The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Tax Reform Operation (P171892) EUROPE AND CENTRAL ASIA | Tajikistan | Governance Global Practice | Requesting Unit: ECCCA | Responsible Unit: EECG1 IBRD/IDA | Program-for-Results Financing | FY 2021 | Team Leader(s): Raul Felix Junquera-Varela, Hassan Aliev, Joey R Ghaleb Seq No: 7 | ARCHIVED on 12-Jun-2024 | ISR60769 | Created by: Joey R Ghaleb on 28-May-2024 | Modified by: Joey R Ghaleb on 10-Jun-2024 Program Development Objectives PDO Table Program Development Objective (from Program Appraisal Document) To simplify the tax system, enhance quality of taxpayer services, and improve voluntary compliance. Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Implementation Status and Key Decisions The operation continues to perform satisfactorily in terms of progress towards respect to prospects of achieving its the development objective and overall implementation progress. Disbursement is at 67% of the Bank financing (up from 54% in December 2023). Total disbursement as of June1, 2024 is about USD 31.5mn. Detailed progress for each DLI is provided below.  DLI 1 - Selected preferential tax and customs incentives eliminated. The DLI has been fully achieved. The new tax code was approved by the Government on September 2, 2021 and ratified by Parliament on December 17, 2021. The new law eliminated over 14 incentives.  DLI 2 - Regulatory foundations for improved tax system established. The DLI has been fully achieved. After meeting DLR 2.1 (identifying the required bylaws), DLR 2.2 was also achieved with the drafting and publication of all required bylaws to implement the tax code. As of January 2024, eighty-four (84) bylaws have been approved by the relevant authorities and published in the official gazette. TC continues its taxpayers’ awareness campaign to disseminate the tax code and complementary regulations.  DLI 3 - Improved transparency of tax expenditure. In December 2023, the TC informed the World Bank that a tax expenditure report (DLR 3.1) was prepared by the MoF. The Ministry shared the report and a list of tax incentives, quantifying the tax expenditures at 10.9% of GDP for 2022. The Bank reviewed - and subsequently - validated the tax expenditure report and the cost-benefit analysis of a select list of tax incentives. The first-year target of DLR 3.1 and 3.2 (cost-benefit analysis of tax incentives) were met in February 2024. The Bank welcomed the progress on this important DLI and encouraged the Ministry and the TC to repeat the work for the upcoming fiscal year and analyze another set of tax incentives, as outlined in the result framework.  DLI 4 – Reduced burden of tax audit. The Bank provided in-person and remote support over the last year to ensure completion of the risk analysis matrix and meet DLR 4.2. This led to the TC's adoption of a revised risk matrix in October 2023. The risk management automated module became operational on October 1, 2023. The TC also developed and adopted a methodology document (i.e., Standard Operating Procedures - SOP) describing in detail: the process of the development of the risk indicators; the selection of the risky taxpayers; the development of the risk-based audit plan; and the evaluation of the audit outcome to adjust the risk matrix. The TC also developed an annual audit plan according to the risk-based approach for the large taxpayers’ segment and started conducting issue- 6/12/2024 Page 1 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) oriented audit whenever the risk is moderate and not mitigated by the desk audit. The Bank welcomed these important measures that should increase overall compliance and support meeting the targets of PDO-indicator 3.  DLI 5- Percentage of VAT refunds processed using risk-based verification. The Bank provided in-person and remote support to assist the TC in developing a solution for the automated VAT risk-based approach. The TC developed an e-filing solution to submit a VAT refund claim electronically and automated the process for the treatment of the VAT refund claims. The VAT refund automated module became operational on December 1, 2023. As a result of these changes, the refund claims - within the reporting period – are now processed via a VAT refund risk matrix with a preset threshold to sort the claims that would undergo a fast track or an in-depth track treatment. This allowed the TC to meet DLR 5 with 25% of VAT refund claims processed using a risk-based verification system. The TC is expected to meet the year 2 target of 50% of DLR 5.  DLI 6 - taxpayer service standards have been enhanced and based on taxpayer feedback. The TC established a taxpayer feedback mechanism (DLR 6.1). The Bank informed the MoF of this achievement in a letter dated April 24, 2023. The new version of the Unified Taxpayer Service Standards was developed in 2022 on the basis of the Tax Code. On May 8, 2024, the TC informed the Bank that two DLIs were achieved and verified: Producing and publishing annual reports on taxpayer feedback collected through the feedback mechanism (DLR 6.2) and publishing a revised unified standards for taxpayer service on the TC website (DLR 6.3).  DLI 7 - improved representation of women in management positions in TC workforce. The TC developed and approved an action plan to address gender gaps in the TC workforce (DLR 7.1). The Bank confirmed that the project had met this target in a letter dated April 24, 2023. Shortly after the May 2023 mission, TC met DLR 7.2 (year 1 target) with women occupying more than 9.1% of management positions. In early December 2023, TC delivered a training session attended by 98 women staff with the aim of building their capacity and to prepare them to become managers. In May 2024, the TC informed the Bank that women representation in management has surpassed the year 2 target set in DLR 7.2. This DLR was met ahead of the target date. [As of December 1st, 2023, a total of 195 women work in the TC.] Progress on the IPF Component of the operation has been slow due to delays in procurement. The agency signed 11 contracts totaling USD 3.74 million since project effectiveness. However, only 1 contract USD 123,829 has been signed since the last mission (December 2023) Six activities with total value of USD 4.202 million at different stages of procurement processing. The STC was unsuccessful in hiring IT specialists as well as a Procurement Specialist and Procurement Assistant despite several attempts due to the scarcity of experts on the domestic market exacerbated by the USD 600 salary ceiling. Overall, there are delays in procurement processing and there are concerns that there will be inadequate time to implement all activities before the project closure. The Bank will discuss mitigating measures including monthly progress meetings for timely monitoring and interventions. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P171892 IDA-D8350 Effective USD 50.00 50.00 0.00 33.86 12.97 72% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P171892 IDA-D8350 Effective 28-May-2021 03-Jun-2021 06-Dec-2021 31-Dec-2026 31-Dec-2026 Program Action Plan Action Description Capacity building on PforR implementation is conducted for the Tax Reform Secretariat and PIG 6/12/2024 Page 2 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Source DLI# Responsibility Timing Timing Value Status Within 2 months after Technical TC Other Completed effectiveness Capacity building is delivered through a series of consultations, organized by WB team for Tax Reform Secretariat Completion Measurement and PIG. Comments Action Description Third party verification (TPV) agency is contracted. Source DLI# Responsibility Timing Timing Value Status Within 3 months after Technical TC Other Completed effectiveness Completion Measurement Signed contract between PIU and TPV agency. Contracts are signed with a TPV per DLR readiness. To date, two consultancy contracts for verification of DLIs have Comments been concluded. Appointment of M&E specialist in PIG to ensure adequate M&E arrangements, data collection and monitoring of Action Description results under the Program Source DLI# Responsibility Timing Timing Value Status Within 2 months after Technical TC Other Completed effectiveness Completion Measurement M&E Specialist is hired Comments Action Description Appointment of 2 ICT specialists in PIG to ensure adequate implementation of ICT procurement under the Program Source DLI# Responsibility Timing Timing Value Status DLI 4 Within two months after Technical TC, PIG Other Delayed effectiveness Completion Measurement IT Specialists are hired Initial process for hiring of the local IT-specialists under the IPF component was unsuccessful due to the insufficient Comments budget allocated for these positions. One consultant was hired and the contract signed on March 30, 2024 Appointment of Environmental and Social (E&S) Specialists responsible for (1) communication and outreach, (2) Action Description outreach to taxpayers to ensure compliance, and (3) environmental and social risks mitigation, monitoring, and reporting at the PIG. Source DLI# Responsibility Timing Timing Value Status 6/12/2024 Page 3 