Revenue Administration Reform Support (RARS): Consulting services on the Overall model of tax management and business process reengineering; Overall architecture of IT system for taxation business; Tax accounting

Project ID: P164410

Project Title: Revenue Administration Reform Support (RARS)

Borrower Bid Reference: CS-QCBS-B01

REQUEST FOR EXPRESSIONS OF INTEREST

(CONSULTING SERVICES – FIRMS SELECTION)

Country: Vietnam

Name of Project: Revenue Administration Reform Support (RARS) Project

Financing Grant No.: TF0A9380

Assignment Title: Consulting services on the Overall model of tax management and business process reengineering; Overall architecture of IT system for taxation business; Tax accounting

Reference No. (as per Procurement Plan): CS-QCBS-B01

General Department of Taxation (GDT) has received a grant from Policy and Human resource Development Fund (PHRD) of the Government of Japan – trust fund administered by the World Bank - through Financing Grant No. TF0A9380 dated August 02, 2019 towards the Revenue Administration Reform Support Project (hereafter called as RARS), and intends to apply part of the proceeds for the captioned consulting services.

• The consulting services (“the Services”) include Consulting services on the Overall model of tax management and business process reengineering; Overall architecture of IT system for taxation business; Tax accounting and will be completed for 12 months, starting in 1st Quarter  2021.

• Overall Objectives are:

1. To assist GDT in tax administration reform and modernization, in order to enable GDT to evolve into a more modern and efficient revenue tax administration through the selection and application of global best practices and workflows, supported by a successfully implemented world class tax administration IT system;
2. Provide GDT with well-documented roadmap for the purpose of making decisions on the best approach to procuring the next generation revenue management system.

• Specific Objectives include:

1. Consultancy on tax administration Business Process Reengineering (BPR) and ICT Architecture; 
2. Consultancy on the overall procurement model of the new tax administration IT system;
3. Consultancy on tax accounting;
4. Consultancy to Prepare the bidding documents for the procurement of an IT system.

The detailed Terms of Reference (TOR) for the assignment are attached to this request for expressions of interest.

The Project Management Unit for RARS project now invites eligible consulting firms (“Consultants”) to indicate their interest in providing the Services. Interested Consultants should provide information demonstrating that they have the required qualifications and relevant experience to perform the Services. The shortlisting criteria are:

+ The Consultant must have at least 10 years of experience in public finance management consultancy for ministerial or governmental finance/tax administration agencies or national governments or territories or states for federal government and/or finance or revenue management consultancy for large global or multinational corporations.

+ The Consultant must have at least 10 years of experience in ICT solution consultancy including the consultancy on overall ICT architecture, ICT system implementation model applied in public administration for ministerial or governmental finance or tax administration agencies or national governments or territories/states for federal government and/or finance or revenue administration for large global or multinational corporations.

+ In the last 10 years, the Consultant must have experience in implementation of at least two (2) successful consultancy contracts in  business process analysis for ministerial or governmental finance or tax administration agencies or national governments or territories or states for federal government, including at least one (1) consultancy contract on  modern tax administration business process reengineering for ministerial tax administration agencies or national governments.

+ In the last 10 years, the Consultant must have experience in implementation of at least two (2) successful consultancy contracts implementing ICT solutions in public administration for ministerial or governmental finance or tax administration agencies or national governments or territories or states for federal government and/or finance/revenue administration for large global or multinational corporations, including at least one (1) consultancy contract on modern ICT solutions for ministerial tax administration agencies or national governments, including assigned tasks in the following areas:

• Analysis, development and documentation of in-depth existing business processes in modern revenue administrations of G20 tax authorities
• Demonstrated knowledge of modern tax authorities good practice in G20 tax authorities
• Demonstrated experience in developing and documenting gap analysis between exisiting business practices and global good practice in revenue administration
• Demonstrated experience in solution and ICT Enterprise Architecture
• Demonstrated experience in Tax Accounting
• Development of bidding packages including functional and technical specifications for complex financial management systems

+ The Consultant must provide its profile with the copies of successfully implemented contracts and contact information for evidence and confirmation of relevant qualifications to the requirements.

+ The Consultant should demonstrate their capacity of providing the appropriate experts (with quality and quantity) during the entire project implementation as required in the TOR. However, Key Experts will not be evaluated at the shortlisting stage.

The attention of interested Consultants is drawn to Section III, paragraphs, 3.14, 3.16, and 3.17 of the World Bank’s “Procurement Regulations for IPF Borrowers” dated July 2016, revised November 2017 and August 2018   (“Procurement Regulations”), setting forth the World Bank’s policy on conflict of interest.

Consultants may associate with other firms to enhance their qualifications, but should indicate clearly whether the association is in the form of a joint venture and/or a sub-consultancy. In the case of a joint venture, all the partners in the joint venture shall be jointly and severally liable for the entire contract, if selected.

A consultant will be selected in accordance with the Quality and Cost-Based Selection method set out in the Procurement Regulations.

Further information can be obtained at the address below during office hours from 08:00 to 17:00 hours (Vietnam time).

Expressions of interest must be delivered in a written form to the address below (in person, or by mail, or by e-mail) by 9:30 October 23rd, 2020 (Vietnam time).

