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Introduction

Country: LAOS

Description of the Assignment:

Objective

The primary objective of this consultancy is to support the MOF and the Government of Lao PDR in preparing the country’s first tax expenditure Report. This will build upon the groundwork established through the NPFID project, particularly the development of the Tax Expenditure Repository and the pilot database of 200 concession agreements. the consultant will conduct a comprehensive tax expenditure analysis, assessing the scope and scale of revenue forgone due to special tax regimes and provisions. The consultancy will contribute to policy recommendations aimed at reforming tax expenditures to align with the broader fiscal policy objectives of the 9th NSEDP Financing Strategy. The Tax Expenditure Report, should align with international best practices and Lao PDR-specific fiscal context.

Given that the Ministry of Finance is in the process of developing a software/database on concession agreements, the consultant is expected to provide technical and advisory support to the Ministry of Finance and the service provider, the Software/database developer on the design of the database and on ensuring that the database is functional and useful for the Ministry of Finance to advance its work on addressing tax expenditures.

Scope of Work

Under the overall guidance of the MOF’s Fiscal Policy Department and UNDP Project Assurance team, the International Consultant will be responsible for the following:

Task 1: Review of Existing Tax Expenditure Framework and Data

· Conduct a comprehensive review of the existing Tax Expenditure Repository and associated documentation developed under the NPFID project.

· Assess the quality and completeness of the data collected, particularly the 200 concession agreements, and identify gaps or areas for improvement.

· Analyze the tax provisions included in the repository, ensuring that all relevant exemptions, deductions, credits, rate reliefs, and deferrals are accurately captured.

Task 2: Enhancement of the Tax Expenditure Database

· Collaborate with the software company contracted under the NPFID project to ensure the automation and functionality of the Tax Expenditure database.

· Support the integration of additional data sources into the database, including additional concession agreements, tax policy changes, and relevant government fiscal data.

· Ensure that the database can accurately calculate the scale of tax expenditures and link tax provisions with their respective beneficiaries.

Task 3: Data Collection and Analysis

· Work with the MOF and other relevant government agencies to identify additional data required for comprehensive Tax Expenditure analysis.

· Collect and analyze any missing data through consultation with key ministries, including further details on the beneficiaries of tax expenditures (e.g., specific sectors, industries, or individuals).

· Conduct in-depth analysis on the estimated revenue forgone due to various tax expenditures, building on the previous benchmarking work.

· Perform a detailed analysis of the tax expenditures identified in the repository, including assessing their alignment with the government’s fiscal policy objectives.

· Provide any reflections on the effectiveness of tax incentives and exemptions in achieving inclusive growth, revenue mobilization, and fiscal sustainability goals.

· Identify key areas where tax reforms, including renegotiation or abolition of certain tax incentives, could lead to increased fiscal revenue.

Task 4: Preparation of the Tax Expenditure Report

· Work closely with the Fiscal Policy Department, MOF to draft the first Tax Expenditure Report for Lao PDR, based on the data and analysis collected.

· Ensure the report aligns with international best practices and provides clear recommendations for tax policy reforms.

· Include a detailed breakdown of tax expenditures, the fiscal impact of current tax incentives, and potential policy changes that could enhance fiscal revenue.

· Present the report to the MOF and relevant stakeholders for review and feedback.

Period of assignment/services:80 working days

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