10
REPUBLIC OF CROATIA
REVENUE ADMINISTRATION M ODERNIZATION PROJECT
TERMS OF REFERENCE
Project Performance and Progress Indicators – Formulation, Base-
lining and Periodic Assessments
Consultancy Assignment under Reference Number: RAMP/C/04-03/CQ
Zagreb – October, 2008
TABLE OF CONTENTS
I. General Background 3
II. Background Specific to the Assignment 4
III. Objective of the Assignment 5
IV. Scope of Work. 5
A. Timing 5
B. Activities 5
C. Languages 7
V. General Responsibilities 8
A. Reporting Relationships 8
B. Reports and Communications 8
C. Resources Provided 8
D. Restrictions 9
VI. Qualifications 9
VII. Deliverables And Timing 10
VIII. List of Attachments 11
I. General Background
The Government of the Republic of Croatia has embarked on a reform of revenue administration.
The impetus for these reforms includes the need for the Croatian revenue administration to keep pace with the requirements of a globally competitive, market economy and to set the stage for EU Accession.
The Croatian Tax Administration (CTA) is a subordinate agency under the Ministry of Finance. The CTA has primary responsibility for the administration of national and local taxes, as well as social insurance collections. The CTA employs approximately four thousand staff in one hundred twenty local offices and twenty regional offices. The CTA is headed by a Director General, with a Headquarters unit in Zagreb. The tax offices in Zagreb account for nearly three quarters of total revenues.
To support the reforms the Government has obtained a 50 million €uro loan from the World Bank to help finance the Revenue Administration Modernization Project (RAMP). The project will be implemented during 2008-2012. It has the following components:
A. Organizational Consolidation and Functional Realignment of the Zagreb Tax Office. (Physically consolidate the tax offices in the Zagreb Region into a single modern facility. Reorganize the consolidated office along functional lines. Rationalize and strengthen large taxpayer administration.)
B. Knowledge and Professional Upgrading of Tax Officials and Stakeholders. (Strengthen the CTA’s human resource management capacity. Upgrade the CTA’s training and knowledge-sharing programs. Establish a Training Centre and distance learning facilities.)
C. Technological Upgrading for Services, Management Information System and TIN Implementation. (Modernize business processes, including e-Tax functions. Acquire contemporary, integrated tax administration application software. Implement appropriate security, business-continuity and disaster-recovery capabilities. Implement an integrated Management Information System.
D. Modernization Management and Project Support. (Develop a Strategy Plan for CTA Modernization. Support project governance, management and administration, including monitoring and evaluation.).
II. Background Specific to the Assignment
Monitoring and Evaluation (M&E) is an essential element of any significant project. It serves to assess return on investment and to illuminate project progress (for internal project management as well as external control purposes).
To support the M&E process, the RAMP includes a set of Key Performance Indicators (KPI) that will indicate the RAMP’s progress towards its overall development objective: to achieve further improvement in efficiency, taxpayer services, and tax compliance through capacity-building, and systems improvement in the Croatian Tax Administration. The M&E process also includes a set of Intermediate Outcomes Indicators (IOI) to track the results of the various project activities under the four project components. The KPI and IOI – including their baseline values, targets and timings – constitute the Results Framework for the RAMP. Although the Results Framework is associated with the RAMP, it is complementary to detailed operational and management indicators used by the CTA. Many of the project activities will contribute to the increased richness and relevancy of these operational and management indicators and to the CTA’s capacity to make effective use of them.
The four KPI are:
§ Taxpayer Compliance: An estimated tax gap to decline from a baseline of [to be established] to target of [to be established] by 2012.
§ Taxpayer Compliance Cost: A survey-based (composite) indicator of taxpayer compliance costs [to be formulated] to decline from a baseline of [to be established] to a target of [to be established] by 2012.
§ Taxpayer Services and Integrity: A survey-based (composite) indicator of taxpayer satisfaction with the quality and integrity of CTA services [to be established] to improve from a baseline of [to be established] to a target of [to be established] by 2012.
§ Institutional Stability and Effectiveness: A survey-based (composite) indicator of CTA staff satisfaction with the CTA working conditions (including, but not restricted to, available resources, professional opportunities and personnel practices, and the available legal authorities to discharge their responsibilities) [to be established] to improve from a baseline of [to be established] to a target of [to be established] by 2012."
