Improving Tax Collection in Mongolia


Tax revenue in Mongolia is highly concentrated – some 400 large enterprises account for about 50-60 percent of total domestic revenue. Among these large enterprises, about 100 large mining companies account for 40 percent of tax revenue, reflecting the importance of the mining sector. Many of these large businesses are also the country’s largest investors. It was in this context that in 2010 the Mongolian authorities requested IMF’s assistance in helping the government design a strategy to improve the performance of its tax administration.


Given the importance of large enterprises to the country’s revenue, the IMF and the government agreed at the outset that strengthening the Large Taxpayer Office (LTO) was a priority. This would help: (i) secure the largest share of revenue; (ii) promote the investment climate; and (iii) because of the relatively small number of taxpayers, be seen as a manageable platform for introducing new approaches to tax administration.

The IMF and the government identified several areas for improvement in the LTOs organizational structure and staffing, legal framework, core tax administration processes and computer systems. To address this, the IMF helped:

  • Reorganize the LTO into units based on tax administration functions, triple the LTO’s staff, and create a special mining audit unit within the LTO.
  • Issue administrative guidance to clarify how the tax laws apply in practice (and draft amendments to the tax laws to provide further clarity).
  • Develop a comprehensive strategy to improve the compliance of mining companies.
  • Design industry-specific audit methods for the mining, banking and construction sectors.
  • Acquire a new computer system that was deployed initially deployed at the LTO.
  • Arrange an information exchange agreement with Mineral Resources Authority.

The collaboration with the Mongolian authorities was funded by the Revenue Mobilization Trust Fund.


The IMF-supported reforms helped improve large taxpayer administration:

  • The largest portion of tax revenue was brought under effective control.
  • A high rate of on-time tax return filing (nearly 100 percent) was achieved, with all tax returns filed electronically.
  • Tax arrears were sharply reduced.
  • Taxpayers expressed a high degree of satisfaction with the reforms.