..................................................................................................................................32 SECTION VIII – ENVIRONMENTAL AND SOCIAL KEY ACTIONS: INPUT INTO THE PROGRAM FOR RESULTS ACTION PLAN...........................................................................................................................34 SECTION IX – CONSULTATION AND DISCLOSURE ..........................................................................36 ANNEX 1: ENVIRONMENTAL AND SOCIAL LEGAL AND REGULATORY FRAMEWORK ..........................37 ANNEX 2: ACTION PLAN SUMMARY OF ENVIRONMENTAL AND SOCIAL MEASURES..........................42 ANNEX 3: STAKEHOLDER CONSULTATIONS HELD..........................................................................44 ANNEX 4. BENEFICIARIES AND STAKEHOLDERS’ EXPECTATIONS, ISSUES AND CONCERNS RELATED TO THE PROGRAM ........................................................................................................................47 ANNEX 5. COMPLAINTS HANDLING MECHANISM AT THE TAX COMMITTEE .....................................50 ANNEX 6. A MULTI-STAKEHOLDER VIRTUAL DISCLOSURE WORKSHOP MINUTES ..............................53 1 EXECUTIVE SUMMARY Introduction 1. Tajikistan’s National Development Strategy (NDS) sets a target of increasing domestic incomes by up to 3.5 times and reducing poverty by half by 2030. Domestic revenue mobilization is one of the top policy priorities to facilitate the required fiscal consolidation in a context of an already high level of debt. The Government declared its intention to continue reforming its tax administration after the five-year Tax Administration Reform Project (TARP) with the support of the World Bank was completed. Consequently, it adopted a program “Tax Administration Development Program for Tajikistan 2020 -2025” which will be supported by the World Bank. 2. The Bank will support a hybrid program financed through a Result-Based Component (US$37.50 million) and Investment Project Financing (IPF) component (US$12.50 million). The result-based financing component (Program for Results) will cover the Government Program Action Plan activities. The IPF component will finance procurement of selected complex expertise, software and software development, where international expertise and international bidding is critical to ensure relevant ICT systems and infrastructure are in place for the Program to achieve its results. The IPF component will also finance Program implementation and management including financing of the Project Implementation Group (PIG). This document covers the Program for Results. 3. Since the Tax Reform Program in Tajikistan PforR relies on the borrower’ s fiduciary, procurement, and environmental and social systems, World Bank teams carried out assessments of those systems and developed a program action plan (PAP). This plan will bring those systems into compliance with World Bank policies and performance standards, as well as with the six core environmental and social principles for environmental and social systems. 4. The current document presents the Environmental and Social Systems Assessment (ESSA) report that has been prepared by the World Bank for the proposed PforR – Tajikistan Tax Reform. The ESSA includes the following information: an introduction of the PforR; a summary of environmental and social risks and benefits associated with activities for achieving the Program Development Objective (PDO) and the Disbursement Linked Indicators (DLIs) for each Results Area of the PforR ; an assessment of the borrower’s environment and social management systems which apply to these activities; an evaluation of the borrower’s performance and track record in implementing its environment and so cial management systems; an assessment of the extent to which the borrower’s environment and social management systems are consistent with the six core environment and social principles of the World Bank Policy; and recommendations and actions the borrower has agreed to undertake to improve the implementation of applicable systems. Program Description 5. The Program Development Objective is to simplify the tax system, enhance quality of taxpayer services, and improve voluntary compliance. 6. The selected activities of the Government program are supported by the PforR and organized under three Results Areas - Results Area 1: Simplified Tax System; Results Area 2: Improved Quality of Taxpayer Services ; and Results Area 3: Improved Voluntary Compliance. There are seven DLIs for the achievement of the PDO: 2 • DLI1 - Selected tax and customs incentives eliminated (PDO Indicator 1). The achievement of the DLI will require that the new edition of the Tax Code of the Republic of Tajikistan approved by the Government, ratified by the Parliament and available on one of the official web-sites (www.adliya.tj, minfin.tj, andoz.tj ) excludes incentives under the preferential tax regimes for the new taxpayers under following economic activities and groups of taxpayers: (a) Construction of hydro power plants (for the investor and general contractor) (b) Supply of manufactured products by the investor implementing a production sharing agreement. • DLI2 - Regulatory foundations for the improved tax system established. The DLI will promote the development of critical secondary legislation to allow for implementation of the new Tax Code. The achievement of the DLI will require that (1) the Government requests the MoF, TC and other relevant ministries and agencies to develop and approve the required secondary regulations under the new edition of the Tax Code have been issued; (2) the Borrower has drafted, approved and published on one of the official web-sites the required secondary regulations, listed in the Borrower’s official requests for MoF, TC and other relevant ministries and agencies of RoT to develop and approve the required secondary regulations under the new edition of the Tax Code in form and susbstance satisfactory to the Bank. • DLI3 - Improved transparency of tax expenditure. The achievement of the DLI will require that annual tax expenditure reports are developed and published with the annual draft republican budget and cost - benefit analysis of selected tax incentives. It will require that (1) tax expenditure report, which includes information on tax expenditure with the estimate of the revenue foregone as a result of tax incentives/exemptions and concessions and “benchmarking” tax exemptions by impact on revenue, is published with the annual draft budget that is submitted to Parliament at the MoF web-site; (2) cost- benefit analysis of two to four targeted tax incentives/ exemptions, having the highest impact on revenue, is submitted and published with the draft annual republican budget at the MoF web-site. • DLI 4 - Reduced burden of tax audit. The achievement of the DLI will require that (1) risk assessment methodology, enhanced based on relevant international experience, is approved by TC; (2) at least 90% of field audits of large taxpayers, registered in TC Large Taxpayers Directorate and regional TC offices for large taxpayers, during a period of the Government financial year (starting January 1 and ending December 31) are conducted for cases selected by the risk-based selection tool and monitored by Compliance Risk Management Unit. • DLI 5 - Percent of VAT refunds that are processed using risk-based verification or fast track procedures. The achievement of the DLI will require that up to 95 percent of all VAT refunds are processed using risk-based verification or fast-track procedures by the end of the Program. • DLI 6 - Taxpayer service standards are enhanced and based on taxpayer feedback. The achievement of the DLI will require that (1) taxpayer feedback mechanism is established and functional in the Taxpayer Contact Center; (2) annual reports on taxpayer feedback, collected through the taxpayer feedback mechanism, are published at TC website annually in 2024-2026; and (3) a Unified Standard for Taxpayer Service is revised based on taxpayer feedback and published at TC website. • DLI 7 - Improved representation of women in management positions in TC workforce. The DLI will address gender gap in managerial positions of TC workforce. The achievement of the DLI will require that (1) an action plan to address gender gap in TC workforce is developed and approved by TC management; (2) women in TC managerial positions out of all staff in managerial positions comprise 11%. 3 Environmental and Social Risks and Benefits of the Proposed Program 7. In preparing the ESSA the team identified that the environmental risks are low, and the social risks are moderate, which contribute to the overall Environmental and Social Risk being ‘Moderate’ . In summary, the potential risks associated with the Program can be mitigated through a series of measures that are included in the Program Action Plan (PAP). 8. The results of the environmental screening suggest that the majority of activities, which will be supported under the PforR, will have limited environmental impacts. Some minor works related to the upgrade of the information and communication technology (ICT) infrastructure of the tax offices (central, regional and local) to be supported under Result Area 2 could result in the generation of electronic waste. If this waste is not recycled and disposed of in an environmentally sound and safe manner, it may cause impacts on human health and the environment. These risks can be mitigated within the current system/procedures with the development and adoption of electronic waste management procedures. The environmental risks are rated ‘Low’. 9. The assessment of potential social risks from the Results areas and DLIs identified under the program are expected to have positive effects in the tax policy analysis and tax administration systems. The PforR will contribute to improved transparency, accountability of the Tax Committee and fiscal discipline among a diverse range of taxpayers. Also, it should ease taxpayers’ access to the improved quality of tax administration services due to renovated ICT infrastructure. It is particularly important during a crisis like the COVID-19 pandemic when in person contacts should be limited. However, some social gaps identified in the system relate to limited citizen engagement and poorly maintained two-way communications with taxpayers, as their opinions and perceptions have been surveyed, but rarely substantively considered by the policy- and decision-makers in the country. In this regard, the social risks may arise from broader public behavioral response to new tax procedures and Tax Code amendments being introduced and the potential resistance from the private sector to the fiscal discipline measures. These risks are to be mitigated by sizeable communications and taxpayer outreach and education activities, which are described in the PAP and budgeted for in the program expenditure framework. The social risk of the PforR is rated ‘Moderate’ . Assessment of Borrowers Systems 10. In preparing the ESSA, an assessment of the legal and regulatory framework, as well as the capacity of potential implementing and associated agencies to manage the potential environmental and social effects of the PforR was carried out. The assessment of the environmental and social management systems found that the existing legal and regulatory framework addresses the identified direct, indirect, induced, and cumulative social and environmental effects for the planned PforR; however, capacity for enforcing those regulations among respective agencies is mixed and will require strengthening as part of the PforR Action Plan. In addition to mitigating the risks identified, the Program Action Plan will address shortcomings by strengthening the capacity of the implementing agencies and their linkages with the regional and local branches. Hence, the Program Action Plan includes environmental and social management capacity strengthening of the relevant institutions. This includes not only technical knowledge but also environmental and social risk management, and financial capacity to operate the system as designed. 4 Adequacy of the Legislative Framework and Borrower’s Capacity on Environmental and Social Aspects 11. Adequacy of the Legislative Framework on Environmental Aspects. The Government of the Republic of Tajikistan has enacted a range of laws, regulations, and procedures relevant t o the management of environmental and social effects of the proposed PforR. The legal and regulatory framework is sufficient to guide the system and procedures for managing environmental risks that were identified during PforR preparation. The existing laws, regulations, norms, and procedures govern the procedure for environmental monitoring of activities, including electronic waste collection, reuse, and recycling. 12. Adequacy of the Legislative Framework on Social Aspects. The legal and regulatory framework at the national and local levels provides an adequate and appropriate enabling framework for implementing the key activities to be supported under the Program. Responsiveness to taxpayer and complainants’ inquiries/questions and public accountability are adequately covered by the legal framework at different levels. The legislation highlights the importance of the state’s commitment to serving and ensuring citizen protection, in general, and to the taxpayers and people to be affected by the project in particular. The laws on personal data protection, consumer rights; grievance redress; and ethics codes in place stipulate rules governing fair taxpayer services; and the tax system reforms to be implemented during the program implementation conform to these laws and codes. The PforR Environmental and Social Systems Analysis 13. The Program environmental systems analysis led to the following conclusions that the Borrower’s system has the following Strengths: (1) adequate environmental legislation and regulations at the national level for conducting environmental impact assessments relevant to the PforR, (2) an adequate network for environmental protection offices at the district level; (3) a disposal procedure for the state-owned equipment that contain precious metals, which is also adopted by Tax Committee (TC); (4) experience of the TC in implementation of a World Bank (WB) project. However, some gaps were identified as well: weak environmental management capacity at TC central, regional and local offices. There is neither policy/legal frameworks nor procedures/management system identified to deal with electronic wastes from an environmental safeguards point of view. 14. The Republic of Tajikistan has well defined legal and regulatory framework at the national and local levels that provides an adequate and appropriate enabling framework for implementing the key activities to be supported under the Program. Responsiveness to taxpayer and complainants’ inquiries/questions, and public accountability are adequately covered by the legal framework at different levels. There is a commitment by the implementing agency (TC) to strengthen the existing GRM at all levels. The legislation highlights the importance of the state’s commitment to serving and ensuring citizen protection, i n general, and the taxpayers and people to be affected by the project in particular. A Targeted Social Assistance Program and Program of Social Benefits are implemented nation-wide. The laws on personal data protection, consumer rights, labor rights, grievance redress, and ethics codes in place stipulate rules governing fair taxpayer services and will apply to the tax system reforms to be implemented during program implementation. Despite the existing system strengths on social aspects discussed above, some gaps were identified, and the gaps are mostly attributed to governance/institutional responsibilities, capacity, and communication outreach issues. 15. The Table below summarizes the potential mitigation measures identified for environmental and social gaps and risks for the Program. 5 Results Areas Environmental and Social Gaps and Risks Potential Mitigation Measures Result Area 1: Simplified Tax •Gap in the capacity to manage e-wastes; •ESMP with e-waste management System. •Gaps in the capacity building of ICT staff procedures will be developed and and ICT skills of tax administrators; implemented; •Gap in the capacity to implement •A comprehensive ICT capacity building continuous training and improving action plan for tax staff will be developed employee knowledge; and implemented; •Risk of negligible environmental impact •A system of continuous in-service training due to improper management of e- and on-job mentorship should be wastes; developed, annual staff training plans and •Risk of non-compatible information on-job-training will be implemented to systems with other government agencies, improve the qualifications of employees; which increases the time and cost for tax •Interagency information system compliance for taxpayers; compatibility assessment will be •Risk of resistance to ICT changes and conducted to fill in the gaps to reduce reforms on behalf of tax administrators time costs of taxpayers; •Risk of social implications from the Tax •Conduct meaningful stakeholder Code amendments, particularly related to consultations, analyze social implications the elimination of selected tax incentives before introducing new tax amendments; for specific subsectors; •Take into account the environmental • The environmental risks associated with impacts of the alternative sources of alternative energy sources that may energy and stimulate less-polluting forms replace new hydropower plants; of energy production (renewable), rather •The environmental risks of developing than sources causing pollution (e.g. coal alternative sources of materials as a result power); of reduced mining activities. •Assess the overall impact of alternative sources of materials on the environment. Area 2: Improved quality of •Gaps in public outreach and securing •Taxpayer Communication Plan is taxpayer services public access to tax expenditure plans as developed, implemented and part of the draft annual republican institutionalized; budget disclosure; •Taxpayer feedback mechanism is •Gaps in taxpayer education and feedback institutionalized at the Call Center and its mechanisms; staff capacity is built; •Gap in interaction of taxpayers with tax •Tax service centers will be established in authorities in electronic form; nearly all local tax authorities, if possible, •Gap in poor knowledge of taxpayer rights in some rural densely populated areas and obligations; where taxpayers have no access to •Gap in taxpayer feedback mechanism internet; given only one-way communication •Annual taxpayer education and •Risk of social tensions in response to non- communication plans are developed and participatory proceedings on implemented in all tax authorities; enforcement of new tax regulations and •Effective grievance redress mechanism is lack of tax expenditure reporting; established and maintained in tax offices •Risk that quality and accessibility of tax of different levels; services in remote areas is not adequate; •Effective methods for taxpayer education •Risk of limited coverage of taxpayers by and awareness are developed and educational and outreach activities. applied. Area 3: Improved Voluntary •Gaps in capacity to conduct a •Capacity-building activities for Compliance consolidated, systematic and focused professional staff in compliance risk analysis of compliance risks and to management and tax audit functions in systematically analyze trends and risk management, risk-based audit and performance indicators for different trend analysis will be implemented; taxpayer segments, industries and tax •Tax audit schedule and compliance obligations. requirements will be publicized; •Risk of frequent time‐ and resource‐ •Meaningful stakeholder consultations are intensive tax inspections of taxpayers to held on a regular basis; be continued. •Analysis of social implications of new tax •Risk of broader public behavioral provisions is completed before any tax 6 response to new tax procedures and Tax amendments introduced; Code amendments; •Sizeable communications and taxpayer •Risk of resistance to the transition from outreach and education activities are informal to a formal business mode in completed based on the Taxpayer order to keep practicing tax evasion, as Communication Plan. well as push back from specific stakeholder groups, such as grey or illegal importers. 