The KPI seek to capture, at a high level, the key dimensions the CTA’s performance – primarily as viewed by the broader Croatian society (in whose name the resources are made available to the CTA). As a complex institutional development project, these key dimensions are multifaceted. Accordingly, the KPI are survey based and composite (i.e., numerically-expressed aggregates of quantitative and qualitative survey results). To be meaningful, the KPI require well-founded conceptual bases and robust survey methodologies. In particular, the KPI require: (a)technical formulation; (b)testing; (c)baseline surveying; (d)target formulation; and (e)annual updating.
III. Objective of the Assignment
The objective of the assignment is to help the CTA develop and implement the Results Framework for the RAMP and build the permanent institutional capacity to monitor and assess the performance of the CTA.
IV. Scope of Work.
The Consulting Firm or consortium (here after the “Consultant”) will perform the assignment’s activities as described below.
A. Timing
The assignment shall commence on December 1, 2008 and conclude on December 1, 2009.
Contingent on satisfactory performance of the assignment, the CTA may request the Consultant to undertake annual surveys and analyses in the outlying years.
B. Activities
The activities under the assignment include formulate, test, baseline, (assist) target, and annually calculate the KPI.
· Familiarization/Initiation.
o Review the GOC Policy Letter on Tax Administration Modernization, other high level policy statements pertaining to the Croatian Tax Administration and the Croatian public administration, and the RAMP documentation.
o Identify available CTA information and staff resources which may be useful to the assignment.
o Research and present to the CTA/MOF international experience in tax and public administration performance monitoring – as it is relevant to the RAMP Results Framework.
o Prepare, present and agreed with the CTA/MOF on an Inception Report. Describe, inter alia, assignment goals and outputs, timing and inputs (consultant and CTA), critical success factors, quality control and problem resolution methods, summary of familiarization phase outputs, etc.
· Indicator Design.
o Design indicators, including the underlying data elements and the formula to aggregate the data into numeric values. In particular the Compliance Rate KPI entails estimating tax gaps separately for each major tax types (e.g., VAT, PIT, and CIT). These estimates may be derived from either national income account data or the results from random selected audits. The Taxpayer Compliance Cost KPI, Taxpayer Services and Integrity KPI and Institutional Stability and Effectiveness KPI entail statistically valid periodic surveys
o Develop sound methodologies to obtain underlying empirical data. The methodologies should include, but not be restricted to, sample frames, sample sizes, timings, survey methods. The methodologies should address quality assurance mechanisms (e.g., activity log and data entry verification, statistical analyses, direct interview supervision, interviewer debriefing, re-sampling, and other monitoring and documentation arrangements, statistically proper handling of non-respondents). The methodologies should also cover information security and confidentiality arrangements (e.g., polling methods and forms, confidentiality of respondent identify and responses, data and system security, survey personnel qualification, code of ethics, etc.). Logistics and coordination arrangements should also be specified (e.g., activity planning, monitoring, resources, advanced notification, selection and training of interviewers, activity supervision, problem escalation, etc.).
o Develop test arrangements for the indicators and methodologies.
o Prepare, present and agree with the CTA/MOF the Preliminary Indicator, Methodology and Testing Scheme.
· Testing.
o In accordance with the agreed Preliminary Indicator, Methodology and Testing Scheme, test the indicator designs and methodologies.
o Prepare and present the Test Results Report to the CTA/MOF, including initial comparisons to any available and comparable indicators developed and published in Croatia and/or internationally (e.g., the World Bank Group’s Doing Business).
o Based on the CTA/MOF comments, revise indicator designs and methodologies as necessary.
o As appropriate, re-test revised indicator designs and/or methodologies.
o Prepare, present and agree with the CTA/MOF the Final Indicator and Methodology Scheme.
· Baseline and Target Formulation.
o In accordance with the Final Indicator and Methodology Scheme, undertake the required data collection and baseline indicator calculations.
o As admitted by the underlying data, analyze the indicator results on the basis of each (composite) indicator’s constituent elements and/or sample segmentation (e.g., geographic, taxpayer sub-group, etc.).
o Prepare and present to the CTA/MOF the Baseline Indicator Results and Analysis Report.
o Assist the CTA/MOF to formulate targets over time for each of the indicators.
o Transfer knowledge indicator design and modeling, survey design, and analysis to CTA staff and management via classroom and hands-on training.
