GUATEMALA FISCAL AND PROCUREMENT REFORM PROJECT (FPRP)
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GUATEMALA FISCAL AND PROCUREMENT REFORM PROJECT (FPRP) Quarterly Progress Report: Quarter 3 (April – June 2018) Contract No. AID-OAA-I-12-00037/AID-520-TO-17-00002 July 2018 This publication was produced for review by the United States Agency for International Development. It was prepared by DAI Global, LLC.
CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002 FISCAL AND PROCUREMENT REFORM PROJECT Quarterly Progress Report Quarter 3 (April – June 2018) Project Title: Fiscal and Procurement Reform Project (FPRP) Sponsoring USAID office: USAID/Guatemala Contract Number: AID-OAA-12-00037/AID-TO-17-00002 COR: Yassin Osman Contractor: DAI Global, LLC Date: July 30, 2018
TABLE OF CONTENTS
Acronyms and abbreviations ........................................................................................................................................... 1
INTRODUCTION ............................................................................................................................................................ 4
Project Goals and Objectives .................................................................................................................................... 5
SIGNIFICANT EVENTS DURING THE QUARTER................................................................................................. 6
POLITICAL ECONOMY UPDATE RELEVANT TO PROJECT IMPLEMENTATION ..................................... 7
ACTIVITY IMPLEMENTATION .................................................................................................................................... 9
Component 1: Domestic Resource Mobilization.................................................................................................. 9
Table 1. Component 1 Key Milestones and Deliverables for FPRP’s Year Two.................................... 17
Component 2: Expenditure Management and Procurement Reform ............................................................ 20
Table 2. Component 2 Key Milestones and Deliverables for FPRP’s Year Two.................................... 29
Cross cutting activities .............................................................................................................................................. 31
Gender Forum: Fiscal Policy and Gender in Guatemala .............................................................................. 31
Conduct donor coordination and outreach......................................................................................................... 32
INDICATOR PERFORMANCE.................................................................................................................................... 33
PROJECT MANAGEMENT ........................................................................................................................................... 34
Project Operations ................................................................................................................................................ 34
Recruitment ............................................................................................................................................................ 34
Finance and Legal ................................................................................................................................................... 35
OTHER MAJOR ACTIVITIES FOR NEXT QUARTER .......................................................................................... 38
Short-term Technical Assistance Plans............................................................................................................. 38
Reporting ................................................................................................................................................................. 38
OTHER CHALLENGES THIS REPORTING PERIOD ............................................................................................ 38
Annex A: DELIVERABLES COMPLETED DURING THE REPORTING PERIOD ........................................... 39
Annex B: TECHNICAL REPORTS COMPLETED DURING THE REPORTING PERIOD ........................... 40
Annex C: TECHNICAL STTA POOL ........................................................................................................................ 41
Annex D: PERFORMANCE INDICATOR TRACKING TABLE (PITT)............................................................. 44
ACRONYMS AND ABBREVIATIONS
APR Annual Progress Report
AWP Annual Work Plan
BPMN Business Process Modeling and Notation
CCN Cooperating Country Nationals
Comisión Internacional contra la Impunidad en Guatemala
CICIG
UN Commission Against Impunity in Guatemala
Centro de Investigaciones Económicas Nacionales
CIEN
Center for National Economic Research
Contraloría General de Cuentas
CGC
Comptroller General of Public Accounts
COP Chief of Party
COR Contracting Officer’s Representative
Comisión Técnica de Finanzas Públicas
CTFP
Technical Commission of Public Finance
Dirección de Asistencia a la Administración Financiera Municipal
DAAFIM
Directorate of Assistance to the Municipal Financial Administration
Dirección de Análisis y Política Fiscal
DAPF
Fiscal Policy and Analysis Directorate
Dirección General de Adquisiciones del Estado
DGAE
General Directorate of Public Procurement
Dirección de Planificación y Desarrollo Institucional
DIPLANDI
Directorate of Planning and Institutional Development
Dirección Normativa de Contrataciones y Adquisiciones del Estado
DNCAE
National Directorate of Public Procurement
DRM Domestic Resource Mobilization
Dirección de Información y Tecnología
DTI
Directorate of Information and Technology
Dirección Técnica de Presupuesto
DTP
Technical Directorate of Budget
eGP Electronic Government Procurement
FAM Finance and Administration Manager
FES Friedrich-Ebert-Stiftung
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CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
FPRP Fiscal and Procurement Reform Project
Fundación para el Desarrollo de Guatemala
FUNDESA
Foundation for Guatemalan Development
GDP Gross Domestic Product
GoG Government of Guatemala
GUATECOMPRAS Guatemala’s electronic public procurement platform
Instituto Centroamericano de Estudios Fiscales
ICEFI
Central American Institute for Fiscal Studies
Instituto Guatemalteco de Seguridad Social
IGGS
National Institute of Social Security
IMF International Monetary Fund
Instituto Nacional de Estadística
INE
National Institute of Statistics
IT Information Technology
LAC Latin American and Caribbean
LCE Law on Public Procurement
LOE Level of Effort
LTTA Long-term technical Advisor
M&E Monitoring and Evaluation
MEL Monitoring, Evaluation, and Learning
MINFIN Ministry of Finance
Oficina Nacional de Servicio Civil
ONSEC
National Civil Service office
OTA U.S. Treasury Office of Technical Assistance
Organismo Supervisor de las Contrataciones del Estado
OSCE
Supervising body of state contracting
Plan Anual de Adquisiciones y Compras
PACC
Annual Procurement and Acquisitions Plan
PITT Performance Indicator Tracking Table
Plan Inmediato de Control del IVA
PIVA
Immediate Plan for VAT Control
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Oficina de Proyectos
PMO
SAT’s Project Management Office
Presupuesto por Resultados
PpR
Results-Oriented Budgeting
PFM Public Financial Management
QPR Quarterly Progress Report
RENAP Registry of Natural Persons
ROB Results-oriented Budgeting
Registro Tributario Unificado
RTU
Unified Taxpayer Registry
SOA Services-Oriented Architecture
Superintendencia de Administración Tributaria
SAT
Tax and Customs Administration
Secretaría de Planificación y Programación de la Presidencia
SEGEPLAN
Presidential Secretariat of Planning and Programming
Sistema de Contabilidad Integrada
SICOIN
Integrated Accounting System
Sistema Informático de Gestión
SIGES
Information Management System
Sistema Integrado de Administración Financiera
SIAF
Integrated Financial Management Information System
STTA Short-Term Technical Assistance
TADAT Tax Administration Diagnostic Assessment Tool
TAMIS Technical and Administrative Management Information System
TCA Taxpayer Current Account
TCN Third Country Nationals
Numero de Identificacion Tributaria
TINs
Tax Identification number
UNSPSC United Nations Standard Products and Services Code
USAID U.S. Agency for International Development
WB World Bank
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INTRODUCTION
This Quarterly Progress Report (QPR) for the Fiscal and Procurement Reform Project (FPRP) activity
documents progress from April 1 to June 30, 2018, in compliance with Section F.3.2. of the referenced
contract. The period of performance for this activity spans three years (two base years plus one
exercised option year) from January 23, 2017 through January 22, 2020. This activity is task order
contract funded through the Public Financial Management IDIQ.