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Environmental and Social Within 2 months after TC, PIG Other Completed Systems effectiveness Completion Measurement E&S Specialists are hired The Environmental Specialist was hired and contracted on September 27, 2022. Comments The Social Specialist was hired and contracted on February 20, 2022. Strengthen the M&E capacity of the tax authorities based on modern methodologies to assess key performance Action Description indicators Source DLI# Responsibility Timing Timing Value Status DLI 4 December 2021, throughout the Technical TC Other In Progress Program implementation Completion Measurement The M&E system is strengthened at the TC. Regular M&E reports on KPIs are produced Comments Action Description Training on cost-benefit analysis of tax incentives Source DLI# Responsibility Timing Timing Value Status Technical DLI 3 MoF Due Date 20-Dec-2023 Completed Completion Measurement Relevant MoF staff is trained on cost-benefit analysis of tax incentives Comments With the support of the Bank-Executed TA, the Bank delivered training on the cost-benefit analysis of tax incentives. Action Description Midline and endline taxpayer surveys Source DLI# Responsibility Timing Timing Value Status Midline survey - 2023, Technical TC Other In Progress endline survey - 2026 Midline and endline taxpayer surveys are completed and data on taxpayer satisfaction with selected available and Completion Measurement new services is available For mid-line survey, contract was signed in March 2023. The company submitted its inception report in November Comments 2023. Establish taxpayer service centers in all district level tax authorities, possibly in rural densely populated jamoats, Action Description where taxpayers have no access to the internet Source DLI# Responsibility Timing Timing Value Status 6/12/2024 Page 4 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Environmental and Social DLI 6 TC Due Date 09-Sep-2024 In Progress Systems Taxpayer service centers are established in all district level tax offices (68) and some densely populated jamoats. As Completion Measurement of June 2024, tax authorities have installed 42 service terminals, all of them equipped. The process continues with a workplan. Service Centers provide help with consultation to taxpayers, who have difficulties with submitting their electronic tax Comments declarations. The work on establishing taxpayer service centers is in progress. Modernize, strengthen and implement the system of continuous in-service training and on-job mentorship with Action Description specific focus on women promotion, including development and implementation of action plan on tax staff ICT capacity building Source DLI# Responsibility Timing Timing Value Status DLI 5 Annually throughout Environmental and Social TC Other the Program In Progress Systems implementation An action plan on ICT capacity building of tax staff is prepared and being implemented. Annual staff capacity Completion Measurement building/training plans are approved, implemented and reported in each tax office. Comments ICT Development Road Map has been approved, which provides for an action plan on capacity building for TC staff. Prepare and implement Taxpayer Communication Plan with strengthened the taxpayer feedback mechanism at the Action Description Call Center and local tax offices. Source DLI# Responsibility Timing Timing Value Status DLI 1 Throughout the Environmental and Social TC Other Program In Progress Systems implementation Taxpayer Communication Plan and Stakeholder Engagement Plan implemented and reported as part of Annual Program Implementation Reports; Completion Measurement Effective GRM is in place in every tax office. Regular GRM reporting Comments TC has submitted information on existing GRM mechanism. Currently, GRM is functioning in all tax offices. Perform a gap analysis of licensed e-waste facilities in Tajikistan against the Bank’s requirements/GIIP prior to Action Description sending e-waste to the facility and update ESMP to include corrective actions to address any identified material issues. Source DLI# Responsibility Timing Timing Value Status Environmental and Social DLI 4 TC/State Property Prior to sending e- Other Completed Systems Committee waste to the facility 6/12/2024 Page 5 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Gap analysis of licensed e-waste facilities in Tajikistan is completed - report submitted to the Bank in April 2023. The ESMP is implemented. Completion Measurement Reporting Progress through Annual Program Implementation Reports Comments The report was submitted in April 2023 Action Description Implement and report on the ESMP with e-waste management procedures Source DLI# Responsibility Timing Timing Value Status DLI 4 Throughout the Environmental and Social TC Other Program In Progress Systems implementation Completion Measurement Annual Program Implementation Reports Comments The first project Annual Program Implementation Report was submitted in April 2023. Development of standard bidding documents and contract forms for the Program procurement of goods, works, non- Action Description consulting and consulting services Source DLI# Responsibility Timing Timing Value Status No later than 6-months Fiduciary Systems TC Other after the project Completed effectiveness Completion Measurement TC shares standard bidding documents and contract forms with WB Documents received from the SAPP and sent to the World Bank for consideration. Bidding documents to be used for Comments the Program (PforR) component were updated by the Procurement Specialist and were submitted for Bank review in June 2023. Prepare a capacity building and training plan, acceptable to the Bank, for improving the TC staff fiduciary capacity. Action Description Dedicated TC staff to complete training and get certified in public procurement and national IA Certification of the MOF Source DLI# Responsibility Timing Timing Value Status No later than 6 months Fiduciary Systems TC Other after the Program Completed effectiveness. Completion Measurement A capacity building and training plan is confirmed acceptable by WB. A Staff Capacity Building Strategy for the Tax Committee has been developed to improve the fiduciary system and is Comments submitted to the management of the Tax Committee, the Ministry of Finance, SAPP, and also to the World Bank for consideration. . 6/12/2024 Page 6 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) The MoF to ensure for each fiscal year under the Program that the originally approved (revised) budget funding for Action Description activities that are supported by the PforR is set at least at a level of the actual TC commitment under respective budget lines. Source DLI# Responsibility Timing Timing Value Status During the budget approval (revision) Fiduciary Systems MoF Other cycle for the Borrower’s In Progress each fiscal year under the Program. Completion Measurement MoF confirms to WB allocation of budget funding annually. Comments MoF confirmed allocation of budget funding for FY 23. An independent private auditor, acceptable to the Bank, procured by the MoF to conduct audit of first two years of Action Description Program implementation. Source DLI# Responsibility Timing Timing Value Status First two years of the Fiduciary Systems TC Other Program Completed implementation Completion Measurement Annual audits completed and submitted to the World Bank within six months after the end of the audit period. Comments Audit was conducted in November 2023. SAPP to establish a mechanism to check, before contract award under the Program, the World Bank’s debarment Action Description (www.worldbank.org/debarr) and temporary suspension lists to avoid awarding to firms or individuals on the debarred list Source DLI# Responsibility Timing Timing Value Status No later than 6 months Fiduciary Systems SAPP Other after the project Completed effectiveness Completion Measurement Copy of audit reports submitted to the Bank. Comments TC publishes annual Procurement Plans at the beginning of each fiscal year and conducts business outreach and Action Description market sounding events before launching tenders Source DLI# Responsibility Timing Timing Value Status Throughout the Fiduciary Systems TC Other Program In Progress implementation 6/12/2024 Page 7 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Completion Measurement Evidence of published Procurement Plans at the beginning of TC fiscal year. The Procurement Plan for the PforR has been published on the TC websites in January 2023 (andoz.tj) and will be Comments updated on an ongoing basis every year. TC payments processed according to the contract conditions but not later than 3 months after fulfilment of Action Description contractors/suppliers/consultants contractual obligations. TC to ensure that all accounts payable are closed and there are no overdue payables. Source DLI# Responsibility Timing Timing Value Status Throughout the Fiduciary Systems TC Other Program In Progress implementation Completion Measurement TC confirms to WB during implementation support missions Comments There is no delays with paying to the project suppliers. Enhanced use of functionalities of online complaint module at the SAPP web portal to address received procurement Action Description related complaints under the Program. Regular monitoring by TC of status of complaints review and resolution Source DLI# Responsibility Timing Timing Value Status Throughout the Fiduciary Systems TC Other Program In Progress implementation Completion Measurement TC confirms to WB during implementation support missions Comments Continuously monitored. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Moderate Moderate Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Moderate Moderate Moderate Sustainability Fiduciary Substantial Substantial High Environment and Social Moderate Moderate Moderate 6/12/2024 Page 8 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Stakeholders Moderate Moderate Moderate Other Moderate Moderate Moderate Overall Substantial Moderate Moderate RiskComments Comments The fiduciary risk is now "High." There are delays in procurement processing for contracts totaling USD 4.1m ranging from 4 weeks to 9 months in either incorporating Bank comments or preparation of documents subject to post review. In August 2023, 20 activities were removed from STEP as the technical specifications/ToR were not in place for over one year. Out which only one activity has since been reinstated recently with the TOR was approved by the Bank on May 22, 2024. Only 1 contract (USD 123,829) signed since last mission in December 2023. Results PDO Indicators by Objectives / Outcomes Simplified Tax System IN01430217 ►Selected preferential tax and customs incentives eliminated (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The new Tax Code of The new Tax Code of the the Republic of Republic of Tajikistan Tajikistan (which was (which was approved by approved by the the Government on Government on Tax incentives September 2, 2021 and September 2, 2021 and eliminated under each ratified and finally ratified and finally of the following endorsed with Resolution endorsed with preferential tax No. 217 of Majlisi Milli of Resolution No. 217 of regimes for the new Majlisi Oli of the Republic Majlisi Milli of Majlisi Oli taxpayers: A new edition of the Tax of Tajikistan on of the Republic of Code is developed and December 17, 2021) Tajikistan on December (a) Construction of adopted. The eliminated the incentives 17, 2021) eliminated the hydro power plants (for amendments to the Tax Value associated with the incentives associated the investor, general Code propose to eliminate construction of with the construction of contractor and at least 14 incentives, hydroelectric power hydroelectric power suppliers) (10 related to two preferential plants (Chapter 46) and plants (Chapter 46) and incentives); (b) Supply tax regimes. persons benefitting from persons benefitting from of manufactured the right to apply for the right to apply for products by the incentives in the incentives in the investor implementing implementation of implementation of a production sharing production sharing production sharing agreement (4 agreements (Chapter agreements (Chapter incentives). 48), which provided for 48), which provided for exemption from payment exemption from of 14 taxes and duties. payment of 14 taxes and duties. Date 31-Mar-2021 20-Dec-2023 28-May-2024 30-Sep-2026 The target is achieved. Comments Improved Quality of Taxpayer Services IN01430219 6/12/2024 Page 9 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) ►(a) Taxpayer satisfaction with the quality of selected available taxpayer electronic services (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 84.19 88.30 88.70 89.00 Date 12-Mar-2021 20-Dec-2023 28-May-2024 30-Sep-2026 This indicator was calculated as the average percentage of respondents satisfied, that is, having rated their level of satisfaction as 4 or 5 on a scale of 1 to 5 with the 3 available services tracked in the survey and listed below. At baseline, satisfaction with 3 existing available services are tracked . At mid and end line, 3 available and new services will be tracked. Currently, the following services are measured under this Comments indicator: e-payments of taxes, electronic labeling of goods, and electronic appeals. Updated data will be provided during the upcoming mission scheduled for July 8, 2024 Source: Taxpayer service department. Once the contracted survey firm issues its findings, the survey results will be updated. IN01430220 ►(b) Taxpayer satisfaction with the quality of selected available taxpayer electronic services - women (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 85.96 87.20 87.90 89.00 Date 30-Sep-2021 20-Dec-2023 28-May-2024 30-Sep-2026 This indicator measures women taxpayer satisfaction with the quality of selected available taxpayer electronic services. See definition of the indicator (a) Taxpayer satisfaction with the quality of selected available taxpayer electronic services. Comments Updated data will be provided during the upcoming mission scheduled for July 8, 2024 Source: Taxpayer service department. Once the contracted survey firm issues its findings, the survey results will be updated. IN01430266 ►(c) Taxpayer satisfaction with the quality of selected new taxpayer electronic services (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 87.70 88.10 84.19 Date 12-Mar-2021 06-Jun-2023 28-May-2024 30-Sep-2026 This indicator was calculated as the average percentage of respondents satisfied, that is, having rated their level of satisfaction as 4 or 5 on a scale of 1 to 5 with 3 new services tracked in the survey and listed below. At baseline, new services were not measured as they did not exist. At mid and end line, new services will be tracked too. The following services are measured under this indicator: New services: Registration of cash registers in electronic format, VAT refund, and E-assistant for all taxpayers (filing declaration, calculate Comments taxes, payment of taxes etc.). Updated data will be provided during the upcoming mission scheduled for July 8, 2024 Source: Taxpayer service department. Once the contracted survey firm issues its findings, the survey results will be updated. IN01430267 ►(d) Taxpayer satisfaction with the quality of selected new taxpayer electronic services - woman (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 89.80 89.90 84.19 Date 30-Sep-2022 06-Jun-2023 28-May-2024 30-Sep-2026 6/12/2024 Page 10 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) This indicator measured women taxpayer satisfaction with the quality of selected new taxpayer electronic services. See definition of the indicator (a) Taxpayer satisfaction with the quality of selected new taxpayer electronic services. Comments Updated data will be provided during the upcoming mission scheduled for July 8, 2024 Source: Taxpayer service department. Once the contracted survey firm issues its findings, the survey results will be updated. Improved Voluntary Compliance IN01430218 ►VAT Compliance Gap (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 45.90 45.90 45.90 33.40 Date 30-Oct-2020 20-Dec-2023 28-May-2024 30-Sep-2026 The indicator measured the difference between the total potential VAT revenues (net of refunds) if 100% of taxpayers are compliant, and percentage of total observed VAT revenue collected (net of refunds). The gap is expressed as a percentage of potential revenue. It should be noted that regarding the Gap in Compliance with VAT, an analysis is currently underway to finalize the revision presented by the World Bank and is being approved by the TC management, further analysis information will be provided, taking into account Comments the rate reduction. It is expected that this information will be provided by end February 2023, but it has not been still provided. Data is from December 2023. An analysis is currently underway to finalize and update the computation of the VAT compliance gap Intermediate Results Indicators by Results Areas 1. Simplified Tax System IN01430269 ►1.1 Regulatory foundations for improvement of the tax system established (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The Recipient’s The Recipient’s Government shall have Government shall have issued official instructions issued official for MoF, TC and other instructions for MoF, TC relevant ministries and and other relevant agencies to develop and ministries and agencies approve the required to develop and approve secondary regulations the required secondary The new edition of the Tax under the new Tax Code. regulations under the The Recipient has Code is developed and On November 2, 2021, new Tax Code. drafted, approved and consulted but not the Government of the On November 2, 2021, published on one of approved. There are no Republic of Tajikistan the Government of the the official web-sites Value secondary regulations in instructed the Ministry of Republic of Tajikistan the secondary place to support Finance, the Tax Code instructed the Ministry regulations required implementation of the new and other ministries and of Finance, the Tax under the new Tax Tax Code. departments of the Code and other Code. Republic of Tajikistan to ministries and develop and apply by- departments of the laws in support of the Republic of Tajikistan to implementation of the develop and apply by- new version of the Tax laws in support of the Code. implementation of the At the moment, On 28 new version of the Tax April, 2023, 74 legal acts Code. 6/12/2024 Page 11 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) supporting new Tax At the moment, On 28 Code were develpoed April, 2023, 74 legal and approved. acts supporting new Tax Code were develpoed and approved. Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 Achieved. Comments IN01430272 ►1.2 Improved transparency of tax expenditure (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Tax expenditure report The tax expenditure is published with the Tax expenditure report is report was published annual draft budget not prepared and Tax expenditure report is and a cost benefit that is submitted to published with the annual prepared, but it has not analysis of two tax Parliament. Cost- draft budget that is been published. Cost- incentives was benefit analysis of Value submitted to Parliament. benefit analysis of conducted. The selected four tax Cost-benefit analysis of selected tax incentives/ associated DLR 3.1 and incentives/ exemptions selected tax incentives/ exemptions is not 3.2 (year 1) were thus is conducted and exemptions is not conducted. achieved. The TC is published with the draft conducted. now working on meeting annual republican year 2 targets.. budget. Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 In December 2023, the TC informed the World Bank team that a tax expenditure report (DLR 3.1) was prepared by the MoF. The Ministry shared during the mission a report and a list of tax incentives (only in Russian) and quantified the tax expenditures at 10.9% of GDP for 2022. The Bank will review the list of Comments incentives - once translated - to determine whether the list includes only valid tax incentives as the level of revenue forgone (i.e., 10.9% of GDP) is deemed high. The Bank requested from the authorities to publish the tax expenditures report along with the national budget in order to meet DLR 3.1. IN01430275 ►1.3 Rules for tax and financial accounting reporting for CPT and VAT are harmonized (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value Rules for establishing a Analysis of international The law on New harmonized rules tax base in tax and standards for amendments to the Tax for establishing a tax financial accounting establishing tax base in Code and relevant base in tax and reporting for CPT and VAT tax and financial regulations to financial accounting are not harmonized. accounting reporting for harmonize the rules of reporting for CPT and CPT and VAT is accounting and tax VAT are enforced. completed. reporting for corporate Contradictions in the income tax and VAT rules for establishing a has been developed tax base in tax and and is being considered financial accounting by the Government of reporting for CPT and the Republic of VAT are identified. Tajikistan. The Decree of the Government of the Republic of Tajikistan on calculating the cost of products, goods, works and 6/12/2024 Page 12 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) services dated October 28, 2023 was approved. Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 Achieved. Comments IN01430278 ►1.4 Percentage of MoF and TC professional staff in tax policy and intelligence functions trained on key tax policy analysis functions, including revenue forecasting, tax policy and data analytics (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 51.00 51.50 95.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 TC is finalizing the Action Plan, which will address all the above issues. Comments IN01430282 o/w women (percentage of all women in tax policy and intelligence functions) (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 24.00 25.00 50.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 IN01430283 ►1.5 Improved representation of women in management positions in TC workforce (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target At the moment, On December, 2023 Women in managerial positions out of all staff in TC managerial positions As of May 29, 2024, comprise 11 percent. The women in managerial target is achieved. positions out of all staff Women in managerial Women in managerial A female manager has in TC managerial positions out of all staff positions out of all staff in been appointed to the positions surpassed Value in TC managerial TC managerial positions Tax Committee to 11%, thereby achieving positions comprise comprise 7.8 percent only. implement the Action the associated DLR 7.2 11.00 percent. Plan to close the gender . gap in the leadership of the Tax Code Order dated January 27, 2022, No. 64-F . Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 An action plan to address the gender gap in TC workforce has been developed and approved by TC management. This IRP (component) is being implemented as part of the Action Plan to eliminate the gender gap in leadership positions in the NC staff, which was approved by the order of the NC No. 118 dated February 23, 2022 Comments A female manager has been appointed to the Tax Committee to implement the Action Plan to close the gender gap in the leadership of the Tax Code Order dated January 27, 2022, No. 64-F / 6/12/2024 Page 13 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) 2. Improved Quality of Taxpayer Services IN01430268 ►2.1 Development and Implementation of a Modern ICT Governance Model (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target A new ICT governance model has been A new ICT governance developed and model has been approved by the internal developed and approved regulation. by the internal regulation. A plan for the A plan for the implementation of the implementation of the development of an development of an automated tax The ICT department automated tax The ICT department does administration system operates based on a administration system for not have an ICT for 2020-2025 within the modern ICT 2020-2025 within the Value governance model or ICT framework of the governance model with framework of the Project infrastructure upgrade Project has been up to date has been developed, plan. developed. According to infrastructure. information on the the ICT Department of progress of execution by the Tax Committee, the periods will be provided process continues and additionally. a plan activities has been developed Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator measures the upgrade of the ICT infrastructure. Implementation will require that a new governance model for ICT department of the TC is developed and approved by the internal regulation. A plan for the implementation of an automated tax administration system for 2020-2025 within the Comments framework of the project has been developed, IN01430271 ►2.2 Number of services reengineered / automated at Level 3 or 4 according to the United Nations (UN) four-stage maturity model of e- Government within the project (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 3.00 4.00 6.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 TC has hired a consulting firm, which is helping with achieving this indicator. The first results were achieved Comments in August 2023. IN01430274 ►2.3 Number of TC offices equipped with the terminals for submission of e-declaration (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 30.00 42.00 42.00 70.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator measures the number of TC offices, where terminals for submission of e-declaration, procured Comments under the project, will be installed. IN01430277 6/12/2024 Page 14 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) ►2.4 Percentage of taxpayers out of all registered taxpayers in the taxpayer group, submitting declaration electronically disaggregated by legal entities and individual entrepreneurs (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 63.85 65.00 66.20 78.50 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator measures the average percentage of: (a) Legal entities out of all registered legal entities as taxpayers, submitting declaration electronically and (b) Individual entrepreneurs out of all registered Comments individual entrepreneurs as taxpayers, submitting declaration electronically. As of May 29, 2024, the indicator was 66.2% for individuals and 97.7% for legal entities IN01430280 ►2.5 Percentage of TC professional staff in taxpayer services and compliance functions, trained in use of e-applications for taxpayer services, reengineered and automated under the Project (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 42.50 70.30 95.