16. The Stakeholder Engagement Plan (SEP) will be prepared by the TC, which covers the whole program to make it inclusive. It details the stakeholders relevant for both the Program and IPF Component and the project’s arrangements to be engaged with them during preparation as well as during implementation. The institutional capacity of the Implementing Agency to interact with stakeholders can be further strengthened to effectively manage social effects in accordance with the Core Principles. Stakeholder Consultation 17. Stakeholder consultations were an integral part of the ESSA process and were carried out in line with principles and objectives of similar Bank operations. The consultations with key implementing agencies were completed during the period between September and November 2020. The consultations with agencies responsible for implementing DLIs, more specifically the staff who are responsible for administering the program and managing social and environmental regulations, grievance management systems and field staff implementing the laws and regulation were presented at the discussions. Due to the outbreak of COVID-19, most consultations were carried out virtually. 18. The Bank team during its virtual missions made a presentation on the content of the PforR and provided opportunity for environmental and social specialists to describe ESSA requirements and process, including World Bank Core Principles. The participants of the consultation noted that the PforR aims to achieve a set of results – DLIs on tax services - with improved environmental and social aspects. 19. A multi-stakeholder virtual disclosure workshop was organized on February 2, 2021 in Dushanbe by the World Bank E&S team. It was attended by a group of diverse stakeholders from across Tajikistan. The workshop participants included business associations, government representatives, civil society, private sector, international donor agencies, and representatives of non-government organizations. Major feedback received from the public consultation was incorporated into the final ESSA. Notes from the workshop are enclosed in Annex 6. 20. For easy and fuller understanding, the draft ESSA was translated into Russian and disclosed on the TC and World Bank websites. The online consultation period was open during February 1-16, 2021. Two written comments were received from the CSOs and local experts and have been incorporated into the ESSA Report. Recommendations and Proposed Actions 21. The specific actions with the timeline and responsible agency are recommended by the ESSA Action Plan. It proposes five mitigation actions across three main areas: governance; training & capacity building; and communications, outreach & feedback mechanisms. The following actions were recommended to be included in the Program Action Plan: • Governance: 7 o A1. Hire E&S Specialists responsible for (1) communication and outreach, (2) outreach to taxpayers to ensure compliance, and (3) environmental and social risks mitigation, monitoring, and reporting by the PIG. 1 o A2. Perform a gap analysis of licensed e-waste management facilities in Tajikistan against the Bank’s requirements/GIIP prior to sending e-waste to the facility and update ESMP to include corrective actions to address any identified material issues. Implement and report on the ESMP with e-waste management procedures; o A3. Establish taxpayer service centers in all district-level tax authorities, and if possible in some rural densely-populated jamoats (sub-districts), where taxpayers have no access to the internet; • Training and Capacity Building: o A4. Modernize, strengthen and implement the system of continuous in-service training and on-job mentorship to improve the qualifications of employees with a specific focus on women promotion, including development and implementation of an action plan for tax staff ICT capacity building; • Communications, Outreach and Feedback Mechanisms : o A5. Prepare and implement Taxpayer Communication Plan with strengthened taxpayer feedback and grievance redress mechanisms (GRM) at the Call Center and local tax offices. 1 PIG should be staffed with adequate professional, fiduciary, envi ronmental and social risk management, administrative and technical personnel, with qualifications, experience and terms of employment acceptable to the Bank, as described in the Program Operations Manual. 8 SECTION I - INTRODUCTION Country and Sector Context 1. Tajikistan is a land-locked, mountainous country in the heart of Central Asia, bordering the Kyrgyz Republic and Uzbekistan to the north and west, China to the east, and Afghanistan to the south. Only seven percent of the country’s total land area is arable. The high mountain ranges make communication between different parts of the country difficult, especially in winter. Adding to these geo-economic weaknesses, Tajikistan is one of the most vulnerable countries in the region to the impact of climate change and natural disasters. 2. Nevertheless, between 2000 and 2019, the poverty rate fell from 83 to 26.3 percent of the population, while the economy grew at an average rate of seven percent per year. Vast inflows of remittances sent by its large and increasing number of migrants, worth between a half and a third of GDP during 2015-19, have helped to reduce poverty. Strong GDP growth, supported by high public expenditures and remittances, continued in 2019, remaining robust at 7.2 percent year-on-year in the first three quarters of 2019. This has fueled domestic consumption and public investment. 3. Since Tajikistan is located in a region with a long history of disrupted trade flows, its economy is exposed to prolonged inward orientation and centralized management. This has resulted in a large, state‐operated sector and underdeveloped markets with low rates of private investment and exports, thus limiting sustainable GDP growth and a faster rate of poverty reduction. 4. The private sector in Tajikistan contributes to only 15 percent of total investment, produces about 30 percent of industrial output, and accounts for just 13 percent of formal employment. While the government has made notable progress in improving its business climate according to Tajikistan’s Doing Business 2020 report, Tajikistan continues to underperform in several i mportant areas, including “Getting Electricity”, “Resolving Insolvency”, “Dealing with Construction Permits”, and “Paying Taxes”. 5. Taxation issues are the most challenging for the private sector in Tajikistan. Due to weak tax administration, the burden of taxation rests disproportionately on a small number of formal firms, while also creating disincentives for small firms and producers to formalize their businesses and constraining their growth potential. 6. The COVID-19 pandemic crisis and its associated economic slowdown are expected to lower government revenues relative to GDP, especially because: (i) tax bases tend to decline faster than GDP in the face of an economic downturn (profits, capital gains, excises, and imports tend to decline faster than GDP during a recession); (ii) the Tajik authorities approved crisis response measures in June 2020 which included tax deferral with exit clauses; (iii) revenue performance may have been harmed by the increased rate of non- performing loans (NPLs), by worsened taxpayer compliance and the inability of tax administrations to maintain business as usual. These potential fiscal impacts will place increased emphasis on the country’s efforts to enhance the robustness of its tax system. 7. The country’s macro-fiscal context suggests that domestic revenue mobilization remains a top policy priority to facilitate the required fiscal consolidation in a context of an already high level of debt. Tajikistan’s total tax effor t was still close to the average for lower-middle-income countries. There was a notable increase in the number of active taxpayers between 2012 and 2019: the total number of active taxpayers increased by 88.5% and corporate income tax (CIT) taxpayers increased by 114%. The largest share of tax revenue comes from value-added tax (VAT) on imports, followed by VAT on domestic transactions, followed by personal income tax (PIT) and corporate income tax. Despite the positive developments, more revenues from low-distortion taxes are needed to support Tajikistan’s robust 9 development agenda of poverty reduction, social service delivery, and infrastructure upgrade and expansion. 8. Over the past five years with the support of the World Bank Tax Administration Reform Project (TARP), the GoT has undertaken several activities to improve tax administration, including implementation of a comprehensive Integrated Tax Management Information System (ITMIS) and Human Resources Management Information System (HRMIS) and related hardware components; introduction of mechanisms and methodologies to fight tax evasion as well as increase Tax Committee (TC)’s staff professionalism and work ethics, expected to reduce avenues for corruption; introduction of 40 electronic taxpayer services; and establishment of a communication center. In general, these achievements helped to attain a recent boost in revenue collection. 9. The government is committed to implementing further reforms to improv e Tajikistan’s business environment. Despite efforts in the right direction, however, past reforms have yet to create the desired effect of notable growth in small and medium enterprises. The government recently adopted the “Tax Administration Development Program for Tajikistan 2020-2025” and new amendments to the Tax Code are expected to be approved by the beginning of 2021, but the TC and MoF will need support to implement the program and the new tax policy. Program for Results Description and Boundary Setting 10. The Government Program “Tax Administration Development Program for Tajikistan 2020-2025” (the Program)2 has been developed to address priorities of the National Development Strategy of the Republic of Tajikistan for the period up to 2030 and to modernize tax administration based on the lessons from international practice. The Program acknowledges the development of tax administration as an essential element of economic reforms in the Republic of Tajikistan, pursuing improvements in the business environment and investment climate, enhancing the competitiveness of the national economy and building a digital economy. The ultimate objective of the Government Program is to address challenges of the shadow economy and constraints in revenue collection through tax policy improvements, support to voluntary compliance and enhancing the quality of taxpayer services. The activities under these areas of the original Government Program will contribute to the achievement of these three major development outcomes, where the critical results of the Program are planned. 11. The Bank and the GoT have agreed on the following PDO to measure the results of the Government Program under the World Bank-financed operation: Improved quality of the tax system, voluntary compliance and quality of taxpayer services. 12. The PforR will support t he Government’s Program (2020-2025) implementation during 2021-2026 providing financing required to achieve results in three agreed Results Areas: 1) Simplified Tax System; 2) Improved Quality of Taxpayer Services; and 3) Improved Voluntary Compliance. The Government Program activities are defined under four thematic areas, but they are aligned with the three Result Areas under the World Bank-financed operation. 13. The Program will be a hybrid program financed through a result-based component (US$37.50 million) and IPF component (US$12.50 million). The result-based financing component of the Program will cover the Government Program Action Plan activities. The IPF component will finance procurement of selected complex expertise, software, and software development, where international expertise and international bidding is critical to ensure relevant ICT systems and infrastructure are in place for the Program to achieve 2 Approved by the GoT Resolution No.643 on December 30, 2019. 10 its results. The IPF component will also finance Program implementation and management including financing of the Project Implementation Group (PIG). Results Area 1: Simplified Tax System. The amendments to the Tax Code of the Republic of Tajikistan, introducing cost-benefit analysis of tax incentives and improvement of tax incentives transparency, simplification of tax reporting requirements and harmonization of tax and financial accounting reporting for selected taxes under Area 1 of the Program are expected to result in improved quality of the tax system. This will be measured by revenue gain as a result of removing tax incentives, as reflected in PDO Indicator 1 and achievement of DLIs 1, 2, and 3. DLI 1 and 2 focus on the implementation of the amendments to the Tax Code through the development of secondary legislation and DLI 3 envisages implementation of a set of measures, aimed at improved transparency of tax expenditures . • DLI1 - Selected tax and customs incentives eliminated (PDO Indicator 1). The achievement of the DLI will require that the new edition of the Tax Code of the Republic of Tajikistan approved by the Government, ratified by the Parliament and available on one of the official web-sites (www.adliya.tj, minfin.tj, andoz.tj ) excludes incentives under the preferential tax regimes for the new taxpayers under following economic activities and groups of taxpayers: (a) Construction of hydro power plants (for the investor and general contractor) (b) Supply of manufactured products by the investor implementing a production sharing agreement. • DLI2 - Regulatory foundations for the improved tax system established. The DLI will promote the development of critical secondary legislation to allow for implementation of the new Tax Code. The achievement of the DLI will require that (1) the Government requests for MoF, TC and other relevant ministries and agencies to develop and approve the required secondary regulations under the new edition of the Tax Code have been issued; (2) the Borrower has drafted, approved and published on one of the official web-sites the required secondary regulations, listed in the Borrower’s official requests for MoF, TC and other relevant ministries and agencies of RoT to develop and approve the required secondary regulations under the new edition of the Tax Code in form and susbstance satisfactory to the Bank. • DLI3 - Improved transparency of tax expenditure. The achievement of the DLI will require that annual tax expenditure reports are developed and published with the annual draft republican budget and cost-benefit analysis of selected tax incentives. It will require that (1) tax expenditure report, which includes information on tax expenditure with the estimate of the revenue foregone as a result of tax incentives/exemptions and concessions and “benchmarking” tax exemptions by impact on revenue, is published with the annual draft budget that is submitted to Parliament at the MoF web- site; (2) cost-benefit analysis of two to four targeted tax incentives/ exemptions, having the highest impact on revenue, is submitted and published with the draft annual republican budget at the MoF web-site. Results Area 2: Improved Quality of Taxpayer Services. Increasing the number of remote and emergency services to taxpayers through reengineering under Area 1 of the Program and automation of selected taxpayer services under Area 2, introduction of an e-line management system in Tax Offices and increasing the number of terminals in tax authorities for submission of electronic tax declarations under Area 1, upgraded ICT infrastructure under Area 2 of the Program, improved staff capacity a nd use of taxpayer feedback for monitoring of taxpayer services under Area 4 of the Program will together result in improved quality of taxpayer services, measured by improved taxpayer satisfaction with selected services (PDO Indicator 2) and achieved DLIs 5 and 6. DLI 5 captures introduction of an automated VAT refund system and accelerated procedures based on risk assessment of VAT refund verification. DLI 6 envisages implementing a new governance model for the TC ICT Department and upgraded ICT infrastructure, which 11 will allow increasing the number of remote services for taxpayers, it also focuses on implementation of the system of continuous assessment and enhancement of the quality of taxpayer services. • DLI 5 - Percent of VAT refunds that are processed using risk-based verification or fast track procedures. This DLI will measure the reduced cost of tax compliance. Achievement of the DLI will require that up to 95 percent of all VAT refunds are processed using risk-based verification or fast- track procedures by the end of the Program. • DLI 6 - Taxpayer service standards are enhanced and based on taxpayer feedback. The achievement of the DLI will require that (1) taxpayer feedback mechanism is established and functional in the Taxpayer Contact Center; (2) annual reports on taxpayer feedback, collected through the taxpayer feedback mechanism, are published at TC website annually in 2024-2026; and (3) a Unified Standard for Taxpayer Service is revised based on taxpayer feedback and published at TC website. • DLI 7 - Improved representation of women in management positions in TC workforce. The DLI will address gender gap in managerial positions of TC workforce. The achievement of the DLI will require that (1) an action plan to address gender gap in TC workforce is developed and approved by TC management; (2) woman in TC managerial positions out of all staff in managerial positions comprise 11%. Results Area 3: Improved Voluntary Compliance. Development and implementation of the risk management and audit module and introducing new methods of tax control (e.g. horizontal monitoring) under Area 1 of the Program, a set of activities on enhanced use of ICT in tax administration under Area 2 of the Program, activities on improving taxpayer outreach and education under Area 3 and enhancing electronic data exchange and integration of information systems with all departments and government agencies, development and implementation of automated systems for Big Data analysis and staff training under Area 4 of the Program are expected to result in improved voluntary compliance, which will be measured by reduction in the VAT tax gap (PDO Indicator 3) and achieved DLI 4. DLI 4 captures implementation of effective risk-management system and risk-based audit and it covers introduction of an automated VAT refund system and accelerated procedures based on risk assessment of VAT refund verification. • DLI 4 - Reduced burden of tax audit. The achievement of the DLI will require that (1) risk assessment methodology, enhanced based on relevant international experience, is approved by TC; (2) at least 90% of field audits of large taxpayers, registered in TC Large Taxpayers Directorate and regional TC offices for large taxpayers, during a period of the Government financial year (starting January 1 and ending December 31) are conducted for cases selected by the risk-based selection tool and monitored by Compliance Risk Management Unit. 14. The Theory of Change below describes the relationship between the State program and PforR, and their activities, outputs and outcomes in more detail. Figure 1 describes the relationship between the two programs and their activities, outputs and outcomes in more detail and outlines the PforR boundaries. 