The World Bank Report No: ISR14194 Implementation Status & Results Romania Revenue Administration Modernization Project (P130202) Public Disclosure Copy Operation Name: Revenue Administration Modernization Project (P130202) Project Stage: Implementation Seq.No: 2 Status: ARCHIVED Archive Date: 19-Apr-2014 Country: Romania Approval FY: 2013 Product Line: IBRD/IDA Region: EUROPE AND CENTRAL ASIA Lending Instrument: Specific Investment Loan Implementing Agency(ies): National Agency for Fiscal Administration (NAFA) Key Dates Board Approval Date 26-Apr-2013 Original Closing Date 31-Mar-2019 Planned Mid Term Review Date 21-Mar-2016 Last Archived ISR Date 01-Sep-2013 Effectiveness Date 09-Aug-2013 Revised Closing Date 31-Mar-2019 Actual Mid Term Review Date Project Development Objectives Project Development Objective (from Project Appraisal Document) The development objectives of the project are (i) to increase effectiveness and efficiency in collection of taxes and social contributions; (ii) to increase tax compliance; and (iii) to reduce the burden on taxpayers to comply. Has the Project Development Objective been changed since Board Approval of the Project? Yes No Component(s) Component Name Component Cost Institutional Development 9.00 Increasing Operational Effectiveness and Efficiency 75.69 Taxpayer Services and Corporate Communications 3.83 Project Coordination and Management 3.31 Institutional Development 9.00 Increasing Operational Effectiveness and Efficiency 75.69 Public Disclosure Copy Taxpayer Services and Corporate Communications 3.83 Project Coordination and Management 3.31 Overall Ratings Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating High High Page 1 of 5 The World Bank Report No: ISR14194 Implementation Status Overview The Project was approved by the World Bank Board on April 26, 2013. The Loan Agreement was signed by the Borrower and the Country Director on May 8, 2013. The implementing agency, NAFA, organized an internal launch of the project on June, 2013 as part of its change management strategy. A formal project launch took plane on September, 2013. NAFA has put in place key resources for project and change management and started preparation of final bidding documents for the initial procurement packages of the project. Public Disclosure Copy Overall project implementation is progressing well and according to original plans. Procurement of critical activities for the first year of the project are all undergoing and reasonably on track. Actual contracting and initial disbursements however, are expected only in the second half of 2014. It is very important to keep the pace of procurement processes and to address any issues related to the contracting promptly. Successful implementation of NAFA’s restructuring and consolidation process is critical to set the basis for upcoming institutional modernization efforts. The team suggested to NAFA to use effectively the financing allocated under the project to support the restructuring of NAFA as deemed necessary. In principle support could be particularly effective in three areas: a) immediate acquisition of IT infrastructure to support implementation of web based services to help migrating databases and information from regional offices to central database in HQ; b) advance implementation of activities geared to support the development and implementation of human resource management and training support, in order to better respond to existing needs of demands for training in newly created functions and for new personnel and those relocated to new functions; c) support interim mechanisms to better share and use relevant taxpayer information from Tax and Customs by using the first phase testing data warehouse servers to be purchased under RAMP; and d) make sure that preparation of change management strategy currently planned to be delivered in August 2014, explicitly address aspects related to the restructuring and consolidation process and develop specific actions to gradually consolidate the process setting the basis for upcoming changes under the project. In addition, the team advised that taxpayer services, as well as internal and external communication be strengthened to alleviate the negative impact on staff and taxpayers’ morale. The activities planned for implementation in the second half of 2014 would help support NAFA’s efforts in this regard. Locations No Location data has been entered Results Project Development Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target Effectiveness in revenue collection measured Percentage Value 40.00 40.00 