1. Outline of the ProjectCountry: Kingdom of Cambodia

Project

Title:

The

Project

forCapacity

Development of GDT under the Framework of
PFM Reform
Issue/Sector: Tax Administration

Cooperation Scheme:
Technical Cooperation Project

Division in Charge: Industrial Development and Total Cost: JPY 204,000,000 (as of the timing of
Public Policy Department

the Terminal Evaluation)

Project（R/D） Sep. 2011-Sep. 2014 (3 years) Partner Country’s Implementation Organization:

PeriodGeneral Department of Taxation (GDT) of
Ministry of Economy and Finance (MEF)（Extended）Oct. 2014-Jul. 2015

Supporting Organization in Japan: National Tax
Agency (NTA)

Other Related Cooperation:- Capacity Building Project for the Tax Department of Cambodia (2004-2007)- Capacity Building Project for the Tax Department of Cambodia (Phase 2) (2007-2010)
1-1 Background of the ProjectIn the recent years, Cambodia has been increasing its tax revenue as a result of its economic
booming.

The level of domestic tax revenue as % of GDP, however, remains relatively low compared tothose of other ASEAN countries.

The General Department of Taxation (the GDT) under the Ministry of

Economy and Finance (MEF) has been promoted in 2008 from a tax department of the ministry with anempowered authority.

Currently, the GDT, with nine (9) Khan Tax branches and twenty-four (24)

Provincial Tax branches, encourages the taxpayers in estimated regime to shift to self-assessment regime.
This brings about new challenges of implementing capacity development of the GDT officers who are notvery experienced for conducting proper tax audit and providing taxpayer services.
JICA has supported the GDT to improve its officers’ capacity in the areas of tax audit, taxpayer
services, book-keeping and accounting since 2004 through two phases of technical cooperation projects.
As a result, the overall capacity of the GDT officers has been improved functionally on the ground. The
lessons derived from the projects indicated that practical training and On-the-Job Training (OJT),
institutional strengthening through day-to-day advises from experts were necessary for improvement ofcapacity and behavioral change for better services. The GDT was in need of enhancing tax audit for new
industries, taxpayer services, and the mechanism for governance and human resources management.

viiiTo meet such challenges, the Royal Government of Cambodia (RGC) requested the Japanese Government
to provide technical cooperation focusing on strengthening tax audit and taxpayer services.

JICA has

responded to the request and was launched a technical cooperation project, “The Project for Capacity
Development of the GDT under the Framework of PFM Reform”, for three (3) year period since
September, 2011 to September, 2014 and extended to July, 2015. JICA currently dispatches two (2)long-term experts (chief advisor/tax administration and project coordinator/information technology (IT))
along with some short-term experts in various areas (organizational management, critical thinking,taxpayer services, tax audit, etc.).

1-2 Summary of the Project(1) Overall Goal
Tax Revenue based on self-assessment regime is increased.
(2) Project Purpose

Tax collection function of the GDT is further strengthened through enhancement ofself-assessment regime.
(3) Outputs

1. The institutional capacity for tax audit is strengthened.
2. Taxpayer service is improved.
(4) Inputs
Japanese side:
Experts

19 persons (89.00MM)

Equipment/Materials

USD 31,519

Local Cost

USD 231,120

Trainees Received to Japan 47 persons
Trainees Received to Other Countries

57 persons

Cambodian side:
Assignment of Counterpart Personnel, Provision of Office Space, Part of Local Cost, Cost forElectricity, Water, and Internet
2. Terminal Evaluation Team
（Role: Name, Position）
Members (1)Team Leader : Mr. Ryuichi TOMIZAWA, Deputy Director General and Group Directorofthe for Governance, Industrial Development and Public Policy Development, JICA

Terminal(2)Tax Administration: Ms Saori MOGAWA, Assistant Professor, International

Evaluation Cooperation Group, Research Department, National Tax College
Team(3)Cooperation Planning: Ms Tomoko KOMURA, Special Advisor, Public Governanceand Financial Management Team, Governance Group, Industrial Development and PublicixPolicy Department, JICA
(4)Evaluation Analysis: Ms Ayako WATANABE, Researcher and Social Planner,
International Department, Regional Planning International
Period of 23 Feb.-6 Mar. 2015

Type of Evaluation: Terminal Evaluation

Evaluation
3. Evaluation Results
3-1 Project Performance
3-1-1 Achievement of Outputs
Output 1: The institutional Capacity for tax audit is strengthened.
Output 1 was found as “mostly achieved.” The capacity for tax audit is being upgraded through thedevelopment of Tax Audit Case-book and the information collection format, while was enhanced by
the training.