12 Figure 1. World Bank Tajikistan Tax Reform Program – Theory of Change Development Program Interventions DLIs and Intermediary Results Outcomes Result Area 1: Simplified tax system • Two preferential tax regimes and A1 associated tax incentives eliminated • Develop secondary regulations to implement • Regulatory foundations that reduce amendments to the Tax Code distortions in the tax system established Outcome 1: • Publish information on tax expenditures • Improved transparency of tax Simplified tax system • Simplify tax reporting requirements expenditure • Harmonize tax and financial accounting • Streamlined rules for tax accounting and • Develop a system of continuous training and reporting improving employee knowledge • Strengthened human capacity to • Conduct training and capacity building for tax administer the tax system consistently administration employees A2 A3 Result Area 2: Improved quality of taxpayer services • Improved management and operation • Introduce an improved model for ICT of ICT systems governance • Expanded access to taxpayer services, • Enhance technical infrastructure and upgrade including to terminals for submitting e- ICT components declarations • Increase remote and emergency services to • Increased submission of declarations Outcome 2: taxpayers electronically Improved quality of • Enhance advisory services for taxpayers in the • Reduced time to file taxes taxpayer services Call Center; • Taxpayer service standards are enhanced • Strengthen taxpayer feedback mechanisms and and based on taxpayer feedback service delivery standards • Staff are knowledgable of, and capable to • Train staff to optimize use of e-services use, e-applications for taxpayer services applications A5 A6 Result Area 3: Improved voluntary compliance • Develop and implement risk management and audit systems • Introduce automated VAT refund system and accelerated procedures • Develop methodological approaches for • Reduced burden of tax audits transfer pricing • Reduced cost of complying with VAT Outcome 3: • Integrate tax system with systems from other requirements through increased fast- Improved voluntary departments and state structures tracked processing of VAT refunds compliance • Develop and deliver taxpayer outreach and • Staff are trained in risk management, risk- education programs based audits, and arears management • Conduct Training of Trainers for business associations on tax matters • Introduce new methods of tax control, including horizontal monitoring • Train staff in risk-based management, risk- based audit, and arrears management A4 A3 13 SECTION II - ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT – ESSA 15. The environmental and social review of the Program requires assessment of the existing legal framework and systems to manage potential environmental and social risks that can arise from the PforR implementation. The World Bank’s assessment team through a combination of reviews of existing program materials and available legal/regulatory documents, as well as interviews with government staff, non-governmental organizations and sector experts prepares the Environmental and Social System Assessment (ESSA). In this ESSA report, the WB environmental and social assessment team presents the identified gaps and provides recommendations to fill in those gaps to ensure sustainable environmental and social benefits of the PforR on Tajikistan Tax Reform implementation. 16. The ESSA is an integral part of the PforR appraisal and implementation. ESSA Objectives 17. The objective of ESSA is to ensure consistency with the core principles outlined in the World Bank’s Policy on Program-for-Results Financing (Nov. 10, 2017) in order to effectively manage program risks and promote sustainable development. 3 These principles are: • Core Principle #1: Environment and Social management systems are designed to (a) promote environmental and social sustainability in the Program design; (b) avoid, minimize, or mitigate adverse impacts, and (c) promote informed decision-making relat ing to the Program’s environmental and social effects. • Core Principle #2: Natural Habitats and Cultural Resources: Avoid, minimize, or mitigate adverse impacts on natural habitats and physical cultural resources resulting from the Program. • Core Principle #3: Public and Worker Safety: Protect public and worker safety against the potential risks associated with: (i) construction and/or operations of facilities or other operational practices under the Program; (ii) exposure to toxic chemicals, hazardous wastes, and other dangerous materials under the Program; and (iii) reconstruction or rehabilitation of infrastructure located in areas prone to natural hazards. • Core Principle #4: Land Acquisition: Manage land acquisition and loss of access to natural resources in a way that avoids or minimizes displacement, and assists the affected people in improving, or at the minimum restoring, their livelihoods and living standards. • Core Principle #5: Vulnerable Groups: Give due consideration to the cultural appropriateness of, and equitable access to, Program benefits, giving special attention to the rights and interests of the Indigenous Peoples and to the needs or concerns of vulnerable groups. • Core Principle #6: Social Conflict: Avoid exacerbating social conflict, especially in fragile states, post- conflict areas, or areas subject to territorial disputes. 18. The specific objectives of the ESSA include: • Review of the baseline environmental and social information to understand the context under which the Program activities are undertaken. • Analysis of environmental and social benefits and risks of the Program activities. • Assessment of the borrower’s systems for environmental and social management for planning and implementing the Program activities for consistency with the applicable Core Principles. 3 World Bank’s P olicy, Program-for-Results Financing, Nov. 10, 2017. 14 • Identification of procedural and policy gaps with Bank Policy and Directive for Program-for-Results Financing as well as performance constraints in carrying out environmental and social management processes. • Development of a set of viable actions to strengthen the systems and improve environmental and social performance outcomes of the Program. ESSA Methodology 19. The ESSA was prepared by the World Bank’s assessment team through a combination of review of existing program materials, relevant legislation and available technical literature as well as interviews with government staff, non-governmental organizations (NGOs) and sector experts. As part of the PforR appraisal process, further consultations will be conducted with government and civil society stakeholders. The findings, conclusions and opinions expressed in the ESSA document are those of the World Bank. 20. The scope of the ESSA covers the activities and systems necessary to achieve the PDO and the defined Results Area Framework of the Tax Program for Results as represented by the PforR ’s DLIs. A scoping analysis of potential participating ministries and committees was completed to determine the applicability of each of six (6) PforR Environmental and Social Core Principles to seven DLIs and Results Framework. Section VII – Comparative Analysis of Borrow System and Bank Core Principles details the results of the scoping analysis. 21. The PforR Financing instrument provides multifaceted support to implement policy, regulatory, governance and social accountability measures of the PforR. The ESSA analysis has been considered on two levels: (i) the system as written in laws, regulations, and procedures; and (ii) the capacity of Program institutions to effectively implement the system in practice. 22. The methodology included three distinct elements: (i) the first consisted of consultation/interview with concerned agencies to understand the contours and implementation processes of key interventions proposed, as well as to understand the motivation behind them; (ii) the second consisted of a review of documents, literature and data available at key government agencies on the regulatory frameworks related to environment and social risk management including grievance management systems; and (iii) the third consisted of virtual stakeholder consultations. The summary with the list of the consulted stakeholders provided in Annex 3. Also, Table 2 lists Program stakeholders. 23. This report has been prepared according to the requirements of the World Bank Policy and Directive for Program-for-Results Financing and to the Bank Guidance “Program-for-Results Financing Environmental and Social Systems Assessment” (effective since July 1, 2019). The ESSA aims at (i) identifying the key environmental and social risks (E&S), that may affect the achievement of the development outcomes, (ii) assessing the capacity of the Government’s existing environmental and social management systems that are the legal, regulatory, and institutional frameworks guiding the Program, and (iii) defining and recommending measures to strengthen the system, and integrates these measures into the overall Program to manage E&S risks. The ESSA is undertaken to ensure consistency with six core principles outlined in paragraph 8 of the World Bank Policy for Program-for-Results Financing to effectively manage Program risks and promote sustainable development. 24. The ESSA analyzes the system of environmental and social management that are relevant for the Program with regards to each of these principles. The gaps identified through the ESSA process and subsequent actions to fill those gaps directly contribute to the Program’s anticipated results to enhance institutional structures related to the Program's activities. The ESSA analysis presents a detailed description of the Program activities and the baseline conditions for existing environmental and social management systems. The Report draws on baseline information and presents an analysis of the existing system with regards to the core principles for environmental and social management in Bank Policy and Directive for 15 Program-for-Results Financing and presents a Program Action Plan that will be incorporated into the overall Program loan documentation. 25. The World Bank conducted an Environmental and Social System Assessment (ESSA) of the existing country's environmental and social management systems. The findings, recommendations and action plan are covered in the following chapters. Excluded Activities 26. The PforR financial instrument will not support activities within the Program that could cause significant harm to the environment of which would have significant adverse social effects. The PforR does not support any major physical investment-related activities (large civil works and activities requiring land acquisition and/or physical displacement). Rather it aims to improve the business environment and service delivery for taxpayers through the improvement of tax services. 27. The environmental and social initial screening done at the concept stage of the Environmental and Social Review Summary (ESRS) did not identify any potential high-risk activities. Consultations and Disclosure of ESSA 28. Consultations were carried out with key stakeholders during September-November, 2020. Before the appraisal, the Bank team will disclose the draft ESSA through the Bank’s portal, and at the Client’s website or appropriate in-country locations such as a public information center. 29. A multi-stakeholder virtual disclosure workshop was organized on February 2, 2021, in Dushanbe by the World Bank E&S team. It was attended by a group of diverse stakeholders from across Tajikistan. The workshop participants included business associations, government representatives, civil society, private sector, international donor agencies, and representatives of non-government organizations. Major feedback received from the public consultation was incorporated into the final ESSA. 30. For an easy and fuller understanding, the draft ESSA was translated into Russian and disclosed on the TC and World Bank websites. The online consultation period was open during February 1-16, 2021. Two written comments were received from the CSOs and local experts and have been incorporated into the ESSA Report. 16 SECTION III - LEGAL AND REGULATORY FRAMEWORK APPLICABLE TO ENVIRONMENTAL ASPECTS OF THE PROGRAM FOR RESULTS 31. A summary of the environmental policies, laws, regulations, as well as guidelines that are relevant to the management of environmental impacts potentially resulting from the implementation of the activities proposed under the Program is enclosed in Annex 1. Adequacy of the Legislative Framework on Environmental Aspects to manage potential environmental risks. 32. The current system of environmental legislation and regulations provides an adequate legal and regulatory framework for implementing the key activities planned under the PforR. The country has made progress in recent years, including an update of the Procedure for EIA and classification and ranking of potentially hazardous activities. The existing system governs the procedure for conducting EIAs of the PforR activities, if required, as well as monitoring of activities, including building renovation. The developed network of environmental monitoring by the Committee on Environmental Protection and municipalities based on existing environmental norms, technical guidelines, and standards, with the right approach at the district and local level can successfully monitor environmental requirements during the management of electronic waste generated during the upgrading of ICT infrastructure of tax offices under the PforR. 33. While the environmental legal and regulatory framework of the Republic of Tajikistan is relatively well- developed, the enforcement and implementation of these regulations on the ground are doubtful. SECTION IV – LEGAL AND REGULATORY FRAMEWORK APPLICABLE TO SOCIAL ASPECTS OF THE PROGRAM FOR RESULTS 34. The relevant chapter in Annex 1 provides details on the social policies, laws, regulations as well as guidelines that are relevant to the activities proposed under the Program. It also provides an assessment of the adequacy of the coverage on social aspects in the legislative and regulatory framework. Adequacy of the Legislative Framework on Social Aspects 35. The legal and regulatory framework at the national and local levels provides an adequate and appropriate enabling framework for implementing the key activities to be supported under the Program. Responsiveness to taxpayer and complainants’ inquiries/questions and public accountability are adequately covered by the legal framework at different levels. The legislation highlights the importance of the state’s commitment to serving and ensuring citizen protection, in general, and to the taxpayers and people to be affected by the project in particular. The laws on personal data protection, consumer rights; grievance redress; and ethics codes in place stipulate rules governing fair taxpayer services; and the tax system reforms to be implemented during the program implementation. 17 SECTION V – ENVIRONMENT MANAGEMENT SYSTEM General Assessment of the PforR Environmental Benefits and Risks 36. The PforR is expected to have both potential environmental benefits and risks. Environmental impacts expected in the course of the PforR implementation are negligible because the physical activities will be limited to the upgrading of the information and communication technology (ICT) infrastructure, including improvement servers, networking equipment, installing cooling systems, fire suppression, supply courses, UPS, etc. and interconnection of 73 local tax offices under the DLI3. Nevertheless, if improperly managed, waste electrical and electronic equipment that will be generated as the result of the replacement of ICT equipment may pose significant human and environmental health risks due to the release of hazardous substances they may contain. Where obsolete equipment and materials cannot be reused, they should be recycled or disposed of by licensed contractors. 37. The potential environmental risks of the PforR are assessed to be low. Table 1, below, summarizes identified environmental risks associated with the PforR Results and DLIs. Table 1: Environmental risks associated with PforR implementation. Results Area/DLI Environment Risks Results Area 1. There is a possibility that the elimination of selected tax incentives for DLI1: Selected tax and the new taxpayers in hydropower plant construction and manufactured customs incentives products suppliers in the mining sector would lead to alternative energy eliminated and material sourcing (as a result of reduced mining activities) that may have environmental impacts. DLI2: Regulatory foundations for the No risk improved tax system established. DLI3: Improved transparency of tax No risk expenditure Results Area 3. The risk is that there will be no system to manage and monitor the DLI4: Reduced burden of identified environmental and social risks (inappropriate electronic waste tax audit disposal, spreading airborne diseases) from providing in-person services to taxpayers. Results Area 2. DLI5: Percent of VAT refunds that are processed using risk-based No risk verification or fast track procedures 18 Results Area/DLI Environment Risks Dismantled obsolete equipment and materials generated during the upgrading of ICT infrastructure at 78 local offices and the Tax Committee may cause risks to human health and the environment if not DLI6: Taxpayer service disposed of in a safe manner. standards are enhanced and based on taxpayer The provision of advisory services for taxpayers in person presents the feedback risk of spreading airborne diseases like Covid-19, flu, measles, chickenpox and others. This risk should be addressed in line with WHO recommendations on the application of PPEs and physical distancing during a pandemic situation. DLI 7: Improved representation of women No risk in management positions in TC workforce. 38. The environmental benefits from the realization of the PforR will include, in particular: • Adoption and implementation of electronic waste management procedures as part of the Environmental and Social Management Plan at the TC central, regional and local offices. The implementation of such procedures at the institutional/corporate level will have a multiplying effect since employees will be trained at each location to sort e-wastes, store them properly, use the services of a licensed e-waste recycling company, tra ck electronic equipment from “cradle” to “grave”. Since the use of ICT is increasing in the country, and consequently, the amount of e-waste will grow significantly, the electronic waste management procedures could be adopted by other governmental and municipal institutions where TC regional and local offices are located. • The Improved quality of the tax system and taxpayer services may improve voluntary compliance and collection of environmental taxes, such as taxes on the use of natural resources, taxes on the use of subsoil, royalties for use of water resources, and others that are regulated by the Tax Code. The improved collection of environmental taxes may benefit the development of state environmental programs, e.g. the national program on e-waste management, incentives to promote renewable energy development, and financing of the implementation of existing national environmental programs. • The improved tax system and taxpayer services may also stimulate the development of the necessary secondary legislation and inclusion of specific provisions in the Tax Code, required for the implementation of various laws on environmental protection and related areas containing provisions for tax preferences and other financial incentives designed to promote environmentally friendly behavior and rational use of national resources. This also includes incentives for the promotion of renewable energy, energy savings, and energy efficiency. Environmental Management System in Program 39. The PforR Areas, Results, and DLIs were assessed against the Core Principles discussed above. The assessment of the environmental management system was completed by looking at the system’s capacity to promote environmental sustainability and the ability to avoid, minimize, or mitigate adverse impacts identified as related to the Program implementation. The ESSA includes the following information: • Current status and strength of the System to manage environmental risks; 19 • Current institutional capacity and where the Program implementing institutions function effectively and in consistence with Bank Policy and Directive for Program financing; • Risks from the implementation of the proposed Program to the system; and • Opportunities/benefits to strengthen the existing system. 40. Based on the initial screening of national legislation and regulation, the environmental management system is well defined. The Environmental Impact assessment and permitting processes are covered in the Law on Environment Protection (2011) and Law on Environmental Expertise (2012). 41. The electronic waste licensed collection facility was identified in Isfara city in the north of Tajikistan. This facility sorts and compacts e-waste before selling it to recycling/processing facilities in China. 42. The Ministry of Finance will be the ministry with overall responsibility for the delivery of the PforR. The TC reform will be responsible for the implementation of the DLIs 43. The TC will carry out all functions related to the technical implementation of the DLIs, as well as Procurement, Financial Management, and any Environmental and Social Safeguards functions related to the implementation of the DLIs. 44. The Program will be monitored by the Coordinating Committee, headed by the Chairman of the Tax Committee of the Government of Tajikistan, and includes Deputy Ministers of Finance, Economic Development and Trade and Chairman of the State Committee on Investment and Management of State Property, as well as the heads of two business associations (members of the Coordination Committee) and the Secretary of the Coordinating Committee. The Coordinating Committee meets at least twice a year to review the implementation of the Program including the activities, financed by international financial organizations. The Chairman of the Coordinating Committee informs the Government of Tajikistan about the progress of this Program bi-annually. 