The World Bank Report No: ISR12407 Implementation Status & Results Croatia Revenue Administration Modernization Project (P102778) Public Disclosure Copy Operation Name: Revenue Administration Modernization Project (P102778) Project Stage: Implementation Seq.No: 13 Status: ARCHIVED Archive Date: 07-Dec-2013 Country: Croatia Approval FY: 2007 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Croatian Tax Administration Key Dates Board Approval Date 28-Jun-2007 Original Closing Date 30-Jun-2013 Planned Mid Term Review Date Last Archived ISR Date 24-Apr-2013 Effectiveness Date 21-Dec-2007 Revised Closing Date 30-Jun-2015 Actual Mid Term Review Date Project Development Objectives Project Development Objective (from Project Appraisal Document) The development objective of the Project is to achieve further improvements in efficiency, taxpayer services, and tax compliance through capacity building and systems improvement in the Croatian Tax Administration (CTA). This will be accomplished by supporting the development of a strategic plan for tax modernization and assisting in its implementation over the next five years. This investment will move the tax administration closer toward harmonization of its policies and operations with EU accession expectations. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Public Disclosure Copy Page 1 of 6 The World Bank Report No: ISR12407 Component(s) Component Name Component Cost Organizational Consolidationand Functional Realignment of Tax Offices 0.41 Public Disclosure Copy and Functional Realignment of Tax Offices Knowledge and Professional Upgrading of Tax Officials and Stakeholders 0.68 Upgrading of Tax Officials and Stakeholders Technological Upgrading for Services, Management Information System, and TIN Implementation 28.83 Support Services, Management Informatio n System, and TIN Implementation Support Modernization Management and Project Support 2.04 Project Support Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Moderate Moderate Implementation Status Overview Public Disclosure Copy Substantial progress has been made on the project since the last ISR was filed: the two largest contracts of the project, the civil works for the Bank-up Center and the Compliance Risk Management System (CRMS), were awarded. Second Level restructuring was approved at the end of June. It included: i) an extension of the closing date from June 30, 2013 to June 30, 2015; ii) Re-allocation of loan proceeds so as to be better aligned with project priorities and activities which are currently focused on institutional reform components; iii) Amendment of the Results Framework to be more comprehensive and measurable of priorities and activities of the project; and, (iv) Partial cancellation of the loan's proceeds for EUR 1.5million as a consequence of the proposed changes in the project. Locations Country First Administrative Division Location Planned Actual Croatia Not Entered Zagreb Page 2 of 6 The World Bank Report No: ISR12407 Not Entered Not Entered Zagreb ✔ ✔ Results Public Disclosure Copy Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Increase in taxpayercompliance rates, based Text Value 2.7 4.4 At least 5% improvement. oninternationally acceptedmethod for Date 31-Dec-2008 30-Apr-2013 30-Jun-2015 estimating the taxgaps. Comments As part of restructuring, the measurement of indicator has been changed to the "tax gap as percentage to the GDP. Decrease in taxpayer compliance costs, as Text Value 14,495 kn 11,977 kn 13,770.25 kn assessed by taxpayer surveys. (Annual tax Date 31-Dec-2010 30-Apr-2013 30-Jun-2015 compliance average cost for legal entities) Comments Perception of taxpayers regarding the quality of Text Value 2.66 3.19 At least 5% improvement. service provided by CTA, as measured by Date 31-Dec-2010 30-Apr-2013 30-Jun-2015 periodic surveys Comments Perception of tax officers regarding the terms Text Value No surveys undertaken. 3.05 At least 10% improvement. of employment and working environment, as Methodology and baseline measured by periodic surveys. data to be developed. Date 31-Dec-2007 30-Apr-2013 30-Jun-2015 Comments 3.05 (in Oct. 2010). it should be noted that the share of completed questionnaires from 35.4% to 15.4% in comparison to 2010. Intermediate Results Indicators Public Disclosure Copy Indicator Name Core Unit of Measure Baseline Current End Target A Pilot LTO in Zagreb that would report directly Text Value No genuin National LTO A full-fledged national level A full-fledged national level to the head of the CTA established exists LTO is in operation. LTO with the CRMS implemented and based on the BPR. Date 30-Nov-2011 31-Oct-2013 30-Jun-2015 Comments Page 3 of 6 The World Bank Report No: ISR12407 (IRI 2) Ratio of staff in inspections functions as Text Value 57% 65% a percentage of total staff in Zagreb Region, Date 21-Dec-2007 31-Dec-2012 30-Jun-2015 Local Offices, plus LTO Comments LTO was established in 2012. Public Disclosure Copy The indicator will be assessed by the end of December, 2013. Training per CTA staff (including distance Hours Value 8.00 15.00 20.00 learning) Date 31-Dec-2011 31-Mar-2013 30-Jun-2015 Comments The indicator will be assessed by the end of December, 2013. E-learning modules developed and Number Value 2.00 5.00 10.00 implemented Date 30-Jun-2013 31-Dec-2013 30-Jun-2015 Comments This is the target number to achieve by the end of 2013. It will be assessed during the December mission. Stop filers of the medium and small taxpayer Percentage Value segments Date Comments VAT Percentage Value 2.81 3.35 2.00 Sub Type Date 31-Dec-2011 31-Dec-2012 31-Dec-2014 Breakdown Comments Monitoring of this indicator The next assessment will be Target: began in 2011 conducted by the end of Less than 2% December, 2013. CIT Percentage Value 4.44 4.33 2.00 Sub Type Date 31-Dec-2011 31-Dec-2012 31-Dec-2014 Breakdown Comments Monitoring of this indicator The next assessment will be Target: began in 2011 conducted by the end of Less than 2% Public Disclosure Copy December, 2013. PIT Percentage Value 3.68 3.81 2.00 Sub Type Date 31-Dec-2011 31-Dec-2012 31-Dec-2014 Breakdown Comments The next assessment will be conducted by the end of December, 2013. (IRI 5) Annual average assessments per Text Value 348,075 EUR 455,328 EUR 500,000 EUR inspector increased Date 21-Dec-2007 31-Dec-2012 30-Jun-2015 Page 4 of 6 The World Bank Report No: ISR12407 Comments The next assessment will be conducted by the end of December, 2013. Public Disclosure Copy (IRI 6) Percent of total declarations by legal Text Value 3.0% 54.32% 90.0% entities filed electronically increased Date 21-Dec-2007 31-Dec-2012 30-Jun-2015 Comments The next assessment will be conducted by the end of December, 2013. Data on Financial Performance (as of 01-Aug-2013) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P102778 IBRD-74710 Effective 28-Jun-2007 03-Jul-2007 21-Dec-2007 30-Jun-2013 30-Jun-2015 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P102778 IBRD-74710 Effective USD 68.00 31.96 36.04 13.49 18.43 42.00 Disbursement Graph Public Disclosure Copy Key Decisions Regarding Implementation Page 5 of 6 The World Bank Report No: ISR12407 The Large Taxpayer Office (LTO) is one of the essential building blocks for modern tax administration. Now that in Croatia the LTO has been established at the national level and being in full operation, the project has shifted its focus on the implementation of the Compliance Risk Management System (CRMS). The Implementation of the CRMS is key to the attainment of Project Development Objectives because all components and activities of the project are connected with this core tax administration function. For full implementation of the CTR, which requires approximately two years, the closing date of the project was extended from June 30, 2013 to June 30, 2015. Public Disclosure Copy Restructuring History Level two Approved on 08-Sep-2010, RVP Decision on 13-Jun-2013 Related Projects There are no related projects. Public Disclosure Copy Page 6 of 6