Is Sports Betting Legal in Mongolia?



Posted by , ,

Our Mongolian lawyers have recently received an inquiry from a prospective client on whether over sport betting activities is legal in Mongolia.

In Mongolia, the establishment and operation of a casino has been prohibited since 1999. Under the Criminal Act, operation of gambling activities is considered a crime while participating in the act of gambling is also a violation of the law.  The question then is whether the sports wagering is type of the gambling category.

 According to the legislations above, any business which involves gambling via dice, playing cards or other objects to make a profits, involving an unpredictable outcome and risk is a crime, including where such activities are conducted via information technology and social media. If someone participates in that activity, his/ her action is considered a breach of the Infringement Law.

According to this definition, sports betting is not considered gambling under the Mongolian legislation. Sports betting is an activity to predict the outcome by betting on real sports games like basketball soccer and tennis. It is possible for sport betters to estimate the probability of results based on their skills, knowledge and information. In other words, there is more control and predictability than the outcome of a game of chance, which differentiates sports betting from gambling.  

Companies in Mongolia are able to obtain a license to operate a lottery or betting games. This shows that Mongolia law sets an important distinction between pure gambling verses betting, reflected in the different regulations.

Helping Foreign Entrepreneurs Understand Today’s Mongolian Business Environment



Posted by ,

The past couple days we have been assisting clients who have interest in entering the Mongolian market. but lack of guidance and reliable resources to do so was challenging them. If you are looking to expand you business in Mongolia, this post is for you.

Mongolia is a landlocked country established an industrial economy based mainly on mining and agricultural product processing. The government will keep looking into methods to diversify the economy, concentrating on new infrastructure projects, the development of the agriculture industry, and using materials and equipment made locally for major projects. In sectors including energy, fuel import and export, telecom, solar energy, wind turbines, and hydropower projects, the government provides international investors with opportunities.

So far, Mongolia has signed double taxation agreements with 26 nations and “Foreign Investment Protection and Promotion Agreements with 43 other nations.

Mongolian Investment Law requires that foreign investors to operate through the following forms of business which should be registered with the Legal Entities Registration Office (LERO): a limited liability company, a representative office or a limited liability partnership. Sole proprietorships like permanent establishments are not required to register with the LERO but should be registered with the tax and social insurance authorities.

There are particular legal and business practice that requires consideration and planning for starting a business. The main legal documents to consider are a company charter and shareholder’s resolution. Particularly because the company charter makes an arrangement for shareholder ownership, they should be resolved based on the company’s charter if there is any dispute over the share.

Furthermore, it also needs to examine whether your business activities are required to obtain special permission under the Law of Permits. Before the Permitting Law is enacted on 16 June, 2022, state administrative officials were authorized to issue 1600 different licenses for business activities. Now, the Law reduces licenses to 365 different types of permits in order to implement more flexible business environment for entrepreneurs and companies. This reduction is a step by the government to make investment in Mongolia more attractive for local businesses and foreign companies alike.

Anti-Corruption Law in Mongolia



Posted by , ,

Each year, Transparency International association develops an index of corruption perceptions which reveals corruption levels at a worldwide standstill. From 2020-2022, Mongolia scored 35 points and ranked 111 out of 180 countries on the corruption index, while this year it was ranked 116th with 33 points.

Corruption is a high risk for foreign investors and companies operating business in Mongolia, arising from political corruption and judicial corruption. Since 1996, Mongolia has been fighting against corruption through activities such as a national anti-corruption program and anti-corruption legislations include the Criminal Code and the Anti-Corruption Law, which prohibit active and passive bribery. However, the fact that Mongolian corruption index has not decreased over the last 3 years, and the most recent update has even seen an increase in the corruption index which has led to questions about the effectiveness of anti-corruption law.

Law on Protection of Human Rights on Social Media



Posted by ,

On January 18, 2023, the draft of Law on Human rights protections on social networks was submitted by the Ministry of Digital Development and Communications, and the bill was adopted by the Mongolia parliament on January 20, 2023 providing no time for public to get acquainted with the bill.