USAID commissioned DAI Global LLC and the FPRP team to design and implement an activity supporting
domestic resource mobilization, and expenditure management and procurement reform in Guatemala.
The goal of FPRP is to improve the Government of Guatemala’s (GoG) ability to invest in health, education,
nutrition, infrastructure and other public services through more efficient tax collection, lower levels of
corruption, and improved public expenditure management.
Each quarterly report will present progress against the project’s two components:
• Component 1: Domestic Resource Mobilization. The objective of Component 1 is to support GoG
reforms in the areas related to domestic resource mobilization identified by the Ministry of
Finance (MINFIN) and the Tax and Customs Administration (SAT), aligned to their strategic plans
and public financial managements (PFM) modernization strategies.
• Component 2: Expenditure Management and Procurement Reform. The objective of Component
2 is to improve expenditure management and further procurement reform efforts.
This Quarterly Progress Report presents key achievements in each of FPRP’s components, as well the
significant project milestones and deliverables during the reported period. The report is divided into the
following sections:
• Introduction, gives an overview of the project and significant events for the reporting quarter;
• Significant Events this Quarter, provides a select list of key events that took place during the
reporting quarter;
• Political economy updates relevant to project implementation;
• Activity implementation, covers the implementation status of activities for each component as
proposed in the FPRP’s Year 2 Annual Work Plan;
• Project management, includes operations, finance, and overall successes and challenges;
• Other challenges this reporting period;
• Major activities for next quarter.
A list of deliverables completed during the reporting period is included in Annex A, a list of technical
reports in Annex B, the STTA plan in Annex C, and the Performance Indicator Tracking Table (PITT) in
Annex D.
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Project Goals and Objectives
The goal of FPRP is to improve the Government of Guatemala’s (GoG) ability to invest in health,
education, nutrition, infrastructure and other public services through more efficient tax collection, lower
levels of corruption, and improved public expenditure management. Through a demand-driven
approach, the project supports on-going reforms in public financial management (PFM), tax
administration, operations, and small and medium-sized business participation in public procurement.
The main counterparts for the activity are Guatemala’s Ministry of Finance (MINFIN) and the Tax and
Customs Tax Administration (SAT). FPRP focuses on two areas: Domestic Resource Mobilization and
Expenditure Management and Procurement Reform. Table 1 outlines the objectives and expected
results for the project by component.
The theory of change for FPRP holds that if the GoG is able to raise tax revenues through improved
domestic resource mobilization (DRM) and reduced corruption, and if the GoG is able to improve
expenditure management through public procurement reform, then the GoG will improve its ability to
invest in health, education, nutrition, infrastructure, and other public services meeting citizen demand.
Figure 1. FPRP’s Results Framework
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SIGNIFICANT EVENTS DURING THE QUARTER
The following events, accomplishments and challenges had the greatest impact on FPRP implementation
during the reporting period:
First meeting with Mr. Abel Cruz as confirmed new superintendent of the SAT
On April 2, 2018, the FPRP team held its bi-weekly meeting with the SAT’s Superintendent, Mr. Abel
Cruz, following the official appointment as the new SAT’s Superintendent (2018-2022). Mr. Cruz was
previously the Interim Superintendent following the dismissal of Mr. Juan Francisco Foppa in January
2018. USAID’s FPRP COR Mr. Yassin Osman also participated in this meeting. The highlights included an
updated approach for 2018 with emphasis on tax revenue mobilization, and a focus on large taxpayers.
Mr. Cruz also expressed the intention to replicate efforts on the re-design of the Unified Taxpayer
Registry (RTU)—which FPRP supports—with other priority areas including Tax Audit and Customs.
SAT approves internal regulatory resolution establishing Macro-Process and Process Framework
Both the SAT and FPRP share the critical goal of ensuring sustainability of the business process
reengineering activity. To achieve that goal, the SAT established the Process Administration Unit within
the Planning Office during this quarter. In addition to that, on April 12, 2018, the SAT approved an
internal regulatory resolution that establishes the Macro-Process and Process Framework—developed
through FPRP support—to serve as the foundational roadmap for undertaking processes redesign. The
FPRP is also supporting the development of the business process reengineering methodology for the
SAT, developing a manual for business process mapping, and for undertaking process reengineering in
all its stages, which will help the SAT sequence this activity and ensure sustainability of the model.
SAT delegation participates in the world Tax Justice Network Conference in Lima, Perú
Following FPRP’s support to the SAT on a Tax and Gender Assessment and Gender Focus Groups on the
cost of compliance, the SAT was invited to present at the world Tax Justice Network Conference (June
13-14, 2018) in Lima, Peru. The SAT presented on the results from the gender studies as well as their
recent efforts to conduct a gender organizational assessment. The SAT’s delegation, which included
representatives from the Tax Collection Intendancy, Taxpayer Service Intendancy, and Planning
Department, were joined by FPRP’s M&E Expert.
