Category Archives: Development

Digital Origin Certificates for Exports from Mongolia to Japan



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The Economic Partnership Agreement (EPA) between Mongolia and Japan came into effect in 2016, with implementation starting on June 7, 2016. This agreement aims to boost trade, investment, and industrial sector exports, while also increasing foreign currency earnings between the two nations. The EPA focuses on reducing tariff and non-tariff barriers, facilitating trade, and simplifying customs procedures for smoother transactions.

Under the agreement, both countries negotiated a reduction in import customs tariffs for a wide range of goods. Mongolia will benefit from a reduction on 59% of the imported goods, which includes around 3,429 types of products across 97 categories. On the other hand, Japan has agreed to lower tariffs on 86% of the goods imported from Mongolia, covering approximately 8,000 types of goods. These tariff reductions came into effect as soon as the agreement was implemented.

To further streamline the export process, Mongolia will now digitize the origin certificates for goods being exported to Japan. According to the Mongolian National Chamber of Commerce and Industry (MNCCI), starting from May 7, 2025, exporters will receive their origin certificates electronically in PDF format. This move is part of an ongoing effort to improve the efficiency and convenience of trade between the two nations.

With this transition to digital certificates, Mongolia and Japan continue to strengthen their economic relationship, creating new opportunities for businesses in both countries.

#MongoliaJapanTrade #EconomicPartnershipAgreement #DigitalCertificates #TradeEfficiency #ExportBusiness #MongolianExports #JapanTrade #TradeSimplification #CustomsProcedures #BusinessOpportunities #MNCCI

Tax Incentives for Businesses Operating in Free Zones in Mongolia: What You Need to Know



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Are you considering investing in a free zone? The benefits can go beyond logistical advantages—there are tax incentives you might be eligible for, depending on the nature of your business and your investment scale. Let’s explore the opportunities outlined in the Corporate Income Tax Law and how they can work for you.

What Are Free Zones?

Free zones are designated areas where businesses can operate under special regulations designed to encourage investment, innovation, and trade. To support economic development, many governments offer tax reliefs to incentivize investments in infrastructure and key facilities within these zones.

Tax Relief: How It Works

Under Article 22.5 of the Corporate Income Tax Law, businesses operating in free zones can enjoy significant tax breaks if they meet one of the following conditions:

1. Investing in Free Zone Infrastructure

If your business has invested $500,000 USD or more in critical infrastructure, such as:

  • Energy and heating systems
  • Pipelines and clean water supply
  • Sewage systems
  • Roads, railways, or airports
  • Communication networkss

Then, 50% of the income you earn from the free zone—equal to the amount of your investment—will be exempt from corporate income tax.

2. Investing in Specific Free Zone Facilities

If your investment focuses on constructing or developing:

  • Warehouses
  • Loading and unloading terminals
  • Hotels or tourism complexes
  • Factories producing export-oriented or import-substituting products

And your investment totals $300,000 USD or more, you’re also eligible for a tax break. Similar to infrastructure investments, 50% of your income from the free zone—up to the value of your investment—is exempt from corporate income tax.

Beyond the tax incentives, free zones offer:

  • Easier access to global markets
  • Streamlined customs procedures
  • Modern infrastructure tailored for business operations
  • Networking opportunities with like-minded entrepreneurs

These advantages make free zones a hotspot for businesses aiming to expand regionally or globally while optimizing costs.

Amendments to the Corporate Income Tax (CIT) Law: Social Responsibility Tax Relief Explained



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As part of its ongoing efforts to encourage corporate social responsibility (CSR), the Mongolian government has introduced significant amendments to the Corporate Income Tax (CIT) Law. Effective from August 30, 2024, these provisions allow businesses to claim tax relief for specific activities that benefit society, the environment, and public welfare. Here’s a breakdown of the new tax relief opportunities available under section 22.9 of the law.