Project Management Unit for Revenue Administration Reform Support Project (RARS)

• Address: Room 108, First Floor, GDT Building, No 123 Lò úc street, ng Mác ward, Hai Bà Trng district, Hanoi, Vietnam
• Tel: +84 24 39712555, Ext 1015 or 1016 or 1018
• E-mail: rars.pmu@gdt.gov.vn

TERMS OF REFERENCE

Consulting Services for Overall model of tax management and business process reengineering; Overall model of IT system for taxation business; Tax accounting

Revenue Administration Reform Support Project (RARS)

A. BACKGROUND

The Revenue Administration Reform Support Project (hereafter called as RARS) is a technical assistance project funded by a trust fund administered by the World Bank with a grant from Policy and Human Resource Development Fund (PHRD) of the Government of Japan) to the Government of Viet Nam. The governing agency is Ministry of Finance and the project owner is the General Department of Taxation (GDT)

The project objectives are to support to develop a transparent and complete tax policy institution, improve tax administration capacity, and reform tax administrative procedures

The project consists of 3 components:

1. Institutional Development
2. Tax Administration Capacity Development
3. Project management and implementation capacity enhancement.

Each component will include activities and summarized as follows:

Component 1. Institutional Development

1.1. Supporting tax policies amendment:

This activity will support the review of tax policies through the revision of legislative reform packages of core tax instruments and the preparation of new tax policies proposed by MOF against the reform objectives of the 2016-2020 Strategy. Specific activities are as below:

 (i) Assessing tax spending:

Activities and expected outputs include:

• Hiring consultants to support the implementation of following tasks:
  • conducting assessment on tax incentives of all relevant taxes (value-added tax, import tax, enterprise income tax, personal income tax, royalties, non-agricultural land use tax, agricultural land use tax, environmental protection tax) in promoting investment, production and economic growth and proposing revision of tax policies to increase the efficiency of tax spending on investment attraction and economic growth;
  • Developing a methodology that can be used in Viet Nam;
  • Carrying out quantitative analysis,
  • Data analysis and evaluation report writing
• Organizing business trips, collecting data.
• Organizing seminars and trainings.
• Translating documents.

(ii) Assessing revenue structure:

Activities and expected outputs include:

• Hiring consultants to support the implementation of following tasks:
•  Assessment report on revenue structure: conducting assessment on the contributions proportion to the state budget revenue from taxes, fees and charges in current tax policy system and proposing new contributions proportion if any
• Proposing tax policies revision (property tax, environmental protection tax, value-added tax, special consumption tax, enterprise income tax, National Assembly Resolution on enterprise income tax policy for small and medium-sized enterprises) aiming at consolidating and stabilizing tax revenues.
• Organizing business trips in some localities.
• Organizing seminars to collect opinions of ministries, localities, and enterprises on drafts of new tax policies.

1.2. Hiring consultants to develop a full-fledged Large Taxpayer Department (LDT):

Hiring consultants to build and develop an LDT model with full functions of tax collection, including reviewing current situation, researching, and proposing suitable models for Viet Nam; developing program for related tax policymaking.

Component 2. Tax Administration Capacity Development

This component will support the tax administration capacity development through the following activities and expected outputs:

2.1. Develop the tax authorities’ risk management capacity

• Hiring consultants to develop a Risk Management Framework for tax administration, including a Tax Compliance Plan.
• IT assessment to provide the information needed for the development of future GDT’s IT roadmap.

2.2. Conduct assessment of current tax administration business processes and provide consultancy on IT system’s roadmap

• Conducting assessment of current situation of tax administration business processes, identifying requirements of future tax administration business processes and preparing a proposal to align tax administration business processes with available IT solutions and tax reform objectives; increasing connection and information exchange via electronic systems with external stakeholders.
• Providing consultancy on future IT infrastructure model of taxation.
• Developing a knowledge database system to support taxpayers.

Component 3. Project management and implementation capacity enhancement

This component will implement a program to enhance the project management capacity through:

• Improvement of GDT’s capacity in project management
• Financing the procurement of equipment and supporting facilities for the project activities.

B. BACKGROUND INFORMATION

B.1. Organization model and functions and tasks of GDT

The General Department of Taxation of Viet Nam is an organization under the Ministry of Finance, advising and assisting the Minister of Finance in state management of domestic revenues nationwide, including taxes, charges, fees and other revenues of the State budget (hereinafter referred to as tax), and carry out tax administration in compliance with laws. The organization structure of General Department of Taxation includes following departments: Policy department, Legal department, Tax revenue estimation department, Propagation and taxpayer service department, Tax declaration and accounting department, Debt collection and enforcement department, Tax administration department on small and medium enterprises and business households, individuals, International cooperation department, Internal examination department, Organization and personnel department, Finance-Administration department, the Office, Information Technology department, Tax Journal and Tax College.

As part of the implementation of the Prime Minister's Decision No.41/2018/QD-TTg dated September 25, 2018, on functions, tasks, powers and organization structure of the General Department of Taxation, GDT organization structure continues with the tax administration of model based on functions and taxpayer types. GDT organization structure is organized into a hierarchical system from the central to local levels according to administrative locations and regions for district tax bureaus: central level (the General Department of Taxation); provincial level (Department of Taxation); district or inter-district level (District Tax Bureau or Region Tax Bureau) with the principle of uniformity, in which the General Department of Taxation performs the task of study and development of legal documents on tax and tax administration as decentralized by the Ministry of Finance; study and development of tax administration business processes, guidance and arrangements of implementation of business processes, staffing and funding management to ensure consistency across the industry; Guidance and direction of the inspection, audit and supervision of the compliance of tax policies and laws, business processes and measures and domestic tax administration tasks nationwide.

In terms of the decentralization of taxpayer management, GDT is responsible for providing guidance and responses on tax policies; doing research and proposing specific unique mechanisms and policies and tax administration for large-scale enterprise with complex business activities in multiple industries, in a wide area; managing key and important sectors of the economy (coal, oil and gas, minerals, banks, aviation, etc.) with great impacts on the financial strategy of the national economy and contributions to state budget revenues. In particular, GDT directly manages:

a) Contracts, agreements on oil and gas exploration, development and exploitation with 100% of revenue allocated to the central budget;

b) Commercial banks and credit institutions; post and telecommunications enterprises with state capital; transportation and aviation services enterprises (except for land-related revenues, which are 100% allocated to local budgets to determine and issue tax notices, including non-agricultural land use tax; land use fees, land rental, registration charges).

c) Management of revenues:

- Capital recoveries of the central budget investments in economic organizations (including both principal and interest); dividends and profits in joint-stock companies and multiple-member limited liability companies with state capital represented by ministries, ministerial-level agencies, government agencies and other central agencies.