The purpose of the law is to protect human rights and legitimate interests in the digital environment, to restrict inappropriate, insulting and discriminatory content, to protect from any kind of violence against children such as immorality, physical, mental and moral development and to prevent the use of drugs and psychotropic substances.

However, some human right organizations raised concerned that the law may not adequately protect rights to freedom of expression, speech and publication as protected under the Constitution of Mongolia. Moreover, they argue that the parliament’s adoption of the law overlooked standard procedures calling for public engagement and discussions.

Currently, the law has been passed by parliament, but has been vetoed by the President within the framework of his constitutional rights.

Obtaining Investment Visas in Mongolia



Posted by ,

Recently, one of our clients had been seeking our advice on how to obtain private purpose permanent residency in Mongolia. Our Mongolian lawyers and visa specialists are able to assist in obtaining permanent residency permits and visas for Mongolia.

The residence permit for personal purposes shall be granted for up to 5 years. This type of residence permit may be issued for family reasons, employment, investment, study and academic research, or immigration.

There are several sub-classes of investment related visas.

  • B1 Investor of foreign-invested enterprises;
  • B1-1 Family member of an investor of foreign-invested enterprises;
  • B2 Foreign national appointed as an investor’s representative or executive management of a foreign-invested enterprises;
  • B3 Foreign national working as an executive or a representative of a foreign legal entity.

Visa grant processing time is 5 working days for standard and may be expedited to 3 working days.

A Visitor must apply for residency permit at the Immigration agency for Mongolia within 21 days after entry.

Amendments to the Personal Income Tax Law



Posted by , ,

Our Mongolian lawyers and accountants regularly assist foreign individuals and companies in Mongolia with advise regarding Mongolian income tax issues. There are important changes to the Personal Income Tax law in 2023 that foreign companies and individuals should be aware of.

On 11 November 2022, the parliament adopted the Law on amendments to the Personal Income Tax which came into effect on 1 January 2023. The legalized change imposes progressive rates on individual’s salaries and other similar income tax. In other word, it is a tax system that increases rates when the taxable income goes up. Previously, the flat rate of 10% of Personal Income Tax on salary, wage, bonus, incentive and similar income was set for resident taxpayer. Now, tax in salaries and other similar income will be imposed as follows:

  1. 10% for taxable income between 0-120,000,000 MNT;
  2. 12,000,000 MNT and the income exceeding 120,000,000 will be subject to an additional tax of 15% for taxable income between 120,000,001-180,000,000 MNT;
  3. 21,000,000 MNT and the income exceeding 180,000,000 MNT will be subject to an additional tax of 20% for taxable income above 180,000,000 MNT

For instance, an individual who earns 144 million tugrug annually would be taxed at the rate of 10% in 120 million tugrug of taxable income. The remaining 24 million tugrug will be taxed at the rate of 15%.

New Regulation on Non-Competition Agreements



Posted by ,

Our Mongolian lawyers were recently approached with a request to assist a client to confirm the legality of non-compete obligations under an employment contract for a mining services company.

Employer companies often ask whether they can oblige employee not to work in the company engaged in the similar type of activity or working after terminating an employment contract. This is regulated in the Labor Law of Mongolia as non-compete obligation under additional term of employment agreement.

In order to protect industrial and business secrets, an employer is given right to provide for an additional term in an employment contract or conclude a supplementary contract with employee creating non-compete obligations. Such agreements create an obligation for the departing employee not to work for a directly competing organization, or individual for a period of time after the termination of the employment relationship, or the employee himself/herself shall not engage in directly competitive activities.

The period of validity of additional non-competition clause or supplementary contract in the employment contract is not more than 1 year after the termination of the employee’s employment contract. After the termination of the employment, the employer shall pay the employee a monthly allowance in an amount equal to at least 50% of the last month’s salary during the period of validity of the additional non-competition clause or supplementary contract.

Meaning of last month’s salary is the salary that includes the base pay, additional pay, extra pay, annual leave pays and bonuses.

