Ref. Ares(2022)633459 - 27/01/2022 OFFICIAL SRSS/S201 9/03 9DOUET DOCUMENTS EUROPEAN COMMISSION Directorate-General for Structural Reform Support The Director-General Amendment No. I to the Administration Agreement between the European Commission and the International Bank for Reconstruction and Development concerning the Part II Europe 2020 Programmatic Single-Donor Trust Fund Trust Fund (No. TFO 73323) (EC Contract No. SRSS/S2019/039) 1. Reference is made to the Administration Agreement between the European Commission (the "Donor") and the International Bank for Reconstruction and Development (the "Bank", and together with the Donor, the "Parties" and each a "Party") regarding the Part II Europe 2020 Programmatic Single- Donor Trust Fund, No. TF073323 (the "Trust Fund"), effective as of June 18, 2019 (the "Administration Agreement"). 2. The Parties agree to amend the Administration Agreement as follows: (a) Article I of the Administration Agreement shall be modified to read as follows: "i. The International Bank for Reconstruction and Development (the "Bank") acknowledges that the European Commission (the "Donor", and together with the Bank, the "Parties" and each a "Party") agrees to provide three million and two hundred and forty-nine thousand Euros (C3,249,000) (the "Contribution") for the Part II Europe 2020 Programmatic Single-Donor Trust Fund, No. TF073323 (the "Trust Fund") in accordance with the terms of this Administration Agreement. The estimated total budget of the Trust Fund is three million two hundred and forty-nine thousand Euros (C3,249,000). The indicative budget set out in Annex 5 shall be used for monitoring purposes only and shall not be binding." (b) Article 3 of the Administration Agreement shall be modified to read as follows: "3. The Donor shall deposit the Contribution in accordance with the following schedule and in the currency specified in Section I above ("Contribution Currency") into such bank account designated by the Bank (each amount deposited hereinafter referred to as an "Instalment") upon submission of a payment request by the Bank: (A) Promptly following countersignature - C1,805,000. (B) E1,444,000 - subject to the disbursement of 70% of the preceding instalment The period for payment of further instalments shall be 60 days. The period for payment of the balance shall be 60 days." (c) Section 2 of Annex I "Part II Europe 2020 Programmatic Single-Donor Trust Fund Description" to the Administration Agreement is replaced by the text of Attachment 1 to this Amendment. EK W~ (d) Annex 4 "Indicative Results Indicators for the Annex I Activities" to the Administration Agreement is replaced by Attachment 2 to this Amendment. (e) Annex 5 "Indicative Budget for the Annex I Activities" to the Administration Agreement is replaced by Attachment 3 to this Amendment. 3. All other terms of the Administration Agreement shall remain the same. 4. Each of the Parties represents, by confirming its agreement below, that it is authorised to enter into this Amendment and act in accordance with these terms and conditions. The Parties are requested to sign and date this Amendment, and upon possession by the Bank of this fully signed Amendment, this Amendment shall come into effect as of the date of the last signature. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By: ( ' c Uk Name: Gallina A. Vincelette Title: Director for European Union Countries Date: I c tI Z) Oc ) EUROPEAN UNION represented by the EUROPEAN COMMISSION By: Name: Mario Nava v-N COA, Title: Director General, DG REFORM Directorate General for Structural Reformr Suppo D REFOR 2 EK ATTACHMENT I ANNEX 1 2. Activities 2.1. Background, specific objectives and description of activities are: The mission of the Structural Reform Support Service ("SRSS") of the European Commission is to provide support for the preparation and implementation of growth-enhancing administrative and structural reforms by mobilising EU funds and technical expertise. To this end, Member States submit requests for Support under Regulation (El) 2017825 on the establishment of the Structural Reform Support Programme ("SRSP Regulation" or the "Programme"). Following the submission of requests and their analysis by the European Commission in accordance with the criteria and principles referred to in Article 7(2) of the SRSP Regulation, the SRSS has agreed to support the projects laid down in this Annex i. To this end, the following project(s) vill be carried out under this Agreement as follows: LATVIA: ASSISTING THE