Kazakhstan • 15 June, 2020

Ministry of Finance reports on оptimizing structure, introducing e-wallets, and switching to online cash registers

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At a reporting public meeting, the Minister of Finance Yerulan Zhamaubayev spoke about the work done in 2019 and for 5 months of 2020, primeminister.kz says.

The ministry's main goals and objectives are focused on implementing strategic tasks and instructions for the sustainable development of the economy, improving the real well-being of Kazakhstanis and facilitating digitalization.

The priorities of the ministry are increasing tax collection to 25% of GDP in 2025, ensuring compliance with debt restrictions, improving the efficiency of budget expenditures and simplifying budget procedures, etc.


Structure optimization

In accordance with the order of the Head of State to reduce audit and ineffective expenses, the staff of the Ministry of Finance in 2019 was optimized by 1,815 places and amounts to 17,978.

As part of the centralization of public procurement, the Treasury Committee was reorganized by joining the Public Procurement Committee.

Also, in order to optimize the subordinate organizations, the “Asset Rehabilitation and Management Company” was reorganized by joining the Fund for Problem Loans, and the Finance Academy was transferred to the Ministry of Education and Science.

Along with this, work is underway to transfer Baikonyrbalance State University to the authority of the relevant industry, the Ministry of Digital Development, Innovation and the Aerospace Industry.

To date, the optimal structure of the ministry consists of a central office, five departments with territorial divisions and four subordinate organizations.


Execution of budget revenues for 2019

As part of ensuring a balanced budget for 2019 at all budget levels, revenue plans are overfulfilled.

The state budget — by 101.2%, the republican budget — 100.6% and local budgets — by 103%.

The state budget revenues amounted to 9.7 trillion tenge, or 119 billion tenge more than planned.

At the same time, 7.1 trillion tenge came to the republican budget, which is 43 billion tenge more than the plan and 1 trillion 276 billion tenge more than in 2018.

It should be noted that the growth of the republican budget revenues is ensured by:

  • improvement of tax and customs administration and their digitalization by 916 billion tenge;
  • growth of the economy and prices for basic export goods by 359 billion tenge.


Execution of budget expenditures for 2019

In 2019, the execution of the republican budget expenditures amounted to 12 trillion 20 billion tenge, or 99.9%. Not executed 8.2 billion tenge. Of these, 2.9 billion tenge are savings. It is worth noting that it has not been disbursed — 5.3 billion tenge.

The main reasons for the lack of development: the lack of applications for budget programs, failed tenders for public procurement, changes in the terms of contracts and behind schedule.

Local budget expenditures were executed in the amount of 6 trillion 179 billion tenge. In 2019, the regions received financial assistance in the amount of 1 trillion 916 billion tenge.

The state programs Nurly Zhol, Enbek, Aul - El Besіgі, Nurly Zher, and the development of the agro-industrial complex and regions were funded from these funds.

In addition, the funds were used to increase the salaries of civil servants, the provision of state targeted social assistance and equalization of the level of security of local budgets.

The allocated funds by the regions have been utilized by 99.1%, which amounts to 1 trillion 900 billion tenge.


Debt burden on budget and public debt

At the end of 2019, the volume of public debt to GDP amounted to 24% with a limit of 50%. At the end of the 1st quarter of 2020 — 25.5%.

It is worth noting that the debt burden on the budget for 2019 amounted to 12.9% with a limit of 15%. According to the forecast in 2020, this figure will be about 13.1% of the republican budget revenues.

Thus, all necessary measures are taken to maintain a public debt at a safe level.


National Fund

At the end of 2019, funds of the National Fund amounted to about 27.5 trillion tenge or $65.5 billion.

Last year, the National Fund received about 4.5 trillion tenge, of which more than 2.8 trillion tenge due to direct taxes from organizations in the oil sector.

The concept of open budget

One of the main indicators of government accountability and openness is the implementation of the Open Budget concept.

The purpose of its implementation is to provide citizens with the opportunity to familiarize themselves with the budget process and participate in the discussion of budget expenditures.

Starting from last year, the ministry also actively introduces the concept of “Budget for public participation” in the country. In 2020, 600 million tenge was allocated for the implementation of initiatives and wishes of the population in the capital, and 1.4 billion tenge in Almaty.

Once every two years, an international assessment is carried out in three areas: transparency (openness) of the budget, public participation and budget supervision.

Within the framework of the Concept of the Budget for Public Participation, the issues of drafting and submitting a civil budget and the development of draft local budgets are normatively regulated.

In 2019, a pilot was conducted in Saryarka district of Nur-Sultan on 14 projects for 100 million tenge.

This year, pilots are envisaged in Nur-Sultan for the amount of almost 600 million tenge and Almaty for 1.4 billion tenge.

