Parliament of Mongolia approved amendments to the 2017 State budget, with proposed tax increases last week in accordance with the Staff-Level Agreement between Mongolia and International Monetary Fund on Three-Year Extended Fund Facility. In regards, following tax increases will take effect on May 1, 2017.
VEHICLE EXCISE TAX
Majority or the 75-86 percent of vehicles registered in Mongolia are outdated and more than 10 years old, causing negative impacts on the environment and increasing amount of air pollution.
Therefore, the tax rebate for hybrid vehicles, LPG-fueled vehicles, and electric vehicles is set to be decreased by 50 percent while excise taxes on vehicles will be increased depending on the engine capacity and aging.
For instance, excise taxes on vehicles with engine size less than 4500 sm³ will be added by 3-15 percent and vehicles with engine size more than 4501 sm³ will be added by 40-250 percent.
Thus, vehicle excise tax revenue expects to increase MNT 33.8 billion and reach MNT 57.3 billion.
INTEREST REVENUE WILL BE TAXED
Interest income on personal savings accounts will be taxed from May 1, 2017. Previously, it was said to be imposed on only owners of savings more than MNT 100 million. However, it was decided to be applied to all owners of savings.
Owners of savings will pay 10 percent of taxes on their interest income.
Thus, it expects to increase budget revenue as follows;
CUSTOMS TAX ON IMPORTED TOBACCO WILL BE INCREASED
Customs tax on imported tobacco is now at 5 percent. Minister of Finance noted that the customs tax on tobacco is lower than limits set by the World Trade Organization and it shall be increased up to 30 percent. Therefore, customs tax on all imported tobacco will be increased by 30 percent.
Thus, it expects to increase state revenues approximately by MNT 20 billion in 2017, MNT 26 billion in 2018 and MNT 27 billion in 2019.
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