LATVIAN STATE REVENUE SERVICE [N IMPLEMENTING THE MID-TERM TAX STRATEGY (INDICATIVE DURATION 18 MONTHS; INDICATIVE BUDGET EUR 600,000 - EC REFERENCE 19LVO1) Project background: According to the Government of Latvia (-GoL"). the country faces a number of tax compliance issues, a large tax gap (in the region of 20%), caused by a combination of carousel fraud, under reporting of income in cash trades and general non-compliance. partly caused by high compliance costs for taxpayers. Additionally, Latvia faces the challenge of "envelope wages" the payment ofpart ofan employee's salary in cash. Moreover, although yield per audit is high, audit productivity is exceedingly low, with less than six audits concluded per auditor per year. The current compliance management strategy does not address risk adequately, and the audit program needs reform. [he World Bank has provided technical support for the reform under a separate Contribution from SRSS (TF072372) and the GoL has requested that the technical assistance be continued. Ihis project will build on the First two phases by continuing to support the (oL on the VAf tax gap analysis, using results to drive a risk-based audit strategy, help establish a compliance risk management strategy, and train audit staff in specific trade sector audits. Project specific objective: The specific objective of this Project is to support the State Revenue Authority (SRS") in improving revenue collection, in particular with regards to VAT, and in reducing the compliance burden. Main project activities to be carried out by the World Bank: * Analytical work to assist the SRS in introducing a compliance risk management strategy that focuses audits on taxpayers at the highest risk of non-compliance, and to a much lesser extent on those that comply voluntarily with their tax obligations. 3 EK * Analytical work to assist the SRS in developing the capability to undertake tax gap analysis using both top down (figures obtained from the National Statistics Bureau) and bottom up (figures obtained from tax audits and SRS records) methodologies. Staff of SRS will also be trained by the World Bank in these methodologies. The advice provided by the Bank will target specific trade sectors in order to improve compliance. * Review of the audit system and identification of key areas for improvement, and development of recommendations to address identified gaps and shortcomings and to strengthen capacities for detection of tax evasion through the audit process. Project final outputs: * Set of evidence-based recommendations for a compliance risk management system. * Tax gap analysis and assistance and recommendations delivered to guide the SRS in independently undertaking a top down and bottom up tax gap analysis. * Analysis and recommendations for strengthening the tax audit function. POLAND: SUPPORT TO THE IMPLEMENTATION OF THE MEASUREMENT, MONITORING & EVALUATION FRAMEWORK TO HELP IMPROVE PERFORMANCE MANAGEMENT OF THE NRA (INDICATIVE DURATION 12 MONTHS; INDICATIVE BUDGET EUR 135,000 - EC REFERENCE 19PLO2) Project background: Poland has embarked on comprehensive institutional, organisational, and operational reforms that aim to transform its revenue administration into a modern, efficient organisation in step with the rest of the European Union. One of the first steps in organisational restructuring was the merger of tax, customs, and fiscal control administrations into one agency forming the National Revenue Administration ("NRA") in March 2017. Existing performance measurement, management activities are not integrated in Poland, making difficult the monitoring and evaluating of the performance of the NRA. The three merged independent services have their own performance measurement, management and evaluation programs which have yet to be consolidated and integrated into a single framework for NRA. SRSS has been providing support to the NRA. initially through a series of working visits using the FISCALIS1 instrument and then through an administration agreement with the World Bank to the NRA (TF073261). The support to NRA included advice to NRA to develop an integrated performance management framework, supported by a balanced scorecard tool that combines both strategic level output and outcome indicators, governance arrangements, streamlining decision-making processes, planning responsiveness to emerging issues and improving the efficiency in use of resources.. This phase of the project will build on the first two phases. Project specific objective: The specific objective of this project is to support NRA in informing the implementation of a modern Measurement, Monitoring and Evaluation Framework ("MME"), to allowx improved performance of the NRA. ISCAIS is an LU cooperation programme which enablcs national tax administrations to crcate and exchanec information and expertise. It altows dev eloping and operating major trans-turopean It s stems together. as wcll as establishing networks h bringing together national officials Ftim across Europe. 