Serbia - Tax Administration Modernization Project : Additional Financing

Overview & Synopsis

The objective of the Additional Financing of the Tax Administration Modernization Project for Serbia is to improve the effectiveness of tax collection and lower the compliance burden for taxpayers. The AF estimated at EUR 27.250 million (approx. USD 30.8 million equivalent) will address the cost overrun to cover the cost of the acquisition and deployment of the COTS ITMS. TAMP is set to close in October 2025, and the implementation of the COTS ITMS solution requires at least 2.5 to 3 years for timely roll-out. By October 2025, following the implementation of non-COTS activities on the parent project, the undisbursed balance of TAMP is expected to be approximately EUR 28.9 million.5 The requested AF and the undisbursed balance of the TAMP will finance the COTS ITMS solution, recurrent costs like salaries of the PIU and operating costs, and seven non-COTS activities that will be repeated or extended (e.g., subscription to databases, taxpayer surveys, ChatBot tool) approved under TAMP, which are expected to continue. The AF will enable the STA to complete the modernization of its ICT infrastructure, resulting in faster compliance processes, lower administrative costs and compliance burden, and enhanced tax revenue collection. Despite increased investment costs, the financial and economic benefits indicate a positive return on investment, making this a strategically sound expansion of the TAMP project. The updated economic analysis projects an Economic Net Present Value (ENPV) of USD 141.3 million and a Financial Net Present Value (FNPV) of USD 165 million, driven by reduced compliance costs, operational efficiencies, and better tax arrears management. The project is expected to save taxpayers USD 303.8 million and reduce STA’s operational costs by USD 15.8 million.