Also, the integration of the state planning information system with the Open Budget portal and private sector information systems is being carried out.


State procurements

The entire process of public procurement have been automated. The volume of public procurement amounted to more than 3.9 trillion tenge.

The largest savings of 361 billion tenge were recorded in 2019 with a total savings of about 1 trillion tenge over the past 3 years. It is worth noting that the digitalization of the Ministry of Finance in the field of public procurement over the 5 years has reduced violations by 765 times.

The launch of the Electronic Store is expected, which will reduce procurement from a single source and allow the purchase of goods on a competitive basis in 1 day.

An electronic depository will be created, which will automatically calculate the experience of potential suppliers, excluding the human factor and corruption risks.

Along with this, it is planned to introduce a rating-point system in the process of public procurement, in which the web portal will automatically assign an appropriate rating to suppliers, taking into account price and quality criteria.


Treasury service system

The treasury system serves more than 13 thousand state institutions and quasi-public sector entities.

About 350 thousand transactions are conducted daily, and more than 11 million financial documents are processed per year.

The 98th step of the Nation Plan for the implementation of the 4th level of the budget have been complated. From 2018 to 2020, 2,350 rural districts were connected to the system. It is worth noting that the 4th level of the budget allowed:

To provide timely service of the 4th level of the local government budget;

To expand the financial independence of local executive bodies;

To increase the transparency of implementing budget funds of local government.


State audit

The 93rd step of the Nation’s Plan for the implementation of the new audit and evaluation system of the state apparatus has been completed.

It should be noted that the main emphasis is on the prevention of violations through the digitalization and integration of information systems.

In addition, the phased development of the sphere of state audit increased financial discipline, reducing by 4 times the significant violations. The use of risk management systems reduced scheduled inspections by 6.5 times.

Full digitalization of public procurement reduced violations in this area by 765 times, which resulted in their timely warning by cameral control.

Automation of cameral control increased public procurement coverage by 6 times and increased the literacy of public procurement organizers, reducing the proportion of violations by 10 times.


State assets and privatization

The comprehensive plan provides for the privatization of 863 state-owned organizations and quasi-public sector entities. Currently 503 objects have been sold for 534.1 billion tenge.

In addition, another 298 objects were reorganized and liquidated, of which 220 have already been reorganized and eliminated.

Implementation of the plan, including objects sold and aimed at reorganization or liquidation, is 93%, and taking into account those at the auction — 96.8%.

Until the completion of the Comprehensive Plan, it remains to implement 62 objects, of which 34 are already at auction.


Tax and customs administration

Improving tax and customs administration is aimed at customer focus.

Currently, the risk management system is constantly being improved, which allows targeted selection of subjects for tax control.

These measures reduced tax audits by almost 30%. At the same time, the amount of detected violations was increased 2 times, which amounted to 344 billion tenge.

In addition, new methods of remote control have been developed.

In order to ensure transparency of public procurement, confirmation of the financial stability of its participants is carried out, which additionally provided more than 1 billion tenge of taxes

A pilot is being implemented to identify risky companies and to limit the issuance of electronic invoices at an early stage, where the illegal deduction of 30 billion tenge of VAT against avoidance schemes was prevented.

As a result, revenue growth by 36% or 323 billion tenge was ensured.

Also, the efficiency of customs risk management system at the stage of cleaning goods by 18% and customs inspections by 26%, which allowed to identify more than 80 thousand violations of customs legislation, increased.


Economic and financial offenses

In 2019, the staff of the Economic Investigation Service was reduced by 40%, which allowed to increase salaries, reduce corruption risks and attract highly qualified specialists.

In the context of downsizing, the emphasis is deliberately shifted towards the identification of significant economic crimes. It is worth noting that 26 organized crime groups were eliminated.

In addition, almost all regions of the country are cleared of gambling establishments, which is positively received by the public.

Along with this, for the first time in the CIS, the largest drug trafficking of heroin weighing over 1.1 tons was eliminated. On the black market, its cost is about 350 million dollars. Also today, the volume of cash withdrawal has been reduced to 18%.


Government services

The ministry provides 50 state services of the tax and customs area, state property, as well as in the field of accounting and audit. At the moment, 42 public services or 84% are automated.

Thus, the order of the Head of State for the automation of public services in 2019 was fulfilled by up to 80%.

At the end of 2019, only 23 million public services were provided, of which:

  • in electronic form over 21 million or 91.8%;
  • in paper form, about 2 million or 8.2%.

This year, 5 more public services will be transferred to the electronic format or the share will be brought up to 94%.


Digitalization of information systems

The Ministry of Finance has 35 information systems, including and internet resources.

In addition, a number of projects are being implemented to solve the problems of fragmentation, lack of integration, as well as replacing obsolete systems.