4 EK Main project activities to be carried out by the World Bank: " Analytical support to the NRA in the development of an MME framework. * Analytical support to the NRA in its institutionalisation of a performance management framework and supporting testing and pilots for the implementation of the selected three to five Key Performance Indicators (KPIs). Final outputs: * Advice and Report including recommendations to NRA for the implementation of the MME framework, including performance management framework, and proposed methodology to identity underperforming areas. * Training delivered to officials of the Ministry of Finance and NRA to support change management processes and implementation of the proposed recommendations, procedures and guidelines. POLAND: INTRODUCTION OF A COMPLIANCE RISK MANAGEMENT SYSTEM IN THE NRA (INDICATIVE DURATION 12 MONTHS; INDICATIVE BUDGET FUR 175,000 - EC REFERENCE 19PLOI) Project background: According to the Government of Poland ("GoP"), the NRA does not currently have a holistic compliance risk management system or comprehensive strategies for improving tax compliance with quantified targets. NRA has extensive and complex operational activities, overlapping sources of information, and non- centralised IT systems and databases. It also has a dispersed and fragmented management supervision systen which challenges the setting of priorities and the implementation of a risk-based approach. In addition, these tasks are yet to be linked to the newly established internal organisational structure, roles and responsibilities. There is a need to introduce a system that covers the entire organisation and evaluates risk in all tax areas with a first step focus on large taxpayers office (1LT") (referred to by NRA as "large business sector"). SRSS has been providing support to the NRA, initially through a series of working visits using the FISCALIS instrument and then through an administration agreement with the World Bank to the NRA (TF7O326 I). This phase of the project will build on the first two phases. Project specific objective: The specific objective of the Project is to support NRA in informing the implementation of a modern compliance risk management systei for the large taxpayer office. Main project activities to be carried out by the World Bank: * Analytical support to NRA in its development of a modern compliance risk management model for the large taxpayers office. " Provision oftraining, workshops and support to the relevant NRA staff " Provision of support in piloting the newly developed compliance risk management framework at the large taxpayers office to provide feedback. 5 EK (-,V Final outputs: * Report on compliance risk management framework. including proposed criteria to be used by NRA when evaluating compliance risk. and recommendations for the implementation of a modern compliance risk management framework within the large taxpayer office. * Report on lessons learned from the pilot of the newly developed compliance risk management framework (as described in bullet 3 above). * Workshop/s on the compliance risk management. report results, and pilot implementation. POLAND: METHODOLOGY FOR ESTIMATING EXCISE GAP (INDICATIVE DURATION 18 MONTHS; INDICATIVE BUDGET EUR 300,000 - EC REFERENCE 19PLl5) Project background: In 2017, Poland introduced a number of measures to improve tax collection and achieved important progress in VAT compliance. One of the priorities of the Polish (overnment set out in the Strategy for Responsible Development until 2020 is to ensure the sustainability of public finances. This could be done by 'sealing" the tax system aad strengthening the effectiveness of the NRA. Developing a gaps measurement approach for VAT, excise. corporate income tax ("Cfl) and personal income tax ("PIT") is one of the priority actions of the NRA for the years 2017-2020. In order to achieve the strategic objectives of NRA and to ensure the complementarity of organisational and regulatory activities, there is a need to develop a methodology for estimating the