45. For the purposes of the World Bank-funded operation, the TC under the Government of the Republic of Tajikistan will be the program implementing agency. The Deputy Chairman of TC will be the Program Director. The Program Director will serve as the contact point on project implementation for the Bank and other external partners and prepare regular progress reports. The Program Director will take operational decisions, exercise fiduciary responsibilities, and ensure the Program implementation according to a Program Implementation Plan. S/he will also act as the Head of the Tax Reform Secretariat which will have regular meetings to discuss project implementation progress. Implementation of Tax Administration activities of the Program will be led by the Deputy Chairman of the Tax Committee and Tax Policy activities - by the Deputy Minister of Finance. 46. At the implementation level, the Tax Reform Secretariat will coordinate reform implementat ion and work with thematic Working Groups and activity leaders to ensure timely implementation of the Program activities. TC staff from the central office and regional offices will be involved in the Program implementation. Additional consultants and specialists will be engaged based on need. The activities, related to the development and implementation of the tax legislation and internal rules and procedures will be implemented by MoF and TC staff under the guidance of the Working Groups on Tax Policy, ICT development, Operational Development and Institutional Development. The Working Group on the Tax Code Development was established for the purposes of the Tax Code development on June 20, 2019 by the President’s Decree №АП-1236 and it will continue operating under the Program for the development of the secondary legislation under the Tax Code. Other Working Groups will be established by the date of World Bank operation effectiveness. 47. To support the Program Director in administrative and fiduciary functions, the Tax Committee will hire a team of local consultants to form a PIG, which will ensure appropriate financial management, disbursement and adherence to the relevant procurement rules and the Bank’s environmental and social standards as will be stipulated in the Grant Agreement and the POM. 20 48. The PIG, placed in the TC, will have the main responsibility for the monitoring of the implementation progress and results, defined in the Results Framework. The PIG will be staffed by a M&E expert to support data collection from relevant MoF and TC departments and progress update on PDO, intermediary indicators, and DLIs. The TC will also hire an audit firm to verify the achievement of the annual DLI targets based on administrative data reported by the TC. The monitoring system will maintain records on implementation and generate mid-year project progress reports and annual reports prepared within four months of the end of the financial year. Progress reports will be prepared by the PIG, approved by the TC Chairman, and forwarded to the World Bank before implementation support missions to guide the discussion of key issues affecting project implementation. Institutional Capacities to Manage Environmental Aspects of the PforR 49. The institutional capacity of the TC was significantly strengthened under TARP in the past five years through enhancing its structure and functional responsibilities, implementation of ITMIS, the introduction of 40 electronic taxpayer services and establishment of a communication center. 50. However, staff capacity remains relatively weak in a number of critical areas. Specifically, TC, as the main PforR implementing agency, has limited in-house capacity for environmental due diligence and risk management, like e-waste. Also, the TC lacks experience with the World Bank PforR financing instrument. 51. To mitigate this risk and support the TC in the achievement of the results under PforR component, a PIG will be established under the IPF component and will support the Project implementation in fiduciary functions and monitoring and evaluation (M&E). In addition, selected activities, where it is critical to attracting high-quality technical international expertise, will be implemented as a part of the IPF component under the World Bank procurement procedures. The PIG will hire a specialist in E&S management. 52. To ensure effective cooperation of different stakeholders under the Program implementation, a regulation, describing the Program implementation arrangements under the World Bank-financed operation, stakeholders mandates and responsibilities and key responsible staff will be approved before the effectiveness of the World Bank-financed operation. The detailed implementation arrangements including M&E data collection and DLIs verification protocols, financial management, disbursement, and adherence to the relevant procurement rules as will be stipulated in the electronic waste management procedures, to be developed before the effectiveness of the World Bank-financed operation. Gaps/Risks of Environmental Management Systems 53. The environmental management system analysis presented in the sections above suggests that the environmental management system for the proposed PforR activities has the following strength and gaps. Strengths: • Existence of the electronic waste licensed collection facility in the country. • Adequate network for environmental protection offices at the district level. There is adequate interaction between CEP district representatives and municipalities, which can provide the necessary environmental due diligence required for the Program. • Procedures for disposal of the state-owned devices/equipment that contain precious metals. • Experience of TC and its PIG from the implementation of the WB projects. This has contributed to the creation of some capacity for project-level management. 21 Gaps: • Weak environmental management capacity at TC central, regional and local offices. • There is neither policy/legal frameworks nor procedures/management system identified to deal with electronic wastes from an environmental safeguards point of view. Overall, TC’s capacity to manage environmental risks is weak. 22 SECTION VI – SOCIAL MANAGEMENT SYSTEMS Overview of the Social Management System 54. The Program financing was assessed against the aforementioned Core Principles, which are spelled out as the evaluation criteria in the World Bank Policy “Program -for-Results Financing”. The assessment of the social management system was completed by looking at the system’s capacity to promote social sustainability and ability to avoid, minimize, or mitigate adverse impacts identified as related to the Program implementation. The ESSA includes the following information: • Current status and strength of the System to manage social risks; • Current institutional capacity and where the Program implementing institutions function effectively and in consistence with Bank Policy and Directive for Program financing; • Risks from the implementation of the proposed Program to the system; • Opportunities/benefits to strengthen the existing system; and • Key issues and gaps between the core principles and capacity constraints. 55. Based on the initial screening of the national legislation and regulatory framework, the social management system is well defined, covering all aspects related to sound prevention, mitigation and management of potential social impacts (e.g. targeted social assistance, social benefits program, tax exemptions for vulnerable groups and home-based small businesses, voluntary compliance for labor migrants, etc.) and institution/authority in charge. 56. The Republic of Tajikistan has a well-defined legal and regulatory framework at the national and local levels which provides an adequate and appropriate enabling framework for implementing the key activities to be supported under the Program. Responsiveness to taxpayer and complainants’ inquiries/questions and public accountability are adequately covered by the legal framework at different levels. The legislation highlights the importance of the state’s commitment to serving and ensuring citizen protection, in general, and to the taxpayers and people to be affected by the project in particular. The laws on personal data protection, consumer rights, labor rights, grievance redress, and ethics codes in place stipulate rules governing fair taxpayer services, and the tax system reforms to be implemented during the program implementation. Social policies, laws and regulations applicable to the PforR are enclosed in Annex 1. Overview of Social Risks and Benefits 57. The proposed program will support improvements in both tax policy and administration. The project will a) enhance institutional capacity and strengthen the integrity of staff working on tax policy (primarily of the MOF) and administration (TC); b) strengthen tax enforcement and compliance management functions; and c) improve taxpayer services and communication, and d) finance change management activities. 58. The Program will support the MOF to implement recently approved amendments to Tajikistan’s Tax Code, which will remove contradictions, unify taxes and simplify tax regimes where possible. Taxpayers will benefit from a relative reduction in time to pay taxes, and a decreased number of taxes. 59. PforR will build upon past reform efforts to modernize TC’s organizational structure by strengthening the technical and operational skills of TC’s human resources. It will develop and implement an internal capacity development and knowledge management program which will emphasize building the needed knowledge and skills to institutionalize use of modern technologies and techniques for tax administration and information processing. The program will also support efforts to prevent and eliminate corruption in tax administration by strengthening TC’s internal investigation unit and its internal audit functions. Staff 23 integrity assurance mechanisms will be strengthened and aligned with international good practices and standards. Mechanisms for monitoring the public’s (including audited taxpayers’) confidence in the tax administration and its perception of integrity will be improved by institutionalizing the routine carrying out of taxpayer perception surveys and by ensuring results are made public. The social benefits include introduced anti-corruption mechanisms, improved public perception monitoring and increased public awareness on tax compliance. 60. The Program will support the implementation of the Tax Code amendments and a set of measures aimed at improved transparency of tax expenditures, simplified tax reporting requirements and harmonized tax and financial accounting reporting for selected taxes. While the TC operational effectiveness will be enhanced to reduce the size of the shadow economy, it will enable the enforcement measures to improve taxpayers’ discipline to voluntar ily comply with the new tax requirements. The IPF component of the Program will also focus on the increased use of ICT technologies in tax administration and taxpayer interaction by reengineering ICT systems and automation of selected taxpayer services. 61. The main social issues and risks associated with the Program include: a) broader public behavioral response to new tax procedures and Tax Code amendments; b) socila implications from the elimination of selected tax incentives for the new taxpayers in hydropower plant construction and manufactured products suppliers in the mining sector. These tax provisions would lead to a potential cost increase for energy and mining commodities, as well as reduced employment opportunities in those sectors in the long run; c) likely resistance to changes, reforms, and ICT based applications from certain quarters of tax administrators in rural areas and other state service staff; d) resistance to the transition from informal to a formal business mode in order to, keep practicing tax evasion, as well as push back from specific stakeholder groups, such as grey or illegal importers; and e) potential exclusion of taxpayers from vulnerable groups, especially those who lack ICT skills/experiences or technological resources, to access the project benefits/results/incentives; and f) the possibility that enhanced tax compliance will imply short-term income impacts that would disproportionately affect small and medium enterprises (SMEs) including poor and/or vulnerable taxpayers 62. Since ICT equipment will be installed within the existing buildings only, no involuntary acquisition of lands is expected. Nor will there be any restrictions on land use and access. Other risks such as labor influx and forced/child labor are low. Overall, the social risk is rated Moderate. Stakeholder Mapping 63. One of the key challenges will lie in mapping out comprehensively the stakeholder profile and the ‘system’ thereof. This would imply identifying various sub-groups of beneficiaries/actors/functionaries; soliciting their expectations (from the program) and ascertaining the issues and concerns thereof. Results emanating from these inquiries will have to be adjudicated against the existing ‘system’ – policies, programs, legislation, institutions and service deliveries. For the purpose of convenience, stakeholders hence have been classified into four groups, including enablers (government ministries which make policies and strategies); direct beneficiaries (TC and MoF relevant departments and taxpayers); indirect beneficiaries (other agencies connected to automated single interagency networking system, banks and audit companies ); and other interested parties such as IFIs, CSOs, and media. Table 2 below describes the mapping of the Program stakeholders. 24 Table 2: Program Stakeholders ENABLERS Ministry of Finance Central Apparatus Tax Committee Central Apparatus Legal Department International Relations Department Ministry of Labor, Employment and Migration Labor Inspection Committee for Environmental Protection Committee on Environmental Department of Waste Management Department of Environmental Monitoring and Regulation and Control Control Information Ministry of Economy and Trade Development Department of Investment Policy State Investments Committee and Immovable Property Management Department of State Property Department of Private Sector Department of Foreign Aid Coordination and Support Monitoring of Projects Committee on Women, and Family Affairs - implements gender policy Regional and Local Executive Bodies Provinces Cities/ Districts Self-governing bodies (jamoats) Local Environmental Offices DIRECT BENEFICIARIES Ministry of Finance Tax Policy and State Duties Tax Reform Department Monitoring of Tax and State Revenue Forecasting Department Non-tax revenues Sub- Sub-department department Tax Committee Department of Tax Main Department on Revenue Main Department on Tax Main Department on Tax Legislation Improvement Accounting and Analysis Control Administration Department of Internal Financial and Maintenance ICT department Human Resource Department Audit Department Taxpayer Registration Taxpayer Service Department Tax Debt Management Department on Mass Media Department (including Call Center) Department Relations In-service Training Center SUE “Tax Administration Tax inspections at the 33 Taxpayer Service Centers Software Center – Andoz.tj ” province/district/city levels Taxpayers Legal Entities/Corporates Physical entities Large taxpayers Patent holders/Individual entrepreneurs INDIRECT BENEFICIARIES Other State Agencies State Agency for Statistics Customs Committee Agency for Social Agency for the Procurement Protection and Pensions of Goods, Works and Services; State Committee for Land The State Traffic Inspectorate State and Non-state Audit Companies Management and Geodesy under the Ministry of Internal commercial Banks Affairs OTHER INTERESTED PARTIES International Financing Institutions and International NGOs IMF IFC ADB Other IFIs and International Organizations/Consulting Firms National NGOs Association of Small and NGOs Association of Other professional unions Medium Businesses Businesswomen Media Print and broadcast – Electronic Media – web sites, news agencies Social media – Facebook, newspapers, TV channels, Instagram etc. radio programs 25 64. Consultation meetings were held with different stakeholder groups. Program information was shared to evince their expectations and the issues/ concerns thereof. These consultations helped in understanding not only the current functioning of the system but also in ascertaining the social issues likely to be addressed by the program. The results so obtained were consolidated and the initial set of impacts likely to occur as a result of the program interventions tabulated. Consultations were held that covered a variety of stakeholders in order to identify gaps, risks, and potential actions. 65. The program beneficiaries and stakeholders’ expectations related to the Program are summarized below. For more details please refer to Annex 4: • Receive technical assistance and financial support for the implementation of the Tax Administration Development Program for Tajikistan 2020-2025, with a specific focus on improving tax collection, reducing the administrative burden of taxpayers, and increasing transparency of the tax system; • Enhance the integrity and capacity of tax authorities through improved technological infrastructure, reengineering and automated taxpayer services; • Improve mechanisms for the exchange of information between state bodies and organizations; • Promote competitive business environment and reduce the shadow economy through improved quality of tax administration system; • Reduce cost of paying taxes by improving the VAT refund process; • Secure access to fast track taxpayer services, mobile applications and e-services; • Access to tax educational tools and opportunities, efficient GRM and hotlines to voice concerns; • Promote tax benefits for female-headed physical and legal entities; • Expand fast track transfers and e-banking services to secure tax payments; and • Promote tax benefits by introducing tax support and feedback mechanisms to strengthen relationships with entrepreneurs and business owners, with special attention to the needs of women and the vulnerable. 66. Key concerns raised are related to insufficient governance, internal control and utilization of taxpayer data, information and communication technology (ICT) systems, and related incompatibility of interagency databases; low quality of taxpayer services, high demand for taxation consultations and education activities among taxpayers; limited capacity of tax offices to satisfy growing taxpayers’ demand for services; low penetration of technologies and lack of digitization in rural areas; low financial literacy among taxpayers; and poor awareness on tax system reforming among the public at large. 67. The Stakeholder Engagement Plan (SEP) has been prepared by the TC, which covers the whole program to make it inclusive. It details the stakeholders relevant for both the Program and IPF Component and the project’s arrangements to be enga ged with them during the preparation as well as during implementation. The institutional capacity of the Implementing Agency to interact with stakeholders can be further strengthened to effectively manage social effects in accordance with the Core Principles. Gender Aspects 68. Tajikistan ranked 123rd out of 149 countries in the World Economic Forum’s 2018 Global Gender Gap Index, with a score of 0.638, indicating worsened score by 0.02 points from its 2007 score of 0.658. While its scores for educational attainment and for health and survival are relatively high, the score for economic participation and opportunity (labor force participation, wage equality, and the numbers of senior, professional, and technical workers) is low, and offset the other positive indicators of equality. The 26 country has maintained high inequality in political empowerment (women in parliament and ministerial positions). 4 69. The Organization for Economic Co-operation and Development’s (OECD) Social Institutions and Gender Index (SIGI) provides additional insight by measuring de jure and de facto discrimination against women in many facets of life to demonstrate the extent to which discriminatory social institutions impoverish and disempower women. According to SIGI, women in Tajikistan experience the greatest discrimination in the family followed by social institutions that provide access to productive and financial resources. The former is evidenced in the recognition of Shariat rules that allow men in registered religious and unregistered marriages to divorce their wives despite laws that criminalize it. The latter is evidenced in unequal access to employment opportunities. Eighty-five percent of managers are male, and women are prevented from working in certain occupations that are considered too dangerous or physically demanding. Women also face additional restrictions for working night shifts and overtime. 