The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) SOUTH ASIA | Bangladesh | Governance Global Practice | Requesting Unit: SACBD | Responsible Unit: GGOES IBRD/IDA | Program-for-Results | FY 2014 | Team Leader(s): Furqan Ahmad Saleem, Syed Khaled Ahsan Seq No: 9 | ARCHIVED on 20-Jun-2018 | ISR32901 | Created by: Furqan Ahmad Saleem on 02-Jun-2018 | Modified by: Furqan Ahmad Saleem on 12-Jun- 2018 Program Development Objectives Program Development Objective (from Program Appraisal Document) The PDO is to improve revenue mobilization and transparency in the VAT administration. Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Unsatisfactory Implementation Status and Key Decisions Project Status and Key Issues: The restructuring has been completed and a relevant Amendment Letter has been signed by the ERD on May 16, 2018. The last implementation support mission dated August 14-27, 2017, followed by a regular engagement, focused on the issues related to the restructuring of the VIP. The Results Framework, Disbursement Linked Indicators (DLI), verification protocol and program expenditure framework have been revised in the restructuring paper. The restructured paper has 5 DLIs after merging DLI and 3 and 4 to DLI 3. New timelines and targets have been set against each of the DLIs. Accordingly, the revised DPP of the program has been approved on March 5, 2018. The draft DLI verification report confirmed several achievements to date, such as implementation of the VAT online registration module, disclosure of VAT collection data, fiduciary actions, conduct of taxpayers’ satisfaction survey etc, but at the same time highlighted the deficiencies to be attended in order to attain full completion of results targets. Considerable amount of preparations is needed to enable and customize the VAT online systems to a modified set of requirements under the existing VAT legislation of 1991. The August mission agreed to disentangle the automation and simplification of processes from the implementation of the VAT Law, 2012; and thereby, pursue the implementation of VAT online system under the existing legislation of 1991. The mission notes that a considerable amount of preparations is yet needed to enable such implementation, including the revision of the existing VAT Rules and related forms to accommodate electronic filing of registration applications, monthly returns and tax payments. This would also require changes in existing registration software as the business process would be different under the 1991 VAT law. This would also need an understanding with the solution provider on the scope of the change and contractual impact. These steps are needed to complete the implementation of VAT online system that includes the online return filing, online payments, and audit and refunds modules. Besides these, the program also needs to focus on increasing the number of active taxpayers, improving the number of large taxpayers’ paying their returns through online, improving online registration web-interface, leading to increasing revenues in a transparent manner etc. For the VAT online systems to be successfully implemented, the program needs to scale-up its advocacy and engagement with the key stakeholders. The mission noted that the implementation of the VAT online return filing module is lagging due to lack of clarity on the new return form and the related rules to enable this change in the form and business process. The NBR would prefer to take this opportunity and build-in a few reforms; however, this requires deepening the engagement with the stakeholders within and outside NBR (including the business community) in a participatory manner. The mission discussed the need for a multi-pronged approach to such engagement and consultations, including the role of Program Management Consultants, IT vendor, VIP Program Management Office, and technical assistance available from the development partners. The VAT registration system is almost complete and the online module is up and running. As of now, more than 100,000 VAT taxpayers have been registered through this online module, covering both new and existing VAT payers. The roll out of the online registration module to different field officers has begun to widen the scope of online registration. The VAT IT collection set-up has not been completed yet. This system has been developed but implementation of this system depends on proper integration with Bangladesh Bank and CGA’s iBAS++ module. The process of integration between Online VAT systems and Bangladesh Bank’s payment data is underway. An independent verification report has assessed the registration set-up part of the DLI 1. Besides identifying a few functionalities that are yet to be fully configured, the report has several good recommendations to improve the registration module. 6/20/2018 Page 1 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Way forward: Enable customization of the VAT online systems to a modified set of requirements under the existing VAT legislation of 1991 and to be revised VAT Rules, which would require the program to scale-up its advocacy and engagement with the key stakeholders. An intense implementation support will be provided to expedite the program implementation in the next 6 months. