The World Bank Implementation Status & Results Report Revenue Administration Reform Project (P149743) Revenue Administration Reform Project (P149743) EUROPE AND CENTRAL ASIA | Montenegro | Governance Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 3 | ARCHIVED on 01-May-2019 | ISR36671 | Implementing Agencies: Montenegro, Montenegro Tax Administration Key Dates Key Project Dates Bank Approval Date: 31-Jul-2017 Effectiveness Date: 13-Mar-2018 Planned Mid Term Review Date: -- Actual Mid-Term Review Date: -- Original Closing Date: 31-Mar-2023 Revised Closing Date: 31-Mar-2023 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The development objective of the project is to improve the effectiveness of operational functions of Montenegro’s tax administration and to reduce the compliance costs for corporate taxpayers. The project supports Montenegro’s long-term vision of a revenue administration that operates with streamlined risk-based business processes that contribute to the efficient collection of taxes and social contributions from all sources of economic activity. Increased compliance will generate a more robust revenue stream to provide essential services to citizens. Improvements in revenue administration capacity will also support the country's goal for EU accession and economic integration with EU member states. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Institutional Development:(Cost $2.61 M) Business Processes:(Cost $12.69 M) Taxpayer Services:(Cost $0.36 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Moderately Satisfactory Moderately Satisfactory Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions The Inception Report for the Project was endorsed by the Steering Committee in March 2019. The report provides for a new timeline in implementing the Integrated Revenue Management System (IRMS) and a more involved approach in implementation by the Montenegrin Tax Administration that augurs well for project ownership, commitment and sustainability. The project procurement plan was also updated. With adherence to the new milestones and updated procurement plan, project implementation is expected to advance significantly. 5/1/2019 Page 1 of 5 The World Bank Implementation Status & Results Report Revenue Administration Reform Project (P149743) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Moderate Moderate Moderate Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Moderate Moderate Moderate Technical Design of Project or Program Substantial Substantial Substantial Institutional Capacity for Implementation and Sustainability Substantial Substantial Substantial Fiduciary Moderate Moderate Moderate Environment and Social Low Low Low Stakeholders Moderate Moderate Moderate Other -- -- -- Overall Substantial Substantial Substantial Results PDO Indicators by Objectives / Outcomes Improve effectiveness of operational functions of MTA and reduce corporate compliance costs IN00691539 ►Tax Gap for VAT (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target baseline to be established - awaiting Value 12.30 -- results from 13.40 consultancy; proxy indicator value is 13.4 Date 01-Apr-2016 07-Sep-2018 23-Apr-2019 31-Dec-2022 The VAT to consumption ratio has been used as a proxy for this indicator. The methodology and baseline for tax gap for VAT will be developed during the first year of the project. As of April 15, 2019, the consultancy for tax gap methodology and baseline is on-going with results yet to Comments: determined. More important, while there is progress in value of proxy indicator, this cannot be credited against the project absent implementation of project activities. IN00691540 ►Percentage of tax returns filed on time (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 5/1/2019 Page 2 of 5 The World Bank Implementation Status & Results Report Revenue Administration Reform Project (P149743) 82 for VAT and 89 for CIT; no change from Value 82.00 -- baseline as per plan; 92.00 no project activities yet to influence change Date 31-Dec-2016 07-Sep-2018 23-Apr-2019 31-Dec-2022 Comments: Number of tax returns filed electronically/total number of tax returns filed IN00691551 ►Time it takes to pay taxes and social contributions (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 300 hrs per Doing Business 2019; progress better than Value 314 hours -- 200 hours planned target (314) is not due to project activities Date 31-Dec-2015 07-Sep-2018 23-Apr-2019 31-Dec-2022 Comments: Number of hours it takes to comply with tax and social security legislation Overall Comments PDO The progress report submitted by the PIU for the period ending 2018 indicates improvement in some target values of results indicators. On the other hand, project activities have yet to be implemented. The Bank team will review the results framework to properly reflect the project's theory of change. Intermediate Results Indicators by Components Institutional Development IN00691552 ►MTA staff satisfaction with the new skills and ability to apply them, disaggregated by gender (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target consultancy for survey methodology just Value 65% -- 75% started; baseline to be established Date 31-Dec-2016 07-Sep-2018 23-Apr-2019 31-Dec-2022 Business Processes IN00691553 ►Estimated tax gap is calculated annually and suitable for publication (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes 5/1/2019 Page 3 of 5 The World Bank Implementation Status & Results Report Revenue Administration Reform Project (P149743) Date 31-Mar-2016 07-Sep-2018 23-Apr-2019 31-Dec-2022 Consultancy for establishing methodology just initiated. Comments: IN00691555 ►Payment compliance rate for VAT (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 62% -- 61.00 85% Date 31-Dec-2016 07-Sep-2018 23-Apr-2019 31-Dec-2022 No project activities yet. End-2018 value is a little less than baseline. Comments: IN00691556 ►Payment compliance rate for CIT (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 81% -- 90.00 91% Date 31-Dec-2016 07-Sep-2018 23-Apr-2019 31-Dec-2022 End-2018 value is almost equivalent to end-target value but project activities have yet to be implemented. Comments: Taxpayer Services IN00691554 ►Taxpayers satisfaction with MTA's quality of taxpayers services and integrity of MTA staff, disaggregated by gender (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target consultancy just Value 68% -- 75% initiated Date 31-Dec-2016 07-Sep-2018 23-Apr-2019 31-Dec-2022 Consultancy to establish methodology and conduct survey just initiated Comments: Overall Comments IR The progress report submitted by the PIU for the period ending 2018 indicates improvement in some target values of results indicators. On the other hand, project activities have yet to be implemented. The Bank team will review the results framework to properly reflect the project's theory of change. Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed 5/1/2019 Page 4 of 5 The World Bank Implementation Status & Results Report Revenue Administration Reform Project (P149743) P149743 IBRD-87720 Effective USD 15.70 15.70 0.00 0.78 14.98 4.9% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P149743 IBRD-87720 Effective 31-Jul-2017 19-Jan-2018 13-Mar-2018 31-Mar-2023 31-Mar-2023 Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) P170454-Additional Financing for the Montenegro Revenue Administration Reform Project 5/1/2019 Page 5 of 5