excise gap. Project specific objective: The specific objective of this project is to support NRA in developing a methodology for excise gap estimation, which would provide the NRA and their stakeholders with a measure of the amount of excise revenues lost or foregone through noncompliance. avoidance, and to help inform policy decisions on development of the NRA and Ministry of Finance ("NIoF"). Main project activities carried out by the World Bank: * Analysing the tax administration and tax policy in Poland and assisting in identifying and collecting the relevant data for estimating the excise gap. * Examining legislation and advising on possible closing of legislative gaps. * Estimating the excise tax gap using relevant methodologies, developing the methodology used to calculate the gap and identify the gap by sectors. * Presenting to the Polish Government the methodology used to calculate the gap and make recommendations on reducing it. * Delivering training to officials of the MoF and NRA in the methodology and techniques used to calculate the gap and support development of in-house capacity, including, w,here appropriate, manuals. 6 EK Project final outputs: * Excise gap analysis that measures the amount of excise revenues lost or foregone through noncompliance, avoidance and policy decisions for the period 20 11-20 17. * Report with recommendations for wider strategy development. * Report with recommendations on the possibility of monitoring the trend of the excise gap and identifyNing measures that contribute to reducing the gap. * Training on methodology for assessing the excise gap for the MoF/NRA stat. POLAND: ASSESSMENT OF TAX INCENTIVES (INDICATIVE DURATION 24 MONTHS; INDICATIVE BUDGET (389,000 - EC REFERENCE 19PL14 Project background: According to the GoP, tax exemptions constitute a large proportion of potential tax revenues, hence the need for a thorough review of the tax exemption system and assessment of effectiveness of particular tax incentives. Total tax exemptions, including revenue lost by both state budget and local governments' budgets, amounted in 2015 to 90.7 billion PLN, i.e. 5.04% of the GDP. These estimates were based on data for most important taxes, that is PIT, CIT. VAT and excise duty as well as real estate tax, forest tax and agricultural tax in the case of local governments. VAT exemptions were largest and equalled 46 billion PLN, while PIT and CIT exemptions were assessed at 21.3 and 14.8 billion PLN respectively. Estimated tax exemptions constituted a considerable proportion of actual potential tax revenues, representing 45%, 37.4% and 25.6% of CIf, VAT and PIT revenues respectively. Project specific objective: The specific objective ofthe Project is to support NP-N in informing the reform of the tax incentive system, to better align it with its distributional, labour-market, investment, innovation and other economic policy objectives, while minimising the revenue losses, through in-depth analysis of the effectiveness of the tax incentives. Main Project activities to be carried out by the World Bank: * Assist MoF in defining tax benchmarks and tax expenditures For key taxes (CIT. PIT, SSC) * Assist MoF and NRA in updating and expanding the list of all tax incentives and non-tax incentivesavailable in Poland. * Provide assistance to Mot' in developing methodology for calculating the cost of incentives. * Provide assistance in strengthening the technical capacity for the analysis of incentives within the NRA and MoF. Project final outputs: * Updated list of tax incentives Proposed User Guide on Microsimulation Analysis of Tax Incentives for Investment 7 EK * Guidance Notes on Corporate and Personal Income Tax and Social Security Contributions Benchmarks and Tax E xpenditures * Notes on Excise, VAT and local taxes benchmarks, tax expenditures and modelling considerations * Proposed Corporate income tax (CIT) microsimulation model (Python and Tax Analyzer Framework), tested on a sample of tax returns provided by the Ministry of Finance * Workshops on assessment of tax incentives and Training of MoF staff on using the proposed CIT microsimulation model POLAND: METHODOLOGY FOR ESTIMATING THE CORPORATE INCOME TAX GAP (INDICATIVE DURATION 24 MONTHS; INDICATIVE BUDGET FUR 450,000 - EC REFERENCE 19PL16) Project background: In 2017. Poland introduced a number of measures to improve tax collection and achieved progress in VAT compliance that increased VAT tax revenues. As a next step the GoP aims to improve corporate tax compliance. Over the period 