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Mongolia

Online Registration of VAT (MN0029)

Overview

At-a-Glance

Action Plan: Mongolia Action Plan 2016-2018

Action Plan Cycle: 2016

Status: Inactive

Institutions

Lead Institution: General Authority for Customs and Taxation, Implementing Agency of Government of Mongolia

Support Institution(s): All government organisations Information technology centre for customs and taxation National Data Centre, GAST; Citizens, Entities, NGOS, MNCCI, Mongolian Economic Forum

Policy Areas

Capacity Building, E-Government, Fiscal Openness, Private Sector, Public Participation, Tax

IRM Review

IRM Report: Mongolia End-of-Term Report 2016-2018, Mongolia Mid-Term Report 2016-2018

Starred: No

Early Results: Major Major

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information , Civic Participation

Potential Impact:

Implementation i

Completion:

Description

Status quo or problem addressed by the commitment: The amendment of Law on VAT by the Parliament of July 09, 2015, established a legal environment for correctly collecting VAT. It created an opportunity for the customers to register their receipts onto the online receipt registration system and get back a certain portion of their tax payment in a form of incentives and lottery prize. GTA has started to implement the “EBARIMT system, which meets international standards, from January 01, 2016 and as of now, the amount of VAT income increased 2.2 times a year on year for the first two months of implementation. Since January 01, 2016 a total of 29,880 entities and 37,045 cash registers are connected to the system. Since 1995, only 12,000 POS machines were connected to a system to register non-cash transactions in Mongolia. Connecting 37,045 Cash Register POS machines into the system in less than three months period is an impressive achievement. With the conversion from paper receipts to online receipts, it became easier for entities to report to the tax system and created an opportunity to reduce stress related to tax reporting. It also stopped the allocation of about 300 million MNT for paper receipts in the government budget. As of May 2016, traffic for Ebarimt.mn website reached 4.5 million and 415 493 people now register their receipts through the website. As a result, the website became the most popular website in Mongolia after Facebook and YouTube according to. https://www.similarweb.com/country/mongolia Main Objective: Provide accessible information to entities and public about VAT online receipt registration and relevant information Brief Description of commitment (140 character limit): Continue registering all sales centres, service providers and markets into the online receipt registration system and provide systematic information to public and entities.

IRM Midterm Status Summary

8. Online registration of VAT

Commitment Text:

Continue registering all sales centers, service providers, and markets into the online receipt registration system and provide systematic information to public entities.

Status quo or problem addressed:

The amendment of Law on VAT by the Parliament of July 09, 2015, established a legal environment for correctly collecting VAT. It created an opportunity for the customers to register their receipts onto the online receipt registration system and get back a certain portion of their tax payment in the form of incentives and lottery prizes.

GTA has started to implement the 'EBARIMT' system, which meets international standards, from January 01, 2016 and as of now, the amount of VAT income increased 2.2 times a year on year for the first two months of implementation.

Since January 01, 2016 a total of 29,880 entities and 37,045 cash registers were connected to the system. Since 1995, only 12,000 POS machines were connected to a system to register non-cash transactions in Mongolia. The connection of 37,045 Cash register POS machines into the system in less than a three month period is an impressive achievement.

With the conversion from paper receipts to online receipts, it became easier for entities to report to the tax system and created an opportunity to reduce stress related to tax reporting. It also stopped the allocation of about 300 million MNT for paper receipts in the government budget.

As of May 2016, traffic for the Ebarimt.mn website reached 4.5 million, and there is now a total of 415 493 people registering their receipts through the website. As a result, the website became the most popular website in Mongolia after Facebook and YouTube according to https://www.similarweb.com/country/mongolia

Main Objective:

Provide accessible information to entities and the public about VAT online receipt registration

Milestones:

8.1. Develop a draft handbook for citizens to provide easy to understand instructions on how to register and log in to the online system. Upon completion of the draft send to civil society organizations for consultation.

8.2. Identify and prepare mediums to distribute the handbooks (such as online, publications, messages, radio, television programs, and social media)

8.3. Disseminate new and improved handbooks in consultation with the public through different mediums.

8.4. Prepare easy to understand and accessible handbooks for service providers and sales persons on VAT and HOW and WHEN to register receipts for customers and disseminate the information through different mediums and outlets.