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P129770 IDA-54260 Effective USD 60.00 60.00 0.00 19.77 33.02 37% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date Program Action Plan 1.By no later than June 30, 2016,the Recipient shall establish Active Registered Baseline ref. to in DLR#2.1, On-line Action Description Filing Baseline ref. to in DLR#3.1 and LTU Baseline ref. to in DLR#4.1 of the table set forth in Sec. IV.A.2 of Schedule 2 to FA. Responsibility Recurrent Frequency Due Date DLI# Status Yes DLI 2: Number of Client Yearly Delayed active VAT taxpayers Comments 2a. The Recipient shall carry out, under terms of reference acceptable to the Association, the following independent Action Description taxpayer satisfaction surveys- 2014 survey by no later than June 30, 2015. Later agreed with GoB to comply with it by June 30, 2016. Responsibility Recurrent Frequency Due Date DLI# Status No DLI 4- (Now merged Client 30-Jun-2015 Completed with DLI-3) Comments 2b. The Recipient shall carry out, under terms of reference acceptable to the Association, the following independent Action Description taxpayer satisfaction surveys- 2016 survey by no later than June 30, 2017. Responsibility Recurrent Frequency Due Date DLI# Status No DLI 4- (Now merged Client 01-Jul-2019 Not Yet Due with DLI-3) 6/20/2018 Page 2 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Comments 2c. The Recipient shall carry out, under terms of reference acceptable to the Association, the following independent Action Description taxpayer satisfaction surveys- 2018 survey by no later than June 30, 2019. Responsibility Recurrent Frequency Due Date DLI# Status No DLI 4- (Now merged Client 30-Jun-2020 Not Yet Due with DLI-3) Comments 3.By no later than 12 months after the Effective Date, Recipient shall install, and thereafter maintain throughout the Action Description implementation of the Program, a fixed asset tracking software in the VAT Wing in order to record, track and manage assets. Responsibility Recurrent Frequency Due Date DLI# Status Yes DLI 5 - Greater Client Yearly transparency of the Completed tax administration Comments 4.By no later than 1 month after the Effective Date, Recipient shall form and maintain throughout implementation of the Action Description Program, a 7-member team evaluation committee, under ToR acceptable to the Association, responsible for high value IT procurement Responsibility Recurrent Frequency Due Date DLI# Status No DLI 1: VAT Client 30-Oct-2014 Implementation Plan Completed on Track Comments 5.By no later than 6 months after the Effective Date, Recipient shall report and thereafter continue reporting throughout Action Description implementation of Program, on key procurement indicators agreed with the Association using Recipient’s proc. monitoring systems Responsibility Recurrent Frequency Due Date DLI# Status No DLI 5 - Greater Client 30-Mar-2015 transparency of the Completed tax administration Comments 6/20/2018 Page 3 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) 6a. By no later than 3 months after the Effective Date, Recipient shall appoint under ToR acceptable to the Association Action Description and maintain throughout imp. of the Program, a focal point within ERD. Responsibility Recurrent Frequency Due Date DLI# Status Client Yes CONTINUOUS Completed Comments 6bi.By no later than 3months after Effective Date,Recipient shall start collecting and compiling into formats agreed with Action Description Association, and thereafter continue collecting throughout implementation of the Prog., all Prog fraud and corruption complaint Responsibility Recurrent Frequency Due Date DLI# Status Client Yes SemiAnnual Completed Comments 6bii. By no later than 3 months after the Effective Date, Recipient shall submit, throughout implementation of the Action Description Program, the aforementioned reports to the Association on a semi-annual basis. Responsibility Recurrent Frequency Due Date DLI# Status Client Yes SemiAnnual Completed Comments Action Description 7a. By no later than June 30, 2015, the Recipient shall carry out training on e-waste handling to IT NBR staff. Responsibility Recurrent Frequency Due Date DLI# Status Client No 30-Jun-2015 Completed Comments 7b.By no later than June 30, 2015, Recipient shall start, and thereafter maintain throughout implementation of the Action Description Prog., proper record keeping of equipment purchase, reused and auctioned. Responsibility Recurrent Frequency Due Date DLI# Status Client Yes CONTINUOUS Completed Comments 8. By June 30, 2015, Recipient shall set up NBR’s contact center, under terms of reference acceptable to the Action Description Association 6/20/2018 Page 4 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Responsibility Recurrent Frequency Due Date DLI# Status Client No Completed Comments Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance -- Substantial Substantial Macroeconomic -- Moderate Moderate Sector Strategies and Policies -- Substantial Substantial Technical Design of Project or Program -- Substantial Substantial Institutional Capacity for Implementation and Sustainability -- Substantial Substantial Fiduciary -- Substantial Substantial Environment and Social -- Moderate Low Stakeholders -- Substantial Substantial Other -- -- -- Overall -- Substantial Substantial RiskComments Comments Safeguard ratings have been reviewed by the respective environmental and social specialists. The environment risk is rated low since there is no civil works and the program is supporting VAT online systems only. On social risks, the program works on systems upgrading and technical aspects only. There are no triggers for OP 4.12 or OP 4.10. The risk rating is assessed as low. Results PDO Indicators by Objectives / Outcomes Increase in VAT revenues ►Increase in VAT revenues (Number (Thousand), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 6,868,000.00 -- 6,868,000.00 9,141,000.00 6/20/2018 Page 5 