Public Disclosure Copy The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P127734) Tax Administration Modernization Project (P127734) EUROPE AND CENTRAL ASIA | Moldova | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2016 | Seq No: 4 | ARCHIVED on 18-May-2018 | ISR32310 | Implementing Agencies: Republic of Moldova, Main State Tax Inspectorate Key Dates Key Project Dates Bank Approval Date:06-Jun-2016 Effectiveness Date:25-Jan-2017 Planned Mid Term Review Date:30-Sep-2019 Actual Mid-Term Review Date:-- Original Closing Date:31-Dec-2021 Revised Closing Date:31-Dec-2021 Project Development Objectives Project Development Objective (from Project Appraisal Document) To improve revenue collection, tax compliance and taxpayer services in the Republic of Moldova Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Tax policy reform:(Cost $1.50 M) Institutional development:(Cost $1.20 M) Operational development:(Cost $1.30 M) IT Infrastructure and system modernization:(Cost $15.00 M) Project management and change management:(Cost $1.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Moderately Unsatisfactory  Moderately Unsatisfactory Overall Implementation Progress (IP)  Moderately Unsatisfactory  Moderately Unsatisfactory Overall Risk Rating  Substantial  Substantial 5/18/2018 Page 1 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P127734) Implementation Status and Key Decisions The project became effective on January 25, 2017. The project is meant to support the implementation of an automated risk-based approach to maximize revenue collection, promote open interaction with taxpayers, and develop a fair, taxpayer-friendly approach to addressing taxpayer grievances. This will allow the State Tax Service (STS) to focus on non-compliant taxpayers, including businesses that avoid paying taxes while reducing compliance costs for taxpayers. The project will also finance the acquisition of a modern revenue management IT system. The long-term vision supported by the project is the creation of client-oriented tax administration. The modernized tax administration will improve the business environment and the country's competitiveness.Implementation of the project is currently delayed due to insufficient project staffing and delays in decisions about how to go forward with the IT system. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  High  Substantial  Substantial Macroeconomic  High  Substantial  Substantial Sector Strategies and Policies  Substantial  Substantial  Substantial Technical Design of Project or Program  Substantial  Substantial  Substantial Institutional Capacity for Implementation and Sustainability  Substantial  High  High Fiduciary  Substantial  Substantial  Substantial Environment and Social  Low  Low  Low Stakeholders  Moderate  Moderate  High Other  --  --  -- Overall  Substantial  Substantial  Substantial Results Project Development Objective Indicators PHINDPDOTBL  Time required to comply with taxes (Hours, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 186.00 -- 181.00 165.00 Date 31-Dec-2015 -- 29-Dec-2017 31-Dec-2021 Comments The target value for 2017 was identified as 186 hours and was achieved. The actual value was 181 hours. 5/18/2018 Page 2 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P127734) PHINDPDOTBL  Overall efficiency of VAT collection (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 52.30 51.24 53.49 54.70 Date 31-Dec-2015 31-Dec-2016 29-Dec-2017 31-Dec-2021 Comments The target value for 2017 was identified as 52,4% and was achieved. The actual value was 53,49% (Total VAT 16 ,870,100,000.0 MDL) / 20%* 15,766,611,300.0 MDL final consumption). The baseline for the following sub-indicator Efficiency of VAT Collection by STS (Percentage, Custom Supplement) was not identified in the PAD correctly. The STS provided evidences and the baseline will be changed (increased) during upcoming project restructuring. The project restructuring issue is reflected in this ISR’s Section # 1.2. PHINDPDOTBL  Efficiency of VAT collection by STS (Percentage, Custom Supplement) Baseline Actual (Previous) Actual (Current) End Target Value 11.06 58.90 61.14 12.54 PHINDPDOTBL  Share of active taxpayers filing income declarations in total registered taxpayer (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 19.35 25.15 28.50 24.00 Date 31-Dec-2015 31-Dec-2016 29-Dec-2017 31-Dec-2021 Comments 5/18/2018 Page 3 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P127734) Target