5 70. The Tajik society is prone to traditional perceptions about the roles of women and men. The division of responsibilities within families remains rigid and women experience a double work burden of home- related tasks and employment in the labor force. There is significant underemployment and unemployment among women in Tajikistan. Women are mostly informally employed or employed in the informal sector, and are denied and lack all social guarantees, such as maternity benefit, sickness benefit, and pensions. There is also vertical and horizontal discrimination of women in the labor market. Risk factors of GBV including SEA6 are manifested at individual, community, and institutional levels. These factors include but are not limited to sociocultural dynamics that maintain male-dominated household decision-making and control over assets; social norms that condone violence; economic, educational and employment disparities between men and women in an intimate relationship. 71. Many challenges facing women in the economy are different from those encountered by men. Though the female labor force participation is around 45% in Tajikistan, women tend to be employed in fields where the average income is lower such as healthcare, education, and agriculture. As regards to private sector, women make only 26% of the total number of entrepreneurs in the country. Women officially manage only 9% of all firms in Tajikistan, compared to the average of 21.1% in the Europe and Central Asia region. As many smaller businesses are run informally it remains difficult to portray an accurate picture of the situation of female entrepreneurs. 72. Economic participation and political empowerment scores of Tajik women lag that of men. Women accounted for only 26 percent of parliamentarians in 2018 and 23 percent of state civil service positions in 2020. In the TC, there were only 11.6 percent female employees at the beginning of 2021 and only 7.8 percent of total staff in managerial positions were women (Table 3). Table 3. TC Employment by Gender (including staff in central and regional offices), as of January 1, 2021 Staff - All Positions Staff - Managerial Positions Total Female Male Total Female Male Number 1,708 198 1,510 431 31 400 Percentage 100.0 11.6 88.4 100.0 7.8 92.2 4 World Economic Forum (2018) 5 Organization for Economic Co-operation and Development’s (OECD) Social Institutions and Gender Index, 2019 6 GBV is an umbrella term for any harmful act that is perpetrated against a person’s will and that is based on socially ascribed (that is, gender) differences between male and female individuals. GBV includes acts that inflict physical, mental, or sexual harm or suffering; threats of such acts; and coercion and other deprivations of liberty, whether occurring in public or in private life (IASC 2015). Sexual exploitation and abuse (SEA) is a form of GBV , defined as any actual or attempted abuse of a position of vulnerability, differential power, or trust for sexual purposes, including, but not limited to, profiting monetarily, socially, or politically from the sexual exploitation of another. Acts of SEA may involve actual or threatened violence or inducements suc h as protection, food, shelter, or the like in exchange for sex. 27 Source: the TC, GoT. 73. To help address this issue, the Program will contribute to the empowerment of women by ensuring that they are prioritized in capacity building and training activities financed by the Program. Specifically, the trainings under the Program will aim to include no less than 50 percent of all women employed in the target staff group. In addition, the Program will aim to increase women in managerial positions by at least 3.2 percent (that is, 11 percent of total managerial positions) by the end of the Program. To achieve this target an action plan to address gender gap in TC workforce will be developed, approved and implemented by TC management during the Program implementation (as reflected in DLI 7). The Program will also support the training of tax officials in gender sensitization. Last but not least, the taxpayer surveys to be conducted will include taxpayer responses disaggregated by gender to allow the analysis of any potential differences in perception of tax administration issues depending on gender. If the results of the taxpayer surveys identify any gender issues, the Program will explore avenues to address those issues. Implementation of Social Management System: Institutional Capacity 74. The proposed program scope is countrywide. The program will be implemented at and by the Tax Committee under the Government of Tajikistan (TC). The Committee carries out its activities directly or through its territorial bodies (at province, district/city levels) in cooperation with other central and local public authorities, enterprises, institutions, organizations regardless of their forms of ownership and organizational and legal form. The TC will implement the program through its central office in Dushanbe and regional offices. 75. The structural reform has been ongoing in the TC since 2012. TC has switched to functional performance, with the aim to introduce a system of voluntary compliance with tax legislation. The Committee has introduced the modern Integrated Tax Management Information System (ITMIS), including Human Resource Management Information System (HRMIS). The installed software has significantly improved the human resource management activities, including an established employee database, performance monitoring and incentives for employees, assistance in staff re-assigning, identifying staff training needs, etc. On the annual basis, the TC approves a plan of advanced development and training courses, covering, in total, five training modules, which made it possible to improve both the quality and quantity in terms of advanced training of the TC employees. 76. The e-filing experience for taxpayers considerably improved once the new ITMIS was launched on July 1, 2019 replacing the old e-filing system. The ITMIS contains 40 modules and provides a single-window approach to key taxpayer services, such as registration, filing of tax returns, payment of taxes, access to personal cabinet with full information on tax obligations, and notifications. Feedback received from taxpayers interviewed during the consultations about their experience with the ITMIS rollout has been mostly positive. Urban businesses noted improvements in the ease of filing taxes, as paper copies are no longer required to accompany e-submissions. They also appreciated the integrated interface and ability to submit all reports in one place. The ITMIS has also had broad acceptance and recognition. According to the 2019 Taxpayer Survey conducted, 81 percent of all respondents are aware of the e-filing, 68 percent reported using the system, and 98 percent of the surveyed users expressed their satisfaction with the system. The Survey indicated that e-filing is still less popular among individual entrepreneurs and farmers, who may have limited access to the internet. 77. The Ethics Commission was formed under the Tax Committee in 2016. This Commission headed by the TC Chairman enforces the implementation of the President’s Decree # 591 dated 03.12.2015 on the Civil Servants Code of Ethics. The Code regulates a set of norms, principles and rules for the official and out- of-service conduct of the civil servant, expressing the moral qualities of his professional activity and conduct at work and in the society and generally recognized moral human values, the moral requirements 28 of society for a civil servant. A civil servant has no right to give preference and privileges to anyone on the basis of national, racial, sexual, linguistic, religious, political beliefs, education, social and property status and other grounds; s/he must show tolerance and respect for the customs and traditions of nationalities, take into account the cultural or other characteristics of ethnic and social groups, and promote inter- ethnic harmony. The Code of Professional Conduct of the Tax Employees adopted by the Tax Committee in 2017 regulates the professional behavior of the employees of the tax authorities. The Ethics Commission reviews the complaints and statements related to non-compliance with ethical norms and rules set for civil servants employed at the TC. 78. The design of various provisions and schemes under the TC are well aligned with the needs of the taxpayers and tax staff. The departments are well equipped to handle their current programs and have well laid out guidelines and processes for implementation within the applicable legal and regulatory framework. However, there is a need to build adequate capacities among functionaries of these departments and tax offices (especially in rural areas) on the new ICT-based system and adjust them to taxpayer needs and preferences based on the rural realities. With the new system of functioning proposed to be introduced, there is a need for better coordination among implementing departments. Citizen Engagement and GRM 79. The TC has documented procedures and established a dedicated department - Taxpayer Service Department - which provide specific and general dissemination of updates to information. In addition, the weekly journal “ Boju Khiroj” provides information to taxpayers. Taxpayers are also informed through proactive engagement before any legal changes take place. A number of channels are used, including website, regular seminars and meetings with business associations at the headquarters and local offices. During 2019, for targeted communication, the TC conducted 3,440 training seminars for taxpayers and their accountants, and 775 mass media regular feeds to keep taxpayers updated with general and specific information. In 2019, twenty universities and schools participated in training workshops on taxation and citizens’ responsibilities. The TC website www.andoz.tj runs 24 hours and throughout the year with dedicated staff regularly updating the information regarding changes in tax laws and administrative procedures. There are 37 e-Terminals with dedicated fiber optics lines in remote tax offices where internet access is weak—this enables taxpayers to meet their tax declaration and payment obligations electronically. 80. Feedback from taxpayers is obtained routinely using a variety of methods. Based on instructions issued by the Chairman, the TC obtains regular feedback from taxpayers through taxpayer’s personal cabinet, seminars, call center, website chat, surveys and business meetings, and replies to all relevant questions. During 2015-2019 annual taxpayer perception surveys were conducted to monitor public confidence in the TC by an independent expert survey firm. To determine general understanding of the tax system, the following indicators were formulated: simplicity and clarity, uniform interpretation and impartial application. Most respondents named the following factors that can affect the increase in the level of voluntary and autonomous payment of taxes by taxpayers: • Improvement of the knowledge of taxpayers in the field of tax legislation; • Tax burden reduction; • Simplification of the tax system and tax calculation procedure; and • Reducing the number of inspections and the amount of fines. 81. The TC considers taxpayers/citizens’ complaints and appeals in accordance with the Law of Republic of Tajikistan on Appeals of Individuals and Legal Entities (from July 23, 2016, № 1339) that contains legal provisions on established information channels for citizens to file their complaints, requests and grievances. Article 14 of the Law sets the timeframes for handling grievances, which is 15 days from the 29 date of receipt that do not require additional study and research, and 30 days for the appeals that need additional investigations. These legal provisions will be taken into account by the Program-based Grievance Redress Mechanism (GRM). 82. Citizens can file their complaints with the TC in three ways: • Written applications submitted to local tax offices or through e-mail -info@andoz.tj; • Electronic applications – through TC website http://www.andoz.tj; • Personal cabinets at the e-filing system; and • Phone calls to the Call Center – 151, 152 83. The existing Grievance Redress Mechanism at the Tax Committee is described in detail in Annex 5. 84. Based on Order # 77 of the TC Chairman, dated 11.03.2015, the Appeal Board was established in the Tax Committee to facilitate transparent dispute resolution and increase taxpayers’ trust in the process. It consists of 11 part-time members with other regular assignments within the TC, who are appointed by the TC Chairman. Since its establishment, the Board has considered more than 70 taxpayers’ complaints, and the number appeals filed with the Board is growing each year. Among the cases considered in 2019, 31 percent of audit decisions remained unchanged, while 69 percent were settled in favor of taxpayers. While taxpayers are informed about this dispute resolution mechanism, the 2019 Taxpayer Survey revealed that 86 percent of surveyed taxpayers, who did not agree with the TC’s decision, opted not to appeal as they believe the process is worthless (42 percent), not necessary (33 percent), or they simply did not want to appeal (11 percent). 85. An important step was taken to create the Call Center under the Taxpayer Service Department of the Tax Committee. Since December 2017, the Tax Committee has improved its services by creating a call center with 10 employees responsible for answering all incoming calls on issues related to the application and compliance with tax laws, as well as complaints about unlawful actions or inaction of tax officials. In 2019, the Call Center received and managed 35819 calls. The Program will invest in the capacity building of the Call Center and local tax offices staff to improve taxpayer feedback mechanism. Social System Assessment and Identification of Gaps 86. The borrower’s systems that the Program’s implementation will rely on, complies to large extent with the World Bank Core Principles. The existing system to the larger extent is consistent with the Core Principle 1 on General Principle of Environmental and Social Impact Assessment and Management, the Core Principle 3 on Public and Worker Safety, and the Core Principle 5 on Vulnerable Groups. Since Principle 4 on Land Acquisition is not applicable to the Program, land management issues were not ana lyzed. Specifically, the strengths of social issues management include: • National policies, legal and regulatory framework for social risk management are well defined. Also, the institutional systems identifying the taxpayer services and complaint procedures to be followed are well defined. Tax offices departments can be contacted via e-filing or directly through tax service centers for payments or any clarifications. • The national legislation and regulations provide for occupational safety and working condit ions, as well as social benefits to the workers. • There is strong political commitment at the national, provincial and local levels to reduce poverty and inequity and to improve access of all social categories to basic social services and economic infrastructure. The Targeted Social Assistance Program and Program of Social Benefits are implemented nation-wide. Tax exemptions for vulnerable individual entrepreneurs are in place. 30 • There is a commitment to strengthen the exisiting GRM. TC implements comprehensive GRM with the Call Center, website feedback chat, open hours to meet with TC leadership, and other communication lines to submit grievances. • Experience of TC and its PIG in implementation of the WB-funded project will contribute to the institutional continuity for project-level management. 87. There are still some gaps between the Core Principles and the borrower system ’ s ability to minimize, mitigate and manage social effects and risks including the following: • No public access to tax expenditure plans/reports as part of the annual republican budget plan/ performance disclosure; • Limited public awareness on tax reforming efforts; • Unsystematic taxpayer outreach and education on tax amendments and compliance requirements;and • Taxpayer feedback mechanism being only one-way communication. 88. The above-mentioned gaps will contribute to the challenges and social risks that the Program may face during implementation, including broad public adverse behavioral response to new tax procedures being proposed; social tensions in response to non-participatory proceedings on enforcement of new tax regulations, and lack of tax expenditure reporting; and increased complaints regarding inadequate access and quality of taxpayer services, especially in remote areas. Considering the above mentioned, the social risk management capacity of the TC is considered weak and requires investments into human capacity building at the central, regional and local levels. 31 SECTION VII – ASSESSMENT OF PROGRAM CONSISTENCY WITH CORE PRINCIPLES OF PROGRAM FOR RESULTS 89. This section provides an assessment of the extent to which the applicable systems are consistent with the core principles and key planning elements expressed in the Bank’s policy on PforR. It also provides a review of the implementing agencies' capacity and aspects where gaps exist between Bank policy requirements and the country systems. Core Principle 1: Overarching Principle of Environmental and Social Management 90. The legal and regulatory framework for the PforR implementation is adequate. Planning and implementation incorporate recognized elements of environmental and social good practice. To be able to translate this vision on the ground, at the national level, there have to be institutional and human capacities as well as monitoring systems that provide such processes the right impetus, timely rewards, and penalties. 91. Social effects will require more attention. Hence, while the environmental assessment focuses on the weakness of the existing waste electronic equipment management practice in TC and its regional/local offices, the social assessment moves beyond, to reflect on the social protection measures, available, in general, in the country. The key element for mitigating the identified environmental and social risks is a proposed set of activities to improve governance, strengthen capacity and training, and improve outreach and information. Core Principle 2: Natural Habitats and Physical Cultural Resources 92. The PforR does not cover any civil works. However, the development of ESMP with e-waste management procedures will be recommended. Further implementation in the PforR to avoid adverse impacts on natural habitats from inappropriate handling and disposal of waste electronic and electrical equipment will be required. The procedures for environmental control and monitoring will be developed and operationalized in TC and its regional/local offices to prevent inappropriate e-waste disposal and handling. Core Principle 3: Public and Worker Safety 93. In analyzing a program for consistency with the sustainability principles of OP/BP 9.00, the ESSA is intended to ensure that programs supported by PforR financing are implemented in a manner that maximizes potential environmental and social benefits and avoids, minimizes , or mitigates any and all adverse environmental and social impacts and risks. Essentially, the ESSA process seeks to improve institutional performance related to the program’s development objectives. Core Principle 4: Land Acquisition. 94. This core principle aims to manage the land acquisition and loss of access to natural resources in a way that avoids or minimizes displacement, and assist affected people in improving, or at a minimum restoring, their livelihoods and living standards. 95. It is not applicable, as the activities to be supported under the program will not require land acquisition. Nor will there be any restrictions on land use and accesses, since ICT equipment will be installed within the existing buildings only. Core Principle 5: Indigenous Peoples and Vulnerable Groups 96. This core principle aims to give due consideration to the cultural appropriateness of, and equitable access to, Program benefits, giving special attention to the rights and interests of the Indigenous Peoples and to 32 the needs or concerns of vulnerable groups. The core principle also emphasizes the need of giving attention to groups vulnerable to hardship or disadvantage, including as relevant the poor, the disabled, women and children, the elderly, or marginalized ethnic groups. If necessary, special measures are taken to promote equitable access to program benefits. 