Public Disclosure Copy 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 | IBRD/IDA | Program-for-Results | FY 2014 | Seq No: 6 | ARCHIVED on 20-Jan-2017 | ISR26477 | Implementing Agencies: Program Development Objectives Program Development Objective (from Program-for-Results 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 Overall Risk Rating  Substantial  Substantial Implementation Status and Key Decisions The Project has commenced to deliver important outcomes for the new VAT Law implementation on July 1, 2017. A major accomplishment has been the partial launching of the IVAS (the VAT core information system) Registration Module for Large Taxpayers (LT) on November 24, 2016. In addition, the Value Added Tax and Supplementary Duty Rules have been published in the Public Gazette November 3, 2016 to regulate the use of the registration, tax returns filling, and tax payment modules and include the paper-based processes as well. The National Board of Revenue (NBR) has launched a communication campaign to inform all taxpayers about the purpose of the new VAT and to help them to understand better their tax obligations under the new Law. The communication campaign is also oriented to educate taxpayers on the meaning of the VAT, how the tax will operate, and the benefits for the economy. It is expected that the Project Implementation Plan (PIP) will be accomplished as planned to prepare both the NBR and the taxpayers' community in the adoption of the new VAT Law before July 1, 2017. 1/20/2017 Public Disclosure Copy Page 1 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) 1/20/2017 Public Disclosure Copy Page 2 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P129770 IDA-54260 Effective XDR 38.80 38.80 0.00 12.97 25.83 33% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P129770 IDA-54260 Effective 09-May-2014 07-Dec-2014 11-Jan-2015 30-Jun-2020 -- 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  --  Moderate  Moderate Technical Design of Project or Program  --  Substantial  Substantial Institutional Capacity for Implementation and Sustainability  --  Substantial  Substantial Fiduciary  --  Substantial  Substantial Environment and Social  --  Low  Low Stakeholders  --  Substantial  Substantial Other  --  --  -- Overall  --  Substantial  Substantial Disbursement Linked Indicators (DLI) PHDLIPDOTBL  DLI 1.1: VAT Implementation Plan on Track (Text) Baseline Actual (Previous) Actual (Current) Baseline 2012/13- VAT Implementation Plan The DLI has been partially Value The DLI has been partially met. approved by Minister of met. Finance Date -- -- 27-Aug-2015 Comments 1/20/2017 Public Disclosure Copy Page 3 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Although DLI 1.1.1 has been partially completed, as agreed with the client, this DLI will be removed from the program during the restructuring. DLI 1.1.2 “ At least 40,000 active VAT taxpayers have been registered in the COTS VAT database” . The registration module has been partially launched for the VAT Large Taxpayers on November the 24th, 2016. Initial estimates of registrations indicate that there may be fewer than 30,000 currently active VAT taxpayers which had been estimated at the time of Board approval. PHDLIPDOTBL  DLI 1.2: VAT Implementation Plan on Track (Text) Baseline Actual (Previous) Actual (Current) Baseline 2012/13- VAT This DLI has not been met Implementation Plan completely yet as there are two Value The DLI has not been met. approved by Minister of other DLRs under it - 1.2.3 and Finance 1.2.4-which needs to be fulfilled. Date 17-Jun-2016 -- 27-Aug-2015 Comments DLI 1.2.1 has been completed, confirmed by the independent verification entity, and subsequently disbursed against. DLI 1.2.2 is in progress. A contract has been signed with the Contact Center and data center. Currently this DLI is under independent verification.. PHDLIPDOTBL  DLI 2: Number of registered active VAT taxpayers (thousands) (Number) Baseline Actual (Previous) Actual (Current) Value -- -- -- Date -- -- 27-Aug-2015 Comments Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized. Initial estimates at time of Board approval indicated approximately 30,000 current active taxpayers. This includes branches of the same company. The baseline is to be established through the launch of the online registration module and taken at one month after launch. PHDLIPDOTBL  DLI 3: Number of taxpayers who filed on-line (Number) Baseline Actual (Previous) Actual (Current) Value -- -- -- Date -- -- 27-Aug-2015 Comments Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized. This has now been delayed until fiscal year 2017/18 when the 2012 Act is due to be introduced and the online filing system launched. 1/20/2017 Public Disclosure Copy Page 4 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) PHDLIPDOTBL  DLI 4: Percent of VAT Large Taxpayer Unit taxpayers who paid on-line (Percentage) Baseline Actual (Previous) Actual (Current) Value -- -- -- Date -- -- 27-Aug-2015 Comments Actual (Current)- No target is set until year 3. Baseline to be established once the VAT online system is operationalized. This has now been delayed until fiscal year 2017/18 when the 2012 Act is due to be introduced and the online payment system launched. PHDLIPDOTBL  DLI 5- Greater transparency (Text) Baseline Actual (Previous) Actual (Current) The DLI has not been fully Value 75 The DLI has not been fully met. met. Date 12-Mar-2014 -- 27-Aug-2015 Comments The DLI on greater transparency has been met for year 1, with significant progress recorded during 2015 and the result will now be verified in June 2017. PHDLIPDOTBL  DLI 6- Fiduciary Actions (Text) Baseline Actual (Previous) Actual (Current) With the submission of With the submission of quarterly quarterly fund utilization Value 2012/13 fund utilization report, DLI 6.3.2 report, DLI 