Thus, the projects implemented in the field of customs administration ASTANA-1 and E-window will replace 5 information systems.

It is worth noting that these two systems were put into commercial operation on Jan. 1, 2020.

Also, from 2019, the upgraded functionality of the State Planning Information System was put into operation. 1,125 state institutions and 4 thousand users are connected to it.

Within the framework of the development of the IS, it is planned to integrate with the systems of state bodies, such as: E-Kyzmet, the database of opinions on the design and estimate documentation, the Ministry of Labor systems for the payment of pensions and benefits, the electronic public procurement system for obtaining real average prices for goods, as well as with tax systems and customs administration.

This will allow you to configure format-logical control in the system according to the real validity of budget requests, and reject ineffective ones when submitting them.

Thus, the examination of budget applications will increase.

Currently, in order to ensure transparency in the formation of the republican budget, integration with the Open Budgets portal and a mechanism for coordinating draft budgets with civil society are being implemented.

Also, the Accounts Committee will be able to analyze the draft budget in the PMSI and give an opinion on it.

The implementation of the project will optimize the time and overhead associated with budget planning, as well as ensure transparency of the budget.


Tax administration for individuals

For tax administration, the accuracy of the information used in the databases of various government agencies is important.

A lot of work has been done to clean up the databases of state bodies, which eliminated the problem of incorrect tax calculation.

It is worth noting that, together with government agencies, more than 25 million information was processed and over 3.6 million erroneous information was updated.

In particular, 2.6 million erroneous information was updated on real estate. On vehicles — 943 thousand, on land — 116 thousand information.

In addition, a service of upcoming payments has been launched, which allows citizens to find out the upcoming tax amount before the due date and pay it with ready-made details.

Also, to simplify the payment of taxes, services were integrated with the mobile applications of second-tier banks.

As a result of integration with Kaspi Bank, 1.2 million tax notifications were sent to customers. This allowed in 2019, compared with the level of 2018, to increase the volume of tax payments from the population by 2.5 times.

A similar service has been launched with Halyk Bank. Currently, work is underway to integrate with other banks.


Implementing e-wallets

Since this year, the mobile application E-Salyq - Azamat (Tax Wallet) has been launched, which will allow you to pay taxes without filling in a lot of details, eliminate incorrect payments, make online replenishment, auto-settlement and auto-payment of taxes within two minutes.

To do this, implemented:

- simplification of authorization by SMS password;

- simplification of tax payment by linking the card of the Halyk Bank and transferring payment to Kaspi.kz;

- display of payment history from all services;

- reducing the time for updating information to 2 minutes;

- viewing data on objects of taxation;

- payment service CAP;

- conducting a return from the unified details of the Tax wallet;

- payment of taxes and social payments in the Debt Information service.

It is also planned to realize until the first quarter of 2021:

- service for applying for a tax refund from the budget;

- The mechanism of the Tax Wallet for legal entities, namely payment for common details and auto settlements;

- expansion of the Tax wallet on the platforms Egov, Mgov and second-tier banks;

- service for adjusting data on objects of taxation.

It is worth noting that the introduction of the Tax Wallet will increase the level of non-cash payment of taxes and ensure the growth of revenues from property tax and land tax.


Online cash register

Since Jan. 1, 2020, a universal transfer of entrepreneurs to the mandatory use of online cash register has been ensured; earlier this process was phased.

Currently, the number of online cash registers is 710 thousand or 97.5% of the total number of cash registers in the country.

The remaining 2.5% or 18 thousand used cash registers without a data transfer function, as they operate in places where there is no public telecommunications network.

The stimulation of the use of online cash registers was through a 50% decrease in IITs from the cost of cash registers and the holding of a lottery for issued checks in 2019.

The service of registration / deregistration of online cash registers is also automated, and the functions of the fiscal data operator are transferred to the competitive environment.

In addition, a number of mobile online cash registers were introduced, which led to a reduction in the cost of cash registers and even the emergence of free mobile applications.


Digitalization of customs administration

Currently, the Single Window information system has been introduced as a single access point to all export and import operations.

Also, this portal has combined more than 13 information resources to obtain information during customs operations. Additionally, integration with 11 information systems is provided.

The Single Window allows you to electronically obtain all the necessary permits and preliminary information necessary for the import /export of goods (rates, tariffs, the definition of state control measures applied to goods).

It is worth noting that thanks to the measures taken, the time to receive these services was reduced from 30 to 5 days, corruption risks were minimized, and the transparency of the actions of customs and other state bodies increased.

It can also be noted that in a minute, over 1.6 million customs declarations are sent to IS ASTANA-1, which is 80% of all declarations.

At the same time, due to a reduction in the cost of storing goods and brokerage services, the savings of participants in foreign economic activity amounted to more than 150 billion tenge.

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