Key Highlights of the Tax Relief Provisions

Under these amendments, businesses can deduct certain expenses from their taxable income as part of their social responsibility initiatives. These expenses must align with the law’s stipulations and are subject to the following conditions:

  • The expenses must be unrelated to the taxpayer’s income-generating operations.
  • Deductions include investments in depreciable fixed assets, financial support for unrelated entities, and charitable contributions.
  • The total deduction is capped at 1% of the taxable income for the relevant tax year.

Activities Eligible for Tax Relief

To qualify for this tax benefit, businesses must invest in one or more of the following activities:

  1. Environmental Conservation
    • Initiatives aimed at reducing pollution, restoring ecosystems, and protecting natural resources.
  2. Care for Vulnerable Groups
    • Supporting senior citizens, individuals with disabilities, and children through care facilities and programs.
  3. Cultural Heritage and the Arts
    • Projects that protect and restore cultural sites, or provide support to museums, libraries, and artistic endeavors.
  4. Public Infrastructure Development
    • Funding and maintaining essential infrastructure such as parks, roads, and public transportation systems.
  5. Sports Development
    • Building and maintaining sports facilities or supporting athletes participating in Olympic-level competitions.
  6. Education and Scholarships
    • Providing scholarships for students and funding educational institutions to enhance learning opportunities.
  7. Research and Development
    • Supporting innovation through grants to universities and scientific organizations.

To ensure transparency and alignment with the law, businesses must adhere to reporting standards set by relevant government ministries. These ministries will also establish guidelines to verify compliance with the eligibility criteria for tax relief.

The amendments are applicable from August 30, 2024, and will remain in effect until January 1, 2035. Businesses planning to take advantage of this tax relief must carefully document and report eligible expenses to qualify.

Conclusion

The revised CIT law provides a dual benefit—encouraging businesses to engage in socially responsible activities while easing their tax burden. By aligning corporate operations with these initiatives, companies can contribute to the broader development of society, culture, and the environment.

If you’re a business owner or finance professional, now is the time to explore how your organization can benefit from these provisions while making a positive impact.

Importance of Conducting a Preliminary Trademark Search



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The process of securing intellectual property rights for a brand name or logo often takes more time than anticipated. Receiving a preliminary decision to reject your trademark registration 6-9 months after filing is not the outcome you desire. Such a situation can lead to complications, including having to change your product or service’s brand name, logo, packaging, or advertising content.

Why are trademark applications rejected?

If you intend to register your trademark with the Intellectual Property Office to secure exclusive rights, it’s important to comply with not only international agreements and conventions but also the requirements outlined in Article 5 of the Law on Trademarks and Geographical Indications.

What are the requirements?

A trademark may be rejected if it:

· Directly describes the goods or services;

· Indicates the characteristics of the goods or services;

· Specifies the origin or place of manufacture of the goods or services;

· Is identical or similar to a previously filed or registered trademark.

Therefore,

Before filing your brand name or logo, the face of your business, with the Intellectual Property Office, it is advisable to conduct a preliminary search to ensure it complies with legal requirements and does not closely resemble existing trademarks.

Important note!

If your brand name is expressed in a foreign language, it is necessary to conduct searches not only using the primary word but also translations, transliterations, and phonetically similar variations. Additionally, check whether translations might inadvertently include inappropriate or offensive term.

Benefits of a preliminary search

· Prevents receiving a preliminary decision to reject your trademark application due to the reasons mentioned above.

· Avoids the risk of unintentionally infringing someone else’s exclusive rights, thereby protecting you from unforeseen legal liabilities and costs.

By conducting a preliminary trademark search, you can mitigate risks and ensure compliance with regulations. Our law firm, with experienced intellectual property lawyers, is ready to assist you in carrying out professional trademark searches tailored to your needs.

Seed Industry Law: Building a Sustainable Future for Mongolia’s Cultivated Plants



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The Seed Industry Law of Mongolia is a critical legislative framework that governs the development and sustainability of the seed industry for cultivated plants. This law fosters innovation, supports fair trade, ensures food security, and protects genetic resources by regulating everything from the creation of new plant varieties to seed trade and quality control.

