Solomon Islands : Domestic Resource Mobilization Project

Sovereign Project | 53305-001

The project supports the Government of Solomon Islands to improve tax administration. The project assists in restructuring the Inland Revenue Division (IRD) to move to a functional structure and train staff in their new roles and processes, finance the acquisition of a new tax administration information system (TAIS) and train staff in its use, and deliver a public outreach program to increase taxpayer compliance. The development outcome is improved domestic resource mobilization through more efficient tax administration that provides better services to taxpayers and increased capacity of IRD to manage the transition to a more efficient, fairer, and transparent tax framework.

Project Details

  • Project Officer
    Hodge, Matthew W.
    Pacific Department
    Request for information
  • Country/Economy
    Solomon Islands
  • Sector
    • Public sector management
Project Name Domestic Resource Mobilization Project
Project Number 53305-001
Country / Economy Solomon Islands
Project Status Active
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 0802-SOL: Domestic Resource Mobilization Project
Asian Development Fund US$ 5.50 million
Grant 0803-SOL: Domestic Resource Mobilization Project
Government of New Zealand US$ 6.50 million
Grant 0804-SOL: Domestic Resource Mobilization Project
Government of Australia US$ 3.50 million
Operational Priorities OP2: Accelerating progress in gender equality
OP6: Strengthening governance and institutional capacity
Sector / Subsector

Public sector management / Public expenditure and fiscal management
Gender Effective gender mainstreaming
Description The project supports the Government of Solomon Islands to improve tax administration. The project assists in restructuring the Inland Revenue Division (IRD) to move to a functional structure and train staff in their new roles and processes, finance the acquisition of a new tax administration information system (TAIS) and train staff in its use, and deliver a public outreach program to increase taxpayer compliance. The development outcome is improved domestic resource mobilization through more efficient tax administration that provides better services to taxpayers and increased capacity of IRD to manage the transition to a more efficient, fairer, and transparent tax framework.
Project Rationale and Linkage to Country/Regional Strategy Solomon Islands is the third largest of the Asian Development Bank's (ADB) developing member countries in the Pacific, with a population of around 721,000. ADB recognizes Solomon Islands as a small island developing state and a fragile and conflict-affected situation. As a small open economy with a narrow economic base, the country is dependent on exports, which represented 42.0% of 2019 gross domestic product (GDP). Within this, logs accounted for 71.6% of exports, 22.0% of government revenues, and directly or indirectly supported nearly half of the workforce. Despite the constraints, Solomon Islands has experienced steady economic growth following the widespread civil conflict from 1998 to 2003. However, economic growth on a per capita basis has not been as large due to the fast-increasing population (more than 2% per year since 2004), and GDP per capita of $1,751, when adjusted for inflation, remains lower today than it was before the conflict. While poverty has declined in recent years, Solomon Islands has the second-lowest gross national income per capita among Pacific developing member countries ($2,020 in 2018). The United Nations classifies it as a least-developed country. Under the Solomon Islands National Development Strategy 2016-2035, the government aims to improve the social and economic livelihoods of women and men through inclusive economic growth. To achieve this goal, the government needs to mobilize more sustainable revenues from domestic sources.
Impact

Sustained and inclusive economic growth and funding for health, education, and social protection improved.
Project Outcome
Description of Outcome

Domestic resource mobilization improved.
Progress Toward Outcome The revenue administration and project management support consulting firm were hired on 24 March 2022, and the contract was awarded for the Supply, Installation, Commissioning, and Maintenance of the Tax Administration Information System (TAIS) on 22 July 2022.
Implementation Progress
Description of Project Outputs

Tax administration restructured along functional lines, and staff trained in new roles and business processes

A new fit-for-purpose TAIS acquired, and tax administration staff trained on how to obtain the greatest benefit from its use

IRD capacity for gender-responsive and effective tax education and taxpayer services improved.
Status of Implementation Progress (Outputs, Activities, and Issues)

Output 1: The Minister of Finance and Treasury has approved the new IRD structure, and the Ministry of Public Services' approval of the restructure is anticipated in Q4 2022, which will include 140 new positions. Some changes are underway. For example, a new Large Taxpayer Office has been created and staffed with 12 (existing) people. The design and development of new business processes have begun now that the advisors are in-country, and staff training will follow.

Output 2: The contract to upgrade the TAIS was awarded on 22 July 2022. The firm to provide the upgraded TAIS is working with IRD and the project advisors to develop a detailed TAIS upgrade plan. It is envisaged that it will take 2 years to install the upgraded TAIS, resolve all bugs, complete user acceptance testing, and train staff in its use.

