As we posted previously, the newly adopted Mongolia Value-Added Tax (VAT) law has come into effect since January 1, 2016.
According to the VAT law, “Any citizen and legal person, who is engaged in the import and export of goods as well as the sale and manufacturing of any goods, performance of work and rendering of services in the territory of Mongolia, shall be value-added taxpayers.” VAT shall be applicable for the following goods, works and services where operational income value reaches 50 or more million tugrugs:
- all types of goods, works and services sold within the territory of Mongolia;
- all types of goods, works and services imported from abroad to Mongolia; and
- all types of goods, works and services exported from Mongolia;
Furthermore, the VAT shall apply to the representative office of a foreign legal entity whose revenue of sold goods, performed works and rendered services in the territory of Mongolia, has reached 50 million tugrugs or more.
In almost all cases, the value-added tax shall be imposed at the rate of 10 percent of the taxable amount of imported, manufactured or sold goods, performed works and rendered services. However, some certain types of goods, work and services can be subject to zero (“0”) percent VAT. The payment of VAT must be within the first ten days of the following month.
The newly adopted law also creates an incentive system with the possibility of recovering up to 20 percent of paid taxes if certain conditions are met. Initial such tax returns are expected to refund in the first quarter of this year.
A conference with our Mongolian Tax Law specialists can help you determine whether your company may be able to take advantage of the 0% VAT, or the VAT recovery.
Can an outside company obtain a rebate on VAT if the product/service is performed by a Mongolian company and the product stays in the country? The Mongolian company invoice includes the VAT to be paid by the outside company.