- The difference between the revenue greater than the expenditure of the State Bank of Vietnam payable to the State budget.

- Revenues from granting rights for mining licensed by the General Department of Geology and Minerals of Vietnam under the Ministry of Natural Resources and Environment.

- Revenues from the use of marine areas for marine areas under the delegated authority of the Central Government.

- Charges and fees including radio frequency use charges; charges for granting radio frequency use licenses; Fees for telecommunications operation rights; ...

- Enterprise income tax directly serving national defense and security recognized by the Ministry of Defense.

- Corporate income tax of security companies and service-delivery units of security companies and service-delivery units with revenues from delivery of public products and services.

The Department of Taxation is a specialized agency under the General Department of Taxation, with the tasks of steering, guiding and performing unified administration of tax collection and other revenues in its assigned areas; also under the management of provincial People’s Committee on certain aspects such as human resources, management and coordination with other levels in the consistent implementation of tax policies and laws and tax administration in a particular province. There are totally 63 Departments of Taxation and 727 subordinate divisions. Departments of Taxations perform the following tasks:

- Advise local governments on the consistent implementation of tax policies and tax administration in the respective provinces.  

- Provide guidance, steering and perform tax audit and inspection to Bureaus of taxation in the execution of tax administration functions.

- Directly manage taxes for large and medium-sized enterprises, with the business operation involving many districts, provinces and cities; enterprises subject to VAT refund; managing large and important revenues, including: Value Added Tax, Excise Tax, Corporate Income Tax, Personal Income Tax with withholding method, fees, charges of organizations, enterprises under the management of provinces and cities.

In particular, Departments of Taxation manage state-owned enterprises, enterprises with state capital, foreign invested enterprises, large enterprises; project enterprises or enterprises directly implementing projects (in cases without establishment of project enterprises such as BOT, BTO, BT, BLT, BTL, O&M as specified by the law on investment; enterprises established and operating in manufacturing zones, industrial zones, economic zones, hi-tech zones, etc.

The Tax Bureau is an agency directly under the Department of Taxation, with responsibility of directly organizing the management of tax collection and other revenues in the locality in accordance with the law and the guidance of the superior tax authority; also under the management of district People’s Committee on certain aspects such as human resources, management and coordination with other levels in the consistent implementation of tax policies and laws and tax administration in districts. There are totally 415 Bureaus of Taxation and 2,973 subordinate teams. Departments of Taxations perform the following tasks:

- Advise local governments on the consistent implementation of tax policies and tax administration in the respective districts. 

- Directly manage the remaining taxpayers, which are small enterprises, personal income taxpayers (without withholding at payers), registration fees, land use right transfer tax, housing tax, fees and charges incurred at district level, etc.).

 B.2. Tax Administration activities

Viet Nam's tax authority currently manages more than 700,000 businesses; 1.8 million business households; 25 million personal income taxpayers; 12 million non-agricultural land use taxpayers and some other taxpayers.

Tax administration complies with the Tax Administration Law and guideline documents (Government decrees and Circulars of Ministry of Finance). Currently, there are two tax filing and payment mechanisms implemented simultaneously: (i) The taxpayers shall calculate, declare and pay taxes with full responsibility of their fulfillment of tax obligations as prescribed by laws (eligible enterprises, organizations and individuals with implementation of accounting books and invoice vouchers) and (ii) tax authorities shall calculate tax, notify the amount of tax payable to tax payers. In particular: the mechanism of taxpayers' self-calculation, self-declaration, self-payment and post-inspection is widely applied; the 2nd mechanism is applied to taxpayers without self-payment of tax obligations (business households with flat taxes) or without adequate tax base (for example non-agricultural land use tax).

Tax authorities manage tax collection for taxpayers in the area as decentralized. The tax yield is managed consistently at the central level. The allocation of revenues between central and local level complies with the provisions of the Budget Law, which stipulates the Central/Local regulatory rates for each revenue, tax, type of taxpayer and collection area.

Tax administration of Viet Nam has been supported by the information technology (IT) application since 1998. So far, most of tax administration at the 3-level tax authorities have been computerized. Tax authorities have provided electronic tax services to taxpayers (over 95% of businesses have done online tax procedures such as tax filing, payment, tax refund) and connected with government management agencies and relevant agencies for information exchange in the coordination of tax collection management (Treasury, Customs, Commercial banks, Business registration agencies, land management agencies, Public security agencies, vehicle registration agencies, etc.).

B.3. Tax administration business processes

     With the organization model and functions and duties of tax authorities, GDT has built a complete set of tax administration business processes for the work performed by all authorities.

     Most of the main tax administration functions of the tax authorities have business processes. The Tax Administration Business Processes are built in accordance with each tax administration function, including processes for supporting taxpayers, tax registration, processing of tax returns and payments, tax refund/exemption, and management of tax debt and debt enforcement, tax audit and inspection, etc. These are processes in line with the chain of operations of the tax administration cycle under mechanism of the taxpayer's self-declaration, self-calculation, and self-payment of taxes. In addition, another set of processes for management based on taxpayers or arising activities such as: Tax administration process for business individuals (flat tax payment), Tax administration process for individual property lease. In addition, there are also Processes for inspection and supervision of internal operations such as internal inspection process, process of resolving tax complaints.