Output 3: This work has not started. This work is likely to begin in the second half of 2023. A significant component of the tax outreach program will focus on increasing taxpayer understanding of how the Inland Revenue Division (IRD) will implement the Value-Added Tax (VAT). The VAT Bill is due to be considered by Cabinet in May 2023, which will impact the outreach program's design. In addition, a survey of taxpayers is being designed to give an overall understanding of how taxpayers perceive IRD's services and where improvements can be made.
Geographical Location Nation-wide
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services 3. Revenue Administration and Project Management Support Consultant (firm)
Procurement

1. Tax Administration Information System

2. Information Technology package
Responsible ADB Officer Hodge, Matthew W.
Responsible ADB Department Pacific Department
Responsible ADB Division Pacific Liaison and Coordination Office in Sydney, Australia (PLCO)
Executing Agencies
Ministry of Finance and Treasury
Timetable
Concept Clearance 17 Sep 2020
Fact Finding 15 Feb 2021 to 19 Feb 2021
MRM 23 Jul 2021
Approval 27 Sep 2021
Last Review Mission -
Last PDS Update 21 Apr 2023

Grant 0802-SOL

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Sep 2021 29 Oct 2021 09 Dec 2021 30 Jun 2027 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 10.12 Cumulative Contract Awards
ADB 5.50 12 Sep 2023 4.87 0.00 88%
Counterpart 4.62 Cumulative Disbursements
Cofinancing 0.00 12 Sep 2023 1.26 0.00 23%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - Satisfactory - Satisfactory

Grant 0803-SOL

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Sep 2021 29 Oct 2021 09 Dec 2021 30 Jun 2027 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 6.50 Cumulative Contract Awards
ADB 0.00 12 Sep 2023 0.00 6.39 98%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 6.50 12 Sep 2023 0.00 1.49 23%

Grant 0804-SOL

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Sep 2021 29 Oct 2021 09 Dec 2021 30 Jun 2027 - -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 3.50 Cumulative Contract Awards
ADB 0.00 12 Sep 2023 0.00 3.26 85%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 3.50 12 Sep 2023 0.00 0.80 21%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - Satisfactory - Satisfactory

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 Access to Information Policy (AIP) 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.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

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
Grant Agreement (External Financed - the Government of New Zealand) for Grant 0803-SOL: Domestic Resource Mobilization Project Grant Agreement Oct 2021
Grant Agreement (External Financed - the Government of Australia) for Grant 0803-SOL: Domestic Resource Mobilization Project Grant Agreement Oct 2021
Grant Agreement (Special Operations) for Grant 0802-SOL: Domestic Resource Mobilization Project Grant Agreement Oct 2021
Domestic Revenue Mobilization Project: Report and Recommendation of the President Reports and Recommendations of the President Sep 2021
Domestic Revenue Mobilization Project: Project Administration Manual Project/Program Administration Manual Sep 2021
Domestic Revenue Mobilization Project: Gender Action Plan Gender Action Plans Sep 2021
Domestic Revenue Mobilization Project: Initial Poverty and Social Analysis Initial Poverty and Social Analysis Sep 2020

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

None currently available.

Related Publications

None currently available.

The Access to Information Policy (AIP) 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.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Revenue Administration and Project Management Support Consultant Firm - Consulting Closed

Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Supply Installation Commissioning and Maintenance of Tax Administration Information System (TAIS) Grant 0802 22 Jul 2022 DataTorque Limited | 5/40 Taranaki Street Wellington New Zealand Ministry of Finance and Treasury 1,366,350.60 —
Supply Installation Commissioning and Maintenance of Tax Administration Information System (TAIS) Grant 0803 22 Jul 2022 DataTorque Limited | 5/40 Taranaki Street Wellington New Zealand Ministry of Finance and Treasury 1,616,527.47 —
Revenue Administration and Project Management Support Consultant Grant 0802 24 Mar 2022 AARC Ltd | 31 Mespil Road Dublin 4 Ballsbridge Ireland Ministry of Finance and Treasury 3,159,497.52 —
Revenue Administration and Project Management Support Consultant Grant 0803 24 Mar 2022 AARC Ltd | 31 Mespil Road Dublin 4 Ballsbridge Ireland Ministry of Finance and Treasury 3,737,997.06 —
Revenue Administration and Project Management Support Consultant Grant 0804 24 Mar 2022 AARC Ltd | 31 Mespil Road Dublin 4 Ballsbridge Ireland Ministry of Finance and Treasury 2,002,498.43 —

Procurement Plan

None currently available.