Tag Archives: Tax

Crash Course on Mongolia Corporate Income Tax



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Mongolia resident economic entities are taxable on aggregate annual income earned worldwide. Non-resident economic entities carrying out business activities in Mongolia are taxable on the income earned within the territory of Mongolia and otherwise from Mongolian sources.

According to the Law on Corporate Income Tax enacted in 2006, taxable corporate income includes income from activities, properties and sale of property.

The general tax rate for an economic entity incorporated in Mongolia is ten percent (10%) for the first 0-3.0 billion MNT and 300 million MNT, plus twenty-five percent (25%) for all income exceeding 3.0 billion MNT.

Dividend income, royalty income and interest income are taxed at ten percent (10%), income from the sale of a right at thirty percent (30%) and income from the sale of immovable property at two percent (2%).

A representative office of a foreign economic entity that transfers its own profit overseas is taxed at twenty percent (20%).  Similarly, the following income of a taxpayer who does not reside in Mongolia but generates income in Mongolia shall be taxed at twenty percent (20%):

  1. dividend income received from an economic entity that is registered and operates in Mongolia;
  2. loan interest and payment for issuing a guarantee;
  3. royalty income and interest on a finance lease, payment for administrative expenses, rent, management expenses and lease, and income from the lease of tangible and intangible assets; and
  4. income from goods sold, work performed and services provided in the territory of Mongolia.

Payment of corporate income tax is on a quarterly basis with the payment for the first three quarters to be paid between the 1st and the 20th of the first month for the following quarter, and for the fourth quarter between January 1st and February 10th of the following year.

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Mongolia Individual Income Tax



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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.

2016 Update to VAT



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

The new VAT law revised key terminology and broadened the types of activities which are subject to VAT. The VAT Law increased the threshold for the 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 remains possible if the income of the entity reaches 10 million MNT.

The Law also introduces a system of incentivizing taxpayers with the possibility of recovering up to 20 percent of taxes paid if certain conditions are met. It 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.

The VAT rate of 10 percent remains the same, 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”) percent VAT.

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.

The Basics of the Capital City Tax



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Parliament approved the Law on Capital City Tax on 19 June 2015 and the law entered into effect on October 1, 2015.  The Law on Capital City Tax encompasses and includes the General Taxation Law, Budget Law and the Law on the Legal Status of the Capital City and other laws and legal acts enacted in conformity with them.

The law imposes a capital city tax for the first time In Mongolia.  The capital city tax is imposed on the sale of alcohol and cigarettes, the supplies of hotel and resort services, and services offered in restaurants and bars.

The tax rate (up to 1%) will be determined, region by region, by the Citizens Representative Khural of the Capital City (or by the local parliament) depending on the location and population size of a particular area within Ulaanbaatar city.