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator will start reporting from September 2024. It will measure the percentage of staff occupying professional positions in taxpayer services and compliance functions in TC central office, contact center, local Tax Offices, out of all staff in professional positions in taxpayer services and compliance functions in TC central office, contact center and local Tax Offices, trained in the use of e-applications for taxpayer services, reengineering and automated under the project. The lists of relevant staff will be approved by the Comments TC management annually. By the end of the project the target is to train 95 percent of the identified relevant staff. As of May 29, 2024, 478 employees (out of 1,725) received training on the topic reengineering and automation of e-services in the year 2024. Out of which, 28 employees were female. IN01430285 o/w women (percentage of all women taxpayer services and compliance functions) (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 81.00 97.00 50.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 IN01430286 ►2.6 Number of hours required for filing tax reporting (DB indicator) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 224.00 1.00 1.00 180.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator measures the administrative burden of paying 3 major taxes (social contributions, CIT and VAT) for medium size companies, expressed in time (number of hours) required for paying taxes and contributions and complying with post filing procedures (VAT refund and tax audit). Since DB discontinued Comments now, the project and WB has agreed that during the project mid-term review to cancel or reformulate this indicator. IN01430288 ►2.7 Taxpayer Service Standards have been enhanced and based on taxpayer feedback (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/12/2024 Page 15 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) The new version of the The new version of the Unified Taxpayer Unified Taxpayer Service Service Standards was Standards was developed in 2022 on developed in 2022 on the the basis of the Tax basis of the Tax Code, Code, which was which was adopted adopted taking into taking into account account proposals from Taxpayer feedback proposals from both both international mechanism is international financial financial institutions and established and institutions and feedback feedback from the functional in the from the private sector. private sector. Taxpayer Contact Monitoring of the Monitoring of the Center. Taxpayer Quality of taxpayer service implementation of the implementation of the feedback mechanism is regulated by a Unified Unified Standards is Unified Standards is is functional in the Standard for Taxpayer monitored by the relevant monitored by the Taxpayer Contact Service (the Standard), Department of the TC relevant Department of Center. Annual reports enacted in 2017. and its results are the TC and its results on taxpayer feedback, Value Implementation of the published in the weekly are published in the collected through the Standard is not monitored. newspaper, and also weekly newspaper, and taxpayer feedback There is no system for posted on the official also posted on the mechanism, are monitoring and website. official website. published at TC continuously enhancing Services to taxpayers are Services to taxpayers website. A Unified taxpayer services. constantly being are constantly being Standard for Taxpayer improved. In 2022, 10 improved. In 2022, 10 Service is revised new services were new services were based on taxpayer introduced, and in 2023, introduced, and in 2023, feedback. 8 new types of services 8 new types of services were developed and were developed and provided for use. provided for use. By 1 December 2023, the By 1 December 2023, Taxpayer Services the Taxpayer Services Department received a Department received a total of 40,450 appeals, total of 40,450 appeals, Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator will measure achievements of DLI 6 and DLR 6.1 and is expected to achieve its targets Comments by September 2024. 3. Improved Voluntary Compliance IN01430270 ►3.1 Reduced burden of tax audit (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target The criteria for assessing The criteria for the level of risk assessing the level of At least 90% of field presented by taxpayers risk presented by audits of large (tax agents) are formed taxpayers (tax agents) taxpayers (i.e. Audits are not risk-based. on the basis of the are formed on the basis taxpayers with annual Risk-based selection annexes of the order of of the annexes of the turnover above 25 methodology is the Tax Committee under order of the Tax million Somoni) during Value developed, but not the Government of the Committee under the the Government consistent with Republic of Tajikistan Government of the financial year are international approaches. and the decision of the Republic of Tajikistan conducted for cases State Committee for and the decision of the selected by the risk- Investments and State State Committee for based selection tool. Property Management of Investments and State the Republic of Tajikistan Property Management 6/12/2024 Page 16 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) "On Criteria for of the Republic of Assessing the Level of Tajikistan "On Criteria Risk". The criteria for for Assessing the Level assessing the level of of Risk". The criteria for risk based on the assessing the level of provisions of the above risk based on the document, risk provisions of the above assessment is carried out document, risk within the data of the assessment is carried Unified Information out within the data of System for Tax the Unified Information Administration, tax System for Tax declarations (reports), as Administration, tax well as information from declarations (reports), authorized bodies, in as well as information accordance with which from authorized bodies, the level of risk of the in accordance with taxpayer's activities which the level of risk of under a special program the taxpayer's activities is assessed. The Bank under a special program provided in-person (field is assessed. The Bank visits in August and provided in-person (field September 2023) and visits in August and remote support to ensure September 2023) and completion of the risk remote support to analysis matrix and meet ensure completion of DLR 4.2. The TC added the risk analysis matrix and adjusted the risk and meet DLR 4.2. The weight to various TC added and adjusted indicators leading to the the risk weight to adoption of a revised risk various indicators matrix in October 2023 leading to the adoption by the Risk Analysis of a revised risk matrix department. The TC in October 2023 by the developed a risk Risk Analysis management automated department. The TC module, which became developed a risk operational on October 1, management 2023. The TC also automated module, developed and adopted a which became methodology document operational on October (i.e., Standard Operating 1, 2023. The TC also Procedures - SOP) developed and adopted describing in detail: the a methodology process of the document (i.e., development of the risk Standard Operating indicators; the selection Procedures - SOP) of the risky taxpayers; describing in detail: the the development of the process of the risk-based audit plan; development of the risk and the evaluation of the indicators; the selection audit outcome to adjust of the risky taxpayers; the risk matrix. The TC the development of the also developed an audit risk-based audit plan; plan according to the and the evaluation of risk-based approach for the audit outcome to the large taxpayers’ adjust the risk matrix. segment. The TC also developed an audit plan according to the risk-based approach for the large taxpayers’ segment. 6/12/2024 Page 17 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) The TC continues to make significant progress (as of May 2024) and it is expected to meet the DLR 4.2 (second year target). Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator will be measured through the implementation and achievements of DLR 4.1 and DLR 4.2. DLR 4.2 was achieved in November 2023. DLR 4.1 - the TC shall have approved the risk assessment methodology enhanced based on relevant Comments international experience. DLR 4.2 - 90 percent of field audits of large taxpayers are conducted for cases selected by the risk-based selection tool between October 1, 2023 – September 30, 2026. IN01430273 ►3.2 Coverage of corporate taxpayers with annual turnover above 25 million Somoni by Tax Monitoring Program (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Tax monitoring is not Tax Monitoring conducted. Program is fully operational and covers There are 242 corporate 10 percent of legal 10% 10% Value taxpayers with annual entities out of all turnover above 25 million registered corporate Somoni as of September taxpayers with annual 1, 2020. turnover above 25 million Somoni. Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 This composite indicator measures the development and institutionalization of Tax Monitoring Program for corporate taxpayers with annual turnover above 25 million Somoni. In Years 1-2 this will include the development of the Concept for tax monitoring and mechanisms of information exchange between TC and taxpayers, the development and the approval of the methodology for assessing reliability of taxpayer information, the piloting of the Tax Monitoring Program and the approval of the regulation, introducing tax monitoring process and Program. In Years 3-5 of the project the indicator will measure the percentage of Comments legal entities, covered by Tax Monitoring Program, out of all registered corporate taxpayers. Tax Monitoring Program is fully operational and covers 10% of legal entities out of all registered corporate taxpayers with annual turnover above 25 million Somoni. As of May 29, 2024, there were 542 corporations with a turnover above the 25 million threshold. IN01430276 ►3.3 Percentage of mass desk audits launched out of total number of audits launched during the financial year (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 31.00 43.00 43.00 75.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 Comments The indicator measures the percentage of mass desk audits as a share of the sum of all audit, launched during the GoT financial year. The data is from December 2023. The TC is revising the desk audit process and this will impact this indicator. Updated data may be collected during the July 2024 mission. 6/12/2024 Page 18 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) IN01430279 ►3.4 Percentage of VAT refunds processed using risk-based verification or fast track procedures between October 1, 2023 – September 30, 2026. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 95 % of VAT refunds out of all VAT refunds Risk criteria or fast track during the Government Value procedure are not used for 25% 55% financial year are verification of VAT refund. processed using risk- based verification or fast track procedures. Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 As of May 2024, about 55% of VAT refunds are processed using risk-based verification or fast track Comments procedures. Hence, the TC has technically met year 2 target of DLI 5 IN01430281 ►3.5 Percentage of active taxpayers in the total number of taxpayers registered (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 70.10 78.00 79.70 90.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator measures the percentage of active taxpayers (taxpayers, submitted tax declaration in the Government financial year) as a share of all registered taxpayers, including legal entities, branches and Comments representative offices of foreign legal entities, individual entrepreneurs, dekhkan farms. IN01430284 ►3.6 Percentage of TC professional staff in compliance risk management and tax audit functions trained in risk management, risk-based audits, and arrears management (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 10.00 83.00 83.00 95.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 The indicator measures the percentage of staff occupying professional positions in compliance risk management and audit functions out of all staff in professional positions in compliance risk management and audit functions in TC, trained in risk management, risk-based audits and arrear management. The lists Comments of relevant staff will be approved by the TC management annually. By the end of the project the target is to train 95 percent of the identified relevant staff. IN01430287 o/w women (Percentage of all women in compliance risk management and audit functions) (Percentage, Custom Breakdown) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 8.70 8.10 50.00 Date 31-Jan-2021 20-Dec-2023 29-May-2024 30-Sep-2026 Disbursement Linked Indicators DLI_IND_TABLE ►DLI 1 Selected preferential tax and customs incentives eliminated (Intermediate Outcome, 3,750,000.00, 0%) 6/12/2024 Page 19 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Achieved. The new Tax Achieved. The new Tax Code of the Republic of Code of the Republic of Tajikistan was approved Tajikistan was approved by the Government on by the Government on September 2, 2021 and September 2, 2021 and A new edition of the Tax ratified and finally ratified and finally Code is developed and endorsed with Resolution endorsed with Resolution consulted. The No. 217 of Majlisi Milli of No. 217 of Majlisi Milli of amendments to the Tax Majlisi Oli of the Republic Majlisi Oli of the Republic Value N/A Code propose to eliminate of Tajikistan on of Tajikistan on December at least 14 incentives, December 17, 2021. It’s 17, 2021. It’s currently related to two preferential currently available on the available on the Tax tax regimes. Tax Committee website: Committee website: www.andoz.tj. The Bank www.andoz.tj. The Bank confirmed the results confirmed the results achievement of DLI/DLR achievement of DLI/DLR 1 1 through a letter dated through a letter dated January 17, 2022. January 17, 2022. Date -- 20-Dec-2023 28-May-2024 -- Comments ►DLI 2 Regulatory foundations for improved tax system established (Intermediate Outcome, 7,500,000.00, 0%) October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Significant progress has been made in drafting, Significant progress has approving, and been made in drafting, publishing the secondary approving, and publishing regulations/complementa the secondary ry regulations required to regulations/complementar The new edition of the Tax implement the tax code. y regulations required to Code is developed, Out of 96 by-laws implement the tax code. consulted and expected to identified by the Out of 96 by-laws be approved by the government, all have identified by the Government by the already been drafted. government, all have Program effectiveness. The team was informed already been drafted. The There are no secondary that to date 84 have team was informed that to regulations in place to already been approved date 84 have already been Value support implementation of N/A and published on the approved and published the new Tax Code. The website. It is also worth on the website. It is also Government Plan of the mentioning that all over worth mentioning that all Regulatory Acts to be the country a taxpayers’ over the country a Approved under the New awareness campaign is taxpayers’ awareness Edition of the Tax Code, is in place to disseminate campaign is in place to drafted and expected to be the tax code and disseminate the tax code finalized by the Tax Code complementary and complementary approval. regulations. This includes regulations. This includes reaching out to social reaching out to social media and mass media media and mass media to to further disseminate further disseminate and and interpret tax interpret tax legislation. legislation. Date -- 20-Dec-2023 28-May-2024 -- Achieved. Comments 6/12/2024 Page 20 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) ►DLI 3 Improved transparency of tax expenditure (Intermediate Outcome, 7,500,000.00, 0%) October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 . In December 2023, the TC informed the World Bank team that a tax expenditure report (DLR 3.1) was prepared by the MoF. The Ministry shared during the mission a report and a list of tax incentives (only in Russian) and quantified the tax expenditures at 10.9% of GDP for 2022. The Bank will review the list of incentives - once translated - to determine whether the list includes only valid tax incentives as the level of revenue forgone (i.e., 10.9% of The first-year target of GDP) is deemed high. To DLR 3.1 (tax expenditure meet DLR 3.1, the Bank report ) and 3.2 (cost- requested from the benefit analysis of tax authorities to publish the incentives) were met in Tax expenditure report is tax expenditures report February 2024. .The not prepared and published along with the national Ministry and the Tax See DLIs (DLRs) Value with the annual draft budget budget. Moreover, the Committee are now 3.1 and 3.2 that is submitted to TC initiated the work on working towards repeating Parliament. the cost-benefit analysis this annual exercise as of tax incentives (DLR dictated by DLI 3.1 and 3.2). The TC is focused conducting additional cost on VAT and Corporate benefit analysis of other Income Tax (CIT) and tax incentives. they have so far identified 7 key benefits related to VAT-type of incentives and 12 key benefits related to CIT- type incentives. The Bank welcomed the progress on DLI 3 and requested from the TC to focus on two tax incentives and finalize the cost-benefit analysis. Given the work registered to date, it is expected that both DLR 3.1 and DLR 3.2 can be achieved in calendar year 2024. Date -- 20-Dec-2023 28-May-2024 -- Comments The tax code removed some tax benefits, and the operation aspires for improving the transparency of tax incentives as indicated by publishing annually a tax expenditure report and conducting a cost-benefit analysis of selected tax incentives. A starting point is the tax gap analysis recently conducted by the WB where the size of the tax policy gap is estimated. Prior to making a decision regarding the potential removal of a tax benefit, it is recommended to initiate a gradual process of comprehensive and systematic evaluation of tax expenditures 6/12/2024 Page 21 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) as a policy instrument. An evaluation of this nature considers the objective of and justification for government intervention, its potential beneficiaries, and alternative policy interventions such as budgetary outlays or regulation. It also includes a careful evaluation of the costs and benefits of intervention. IN01430292 DLI 3.1 Tax expenditure report is published with the annual draft budget that is submitted to Parliament (Output, 3,000,000.00, 0%) Unit of Measure: Text Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 In December 2023, the TC informed the World Bank team that a tax expenditure report (DLR 3.1) was prepared by the MoF. The Ministry shared during the mission a report and a list of tax incentives (only in Russian) and quantified the tax expenditures at 10.9% of GDP for 2022. The Bank will review the list of incentives - once translated - to determine whether the list includes only valid tax incentives as the level of revenue forgone (i.e., 10.9% of GDP) is deemed high. To meet DLR 3.1, the Bank requested from the The Ministry of Finance authorities to publish the DLR 3.1. Tax prepared and published a Tax expenditure report is tax expenditures report expenditure report is tax expenditure report not published with the along with the national published with the Value (along with the annual annual draft budget that is budget. Moreover, the annual draft budget budget) thereby meeting submitted to Parliament. TC initiated the work on that is submitted to the first-year target of DLR the cost-benefit analysis Parliament. 