MINFIN’s Vice-Minister of Revenue and Fiscal Evaluation, Dr. Lionel Lopez, resigns
On June 8, 2018, the Vice-Minister of Revenue and Fiscal Evaluation of MINFIN, Dr. Lionel López,
resigned. The Vice-Minister of Internal Administration and Technology Ms. Carmen Abril was sworn in as
his replacement. The new Vice-Minister replacing Ms. Abril, is an external person, Ms. Claudia Rodas.
For 17 months, FPRP worked closely with Dr. López, who always provided guidance and decidedly led
the fiscal reform processes that the project supports within MINFIN. Minister Julio Hector Estrada
thanked Dr. Lopez’s work, highlighting his support to the modernization of the SAT, strengthening of the
public procurement system—both of which FPRP supports—and creation of environmental fiscal policy
tools. FPRP looks forward to working with the newly appointed Vice-Minister Ms. Abril.
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CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
Launch of Public Procurement System Reform Discussion Platform led by OES/ASIES
On June 20, 2018, the Sustainable Economic Observatory (OES/UVG) and the Association for Research and
Social Studies (ASIES) launched a discussion round-table o analyze and build a new proposal to improve
the efficiency and transparency of the Guatemalan public procurement system. FPRP's COP and
Component 2 Lead participated in this new discussion platform named “Towards a new public
procurement system.” During this discussion, the MINFIN’s new Vice-Minister of Revenue and Fiscal
Evaluation Ms. Carmen Abril presented, among other speakers, on the challenges of the current public
procurement system and progress to-date in reforming the system. Others invited to the discussion
included the Centro de Investigaciones Económicas Nacionales (CIEN), the World Bank, Guatemala´s
Congress, Contraloría General de Cuentas (CGC), Instituto Centroamericano de Estudios Fiscales (ICEFI),
and the Instituto Guatemalteco de Seguridad Social (IGSS).
Pictured Above: MINFIN’s Vice-Minister Carmen Abril presenting on the challenges of the public
procurement system during the OES-ASIES round-table discussion held on June 20, 2018.
Presidential Approval of Governmental Agreement 112-2018 creates new DGAE at MINFIN
Following the creation of the MINFIN’s new Vice-Ministry of Fiscal Transparency and Public
Procurement, on June 28th the President of the Republic of Guatemala approved the new Internal
Organic Regulation (Reglamento Orgánico Interno) through Governmental Agreement 112-2018
(published on the Diario de Centro América). Furthermore, the National Civil Service Office (ONSEC)
approved the new personnel positions. These two approvals give official rise to the new General
Directorate of Public Procurement (DGAE)—formerly DNCAE, the General Registry of Public
Procurement (RGAE), the Directorate for Fiscal Transparency, and the Directorate of Training and
Professional Development in Public Procurement. FPRP supports the institutional strengthening of the
new DGAE.
POLITICAL ECONOMY UPDATE RELEVANT TO PROJECT
IMPLEMENTATION
FPRP’s progress was impacted by several events within the Guatemalan political economic realm during
the reporting period.
MINFIN’s Vice-Minister of Revenue and Fiscal Evaluation, Dr. Lionel Lopez resigned on June 8, 2018.
Vice-Minister of Administration and Technology, Ms. Carmen Abril, was sworn in as his replacement
shortly thereafter. Dr. Lopez had been a key ally and supporter of FPRP for approximately 17 months,
7CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
providing guidance and leadership as a champion of fiscal reform and implementation of the project at
both the SAT and the MINFIN. FPRP looks forward to working with Ms. Carmen Abril as Vice-Minister
and lead counterpart for the FPRP project’s implementation. FPRP will introduce the project objectives,
activities and achievements to Ms. Abril in early July.
While progress towards the creation of a Vice Ministry of Fiscal Transparency and Public Procurement
within MINFIN made slow progress during the beginning of the reporting period1 the progress picked up
in June. Now with the final approval of the new Internal Organization Regulation (Reglamento Orgánico
Interno) the creation of the new Vice Ministry is expected in the upcoming reporting period. According
to an analyst from the Central American Institute of Fiscal Studies (Instituto Centroamericano de
Estudios Fiscales, ICEFI), the MINFIN has made some progress in terms of transparency, but "more
integral actions are missing so that the population perceives that effective actions are being promoted
to better utilize public resources"2. FPRP hopes to both provide support to and benefit from the creation
of this new Vice Ministry within MINFIN.
At the national level, the appointment of the new Attorney General (AG) Maria Consuelo Porras,
replacing outgoing AG Thelma Aldana, was a very significant event during the reporting period. AG
Aldana was a strong advocate of the U.N. International Commission Against Impunity in Guatemala
(CICIG) and had openly disagreed with President Jimmy Morales and his administration. It remains to be
seen how the new AG, who was appointed by President Morales among six final candidates, will interact
with him and his administration.
At a press conference, Presidential spokesman Heinz Heimann noted one of the main factors in selecting
Porras for the position was to support the specific objective of reducing tax delinquency3. , 4. During her
swearing in ceremony, which took place on May 17th and was attended by high level international
officials, including CICIG Chief Iván Velásquez Gómez and Guatemala’s Human Rights Ombudsman
Jordán Rodas, AG Porras declared that "we will work independently, without compromises of any kind"5.
According to analysts and media outlets, AG Porras has three critical issues to face at the beginning of
her tenure. The first is the decision whether to seek a preliminary hearing against President Jimmy
Morales for his alleged connections with illicit electoral financing6. The second issue is the investigation
into possible negligence by Guatemalan officials in managing the disaster following the eruption of the
Fuego Volcano on June 3, 2018 7. Finally, AG Porras must investigate the recent controversial deaths of
seven peasant leaders to determine whether they were politically motivated8.
