According to the Personal Income Tax Law, a taxpayer is defined as “A citizen of Mongolia, foreign citizens and stateless persons residing in Mongolia who are responsible for payment of tax in accordance with law for their earned taxable income for the tax year or even when no income is earned.”
Taxpayers are further classified as “resident” and “non-resident” taxpayers.
A foreign individual is considered as Mongolian tax resident if he or she resides in Mongolia for 183 or more days in a tax year or owns a residence in Mongolia. Above days are calculated based on the number of days of a calendar year from the day of entry into Mongolia and in case of multiple entries, it will be determined based on the total days of stays in Mongolia.
A foreign individual is considered as a non-resident taxpayer in Mongolia if he or she has no residence in Mongolia and has not stayed in Mongolia for 183 or more days in a tax year.
Income is determined to be taxable “on income earned by the permanent resident taxpayer of Mongolia for the relevant tax year in the territory of Mongolia and abroad” and “on income earned by the non-resident taxpayer for the relevant tax year in the territory of Mongolia.” This includes, but is not limited to, salaries, wages, bonuses, income from activities, income from proprietorship, income from the sale of property and indirect income. In general, the tax rate on salaries, wages, bonuses and income from activities is a flat rate of ten percent (10%).
If a taxpayer did not pay taxes on time, tax administration will impose penalty per each late payment day on outstanding balance of taxes payable. Penalty for late submission of tax return is imposed on individuals. Responsible person who has failed to file tax returns on time as specified in tax legislation to the tax administration would be fined 3-4 times the minimum labour wage. Please note that current minimum labor wage in Mongolia has been increased to MNT 240,000 since the beginning of 2017.