The law is designed to cover all aspects of seed industry development, from research and innovation to seed propagation and sale. It applies to both domestically produced and imported seeds of cultivated plants, ensuring that the genetic resources and biodiversity are maintained and that the rights of plant variety creators are protected.

Key Definitions Under the Law

  • Seed: Defined as living seeds, implants, seedlings, embryos, and reproductive organs used for the reproduction of cultivated plant varieties.
  • Variety: A group of plants within a botanical community that are distinguished by the expression of stable characteristics resulting from specific genotypes and their combinations.

Areas of Regulation

The law encompasses various aspects of seed industry regulation, including:

  1. Seed Production: Encouraging the sustainable and efficient production of seeds.
  2. Seed Quality Control and Assurance: Mandating strict control over seed quality to ensure that only high-quality seeds reach the market.
  3. Seed Trade: Regulating the trade of seeds to foster fair competition and protect the rights of traders and consumers.
  4. Registration of Varieties: Implementing a structured process for registering new plant varieties, allowing for the protection of intellectual property rights of plant breeders.
  5. Protection of Cultivated Plant Varieties: Safeguarding the innovations and efforts of variety creators by granting them exclusive rights and ensuring the sustainable use of cultivated plant genetic resources.

Government Involvement

At the national level, the implementation and management of seed-related policies are overseen by the state central administrative body in charge of agricultural matters. Local farming departments and agricultural units play key roles in administering these policies within their respective regions, ensuring consistency in the enforcement of quality standards and fostering the growth of the seed industry.

By establishing a legal framework for seed production, quality control, and innovation, Mongolia is building a robust foundation for agricultural sustainability, food security, and economic growth in its farming sector.

#SeedIndustryLaw #MongoliaAgriculture #PlantVarieties #SeedTrade #CultivatedPlants #FoodSecurity #SeedProduction #AgricultureLaw #SustainableFarming #VarietyProtection #SeedQualityControl #AgriculturalInnovation #FarmingPolicy #PlantBreeding #SeedRegulations #Biodiversity #GeneticResources #FairTrade #IntellectualProperty #Farming #FoodSafety #CultivatedVarieties #AgriculturalDevelopment #SeedInnovation #MongolianLaw

Unlock the Benefits of Trade: How to Obtain a Certificate of Origin in Mongolia



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A Certificate of Origin is essential for businesses exporting products, as it certifies that the goods are partially or fully produced in Mongolia. Issued by the Mongolian National Chamber of Commerce and Industry (MNCCI), this document plays a key role in international trade by verifying the origin of goods for tariff benefits, trade agreements, and legal requirements.

What is a Certificate of Origin?

According to Article 6.2 of the Mongolian Law on Chamber of Commerce and Industry, the MNCCI issues certificates of origin under the “Regulation on determining the origin of export products derived from Mongolia and on issuing the certificate of origin.” This legal document is proof that goods exported from Mongolia are either entirely or partially manufactured within the country.

Types of Certificates of Origin:

The MNCCI issues several types of Certificates of Origin based on specific trade agreements, including:

  • Certificate of Origin Form A
  • Certificate of Origin Form E
  • Certificate of Origin Form APTA
  • Certificate of Origin Form B
  • Certificate of Origin Form-D

These forms are crucial in enabling products to qualify for tariff reductions or exemptions under various trade agreements, ensuring smooth international transactions.

Required Documents for Obtaining a Certificate of Origin

Entrepreneurs looking to obtain a Certificate of Origin must submit the following documents:

  1. Copy of foreign trade contract (buying/selling)
  2. Application form
  3. Invoice (English sample with Mongolian explanation)
  4. Packing list (Invoice & Packing list in Russian/English)
  5. Copy of Incorporation Certificate (individuals provide a copy of their identity card)
  6. Document detailing product composition (if raw materials were imported, include the customs declaration)
  7. Copy of product license
  8. Quality conformity and hygiene certificates
  9. Additional documents may be required for certain certificates, including an additional examination.

