ADB is supporting the Kyrgyz Republic in establishing an effective, modern, and efficient State Tax Service. The project will help put in place an integrated tax administration system with a central database and management information system, and a communication network for tax offices.
|Project Name||Tax Administration Reform and Modernization Project|
|Project Type / Modality of Assistance||Grant
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Governance and capacity development
|Sector / Subsector||
Public sector management - Public expenditure and fiscal management
|Gender Equity and Mainstreaming||No gender elements|
The project will contribute positively to the Kyrgyz Republic's economic growth and poverty reduction by establishing a State Tax Service (STS) that (i) helps promote macroeconomic stability and provides fiscal space for priority economic and social expenditures through increased revenue collection; (ii) minimize corruption and practices good governance and transparency, and (iii) facilitates private sector development.
The outcome of the Project is an effective, modern, and efficient STS that achieves improvement in tax collection.
|Project Rationale and Linkage to Country/Regional Strategy||
The Kyrgyz Republic has maintained macroeconomic stability and achieved steady growth, despite economic and political shocks. During 2000-2005, real gross domestic product (GDP) growth averaged 3.9% and inflation remained modest at 4.4%. Notwithstanding political uncertainties in 2005-2006, structural reforms continued to progress. Growth in 2006 is estimated at about 3%, with inflation remaining below 6%. For 2007, GDP growth is projected to be 5.5% and inflation 4.5%.
Fiscal consolidation has been an important component in the Kyrgyz Republic economy's good performance, and will be vital in sustaining its achievements. The general Government fiscal deficit, which had exceeded 9% of GDP during 1996-2000, declined to about 5% of GDP during 2001-2005. Consequently, external public debt fell from 111% of GDP in 2001 to 70% of GDP in 2006. This fiscal achievement has been due to good control of expenditures and modest increases in tax collection. During 2000-2005, tax collection (excluding customs revenues and local governments) increased from 13.3% of GDP to about 15% of GDP.
The Kyrgyz Republic faces the dual fiscal challenge of maintaining its prudent fiscal policy to sustain macroeconomic stability and economic growth, while providing for priority economic and social expenditures to help raise per capita GDP above $540 and meet the Millennium Development Goals. The challenge requires sustained increases in tax collection.
However, tax administration was beset by inadequate equipment and facilities, inefficient practices, and inadequate staff skills. Consequently, tax collection was below potential, operations are error-ridden and prone to corruption, and tax administration was not perceived to be conducive to business and private sector development. The STS needed reform and modernization to install appropriate infrastructure, instill best practices in tax administration, reform its business processes and workflows, upgrade its staff's skills, and ensure that its operations use modern technology. These reforms enable STS to (i) increase its efficiency and staff skills, thereby improving its tax collection capacity, governance, and transparency; (ii) minimize corruption; and (iii) reduce compliance costs.
|Impact||Increased contribution of tax administration to fiscal consolidation and maroeconomic stability|
|Description of Outcome||Effective, modernized, and efficient State Tax Service|
|Progress Toward Outcome||The project is now closed and the outcome has been substantially achieved. The development of the main component of the project - the Integrated Tax Administration System (ITAS) - has been finalized and rolled out in all tax offices, including in tax offices where before all operations were paper-based. More than 66,000 taxpayers have been electronically registered in the new centralized database (by June 2013).|
|Description of Project Outputs||
Central database and management information system established
Communication network for tax offices developed
Establishment of modern central operations and improvement of taxpayers service
|Status of Implementation Progress (Outputs, Activities, and Issues)||
Substantially completed. The core modules have been rolled out in all tax offices.
Substantially completed. Central database is in place and being populated. MIS has been rolled out. Emergency data recovery center is in place.
Substantially completed. The core ITAS modules have been rolled out in all tax offices.
Partially completed. Protocol for electronic exchange of information with third parties has been developed and tested. An information exchange agreement was signed by STS and Customs on 30 April 2013. Integration with Treasury and commercial banks via ITAS is pending due to delays on the Treasury side.
E-filing implemented since 2010 and optional for all taxpayers, not just LTU clients.
More than 4,000 taxpayers are filing their tax returns electronically.
Substantially completed. All tax offices are electronically connected to the central database through Internet services provided by Kyrgyz Telecom, but bandwidth capacity outside Bishkek City and Chui oblast is weak. Layout of last-mile fiber optic connection in the northern regions (where Kyrgyz Telecom network is in place) has been completed.
