As we posted previously, the general corporate income tax rate for an economic entity incorporated in Mongolia is ten percent (10%) for the first 0-3.0 billion; and a 300 million MNT base tax, plus twenty-five percent (25%) tax on all income exceeding 3.0 billion MNT.
However, Parliament recently approved amendments to the Law on Corporate Income Tax. The amendment aimed at supporting “small and medium-sized enterprises” (SMEs) in particular sections by offering a 90% tax reduction for a period of several years.
The 90% tax reduction will be available to SMEs with less than 1.5 billion MNT in sales operating in the following four sectors:
- the food production industry;
- the clothing and textiles industry;
- the production of construction materials; and
- the agricultural and livestock industries and its supplementary operations.
The SMEs will be eligible to pay a 1% tax on business conducted from January 1, 2017 to January 1, 2021 (That’s 4 years at a 1% corporate income tax rate!). The government believes that this will reduce the tax burden for SMEs, create a favorable environment for increasing employment, result in increased investment, encourage entrepreneurship, and increase the number of SMEs.
Now is the time to start your new operation in Mongolia!