2010 - 2015, the share of GoP revenue from taxation of income and wealth was around 5.8% lower in Poland than the EU Member State average. Since 2015, the GoP introduced several measures to increase CIT compliance (e.g. introduction of a general anti-avoidance rule for CII in 2016) oInwever, the assessment of the impact of this measure, and other measures taken, has not been possible due to the absence of an appropriate methodology for estimating the CII gap. Project specific objective: The specific objective of the project is to support NRA in estimating the CIT gap. using either top down or bottom up methodologies, to identify policy action that could limit tax revenue lost due to CIT non- compliance. Main project activities to be carried out by the World Bank: * CarrNying out introductory analytical activities to study the tax administration and tax policy in Poland and identify the most appropriate data for estimating the CII gap. * Reviewing lessons from other tax administrations in their methods for estimating the CIT gap (to be separately conducted using FISCALIS). * Estimating the gap by determining core activities that will involve estimating the ClI gap using both top down or bottom up methodologies. * Outlining proposed preparatory actions for determining the CIT gap and undertake the analysis. * Providing recommendations from the findings of the gap analysis which could be used by NRA to take actions on reducing the CIT gap. * Carrying out training activities concurrently with the activities above (Imainly through training by doing) building capacity within the MoF and NRA to allow in-house gap estimation. Final project outputs: * An estimate for the CIT gap for the period 2011 - 2017. * Training to Mol-/NRA on methodology for assessing the CIf gap. 8 EK * Report with recommendations, to be used by MoF and NRA in proposing strategies to be taken to reduce the CIT gap. LITHUANIA: IMPROVEMENT OF THE VAT ADMINISTRATION (INDICATIVE DURATION 12 MONTHS; INDICATIVE BUDGET ER300,000 - EC REFERENCE 19LT25) Project background: According to the Government of Lithuania ("GoL"), VAT revenue is a major source of income and made up 42% of all national budget revenues administered by the State Tax Inspectorate ("ST") in 2018. According to a study commissioned by European Commission, the VAT gap in Lithuania in 2015 amounted to more than I billion euros or 26%0 of potential VAT revenue (amount which would be collected if there was no gap). According to VAT gap reports, the VAT gap in Lithuania has been decreasing steadily since 2012, yet it still remains one of the highest in the ELU. Currently, VAT fraud detection based solely on database data is complicated, since, without the specific tools to manage data, the effective exploitation of VAT invoice data and various other data sources is hardly possible. The STI is interested in making use of new IT tools and methods, including machine learning in the area of VAT control, taking into account an automatic risk assessment of all VAT payers who submitted returns with refundable VAT. Project specific objective: The specific objective of the project is to support STI in enhancing efforts to ensure the collection of planned budget revenue on the VAT. Main project activities carried out by the World Bank: * Support STI in preparing a proposed methodology for discovering VAT fraud schemes. including risk criteria and proposed methodologies to identify an element of fraud in the chain of transactions (based on all information available to STI). * Presenting the proposed methodology in knowledge sharing/workshops: I) for STI staf'generally; and 2) for STI staff to be involved in further implementation of the proposed methodology. * Preparing a proposed action plan for the implementation of the methodology. * Assisting STI in the development of a new process for automatic risk assessment of all VAT payers who submitted VAT returns for refundable VAT (not only limited to refundable VAT claims) and make recommendations based on EU best practice. * Preparing a report with recommendations for visualising VAT data, including technical specification for a new software. Project final outputs: * Report describing the new proposed methodology for discovering VAT fraud schemes. * Proposed action plan for the implementation of the proposed methodology. * Recommendations Report on technical specifications for software development. ITALV: IMPROVING THE EVALUATION OF VAT AND EXCISE TAX POLICIES (INDICATIVE DURATION 12 MONTHS; INDICATIVE BUDGET FUR 