value for 2017 was identified as 20% and was achieved . The actual value was 28.5% (98526 filed income declarations for 2017/ 345667 taxpayers). PHINDPDOTBL  Increase in additional tax assessed per audit (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -48.70 12.25 34.00 Date 31-Dec-2015 31-Dec-2016 29-Dec-2017 31-Dec-2021 Comments The target value for 2017 was identified as 10% and was achieved. The actual value was 12,25%. Overall Comments The client is improving on several indicators. However, those improvements are mostly based on actions taken with the government’s own funds or other donors’ support and cannot be directly attributed to the use of project resources. Intermediate Results Indicators PHINDIRITBL  Share of large taxpayer audits which includes related parties, when related parties exist (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 35.00 Date 31-Dec-2015 31-Dec-2016 29-Dec-2017 31-Dec-2021 Comments There was no target value for 2017. 5/18/2018 Page 4 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P127734) PHINDIRITBL  Decrease in tax arrears (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 8.50 6.60 6.70 7.00 Date 31-Dec-2015 31-Dec-2016 29-Dec-2017 31-Dec-2021 Comments The target value for 2017 was identified as 8.50% and was not achieved. The actual value was 6.7%. PHINDIRITBL  Taxpayer satisfaction (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Satisfaction in crease - 20% (compared to baseline) Final survey conducted with Satisfaction survey is data budgeted, selection is disaggregated Value Satisfaction not measured -- done but contract by gender, negotiations are results and ongoing. suggests actions of the STS to address weaknesses are published on the STS website. Date 31-Dec-2015 01-Oct-2017 29-Dec-2017 30-Oct-2021 Comments The indicator was not achieved. The target was: Baseline survey conducted with data disaggregated by gender, results and suggests actions to the STS to address weaknesses are published on the STS website. The survey was not conducted due to the significant procurement delay. The ToR was developed for the taxpayer survey; procurement is delayed but is now expected by end FY18 for implementation in Q1 FY19. 5/18/2018 Page 5 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P127734) PHINDIRITBL  The Training Center capacity in permanent training program (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 100% of appropriate STI staff have been The list of training trained in use The list of training Value -- programs is not of business programs is not identified identified. functions and new tools, data disaggregated by gender Date 31-Dec-2015 01-Oct-2017 29-Dec-2017 31-Dec-2021 Comments There was no target value for 2017. PHINDIRITBL  Share of income tax returns filed electronically (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 39.60 43.00 45.96 60.00 Date 31-Dec-2015 31-Dec-2016 29-Dec-2017 31-Dec-2021 Comments The target value for 2017 was identified as 40% and was achieved. Actual value was 45.96% (45292 income tax filed electronically / 98526 field income declarations). PHINDIRITBL  Number of hits to the STS web-site (Number (Thousand), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3,570,004.00 3,529,014.00 6,106,607.00 5,700,000.00 Date 31-Dec-2015 31-Dec-2016 29-Dec-2017 31-Dec-2021 Comments The indicator was achieved. The target value for 2017 was 3,900,000 and actual was 6,106,607. 5/18/2018 Page 6 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P127734) Overall Comments The client is improving on several intermediate indicators. However, those improvements are mostly based on actions taken with the government’s own funds or other donors’ support and cannot be directly attributed to the use of project resources. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P127734 IBRD-86250 Effective USD 12.58 12.58 0.00 0.00 12.58 0% P127734 IDA-58290 Effective USD 7.42 7.42 0.00 0.12 7.58 1.6% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P127734 IBRD-86250 Effective 06-Jun-2016 28-Jun-2016 25-Jan-2017 31-Dec-2021 31-Dec-2021 P127734 IDA-58290 Effective 06-Jun-2016 28-Jun-2016 25-Jan-2017 31-Dec-2021 31-Dec-2021 Cumulative Disbursements 5/18/2018 Page 7 of 8 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report Tax Administration Modernization Project (P127734) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 5/18/2018 Page 8 of 8 Public Disclosure Copy