8.5. Provide training on VAT for accountants in urban and rural areas.

8.6. Report the effectiveness of the online registration of VAT through the media on regular basis.

8.7. Inform the public about the new procedures for the lottery system.

8.8. Live broadcast of the lottery process to the public.

Responsible institution: General Authority for Taxation, Implementing Agency of Government of Mongolia

Supporting institutions: All government organizations, Information technology center for customs and taxation, National Data Centre, GAST, citizens, entities, NGOS, MNCCI, Mongolian Economic Forum

Start date: 30 June 2016

End date: 30 June 2018

Context and Objectives

Mongolia passed an updated Law on VAT (value-added taxes) in 2015 which created an online system to register receipts.[Note94: For the revised Value Added Tax Law, see (in Mongolian): http://www.legalinfo.mn/law/details/11227?lawid=11227.] This commitment seeks to provide the public with accessible information on the new online receipt system by drafting a handbook on how to register in consultation with civil society, and to disseminate the handbook to the public through easily accessible mediums. It also plans to train accountants in using the new system, to regularly report on the effectiveness of the system through the media, to inform the public about the new procedures for the lottery system, and to broadcast the lottery process to the public. The dissemination of the handbook on using the new online registration system to the public is relevant to the OGP value of access to information, while the development of the handbook in consultation with civil society and the public is relevant to the OGP value of civic participation. The commitment’s milestones present a relatively clear roadmap for how the handbook on the new online VAT registration system will be developed and presented to the public, though the consultation process with civil society during the drafting of the handbook is not defined in the commitment. Therefore, the specificity is considered medium. Providing the public with information on how to use the new online VAT system is a positive initiative in terms of transparency and access to information, while consulting civil society and the public will help ensure the handbook addresses specific user needs. However, it is unlikely that the development and distribution of a handbook will have more than a minor potential impact on access to information and civic participation.

Completion

In September 2016, a meeting with CSOs was held to discuss the draft handbook to implement the Law on VAT. The Mongolian Tax Administration distributed information on the use of the EBARIMT system through five television channels, two daily newspapers and two online media publications. 28,300 posters to promote the VAT refund through EBARIMT were posted in shopping centers and stores by April 2017. By the time of writing this report, 2,023 training workshops to introduce Law on VAT and how to use the EBARIMT system were held throughout the country, including all aimags and cities. However, there is no evidence of specific trainings for accountants on the VAT system in urban and rural areas, or reporting the effectiveness.

The system is very popular among citizens and businesses and it is effective, transparent and user-friendly. There are two strong financial incentives to use the system for citizens. First, 20 percent of VAT payment is refunded, and second, every registered receipt also serves as a lottery ticket, where the winners announced every month live through a television channel. There are step-by-step instructions on how to register receipts, receive VAT refund, participate in the lottery and relevant laws and regulations both for citizens and businesses. EBARIMT also has a well-developed mobile application.

Overall, implementation of this commitment is considered substantial at the end of the first year of the action plan.

Next Steps

This commitment should be completed during the current action plan period. If this commitment is fully implemented at the end of the action plan cycle, it does not need to be carried forward to the next action plan.

In the future, a commitment that more explicitly makes government-held information available to the public could have a higher potential impact on open government practices. Likewise, creating a channel through which citizens can directly communicate with government officials regarding VAT services would better align the commitment with OGP values.

IRM End of Term Status Summary

8. Online registration of VAT

Commitment Text:

Continue registering all sales centers, service providers, and markets into the online receipt registration system and provide systematic information to public entities.

Status quo or problem addressed:

The amendment of Law on VAT by the Parliament of July 09, 2015, established a legal environment for correctly collecting VAT. It created an opportunity for the customers to register their receipts onto the online receipt registration system and get back a certain portion of their tax payment in the form of incentives and lottery prizes.

GTA has started to implement the “EBARIMT” system, which meets international standards, from January 01, 2016 and as of now, the amount of VAT income increased 2.2 times a year on year for the first two months of implementation.

Since January 01, 2016 a total of 29,880 entities and 37,045 cash registers were connected to the system. Since 1995, only 12,000 POS machines were connected to a system to register non-cash transactions in Mongolia. The connection of 37,045 Cash register POS machines into the system in less than a three month period is an impressive achievement.

With the conversion from paper receipts to online receipts, it became easier for entities to report to the tax system and created an opportunity to reduce stress related to tax reporting. It also stopped the allocation of about 300 million MNT for paper receipts in the government budget.