The knowledge/knowhow provided by the Project started being put gradually into tax

audit practice. After finalizing and obtaining the approval from the GDT which would be quite soon,
it is expected for the Project to go into the trial application process of the information collection
format for tax audit.

Output 2: Taxpayer service is improved.
Output 2 was found as “mostly achieved.” The capacity for taxpayer service is being upgradedthrough the development of the FAQs, OJD, training, and application of the knowledge/knowhow
obtained from the Project. Many cases were found as positive changes in tax officers’ behavior s
toward taxpayers, which resulted in improvement of taxpayers’ impressions on tax officers.
addition to the above, taxpayer seminars were conducted more frequently than before.

In

It is expected

for the Project, with strong commitment of the Cambodian side, to swiftly finalize the FAQs and go
into the application process within the Project term.

3-1-2 Achievement of Project Purpose
Project Purpose is “fairly achieved.” Knowledge/knowhow is being shared within the GDT as
well as tax branches in Phnom Penh, at least, which would be expanded to tax branches inprovinces within the Project period. Also, the GDT has been seeking to set up organizational
mechanisms for knowledge/knowhow sharing.

Even in comparison with [Reference] OVIs, theProject saw sound increase in percentage of self-assessment regime taxpayer as well as steadyincrease of actual number of registered taxpayers. The commitment of the Cambodian side
would be the key for further achieving the Project Purpose.

x3-1-3 Achievement of Overall Goal
Overall Goal, evaluated with the set OVIs, is found “achievable” in view of project progress at thetime of the Terminal Evaluation, the own efforts made by the GDT, and the current status of Important
Assumptions.

Tax revenue against GDP is soundly increasing, while percentage of self-assessed tax

revenue against total tax revenue is increasing as well.

The Project activities are just a part ofmeasures for further increasing tax revenue and there must be various other actions which should betaken by the GDT. Additional tax amount by re-assessment was increased due to the efforts made by
the GDT.

Important Assumptions for attaining the Overall Goal, no significant changes were foundand sound and steady progress was found in the actions taken by the Royal Government of Cambodia(RGC). The commitment and further capacity building of the Cambodian side would be the key forachieving the goal.

3-2 Summary of the Evaluation Results(1) Relevance: “High”
The Project is consistent with the policy of the Cambodian Government which aims for
improvement and modernization of tax administration. This direction is mentioned in the major
policy papers such as National Strategic Development Plan (NSDP), the Public FinanceManagement Reform Program (PFMRP), and the Revenue Mobilization Strategy (RMS).

Also,

the Project is consistent with the needs of the GDT which has been promoting the transition toself-assessment taxation system in Cambodia, while it is consistent with the Japanese ODA policy
toward Cambodia which put emphasis on the cooperation for strengthening the capacity in tax
collection.
Relevance of the Project was, therefore, judged as “high” with the above mentioned facts.
(2) Effectiveness: “Moderately High”
Project Purpose is “fairly achieved” as described in the preceding part of this sheet with thesteady progress about the OVI 3 “knowledge/knowhow is shared and utilized” and organizational
mechanism for sharing knowledge/knowhow is still being established.

Regarding taxpayer

service, the C/Ps was found upgrading in their awareness and knowledge and paid sufficientattention to the tax filing periods in the process of development and implementation of the Action
Plan for Taxpayer Service Improvement, while they upgraded their capacity and became
confident in its implementation on its own. The DLT of GDT currently has been holding
taxpayer seminars on their own by making plan ahead based on taxpayers’ needs. Positivechanges were found on “share of self-assessment regime taxpayers” ([Reference] OVI 2) as well.
An increase in number, not in percentage, of taxpayers who filed tax return was also found in
relation to “share of taxpayers who file tax return” ([Reference] OVI 1).

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Important Assumption for attaining the Project Purpose was partly met with no change of C/Ps
within the Project term except the four (4) of the core members who were transferred by political
appointment after general election.
By reviewing those facts, effectiveness of the Project was judged as “moderately high.”(3) Efficiency: “Medium”
The inputs were found delivered mostly in proper manner both from the Cambodian sideand the Japanese side. The dispatch of Chief Advisor was delayed but eventually resulted inleast negative influence on the progress of the Project by implementing the perception survey of
taxpayers, training in the neighboring countries, and the like.