     Business processes are developed and implemented consistently at 3 management levels of the tax authorities (General Department of Taxation, Department of Taxation, Tax Bureau). Information Technology has been applied to support most or all key processes such as tax registration, declaration processing, tax debt management process, etc. However, some processes are not supported by IT system but are carried out manually by tax officials or captured in other software, such as the Process of communication and supporting taxpayers.

     GDT initially approached the tax administration based on risk assessment which has been included in several steps in each process such as Tax Registration Management Process, Tax Filing Management Process, Tax Audit, and Inspection Process, etc. However, the current GDT’s business processes are built by functional units based on their task requirements, resulting in excessive customization of the information technology solution (SAP TRM) and unintended consequences in management of IT infrastructure, and management of taxpayers’ compliance.

B.4. Current IT information system supporting Tax administration

B4.1. Application

Tax administration of Viet Nam has been supported by the information technology (IT) application since 1998.

1998 – 2010: GDT (the central agency) worked with several domestic IT companies to develop tax administration applications and deploy them consistently to all local tax authorities. Tax administration applications in this period were single development applications, with distributed databases on servers located at each tax authority at province and district levels. Some applications were connected, with exchanged information with each other via the Local area Network (LAN) of each tax authority and with General Department-level applications through the national wide area network (WAN).

2010 - 2015: With the need for an IT application to support the implementation of the Personal Income Tax (PIT) Law, in parallel with the continued maintenance of decentralized applications in tax administration, the tax industry procured and deployed a COTS product of SAP (SAP-TRM) to manage PIT, named as PIT (implemented to manage only PIT).

2015 - present: The tax industry has developed a centralized tax administration system (TMS) based on an upgrade of PIT system to manage other taxes and with consistent deployment nationwide.

TMS centralized tax management system is implemented to replace about 16 single tax management applications, which is an integrated tax management system that allows the centralized processing and management of tax administration information nationwide to meet the tax administration requirements. The TMS application currently supports the main tax administration functions such as: Capturing of receipt and return of tax records between tax authorities and taxpayers; Tax registration and taxpayer information management; Tax declaration/tax voucher processing, Tax accounting, Debt management and tax debt enforcement.

TMS has been successfully implemented across the country with significant improvements in tax collection progress, in the exchange of information flows between GDT and the Ministry of Finance, and efficiency through significant reduction in the number of information systems managed by GDT.

However, TMS does not fully cover the tax administration requirements of the tax industry. Several tax administration activities are supported by applications but outside TMS such as:

• • Applications supporting tax audit and inspection;
  • Applications supporting tax declaration and electronic tax service delivery;
  • Application for Management of land-related revenues and vehicle registration;
  • Application for information exchange with business registration agencies in Enterprise registration - Tax registration;
  • Information portal for data exchange with external departments and organizations;
  • Application for data centralization and taxpayer information utilization and Database Warehouse (DWH)

          These applications are supporting tax administration, but the connection and information exchange with TMS are not real time. Several applications such as electronic tax application and information exchange portal with agencies exchange information with TMS through intermediaries. A number of applications related to tax administration data of taxpayers are not connected with TMS. The data storage is implemented in multiple places, resulting in a waste of resources; multiple platforms in use makes the system maintenance and upgrade become complicated.

In addition, GDT’s current regulations and business processes have not been modernized, leading to excessive customization of the original SAP-TRM solutions and resulting in unexpected consequences in management of IT infrastructure, management of taxpayers' compliance and management of tax costs.

B4.2. IT Infrastructure:

During the implementation of TMS, the IT infrastructure with hardware platforms, communication infrastructure, internet and database center (including Production and DR systems) has been selected and installed (the IT infrastructure of the tax industry is one of the largest and most modern among government organizations).

The communication infrastructure, data center, Internet, network connection at tax authorities are designed with fiber optic cables, broadband and with lease line for tax industry, to ensure smooth connectivity within the industry and with a focus on safety and security.

However, the equipment has been used over a period and needs to be reviewed and evaluated for any upgrade and replacement due to rapid growth of data and close to warranty expiry date.

B4.3. Issues

A critical problem for the current TMS system is the support from SAP for the current version of SAP-TRM will expire in 2025 and any upgrade will actually require the complete deployment of a newer version. Therefore it has become  mandatory for GDT to transform the existing TMS tax adminsitration system to a new one. This is also an excellent opportunity for Viet Nam tax industry to evaluate the current IT system and develop an overall IT model for the next period which will enable to address the issues of the existing system and to meet tax administration requirements in the next 10 to 15 years.

B.5. Tax accounting

• Tax accounting of Vietnamese tax authorities includes taxpayer accounting and state budget accounting.
• The taxpayer accounting records and captures all data related to each taxpayer's tax obligations, including payables (according to declarations, tax arrears decisions, decisions by tax authorities and competent public management agencies on penalties for breaches); amounts paid by taxpayers; refunds, offsets, tax relief, write-offs, thereby determining the debts, overpaid, and deductibles of taxpayers.
• State budget accounting consolidates the total receivables, amount collected, and outstanding receivables from taxpayers; total payables, paid amounts, and outstanding payables to taxpayers; amounts of exemption, relief, write-off of debts, etc., meeting the requirements of the management of state budget revenues. The reports are aggregated according to collectors, collection area, fiscal year, state budget classification and other criteria as required in each period.
• Support of Information Technology in tax accounting:
• With the implementation of IT applications for tax administration (as stated in Section 4.1), tax accounting has been supported by the centralized tax management system (TMS). The tax accounting in TMS is based on a Domestic tax accounting regime issued by the Ministry of Finance and the accounts provided by SAP –TRM.