3.1 in February 2024. of tax incentives (DLR 3.2). The TC is focused on VAT and Corporate Income Tax (CIT) and they have so far identified 7 key benefits related to VAT-type of incentives and 12 key benefits related to CIT- type incentives. The Bank welcomed the progress on DLI 3 and requested from the TC to focus on two tax incentives and finalize the cost-benefit analysis. Given the work registered to date, it is expected that both DLR 3.1 and DLR 3.2 can be achieved in calendar year 2024. 6/12/2024 Page 22 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Date -- 20-Dec-2023 28-May-2024 -- The tax code removed some tax benefits, and the operation aspires for improving the transparency of tax incentives as indicated by publishing annually a tax expenditure report and conducting a cost-benefit analysis of selected tax incentives. A starting point is the tax gap analysis recently conducted by the WB where the size of the tax policy gap is estimated. Prior to making a decision regarding the potential removal of a tax benefit, it is recommended to initiate a gradual process of comprehensive and systematic evaluation of tax expenditures as Comments a policy instrument. An evaluation of this nature considers the objective of and justification for government intervention, its potential beneficiaries, and alternative policy interventions such as budgetary outlays or regulation. It also includes a careful evaluation of the costs and benefits of intervention. IN01430293 DLI 3.2 Cost-benefit analysis of selected tax incentives/ exemptions is conducted and published with the draft annual republican budget (Output, 4,500,000.00, 0%) Unit of Measure: Text Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 DLR 3.2. Cost- The Tax Committee benefit analysis of conducted a cost benefit four targeted tax Cost-benefit analysis of analysis of select tax incentives/ selected tax incentives/ Value Not yet due. incentives thereby exemptions is exemptions is not meeting the first year conducted and conducted. target of DLI 3.2 in published with the February 2024 draft annual republican budget. Date -- 20-Dec-2023 28-May-2024 -- Comments ►DLI 4 Reduced burden of tax audit (Intermediate Outcome, 5,500,000.00, 0%) October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Value Audits are not risk-based. The Bank provided in- The Bank provided in- See DLI (DLR) 4.2 person (field visits in person and remote August and September support in 2023 and early 2023) and remote 2024 to ensure completion support to ensure of the risk analysis matrix completion of the risk and meet DLI 4.2 and 4.2. analysis matrix and meet The TC added and DLR 4.2. The TC added adjusted the risk weight to and adjusted the risk various indicators leading weight to various to the adoption of a indicators leading to the revised risk matrix in adoption of a revised risk October 2023 by the Risk matrix in October 2023 Analysis department. The by the Risk Analysis TC developed a risk department. The TC management automated developed a risk module, which became management automated operational on October 1, module, which became 2023 (thereby meeting DLI operational on October 1, 4.1). The TC also 2023. The TC also developed and adopted a developed and adopted a methodology document 6/12/2024 Page 23 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) methodology document (i.e., Standard Operating (i.e., Standard Operating Procedures - SOP) Procedures - SOP) describing in detail: the describing in detail: the process of the process of the development of the risk development of the risk indicators; the selection of indicators;, the selection the risky taxpayers; the of the risky taxpayers;, development of the risk- the development of the based audit plan; and the risk-based audit plan;, evaluation of the audit and the evaluation of the outcome to adjust the risk audit outcome to adjust matrix. The TC also the risk matrix. The TC developed an annual audit also developed an audit plan according to the risk- plan according to the based approach for the risk-based approach for large taxpayers’ segment the large taxpayers’ and started conducting segment. issue-oriented audit whenever the risk is moderate and not mitigated by the desk audit. Date -- 20-Dec-2023 28-May-2024 -- Comments IN01430295 DLI 4.1 The TC shall have approved the risk assessment methodology enhanced based on relevant international experience (Output, 1,000,000.00, 0%) Unit of Measure: Text Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Value Risk assessment The Bank provided in- The Bank provided in- N/A methodology is developed, person (field visits in person (field visits in but is not consistent with August and September August and September modern tax administration 2023) and remote 2023) and remote support approaches. support to ensure to ensure completion of completion of the risk the risk analysis matrix analysis matrix and meet and meet DLR 4.1. The DLR 4.2. The TC added TC added and adjusted and adjusted the risk the risk weight to various weight to various indicators leading to the indicators leading to the adoption of a revised risk adoption of a revised risk matrix in October 2023 by matrix in October 2023 the Risk Analysis by the Risk Analysis department. The TC department. The TC developed a risk developed a risk management automated management automated module, which became module, which became operational on October 1, operational on October 1, 2023. 2023. The TC also developed and adopted a methodology document (i.e., Standard Operating Procedures - SOP) describing in detail: the process of the development of the risk indicators;, the selection 6/12/2024 Page 24 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) of the risky taxpayers;, the development of the risk-based audit plan;, and the evaluation of the audit outcome to adjust the risk matrix. The TC also developed an audit plan according to the risk-based approach for the large taxpayers’ segment. Date -- 20-Dec-2023 28-May-2024 -- Comments IN01430296 DLI 4.2 90% of field audits of large taxpayers are conducted for cases selected by the risk-based selection tool between October 1, 2023 – September 30, 2026 (Output, 4,500,000.00, 0%) Unit of Measure: Text Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 The Bank provided in- person (field visits in August and September 2023) and remote support to ensure completion of the risk analysis matrix and meet DLR 4.2. The TC added and adjusted the risk weight to various indicators leading to the adoption of a revised risk The Bank provided in- matrix in October 2023 DLR 4.2. At least person (field visits in by the Risk Analysis 90% of field audits of August and September department. The TC large taxpayers (i.e. 2023) and remote support developed a risk taxpayers, registered to ensure completion of management automated in TC Large the risk analysis matrix module, which became Taxpayers and meet DLR 4.2. In operational on October 1, Directorate and December 2023, the first Value Audits are not risk-based. 2023. The TC also regional TC offices year target was met (40% developed and adopted a for large taxpayers) of field audits of large methodology document during the taxpayers cases selected (i.e., Standard Operating Government through the risk based Procedures - SOP) financial year are mechanism). The TC is describing in detail: the conducted for cases expected to meet year 2 process of the selected by the risk- target (60%) ahead of development of the risk based selection tool. schedule. indicators;, the selection of the risky taxpayers;, the development of the risk-based audit plan;, and the evaluation of the audit outcome to adjust the risk matrix. The TC also developed an audit plan according to the risk-based approach for the large taxpayers’ segment. 