The World Bank Report No: ISR16109 Implementation Status & Results Croatia Revenue Administration Modernization Project (P102778) Public Disclosure Copy Operation Name: Revenue Administration Modernization Project (P102778) Project Stage: Implementation Seq.No: 15 Status: ARCHIVED Archive Date: 21-Sep-2014 Country: Croatia Approval FY: 2007 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): Key Dates Board Approval Date 28-Jun-2007 Original Closing Date 30-Jun-2013 Planned Mid Term Review Date Last Archived ISR Date 05-Mar-2014 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: ISR16109 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 Unsatisfactory Overall Risk Rating Substantial Implementation Status Overview Public Disclosure Copy Delays in the implementation of the CRMS tool continue to impact on the overall project implementation and could compromise full achievement of project objectives. CTA is currently deploying necessary efforts to resolve pending issues and resume full implementation of the project. The CTA has also started to analyze and further design the tax property reform, which is expected to be put in place by 2016. The WB may provide support to this effort through this project. Locations Country First Administrative Division Location Planned Actual Croatia Not Entered Zagreb Not Entered Not Entered Zagreb ✔ ✔ Page 2 of 6 The World Bank Report No: ISR16109 Results Project Development Objective Indicators Public Disclosure Copy Indicator Name Core Unit of Measure Baseline Current End Target Decrease in taxpayer compliance costs, as Text Value 2.7 2.7 At least 5% improvement. assessed by taxpayer surveys. Date 31-Dec-2008 30-Apr-2013 30-Jun-2015 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 3,05 (out of 5-the highest 5) 3.14 At least 10% improvement. of employment and working environment, as Date 31-Dec-2010 30-Apr-2013 30-Jun-2015 measured by periodic surveys. 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 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 Public Disclosure Copy the BPR. Date 30-Nov-2011 31-Oct-2013 30-Jun-2015 Comments (IRI 2) Ratio of staff in inspections functions as Text Value 57% 49% 65% a percentage of total staff in Zagreb Region, Date 31-Dec-2012 31-Dec-2012 30-Jun-2015 Local Offices, plus LTO Comments LTO was established in 2012. The indicator will be assessed by the end of December, 2013. Page 3 of 6 The World Bank Report No: ISR16109 Training per CTA staff (including distance Hours Value 8.00 2995.00 20.00 learning) Date 31-Dec-2011 31-Mar-2013 30-Jun-2015 Comments The indicator will be assessed Public Disclosure Copy by the end of December, 2013. E-learning modules developed and Number Value 2.00 300.00 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 2.81 4.46 2.00 segments Date 31-Dec-2011 31-Dec-2013 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% 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. Public Disclosure Copy (IRI 5) Annual average assessments per Text Value 348,075 EUR 1) 939.227 EUR (LTO) 500,000 EUR inspector increased 2) 229.192 EUR(Other) Date 21-Dec-2007 31-Dec-2012 30-Jun-2015 Comments The next assessment will be conducted by the end of December, 2013. (IRI 6) Percent of total declarations by legal Text Value 3.0% 97.66% (VAT) 90.0% entities filed electronically increased Date 21-Dec-2007 31-Dec-2012 30-Jun-2015 Page 4 of 6 The World Bank Report No: ISR16109 Comments The next assessment will be conducted by the end of December, 2013. Public Disclosure Copy Data on Financial Performance (as of 03-Jun-2014) 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 16.46 15.49 52.00 Disbursement Graph Public Disclosure Copy Key Decisions Regarding Implementation The current implementation of the CRMS project continues to raise concerns. Urgent decisions from CTA management are needed in order to adjust plans for implementation of CRMS project as well for the reallocation of loan proceeds before project closing date. Reallocation of proceeds may include support to new activities related to the design and introduction of the country's property tax regime. Restructuring History Page 5 of 6 The World Bank Report No: ISR16109 Level two Approved on 08-Sep-2010, Level 2 RVP Decision on 13-Jun-2013 Related Projects Public Disclosure Copy There are no related projects. Public Disclosure Copy Page 6 of 6