TMS enables capturing the fulfillment of tax obligations, fees, charges, overdue payment, fines, and other revenues; payment status with the state budget; status of refunding state budget revenues to taxpayers.

• Support tax payer accounting: Accounting of business transactions at the detailed level on tax payer accounts, management of the payment, off-setting between payable, paid, exempted, relieved, adjusted amounts, which serves as  a basis for performing tax administration by tax authorities, including urging debt collection, calculation of overdue payment fines and tax refund. Detailed accounting transactions include: Obligations of taxpayers from declarations, taxpayers' remittances, decisions of tax authorities, legal documents related to tax obligations, interest calculation, penalties for overdue payment and other transactions such as collection delegation, collection team
• Support Accounting of payment with the state budget: Accounting of transactions to accounts at different levels of tax authorities according to the management needs.

However, GDT’s current tax accounting faces several issues which need solutions associated with IT solutions as follows:

• Data query, reporting: The current TMS system does not fully meet the requirements for processing and producing reports required by the domestic tax accounting regime, due to the difference between business requirements and response of the core system. The reporting could not support the nationwide consolidation and each tax authority must produce reports with manual addition outside the system, making it difficult to consolidate accounting data of the industry.
• Policy: The tax accounting system is dependent on the regulations of the State Budget Law which requires tax authorities to capture and provide detailed data for the purpose of the Government's revenue and expenditure management with details of each revenue, revenue item and many other criteria, leading to complicated capturing and accounting.
• Process: There is no separation between the accounting process and business processes. If there is any change or adjustment in business processes (in nature, no impact on accounting), there should be a change in accounting treatment, especially adjustments to captured transactions. In particular, the Tax Administration Law defines that taxpayers are allowed to submit their additional tax declarations at any time, not limited to additions and extension time (10 years), resulting in difficulties in accounting of adjusted data in TMS with some cases of incorrect tax obligations data of taxpayers.
• The current TMS system is not flexible in updating change requests when there is any change in policies or business requirements, it takes long time to upgrade the system and affect accounting operations.

B.6. Future development orientations of Tax Authorities

In the period of 2021-2030 with the goal of becoming a modern, effective and efficient tax authority with transparent tax administration, towards good international standards based on the application of advanced achievements of science and technology to tax administration and service delivery to taxpayers, Vietnamese tax authorities have identified numerous key development orientations as follows:

Organization structure:

Tax authorities need an organization restructuring to cater for the increasing workload with increasingly complex operations, while administrative costs and human resources of tax authorities are limited. Several strategic orientations until 2030 are as follows:

• Streamlining tax authorities, establishing Regional tax authorities by merging local tax authorities (Tax Departments/Bureaus); centralized management resources at the central agency.
• Establishing a full-fledged Large Taxpayer Department at GDT to manage corporations, and ultra-high-net-worth individuals with complex business operations. About 1,000 taxpayers are expected to be managed by GDT with a tax revenue of about 70-80% of the total domestic revenue. This is to ensure the consistent implementation of tax administration regulations and policies nationwide, and on the other hand, it helps GDT in steering and managing budget collection tasks. The centralized management resources at GDT which requires the tax authorities to have a comprehensive and centralized database to deploy the overall model of risk management in tax administration, and implementation of risk-based tax administration and delivery of the best support services to taxpayers.
• Upgrade of Internal examination department to ensure the disciplines of task execution and prevention of corruption in tax authorities.
• Restructuring the organizational structure with a reduction of supporting units and strengthening departments/units directly involved in tax administration based on the application of electronic services and system administration.

Functions and tasks:

Along with the development of the country's economy, the task of revenue administration of tax authorities is increasing with the more taxpayers and more complex operations, especially activities related to prevention of tax base erosion such as transfer pricing, money laundering through multinational companies and corporations; Expanding the tax base, developing and implementing the property tax law; the Government's reforms with additional tasks assigned to tax authorities, such as the management of other revenue collections (other than taxes and fees) or collection of social insurance payments.

Tax administration:

• Improve effectiveness of tax administration based on voluntary compliance of taxpayers; widely apply tax self-declaration and self-payment management mechanism to business households/individuals, restrict flat-tax mechanism; develop taxpayer support services through the delivery of electronic tax services for most taxpayers; gradually apply to provide pre-filled declaration form for individuals.
• Apply tax management mechanism based on risk assessment; Develop an overall compliance program based on the analysis and exchange of information from the database of the tax industry and other related agencies;
• Key tax administration functions such as tax registration, tax declaration, tax payment, tax refund, debt collection and tax enforcement, settlement of tax complaints; service delivery to support taxpayers, tax audit and inspection are gradually moving towards international standards and good practices in the world and in the region.
• Develop a strategy of business process reengineering to simplify processes and procedures as a whole; Measure the processing time of key processes

 Modernization of tax administration:

• Develop a new functional model based on simplification and restructuring of business processes, centralizing databases and applications, and data integration.
• Apply new technologies such as Al, Blockchain etc. to modernize the management and service delivery to taxpayers (automatically answers to simple questions from taxpayers to be responded by the system, using artificial intelligence and machine learning, etc.)
• Build a data warehouse (DWH) and centralized data processing, improving the capacity of data utilization and analysis in management;
• Exchange information with Viet Nam National Single Window, automatic data exchange with relevant agencies such as National Population Database, National Database on land, environmental resources, banks, Customs, Social Insurance agencies, labor management agencies. In addition, Viet Nam has become the 100th member of the Forum on Implementation of Measures to counter Base Erosion Profit Shifting (BEPS) and has participated in/implemented activities of information exchange and reporting (Report on profit shifting of Multinational Corporations, exchange of tax information under the Bilateral Agreement) with other tax authorities in the world;

• The e-Invoice system is deployed for most taxpayers which are enterprises, organizations, and business households. Accordingly, all detailed data on invoices of goods purchase and sale of taxpayers are sent to tax authorities and consistently managed at GDT and utilized in tax administration.
• Implement the overall model of risk management: Risk management should be applied to all tax administration functions and with IT support. All risks should be identified for all taxpayers (large/medium/small), economic sectors and the key functions of tax administration (such as registration, declaration, payment, inspection and debt management, moving towards a full and effective implementation of risk-based compliance programs for all core tax administration functions (not only limited to risk-based inspections, but also applicable to registration, declaration, tax payment and debt risk.). Data warehouses will be expanded to support the use of information from third parties to support risk management.