President Morales is increasingly embattled with several scandals that evolve and undermine his
administration’s ability to effectively govern the country. As outlined above, while tensions with
Guatemala’s Public Ministry, and by extension the CICIG, may ease with the appointment of AG Porras,
1 https://elperiodico.com.gt/inversion/2018/05/14/minfin-a-paso-lento-para-conformar-el-viceministerio-de-
transparencia/
2
Ibid
3
‘Think Tank’ Weekly Report-General Situation, 28 April – 04 May, 2018.
4
Ibid.
5
https://www.prensalibre.com/guatemala/justicia/maria-consuelo-porras-juramentada-como-nueva-fiscal-general-
del-ministerio-publico-mp
6 https://www.prensalibre.com/guatemala/justicia/fiscal-general-maria-consuelo-porras-no-descarta-antejuicio-
jimmy-morales
7
https://www.soy502.com/articulo/posible-negligencia-mp-podria-investigar-tragedia-volcan-100930
8
https://www.prensalibre.com/guatemala/comunitario/codeca-realiza-marcha-campesina-en-la-capital
8CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
the allegations of illicit electoral financing continue to trail President Morales. The bungled response to
the tragic eruption of the Fuego Volcano has further damaged the president’s credibility, with a barrage
of severe criticisms coming from various elements within Guatemala’s civil society. Finally, accusations
of sexual misconduct against the president which have begun to emerge during the reporting period
have further weakened the president and his ability to accomplish his objectives9.
Other notable events and ongoing issues in Guatemala during the reporting period include the deaths of
Álvaro Arzú, Guatemala City’s mayor and former president, as well as Efraín Ríos Montt, both of whose
deaths have altered the political landscape; the ongoing case of the Russian Bitkov family; the opening
of a new Guatemalan embassy in Jerusalem (coinciding with the opening of the new US embassy in that
city); and the national controversy over the response (or lack thereof) of the Guatemalan government to
the separation of Guatemalan families when crossing the border illegally into the United States.
While most of these issues affect the project indirectly, they impact the political environment the
project is working in, drawing attention and energy and complicating efforts towards effective
governance and reform.
ACTIVITY IMPLEMENTATION
This section provides a more detailed overview of FPRP’s progress with the implementation of the
activities outlined in its Year 2 Annual Work Plan, per component, including (1) key activities for this
Quarterly Progress Report; (2) constraints/challenges/lessons learned; (3) implementation progress by
activity; and (4) major activities for next quarter.
Component 1: Domestic Resource Mobilization
The objective of Component 1 is to support GoG reforms in the areas of tax policy, administration,
registration, audit, human resources, compliance, customs, and other areas related to domestic
resource mobilization as identified by the MINFIN and SAT and aligned to their strategic plans and PFM
modernization strategies. The main objectives are to raise tax revenues, reduce corruption, and enhance
transparency, while encouraging broad-based economic growth.
Component 1 activities include the following:
1. Business process reengineering of SAT’s prioritized core tax administration areas
2. Improve the accuracy and reliability of the Taxpayer Registry (RTU)
3. Support implementation of Trilateral Cooperation Guatemala-Mexico-U.S.
4. Development/implementation of citizen perception and cost of compliance survey, and gender
focus groups (SAT)
5. Implementation of the MINFIN-SAT agreement on exchange of information
6. Tax modeling capacity and policy analysis at MINFIN and SAT
9
https://www.guatevision.com/noticia/jimmy-morales-podria-estar-envuelto-en-escandalo-por-abuso-sexual/
9CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
Key Activities for this Quarterly Progress Report
• The SAT officially announcing the new macro-process and process framework to serve as the
basis for the continued business process reengineering efforts at the SAT.
• Delivery of the Business Process Reengineering standardized methodology, including formats,
templates, taxonomy, and more.
• Completed validation of RTU macro-process, processes and business rules with the Intendancy
of Collections and the Intendancy of Taxpayer Services.
• Delivery of a proposed technology architecture in support of the upcoming RTU software
development efforts.
• Reclassification of 1,686,937 taxpayers in the Taxpayer Registry aimed to correctly reflect
taxpayers’ obligations regarding income tax for employees and annual vehicle tax.
• Completed the design and adjustments to the instrument (questionnaire) for the tax perception
and cost of compliance survey to serve as the basis for the collection of information applied to a
sample of general population and businesses to be executed in the next quarter.
Constrains, Challenges and Lessons Learned
• Lack of consensus between SAT and MINFIN on the information to be shared as part of the
Exchange of Information Agreement. To mitigate this, the project has engaged a consultant with
extensive experience in information exchange for statistical and modeling efforts to support the
data exchange agreement beginning July.
• As reported in the previous reporting period, the lack of a national policy for e-government has
hindered efforts in the cleansing of the RTU which requires information from external sources
such as from Registry of Natural Persons (RENAP), Merchant’s Registry (Registro Mercantil),
social security, among others. The negotiation between the SAT and RENAP on the new RTU’s
use of RENAP’s information has stalled and mitigation actions will be required. The team is
currently reviewing the impact and will adjust the business processes as required.
• Timely assignment of SAT’s Information Technology resources and software development will be
critical provided the strict timeline for the development of the new RTU. To mitigate any delays,
FPRP will follow up with the SAT’s PMO to ensure timely allocation of resources and timely
delivery of products by the SAT’s IT Department.
Progress by Activity
Activity 1.1: Business Process Reengineering of SAT’s Prioritized Core Tax Administration Areas
Establish a Methodology for Business Process Reengineering at the SAT to serve as guide for
standardizing the redesign of processes. During the previous quarter, FPRP’s component 1 team, in
collaboration with the SAT’s Modernization team and the Planning Department, completed the
definition and documentation of the standardized methodology for business process modeling for SAT
following the BPMN 2.0 methodology and software Bizagi. During the current quarter, FPRP’s
10CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
component 1consulting team continued the support the consolidation and socialization of SAT’s new
approach to define and document processes.
The consultants engaged in several working sessions with the planning department counterparts. The
objective was to prepare an initial training activity that focuses on the new methodology and using the
Taxpayer Registration macro-process documentation as
a base to demonstrate the use of the methodology.
