Category Archives: Tax

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



Posted by , , ,

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.

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



Posted by , ,

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

“Mongolian Social Insurance Reporting: Avoid Costly Mistakes and Penalties!”



Posted by ,

In Mongolia, accurate and timely social insurance reporting is more than just a legal obligation; it’s critical for protecting your business and employees. Employers must navigate the precise requirements set by the Mongolian government to report social insurance contributions properly. Failure to do so can lead to steep penalties, reimbursement demands, and costly audits. Here, we’ll guide you through the essential steps and consequences to keep your company compliant and running smoothly.

Timely Submission of Reports

Every employer in Mongolia is required to submit a monthly social insurance contribution report to the relevant social insurance institution. This report is due by the 5th of the following month and must be certified with an electronic or digital signature. Missing this deadline can result in financial penalties, so it is crucial to remain diligent with reporting.

If the 5th of the month happens to be a weekend or a public holiday, the report is due the next working day. This flexibility ensures that businesses can maintain compliance even during holidays without incurring penalties. However, it’s important to stay on top of your deadlines to avoid unnecessary complications.

Compliance and Potential Consequences

The Mongolian regulatory framework is strict about ensuring that employers comply with the laws surrounding social insurance contributions. Violations are taken seriously, and businesses found to be in breach may face reimbursement demands and other penalties.

Here are some common violations that could trigger compliance issues:

  • Concealment or Incorrect Reporting: If a company intentionally misreports or conceals the actual salary fund for social insurance contributions, it’s a serious violation. Employers must ensure that their contributions reflect the true financial activities of their business. This includes reporting all income subject to social insurance correctly.
  • Underpayment of Contributions: Employers who fail to pay the correct amount of social insurance contributions may face financial penalties. Conducting regular internal audits of payroll and contribution systems is essential to ensure that payments are accurate and reflect the correct figures.
  • Late Payments: If social insurance contributions are submitted late, penalties may apply. This could lead to reimbursement obligations and additional fines. It’s vital for employers to establish a consistent calendar of deadlines to stay compliant.

Why Compliance is Essential

Beyond avoiding penalties, compliance with social insurance reporting is an integral part of maintaining a stable business in Mongolia. By fulfilling your obligations, you contribute to the social safety net, which benefits both employees and employers. Accurate contributions ensure that your employees have access to social services such as healthcare, pensions, and unemployment insurance. It also protects your business from government audits and financial risks.

Employers are urged to stay informed of any regulatory changes to avoid non-compliance. The government may update regulations, and businesses must adapt to these changes promptly. With diligent record-keeping and a proactive approach to regulatory shifts, your company can remain compliant and support the welfare of its employees.

Final Thoughts

While the rules surrounding social insurance contributions in Mongolia can seem complex, staying compliant is critical for the smooth operation of your business. By prioritizing accurate and timely reporting, you not only meet your legal obligations but also contribute positively to your workforce’s welfare.

For any employer, navigating these regulations carefully will ensure the protection of both the business and its employees. Keeping up with the evolving legal landscape will enable you to avoid fines, audits, and penalties while fostering a secure and compliant workplace.

“Essential Financial Reporting Deadlines for Businesses in Mongolia: What You Need to Know”



Posted by

In Mongolia, complying with financial reporting regulations is crucial for businesses to maintain smooth operations and avoid penalties. Whether you are a new enterprise or an established organization, understanding and adhering to the specific deadlines set by the country’s accounting laws is key to ensuring regulatory compliance.

1. Financial Reporting Year

Mongolia follows the standard calendar year for financial reporting, with the year starting on January 1 and ending on December 31. This structure aligns with global practices, making it easier for businesses to synchronize their annual reports.

2. Reporting for New Enterprises

For newly established businesses, the financial reporting year begins from the date of state registration and concludes on December 31 of that year. This approach ensures new entities are seamlessly integrated into the regular reporting cycle.

3. Key Submission Deadlines

  • First Half-Year Financial Report: Businesses adhering to International Financial Reporting Standards (IFRS)are required to submit their first half-year financial reports by July 20.
  • Annual Financial Report: These same entities must submit their annual financial reports electronically by February 10 of the following year.

4. Consolidated Financial Statements

For companies that must prepare consolidated financial statements, the deadline is set for March 1 of the following year. These reports must also be submitted electronically to the relevant financial institutions.

5. Reporting for Non-Consolidating Entities

Entities involved in the consolidation process, but not directly responsible for the preparation of consolidated financial statements, are required to submit their annual financial statements by February 10 of the following year.

Stay Compliant, Stay Efficient

Meeting these deadlines is critical for businesses in Mongolia to ensure compliance with accounting laws and maintain their financial standing. Timely reporting helps avoid penalties and keeps businesses on the right track, while accurate record-keeping ensures transparency and operational efficiency.

By paying close attention to these important dates, businesses can effectively navigate Mongolia’s regulatory landscape and ensure that they are consistently aligned with the country’s financial and legal standards.

#MongoliaBusiness #FinancialCompliance #AccountingLaws #ReportingDeadlines #BusinessRegulations #MongoliaFinance #CorporateLaw #TaxCompliance #FinancialReporting #LegalCompliance #IFRS #ConsolidatedReports #CorporateFinance #AccountingStandards #BusinessOperations #TaxLaw #BusinessSupport #Mongolia #BusinessGrowth #TaxPlanning

New Law on Social Insurance Comes Into Effect January



Posted by , ,

The General Law on Social Insurance (“GSI law”) was approved by the Mongolian Parliament on July 7, 2023, and it will take the place of the Law on Social Insurance (1994) as of January 1, 2024. The law intends to enhance the administration and structure of the social insurance and pension systems , and control late payments and report resubmissions, among other things.