450,000 - VC REFERENCE 191T29) 9 EK Project background: According to the Government of Italy (-Gol-), the Italian tax gap is one of the highest in the EU. being about three times higher than the ELU average, as recently reported in the EU VAT gap report. Having a high tax gap. particularly regarding excise and VAT. works against tax collection, fairness, and the sustainability of public finances. To reduce the tax gap in Italy, the Gol has undertaken several actions in the past few years, of which the most important is the adoption of the VAT split-payment mechanism and specific measures in the excise sector. The extension of the mandatory electronic invoicing to all private sector transactions from 2019 is expected to improve VAT and excise tax compliance relevantly. To implement effective tax policies for reducing the tax gap, however, it is important to develop evaluation models that are able to describe and simulate all the featuring aspects of VAT and excise taxes. SRSS has been providing support to the Ministry of Finance and Economy (Mo[FE). This Project will build on the support provided earlier by SRSS. Project specific objective: The specific objective of the project is to support the MoFE in improving the evaluation of VAT and excise tax policies, and in developing the design of more effective tax policies for reducing the VAT gap and the excise tax gap. Main project activities to be carried out by the World Bank: * Identify the current situation regarding the VAT gap to understand the problems and exact needs of the MoFE and specify the approach for the task. * Collect data, analyze data (including the updating and harmonization of the data) and prepare the detailed social accounting matrix. * Support MoFE in the modelling construction phase by proposing an adaptation of the theoretical structure of the framework to the specific features of Italy; specification of dimensions of the model; definition of the functional forms and keN causality chains: calibration and econometric estimation. Provide support to MoFE to implement the Computable General EqtUilibrium model. Provide support to MoFE to test and fine-tune activities to validate the model. * Support MoFE in the development of a LIser-friendly interface, such that the model can easily be used by non-specialists to provide timely policy simulations and reports that are useful for analysing the economic and social impact of tax policies on VAT and excise sector. * Support MoFE prepare a technical manual describing the model structure, calibration, and its database * Provide a comprehensive training program including both theory and practice to MoFE staff. This training will focus on the economic mechanisms incorporated in the model, scenario building process. simulation management, extracting simulation results, interpreting the results and using them in the policy making process. Project final outputs: * I echnical manual describing the model. * Report on a user-friendly interface for the Computable General Equilibrium model, which enables use by non-specialists. * Training to MoFE staff. 10 EK FINLAND: SUPPORT FOR DESIGN AND IMPLEMENTATION OF A NEW VAT REPORTING MODEL (INDICATIVE DURATION 18 MONTHS; INDICATIVE BUDGET EUR 450,000 - EC REFERENCE 19FI05) Project background: As described in the European Commission's Country Report Finland 2018, Finland is emerging from a protracted crisis. The country has made progress in improving the long-term sustainability of its public sector. It is expected that a well-functioning VAT reporting system would decrease the VAT gap and therefore have an impact on economic growth and sustainability of public finances. However, public debt- to-GDP ratio is projected to start increasing again in the early 2020s. Increasing tax gap can make this situation significantly worse and reduce Finland's ability to improve the sustainability of its public sector. VAT is one of the most significant revenue sources for Finland. Digitalisation, new technologies, globalisation, and other changes in the way of doing business impose new challenges for the tax administrations to work efficiently and secure level playing field to taxpayers nationally and within EU. In order to enhance the capability of the Finnish Tax Administration ("FTA") to perform proper risk analysis and risk management, more data has to be collected electronically from all VAT taxpayers. Therefore, the FTA is planning to carry out a reform in the model for collecting VAT information from the economic operators (VAT return