As of May 2016, traffic for the Ebarimt.mn website reached 4.5 million, and there is now a total of 415 493 people registering their receipts through the website. As a result, the website became the most popular website in Mongolia after Facebook and YouTube according to https://www.similarweb.com/country/mongolia

Milestones:

8.1. Develop a draft handbook for citizens to provide easy to understand instructions on how to register and log in to the online system. Upon completion of the draft send to civil society organizations for consultation.

8.2. Identify and prepare mediums to distribute the handbooks (such as online, publications, messages, radio, television programs, and social media)

8.3. Disseminate new and improved handbooks in consultation with the public through different mediums.

8.4. Prepare easy to understand and accessible handbooks for service providers and sales persons on VAT and HOW and WHEN to register receipts for customers and disseminate the information through different mediums and outlets.

8.5. Provide training on VAT for accountants in urban and rural areas.

8.6. Report the effectiveness of the online registration of VAT through the media on regular basis.

8.7. Inform the public about the new procedures for the lottery system.

8.8. Live broadcast of the lottery process to the public.

Responsible institution: General Authority for Taxation, Implementing Agency of Government of Mongolia

Supporting institutions: All government organizations, Information technology center for customs and taxation, National Data Centre, GAST, citizens, entities, NGOS, MNCCI, Mongolian Economic Forum

Start date: 30 June 2016

End date: 30 June 2018

Editorial Note: This is an abridged version of the commitment text. For the full commitment text from the Mongolian National Action Plan, see: https://www.opengovpartnership.org/wp-content/uploads/2017/05/Mongolia-NAP2-Final-Eng_0.pdf

Commitment Aim

This commitment sought to provide the public with accessible information on the new online VAT receipt registration system. Planned outreach included consultation with civil society and dissemination of an explanatory handbook to increase engagement with the system.

Status

Midterm: Substantial

In September 2016, the General Department of Taxation (i.e. Mongolian Tax Administration, MTA) held a meeting with CSOs to discuss the draft handbook to implement the Law on VAT (Milestone 8.1). While this meeting aimed to facilitate and accommodate CSO feedback, the development of the handbook was led by a team of technical professionals. The MTA also distributed information on the use of the EBARIMT system through five television channels, two daily newspapers, and two online media publications. In addition, the MTA posted 28,300 posters to promote the VAT refund through EBARIMT in shopping centers and stores by April 2017. By the end of the midterm, the MTA and related stakeholders had held 2,023 training workshops to introduce Law on VAT and how to use the EBARIMT system throughout the country, including in all aimags and cities (Milestones 8.2 – 8.5).

For more information, please see the IRM 2016-2017 Progress Report. [52]

End of term: Complete

As of 31 May 2018, VAT receipts were available through 88,000 Point of Sale (PoS) machines. In 2017, 247 million receipts were given, and VAT repayments of MNT 52.6 billion were made to taxpayers. [53] From 2016 to the first half of 2018, income to the state budget from VAT continuously increased, with more than 620,000 taxpayers, out of 900,000, registered on the system.

Training workshops were regularly held for business owners, accountants, and citizens throughout the country (Milestone 8.5). Also, information on the use of the EBARIMT system was constantly disseminated through different media channels (Milestone 8.6). The EBARIMT website is now the third most-visited website in Mongolia (after Facebook and Twitter). [54] The lottery system is popular among citizens and broadcast each month by a TV channel (Milestone 8.7 and Milestone 8.8).

Implementation of this commitment is therefore considered complete at the end of the second year of the action plan.

Did It Open Government?

Access to Information: Major

Civic Participation: Marginal

This commitment led to the publication and dissemination of signficant information on the availability and use of the tax administration’s VAT payment system. Taxpayers can now track how much VAT they have paid and how much they are entitled to redeem. The handbook on using the VAT system was also widely disseminated through multiple channels, and training sessions were held for a diversity of non-state stakeholders. As a result, this commitment contributed to a major improvement in access to government-held information.

Although the handbook was developed in consultation with civil society, it is unclear to what extent civil society had the technical capacity to provide substantive feedback on the draft. The handbook was developed by technical professionals and the single consultation meeting between the MTA and CSOs did not yield significant additional input. Therefore, this commitment only led to a marginal improvement in civic participation.

Carried Forward?

The commitment is not included in Mongolia’s third action plan.

[52] Independent Reporting Mechanism, Mongolia Progress Report 2016-2017, https://bit.ly/3fjy1qM
[54] Christopher de Gruben, 3 things that Mongolia (probably) does better than the rest of the world, http://www.degruben.com/3-things-that-mongolia-probably-does-better-than-the-rest-of-the-world/

Commitments

Open Government Partnership