Cryptocurrency Exchange and Trading in Mongolia



Posted by , , ,

As we work with many foreign clients engaged in range of international businesses, one of the comment questions asked by our clients lately is whether cryptocurrency is legal in Mongolia and how it is regulated.

In Mongolia, cryptocurrency trading and exchanges are legal, and the country implemented the Law of Mongolia on Virtual Property Service Providers (VPSP law) which came into force on December 17, 2021.

Along with the rapidly evolving technological processing in the world, the market of crypto is expanding in Mongolia. At the same time, there was a need to create a legal framework for the sector of crypto trading and exchanging in order to prevent from public risks as well as to have required records, suspicious or terrorist-related transactions reports.

Considering these issues, Mongolia has taken an adoptive approach to cryptocurrency regulation by applying legislation mentioned above. The main objective of the VPSP law is to register cryptocurrency exchanging and trading providers, monitor their activities, and determine their legal rights and obligations.

The VPSP law brought cryptocurrency under the regulatory authority of the Financial Regulatory Commission from December 2021, and imposed a requirement from cryptocurrency service provider companies to register and obtain a special license. Moreover, cryptocurrency exchange and trading service provider’s income is taxable and exempt from value added tax.

Can You Obtain a Damages Award for Emotional Distress in Mongolia?



Posted by ,

In order to guarantee the fundamental rights of the citizens, regardless of the material damage, the rights to claim emotional distress damage should be open. In Mongolia, the right to claim emotional distress damages is limited by the Civil Code of Mongolia. In judicial practice, only emotional damages related to defamation of other people’s distinction, reputation and business reputation are awarded. Other than that, emotional damage that may occur is interpreted as not specifically regulated on compensation for emotional damage based on the Article 230.2 of the Civil Code of Mongolia.

Jurisprudence shows that certain conditions must be met in order to award emotional damage compensation. It includes:

  • Emotional damage should be related to the victim of the case
  • The damage cannot be repaired or restored
  • Intentional or reckless guilt
  • The act must have been manifested in an action that is discussing, repulsive and noticeable to anyone
  • Victims may have experienced emotional damage
  • The right to demand compensation for emotional damage must be specified in the civil law and other laws.

Studying the decisions of the courts of Mongolia, emotional damage award will be depending on the severity of the case. Although the court considered that emotional damage has not been proven, in cases of obviously serious, repulsive and despicable acts, there are cases where claims are satisfied including the amount and evaluation of emotional damage in the physical damage of the victim. However, the scope of the right to claim emotional damages is still limited by Article 230.2 and 511 of the Civil Code.

The Law on Criminal Procedure and the Law on Family provide for the possibility of demanding compensation for emotional damage, but the court refuses to issue compensation for emotional damage on the grounds that “it is not specifically provided for in the Civil Code”.

What Rights to Land Does a Foreign Invested Company Enjoy in Mongolia?



Posted by , , ,

Articles 27-44 of the Law of Mongolia on Land regulates granting land for possession or use. In this blog we will discuss difference between the right to possess and use land in Mongolia as well as the right of foreign investment company in this field.

The right to use and possess land are different by the subjects, purpose of its use, size and duration under the Law of Mongolia on Land. For instance, in regards with the subject, the land possession shall be given only to Mongolian citizens, companies and organizations.

Under Mongolian legislations, foreign investment company is considered as Mongolian legal entity. However, according to Article 44 of the Law of Mongolia on Land, there is only right to use the land not to possess for foreign investment company. Also, the article 6.5 of the Constitution of Mongolia specifically state that “the State may allow foreign nationals, legal persons, and stateless persons to use land for a specified period of time under conditions and procedures as provided by law”.

This is related to the concept “Land relations are the basis of national heritage and independence” of the Constitution of Mongolia. Therefore, granting land possessing rights to foreign invested company is contrary to the concept of the Constitution of Mongolia.

Foreign invested economic entities can use land for specific purposes, terms and conditions set forth in the Law of Mongolia on Land and the Government shall set the relevant term and duration to use land.