Five steps for setting up a company in Mongolia

Journalist A.Odontuya

2017-01-16 09:00 GMT+8
Photo source: www.mad-intelligence.com

Are you planning to set up your company in Mongolia? According to the 2017 Doing Business Report by World Bank-International Finance Corp, Mongolia ranked 64th in the report. 

We at GoGo Mongolia points out the five steps to help you to establish your company in Mongolia. 

1Verify and reserve a unique company name
First, you should determine the types of the enterprise whether it is LLC, JSC or a representative office of a foreign legal entity. Foreign investor is eligible to set up an enterprise of this type only. A representative office shall not be deemed a legal entity. It is prohibited for a representative office to carry out any commercial activities for the profit earning purpose within the territory of Mongolia. 

Then, the business owners must propose and reserve the name of the company with the Legal Entities Registration Office of the General Authority for State Registration of Mongolia (LERO). Upon approving the proposed name of the company, LERO will issue a name reservation slip (in writing or electronically) and a "bank account permission slip". The entrepreneur opens a temporary account at the bank within the same office and, at the same time, can instruct the bank to make a payment to the account of the Tax Authority.

Although the company name may be reserved online, the name reservation slip is one of the documents that needs to be supplied in original for the incorporation purposes. As such, ultimately a visit to LERO in person is required. 

Granting a name permission

The name of a company with foreign investment cannot clash with the names registered in Mongolia, so that it will not cause any confusion. Prior to company incorporation, an entity shall obtain the verification certificate from General Authority of State Registration, where the name shall be printed in Cyrillic.

Documents required for obtaining name verification certificate:

  1. Original copy of ID of an incorporator
  2. If foreigner, original copy of the passport
  3. Obtainable via Power of Attorney /accreditation is applicable by original copy of an ID or passport/
  4. Document processing fee 500 MNT needs to be remitted to GolomtBank-1401001101

Time to complete: 1 day
Associated costs: 500 MNT

2Open a bank account and pay registration fee
Upon obtaining the name verification certificate, the company needs to have a bank account in order to register. Please note that bank might request additional documents.

To establish a representative office, a foreign legal entity obtain certificate of establishment from General Authority of State Registration and grant permission for account opening from City Tax Office.

Following is the list of banks currently operating in Mongolia:

Golomt Bank – www.golomtbank.com

Time to complete: 1 day
Associated costs: Depends on the bank

3Register the company incorporation and register as tax payer
The following documents should be submitted at LERO in order to register incorporation and obtain a state registration certificate:
1. Completed proforma application form;
2. Bank account approval letter, and evidence of dormant account with some funds deposited;
3. Company charter;
4. Lease agreement with the company's official address;
5. Founding or shareholders' resolution;
6. Payment slip of the registration fee;
7. Name reservation slip;
8. Opening balance sheet; and
9. Copies of the shareholders' passports (IDs). 

* For business activities that require licenses, these must be obtained first from the relevant authorities.

On 29 January 2015, the Mongolian Parliament adopted the Revised Law on the State Registration of Legal Entities which entered into force on 1 March 2015. The relevant ancillary regulations were adopted on 27 February 2015 by the Ministry of Justice and the General Authority for State Registration of Mongolia. According to the new regulations, the Legal Entities Registration Office must process company registration within 5 business days. The same regulation also introduced online registration, which is yet to be put into practice.

Upon registration of the company, the Registry automatically publishes a notice of company formation. The Registry also automatically pass the relevant documents to the tax department for the area in which the company is located. Thereafter, the company will be registered as a corporate income tax payer and VAT payer, if applicable. 

Under the Law of Mongolia on Value Added Tax dated 29 June 2006, a taxpayer should submit its request for registration as a VAT payer within 3 days of its sales income reaching MNT 10,000,000 (approximately US$ 5010), which is to be evidenced by certified corporate income tax and financial reports.

Time to complete: 1 day
Associated costs: 44,000 MNT

4Apply for Social Security Code
Foreign entity shall register in local Social Insurance office according to incorporated company`s address in order to obtain social insurance certificate. An entity is required to bring original copy and the copy of certificate of incorporation obtained from General Authority of State Registration.

Register in Tax Office

Information on company incorporation is sent to local tax office automatically and an entity shall bring original copy and the copy of certificate of incorporation to local tax office within 14 days after obtaining the certificate of incorporation to get registered.

A representative office of foreign legal entity shall get registered in the City Tax Office.

Time to complete: 1 day
Associated costs: No charge

5Obtain the company seal
The company must first obtain a seal request form LERO. Then, the company must provide one of twelve seal makers in Ulaanbaatar who are currently registered with Ministry of Justice with a copy of its state registration certificate.

Required documents:

Foreign invested company:

  • Original copy of certificate of incorporation

Representative office

  • Representative office incorporation certificate
  • Official request letter
Seal manufacturing companies Address Contact number
1. “Tod Tamga”Ltd Chingeltei District, Ankara Street-23, Tod Tower, 1s floor 323454

 

www.todtamga.mn

2. “Agarmoosh” Ltd Chingeltei duureg, 4th horoo, Tsetsee gun university, 3rd floor #307 323029
3. “Gesu”Ltd Sukhbaatar district, Baga toiruu #48-1 330866
4. “Khas Tamga” Ltd Chingeltei duureg, 3-r horoo, Urt tsagaan east wing #208, 301 70129100
5. “Khash Tamga” Ltd Sukhbaatar district, 6-r horoo, Focus centre #102  

Time to complete: 1 day
Associated costs: 59,800 MNT

Source: Invest Agency Mongolia and www.doingbusiness.org

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