FPRP will support the delivery of a training workshop in
the next reporting period and will serve as a pilot to a
larger SAT internal training effort for building capacity
on the use of the methodology. FPRP consultants will
continue supporting this effort, beyond what is stated
in the work plan for establishing the methodology, to
reinforce the adoption of the new business process
methodology at SAT.
Define SAT’s Improved Macro-process and Process
Framework to serve as the foundational roadmap for
undertaking processes redesign. This activity was
completed in the previous reporting period,
nevertheless it is worth noting that the SAT
institutionalized this deliverable during this quarter
through an official document and communication
signed by the planning department, the PMO and the
Superintendent (see Figure 2).
Define and develop the RTU conceptual model,
business processes, use cases and software
development activities. During the reporting period,
Figure 2 - Official document issued by SAT’s
FPRP completed the definition of business processes for planning department where the new SAT’s
the new Unified Taxpayer Registry (RTU) following the macro-process map is officially established and
established methodology in BPMN 2.0, at levels 1, 2, 3 communicated.
and business rules. FPRP continued with the validation
and approval process, working with the SAT’s RTU
modernization team, completing three all-day validation
workshops with key stakeholders including
representatives from the Intendancy of Collections and
the Intendancy of Taxpayer Services. During the next
reporting period, the FPRP team will seek formal
approval for the three RTU processes—the registration,
taxpayer update, and cease of operations processes.
Since the new RTU will absorb the different registries at
the SAT including the registration of Auxiliaries of the
Public Function related to Customs, the FPRP’s business
process reengineering team supported the SAT’s Pictured Above: On June 8th, SAT’s RTU
modernization team deliver a presentation to the Modernization team member leading the
Customs Intendancy personnel focused on the re- presentation on the Re-designed RTU addressing the
Intendants of Tax Collection and Taxpayer Service
designed business processes. The re-designed RTU
and their personnel.
11CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
considers the integration of customs stakeholders as part of the integral Taxpayer Registry which will
contribute to the integration and streamlining of processes. The FPRP team met with the Comptroller's
Office (CGC) to explore the data exchange capabilities that support the integration of the Public Function
Auxiliary Registry into the new RTU via electronic checks.
Additionally, the FPRP business process reengineering team worked with the modernization team and
the Intendancy of Collections on a presentation delivered to the Taxpayer Services Intendancy that
sought the alignment of the redesigned RTU, with
taxpayer service initiatives. Among topics discussed
were: the delivery of virtual mechanisms for taxpayer
service, such as the taxpayer digital signature or digital
certification; the virtual service desk; the taxpayer's
inbox; and the allocation of taxpayers’ service
appointments.
Based on the success of previous situational analysis
workshops, SAT’s Information Technology Department
and the Office of Projects requested FPRP’s support to
organize, facilitate and deliver a situational analysis
workshop for their department. On Friday April 6th,
FPRP consultants held a workshop with the IT software
development department to identify current issues and Pictured above: FPRP consultants delivering workshop to
risks in the software development process. The output SAT’s IT Department and representatives from the Office
of Projects, on Friday April 6th in support of developing a
of the event will serve as the basis for planning a
software development strategy for the new RTU.
software development strategy for upcoming stages in
the design, development, and implementation of the
new RTU process and systems. Box 1. Relevant innovations included in
the reengineered Unified Taxpayer
The project provided additional support to the SAT’s IT
Registry (RTU).
Department through activities related to defining the
• For individuals, TIN assignment at
software development architecture for the new RTU. FPRP’s the issuance of Identity Card (DPI).
data warehouse and technology architecture specialist • For businesses, TIN assignment at
delivered an 8-hour hands-on training to the SAT’s registration in the Business Registry.
Information Technology personnel of the SAT’s • Implementation of the taxpayer
modernization team. The training offered a full view of the electronic inbox for notifications.
available services through cloud-based technologies, hands- • Unification of 13 different taxpayer
on exercises in creating and managing infrastructure as well registries.
as software development tools. Sessions were recorded and • Risk based registration.
will be available for future reference, providing a e-learning • Image integration in a Document
opportunity for interested personnel. Management System.
• Multiple address management.
Redesign two additional core processes: Compliance
Control and Tax Audit. During the reporting period, FPRP’s tax administration modernization and tax
audit specialists continued work with the tax audit and compliance control teams of the SAT’s
modernization team. The effort was focused on two goals: (1) identifying and documenting potential
solutions to issues identified during the problem and vision setting workshops; and (2) supporting the
documentation of levels 1 and 2 processes following the BPMN 2.0 methodology for the tax audit and
compliance control macro-processes. At the end of the reporting period, the documentation had been
completed and level 3 documentation started.
12CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
Furthermore, the FPRP consultants held validation workshops with the SAT’s modernization teams
supporting the compliance control and tax audit areas and delivered presentations to the Collections
and Tax Audit Intendancies.
On April 2nd, the FPRP team held its regular bi-weekly meeting with the SAT’s Superintendent, Mr. Abel
Cruz. USAID’s FPRP COR also participated in this meeting. This was the first meeting with Mr. Cruz as the
newly elected Superintendent for SAT (2018-2022). During the meeting the Superintendent expressed
that one of his focus areas include an updated approach for 2018 with emphasis on increasing tax
collections, with a focus on large taxpayers. The project offered its support and proposed to re-focus the
upcoming visit of one of the tax audit specialist in identifying compliance actions for large taxpayers. By
mid-May the tax audit specialist arrived and quickly incorporated a multi-disciplinary team with
participation from the Intendancies of Tax
Collections, Customs, Fiscal Investigation Unit and
the operational audit area for large taxpayers. The
tax audit specialist identified key evasion
indicators and potential revenue mobilization
cases. At the end of the visit, the specialist
assigned specific actions to the Large Taxpayers
unit towards the implementation of a pilot
program to tackle selected cases.