97. This Core Principle is applicable (except for Indigenous Peoples since there are no indigenous peoples in Tajikistan identifiable under the World Bank Policy). 98. Strengths : There is a strong political commitment at the national, provincial, and local levels to reduce poverty and inequity, and to improve access of all social categories to basic social services and economic infrastructure. The Targeted Social Assistance Program and Program of Social Benefits are implemented nation-wide. 99. Gaps: The existing monitoring and evaluation system for targeted social assistance is incomplete and unreliable, and consequently is not fit to inform policymaking. Lack of clarity and consistency regarding the implementation mechanism for consultation and stakeholder engagement could alienate poor and vulnerable groups. 100. Actions and Opportunities : A Stakeholder Engagement Plan (sensitization and awareness, consultation, information disclosure and grievance mechanism) should be developed as part of the outreach program, particularly targeting the vulnerable groups. Engagement of NGOs, business associations and other civil society organizations to support with outreach and capacity building of vulnerable taxpayers is required. Risks : Key social issues are: i) potential exclusion of taxpayers or vulnerable groups, especially those lacking ICT skills/experiences or technological resources, to access the project benefits/results/incentives; (ii) the possibility that enhanced tax compliance will imply short-term income impacts that would disproportionately affect small and medium enterprises (SMEs) including poor and/or vulnerable taxpayers; (iii) removal of selected tax incentives for new taxpayers will impact the price of the energy prices and mining commodities (gold, coal), and ultimately the end customers will bear part or all of the cost. Core Principle 6: Social Conflict 101. This Core Principle aims to avoid exacerbating social conflict, especially in fragile states, post -conflict areas, or areas subject to territorial disputes. 102. This Core Principle is applicable. Tajikistan is a fragile country affected by internal social tensions and security challenges at the border districts, although the incidences and conflicts differ significantly among the regions. Among them, the ethnic conflict in the Kyrgyz-Tajik border in the north, and 1,500 km of the Afghan border is affected by drug trafficking. GBAO accounts for the highest level of relative poverty measure. 103. Risks: Unemployment among the youth and vulnerable peoples is quite high, which represents a source of instability and a potential threat for the country as a whole. Vulnerable villages along borders and the absence of sustainable income sources can impact the program accomplishments and service delivery in the affected areas. 33 SECTION VIII – ENVIRONMENTAL AND SOCIAL KEY ACTIONS: INPUT INTO THE PROGRAM FOR RESULTS ACTION PLAN 104. ESSA preparation was chiefly based on consultations with key stakeholders. These engagements enabled gauging expectations against the related environmental and social risks and the identification of possible mitigation measures to alleviate those risks. The ESSA Action Plan has been developed to augment the Program and ensure that actions critical to the delivery of the PDO are achieved in an environmentally and socially sustainable manner. In a broader context, the measures recommended are designed to help proponents improve system performance and to address gaps identified. 105. This section summarizes the key measures that need to be taken during Program implementation for social as well as environmental aspects. In a broader context, the measures recommended are designed to help proponents improve their system performance and to address the discussed risks. 106. Table 4 below summarizes the potential mitigation measures identified for environmental and social gaps and risks for the Program. Table 4: Environmental and Social Gaps & Risks and Mitigation Results Areas Environmental and Social Gaps and Risks Potential Mitigation Measures Result Area 1: •Gap in the capacity to manage e-wastes; •ESMP with e-waste management procedures Simplified Tax System. •Gaps in the capacity building of ICT staff and will be developed and implemented; ICT skills of tax administrators; •A comprehensive ICT capacity building action •Gap in the capacity to implement continuous plan for tax staff will be developed and training and improving employee knowledge; implemented; •Risk of negligible environmental impact due to •A system of continuous in-service training and improper management of e-wastes; on-job mentorship should be developed, •Risk of non-compatible information systems annual staff training plans and on-job-training with other government agencies, which will be implemented to improve the increases the time and cost for tax compliance qualifications of employees; for taxpayers; •Interagency information system compatibility •Risk of resistance to ICT changes and reforms assessment will be conducted to fill in the gaps on behalf of tax administrators; to reduce time costs of taxpayers; •Risk of social implications from the Tax Code •Conduct meaningful stakeholder consultations, amendments, particularly related to the analyze social implications before introducing elimination of selected tax incentives for new tax amendments; specific subsectors; • Take into account the environmental impacts •The environmental risks associated with of the alternative sources of energy and alternative energy sources that may replace stimulate less-polluting forms of energy new hydropower plants; production (renewable), rather than sources •The environmental risks of developing causing pollution (e.g. coal power); alternative sources of materials as a result of •Assess the overall impact of alternative sources reduced mining activities. of materials on the environment. 34 Results Areas Environmental and Social Gaps and Risks Potential Mitigation Measures Area 2: Improved •Gaps in public outreach and securing public •Taxpayer Communication Plan is developed, quality of taxpayer access to tax expenditure plans as part of the implemented and institutionalized; services draft annual republican budget disclosure; •Taxpayer feedback mechanism is •Gaps in taxpayer education and feedback institutionalized at the Call Center and its staff mechanisms; capacity is built; •Gap in interaction of taxpayers with tax •Tax service centers will be established in nearly authorities in electronic form; all local tax authorities, if possible, in some •Gap in poor knowledge of taxpayer rights and rural densely populated areas where taxpayers obligations; have no access to internet; •Gap in taxpayer feedback mechanism given •Annual taxpayer education and communication only one-way communication plans are developed and implemented in all tax •Risk of social tensions in response to non- authorities; participatory proceedings on enforcement of •Effective grievance redress mechanism is new tax regulations and lack of tax expenditure established and maintained in tax offices of reporting; different levels; •Risk that quality and accessibility of tax services •Effective methods for taxpayer education and in remote areas is not adequate; awareness are developed and applied. •Risk of limited coverage of taxpayers by educational and outreach activities. Area 3: Improved •Gaps in capacity to conduct a consolidated, •Capacity-building activities for professional Voluntary Compliance systematic and focused analysis of compliance staff in compliance risk management and tax risks and to systematically analyze trends and audit functions in risk management, risk-based performance indicators for different taxpayer audit and trend analysis will be implemented; segments, industries and tax obligations. •Tax audit schedule and compliance •Risk of frequent time‐ and resource‐intensive requirements will be publicized; tax inspections of taxpayers to be continued. •Meaningful stakeholder consultations are held •Risk of broader public behavioral response to on a regular basis; new tax procedures and Tax Code •Analysis of social implications of new tax amendments; provisions is completed before any tax •Risk of resistance to the transition from amendments introduced; informal to a formal business mode in order to •Sizeable communications and taxpayer keep practicing tax evasion, as well as push outreach and education activities are back from specific stakeholder groups, such as completed based on the Taxpayer grey or illegal importers. Communication Plan. 107. The ESSA Action Plan proposes five actions across three main areas: governance; training & capacity building; and communications, outreach & feedback mechanisms. Those actions are as follows: Governance: A1. Hire E&S Specialists responsible for (1) communication and outreach, (2) outreach to taxpayers to ensure compliance, and (3) environmental and social risks mitigation, monitoring, and reporting by the PIG. 7 A2. Perform a gap analysis of licensed e-waste management facilities in Tajikistan against the Bank’s requirements/GIIP prior to sending e-waste to the facility and update ESMP to include corrective actions to address any identified material issues. Implement and report on the ESMP with e-waste management procedures; A3. Establish taxpayer service centers in all district-level tax authorities, and if possible, in some rural densely populated jamoats (sub-districts), where taxpayers have no access to the internet. 7 PIG should be staffed with adequate professional, fiduciary, environmental and social risk management, administrative and technical personnel, with qualifications, experience and terms of employment acceptable to the Bank, as described in the Program Operations Manual. 35 Training and Capacity Building: A4. Modernize, strengthen and implement the system of continuous in-service training and on-job mentorship to improve the qualifications of employees with a specific focus on women promotion, including development and implementation of an action plan for tax staff ICT capacity building. Communications, Outreach and Feedback Mechanisms : A5. Prepare and implement Taxpayer Communication Plan with strengthened taxpayer feedback and grievance redress mechanisms (GRM) at the Call Center and local tax offices. 108. The proposed actions are also included in the Program Action Plan, which will be part of the overall Legal Agreement governing the Program. Full details of the ESSA Action Plan are found in Annex 2. SECTION IX – CONSULTATION AND DISCLOSURE 109. During the WB virtual mission in September 2020, the Environmental and Social team members introduced the Ministry of Finance and TC officials to the ESSA principles and objectives of other Bank operations. Considering the Covid-19 pandemic situation the follow-up stakeholder consultations were carried out via e-mail, virtual meetings, and phone interviews during October and November 2020. Information necessary to conduct the ESSA was gathered from: a. Communication with government agencies and key informants; b. Findings of the stakeholder consultations held by the TC during program preparation; c. Task team assessments and other related Bank activities (sector studies, country studies); d. Assessments undertaken by other development agencies, or other relevant national, regional, or sectoral assessments or analysis; e. Consultations held with the Tax Committee Departments; and f. Desk review of the relevant literature and data. 110. A multi-stakeholder virtual disclosure workshop was organized on February 2, 2021 in Dushanbe by the World Bank E&S team. It was attended by a group of diverse stakeholders from across Tajikistan. The workshop participants included business associations, government representatives, civil society, private sector, international donor agencies, and representatives of nongovernment organizations. Major feedback received from the public consultation was incorporated into the final ESSA. Notes from the workshop and a full list of participants are found in Annex 6. 111. For easy and fuller understanding, the draft ESSA was translated into Russian and disclosed on the TC and World Bank websites. The online consultation period was open during February 1-16, 2021. Two written comments were received from the CSOs and local experts and have been incorporated into the ESSA Report. English version links: https://www.worldbank.org/en/country/tajikistan/brief/consultation-tajikistan-essa-report http://wrld.bg/esoW30rv74z Russian version links: https://www.vsemirnyjbank.org/ru/country/tajikistan/brief/consultation-tajikistan-essa-report http://wrld.bg/uZB730rv75H 36 ANNEX 1: ENVIRONMENTAL AND SOCIAL LEGAL AND REGULATORY FRAMEWORK 1. The system of legal acts in Tajikistan includes the Constitution; international agreements to which Tajikistan is party; codes and laws; joint resolutions of the two chambers of the parliament, Majlisi milli (National Assembly) and Majlisi namoyandagon (Assembly of Representatives); resolutions of Majlisi milli and resolutions of Majlisi namoyandagon; decrees of the President; resolutions of the Government; resolutions of ministries, state committees and other state bodies; and orders of the local executive authorities. Also, there are several relevant National Plans that can be considered as guiding documents such as the National Development Strategy for the period to 2030 and the Sustainable Development Transition Concept. Environmental Policies, Laws and Regulations Applicable to the PforR. 2. The Law On Environment Protection (2011) stipulates that Tajikistan's environmental policy should give priority to environmental actions based on scientifically proven principles to combine economic and other activities that have an impact on the environment with nature preservation and the sustainable use of resources. The Law defines the applicable legal principles, the protected objects, the competencies and roles of the Government, the State Committee for Environmental Protection (CEP), the local authorities, public organizations and individuals. The Law also stipulates measures to secure public and individual rights to a safe and healthy environment and requires a combined system of ecological expertise and environmental impact assessment of any decision on an activity that could have a negative impact on the environment. 3. Environmental regulations and standards are also set for air and water pollution, noise, vibration, magnetic fields and other physical factors. Several ministries/committees determine environmental quality standards, each in its field of responsibility. Standards are divided into national, territorial, sectoral and standards into account the requirements to means of production, transport, processes, raw and other materials, the working environment as well group protection of workers. 4. The Law of the Republic of Tajikistan On Wastes of Production and Consumption (adopted on May 10, 2002 and amended on June 28, 2011) defines types of wastes, property rights on wastes; responsibility of waste owner, etc. There are several regulations on extracting metals. The Law does not define electrical and electronic wastes (e-waste), however. There is no specific regulation that defines procedure for e- wastes utilization/recycling either. Since the e-waste contain a lot of precious and semi-precious metals there are several Decrees of the Government of the Republic of Tajikistan on metal scrap recycling that can be applicable to e-waste. In 2011, the Government approved procedures for collection and removal of industrial and municipal waste (2011 Resolution of the Government #279). According to the procedures, special container sites shall be installed in urban and rural settlements. The sites shall be covered with asphalt, lit equipped with runoff and have easy access for inhabitants and transport operators. 5. Decree #184 adopted on April 30, 2012 by the Government of the Republic of Tajikistan On Approval of the Procedure to Write Off the State-Owned Fixed Assets is applicable in case of e-waste recycling. The Decree describes the steps, which state-owned fixed asset Keeper should follow to write them off. If the owner of the fixed asset is the Republic of Tajikistan then the central apparatus body with corresponding responsibility takes a decision about writing them off. In case the fixed assets are in municipal ownership, the corresponding Majlisi (councils), heads of Gorno-Badakhshanskiy Autonom Region, other regions, towns and districts take decision about writing off the fixed assets. After receiving a permit to write-off the fixed assets from the responsible authority, the fixed assets Keeper has three months to (i) demount 37 and break into pieces the fixed asset; (ii) sort out scrap part into black and color metals, store scrap and account it; (iii) get consent from the State Instrumental Supervision Authority at the Ministry of Finance of the Republic of Tajikistan to extract precious metals from the scrap, recycle at the licensed faculties and hand over to the Ministry of Finance, and (iv) report to the responsible authority (the one who gave permit) on written-off fixed assets. Social Policies, Laws and Regulations Applicable to the PforR 6. As the fundamental law of the State, the Constitution defines the structure of the government, basic rights, liberties and responsibilities of its citizens, as well as the powers of the legislative, executive and judicial branches. Article 5 mandates that: The life, the honor, the dignity, and other natural human rights are inviolable. Human rights and freedoms are recognized, observed, and protected by the state. Article 12 guarantees that: The economy of Tajikistan is based on different forms of ownership: freedom of economic and entrepreneurial activity, equality of rights, and legal protection of all forms of ownership, including private property. Some key strategies, laws and regulations that have relevance for social protection for the Tajikistan Tax Reform Program are presented below. 7. National Development Strategy (NDS) for the period of up to 2030 sets a target of increasing domestic incomes by up to 3.5 times and reducing poverty by half by 2030. The country’s macro -fiscal context suggests that domestic revenue mobilization remains a top policy priority to facilitate the required fiscal consolidation in a context of an already high level of debt. At 22 percent of GDP, Tajikistan’s total tax effort is close to the average for lower-middle-income countries. However, more revenues from low- distortion taxes are needed to support Tajikistan’s robust development agenda of poverty reduction, social service delivery, and infrastructure upgrade and expansion. 8. Tax Administration Development Program for Tajikistan 2020-2025 is a medium-term program based on the priorities of the National Development Strategy of the Republic of Tajikistan for the period up to 2030. It is aimed at simplifying and making accessible taxpayers services and increasing tax discipline of taxpayers, ensuring consistent development of the tax administration system, introducing ICT best practices and further improving tax relations between taxpayers and tax authorities. Moreover, the main lines of action to improve tax administration for the TC will be to ensure compliance with tax legislation by improving the service mechanisms, the consistent development of automation systems for tax administration, remote interaction between taxpayers, state bodies and local governments , and building the tax culture in taxpayers. 9. As part of the implementation of the State Program on Development and Introduction of Information and Communication Technologies in the Republic of Tajikistan for 2018-2020, and using the interagency Data Processing Center infrastructure, the TC is currently exchanging data offline with the following ministries and agencies of the Republic of Tajikistan: Ministry of Finance, State Agency for Statistics, Customs Committee, Agency for Social Insurance and Pensions, Procurement Agency, State C ommittee for Land Management and Geodesy, State Traffic Inspectorate under the Ministry of Internal Affairs, Nationa l Bank of Tajikistan; State Savings Bank “Amonatbank” and commercial banks of the RT. 10. Within the framework of the Law on Protection of Personal Data (2018), Law on State Secrets (2015), and Law on Protection of Information (2005), in accordance with the agreement No. 2019-190, dated 19.12.2019 signed with the Head Office of State Secrets under the Government of the Republic of Tajikistan, the TC has carried out certification and examination of the Integrated Tax Management Information System and its information and communication infrastructure. 