6/12/2024 Page 25 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) Date -- 20-Dec-2023 28-May-2024 -- Comments ►DLI 5 Percent of VAT refunds processed using risk-based verification or fast track procedures between October 1, 2023 – September 30, 2026 (Outcome, 7,500,000.00, 0%) October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 The Bank also provided in-person and remote support to assist the TC in The Bank also provided developing a solution for in-person and remote the automated VAT risk- support to assist the TC based approach. The TC in developing a solution developed an e-filing for the automated VAT solution to submit a VAT risk-based approach. The refund claim electronically TC developed an e-filing and automated the solution to submit a VAT process for the treatment refund claim of the VAT refund claims. electronically and The VAT refund 95 % of VAT automated the process automated module refunds out of all for the treatment of the became operational on VAT refunds during VAT refund claims. As a Risk criteria or fast track December 1, 2023. As a the Government result of these changes, Value procedure are not used for result of these changes, financial year are the refund claims - within verification of VAT refund. the refund claims - within processed using the reporting period – are the reporting period – are risk-based now processed via a VAT now processed via a VAT verification or fast refund risk matrix with a refund risk matrix with a track procedures. preset threshold to sort preset threshold to sort the claims that would the claims that would undergo a fast track or undergo a fast track or an an in-depth track in-depth track treatment. treatment. This allowed This allowed the TC to the TC to meet DLR 5 meet DLR 5 with 25% of with 25% of VAT refund VAT refund claims claims processed using a processed using a risk- risk-based verification based verification system. system. The TC is expected to meet the year 2 target of 50% of DLR 5. Date -- 20-Dec-2023 28-May-2024 -- Comments ►DLI 6 Taxpayer Service Standards have been enhanced and based on taxpayer feedback (Intermediate Outcome, 3,750,000.00, 0%) October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Value Quality of taxpayer service The TC established a The TC established a See DLI (DLR) 6.2 is regulated by a Unified taxpayer feedback taxpayer feedback Standard for Taxpayer mechanism (DLR 6.1) mechanism (DLR 6.1). Service (the Standard), and the Bank formally The Bank informed the enacted in 2017. informed the MoF of this MoF of this achievement Implementation of the achievement in a letter in a letter dated April 24, Standard is not monitored. dated April 24, 2023. The 2023. The new version of There is no system for new version of the the Unified Taxpayer 6/12/2024 Page 26 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) monitoring and Unified Taxpayer Service Service Standards was continuously enhancing Standards was developed in 2022 on the taxpayer services. developed in 2022 on the basis of the Tax Code. On basis of the Tax Code. May 8, 2024, the Bank No major progress was was informed that two recorded since the May DLIs were achieved and 2023 mission. The next verified: Producing and steps include producing publishing annual reports and publishing annual on taxpayer feedback reports on taxpayer collected through the feedback collected feedback mechanism through the feedback (DLR 6.2) and publishing mechanism (DLR 6.2); a revised unified and publishing revised standards for taxpayer unified standards for service on the TC website taxpayer service on the (DLR 6.3). TC website (DLR 6.3). Date -- 20-Dec-2023 28-May-2024 -- Comments IN01430299 DLI 6.1 Taxpayer feedback mechanism has been established and functional in the Taxpayer Contact Center (Intermediate Outcome, 1,000,000.00, 0%) Unit of Measure: Yes/No Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Value No Yes Yes Yes Date -- 20-Dec-2023 28-May-2024 -- Taxpayers’ feedback on tax services provided by the tax administration. The TC has a Call Center in place that receives feedback from taxpayers on a regular basis. The TC has also put in place a Hotline where taxpayers can complain or submit information requests. Overall, including the Call-Centers, chats, emails, or the Hotline, Comments the TC has received in 2022 so far around 20,900 complains/requests. IN01430300 DLI 6.2 Annual reports on taxpayer feedback, collected through the taxpayer feedback mechanism, has been published on TC website annually between October 1, 2024 – September 30, 2026. (Intermediate Outcome, 1,000,000.00, 0%) Unit of Measure: Text Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Value There is no system for The TC established a On May 8, 2024, the Bank DLR 6.2. Annual monitoring and taxpayer feedback was informed that two reports on taxpayer continuously enhancing mechanism (DLR 6.1) DLIs were achieved and feedback, collected taxpayer services. and the Bank formally verified: Producing and through the taxpayer informed the MoF of this publishing annual reports feedback achievement in a letter on taxpayer feedback mechanism, has dated April 24, 2023. The collected through the been published on new version of the feedback mechanism TC website. Unified Taxpayer Service (DLR 6.2) and publishing Standards was a revised unified developed in 2022 on the standards for taxpayer basis of the Tax Code. 6/12/2024 Page 27 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) No major progress was service on the TC website recorded since the May (DLR 6.3). 2023 mission. The next steps include producing and publishing annual reports on taxpayer feedback collected through the feedback mechanism (DLR 6.2); and publishing revised unified standards for taxpayer service on the TC website (DLR 6.3). Date -- 20-Dec-2023 28-May-2024 -- Comments IN01430301 DLI 6.3 A Unified Standard for Taxpayer Service has been revised based on taxpayer feedback and published on TC website between October 1, 2023 – September 30, 2024. (Intermediate Outcome, 1,750,000.00, 0%) Unit of Measure: Yes/No Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Value No No Yes No Date -- 20-Dec-2023 28-May-2024 -- The work is expected to start by the end 2023. Comments ►DLI 7 Improved representation of women in management positions in TC workforce (Intermediate Outcome, 2,000,000.00, 0%) October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Value Women in managerial 11.00 TC developed and See DLI (DLR) 7.2 positions out of all staff in approved an action plan to TC managerial positions address gender gaps in comprise 7.8 percent only. the TC workforce (DLR 7.1). The Bank confirmed that the project had met this target in a letter dated April 24, 2023. Shortly after the May 2023 mission, TC met DLR 7.2 (year 1 target) with women occupying more than 9.1% of management positions. In early December 2023, TC delivered a training session attended by 98 women staff with the aim of building their capacity and to prepare them to become managers. In May 2024, the TC informed the Bank that women 6/12/2024 Page 28 of 29 The World Bank Implementation Status & Results Report Tax Reform Operation (P171892) representation in management has surpassed the year 2 target set in DLR 7.2. This DLR was met ahead of the target date. Date -- 20-Dec-2023 28-May-2024 -- An action Plan is approved and being implemented. Comments IN01430303 DLI 7.1 An action plan to address gender gap in TC workforce has been developed and approved by TC management between October 1, 2021 – September 30, 2022. (Intermediate Outcome, 750,000.00, 0%) Unit of Measure: Yes/No Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 Value No Yes Yes No Date -- 20-Dec-2023 28-May-2024 -- An action plan is approved and being implemented. Comments IN01430304 DLI 7.2 Representation of women in TC managerial positions increased to 11% by September 30, 2026. (Intermediate Outcome, 1,250,000.00, 0%) Unit of Measure: Text Indicator Type: October 1, 2025 - Baseline Actual (Previous) Actual (Current) September 30, 2026 DLR 7.2. Woman in Women in managerial TC managerial positions out of all staff in positions out of all Value 11.00 11.00 TC managerial positions staff in managerial comprise 7.8 percent only. positions comprise 11%. Date -- 20-Dec-2023 28-May-2024 -- A lot of work has been done on gender balance, especially in terms of hiring women and having more women at a managerial level. In this regard, TC is working in close collaboration with the National University. Currently around 12.3 percent of the total staff of the TC are women (221 women including 23 in managerial positions). The TC pointed to a research that was recently conducted by the Asian Development Bank (ADB) in the region where the revenue administration of Tajikistan has the higher percentages of women. While recognizing Comments progress in this area, it is important to continue moving in this direction to increase the percentage of women working in the institution especially in managerial positions in alignment with the indicators included in the project. The TC has developed the gender action plan, which the Bank provided comments on December 7, 2022 6/12/2024 Page 29 of 29