Deliver workshops to SAT’s Modernization team
on leadership, project management, and change
management. During the quarter, FPRP’s change
management expert continued supporting
activities based on the defined change
management strategy. The expert focused on two Pictured above is Change Management consultant delivering
areas: (1) strengthening the SAT’s modernization a workshop on “Requirements definition and negotiation
techniques” to the Modernization team on May 25, 2018.
team through project management skills; and (2)
development of the RTU Communications Plan including the SAT’s Project Management Office (PMO)
and Communications Department. The expert also held a workshop on the definition of requirements
and negotiation techniques. The change management expert also supported the SAT’s PMO office to
apply the Test DdaE, following the RECH (Strategic Reorientation of Human Behaviors—from its Spanish
Acronym) methodology, which measures self-perception on 4 factors that affect the capacity and
effectiveness in execution of a collaborating force assigned to a project: skills, discipline, individual
attitude, and team spirit. This was a re-assessment to the same test applied in February 2018,and results
showed improvement in the SAT’s modernization team perceptions. FPRP provided recommendations
on how to further strengthen the modernization team in these four areas.
Activity 1.2 Improve the accuracy and reliability of the Taxpayer Registry (RTU)
During the reporting period and following the RTU cleansing strategy validated with the SAT, the SAT’s
RTU modernization team referred to the Intendancy of Collections a set of Taxpayer Identification
Number (TINs) subject to reclassification, identified via cross-reference. This included administrative
TINs that reported an active tax obligation through the vehicle registration system and/or the income
tax withholding system. These cases need to be re-classified and assigned the tax obligation as reported
by the other sub-systems.
By the end of the reporting period, the Intendancy of Collections reported a total of 1,686,937
reclassified taxpayers comprised of 486,477 taxpayers reclassified as subject to income tax withholding,
13CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
949,531 taxpayers reclassified as vehicle owners and subject to the vehicle registration tax, and 250,929
taxpayers that no longer own vehicles and requiring the tax obligation to be removed.
Challenges identified in the previous reporting period remain unresolved. For instance, the integration
of the information cube took time which required specialized IT personnel and business intelligence
software from the SAT. Additional information remains to be uploaded to the information cube as the
infrastructure has proven to be insufficient to support the consolidation of more information, and the
SAT reports failed attempts in bidding processes to procure enhanced infrastructure. As identified in the
previous report and as part of the mitigation activities, the project engaged and deployed a data
warehousing specialist to conduct an evaluation and propose a roadmap to resolve the infrastructure
issue in the short term.
Among other activities, the data warehouse (DW) specialist completed the assessment of the
infrastructure and current data warehousing processes at the SAT. The consultant held meetings with
stakeholders from the data warehousing area, the RTU modernization team, and the Fiscal Investigation
Unit. The consultant presented the findings and a roadmap to implement a proof of concept (or pilot)
project for a DW hosted in a cloud environment. The purpose of this proposal is to support the new RTU,
the cleanup and reclassification of the RTU, and the compliance risk framework through better data
governance.
FPRP plans to support the data warehouse pilot implementation, pending signing of a non-disclosure
agreement between the SAT and the cloud service provider, which will serve as the critical basis not only
for the RTU cleansing effort as defined in the cleansing strategy but also other efforts that require
consolidated data including the tax compliance risk analysis and the exchange of information agreement
between SAT-MINFIN.
Activity 1.3. Support Implementation of Trilateral Cooperation Guatemala-Mexico-U.S.
The Year 2 Work Plan included activities to support the implementation of the Trilateral Cooperation
agreement between Guatemala, Mexico and the United States. During the reporting period,
coordination activities with the SAT’s Project Management Office took place and the project promoted
engagement activities with Mexican authorities. One of the results of the engagement activities was the
formal invitation by the Mexican Tax Administration authorities (SAT Mexico) to SAT Guatemala to
conduct a visit aimed at sharing best practices in Compliance Tax Risk management. Unfortunately, SAT
Mexico insisted in limiting the invitation to SAT personnel only.
Guatemala’s SAT delegation visited the Mexican SAT to review the implementation of a tax compliance
risk framework. No work plan followed up for additional exchanges between the Guatemalan and
Mexican tax administrations. FPRP is not expected to facilitate any additional exchange visits between
the two tax administrations.
Design of Tax Compliance Risk Framework. Based on the limited engagement with the SAT Mexico
representatives, FPRP refocused the scope of the activity to support the SAT in the definition of a Tax
Compliance Risk Framework. FPRP mobilized a Tax Compliance Risk expert to undertake an assessment
of the tax compliance risk at the SAT based on an analysis of taxpayers’ risk. FPRP’s expert held
discussions with the Superintendent, the SAT’s Tax Risk Committee, Vice-Minister of Revenue and Fiscal
Evaluation, an IMF advisor, and the SAT’s Board of Directors, to discuss the general strategy and
approach taking into consideration the need to increase perception risks and to mobilize tax revenue in
the short and medium term.
The tax risk advisor engaged with key stakeholder including the Fiscal Investigation Unit and the recently
appointed Tax Compliance Risk Committee to identify and assess tax risks, and to discuss the strategy
14CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
and approach. Some of the initial activities included the delivery of a tax risk workshop including high
level officials from the Intendancies of Collections and Audit, as well as the Tax Risk Committee.
Pictured above (clockwise): Intendent Leonel Villamar speaking to the group; workshop participants with FPRP Tax Risk Advisor;
and workshop participants group picture (SAT-IMF-FPRP) held on May 4th.
The Tax Compliance Risk advisor then supported the
development of tax risk prototypes to better
understand the current composition of the VAT
taxpayers’ risk. On May 11th, the advisor prepared
and delivered a presentation to the SAT Board of
Directors and the Superintendent. The presentation
focused on describing the different types of risk
approaches that the SAT should evaluate, the results
of the prototypes and specific suggestions on next
steps aimed at strengthening current efforts in the
development of a tax compliance risk framework. In
addition, the advisor presented a high-level road
map that identifies key activities and resources for Pictured Above: SAT’s Tax Risk advisor presenting Tax Risk
concepts and their practical application to SAT’s project managers
the short, medium, and long term. during their weekly meeting held on June 11th.
15CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
Furthermore, FPRP’s Tax Risk advisor supported the data selection criteria, definition and creation of
different risk profiles for taxpayers and defining Maqueta de control en Declaración de IVA
prototypes for development of risk mitigation tools.
On June 26th, the FPRP team presented the results
of different taxpayer risk profiles created for VAT
active taxpayers to the Superintendent and the PMO
office. The presentation successfully demonstrated
the current precarious VAT tax risk situation for SAT.
The advisor also presented recommendations on
how to tackle current VAT risk including addressing a
specific type of VAT risk from taxpayers that have not Pictured Above: SAT’s Tax Risk advisor working with the
8
Fiscal Investigation Unit, presented a prototype for
declared any VAT debits in the past four years. This applying risk mitigation to VAT monthly filings.
risk mitigation strategy along with other risk strategies
proposed by the advisor align with the new overall focus of tackling risk at the source and not
necessarily once the taxpayer has already declared. During the meeting, the Superintendent expressed
his support to the strategy presented. FPRP will continue supporting the definition of the tax compliance
risk framework and is working with the USAID mission to consider expanding the scope to the
implementation of the strategy during 2018 per the SAT’s request.
Activity 1.4: Development/implementation of citizen perception and cost of compliance survey, and
gender focus groups (SAT)
Design of tax surveys. During the reporting and following the signing of the subcontract with CID Gallup
for the design and implementation of the tax perception and cost of compliance survey, FPRP’ M&E
expert engaged in planning activities with CID Gallup during the month of April. The topics discussed
during the meeting included methodology, timelines and products that will be reflected in the work
plan, as well as technical details regarding the tools for data capturing and analysis. At the same time,
FPRP began coordinating the upcoming visit of the tax survey expert May 7-25 who would work with CID
Gallup on the development of the survey instrument, the sampling methodology and pilot the surveys
before the full implementation.
Upon his arrival in country, the tax survey expert engaged with CID Gallup, in the design of the specific
surveys guiding the development of the instrument and the methodology of the survey. The survey
team worked on adapting the existing instrument and methodology used in other countries to meet the
specific needs and criteria for Guatemala. After the three-week visit, major accomplishments included
working with CID Gallup on completing the survey instrument (questionnaire) and methodology for the
planned Tax Perception and Cost of Compliance Survey.
Consequently, CID Gallup prepared a final version of the instruments, both for companies and for the
general population. CID Gallup also delivered the sample design for the general population, which was
reviewed and approved by the FPRP team.
Launch a pilot survey. During the reporting period, CID Gallup carried out a pilot test of the general
population survey instruments, which resulted in some minor adjustments reflected in the final version.
Field work of the general population survey is expected to begin in July 2018, involving a sample of
1,000 interviews throughout the country.
FPRP experienced delays related to the definition and sharing of a sample of business contact
information, by the SAT. Sharing the information required additional internal approvals from SAT
16CONTRACT NO. AID-OAA-12-00037/AID-TO-17-00002
including from legal affairs, Collections Intendancy, and ultimately generation of the data from the IT
Department. By the end of the reporting period, FPRP was still pending receipt of the sample business
data to proceed with the field implementation.
Activity 1.5 Implement the exchange of information agreement SAT-MINFIN
Per the previous quarterly report, the implementation of the exchange of information agreement
between SAT and MINFIN continues to face challenges as both the SAT and MINFIN have not reached an
official consensus around the draft conceptual model which defines the data to be exchanged and the
criteria for the exchange due to privacy of taxpayer information from tax declarations.
As a mitigation action, the project engaged in recruiting an international expert with experience in data
exchange for tax administrations and data processing for statistics and modeling purposes. The project is
now ready to deploy the tax modeling expert in July 2018, who will be tasked with supporting MINFIN
and SAT in the definition of datasets for an initial set of models.
Activity 1.6 Strengthen tax modeling capacity and policy analysis at MINFIN and SAT
In the previous quarter, FPRP delivered the revenue projections model including training workshops for
SAT and MINFIN personnel who report using the model as supporting methodology for estimating and
monitoring revenue performance. The FPRP team also worked with the IT Departments at the SAT and
MINFIN to define the purchase of 5 Eviews licenses for each institution; this is an important tool for
regression analysis and used to run the revenue projections model. By the end of the reporting period,
FPRP was still pending definition from the respective IT Departments on the type of licenses to be
purchased based on the current IT infrastructure.
Micro-simulation modeling workshop and tax policy impact models
FPRP has identified an expert to support the exchange of information between SAT and MINFIN, who
will also support the delivery of tax analysis and modeling workshops in July to serve as the basis for
defining the tax policy impact models to be developed, pending data exchange agreements, and
available data from the National Statistics Office (INE), Social Security (IGSS), and Central Bank
(BANGUAT).
Table 1. Component 1 Key Milestones and Deliverables for FPRP’s Year Two
Milestones and Deliverables Deadline Output
Status Comments
1.1 Business Process Mar. 30, Document approved by Completed The document has been
Reengineering 2018 Planning Department delivered to the
Methodology Completed and Project Office. Superintendency, Project
and validated Office and Planning
Department.
1.1 Improved Macro-process Mar. 30, Document approved by Completed Framework presented to the
and Process Framework of 2018 Superintendent and Superintendent and
the SAT Project Office. Intendent Committee
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Milestones and Deliverables Deadline Output
Status Comments
1.1 RTU Business processes Apr. 30, Process maps validated Completed All level completed and
modeled in BPMN 2.0, 2018 and approved by validated. Pending formal
levels 1&2 Collections Intendancy. approval.
1.1 RTU’s software modules Jul. Oct., Currently, the new RTU Not yet started The first set of development
developed Jan. implementation “go expected for July is now
live” date is estimated estimated for August 2018.
for March 2019.