and other information that is collected for VAT purposes, e.g. transactional data on sales and purchases). Project specific objective: The specific objective of the project is to support the FTA in enhancing its capability to perform proper risk analysis and risk management, by proposing a feasible "tailor-made to-be model" for VAT reporting for Finland that will not create too much administrative burden for both taxpayers and tax authorities. Main project activities to be carried out by the World Bank: * Identify the current situation regarding the VAT reporting in Finland, understand the problems and exact needs of the FTA and specify the approach for the task. * Carry out a comparative analysis/benchmarking study of the good practices in other EU and non-EU countries: Based on criteria selected in consultation with the FTA, the World Bank will select a mix of at least five EU and non-EU countries for benchmarking in the area of VAT reporting. The key questions/areas for research, comparison and analysis will be selected in consultation with the FTA prior to the benchmarking study. * Provision of support for development of a new tailor-made VAT reporting model for Finland: On the basis of the current situation in Finland and the information collected during the benchmarking study, a proposed new tailor-made VAT reporting format for Finland will be elaborated in consultation with the FTA. Furthermore, the Bank will organise workshop/s, brainstorming and drafting session/s, as needed. Project final outputs: * Analytical report with the results from the benchmarking study; * Report describing the current situation on VAT reporting and the proposed new tailor-made VAT reporting model with assumptions, risks and indicators, and proposed implementation plan for the new model. 11 EK SRSS,'S20 19,'03 9 ATTACH M ENT 2 ANNEX 4 INDICATIVE RESULTS INDICATORS FOR THE ANNEX 1 ACTIVITIES Expected Indicators Baseline 1 Result guals Turget Assumptions Results groups (logic of intervention) Impuct Over Ilie long term. Ihe activities, outpis and associated outcomes are expected to contribute tovards supporting Conditions for smart groxwth in selected European Union member states. Outcome (s) The overall expected outcome ofthc proJect is increased capacity of public administraions in Lax policy design and tax administration. Reform-iied VA I VA I reportmn reporting imodel Ilodel requires estrnind Adoption and reform to enhance catelis\-d implementation captluri ng Govnernment of lenupoab the capabihity, ofthie I of the outputs by 191105 - Improved VAT collection . . eritical Finland adnirustration to . ... Gvrmn m HIland itormation, (-innish Y ax . . perlorm proper risk an balancig Adinisraton authoritis and analysis and risk hsubseluent effbectivenecss mlanagement and eflicienex cntorcement (Finland) (Finland) MIethodo logy dCeloped tor discovering VAT fraud selemes and other possible Vc o rad factors for Adoption and detelonbaed undler reporting , mplementation solely on database .ne r.i Gox ernment of of t,eiiilnUitiohi 191 125 - Reduced VAT gap in data is compandated . lithuma (State ,ithunamia xitliout specific .rit s t axr algoithm lorautihoriiles and tools to manage ItgrtiTsIr nspectoriate) atoiisao daacYiiri h anfinding an subsequent . elenment of fraud enforcement (ILithuamiia) in the chain ol transactions (hased on all information axailahle to Sl). L aluation niodels Fvaluation not available to model Gov erniament o A 19[T29 - Reduced VAT and excise intorn the design describing and Italy Ministry of tihe ttputs by tax gap in Italv and implementation simUlating all of inance and Gov.ernm-ent of effectiv e Lax Ite featuring Econiy) pohicies for aspeets of VA l EK Lpected Indicators Baseline Result goals Target Assumptions Results groups (logic of intervention) reducing the tax gap and excise taxes subsequent (Italy) available to enforcentni iniorn policy design and implementation (Italy) Increased cap t iv oIRSý iAdloption and 1 be current to implement an lrnentation compliance ex idence-basced (oxvcrnnint of . . of the outputs by 191LVO - Reduced ta\ gap in managernent compliancc risk Latx ia (state (1oerinent latvia strategy does not management Revenue a .ffiitics und address risk stratey and Ser c sseiqce) adequatly ( Latv ia) CarrY out tax enforcenent gap ana lys isH( 2atv ia) ._..._.._................ Polish NRA has no A mnoderni P compliance risk Adoption and 1)istie Conipljanco Imanagenent imrplementation risk mniagemLenti 9Lmori ntatoes frainework at Poland \ational of the outputs by 1 9PI (>1 - [mprov ed tax system that cov ers the level of the Revenuc Government cori mpla ice in Poland Ilie e nli1relarge taxpay er Authority autihorities and organisation and e . evaluates risk in all dced Cntorcct t1X irasdeveloped enfcemenllclt tax areas ._._............................................(P o la n d ) Polish NRA has no An Integrated centralised and perförmance unitorm managenient Adoption and I 9p1 PIM2 - mmpvcd decision- rnanagement (KINlE) nodel implementation miking proecsses. responsivencss intfrmation sy stem. cox erine all Poland National oC the outputs by and efficiency otonsxnal pcrfrmance three legacy Rex enue Government nianagement being imistitutins Authority authorities and Rex enue Authority in Poland spread across a under one subscqucnt x ide range of umbrella is enörcenent oflices and tax developed heads. (Poland) Polish NRA has reliable Polish NRA has a estimates of tc limlited anount of under standing of excise rex enues the amount of lost or forgconc Poland N.tional I9PL 5 - Reduction oftexcise gap excise revenues lost irough I ~Rev enue i Poland or f oregone through noncompiance . AUthority ioncompliance and and avoidance, avoidance. to inform policy constraining policy decisions on decisions. developient of die NRA and MoF. 1 9PI 14 - Improved alignment of Polish MoF [tas no Polish MoF has Poland Mlinistrx Polish tax incentixe system xwith capacity to assess if iniormation and of F inariec 2 EK Expected Indicators Buseline Result goals Target Assumptions Results groups (logic of intervention) economie policy objectives while tax incentive some analytical minimising revenue losses systern is aligned tools wk it h i ts / iethodoy loguies d istributional that can lahour-market. contribute to investment, assessing the innovation and tax incentive other economic sy stem policy obicetiv es The assessment of CIT gap and its Application of driv ers (cornpliance nthodology to 19P1.16 - National puh]ic or policy ) has not estimation of been performed by CIT gap, Poland National administration tas increased the Polish NRA due allowing to Revenue capacity in assessment otcorporate to lack of identir poliev Authority incomre tax gap in Poland appropriate action that wsill methodology for limit the gap in estimating the Cl1 Poland. gap. Out put s 1 ov'ernment of 191105 - Report describing the joinmnof new tailor-made VAT reporting 0 l 0msh fax uodle] (Finland> Administration) 19L 125 - Report describing the Covernintnt o1 Lithuania (State new methodology for discov ering 0 Twa V'A fraud schemes (tithuania1 Inispectorat-ie) 19lT29 - Technical manual and Government ol user-friendly intertace for the Italy (Ministry Computable General Fquilibrium of Finanee and model (ltaly) Economy ) Government of 19LV01 -Eiec-ae 0 [atvia (State recommendations for a compliance 0 ý ertuc risk management sy stem 1 atvi) Serv ice) 19P1, li - Recommendations report for the implementation of a Poland National modern conpliance risk 0 1 Revenue managenent Iramework wtithin the Authority key entities sector ( Poland) 191P1 02 - AdvIcc and recommendations report on the Poland National per t1rm ance management tool, and 0 Revenue on how to identify Authority underperforming areas (Poland) 191>1,15 - xcise gap analysis that measures the amount ot excise Poland National revenues lost or oregone through 0 1 Revenue noncotnp lii ance. avoidance and Authority poliev decisions (Poland) 3 EK Expected Indicators Baseline Result goals Target Assumptions Results groups (logic of intervention) 19P14 - Deliver methodology of o ), ofPoland National impact assessment of 2 selected tax 2 Revenue incentives and advise 0u2reN modifications (Poland) 19PL16 - Deliver mcthodology on Poland National estimation ofthe CFf gap (Poland) 0 1 Revenue Authority 4 EK ATTACHMENT 3 ANNEX 5 INDICATIVE BUDGET FOR THE ANNEX 1 ACTIVITIES Expenditure Category Average Number Amount in Euro Staifand consuItant services 55 1,541,275 Cost of*travel 45 925,965 I raining and workshops 154,328 Other services including 15 462,982 translation Sub-total 3,086,550 Administration fee (5,) 162,450 Total 3,249,000 The amount estimated for personnel is calculated taking into account different levels of expertise estimated to be required for carrying out the activities described in Annex 1. The World Bank Group entity may transfer amounts between categories of the indicative budget. This does not require an amendment of the Administration Agreement if the Action is carried out as described in Annex 1. 5 EK