Tag Archives: Customs

Customs Processing and Temporary Warehousing



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Our Mongolian lawyers often work with foreign clients and local trading companies involved in import of product into Mongolia. Products entering Mongolia often require short term storage as the products are inspected by Customs. Importers are able to utilize temporary warehousing solutions for these goods for the duration the products are under Customs control yet not yet cleared.

Temporary Customs warehousing may be open for the public, or limited access. Goods are typically placed in temporary storage upon decision by Customs that the goods be stored pending the Customs inspection process. Goods seized by Customs or detained on suspicions of violations of import regulations are also stored in the temporary warehouse.

When goods are placed in temporary storage, a copy of the manifest and other documentation relating to the shipment is kept on file. In normal circumstances storage in temporary warehouses is permitted for a period of up to 2 months from the date of entry. Customs has the option to extent this period for an additional month. For perishable or hazardous goods, storage may be for 2 weeks, with a possible one week extension.

Storage of petroleum products is permitted in a limited access facility operated a licensed fuel importer. Third parties and those not having the necessary import license will not be permitted to store products in such facility.

A party with product in temporary storage may not transfer title to a third party until customs inspection and clearance is completed.

Seizure of Infringing Product by Mongolia Customs



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We have written previously about the legal mechanisms for registration of intellectual property rights in the Mongolia Customs database for preventing the intellectual property infringement in Mongolia. In this post we will go more in-depth regarding processes for seizure and detention of suspected counterfeit products by Customs at import or export, which has proven to be effective to fight against the infringement of intellectual property rights in the country.

In general, a holder of intellectual property rights is able to submit an application to Mongolia Customs authorities to take measures to prevent infringing & counterfeit goods from entering into Mongolia when there is evidence known or suspected illegal or counterfeit products are in transit through Customs. An application must contain information about the IP holder, the relevant intellectual property itself; and detailed information about the products requested to be seized.

Upon identifying target goods transiting Customs, authorities may require a cash deposit by the IP rights holder equal to the total value of the seized products (or MNT 1,500,000 if the total value is not possible to determine in advance). Alternatively, the IP rights holder may provide a bank guarantee to cover the deposit value.

This deposit serve as guarantee that the applicant will not cause any undue harm to the exporter or importer of the goods, and if any damage is caused due to false information, the deposit will be used to pay for damages.

The Customs authority will make a decision within 30 working days after receiving the application in accordance with the relevant laws and regulations. If the relevant customs authority decides to detain goods related to intellectual property rights pursuant to an application, it shall notify the Intellectual Property Office and the applicant.

Registering Your IP with Mongolia Customs



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Holders of Intellectual Property rights (IP) registered in Mongolia have the option to register these rights with Customs. This registration allows an IP holder an important tool to prevent import or export of counterfeit products into or out of Mongolia.

In order to be included in the customs database, an IP rights holder must submit a request to the General Customs Administration to include the holder’s IP rights in the Customs database. Such request shall contain the details of the goods related to the intellectual property rights, information of the holder, documents confirming the intellectual property rights, along with a list of goods to be registered and protected. There is no official fee for this registration.

The decision to register goods related to intellectual property rights in the Customs database is finalized by the head of the department in charge of control and risk of the Central Customs Administration. Information registered with the central database is shared with regional Customs offices around the country.

IP holders should take care to report to Customs and request updated registration with Customs when any important information regarding the IP rights is changed, including duration of protection, name of the rights holder, or others.

The Central Customs Administration may publish the list of goods registered in the Customs database and changes thereto in the official customs edition and some other information on the customs website with the permission of the rights holder.

Using Customs Seizure to Stop Import of Infringing Products to Mongolia



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Our firm’s Mongolian intellectual property lawyers have seen a lot of inquires in recent months from clients seeking assistance regarding counterfeit products which were being sold in Mongolia.

There are several mechanisms our Mongolian lawyers recommend to deal with counterfeit products in Mongolia.  One of the most important of these is utilizing Customs to restrict entry of counterfeit products or goods infringing registered trademarks from entering Mongolia.

This works by seizing infringing goods at Customs upon attempted entry into Mongolia. Before this may be done, the authentic goods bearing a validly registered Mongolian Trademark must be registered with Customs.

This registration process is relatively easy, requiring documentation of the registered trademarks, basic information regarding the trademark owner, a description of the products, and a list of items requested to be reviewed and protected by Customs. Our Mongolian lawyers will walk you through the process. The review procedure will talk approximately 30 days from the date of submission of the application, after which, the registered information will be forwarded to Customs entry points around Mongolia.

A written request for seizure of infringing goods, must be submitted along with a small cash deposit or bank guarantee. The customs office prefers having the deposit to avoid incurring any damages to importer before starting examination of infringing goods based on the original goods with customs registration.

Our Mongolian lawyers and clients have found such Customs seizures to be effective at blocking incoming shipments of infringing products. However it is important to note the applicant seeking to block the shipments must have a valid, registered Mongolian trademark in order to support such action by Customs.

Importing Products into Mongolia without a Buyer? Put it in a Bonded Warehouse.



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Foreign investors who import products into Mongolia may be required or need to place their products into a custom bonded warehouse. In this case, below are main regulations of the bonded warehouse and things to know.

The purpose of the placing products in the custom bonded warehouse is providing an opportunity to find a market for imported products, as well as to time for the importers to pay customs duties and other taxes.

The kinds of goods which should be stored in the bonded warehouse are firstly, Mongolian goods, secondly, foreign goods coming from abroad and thirdly, goods which are placed in the bonded warehouse temporarily in connection with other non-import or export procedures.