1.1 Audit and Compliance Jun. 30, Document approved by In progress Completed. Pending formal
conceptual model 2018 the Audit Intendancy approval.
document and SAT’s PMO
1.1 Audit and Compliance Aug. 30, Process maps validated In progress Completed at level 1 and 2.
Business processes 2018 and approved by the Pending formal approval.
modeled in BPMN 2.0, Audit Intendancy and
levels 1 and 2 SAT’s PMO
1.1 Develop Communications Sep. 30, Document approved by Completed Draft strategy completed and
Strategy for new RTU 2018 Project Office. discussed with
communications area.
1.2 Additional segments Apr. 30, List of cases approved Completed Use cases and extractions
identified for cleaning and 2018 by Collections and processed for deceased and
transferred to appropriate Management re-classifications. More cases
area of the SAT Intendancy. to document pending Data
warehouse implementation.
1.2 May 31, Documented In progress Progress in the cleansing of
Definition of automatic
2018 Algorithms and Findings deceased taxpayers as
cross-checks to recurrently
presented in the previous
identify inaccurate
sections. Automatic cross-
reporting for re-
checking pending
classification
documentation.
1.2 Launch pilot programs for Aug. 30, # of cases; estimated Not yet started Information cube has not
cleansing and re- 2018 DRM potential provided the necessary
classification, executed by analysis and cross checks to
SAT areas develop pilot program.
1.3 Workplan definition for Mar. 31, Workplan document Canceled SAT to assume this activity.
SAT Mexico’s technical 2018 Activity will be removed in
assistance to SAT revised workplan.
Guatemala
1.3 Identification of first set of Jun. 30, Risks identified, by type In progress Compliance risk initially
compliance risks 2018 of tax identified for VAT taxpayers.
Pending formal delivery
documentation.
1.3 First Draft Compliance Risk Aug. 30, Risk Framework Draft In progress Tax risk advisor identified,
Framework 2017 Document and first visit completed.
Pending formal delivery
documentation.
1.4 Selection of survey Mar. 30, Subcontract Signing Completed Completed and contract
company to execute tax 2017 signed.
surveys
1.4 Launch pilot survey Jun. 30, Pilot survey for General Completed Pilot launched full
2018 Population Launched implementation expected in
July 2018
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Milestones and Deliverables Deadline Output
Status Comments
1.4 Tax survey results report Sep. 30, Document In progress Surveys to be implemented
2018 during July. Results report
will follow.
1.4 Gender focus groups Mar. 30, Recommendations Completed Focus groups completed;
findings 2018 recommendations delivered
to SAT’s Taxpayer Service and
Tax Collections.
1.5 Define integrated Jul. 30, Document In progress Advisor identified pending
Conceptual Model for the 2018 deployment in July/2018.
exchange of information
1.5 Define technical Sep. 30, Document In progress Advisor identified pending
requirements for the 2018 deployment in July/2018.
exchange of information
1.5 Support Interface software Nov. 30, Interface developed Pending Pending definition of the
development for the 2018 scope of information and
exchange of information technology to be used.
1.6 Training on revenue Feb. 28, # of trained personnel Completed 21 SAT and MINFIN personnel
projections model 2018 trained. Revenue Projection
model documents delivered.
1.6 Define viable options for Mar. 30, Options document In progress Advisor identified pending
microsimulation modeling 2018 deployment in July/2018.
for both SAT and MINFIN
Major Activities for Next Quarter
Activity 1.1 Business Process Reengineering:
• Support the preparation of new RTU use cases. RTU use cases expected to be completed by the
end of next reporting period.
• Deploy information technology specialist to support the design and development of software
applications for the new RTU, and commence the software development effort.
• Document compliance and audit macro-processes at level 3.
• Deliver impact analysis from the legal and organizational perspective for the new RTU.
Activity 1.2 Cleansing of the RTU and Current Account:
• Coordinate with the SAT’s Fiscal Investigation Department and the IT Department for the
implementation of a cloud-based data warehouse strategy and initiate the deployment of the
cloud-based data warehouse proof of concept.
• Continue support in large taxpayers’ office audit cases and on-the-job training for selected audit
cases.
Activity 1.3 Tax Surveys:
• Obtain data of business taxpayers from the SAT that will be subjects in the cost of compliance
survey.
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• Execute tax surveys.
Activity 1.4 Exchange of Information Agreement MINFIN-SAT:
• Obtain signed agreement of the alternative model for facilitating the exchange of information
between SAT and MINFIN, in the face of confidentiality challenges and data sharing restrictions.
• Develop an IT strategy for information exchange interface and automating queries and
consultations.
Activity 1.5 Tax Modeling and Analysis:
• Complete the purchase of specialized software for statistical and regression analysis Eviews.
• Complete the list of tax policy impact models to be developed.
Component 2: Expenditure Management and Procurement Reform
The objective of Component 2 is to improve expenditure management and further procurement reform
efforts. FPRP is tasked with supporting the MINFIN to improve public procurement processes and the e-
procurement system GUATECOMPRAS to increase transparency, accountability, and efficiency; to
increase the utilization of small and medium businesses in public procurement; and to integrate public
procurement reform with the rest of the public financial management system.
Component 2 activities include the following:
1. Support the reform of the public procurement law
2. Continue activities to transform GUATECOMPRAS into a transactional management system
3. Create the General Registry for Government Procurement
4. Conduct human and institutional strengthening of the General Directorate of Public
Procurement (DGAE)
The following section outlines the specific activities to be carried out in each area, organized by area.
Key Activities for this quarter
• Participated in regular meetings with MINFIN’s technical group working on a new public
procurement law, including a consultant from the World Bank, Congressman Amilcar Pop’s
advisors, and ASIES advisors.
• Completed comparative analysis of current public procurement law with UNCITRAL’s model law
and other best practices; proposed legal draft of innovative procurement modalities and
electronic government procurement (eGP) innovation to the MINFIN’s technical group working
on a new public procurement law
• Joined the new OES-ASIES round-table discussion group “Towards a new public procurement
system” including government institutions, think tanks and international cooperations.
• Completed the process redesign of the Annual Procurement Plan (PACC—by its Spanish
acronym) formulation, PACC execution, and contract execution processes at levels 1, 2 and 3
following the BPMN methodology.
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