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:
- 10% for taxable income between 0-120,000,000 MNT;
- 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;
- 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%.