6.3.2 has been has been met. met. Date -- -- 27-Aug-2015 Comments DLI 6.1 and DLI 6.2 are currently under independent verification. Results Results Area 1/20/2017 Public Disclosure Copy Page 5 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) Intermediate Results Area Project Development Objective Indicators PHINDPDOTBL  VAT Tax-GDP Ratio (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 3.70 3.63 3.63 4.70 Date 12-Mar-2014 27-Aug-2015 31-Aug-2016 30-Jun-2020 PHINDPDOTBL  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 27-Aug-2015 31-Aug-2016 30-Jun-2020 Overall Comments The PDO indicator on VAT tax collection against the GDP will be assessed in January 2018 after six months of the new VAT Law implementation. In addition, the VAT Micro-Simulation Model to be completed in June 2017 will help to forecast the VAT collection against the GDP and as percentage of other taxes. Intermediate Results Indicators PHINDIRITBL  Intermediate Results Indicator 1: VAT Implementation Plan on Track (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target At least 60,000 VAT Implementation Plan Target has not been PIP Updated and linked VAT returns are Value endorsed by Minister of met. to DLIs processed per Finance month Date 01-Jul-2013 27-Aug-2015 30-Nov-2016 30-Jun-2020 1/20/2017 Public Disclosure Copy Page 6 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) PHINDIRITBL  Intermediate Results Indicator 2: New registered active VAT taxpayers (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 20,000.00 -- -- 40,000.00 Date 01-Jul-2016 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The baseline is only referential and it will be measured once the IVAS system is rolled out. The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. PHINDIRITBL  Intermediate Results Indicator 3: Value of VAT e-payments (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- -- 40.00 Date 01-Jul-2016 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. PHINDIRITBL  Intermediate Results Indicator 4: Reduced VAT stop filers (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- -- 20.00 Date 01-Jul-2016 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. 1/20/2017 Public Disclosure Copy Page 7 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) PHINDIRITBL  Intermediate Results Indicator 5: Taxpayers file on-line (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- -- 50.00 Date 01-Jul-2016 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. PHINDIRITBL  Intermediate Results Indicator 6: VAT Large Taxpayers who pay on-line (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- -- 50.00 Date 01-Jul-2016 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. PHINDIRITBL  Intermediate Results Indicator 7: Average time to process and issue tax refunds (Days, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 100.00 -- -- 30.00 Date 01-Jul-2016 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The baseline is only referential and it will be measured once the IVAS system is rolled out. The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. 1/20/2017 Public Disclosure Copy Page 8 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) PHINDIRITBL  Intermediate Results Indicator 8: “Hit rate” of tax audits –percentage of tax audits resulting in additional tax assessments (in a year) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- -- 5.00 Date 01-Jul-2016 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. PHINDIRITBL  Intermediate Results Indicator 9: Lower taxpayer costs for complying with VAT (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- -- -15.00 Date 01-Jul-2016 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The baseline is only referential and it will be measured once the IVAS system is rolled out. The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. PHINDIRITBL  Intermediate results Indicator 10. Greater transparency (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Tax collected disclosed; Taxpayer satisfaction The target has not The target has not been survey Value Information disclosed been fully met. fully met. disclosed; Processing and Contact center performance disclosed Date 12-Mar-2014 27-Aug-2015 30-Nov-2016 30-Jun-2020 1/20/2017 Public Disclosure Copy Page 9 of 10 Public Disclosure Copy The World Bank Implementation Status & Results Report Revenue Mobilization Program for Results: VAT Improvement Program (VIP) (P129770) PHINDIRITBL  Intermediate results Indicator 11. Greater taxpayer satisfaction with services (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 -- -- 50.00 Date 30-Jun-2014 27-Aug-2015 30-Nov-2016 30-Jun-2020 Comments The end target figure is only referential based on initial discussions with the PIU, this value and others will be reviewed during the Mid-Term Review. PHINDIRITBL  Intermediate Results Indicator 12. Improved fiduciary management (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 75 percent of NCB contracts are done NCB contracts are not through e-GP. done through e-GP. All significant All significant audit audit objections objections resolved in resolved in 6 more than 6 months. The target has been The target has been months. Value Non systematic submission partially met. partially met. Submit quarterly fund utilization quarterly fund report to FD & complete utilization report fund release processes to FD & after each quarter. complete fund release processes after each quarter. Date 12-Mar-2014 27-Aug-2015 30-Nov-2016 30-Jun-2020 Overall Comments Some of the baseline values are only referential and they will be measured once the IVAS system is rolled out. Some of the end target figures are only referential based on initial discussions with the PIU, these values and others will be reviewed during the Mid-Term Review. 1/20/2017 Public Disclosure Copy Page 10 of 10