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.
    Sectors Group
    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
Source Amount
Asian Development Fund US$ 5.50 million
Grant 0803-SOL: Domestic Resource Mobilization Project
Source Amount
Government of New Zealand US$ 6.50 million
Grant 0804-SOL: Domestic Resource Mobilization Project
Source Amount
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)

A contract variation was signed by the government and the vendor, to reflect the vendor's changed approach to developing the software by using an iterative rather than the traditional approach. However, resource issues within the vendor led to their failure to meet the new milestones, and they did not invoice the government for any work during quarter 3, 2023. The vendor assured the government that the resource problems have been solved and that the Solomon Islands Inland Revenue Division (IRD) TAIS upgrade is the top priority for the company. The IRD recently wrote to the vendor suggesting the timeline be extended to enable the IRD to spend sufficient time reviewing the modules. A manual data cleanse work continues by the special IRD team, but progress is slow. The team now has phones and dedicated lines, and has been contacting taxpayers to resolve duplicate Taxpayer Identification Numbers cases, update contact details etc. Work has also commenced on preparing specifications for the bulk cleanse of data, such as incorrectly applied penalties, and debts which comprise only penalty.

A baseline survey has been completed, including a preliminary analysis of gender-disaggregated data. The focus has turned to advising the public that the survey is completed and presenting key findings; preparing and distributing a special edition newsletter to IRD staff. An analysis of the survey results has been completed and work has commenced with IRD to develop action plans to improve taxpayers' services accordingly. The survey findings will inform the development of service and education improvement strategies and plans which will be completed before the end of 2023.

Final approvals have now been received from the Ministry of Public Services for the organisational restructure. Recruitment planning has commenced, with assignment of existing staff to positions in the new structure. The first phase of recruitment will commence in the fourth quarter of 2023. A roadmap has been prepared to ensure work can continue, whilst the organization is restructured and new people are employed and trained. The development of a comprehensive organisation-wide capacity development plan building on what has been undertaken previously will be supported by a project financed human resource expert. An appointment to the position is expected early in Quarter 4 of 2023. Capacity development initiatives relating to functions, business processes, information technology, and technical capacity will continue to be delivered.

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

Contact

Responsible ADB Officer
Hodge, Matthew W.
Responsible ADB Department
Sectors Group
Responsible ADB Division
Public Sector Management and Governance Sector Office (SG-PSMG)
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
27 Oct 2023

Funding

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
  Total (Amount in US$ million)
Project Cost 10.12
ADB 5.50
Counterpart 4.62
Cofinancing 0.00
Grant Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 4.91 0.00 89%
Cumulative Disbursements 06 Jun 2024 2.19 0.00 40%
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
  Total (Amount in US$ million)
Project Cost 6.50
ADB 0.00
Counterpart 0.00
Cofinancing 6.50
Grant Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 0.00 6.25 96%
Cumulative Disbursements 06 Jun 2024 0.00 2.59 40%

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
  Total (Amount in US$ million)
Project Cost 3.50
ADB 0.00
Counterpart 0.00
Cofinancing 3.50
Grant Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 0.00 3.28 85%
Cumulative Disbursements 06 Jun 2024 0.00 1.39 36%
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.


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.