Easy Online Submission

For added convenience, businesses can now submit their requests for certificates of origin online by uploading the necessary documents to the MNCCI’s platform. This streamlines the process, making it easier for businesses to meet their export requirements efficiently.

By obtaining a Certificate of Origin, businesses not only comply with international trade laws but also unlock tariff benefits and access to global markets.

Why It Matters

Securing a Certificate of Origin from Mongolia ensures your products are recognized internationally, facilitating smoother transactions, securing tariff advantages, and opening doors to global opportunities.

#CertificateOfOrigin #MongoliaExports #ChamberOfCommerce #MNCCI #TradeLaw #ExportDocuments #BusinessCompliance #TradeAgreements #MongolianProducts #GlobalTrade #ProductLicensing #QualityControl #Exporting #InternationalBusiness #ForeignTrade #BusinessGrowth #TariffBenefits #ExportersGuide #CustomsCompliance #LegalDocumentation #TradeRegulations #OnlineCertification #CommerceIndustry #ExportSuccess #DocumentPreparation

Mongolia to Take Action to Address Corruption



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During its regular session on March 14, 2024, the Cabinet of Mongolia made a significant step forward in the fight against corruption by supporting the submission of a draft Resolution to the State Great Khural of Mongolia for approval.

The draft Resolution outlines the implementation of an Action Plan for the Implementation of the National Anti-Corruption Program. the Resolution aims to establish an effective legal framework to combat corruption and encourage public trust in government. The newly proposed resolution for implementing the national anti-corruption program is a much-needed initiative to address the misuse of power and authority.

The draft Resolution outlines 290 measures to be implemented between 2023 and 2030, aimed at achieving the 11 goals and 48 objectives of the National Anti-Corruption Program, as set out in 2023 Resolution No. 59 of the State Great Khural. The success of this program hinges on the active participation and cooperation of all stakeholders, including the public and private sectors, civil society organizations, international organizations, the media, and citizens. The anticipated outcomes of this program are promising. A yearly decline in corruption levels is expected under the plan, leading to an expanded state budget, increased public trust in public organizations, rising citizen income, and a strengthened culture of zero tolerance for corruption. Furthermore, a more robust whistle-blowing system will be established, providing a crucial avenue for reporting and addressing corrupt activities.

Official corruption is a pervasive problem in many Asian countries, undermining the rule of law, hindering economic development, and eroding public trust in institutions. Corruption takes various forms, including bribery, embezzlement, nepotism, and cronyism. It affects all levels of government, from local administrations to national agencies, and can influence decision-making in areas such as business regulations, public procurement, and law enforcement.

The consequences of official corruption are far-reaching. It distorts markets, creating an uneven playing field for businesses and discouraging foreign investment. It also undermines the delivery of essential public services, such as education, healthcare, and infrastructure. Corruption can lead to inefficiencies, waste, and misallocation of resources, further exacerbating poverty and inequality. Moreover, it can fuel social unrest and political instability, as citizens become disillusioned with their governments and demand accountability.

The root causes of official corruption in Asian countries are complex and multifaceted. Some of the key factors include weak institutions, lack of transparency and accountability, and cultural norms that tolerate or even encourage corrupt behavior. In many cases, low salaries and inadequate resources for public officials create incentives for them to engage in corrupt activities. Additionally, complex regulatory systems and opaque decision-making processes can create opportunities for corruption to thrive.

A Mongolian perspective on Public-Private Partnerships Development



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Since the Law of Mongolia on Concessions was adopted in 2010, it has established a legal framework for public-private partnership by granting concessions to private investors to use existing infrastructure facilities owned by the state, and to construct new infrastructure facilities for the purpose of providing services.