38 11. Tax Code of the Republic of Tajikistan stipulates the legal provisions on setting, amending, cancelling, assigning and payment of taxes, as well as regulates the relations between the state and taxpayers in regards with implementation of tax obligations. It also defines the organizational structure of tax authorities, their rights and responsibilities, methods of tax control and measures for tax legislation violations. Article 81 of the Tax Code describes the right of a taxpayer to file a complaint and/or disagreement on the tax statement received, actions and inactions of tax administrators. The grievance is filed only in writing with the first instance tax authorities within 30 days of the tax statement receipt. The Code sets the timeframes for handling grievances, which is 30 days from the date of receipt of the complaint. The taxpayer can file an appeal in the upper tax administrative level or in a court. Article 104 of the Tax Code determines the specific cases for tax exemptions for physical entities receiving the Targeted Social Assistance and other social compensations and benefits. Articles 102, 104, 110, 169, 274, 278, 289 и 290 provide tax benefits for vulnerable people and people with disabilities. Article 213 (para 4) of the Tax Code stipulates the right of the labor migrants to voluntarily register with the tax authorities and make social tax payments as prescribed by the legal regulations. Patent or Certificate-Based Individual Entrepreneurs Taxation Rules approved by the Government Resolution #451 on 31.08.2012 provide tax benefits for vulnerable entrepreneurs. Besides the individual entrepreneurs engaged in retail sales and services in the streets, social workers providing services to elderly, sick and children, as well as some type of home-based individual entrepreneurs are exempted from taxation. 12. Based on the Government Resolution #456 on Tax Committee Setup issued in 2012 (last amended 2019) the structural reform was implemented in the Committee. The TC switched to the functional performance, with the aim to introduce a system of voluntary compliance with tax legislation. The main functions of the Committee are to ensure the implementation and compliance with tax legislation, develop tax administration mechanisms in order to ensure the timely and complete tax payments into the relevant budgets, participate in preparation of draft laws and other regulatory legal acts on tax issues, including contracts with other states, explain to taxpayers their rights and obligations and timely inform taxpayers about changes in the tax legislation. The Committee carries out its activities directly or through its territorial bodies in cooperation with other central and local public authorities, enterprises, institutions, organizations regardless of their forms of ownership and organizational and legal form. 13. Law on Civil Service determines the organizational and legal basis of the civil service, the legal status and social guarantees of civil servants of the Republic of Tajikistan. Article 35 of the law regulate termination of employment as a result of major changes in the organization or in instances when an organizational entity is merged or dissolved. The Law provides that in instances when certain job positions would be abolished, the redundant civil servants can be reassigned to other job positions. If transfer to another relevant civil service position is not possible, the civil servants are placed in the cadre reserve for one year and refresher training opportunities are offered. 14. As part of further reform efforts aimed at creating favorable conditions for entrepreneurial activities, involving larger numbers of citizens in entrepreneurial activities and reducing their costs when starting small and medium-sized businesses , the Law of the Republic of Tajikistan “ On state duty”, dated January 2, 2020, No. 1680, and the Law of the Republic of Tajikistan “ On state registration of legal entities and individual entrepreneurs”, dated January 2, 2020, No. 1681, were amended. As the result, payments of the state duty were cancelled for all types of state registration (regardless of the form and type of activity) of the opening, closing, reorganization of legal entities and individual entrepreneurs, branches and representative offices of foreign legal entities, as well as for getting an extract from the Unified State Registry (i.e. for taking legally significant actions related to the registration of a legal entity and individual entrepreneur). 39 15. Law on Inspections of Economic Activities issued in 2015 establishes the legal basis and procedures for inspections, procedures for conducting them, the rights and obligations of business entities, officials of inspection bodies and is aimed at protecting the health, legal rights and interests of citizens, the environment, national security and protecting the activities of audited business entities, regardless of forms of ownership. Article 10 includes thirty state bodies entitled to implement inspections of the legal entities. The newly established enterprises are inspected only after two years upon their establishment (Article 14). 16. Law on Appeals of Individuals and Legal Entities of Republic of Tajikistan (from July 23, 2016, № 1339), contains legal provisions on established information channels for citizens to file their complaints, requests and grievances. Article 14 of the Law sets the timeframes for handling grievances, which is 15 days from the date of receipt that do not require additional study and research, and 30 days for the appeals that need additional study. These legal provisions will be taken into account by the Program- based Grievance Redress Mechanism. Based on the Order # 77 of the TC Chairman, dated 11.03.2015, the Appeal Board was established in the Tax Committee to address and resolve the outstanding grievances and complaints filed. 17. Law on Freedom of Information is underpinned by Article 25 of the Constitution, which states that governmental agencies, social associations and officials are required to provide each person with t he possibility of receiving and becoming acquainted with documents that affect her or his rights and interests, except in cases provided by the legislation. Based on this Law, the Project Affected People (PAP) have the right to access the Program related information. 18. Law on Consumer Rights (2004, updated 2018) regulates legal relations between the consumer and producers, implementers, sales entities during procurement of goods, works, and services of adequate quality and safety, ensuring access to information on goods, works, and services and their producers, and secures the state and public protection of consumer rights, and describes the consumer rights implementation mechanisms. The legal provisions of this Law will be applied by the taxpayers in cases when their consumer rights to taxation services will be violated during the project implementation. According to this Law the taxpayers have a right to be informed on the tax rates to be changed and associated investments to be made to justify the new taxation procedures. 19. The Ethics Commission was formed under the Tax Committee in 2016. This Commission headed by the TC Chairman enforces the implementation of the President’s Decree # 591 dated 03.12.2015 on Civil Servants Code of Ethics. The Code regulates a set of norms, principles and rules for the official and out-of-service conduct of the civil servant, expressing the moral qualities of his professional activity and conduct at work and in the society and generally recognized moral human values, the moral requirements of society for a civil servant. A civil servant has no right to give preference and privileges to anyone on the basis of national, racial, sexual, linguistic, religious, political beliefs, education, social and property status and other grounds; s/he must show tolerance and respect for the customs and traditions of nationalities, take into account the cultural or other characteristics of ethnic and social groups, and promote inter-ethnic harmony. The Code of Professional Conduct of the Tax Employees adopted by the Tax Committee in 2017 regulates the professional behavior of the employees of the tax authorities. The Ethics Commission reviews the complaints and statements related to non-compliance with ethical norms and rules set for civil servants employed at the TC. 20. It should be noted that the legislation related to land use and acquisition is not applicable to the activities to be supported under the Program. Within Results Area 2, the Program will support rehabilitation and upgrade of ICT infrastructure. These activities are not expected to require land acquisition or impact any other land users because they will be implemented within the buildings and boundaries of the tax authorities. 40 21. Law on Public Procurement of Goods, Works and Services” (2006, amended in 2012) establishes general legal provisions on the government procurement of goods, works and services by any legal entities within the territory of the Republic Tajikistan. It regulates the procurement procedures carried out partially or completely from the state budget funds. Article 16 of this Law defines the right of complainants. Participants in the auction procedures have the right to lodge a complaint to the tender commission with regard to the selection results before the decision of the tender commission is made. Participants in procurement procedures can also lodge a complaint to the procuring organization with respect to any decision of the tender commission during 10 days after publication of results of purchasing procedures. 22. Labor Code of the Republic of Tajikistan (dated July 26, 2016) is the fundamental legislative act aimed at regulating all labor issues arising in the Republic of Tajikistan. This Code governs employment relationships and other relations, directly related, directed to protection of the rights and freedoms of the parties of employment relationships, establishment of the minimum guarantees of the rights and freedoms in the sphere of work. Article 7 of the Code prohibits discrimination and guarantees that all citizens have equal rights to work; discrimination in labor relations is prohibited. Article 22 of the Tajikistan Labor Code embraces the principle that all employees should be treated equally. Accordingly, employers cannot treat temporary and agency workers or part-time workers differently from the permanent employees unless justifiable grounds exist for the different treatment. Article 8 prohibits forced labor. Article 174 sets the minimum age at 15, however, in certain cases of vocational training, mild work may be allowed for 14 years old. 23. Articles 189-192 of the Labor Code regulate labor disputes between the employer and employee and working conditions provided by labor agreement (contract) and collective agreement and contracts. Section 5 of the Labor Code narrates the roles and responsibilities of employers and employees related to occupational health and labor safety. 24. List of International Treaties and Conventions related to Social Issues ratified by Tajikistan: • Rotterdam Convention on Prior Informed Consent (PIC) procedure (1998); • Convention for the Safeguarding of the Intangible Cultural Heritage (2006); • International Covenant on Economic, Social and Cultural Rights; • Convention on the Elimination of all forms of Discrimination Against Women; • Convention on Minimum Age for Admission to Employment (1993); • Convention on Worst Forms of Child Labor (2005); • Abolition of Forced Labor Convention (1999); • Employment Policy Convention (1993); • Labor Inspection Convention (2009); • UN Convention on the Rights of the Child CRC (1993); • Tripartite Consultation (International Labor Standards) Convention, (2014); and • Occupational Safety and Health Convention (2009). 41 ANNEX 2: ACTION PLAN SUMMARY OF ENVIRONMENTAL AND SOCIAL MEASURES The Action Plan to strengthen the implementing entities ’ environmental and social management system for addressing potential environmental and social risks associated with the PforR implementation is presented below. The proposed actions in this ESSA Action Plan are critical to the successful delivery of the PforR and it is incumbent upon the PIG to ensure they are carried out. The proposed Actions are particularly important; therefore, they are also included in the Program Action Plan, which will be part of the overall Legal Agreement governing the Program. DLI Responsible Completion Action description Due Date supported Party Measurement Results Area 1, 2 and 3 A1 - Governance. Recruit E&S At the start of 1-6 PIG E&S Specialists are hired Specialists responsible for (1) the Program communication and outreach, (2) outreach to taxpayers to ensure compliance, and (3) environmental and social risks mitigation, monitoring, and reporting by the PIG. A2 - Governance. A2. Perform a gap Prior to sending 3 PIG The ESMP is prepared, analysis of licensed e-waste e-waste to the disclosed, and management facilities in Tajikistan collection implemented. against the Bank’s requirements/GIIP facility Annual Program prior to sending e-waste to the Implementation Reports facility and update ESMP to include Ongoing implementation corrective actions to address any identified material issues. Implement Regular and report on the ESMP with e-waste reporting management procedures A3 - Governance. Establish taxpayer Year 2 6 TC Tax service centers are service centers in all district-level tax established in nearly all authorities, and if possible, in some rural tax offices rural densely populated jamoats (sub-districts), where taxpayers have no access to the internet; 42 DLI Responsible Completion Action description Due Date supported Party Measurement A4 – Modernize, strengthen and Year 1 and 4 TC An action plan on ICT implement the system of continuous ongoing capacity building of tax in-service training and on-job staff is prepared and mentorship to improve the being implemented. qualifications of employees with Annual staff capacity specific focus on women promotion, building/training plans including development and are approved, implementation of an action plan for implemented and tax staff ICT capacity building reported in each tax office A5. Communications and Outreach. Ongoing 1-6 TC -Taxpayer Prepare and implement Taxpayer Communication Plan and Communication Plan with Stakeholder Engagement strengthened taxpayer feedback and Plan implemented and grievance redress mechanisms (GRM) reported as part of at the Call Center and local tax Annual Program offices. Implementation Reports; -Effective GRM is in place in every tax office. -Regular GRM reporting 43 ANNEX 3: STAKEHOLDER CONSULTATIONS HELD The TC and the World Bank initiated a discussion on the project concept in late December 2019. The latest discussions on the program content and project design occurred from June through November 2020 via virtual meetings with the stakeholders in Tajikistan. Details about the meetings and consultations are below: Place and Date Participants Key points raised Method Dushanbe, face- October - Tax Committee • Preparation of the social and environmental to-face November, 2020 Departments on risk management documents by the TC with the WB technical support. meetings, e-mail Legislation Improvement, • Institutional GRM in place at the national and exchanges, Call Center, Taxpayers local levels phone Service Department, • E-waste management issues consultations, Department of Organizing • Regulatory and legal provisions for citizen webex Documents and Information engagement, labor management and environmental protection discussions Flow. • Organizational organigram • Program expectations and anticipated E&S impacts Dushanbe, September 14- WB Task Team, Ministry of • TRP development objectives, scope, design, virtual meetings 18, 2020 Finance, Tax Committee, main results expected, and implementation through webex Ministry of Economic arrangements of the proposed Tax Reform Development and Trade Program (MEDT), Ministry of • the World Bank-supported technical Justice (MoJ), National Bank assistance on Tax Policy and Tax of Tajikistan (NBT), State Administration Reform Project (P173237) Committee of Investment focusing on supporting the reforms of tax and State Property policy, tax administration, and tax Management (SCISPM), expenditure analysis, Custom Service and • further support the drafting of the new tax members of the Working code, as well as analytical work to assess the Group for the new Tax impact of changes on the flow of cash Code. proceeds to the budget Dushanbe, June-October, Advisory consultations /TA • Tax Administration: COVID-19 Stress testing workshops, 2020 to the Tax Code • Diverse taxation scenarios meetings, virtual amendment Working Group • Tax Compliance Strategy discussions (including representatives • Proposed Tax Code amendments related to of business associations as VAT refund, tax exemptions well). Dushanbe, December 16 to Interviews with senior and Tax Administration Diagnostic Assessment Tool Vahdat, 29, 2019 middle management of the (TADAT) was used to complete a baseline meetings, site assessment of tax administration performance. visits, interviews TC. Site visits to the Large The findings have been used to determine reform with key Taxpayer Office in priorities, and to incorporate them into the informants Dushanbe, the local tax program design. office in Vahdat district, interviews with representatives of the Chamber of Commerce and Industries. Dushanbe, January, 2020 Chairman of the TC and A draft tax administration performance Presentation and representatives of relevant assessment report was presented, and feedback consultation ministries. received from the TC and line ministries. Their with key state comments and inputs have been stakeholders incorporated in the final report and laid the ground for the tax reform priorities. 44 Dushanbe, and 4 October- 1042 respondents. • 62% of respondents are aware of the Call regions of the November, 2019 Center services. FGD participants express the country The proportion of men opinion that the Call Center is important, but surveyed was 80%. it does not affect the timely payment of taxes. 2019 Taxpayer • 70% know about the existence of the TC Perception The share of legal entities website. was 46%, dekhan farms - • Only 32% are aware about the e-application Survey 32%, and individual services. entrepreneurs - 22%. • 81% are aware of the possibility of e-filing; Entrepreneurs from Khatlon region turned out Five FGD were also to be less informed - 50%. The distribution by conducted. gender shows that men are more aware of this possibility than women - 82% and 76%, respectively. • 63% of respondents said they were using the e-filing system. • 90% of VAT payers use this service. E-invoicing option is mostly used by entrepreneurs from Dushanbe - 93%. • 61% of entrepreneurs surveyed are aware of the e-mail option. Only 11% of those aware used it. • The vast majority of respondents visited local tax offices - 92%. These were represented by legal entities dekhan farms and entrepreneurs from rural areas. • 20% of the total number of surveyed entrepreneurs used a Single Window. The main reasons for applying: need to amend documents - 36% and re-registration - 20%. • Workshops are one of the most important tools for raising awareness of entrepreneurs in the field of taxation. Out of the total number of respondents, 44% of respondents participated in workshops. • Almost half of the respondents (45%) indicated that, based on the results of audits, they had been charged additional taxes and penalties. At the same time, the vast majority replied that they agreed with the decision of the tax authorities and only 17% indicated their disagreement. Lessons Learned in Engaging Stakeholders from Previous Projects: Community mobilization and involvement play important roles in ensuring relevance and ownership of interventions. The project draws on the stakeholder engagement experience under several World Bank (WB) and other donor-supported projects 8 to identify effective approaches to citizen engagement. During the discussions with the WB ESF team members it was recommended that the project team should take into consideration the impact of COVID-19 on the project design, risks and DLI targets. Annual taxpayer surveys during TARP to be continued during TRP. The Tax Code, the provisions and instructions on taxation and the practical implementation of the tax system were highlighted as the key elements of the system in the 2019 Taxpayer Perception Survey. To determine general understanding of the tax system, the following indicators were formulated: simplicity and clarity, uniform interpretation and impartial application. Most respondents named the following factors that can effect an increase in the level of voluntary and autonomous payment of taxes by taxpayers: • Improvement of the knowledge of taxpayers in the field of tax legislation; 8 World Bank Tax Administration Reform Project (TARP); Bank-executed Trust Fund Tajikistan Tax Policy and Administration Reform (TF0B2202), financed by the Global Tax Program (GTP) – a Multi-Donor Trust Fund, supported by a broad circle of international development partners 45 • Tax burden reduction; • Simplification of the tax system and tax calculation procedure; and • Reducing the number of inspections and the amount of fines. Insufficiency of information to raise awareness in the field of taxation was noted in almost all focus group discussions held. The total key performance indicators (KPIs) of all services provided to taxpayers by the Tax Committee of the Republic of Tajikistan was 82%. The satisfaction with the taxpayer services provided was based on certain key processes, and the TC KPIs were rated as follows: • Call center - 95%; • Website - 75%; • Electronic application to the Tax Committee of the Republic of Tajikistan - 54%; • Electronic filing of returns - 81%; • Electronic invoicing for VAT - 90%; • Services at tax offices - 90%; • Services by the Single Window - 92%; • Workshops - 81%; and • Overall satisfaction with services - 82%. The results obtained will serve as a baseline study to assess the KPIs for upcoming investments. Feedback received from taxpayers interviewed during program preparation, especially urban businesses noted improvements in the ease of filing taxes, as paper copies are no longer required to accompany e- submissions. E-filing is still less popular among individual entrepreneurs and farmers, who may have limited access to the internet. 