Some of the activities were not tobe conducted as planned due to the constraint in human resources of the Cambodian side as wellas the personnel rotation of the four (4) core members including Project Manager during the
Project period. Beside the above, there were some cases of revision or changes in activities due
to insufficient coordination with NTS and also about other donor support.
Efficiency of the Project was, therefore, concluded as “medium.”(4) Impact: “High”
Overall Goal of the Project is set as “Tax revenue based on self-assessment regime isincreased.” Regarding the OVI 1, “% of tax revenue against GDP” saw an increasing trend from
4.5% in 2011 to 6.3% in 2014.

Overall Goal was, therefore, found as “achievable.”

Beside the Overall Goal, positive impact was found as the recommendations to the GDT
which were compiled through the analysis of the inquiries from enterprises.

Those

recommendations were included in Prakas issued in January, 2015, which is expected tocontribute the institutionalization of the necessary responses and eventually to lead to fairtaxation in Cambodia. No negative impact was found by the time of the Terminal Evaluation.
Impact of the Project was, thus, concluded as “high.”(5) Sustainability: “Medium to High”
Sustainability in policy aspect was found as “high.”

As mentioned in the part of“Relevance,” the Project is along the line of the policy of the Cambodian Government such as the
NSDP and PFMRP which target until 2018 or 2025. The policy support from the Cambodian
Government to the Project activities, therefore, would be continued after the completion of the
Project.
Sustainability in technological aspect was found as “medium.” The capacity of the C/Ps isbeing steadily upgraded and particularly in taxpayer service, the C/Ps obtained knowledge andbecome more conscious as well as confident up to the level of proactive planning andimplementation of activities by paying attention to the needs of taxpayers as well as the tax filingxii

periods. Training of trainers is rather limited partly due to the lack of training plan, but it isdone by the OJT at a certain extent. Mechanism for knowledge/knowhow sharing was foundstill varying among departments/bureaus, so it should be further established. The Tax Audit
Case-book, the information collection format for tax audit, and the FAQs on TOP should beapproved without delay and put into the application process within the Project term in order toincrease their applicability.
Institutional sustainability was found as “medium.”

The GDT has been issuing Prakas,

notifications, and letters for enforcing the necessary actions to promote self-assessment regime.
The C/Ps were found becoming confident in performing their duties through the upgrading of
their capacity by participating in the Project activities.

It is expected for them to continue

implementing related activities proactively even after the completion of the Project.
eventually will contribute to upgrade the institutional capacity of the GDT.

ThisInternal training for

tax officers were still implemented on ad-hoc basis. In the field of taxpayer service, the Projectworked jointly with the GDT in the development of the Action Plan and submitted the draft to
DG.

Therefore, it is strongly recommended to implement the Action Plan for sustainable tax

administration.
Financial sustainability was judged as “medium.”

Regarding taxpayer service, the Prakas

was issued in December, 2014 on operational cost of the GDT and it became possible fo r tax
branches to obtain budget upon request.

Budget of the GDT is still limited and depends on thepriority of the Cambodian Government, so cannot be forecasted correctly.
3-3 Factors Promoting the Production of Effects(1) On Planning of the Project
N.A.
(2) On Implementation Process
The Project, since its inauguration, has been paying much attention to maintain thesustainability of the activities after the completion of the Project.

The project, therefore,

compiled the results of its activities, evaluated and analyzed the results, accumulated therecommendations, and submitted to the GDT. All those recommendations are to be bound into abook before the Project termination and to become a useful reference for all the tax officers in
Cambodia to provide as many clues as possible when they perform their duties on their own.

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3-4 Factors Inhibiting the Production of Effects(1) On Planning of the ProjectSome of the Project Activities were duplicated with the other donor’s activities due toinsufficient information shared by the GDT.

This problem was found and solved in theimplementation process of the Project with some revision of the contents of the Project.
The correlation between Outputs and Project Purpose was relatively weak and particularly
the OVIs were not appropriate. For example, the [Reference] OVI 1, i.e. “% of taxpayers who
file tax return is increased” cannot be attained only through “the strengthening of theinstitutional capacity of tax audit” (Output 1) and “the improvement of taxpayer services”(Output 2) but requires various other measures such as the support for taxpayers.

In order tomitigate the gaps between the Project Purpose and Outputs, Explanatory Note was prepared.
Necessary workload for the Project was found rather heavy to be handled by one (1)technical advisor and one (1) coordinator.
(2) On Implementation Process
The C/Ps were found with heavy time constraints and not fully participated in the Project
activities.