C. OBJECTIVES OF THE CONSULTING SERVICES

C.1. OVERALL OBJECTIVES

To assist GDT in tax administration reform and modernization, in order to enable GDT to evolve into a more modern and efficient revenue tax administration through the selection and application of globally realistic practices and workflows, supported by a successfully implemented tax administration IT system.

Provide GDT with well-documented roadmap for the purpose of making decisions on the ultimate approach to procuring a revenue management ICT application system.

This consultancy will be preceded by a separate foundational consultancy on further developing the overall tax administration model for the GDT. The output of the preceding consultancy is proposed improvements in the overall model of tax administration for Viet Nam based on tax administration global practices, ensuring gains in efficiency and effectiveness, and being consistent with the taxation reform strategy for the period of 2021-2030, vision to 2045. The activities of the current consultancy will consider and be based on the results of the consultancy on the overall tax administration model as far as these results have been approved by the GDT.

C.2 SPECIFIC OBJECTIVES

1. Consultancy on tax administration Business Process Reengineering (BPR) and ICT Architecture

This activity requires the Consultant to recommend improvements to the GDT tax administration business processes based on international good practice in development and operation of successfully implemented revenue administration business processes in several countries. Taking into consideration the revised tax administration model the consultancy will support the reform of GDT business processes and suggest to the extent required revisions to the Tax Administration legal and regulatory framework to ensure the necessary legal basis for the revised processes. The consultancy will identify these options for business process reform and the legal and regulatory requirements for such reforms.

In parallel with tax administration business process reengineering, the consultancy will propose an ICT architecture for tax administration business of Vietnam taxation system, of which the conformity with the ICT application system will be a strategic condition to ensure the efficiency and cost effectiveness of the investment in the ICT system for revenue management.

This activity focuses on situational review and detailed assessment of current status and the need for IT system (hardware and software) for the purpose of tax administration of GDT; proposal of the overall, detailed architecture of tax administration IT system for the period of 2025-2035, in compliance with the Tax Administration Law, tax laws and guidelines documents, in accordance with the proposed overall model of tax administration and GDT’s tax administration reform strategy for the period of 2021-2030, vision to 2045. 

2. Consultancy on the overall procurement model for the new tax administration IT system.

Drawing on the detailed outputs of the Business Process Reengineering and  ICT  Architecture, the consultant shall recommend the selection of a procurement model for a new revenue administration system, based on the analysis and comparison of the procurement model options of the modern tax administration agencies and advise GDT to select a procurement model to be implemented which will address the limitations of the current system, be in line with international practices, with appropriate costing and ultimate efficiency.

3. Consultancy on tax accounting

This activity requires the Consultant to provide GDT with international practices in the design and implementation arrangements of tax accounting systems with a specific focus on the tax accounting systems applied in advanced tax administrations of a similar size as the GDT in Viet Nam. The Consultant shall propose reform options for the tax accounting system in Viet Nam based on this international experience, including ensuring the alignment between the tax accounting implementation and provision of information for the purpose of tax administration in line with tax administration IT application system, as requested by tax authorities at various levels and governing bodies, in compliance with Viet Nam’s laws and regulations.

4. Consultancy to Prepare the bidding documents for the procurement of an IT system

Based on the proposed overall model of tax administration, and using inputs from the Business Process Reengineering and ICT Architecture consultancy outputs, the Consultant shall prepare a detailed bidding package including functional and technical specification document for procurement of a tax administration information system, including both software and hardware, with the objective of supporting GDT to procure a best fit tax administration IT system at the minimum cost to provide modern and efficient services to Viet Nam’s tax payers and to promote implementation workflows in line with international practices at tax authorities.

D. SCOPE OF SERVICES AND DELIVERABLES

To achieve the specific objectives stated in section C.2, the Consultant shall provide consulting services and technical assistance to GDT (but not limited to) for the following activities and tasks:

D.1. Consultancy on Business Process Reengineering and ICT Architecture

D1.1 Business Process Reengineering

The consultant shall:

D1.1.1 Conduct an analysis of the system and operation of the currently applied business processes in the three levels of tax authorities in Viet Nam. The consultant shall prepare a diagram of detailed business processes with breakdown into workflows, participants in the processes, interactions among units/departments to analyze the need to develop new business processes or adjust existing processes to implement the revised tax administration model and systems/ software supporting the processes. Develop precise suggestions for new or adjusted business processes as needed.

A high level, non-technical analysis suitable for senior management that will enable senior management to have a clear managerial picture of the As-Is state of GDT and its limitations and impact on the current business processes shall be prepared.

D1.1.2 Identify and analyze problems in business process applications, examine the potential for simplification, elimination of bottlenecks, and ways to increase tax administration efficiency and effectiveness and/or reduce the taxpayer compliance burden through the reengineering of specific business processes. To perform this task the consultant shall refer to international good practice examples in tax administration business process design and operation and aim at better aligning the GDT business processes with such international good practice. The consultant shall prepare an inventory of business processes to be reformed and suggest suitable reform options.  