46 ANNEX 4. BENEFICIARIES AND STAKEHOLDERS’ EXPECTATIONS, ISSUES AND CONCERNS RELATED TO THE PROGRA M Consultation meetings were held with different stakeholder groups. Program information were shared to evince their expectations and the issues/ concerns thereof. These consultations helped in understanding not only the current functioning of the system but also in ascertaining the social issues likely to be addressed by the program. The results so obtained were consolidated and the initial set of impacts likely to occur as a result of the program interventions tabulated. Consultations were held that covered a variety of stakeholders in order to identify gaps, risks, and potential actions. The Program beneficiaries and stakeholders will have different expectations from, and issues related to, the Program Table 5: Expectations, Issues, and Concerns 1. Group/ 2. Expectations from the 3. Current Status 4. Concerns and issues 5. Significance 6. Enabling Conditions required Subgroup Program of Risks Ministry of Secure funding to meet the MoF faces substantial • More revenues are needed to support Tajikistan’s High Conduct ICT-based Finance priority objectives of the Tax challenges in mobilizing robust development agenda of poverty reduction, social governance assessment and (MOF) Administration Development inclusive domestic service delivery, and infrastructure upgrade; implement new ICT-based and its Tax Program for Tajikistan 2020- revenues because of long- • Weak capacity to conduct quality tax policy analysis governance model in the tax Policy 2025, with specific focus on standing challenges with (including tax incidence), forecasting and policy system; Department improving tax collection, tax policy design and formulation. reducing the administrative administration. • While the recent proposal for amendment to the Tax Build capacity of the MoF burden of taxpayers, and Code has addressed many policy issues, few professional staff to develop increasing transparency of the Insufficient resources to improvements are needed to the administrative and and implement evidence- tax system. promote broad-based procedural part of the code. MOF will need to address based tax policy analysis; governance reforms. legislative and administrative hurdles to allow the TC to be more effective in fulfilling its role to combat tax Harmonization of tax evasion and default. Legal provisions will need to be legislation with other laws: added for facilitating online inter-agency data exchange adopt critical secondary and information matching. legislation for implementation of new Tax Code to be approved by 2021. Tax Committee Receive technical assistance and Improvements in Tax • A plethora of tax exemptions that introduce complexity High Integration and enhancement of the Central financial support for Administration have been and distortions into the tax system, increase compliance automated information and Apparatus and implementation of the Tax achieved with support of costs, and make the tax system harder to administer; analytical systems its Departments Administration Development the WB TARP project: • Low capacity of TC to detect tax evasion and locate non- Program for Tajikistan 2020- • Major business filers; Digitalization of taxpayer services 2025 processes are • Limited use of risk-based approaches in audit; and taxation operations automated through • Insufficient governance, internal control and utilization ITMIS and HRMIS; of taxpayer data, information and communication On-job training and mentoring technology (ICT) systems, and related databases; opportunities 47 Improve the technological • 40 taxpayer services • No use of taxpayer feedback in enhancing taxpayer infrastructure, reengineer and are available in on-line services; Effective GRM is in place automate taxpayer services form; • Limited use of critical taxpayer e-services by individual • Call Center is entrepreneurs and individual taxpayers (e.g. e- Enhance the integrity and established; declaration); capacity of tax authorities • New Tax Code, aiming • Low capacity to deliver high-quality taxpayer services to make the tax system and simpler, less • Taxpayers’ limited awareness of their rights and distortionary and more responsibilities. transparent is in development; and • Annual taxpayer surveys implemented for the last 3 years. Regional and Enhance the integrity and These 78 offices service • Due to complexity of the tax legislation, demand for High Integration and enhancement of the district level Tax capacity of regional and local about 39,000 legal taxpayer services is high. Yet the level of taxpayer automated information and Offices tax authorities; entities paying 14 service is low. Since more than 75 percent of field tax analytical systems different taxes and about offices have less than 20 employees, maintaining the Procure new PCs and other 150,000 physical persons required professional skills to satisfy growing taxpayers’ Digitalization of taxpayer services office equipment for regional paying social security and demand for services is difficult; and taxation operations divisions one or several of the 10 • About a third of the offices do not have their own other taxes. premises and lack modern office equipment and On-job training and mentoring technologies; opportunities They follow the single • Technical capacity of staff is inadequate; and window approach and • Lack of analytical capacity and insufficient knowledge of Effective GRM is in place offer taxpayer registration modern computer technologies for analysis, audit and services at the local level. investigation of tax fraud. State Improving the mechanisms for Committee has the Real estate tax payment data mismatching against Real Moderate Use of large-scale Investments the exchange of information database on the state- Estate Register data at the State Investment Committee data-matching systems to Committee and between state bodies and owned real estate and detect inaccurate reporting Immovable organizations; often it is rented by between the state agencies. Property private businesses. Management It also oversees the investment projects and maintains the database of foreign aid investments. 48 State Enhance the institutional Controls over the Low penetration of technologies and lack of digitization in Substantial Preparation, disclosure and Procurement capacity of the TC in e- implementation of state rural areas; implementation of the Project Agency procurement of goods, procurement of goods, services, Procurement Strategy for services and works by the Low investment attractiveness of the sector; and works for training centers Development under the IPF and data centers state organizations. component. Insufficient number of procurement staff countrywide; Improving the mechanisms for Builds the capacity of and Use of large-scale the exchange of information state procurement staff. data-matching systems to between state bodies and Maintains a separate registration database for national detect inaccurate reporting organizations; Conducts international service and good providers. between the state agencies. tenders and monitors the compliance to the national legislation. 49 ANNEX 5. COMPLAINTS HANDLING MECHANISM AT THE TAX COMMITTEE The TC considers taxpayers/citizens’ complaints and appeals in accordance with the Law of Republic of Tajikistan on Appeals of Individuals and Legal Entities (from July 23, 2016, № 1339) that contains legal provisions on established information channels for citizens to file their complaints, requests and grievances. Article 14 of the Law sets the timeframes for handling grievances, which is 15 days from the date of receipt that do not require additional study and research, and 30 days for the appeals that need additional investigations. Citizens apply to the TC with their appeals and complaints in three ways: 1. Written applications 2. Electronic applications – through TC website http://www.andoz.tj; E-mail -info@andoz.tj 3. Through Call Center – 151, 152 Department for Organizing Document Flow and Office Work (former General Department) at the Tax Committee Headquarter in Dushanbe is responsible to accept citizen written appeals, register them in the separate Notebooks of statistical accounting of appeals of individuals and legal entities, and makes sure the customers’ requests are addressed properly and in timely manner . Briefly the process of the complaints considerations is indicated in the figure below: Reception and Direction of the Written registration of the Consideration and notification of the appeal to the resolution of the appeal\complaint appropriate issue within 15 days citizen on the in books and Department within appeal or or more electronically TC complaint status Different appeals are being registered in the separate books and also electronically in the Electronic Document Flow Program that had been operating since 2014 internally within the TC headquarter only. In April 2020 the Electronic Program was upgraded and now all divisions of the Tax Committee Headquarter and Oblasts Tax Administrations have access to it. There are 7 specialists in the Department that are processing citizens appeals. 50 Below is the contact person directly responsible for receiving incoming letters and reverting back to citizens: Shahnoza Yunusova Senior Specialist of Department for Organizing Document Flow and Office Work 734018, 42/2 Negmat Karabaev str. Work phone #: 233-06-86 Mobile phone #: 933309990 In case if the complainant does not come for an answer within 2 weeks, the Department sends the response to him/her by mail. In 2020, a total of 23049 written appeals were received by the TC from ministries, agencies, legal entities and individuals. All letters which required responses were replied and the addresees received responses. Respectively in 2020 the TC sent out 21665 letters in response to the ministries, agencies, legal and physical entities. The remaining 1384 letters did not require responses, as they were submitted for the information. Time for consideration of citizens' appeals depend on the raised issue, some issues may be solved immediately, others within 15-30 days. Responses to citizens' appeals are given in writing on TC letterhead with the outgoing number. If the raised issue is addressed it is being recorded in the book. At province/oblast and districts levels there are no such special departments for receiving applications from citizens and taxpayers, the designated specialists are responsible for this. Table 6 below indicates specialists responsible for registration and processing citizens and taxpayers appeals at Central and Oblast level: # Name Position Contact # Tax Committee Headquarter, Dushanbe Department for Organizing Document Flow and Office Work 1. Firuzahon Alieva Head of Department 929800005 2. Sailigul Odinaeva Deputy Head 951450010 Taxpayer Service Department 3. Jamshed Nurmahmadiyon Deputy Head 909071017, jshermatov7@mail.ru 4. Mehrob Ismoilov Head of Division on 987253333, Information and Mehrob.3333@mail.ru Consideration of Electronic Appeals Legal Support Department 5. Bahriddin Nabiev Head of Department Tax Administration in Dushanbe city 6. Shahnoz Hasanova Leading Specialist 934171246 Tax Administration in GBAO 7. Nizora Muborakshoeva 501201992 Tax Administration in Khatlon Region 8. Bunavsha Zabirova Specialist 112252626 Tax Administration in Sughd Region 9. Saboat Rahimboeva Chief Specialist 927463192 The Call Center was established under the Taxpayer Service Department of the Tax Committee in December 2017, with employees responsible for answering all incoming calls on issues related to the applicat ion and compliance with tax laws, as well as complaints about unlawful actions or inaction of tax officials. 51 The TC’ Division of Information and Consideration of Electronic Appeals under the Taxpayers Service Department is responsible for processing electronic appeals from taxpayers through TC website at email: info@andoz.tj. Electronic appeals are also being recorded. Appeals on official letterheads are forwarded to Department for Organizing Document’ and Work Flow , the rest are forwarded to the First Deputy Chairman of the TC for further processing. Responses to electronic inquiries from individuals are provided within 3-5 days. There is also a chat on the TC website, where the operators of Call Center immediately respond to citizens appeals. Seven operators of the TC headquarter Call Center answer general questions of taxpayers at contact number 151 and about the individual taxpayer contact number 152. Table 7 below indicates number of citizens’ appeals (electronic , TC website chat, phone) received by TC Headquarter in the period of January -September 2020: Table 7. Number of citizens’ appeals received by the TC Headquarter during January -September 2020: Type of appeal # of appeals within January-September 2020 E-mail 640 TC website Chat 435 Calls to 151 20837 Calls to 152 2755 At the province level, there are following numbers for taxpayers to obtain information: Region Contact phone numbers GBAO 20040 Sughd 909 Khatlon 154 There is also helpline at the TC Chairman office: +992 372 233 09 05 If the taxpayer does not agree with the results of the tax audit, he can apply to the Appeal Board that was established in the Tax Committee based on Order # 77 of the TC Chairman, dated 11.03.2015, t o facilitate trans parent dispute resolution and increase taxpayers’ trust in the process. In addition to the above, citizens have an opportunity to meet directly with the leadership of the Tax Committee in accordance to the following schedule of citizens’ personal reception: # Official of TC Day Time of citizens reception 1. Mr. Davlatzoda N., Chairman of TC Wednesday, from 9:00 to 12:00 Saturday 2. Mr. Solehzoda A., First Deputy Chairman Monday from 9:00 to 11:00 3. Mr.Bakhtiyor Sulton, Deputy Chairman Wednesday from 9:00 to 11:00 4. Mr.Rahimzoda A.,Deputy Chairman Thursday from 9:00 to 11:00 5. Mr. Melikzoda K., Deputy Chairman Tuesday from 9:00 to 11:00 6. Mr. Malikzoda N, Deputy Chairman Friday from 9:00 to 11:00 52 ANNEX 6. A MULTI-STAKEHOLDER VIRTUAL DISCLOSURE WORKSHOP MINUTES Date: February 2, 2021 Meeting held: Webex connection Attendees: 19 attendees The workshop participants included business associations, government representatives, civil society, private sector, international donor agencies, and representatives of nongovernment organizations. Meeting purpose: • Share the results of ESSA and evince a feedback. • Deliberate on strength and weaknesses of the existing system and agencies responsible for managing environmental and social risks that may occur in the course of the Program implementation. • Discuss and deliberate on the Program Action Plan meant to address the gaps in the national system to manage social and environmental risks. • Improve coordination and partnership among stakeholders. Topics of discussion: Overall, the meeting welcomed the Program intervention and felt that the time is apt for such an intervention. The meeting expressed happiness on the Program’s objective to open the doors for all sections of the society, business associations, mass media, private sector and international donor representatives . Key focus was on ‘ transparency of tax reform’. Keen interest was shown in knowing what avenues exist in the program for CSO participation and citizen active engagement in decision making process. Ultimately, the meeting emphasized securing access to information in rural areas where there is low penetration of internet and e-services to be offered by the TC. Same time, several concerns were raised on efficacy of the TC offices in service delivery. Meeting recommended establishing taxpayer service centers in rural tax offices. Some specific questions raised are listed below. • Benefits for vulnerable taxpayers. What types of benefits are proposed within the new TAX Code for vulnerable taxpayers? Will the trainings/educational activities be adjusted to/considerate of the needs of vulnerable groups? Is there a way of creating a rural tax education center at the district center? Will there be a dialogue platform based in rural areas to ensure transparency of the system? • Is there any information campaign plans, information materials available which lists the program details? • How the GRM structure is set and will be improved to meet the complainants expectations? • What is the duration of the Program and when is it likely to start? • Improvement of quality tax services. Implementation of ICT modules will require to enhance the ICT skills of both the tax administrators and taxpayers. What are the capacity building plans? • Improvement of taxpayer outreach and education. Will all tax administrators go through trainings, since they will be serving the taxpayers in the front desks as firsthand advisors/consultants to the taxpayers? • Increase citizen participation in decision making process, as the program promotes citizen engagement in project implementation List of participants 53 Full Name Position 1. Aminjon Solehzoda Deputy Chairman, Tax Committee 2. Rahimzoda A Deputy Chairman, Tax Committee 3. Suyuhon Rustamov Head of the Tax Legislation Improvement Department, TC 4. Manizha Sayfiddinova Head of International Cooperation Department, TC 5. Umedzhon Khairiddinov Deputy Head of International Cooperation Department, TC 6. Abubakr Kholikov Chief Specialist, Tax Policy Department, Ministry of Finance 7. Akmal Murotaliev Chief Specialist, Agriculture Department, Ministry of Economic Development and Trade 8. Murod Boturshozoda Head of Single Registry Department, State Investment Committee 9. Alisher Karimov Head of Customs Control Department, Customs Committee 10. Hassan Aliev Senior Public Administration Specialist, WB Country Office in Dushanbe 11. Nasiba Saidova Program Assistant, WB Country Office in Dushanbe 12. Hmayak Avagyan Environmental Specialist, World Bank 13. Muattar Khaidarova Independent expert 14. Kamo Petrosyan ICNL Country Office Tajikistan 15. Nazir Nazirzoda Leading Specialist, Tax Legislation Improvement Department, TC 16. Mavlono Ghafforiyon Specialist of SUE tax administration programming center “Andoz TJ” 17. Obidi Muhammadsaid Head of Information and Consideration of electronic appeals Division, Taxpayer Service Department 18. Gulchehra Madaminova Head of Planning and Analysis Sector, Financial Economic Department, TC 19. Sobir Vazirov Head of Tax Legislation division, TC Draft ESSA was also posted for online consultations at the WB country office website. The online consultation period was open from Monday, February 1, 2021 to Wednesday, February 16, 2021. The disclosure links are provided below: English version links: https://www.worldbank.org/en/country/tajikistan/brief/consultation-tajikistan-essa-report http://wrld.bg/esoW30rv74z Russian version links: https://www.vsemirnyjbank.org/ru/country/tajikistan/brief/consultation-tajikistan-essa-report http://wrld.bg/uZB730rv75H Two written comments were received from the CSOs and local experts and have been incorporated into the ESSA Report. 54