In addition, four (4) core members including Project Manager was transferred toother organizations by the personnel rotation after general election.
The communication was found fairly smooth between the Cambodian side and the Japaneseexperts. In some cases, however, the Project could not reach sound consensus on some issues
such as “what questions should be on the FAQs,” and “what the information collection format
should be like.”
Coordination with other development partner (US Treasury) was not sufficiently done by
the Cambodian side.
3-5 Conclusion
The Joint Evaluation Team, after going through all the process of evaluation survey, reached theconclusion that the Project is making steady progress and the Outputs are mostly attained.
Delay in progress was found, but all the activities are to be completed within the Project term.
The Project Purpose will be achieved by the end of the term.
3-6 Recommendations【For Short-term (expected to be addressed within the Project term)】】(1) Institutionalization of organizational mechanism for sharing knowledge/knowhow
There have been some organizational mechanisms established such as sharing a back-to-officereport and using the Tax Audit Format in order to utilize knowledge/knowhow at the managementlevels of the GDT and at the department/bureau levels. Yet, for further strengthening of suchxivmechanisms, official notice should be issued in order to put in place.
(2) Dissemination and utilization of Tax Audit Case-book, the information collection format and theFAQs
Tax Audit Case-book, the information collection format, and the FAQs are at the stage offinalization, which will be completed after the applications. With this finalization, those products
should be disseminated and utilized within the GDT.
【For Medium to Long-term (expected to be addressed after the termination of the Project)】】(3) Institutionalization of the usage of the Tax Audit Case-book, the information collection format,
and the FAQs
In relation to the above (1) and (2), the GDT is recommended to institutionalize their usage bymaking it compulsory on a day-day operation of the activities in order to enhance capacity
sustainably.

One example of institutionalization is the documentation of standardized businessprocess at the operational levels.
(4) Provision of incentives for further promotion of self-assessment regime
It is recommended that the GDT provide more incentives to promote Self-Assessment Regime
such as the introduction of the simplified accounting format for simplified Self-Assessment
Regime. In order to promote policy change, the GDT needs to establish mechanism to provide
assistance for taxpayers.
(5) Promotion of culture of planning activities ahead
Promoting a culture of planning activities ahead, including human resources and budget
allocation and practicing those “plan-based” activities is a key for the sustainability of the project
outputs and outcomes within the GDT although the GDT has made some efforts towards building
this culture.
(6) Initiative of DTSTA on planning and requesting budget for tax branches
It is highly recommended that Department of Taxpayer Services and Tax Arrears will takeinitiative on planning and request the budget for tax branches to prepare the related activities, as
the initiative already taken for the operational budget of fiscal year 2015.
(7) Utilization of the Project framework of development partners
In the formulation of the project, the GDT should utilize the Project framework of Development
Partners to achieve its goals within the Revenue Mobilization Strategy.

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(8) Assignment of responsible personnel for donor coordination
Donor coordination should be improved by assigning responsible personnel in the GDT toeliminate overlaps during the Project formulation and implementation stages.
(9) Further promotion of internal training within each department and branchInternal training within each department and branch by participants of the project activities should
be further promoted in order to share practical knowledge and skills learnt through seminars andtrainings.
(10) Further promotion of transparency
For the purpose of transparency, the GDT is recommended to publish the tax revenue data by tax
items and regimes.
3-7 Lessons Learned(1) Assignments of counterparts with the responsibilities relevant to the project activities:
In the course of the Project, responsibilities of some counterparts were not necessarily related
to the Project activities, and therefore, the motivation of these counterparts to engage themselvesin the Project was rather limited. JICA needs to request the implementing organizations to assign
personnel who are much relevant to the project activities so the project outcome will be
maximized and the related activities will be sustainable.
(2) Realistic project design in case of limited resources:
Necessary workload for the Project was found rather heavy to be handled by one (1) technicaladvisor and one (1) coordinator.

When the planned human resource allocation is limited, properand realistic scope of the project activities must be well discussed and determined based on theneeds of the implementing organizations.
(3) Incorporation of the project activities into the existing plans of the recipient country:
The Project contained some activities which have been newly introduced during theformulation of the Project. At the initial stage of the Project, those new activities were notnecessarily incorporated in the existing plans of the Government where difficulties have arose in
implementing the Project activities that should be recognized as the GDT activities.
In order to maximize the efficiency of implementing organizations and secure thesustainability of the project achievements, the project activities must be incorporated into theexisting plans such as a strategic plan and a yearly activity plan. Also, building an implementing
mechanism with personnel and budget matters should be considered to be included as one of the
project activities.

xvi