However, the current Concessions law is inadequate to meet the needs of fundamental principles of public-private partnership such as planning, granting and effective risk and debt management.

The implementation of the Concessions law raised the following issues:

  • Illegal selection of participants for granting a concession
  • Concluding an invalid direct agreement
  • Ineffective concession which creates significant burden of the state budget
  • Absence of specific regulations and policies of concession procedure guidelines.
  • Lack of related administrative authorities’ involvement on selecting, contracting, implementing, or overseeing concession
  • Risk management and risk allocation methodologies

Therefore, the government submitted the first draft of Law on Public-Private Partnership on April 6, 2022, and requested to repeal the Law of Mongolia on Concession. The purpose of the law is to support private sector’s participation and investment in the implementation of public-private partnership in the field of public infrastructure and public services projects, and to create favorable legal environment for long-term efficient cooperation.

Are Uncompleted Buildings Real Estate?



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It is common practice for a real estate developer to take an order or advance payment from customer for an apartment building, obtain an uncompleted building certificate from the state registry, and pledge the certificate to a bank or non-bank financial institution and obtain loan in order to finance the project.

According to the State Registration Agency, as of September 30, 2020, 552 uncompleted buildings in Ulaanbaatar were registered as real estate. Of these, 123 uncompleted buildings are pledged as collateral for loans from banks and financial institutions. In addition, there are 333 people who have not been able to obtain a real estate certificate even though the building has been completed and people has purchased the apartment. Moreover, bribery of the General Authority of State Registration in order to obtain a real estate certificate, as well as the creation of a network of bribes through acquaintances, is due to the regulation of registration of uncompleted buildings as real estate.

Therefore, taking into account the above circumstances, Article 10.10 of the Law on State Registration of Property Rights” amended as “An apartment building will not be registered in the state registry of property rights until it is commissioned/ handed over for permanent use” and the amendment was supported by the relevant standing committee and was recently submitted to the plenary session of the Parliament.

It is an important to change the regulations that corrects the practice of registering uncompleted buildings as real estate which violates citizens’ property rights, and creates new regulations related to the rights of public apartment and surrounding land. In addition, the amendments are based on the need to harmonize the Civil Code and the Land Law, including the need to change and improve the regulation of serious violations of citizens’ property rights related to public housing/apartment.

Avoid Risks in Foreign-Mongolian Cooperation Agreements



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Our Mongolian Lawyers regularly assist foreign investors in various forms of joint ventures and business cooperation with Mongolian partners. These partnerships are sometimes necessary to allow a foreign investor to participate where Mongolia law restrictions direct foreign ownership. For example, Mongolian law has certain restrictions on entities with foreign investment owning and using land. One client the firm has worked with, a European party engaged in property development entered into one such arrangement with a Mongolian partner for the development of land located in a special restricted zone of Ulaanbaatar.

The European side, and the Mongolian side entered into a “Cooperation Agreement” which described a cooperative business arrangement in which the European party contributed funding, while the Mongolian party contributed access to the land targeted for development. This type of cooperation, is common in Mongolia between foreign investors and Mongolian property owners, and has been upheld by Mongolian courts.

However, when entering into such an arrangement, a foreign investor should be aware of risks.  A few years into the partnership, relations broke down between the Mongolian party and the foreign investor resulting in extensive litigation over the validity of the Cooperation Agreement and ownership of the land.

Foreign participants in this kind of Cooperation Agreement should engage independent Mongolian legal counsel to review the agreement for compliance with Mongolian law, and to ensure the foreign party is protected. The agreement should be clear about the nature of the cooperation, and the contributions of each party. It is important specify that legal ownership of the land remains with the Mongolian party. To eliminate confusion, there are certain key phrases which should be avoided when describing the foreign investor’s relationship to the land. If the language of the Agreement is ambiguous the Mongolian side may latter attempt to challenge the validity of the Agreement alleging violation of Mongolian law.