Mongolia’s VAT Refund Plan: Household Relief or Fiscal Risk?

Mongolia plans to more than double VAT refunds in a move that promises relief for households and a crackdown on tax evasion.

But with a price tag of $1.1 billion and shaky coal revenues, the gamble could either modernize the country’s fiscal system—or blow a hole straight through it.

The refund hike promises relief to households burdened by inflation and rising costs. At the same time, it leans on Mongolia’s innovative e-receipt system to crack down on a sprawling shadow economy.

VAT is Mongolia’s financial backbone. It delivers between 25%-35% of total tax revenues and made up over 7% of GDP in 2022. Zandanshatar’s proposal to raise consumer refunds from 2% to 5% isn’t a sudden political whim.

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