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: 7 | ARCHIVED on 05-Jun-2017 | ISR28344 | Implementing Agencies: National Board of Revenue, Economic Relations Division 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 Unsatisfactory  Moderately Satisfactory Overall Risk Rating  Substantial  Substantial Implementation Status and Key Decisions The project has continued delivering critical outputs that will be key for supporting the successful implementation of the new VAT Law as July 1, 2017. In particular, the online registration module of the IVAS system went live on March 23, 2017. By now, more than 20,000 taxpayers have been re-registered and registered getting the new 9-digit Business Identification Number (BIN) which evidences the tax reform process has been gaining significant traction compared with the preliminary modest target of 350 new BINs by June 30, 2017. In addition, the project has completed the first round of the User Acceptance Test (UAT) of the online modules of tax return and tax payment which will go live on July 1, 2017. The preparation of the modules have required the interoperability of other information system such as the ASYCUDA Customs system to enable traders to use the new BIN for future transactions. Also, the project is working out the interoperability of the payment system with the Bangladesh Bank to use its payment platform in order to facilitate the payment of VAT obligations. On the side of taxpayers services, the project has made the outsourced Calling Center (CC) operational to support the ongoing registration process and the further tax return submission and payment process as well. Finally, the project has proposed a new functional organizational structure for the NBR VAT Wing in order to support the new VAT Law implementation on July 1, 2017. 6/5/2017 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) 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 14.27 24.53 37% 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 6/5/2017 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) 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 The DLI has been partially Value approved by Minister of met. completed. Finance Date -- 27-Aug-2015 27-Aug-2015 Comments Although DLI 1.1.1 has been completed, as agreed with the client, this DLI is expected to 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 went live on March 23, 2017. By the time of this ISR more than 20,000 new VAT reregistered and new registered taxpayers have received the new 9-digit Business Identification Number (BIN). 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 27-Aug-2015 6/5/2017 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) 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. The National Board of Revenue (NBR) signed off a Service Level Agreement (SLA) with the Bangladesh Computer Council (BCC) for the Data Center and IT infrastructure. as agreed with the client, this DLI could be removed from the program during the restructuring. PHDLIPDOTBL  DLI 2: Number of registered active VAT taxpayers (thousands) (Number) Baseline Actual (Previous) Actual (Current) Value -- -- -- Date -- 27-Aug-2015 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 three-four months after launch. PHDLIPDOTBL  DLI 3: Number of taxpayers who filed on-line (Number) Baseline Actual (Previous) Actual (Current) Value -- -- -- Date -- 27-Aug-2015 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 on July 1, 2017. 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 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 on July 1, 2017. 6/5/2017 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 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 27-Aug-2015 Comments This DLI has been completed, confirmed by the independent verification entity, and subsequently disbursed against. 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 27-Aug-2015 Comments This DLIs has been completed, confirmed by the independent verification entity, and subsequently disbursed against. Results Results Area 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 4.72 4.70 Date 12-Mar-2014 31-Aug-2016 30-Jun-2016 30-Jun-2020 Comments 6/5/2017 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) The actual VAT Tax-GDP Ratio comprises collected domestic VAT and imports VAT. The ratio was measured during the Tax Administration Diagnostic Assessment Tool (TADAT) field mission of February 2017. 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 31-Aug-2016 31-Mar-2017 30-Jun-2020 Overall Comments 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 PIP Updated and linked PIP Updated and linked VAT returns are Value endorsed by Minister of to DLIs to DLIs processed per Finance month Date 01-Jul-2013 30-Nov-2016 30-Nov-2016 30-Jun-2020 PHINDIRITBL  Intermediate Results Indicator 2: New registered active VAT taxpayers (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 20,000.00 -- 20,000.00 40,000.00 Date 01-Jul-2016 30-Nov-2016 30-May-2017 30-Jun-2020 PHINDIRITBL  Intermediate Results Indicator 3: Value of VAT e-payments (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target 6/5/2017 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) Value 0.00 -- -- 40.00 Date 01-Jul-2016 30-Nov-2016 30-Nov-2016 30-Jun-2020 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 30-Nov-2016 30-Nov-2016 30-Jun-2020 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 30-Nov-2016 30-Nov-2016 30-Jun-2020 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 30-Nov-2016 30-Nov-2016 30-Jun-2020 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 30.00 Date 01-Jul-2016 30-Nov-2016 28-Feb-2017 30-Jun-2020 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 6/5/2017 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) Date 01-Jul-2016 30-Nov-2016 30-Nov-2016 30-Jun-2020 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 30-Nov-2016 30-Nov-2016 30-Jun-2020 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 30-Nov-2016 30-Nov-2016 30-Jun-2020 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 30-Nov-2016 30-Nov-2016 30-Jun-2020 PHINDIRITBL  Intermediate Results Indicator 12. Improved fiduciary management (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target NCB contracts are not 75 percent of done through e-GP. NCB contracts All significant audit are done objections resolved in through e-GP. The target has been The target has been Value more than 6 months. All significant partially met. partially met. Non systematic submission audit objections quarterly fund utilization resolved in 6 report to FD & complete months. fund release processes Submit 6/5/2017 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) after each quarter. quarterly fund utilization report to FD & complete fund release processes after each quarter. Date 12-Mar-2014 30-Nov-2016 30-Nov-2016 30-Jun-2020 Overall Comments Results Intermediate Indicator Measured (Y/N) Observation 1 Intermediate Results Indicator 1: VAT Yes, in the MTR The PIP is now linked to the DLIs. The weekly Implementation Plan on Track. Project Coordination Committee (PCC) assesses progress on the PIP and recommends further actions 2 Intermediate Results Indicator 2: New registered Yes. The Online registration active VAT taxpayers. module went live on March 23, 2017. 3 Intermediate Results Indicator 3: Value of VAT e- No. The RII measurement depends on the new VAT payments. Law implementation. 4 Intermediate Results Indicator 4: Reduced VAT No. The RII measurement depends on the new VAT stop filers Law implementation. 5 Intermediate Results Indicator 5: Taxpayers file on- No. The RII measurement depends on the new VAT line. Law implementation. 6 Intermediate Results Indicator 6: VAT Large No. The RII measurement depends on the new VAT Taxpayers who pay on-line Law implementation. 7 Intermediate Results Indicator 7: Average time to Yes. In the TADAT mission of VAT refunds are not assessed against risk process and issue tax refunds February 2017. criteria. A very small percent of refunds is paid within 30 days. 8 Intermediate Results Indicator 8: “Hit rate” of tax No. The RII measurement depends on the new VAT audits –percentage of tax audits resulting in Law implementation. additional tax assessments (in a year) 9 Intermediate Results Indicator 9: Lower taxpayer No. The RII measurement depends on the new VAT costs for complying with VAT Law implementation. 10 Intermediate results Indicator 10. Greater Yes. transparency 11 Intermediate results Indicator 11. Greater taxpayer Yes. satisfaction with services 12 Intermediate Results Indicator 12. Improved Yes. fiduciary management 6/5/2017 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) 6/5/2017 Public Disclosure Copy Page 10 of 10