The call center started functioning in the SSB in May 2012
One-stop shops with no-contact windows have been established in 22 offices covering 252,046 taxpayers
|Geographical Location||Kyrgyz Republic|
|Summary of Environmental and Social Aspects|
|Environmental Aspects||The Project is classified as environmental category C based on site visits and assessment under the project preparatory TA. No land acquisition or resettlement was required for the SSB since its construction was done on a suitable existing vacant real estate owned by the State Tax Service. Site visits were made to the regional tax offices to examine the civil works requirements for the installation of ICT equipment. All construction, rehabilitation, and installation activities will be carried out within the premises of existing STS properties. During construction work, some minor noise and dust pollution will occur. The civil works contracts will include mitigating measures to minimize such pollution. Therefore, the Project's environmental impact is minimal and can be kept at acceptable levels.|
|Involuntary Resettlement||No land acquisition or resettlement was required for the construction of the Special Services Building or will be required for repair works in tax offices.|
|Indigenous Peoples||The project does not have any negative impact on indigenous peoples.|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||Reforming tax policy and tax administration was a key part of the Government's Country Development Strategy (CDS) for 2006-2010. In the area of tax policy, the Tax Code is the key measure.|
|During Project Implementation||The Government and STS established a Project Steering Committee to consult with relevant Government agencies and private sector stakeholders. The Steering Committee has had 8 meetings during project implementation. ADB review missions regularly consulted with relevant stakeholders, such as taxpayers, business associations, international organizations and the Chamber of Tax Consultants.|
|Consulting Services||The Project will finance international and national consulting services for project implementation. The terms of reference for the consulting services include systems analysis and design, systems development and integration, systems implementation, and project management. About 32 person-months of international and 45 person-months of national consultancy will be required. The consultants will be engaged as individuals in accordance with ADB's Guidelines on the Use of Consultants. Advance recruitment of consultants will be undertaken in accordance with ADB's Guidelines on the Use of Consultants.|
|Procurement||The Project Management Office will be responsible for procurement of all equipment, services, and civil works. All services, supplies and equipment to be financed by ADB will be procured in accordance with ADB's Procurement Guidelines.|
|Responsible ADB Officer||Barreto, Ruben B.|
|Responsible ADB Department||Central and West Asia Department|
|Responsible ADB Division||Public Management, Financial Sector and Trade Division, CWRD|
Prime Minister's Office
58 Erkindik Street, Bishkek City
720874, Kyrgyz Republic
|Concept Clearance||12 Sep 2005|
|Fact Finding||17 Oct 2006 to 25 Oct 2006|
|MRM||08 Dec 2006|
|Approval||14 Jun 2007|
|Last Review Mission||-|
|PDS Creation Date||22 Apr 2008|
|Last PDS Update||20 Mar 2014|
|Approval||Signing Date||Effectivity Date||Closing|
|14 Jun 2007||07 Aug 2007||20 Nov 2007||30 Sep 2012||30 Sep 2013||21 Jan 2014|
|Financing Plan||Grant Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||12.50||Cumulative Contract Awards|
|ADB||10.00||14 Jun 2007||9.38||0.00||94%|
|Cofinancing||0.00||14 Jun 2007||9.38||0.00||94%|
|Status of Covenants|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.
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In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
|Title||Document Type||Document Date|
|Tax Administration Reform and Modernization Project: Project Completion Report||Project/Program Completion Reports||Mar 2015|
|Tax Administration Reform and Modernization Project||Project/Program Administration Manual||Feb 2009|
|Grant Agreement for Tax Administration Reform and Modernization Project between Kyrgyz Republic and Asian Development Bank dated 7 August 2007||Grant Agreement||Aug 2007|
|Tax Administration Reform and Modernization Project||Reports and Recommendations of the President||May 2007|
|Proposed Asian Development Fund Grant and Technical Assistance Grants Kyrgyz Republic: Tax Administration Reform and Modernization Project||Procurement Plans||May 2007|
|Tax Administration Reform and Modernization Project||Design and Monitoring Frameworks||Mar 2007|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
|Title||Document Type||Document Date|
|Kyrgyz Republic: Tax Administration Reform and Modernization Project||Validations of Project Completion Reports||Nov 2015|
|Title||Document Type||Document Date|
|Implementing a Tax Administration System in the Kyrgyz Republic||Papers and Briefs||Dec 2014|
|ВНЕДРЕНИЕ СИСТЕМЫ НАЛОГОВОГО АДМИНИСТРИРОВАНИЯ В КЫРГЫЗСКОЙ РЕСПУБЛИКЕ||Papers and Briefs||Dec 2014|
The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.
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