Importantly, Foreign goods placed in bonded warehouse are not subject to non-tariff restrictions which means goods which are not generally prohibited to cross the national border of Mongolia are not required to obtain any further permissions from the relevant authorities when goods are entering into the border of Mongolia. When products are kept in the bonded warehouse, any permission or licenses normally required for possession of such products are not required to be obtained from the relevant government organization. This is because the customs bonded warehouse is considered as being outside of the customs territory of Mongolia. Keep in mind that the relevant license or permission is required upon release of the products from the bonded warehouse.

The product is to be stored in the bonded warehouse under the name of the importer. When imported products are exported directly from the custom bonded warehouse out of Mongolia, payment of an export tax is not required. There are not any export controls/restrictions and/or any licences/permits, to be obtained in order to export the product from the bonded warehouse.

In contrast to imported goods, Mongolian goods placed in the bonded warehouse will be subject to non-tariff restric­tions, which mean the exporter is required to obtain permission from relevant authority and limits may be imposed on the quantity of the goods. Of course, goods which are prohibited to be carried through the national border will not be allowed.

There are two types of bonded warehouse in Mongolia, open and closed. Open bonded warehouse is for public use and all goods allowed to enter or leave Mongolia may be stored or placed in the open bonded warehouse.

A closed bonded warehouse is not for public use and is designated for use solely by one or more legal entities or organization. Goods which require special storage condi­tions, facilities and equipment or which may have af­fect on other goods are typically placed in a closed bonded warehouse.

The timeline for storage of goods in a bonded warehouse is up to two years. The Customs Office will extend the timeframe by up to 1 year with no further renewal possible.

Tracking Manufacturer of Imported Counterfeit Product in Mongolia



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A client recently asked our firm’s Mongolian intellectual property lawyers for assistance regarding counterfeit products which were being sold in Mongolia. It seems the details of the manufacturer’s identify and contact information as listed on the packaging were false, so the client needed our assistance in identifying the actual importer and manufacturer. Records of the importer would be kept by Mongolian customs, but these records cannot be accessed by everyone. We presented with their options for gaining access to this information.

 If there is an officially appointed distributor in Mongolia for the authentic products which are the subject of the counterfeit, this official distributor may approach Mongolia Customs, provide the contract granting it authority to distribute the relevant products in Mongolia, and request that Customs provides the name and information of the importer. This is the simplest and most straight forward course of action, but requires an existing distribution contract with an authorized Mongolian importer.

Once information on the importer is obtained from Customs, a complaint on the counterfeit goods and trademark may be made to the Mongolian Intellectual Property Office, and to Customs. The IP Office will conduct its own investigation, and will issue a report as to the suspected infringement. Assuming the report of the IP Office finds infringement and counterfeit goods, the Customs Office will stop import of the fake goods at the border. Requests may also be made to the IP Office and to Customs that they provide the authentic goods manufacturer with the officially registered name of the manufacturer to allow us to independently pursue legal actions.

However, authentic manufacturer does not have an official distributor for its products in Mongolia, the stores which are selling the counterfeit products in question must be identified, and evidence of the counterfeit goods compiled. Then a report on the counterfeit products and stores selling the goods must be submitted to the IP Office, which will then initiate an investigation and will issue a report. As above, the report of the IP Office may be shown to Mongolia Customs in order to have them stop import of the counterfeit goods.

One other option for identifying the true identity of the manufacturer will be to contact local sellers of the counterfeit products in Mongolia directly. As can be imagined this may be a long process without a real guarantee the sellers would cooperate to provide the information requested. These sellers can be presented with the legal consequences for their failure to cooperate. If the seller only knows the identity of the local Mongolian distributor, the distributor will have to be approached for information in the same way.

We will not here that Mongolia does not have a reliable “private investigator” sector so any investigative inquiries at the local stores and distributors will need to be made by an attorney.

Keep up to Date on The Mongolia VAT



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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.

Basics of Mongolia Customs Restrictions



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Mongolia recognizes 4 categories of commodities for purposes of cross-border trade. Items are classified as either:

  1. Forbidden;
  2. Licensed;
  3. Taxed;
  4. General.

An item classified as Forbidden is not allowed to pass through Customs whether by import or export. Narcotic s and related equipment for production or use are Forbidden.

Items which are not Forbidden, but which are subject to certain legal restrictions are Licensed. There must be an appropriate license for import or export. Some licenses are restricted to only export, or only import. Medical drugs and alcoholic beverages are examples of items which must be licensed. Imported or exported metals must also be accompanied by a license, however there is an exception for used aluminum drink cans. Other items which must have a license for export or import are toxic chemicals, blood and organs for donation, raw or processed uranium, firearms, historic or cultural items, and Mongolian pedigree cattle.

Some items which do not require a license are nevertheless subject to special taxation on import or export. As of September 09, 2016 changes to the law, such taxes on goat cashmere and camel wool are removed. Only processes and unprocessed timber remain subject to special taxation.

Customs Duty On Import Goods Increased



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Under the Law on Customs Tariff and Duty, enacted on 20 May, 2008, Customs tariff on imported goods shall be classified into one if the following three types:

  • Ordinary
  • Most Favored
  • Discounted Tariff

The rate of ordinary tariff will be twofold the most favorable tariff. Discounted Tariffs will be established by treaty. Most Favored tariffs on imported goods will be approved directly by the Parliament of Mongolia.

On 28 March, 2016, the Cabinet issued a decree to raise the customs duties on imported goods between for 100 types of products as part of the efforts to promote domestic manufacturing. The list of affected products includes a range of goods including selected dairy products, vegetables, construction materials, some types of furniture, and raw materials of animal origin. It is claimed that all these types of goods are produced domestically and that such domestically produced goods have the potential to meet local demand. The enforcement of this decree is effective from May 1, 2016.