50.00 as the rate of tax arrears Date 31-Jan-2012 01-Mar-2014 31-Dec-2018 Comments Public Disclosure Copy Effectiveness in revenue collection as Text Value VAT 35.8%, PIT 11.9% VAT 34.52%, PIT 10.88% VAT 46%, PIT 21% measured by the productivity rate of VAT and Date 31-Dec-2012 01-Mar-2014 31-Dec-2018 CIT Comments Efficiency in revenue collection measured as Number Value 6309.00 6979.40 9656.00 the revenue collected per NAFA staff Date 31-Dec-2012 31-Dec-2013 31-Dec-2018 Comments Old value: 6991.3 Thousands of RON Thousands of RON Changes to the indicator as a result of the merge of Page 2 of 5 The World Bank Report No: ISR14194 Customs and setting up of the Anti Tax Fraud General Directorate. Tax Gap for VAT, CIT, and PIT Percentage Value -10.00 Public Disclosure Copy Date 31-Dec-2014 31-Dec-2018 Comments To be established. The unit of Percentage point reduction: measure will be "percentage 10 for VAT, 5 for CIT, 5 for change." PIT Compliance cost as the average time for Days Value 222.00 200.00 176.00 preparation of tax returns for corporate Date 31-Dec-2012 01-Mar-2014 31-Dec-2018 taxpayers Comments Intermediate Results Indicators Indicator Name Core Unit of Measure Baseline Current End Target Comp 1-Instl Devt: Estimated tax gap is Text Value No Yes calculated annually Date 31-Dec-2012 31-Dec-2018 Comments Comp 1-Instl Devt: Case management tools Yes/No Value No Yes implemented for managing legal and appeals Date 31-Dec-2012 31-Dec-2018 processes Comments The case management tools will be developed during the second year of the project Comp 1- Instl Devt: NAFA staff’s level of Percentage Value 10.00 satisfaction withnew skills and ability to apply Date 31-Dec-2018 them for better performance Comments Survey to be developed in Increase by 10 percentage 2014 points Comp 2-Increasing Effectiveness & Efficiency: Text Value Firms: RON 2372 Firms: RON 3793.9 Firms: RON 3600 Yield per audit of firms and High-wealth HWI: To be developed HWI:TBD HWI: Increase of 25% individuals Date 31-Dec-2012 31-Dec-2013 31-Dec-2018 Public Disclosure Copy Comments Amount in RON '000s Amount in RON '000s Comp 2-Increasing Effectiveness & Efficiency: Text Value VAT: 78.5% VAT: 80.01% Increase to VAT:83.5% Payment compliance rate for VAT, PIT, Social PIT: 81.5% PIT:83.95% PIT:86.0% Contributions SC: 76.5% SC:79.33% SC:82.5% SC: 76.5% Date 31-Dec-2012 31-Dec-2013 31-Dec-2018 Comments in % Page 3 of 5 The World Bank Report No: ISR14194 Comp 2-Increasing Oprtnl Effectiveness & Days Value 61.00 88.00 45.00 Efficiency: Average time required to settle Date 31-Dec-2012 31-Dec-2013 31-Dec-2018 dispute resolution Comments Public Disclosure Copy Comp 2-Increasing Oprtnl Effectiveness & Text Value 1.1% 1.15% 0.9% Efficiency: Cost of revenue collection Date 31-Dec-2012 31-Dec-2013 31-Dec-2018 Comments in % Comp 3-Taxpayer Srvcs and Corp Comm: Percentage Value 3.00 2.60 10.00 Ratio of NAFA staff in Taxpayer Services Date 31-Dec-2012 31-Dec-2013 30-Sep-2018 Comments Old value-3% The decrease of the value is New value-2.5% mainly due the absorption of Changed as a result of the the Customs personnel (294 merge of Customs and the persons) and the newly setting up of the Anti Tax created Anti-fraud Directorate Fraud General Directorate. (842 persons) Comp 3-Taxpayer Srvcs and Corp Comm: Percentage Value 95.00 95.80 98.00 Electronic filing rate by large and medium size Date 31-Dec-2012 31-Dec-2013 31-Dec-2018 firms (legal persons) Comments % % Comp 3-Taxpayer Srvcs and Corp Comm: Text Value Increase by 15% Taxpayers’ satisfaction with NAFA’s integrity Date 31-Dec-2018 Comments To be established in 2014 Comp 3-Taxpayer Srvcs and Corp Comm: Text Value Increase by 15% Taxpayers’ satisfaction with NAFA’s quality of Date 31-Dec-2018 taxpayers services Comments To be established in 2014 Comp 3-Taxpayer Srvcs and Corp Comm: Text Value Reduce by 20% Taxpayer perception of the time required to Date 31-Dec-2013 comply with tax procedures Comments To be established in 2014 Public Disclosure Copy Data on Financial Performance (as of 14-Oct-2013) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P130202 IBRD-82610 Effective 26-Apr-2013 08-May-2013 09-Aug-2013 31-Mar-2019 31-Mar-2019 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P130202 IBRD-82610 Effective USD 91.80 91.80 0.00 0.00 91.80 0.00 Page 4 of 5 The World Bank Report No: ISR14194 Disbursement Graph Public Disclosure Copy Key Decisions Regarding Implementation None. Restructuring History There has been no restructuring to date. Related Projects There are no related projects. Public Disclosure Copy Page 5 of 5