A. BACKGROUND

The World Bank (WB) and the European Union (EU) has been implementing a new hybrid Trust Fund (TF)-financed Strengthening Governance in Mongolia (SGM) project aimed to support the efforts of the Government of Mongolia (GOM) to improve fiscal discipline, public financial management (PFM), as well as transparency and accountability processes for strengthened governance in Mongolia. 

This TF, through both Recipient Executed (RE) and Bank Executed (BE) interventions, serves two main purposes. Firstly, it complements and expands the ongoing technical assistance the WB is providing through the Strengthening Fiscal and Financial Stability (SFFS) Project. Secondly, this TF supports the GOM in advancing the current efforts toward increasing transparency, participation, and accountability in fiscal matters as well as in strengthening its capacity to deal with non-technical drivers of the reform process that prevent state agencies from implementing policies and regulations as intended.

Sub-Component 1.3 “Taxation and revenue management” aims at improving the existing tax legal framework through reviewing the related fiscal laws and including new fiscal relations to address the inconsistencies in tax laws, introduce international best practices in the tax laws such as transfer pricing and base erosion and profit shifting (“BEPS”), and build comprehensive revenue forecasting and financial models for economic analysis of large-scale mega projects.

The Government of Mongolia has undertaken a number of important measures of tax reform since 2019 to promote investment climate, create more jobs, support small and medium sized enterprises, protect and balance the taxpayer rights and responsibilities and reduce significantly the compliance costs. Accordingly, the tax reform package was approved by the Parliament on 22 March 2019 and has been effective since 1 January 2020. 

One of the key changes made to the current tax system by the tax reform was to introduce risk-based approach to all tax enforcement activities. Accordingly, all taxpayers are subject to risk assessments and tax inspections would be carried out for the high-risk taxpayers. Thus, a Risk Management Department within the General Taxation Department (GDT), was established by the Minister’s of Finance Order No. 4 of 2020 titled “Approval of the Organizational Structure of the General Department of Taxation and its Operational Strategy and Organizational Restructuring Program”. The GDT has since been working on establishing a risk management system in line with the international standards. Within the framework of this work, the GTD is working towards implementing advanced technology-based risk management activities using artificial intelligence and big data processing and developing appropriate research and analytical methods.

In particular, the GTD is currently planning to determine ways to identify and assess all kinds of taxation risks and reduce and prevent from them based on artificial intelligence and big data analysis. Yet, due to the lack of experience and capacity to operate fully as per its functions, the Risk Management Department seeks to work with a consultant to strengthen the risk management function, conduct big data analysis, improve the quality of its research and analysis, learn from internationally recognized research studies, and as a result build the skills needed to develop independent research work in this area.

B. OBJECTIVE OF THE ASSIGNMENT

The objective of the assignment is to provide technical support to the GDT in strengthening the tax risk management system. 

C. SCOPE OF WORK

Within the scope of this assignment, the consultant will perform the tasks including, but not limited to, the following:

1. Carry out a comprehensive analysis on the current procedures and internal manuals on risk management with a view to improving them in accordance with the international best practices;  
2. Improve the accuracy and efficiency of tax risk criteria and the related indicators, and develop relevant methodologies;
3. Analyze tax risks by industry classifications based on the tax payments and trends as informed by international experiences;
4. Identify risks posed by the shadow economy and provide recommendations on mitigating these risks;
5. Identify potential tax avoidance risks posed by cross-border transactions based on the data analysis and provide recommendations on mitigating these risks based on BEPS Action 11 documents;
6. Based on the above-mentioned tasks, define business processes and requirements for modules of tax risk assessment and management; and present the draft business processes and requirements document to the respective officials of the GDT and the Tax Administration Information System (TAIS) developers for review and feedback;
7. Assist in further improvements in the registration, assessment, and database creation of taxpayers’ risks;
8. Promote the future sustainability of tax risk assessment functions by producing internal procedures, manuals, and training materials to build the capacity of permanent staff; and
9. Undertake any other tasks related to the activities above as reasonably requested by the Client.   

D. DELIVERABLES

1. Draft regulations and internal manuals on risk management; 
2. Recommendations on possible improvements in the risk criteria and assessment and the relevant methodologies;  
3. A report on tax risks by industry classifications;
4. A report on potential risks posed by shadow economy and recommendations on measures to mitigate these types of risks; 
5. A report on potential tax avoidance risks related to cross-border transactions and recommendations on measures to mitigate these types of risks; and
6. Documentation of the business processes and requirements of modules on tax risk assessment and management.

E. CONSULTANT’S QUALIFICATION/ SELECTION CROTERIA

Education: A suitable candidate should have a master’s degree in a relevant field: finance, economics, taxation, business administration, mathematics, mathematical modeling of economics or a relevant     discipline;

Experience: The candidate should have at least five years of professional experience in taxation, finance or economics research and analysis. A knowledge of international taxation would be an advantage;

Language skills: Fluent written and spoken skills in English (at least iBT 70 scores or IELTS 6.0 score);

Computer literacy: Be proficient in MS Office such as Word, Excel, and PowerPoint, and have preferably skills for excellent web research and navigation skills; 

Others:

• Excellent analytical, organizational, communication and interpersonal skills with the ability to function effectively and collaboratively in a team environment; high integrity and accountability; and
• Be able to work overtime if required.

F. SUPERVISION AND REPORTING

The Consultant will report directly to the Director General of the Tax Policy Department, MOF, and the Heads of the Research and Analysis Division (RAD) and the Risk Management Department (RMD) of GDT and will work on a day-to-day basis with officers, international and local consultants of the GDT and MOF on all matters related to the assignment. The Head of the RAD and Head of the RMD will meet regularly with the Consultant to review progress with the work program and to resolve any outstanding issues. 

The Consultant will be required to carry out his/her tasks in line with the approved Contract Implementation Plan (CIP) which will serve as a basis for measuring progress on desired outcomes and goals for the entire consultancy service. 

All information provided to the consultant will be regarded as confidential and information will not be shared with any outside individuals or organizations.

G. INSTITUTIONAL ARRANGEMENTS

The General Department of Taxation (RMD) will provide office space and will work with the consultant on a day-to-day basis. The consultant shall be provided with all necessary data and information to perform the tasks detailed in Section C. 

H. CONTRACT DURATION AND PAYMENT CONDITION

The assignment is expected to commence in May 2022. The total duration of the consultancy service rendered is estimated to be 10 months. 

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