|Recommendation||BenchMark Description||Status||Progress In 2020|
|Domestic revenue mobilisation through preparation for the introduction of Value Added Tax (VAT).||a) To improve tax administration ARD issues a circular mandating e-filing for 100% of Large Taxpayers (SLTO) and selected sectors in the Medium Taxpayer Office (MTO) and the Small Taxpayer Office (STO).||In Progress||The SLTO currently 100% implementing the E-filling system for submission of Tax return and tax filling.|
The E-filling as well has been extended to the MTO and STO, by end of FY 1399 the MTO and STO will implement the E-filling in selected sectors of MTO and STO.
|b) In preparation for the start of Value Added Tax (VAT) implementation as of the FY-2021, the Electronic VAT module is prepared by end-September 2020 and is operational by 20 December 2020. ||In Progress||The lead for preparation of the VAT Module is with the NSIA. The VAT team has developed and shared VAT Business Processes with the NSIA. A joint ARD-NSIA team has been introduced to coordinate the efforts. Considering the complexity of the system, it needs more time to prepare a reliable system than early planned. |
|Pubic Financial Management:|
Satisfactory progress in the implementation of reforms to improve public financial management, including domestic revenue mobilisation, and continued relevance and credibility of the reform programme.
|Progress on domestic revenue mobilisation in line with the IMF revenue target through enhancing tax potential, improving compliance and reducing leakages such as through reforms of customs human resources (HR), customs enforcement, Afghanistan Revenue Department (ARD)|
– Afghanistan Customs Departments (ACD) collaboration (coordination);
– Progress on the improvement of tax administration;
– Progress on the reform of tax policy;
|Status||It’s a Fixed trach, this benchmark under the implementation of DM Customs and Revenue in which both DGs department must to cooperate.|
The ARD Tax Administration part consist of E-filling implementation in tax offices, E-letter, establishment of VAT module and preparation for the VAT implementation.
The ARD Tax policy consist of VAT procedures, manual, guide, rulling. Amendment of TAL manual based on TAL law, Land Tax law which already MOJ passed. Arrears tax law and development of Audt procedure from time bound perspective.
|Special Policy Dialogue Objectives (SPDOs)||i) To improve tax administration, following ARD’s circular mandating e-filing for 100% of Large Taxpayers (SLTO), ARD mandates e-filing for selected sectors in the Medium Taxpayer Office (MTO) and the Small Taxpayer Office (STO) according to ARD’s circular.|
ii) A dedicated VAT ICT Team is created in the National Statistics and Information Authority (NSIA) for the development of the new VAT Module.
iii) The VAT Business Processes are prepared, including VAT E-Filing, VAT Payments and VAT Refunds.
iv) A VAT Refund Mechanism including risk-based-framework is developed;
v) The functional requirements and technical designs for an electronic VAT module are prepared based on the updated Business Processes.
vi) A Quality Analysis on VAT module preparation is conducted.
vii) The legal and legislative framework is for VAT introduction is revised and adjusted as needed, in line with the approved 2017 VAT Law and the 2019 VAT regulation.
|The e-filing has been implemented 100% in the LTO. MTO and STO is working on the subject.|
Members of a supervisory and coordination committee introduced, will start meeting regularly. NSIA has the responsibility to assign the technical staff.
The benchmark has been achieved.
The draft of the VAT Refund Mechanism including risk-based-framework is ready. The next step is to get it reviewed/approved by the stakeholder and the delegation of the authority to be ratified by the Minister of Finance.
Two components have been prepared for functional requirements; Registration and Refunds ,other components are to be developed. The technical design will also be developed.
The quality analysis will be conducted once the VAT module is prepared.
The VAT Law amendment proposed and is in Ministry of Justice for further proceedings. The VAT Regulation amendment will be started once the VAT Law amendment is ratified.