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Date 30-Jun-2017 -- 30-Jun-2017 30-Jun-2020 ►VAT Tax-GDP Ratio (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3.70 5.00 5.00 4.70 Date 12-Mar-2014 30-Jun-2017 30-Jun-2017 30-Jun-2020 Greater trasparency of the tax administration ►Greater transparency of the tax administration (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N -- Y Y Date 30-Jun-2013 -- 31-Dec-2017 30-Jun-2020 ►Compliance with the availability of information listed in the RTI rules and regulations (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 75.00 75.00 75.00 100.00 Date 12-Mar-2014 31-Mar-2017 31-Mar-2017 30-Jun-2020 Intermediate Results Indicators by Results Areas Increased VAT revenues ►IR Indicator 1.1: VAT Implementation Plan on Track (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target VAT Registration VAT Implementation Plan module implementation At least 60,000 VAT PIP Updated and linked Value endorsed by Minister of (65% complete) and returns are processed to DLIs Finance 100,000plus registered per month online Date 01-Jul-2013 30-Nov-2016 05-Jun-2017 30-Jun-2020 ►IR Indicator 1.2: Number active VAT Taxpayers (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/20/2018 Page 6 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Value 80,000.00 62,000.00 100,000.00 120,000.00 Date 01-Jul-2016 30-Nov-2017 05-Jun-2018 30-Jun-2020 ►IR Indicator 1.3: Percentage of large taxpayers submitting on-line returns and taxes (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 90.00 Date 01-Jul-2016 30-Nov-2016 30-Nov-2016 30-Jun-2020 ►IR Indicator 1.4: Value of VAT e-payments (Number (Thousand), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 105,000,000.00 Date 01-Jul-2016 30-Nov-2016 30-Nov-2016 30-Jun-2020 ►IR Indicator 1.5: Number of VAT stop filers (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 99,999.00 -- 99,999.00 77,777.00 Date 01-Jul-2016 30-Nov-2016 30-Nov-2016 30-Jun-2020 ►IR Indicator 1.6: Average time to process and issue tax refunds (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 120.00 30.00 120.00 102.00 Date 01-Jul-2016 28-Feb-2017 28-Feb-2017 30-Jun-2020 ►IR Indicator 1.7: Percent of audits per year resulting in additional tax assessments (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 20.00 -- 20.00 25.00 Date 01-Jul-2016 30-Nov-2016 30-Nov-2016 30-Jun-2020 Greater transparency ►IR Indicator 2.1: Fiduciary Action (Text, Custom) 6/20/2018 Page 7 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Baseline Actual (Previous) Actual (Current) End Target NCB contracts are not 75 percent of NCB done through e-GP. contracts are done All significant audit through e-GP. objections resolved in All significant audit more than 6 months. objections resolved in The target has been The target has been Value Non systematic 6 months. partially met. partially met. submission quarterly fund Submit quarterly fund utilization report to FD & utilization report to FD complete fund release & complete fund processes after each release processes quarter. after each quarter. Date 12-Mar-2014 30-Nov-2017 05-Jun-2018 30-Jun-2020 ►IR Indicator 2.2: Greater taxpayer satisfaction with services (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- 0.00 75.00 Date 30-Jun-2014 30-Nov-2016 30-Nov-2016 30-Jun-2020 Disbursement Linked Indicators DLI_IND_TABLE ►DLI 1 DLI 1: VAT Implementation Plan on Track (Output, 34.50, 13%) Baseline Actual (Previous) Actual (Current) FY2019-20 VAT Registration module Baseline 2012/13- VAT implementation (65% The DLI has been Value Implementation Plan complete) and 100,000 -- partially completed. approved plus have registered online Date -- 27-Aug-2015 05-Jun-2018 -- Comments ►DLI 2 DLI 2: Number of active VAT taxpayers (Intermediate Outcome, 8.00, 0%) Baseline Actual (Previous) Actual (Current) FY2019-20 Value 80,000.00 -- 100,000.00 -- Date -- 27-Aug-2015 05-Jun-2018 -- Comments 6/20/2018 Page 8 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) ►DLI 3 DLI 3: Percentage of large taxpayers submitting online returns and tax payments (Intermediate Outcome, 7.50, 0%) Baseline Actual (Previous) Actual (Current) FY2019-20 Value 0.00 -- 0.00 -- Date -- 27-Aug-2015 05-Jun-2018 -- Comments ►DLI 4 DLI 4- (Now merged with DLI-3) (Output, 0.03, 0%) Baseline Actual (Previous) Actual (Current) FY2019-20 Value 0.00 0.00 0.00 -- Date 12-Mar-2014 27-Aug-2015 05-Jun-2018 -- Comments ►DLI 5 DLI 5 - Greater transparency of the tax administration (Process, 5.00, 0%) Baseline Actual (Previous) Actual (Current) FY2019-20 NBR releases monthly VAT collection data on their website but not on refunds. NBR reports that the amount of refunds is With the submission of Value 2012/13 negligible. -- quarterly fund utilization A survey has been carried out and it is on NRB’s website for feedback. The NBR will formally close the survey within June 2018. Date -- 27-Aug-2015 05-Jun-2018 -- Comments ►DLI 6 DLI 6 - Fiduciary Actions (Process, 4.96, 0%) Baseline Actual (Previous) Actual (Current) FY2019-20 Value nil -- The first of the three -- criteria have been met. The verification agent has verified that 70% of all NCB contracts are done through e-GP in their third report. 6/20/2018 Page 9 of 10 The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Verification report states that the audit issues have not been resolved within the 6 months. Therefore, this DLI remains unachieved. Quarterly Fund Utilization Report has been submitted by the Program to the Internal Resources Division for FY 2016-2017. And they were cross verified by the verification agent. Date -- -- 05-Jun-2018 -- Comments 6/20/2018 Page 10 of 10