In this blog we will share an overview of key changes of the GSI Law and certain amendments to recognize for businesses and employers.

Under the new Law, the following amendments were made to expand the coverage of social insurance, to move from the distribution system to a semiconducting system, to reduce future losses in the insurance fund, and to initiate actual collection of pension insurance funds.

– From 2030, the insurer will be able to spend monetary asset from initial account on education, health care and mortgage repayments;

– A certain amount of the monetary assets from the initial account will be inherited by the insurer’s legal heirs;

– The government will pay for the insurance contribution of parents who has a child under medical supervision and permanent care;

– The maximum monthly income for voluntary social insurance is equivalent to an increase of 7 times that of the minimum wage rate.

Additionally, it should be noted that the following changes were made in relation to rights and obligations of the employers and businesses.

– the social insurance contribution to pay from an employer is slightly changed. The rate of manufacturing accidents and occupational-related disease insurance was reduced to 0.5-2.5 insurance and the rate of unemployment insurance increased as 0.5;

– An employer shall have the obligation to compensate and employee for social insurance contribution if it is found that an employer has not paid the income of social insurance for a period, has hidden, reduced rates, underpaid, and wrongly dismissed by employee.

– employees who are working for another employer under employment contract in addition to their full-time principal employer or under the contract shall be insured compulsorily for only pension insurance;

– foreign entities earning a source of income from Mongolia are obliged to pay and report social insurance contribution.

Basics of Mongolian VAT



Posted by , ,

Introduction of VAT

The Value-Added Tax Law came into effect on 1 January 2016. 

The VAT Law increased the threshold for requirement to register as a VAT payer from 10 million MNT to 50 million MNT in an effort to support small and medium sized enterprises. Voluntary registration as a VAT payer is possible if the income of the entity reaches 10 million MNT.

The Law also introduced a system of incentivizing taxpayers with the possibility of recovering up to 20 per cent of the taxes paid if certain conditions are met. Its further attempts to improve the system and procedure for collating, processing and reporting data relating to the payment of VAT by creating a consolidated registration system.

Who is the taxpayer?

Taxpayer will be individual and legal entity.

In connection with individual, a person who purchases goods, works or services in any form or otherwise purchases, for the purpose of own use regarded as a taxpayer.

With regard to legal entity, legal entity sold, imported, exported goods, works, services and whose operational sales income value reached to 50 or more million tugrugs and obligated to impose and withhold taxes and pay to budget shall be a withholder.

For individuals who work permanently or temporarily under the labor contract is not subject of VAT levy.

What kind of goods and services will be subject of VAT?

  • Imported, exported and sold all goods, works and services;
  •  sale of rights;
  •  closing of any debts through barter such as goods, work and service
  • Sold, performed or rendered goods, works, services by foreigner to Mongolian
  • electricity, heat, gas, water supply, sewerage, post, communication and other services;
  • leasing of goods or granting rights to possess or use in other manner;
  •  renting of accommodation in a hotel or similar establishment or granting of rights to possess or use in other manner;
  • renting of immoveable or moveable properties, or granting of rights to possess or use in other forms;
  • transfer, lease and sale of intellectual property;
  • lottery, quiz and gambling;
  •  mediation trade representation, commission service;
  •  interests, fine or forfeiture;
  •  asset evaluation service;
  • budget financing, subsidy or promotion by government;
  • funding through acquiring right to demand (factoring, forfaiting and transactions similar to them);
  • legal service
  • all types of services including hairdresser, beauty salon, repair, washing and dry cleaning.

VAT Rate

The current VAT rate is 10 per cent, however, there have been some changes in the types of goods, work and services that are exempted from value-added tax and those that are subject to zero (“0”) per cent VAT.

10 percentages value added taxes will be imposed on the all types of goods, works and services sold within Mongolia and imported from abroad to Mongolia. No valued added tax will be imposed on export goods. 0-10 percent rate of tax will be imposed on the amount of imported, manufactured and sold petrolium and dissiel, however, Government of Mongolia will determine the rate of tax within the frame.  

Zero Tax Rate

Zero tax will be imposed on the goods exported and declared with the customs office; passenger and cargo services rendered from Mongolia to foreign countries, from foreign countries to Mongolia, as well as transiting through Mongolia according to the international treaties of Mongolia; any services rendered outside of Mongolia and rendering services to non residents  /”including non-taxable services”/;  any services of air navigation management, technical and fuel, catering, cleaning services provided for both foreign and domestic airplanes conducting international flight, state medals, currencies or coins manufactured domestically by order of Government or Bank of Mongolia; final mining products.

Changes to Customs Tax and VAT Exemptions



Posted by , , , ,

During Parliament’s regular session on May 10, a final review of amendments to the Value-Added Tax Law and Customs Tax Exemptions Law were conducted and approved with a majority vote from Parliament members in attendance.

According to the amendments, all imported wood construction materials except oriented strand board (OSB), standardized pre-fabricated wood building structures, and logs will be exempt from customs duty. Other imported wood products, except those related to forestry and horticulture, will be exempt from value-added tax until 2022.

The Amendments to Value-Added Tax Law and Customs Tax Exemptions Law will be effective from January 1, 2018.