· Annual Monitoring.
o In accordance with the Final Indicator and Methodology Scheme (as may be refined from time to time), undertake the required data collection and indicator calculations.
o As supported by the underlying data, analyze the annual indicator results on the basis of each (composite) indicator’s constituent elements and/or sample segmentation (e.g., geographic, taxpayer sub-group, etc.).
o Prepare and present to the CTA/MOF the Annual Indicator Results and Analysis Report.
C. Languages
The Consultant shall work in the English and Croatian languages. Specifically, all communications shall be carried out in English or Croatian. All documents shall be presented in the Croatian language, with executive summaries, key tables and graphics translated into English. The Consultant shall be responsible for providing the interpretation and translations services.
V. General Responsibilities
A. Reporting Relationships
The Consultant will report to and work under the direction of the State Secretary/Director General of the CTA, M.Sci.Ivica Mladineo. The Project Director, Mr. Milan Klišanić be the Consultant’s main counterpart on key substantive matters. The Project Director, Mr. Milan Klišanić will facilitate the Consultant’s access to the necessary documentary materials as well as access to the key stakeholders to the assignment.
In the Consultant’s working relations with the Client and all the key stakeholders, the Consultant will be expected to be self-sufficient and conduct him/herself in the highest professional manner.
B. Periodic Reports and Communications
The Consultant shall prepare:
(a) An Inception Report which shall describe the Consultant’s: (i) proposed approaches for fulfilling his engagements under the Contract; (ii) proposed clarifications to the resources to be provided by the Consultant and the Client; (iii) view as to any preconditions for successful execution of the assignment; (iv) an action plan for fulfillment of the assignment; and (v) any other matter which the Consultant wishes to raise relative to the assignment or the Project.
(b) Monthly Progress Reports that summarize, among other things, (i) results accomplished during the prior period; (ii) cumulative deviations to date from schedule of progress milestones; (iii) corrective actions to be taken to return to the planned schedule of progress; (iv) proposed revisions to the planned schedule; (v) proposed actions to be taken and inputs provided by the Consultant in the upcoming period; (vi) resources that the Consultant expects to be provided by the CTA and/or actions to be taken by the CTA in the next reporting period; (vii) other issues or potential problems the Consultant foresees that could impact on assignment progress and/or effectiveness. These shall be submitted to the Project Director by end of the first week of the following month.
(c) A Final Report that summarizes the work performed, results achieved, and recommendations for follow-on action to further the objectives of the contract or otherwise promote success of the Project.
C. Resources Provided
The Consultant shall be responsible for providing all necessary human, logistical and material resources to undertake the assignment.
The CTA will provide coordination assistance with state bodies, including the CTA sub-units. It will also provide meeting logistics and space for the Consultant’s presentations to the CTA/MOF. The CTA will provide timely access to any CTA data that have been identified and agreed upon in the Inception Report and/or any of the subsequent Indicator and Methodological Schemes.
D. Restrictions
All materials created under this Contract will remain the sole property of the CTA. Re-use of the materials will require the formal, written approval of the CTA.
On the commencement of the assignment, the Consultant will jointly prepare with the CTA a statement of confidentiality that will bind the Consultant to nondisclosure of any sensitive information that the Consultant may become knowledgeable of during the course of the assignment. The terms of this agreement shall be made consistent with the relevant privacy laws of the Republic of Croatia.
VI. Qualifications
The Consultant shall provide expertise in the development and implementation of M&E with respect to tax administration. In particular:
§ Demonstrated experience in performing compliance analysis for tax administrations using models based on national account and/or audit results.
§ Demonstrated experience in designing and conducting client and staff surveys for public services/administration.
§ Demonstrated experience in conducting surveys in the European Region.
Minimally the Consultant’s team shall include the following members with the respective qualifications.
Project Manager (this role may be combined with Senior Tax Administration Expert or Lead Statistician roles).
· At least 5 years experience in leading and managing project teams of commensurate size and complexity.
· Demonstrated successful experience in managing a similar sized M&E project.
· Ability to speak, write and read English fluently.
· Ability to speak, write and read Croatian fluently.
Lead Tax Administration Expert
· Advanced degrees in finance, public finance, law, accounting, economics, public administration or relevant field.
· At least 6 years experience in tax administration.