D1.1.3 Analyze to what extent proposed revised business processes are supported by the existing legal and regulatory framework for tax administration in Viet Nam. In case reform proposals elaborated by the consultant do not have a sufficient legal basis in the current system the consultant shall develop proposals for the amendment of the current laws or regulations.  

D1.1.4 Conduct an impact analysis of the BPR proposals and assess their potential for reducing tax administration costs and/or taxpayer compliance costs. For each reform proposal the consultant will determine if it affects tax administration and compliance costs or not, and if yes, the level of the impact will be quantified.

D1.1.5 In delivering the Business Process Reengineering recommendations, the consultant shall organize workshops with functional departments and field trips to local tax authorities. The purpose of the workshops and field trips is to both obtain information for the BPR exercise and to inform and orient the participants towards the expected new business processes

D1.2 ICT Architecture

D1.2.1 Conduct a current state ICT assessment to identify, inventory and detail the current ICT architecture, interfaces with external systems, agencies, and data sources. The inventory shall also include the state of specific warranty if any for all hardware, the state of licenses for software, identify support, warranty and recurring costs for the ICT architecture including all communication and network costs. The inventory will then serve as the ICT As-Is to prospective bidders and upon which bidders can make their recommendations and costings for the best fit revenue management software and hardware solutions.

The D1.2.1 task shall include at a minimum but not limited to the following:

• A clear comprehensible assessment of the current hardware and software architectures in GDT
• Verification of the current hardware and software licensing, versions, warranties, and capacities
• An in-depth As-Is technical analysis that will form the technical basis for the future revenue management system implementation once the solution model and vendor is selected
• Based on the analysis, identified limitations of the current system which fail to satisfy management requirements of business departments and their causes.

D1.2.2 Conduct an in-depth cyber security analysis of the As-Is configuration and propose improvements to support existing systems and infrastructure.

D1.2.3 Based on the recommended tax administration model and processes defined in D.1.1, the Consultant shall propose the most appropriate and cost-effective revenue administration IT architecture and operating model based on the detailed inventory of the current ICT infrastructure defined in D1.2.1.

The proposed architecture and operating model should be based on the prevailing best practice IT reference model for revenue management agencies, in line with the overall tax administration model of tax industry and orientations in the tax administration reform and modernization strategy for 2021-2030 period.

The recommended architecture should fulfill the following requirements:

- For the overall tax administration IT system architecture:  indicate business processes to be implemented in the core system and supporting systems; the systems to provide services to taxpayers; systems for the purpose of reporting and data query; data connection and exchange with third parties. 

- For the Business Logic Layer: propose in detail for the following levels.

• Overall level – Level 0: Identify the application modules to be implemented under the proposed architecture; interfaces between modules and interfaces for information exchange with external systems
• Detailed level 1: Identify application functionalities in each module and the relationship between functionalities.
• Detailed level 2: Identify workflows of application functionalities and implementation steps, impacts of workflows of other functionalities or other background data processing processes

- The infrastructure architecture should include at least the following components: anticipated hardware configurations and devices; scalability, implementation plan and platform; data storage strategy, capability for backup and disaster recovery (covering primary data center, backup data center, and disaster recovery data center); system requirements and availability check; recommended system monitoring model.

- The proposed architecture shall meet the stability with standard processes, flexibility with functionalities associated with tax policies subject to frequent changes with quick upgrade in the event of changes and with little impact on the core system and the supporting systems.

The architecture and operating model recommendations will be submitted to the GDT for consideration and decision-making. The Consultant should be prepared to support the decision-making process as needed. Once the architecture and operating model are agreed upon and approved by the GDT, they will form the basis for the detailed functional and technical requirements in the procurement documentation to be developed in task D.4.

II. Deliverables:

Outputs of the Consultancy on the Business Process Reengineering and ICT Architecture include the following:

1. Detailed documentation report of the existing business processes in the three levels of tax administration in Viet Nam (As-Is analysis).  Assessment report of the As-Is processes documenting implementation problems and identify gaps to international good practice. The report should also analyze the capabilities to extract output information for management requirements, and the conditions and requirements for operation of business processes. The assessment report will then list proposals for the re-engineering of business processes to address the implementation issues of the current processes and to better align the processes with international good practice, and consistent with the new tax administration model
2. Report with proposed tax administration business processes suitable for Vietnam tax authorities including high-level processes and business processes based on tax administration functions. The report shall detail the principles of development and linkages between processes and capabilities of information extraction for the management purposes and conditions and requirements for operation of these processes.
3. Report on the impact of the revised tax administration model on the existing business processes including precise proposals for modification of the As-Is processes to implement the new tax administration model.
4. Legal analysis of the proposed revised business processes including precise suggestions for necessary revisions to the legal and regulatory framework for tax administration.
5. Report with proposed overall architecture of tax administration IT system for the 2025-2035 period, vision to 2045. The report shall include but not limited to hardware, software, networking and communications, licenses, warranty status, replacement / upgrade status.
6. Report on the Cyber Security analysis including but not limited to identified weaknesses, predictable weaknesses and vulnerabilities and suggestions for improving cyber security in the present and near-term environments.
7. Report on the results of workshops, consolidation of feedbacks and comments from functional units with responses to queries and the proposed effective implementation methods.

D.2. Consultancy on the overall procurement model for the new tax administration IT system

I. Scope of services

D2.1. Using the detailed output of the D.1 Business Process Reengineering and ICT Architecture, the consultant shall recommend the selection of a procurement model for a new revenue administration system.

Analyze and compare the procurement model options listed below and advise GDT to select a procurement model to be implemented which will address the limitations of the current system indicated in the D.1 output, according to international practices, with appropriate costing and ultimate efficiency.

