Mongolia to increase income tax rates


2016-09-02 13:56 GMT+8

Newly formed Government, after the 7th Parliamentary election, introduced its plan to lower budget deficit by rising personal income tax rates. The plan has not yet approved by the State Great Khural (unicameral parliament of Mongolia). If the plan wins majority support from MPs, the plan will come into effect immediately. 

At the moment, the Mongolian economy is facing a very difficult situation. Therefore, newly formed Government introduced some measures to tackle the tough times, which included plan to increase personal income tax rates. 

Individuals with monthly wages higher than US$ 909 (2.5 million Mongolian Tughrik) will pay 10 per cent personal income tax on its up to US$ 909 income and pay 25 per cent personal income tax on its additional income. An average monthly wages in Mongolia stands at US$ 363 (800,000 Tugrik). However, people to pay 25 per cent personal income taxes account 1.6 per cent of total employed people in Mongolia. As a result, the budget revenue has projected to be increased by US$ 27 million annually starting 2017.

But first, the plan has to be discussed at related Standing Committee meetings and approved by the State Great Khural. Currently, State Great Khural has recalled the plan. Of course, the Democratic Party (DP) is the most powerful opponent to the plan, initiated by the Mongolian People`s Party which became the majority in State Great Khural winning 65 seats out of 76 in the 2016 Parliamentary election.

DP group considered that increase in tax rates is wrong policy.

Member of DP Group, MP D.Erdenebat noted: “It is a wrong decision to increase tax rates during economic difficulties. Instead, we should expand the number of taxpayers. Majority of people is paid less than US$ 909 as monthly wages”.

Citizen Chuluuntsetseg said “We have sufficiently educated and learned more than others to get monthly salary of more than US$ 909. But it is unfair to pay more taxes than others”.

The plan will be finalised in the next few days. But the exact time and final decision have not yet clarified. If the plan wins majority support from member of parliament, the plan will come into effect immediately. 

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