Procurement models include but are not limited to the following options in modernization of non-legacy tax administration systems:

1. Procurement of a COTS solution which has been successfully implemented in other countries and with moderate customization to fit the future revenue administration model of Viet Nam.
2. Replace the current SAP-TRM core solution and related software and procure an SAP-HANA based full featured solution.
3. Procurement of a successfully implemented tax administration system of an advanced country and modification to fit with Vietnam’s tax administration model.
4. Contracting with revenue management service provider to completely outsource the GDT ICT services. If the consulting firm recommends this approach the output must also examine the length of the outsourcing engagement and its projected operational cost benefit impacts over the period of the contract.
5. Contracting with a firm (local or international) to develop a custom-built system based on GDT’s requirements as specifically reflected in the procurement document which will be part of the overall outcome of the consultancy.

D2.2. Organize Discovery Workshop

The Consultant shall contact and invite modern tax administration IT solution providers who have implemented successfully in other countries to present their solutions for information to GDT to evaluate and select the ultimate option.

II. Deliverables:

The outputs of the consultancy defined in D.2 task shall include at a minimum but not limited to the following:

(1) Report with proposed procurement option for IT system:

For each procurement option, the Consultant shall indicate the relative pros and cons of each model based on recent international experiences of countries who have actually employed the specific model in a non-legacy environment and implemented successfully; especially those with similar development conditions and contexts with Viet Nam. Specific consideration shall be given to the overall long-term benefits for GDT including but not limited to the capabilities to meet future business requirements, maintenance, support, and upgrade cost and cyber security.

The Consultant shall propose and report on in detail, the best fit procurement model i.e. (i) COTS; or (ii) replacement with SAP-HANA; or (iii) outsourcing; or (iv) procurement of a successfully implemented tax administration system of an advanced country; or (v) contracting with a firm to develop a custom-built system based on GDT’s requirements, with in depth focus on meeting the requirements and characteristics of Viet Nam’s revenue administration with the optimal cost–benefits, and addressing the current limitations, with the implementation duration of roughly 3 years and expandability to respond to the future needs of GDT.

(2) Report on results of the Discovery Workshop

D.3 Consultancy on tax accounting

The component on tax accounting reform is closely linked to the task to improve the tax administration business processes in Viet Nam insofar as a key element of the component is the preparation of recommendations for tax accounting business processes in line with international good practice.

I. Scope of services

D3.1. Survey and assess the status of the As-Is tax accounting system in terms of both policies and implementation arrangements.  Compare the As-Is tax accounting system in Viet Nam with standard international good practice, identify issues and problems with the application of the As-Is system, causes for these problems, and propose reforms resulting in an alignment of the tax accounting system in Viet Nam with international good practice.  Propose the resulting recommended solutions to meet requirements of tax accounting implementation and consistent with selected software solution application.

D3.2. Review the business processes for tax accounting and prepare proposals for a revision of these processes to support the revised tax accounting model produced from the predecessor tax model project. Ensure that these business processes are in line with standard international practice in tax accounting and the IT system and provide documentation of such standard international practice.

D3.3. Organize workshops

II. Deliverables

Outputs of the consultancy on Tax Accounting should include the following components:

1. Report on the assessment of the current design and operation of the tax accounting system in Viet Nam compared to standard international good practice.
2. Report on a proposed revised tax accounting model in line with standard international good practice, including proposals on the accounts, accounting processes, legal and regulatory framework, and organization structure.
3. Report on workshop results.

D.4. Prepare the bidding documents for the IT system.

Based on the proposed procurement methodology (COTS, replace SAP, procure a successfully implemented system, Outsource, Custom-Built), business processes and tax accounting approved by the project owner, the Consultant should prepare the bidding documents for procurement and implementation of the IT system. GDT will provide information on the applicable procurement guidelines and templates during the preparation of the bidding documents, but no later than the date of GDT’s approval on reports (outputs) of the Consultancy on the overall procurement model for the new tax administration IT system as specified in D.2 above and reports (outputs) of the Consultancy on tax accounting as specified in D.3 above. 

I. Scope of services

D4.1. Develop the detailed technical inventory needed by Bidders in order that the Bidders can prepare, as part of each Bidder’s Proposal, the Bidder’s specific hardware and software best fit needs for their specific solutions for the procurement of IT system, including:

• Technical requirements for application software
• Technical requirements for infrastructure for the implementation of the application
• Detailed minimum technical requirements for the system implementations.

D4.2. Prepare a procurement strategy and a plan for procurement and implementation of the IT system

D4.3.   Prepare bidding documents for the procurement and implementation of IT system

II. Deliverables

The outputs of the task “Prepare bidding documents for procurement of IT system and implementation timeline” should include at least but not limited to the following bidding package:

1. Technical requirements for application software
2. Technical requirements for technical infrastructure and systems software
3. Functional requirements
4. Procurement strategy and Detailed Procurement plan
5. Proposed timetable for all initial deliverables including implementation process, onboarding, delivery of the Inception Report and Project Plan
6. Proposed Payment structure
7. Proposed Warranty and non-warranty support structure and timetables
8. Complete bidding documents

E. CONSULTANCY PROJECT MANAGEMENT

The Project Management Unit (PMU) of the project owner and the Consultant should coordinate to establish a Project Management Committee, including staff from PMU and the Consultant. The Project Management Committee shall be responsible for the project activities and for the implementation arrangements as per the contract to ensure the success.

The Consultant should appoint a Project Manager who will have the following tasks:

• Overall responsibility for delivery of project’s results;
• Preparation of inception, project plan, progress, and final reports;
• Coordination of inputs and tasks with the experts who will carry out the project.

E.1. Detailed planning for consultancy project implementation

The Consultant shall clearly indicate in the Proposal an initial project plan with details of the Work Breakdown Structure (WBS), a framework plan for consultancy project activities. This