Mongolia is continuously improving tax environment through the government`s commitment by abolishing burdens of tax.
CORPORATE INCOME TAX
Taxable income falls under the following three categories: - Income from activities which include:
- Business activities;
- Capital gains of securities;
- Gains on foreign currency exchange rates.
Income from property which includes:
- Rental;
- Royalties;
- Dividends;
- Interest
Income from the sale of property (both immovable and movable, except for shares and securities).
Mongolian corporate income tax uses the progressive rate sale of 10% and 25%.
- 10% applies to annual income of up to 3.0 billion MNT
- 25% applies to the amount in excess of 3.0 billion MNT
Certain types of income may be taxed at different tax rates.
| Source of income | Applicable tax rate |
| Dividens | 10% |
| Royalties | 10% |
| Interest | 10% |
| Gambling, betting games and lotteries | 40% |
| Sale of immoveable property (gross) | 2% |
| Sale of rights (gross) | 30% |
Mongolia is one of the countries with the lowest tax rate in the Asia Pacific region with 10% and 25% for corporate income tax, 10% for individual income tax and VAT rate of 10%.
VALUE-ADDED TAX
VAT is imposed at the rate of 10% on the supply of taxable goods and services in Mongolia and on imports into Mongolia.
Taxpayers are required to register with the tax authorities for Mon- golian VAT purposes when their taxable turnover exceeds 10,0 mil- lion MNT. Taxpayers may also voluntarily register when their taxable turnover reaches 8,0 million MNT or if they have invested more than USD$2,0 mil in Mongolia.
VAT is levied on the following in Mongolia:
- Work performed or services rendered in Mongolia;
- Goods sold in Mongolia;
- Goods imported into Mongolia to be sold or used; and
- Goods exported from Mongolia for use or consumption outside Mongolia.
10% rate of VAT is imposed on (i) the supply of taxable goods and services in Mongolia, (ii) exports from Mongolia and (iii) imports into Mongolia. Exported goods and services are taxed at 0% rate and are listed in the law.
CUSTOMS DUTY
Most imported goods are subject to 5% ad valorem Customs duty while others are subject to seasonal duties. Certain goods for export are subject to specific Customs duties. Any person (physical or legal) en- gaged in foreign trade is liable to pay Customs duties, as well as some other taxes and fees upon importation or exportation of goods.
*You can find more information from the Mongolian Customs Office at www.ecustoms.mn or through its hotline 1800-1281
PERSONAL INCOME TAX
A permanent resident taxpayer of Mongolia is subject to tax on his/ her world-wide income. A permanent resident taxpayer of Mongolia is:
- An individual who owns a residence in Mongolia; or
- An individual who resides in Mongolia for 183 or more days in a tax year.
A non-resident taxpayer of Mongolia is subject to tax on the income earned in the territory of Mongolia in a tax year. A non-resident taxpayer of Mongolia is:
- An individual who has no residence in Mongolia and has resided in Mongolia for 183 or less days in a tax year.
*For more information on the taxation please contact the General depart- ment of taxation: on www.mta.mn or hotline 1800-1288
| Source of income | Applicable tax rate |
| Employment income | 10% |
| Business and professional income | 10% |
| Property, i.e. dividens, royalty, interest, capital, gain from sale of securities/stocks | 10% |
|
Sale of immovable property (gross) |
2% |
|
Scientific, literacy artistic works, inventions, product; designs and useful designs (gross) |
5% |
|
Designs and useful designs (gross) |
5% |
|
Sport competitions, art performances, and similar income (gross) |
5% |
|
Betting games, gambling and lotteries (gross) |
40% |
TAX TREATIES
Bilateral foreign tax credits are only available to residents of Mon- golia. To avoid double taxation, Mongolia uses the ‘tax sparing method’. In this case, the amount of foreign tax paid is allowed as a credit against the Mongolian tax payable on the same income or capital. However, the amount of such tax credits should not exceed the amount of tax payable on the same amount of income in Mongolia.
The chart below shows the withholding tax rates (in percent) on Mongolian source dividends, interest and royalties remitted to a resident of other contracting state where the income is not connected with a per- manent establishment in Mongolia.
Mongolia has currently concluded Avoidance of Double Taxation Agreements with 25 countries. The Double Taxation Agreements with State of Kuwait were terminated. It will remain in force until April 01 2015.
TAX INCENTIVES
According to the Law on Investment of Mongolia, one of the inves- ment promotions for investors is tax incentives.
The tax incentives are granted to investors in the following types:
- to exempt from taxes;
- to render tax incentive;
- to calculate the deductible depreciation expense through the accelerated method;
- to calculate the deductible loss by carrying it forward to the future revenue;
- to deduct the employee training expenses from the taxable revenue
Imported machinery and equipment may be exempted from the customs duty and VAT during the construction works in the following cases:
- to build construction materials, oil and agricultural processing and export product plants;
- to build plants to use nanotechnology, bio technology and inno- vation technologies;
- to build power plant and railway.
Tax incentives are provided through the tax law.
TAX DECLARATION
Tax reports are submitted to the tax office by the taxpayer, tax agent or their representative. Since 2013, the tax administration has launched the e-filing online system. Taxpayers are allowed to submit electronic tax reports once they obtain the e-signature from the tax authority.
TAX STABILIZATION
The legal entity which is going to implement an investment proj- ect in Mongolia can obtain Stabilization certificate upon application if it meets the requirements specified in the Law on Investment of Mongo- lia (2013). Stabilization Certificate is a certificate issued by the Invest Mongolia Agency for the purposes of stabilizing tax rates for a specified period of time.
The rates of the following four taxes are stabilized under the stabili- zation certificates from 5 up to 18 years depending on the size and target region of investment:
- Corporate Income Tax;
- VAT;
- Customs Tax;
- Royalty.
Criteria for issuing the stabilization certificate:
- Thresholds based on the regions;
- Environmentally friendly;
- New technology & know-how; and
- Stable job creation.
The below illustrates the scope of Stabilization Certifi- cates for the minerals, heavy industry and infrastructure development sectors.
MINERALS, HEAVY INDUSTRY OR INFRASTRUC- TURE DEVELOPMENT SECTOR
OTHER SECTORS
The table below covers all other sectors. The Investment Law does not apply to investments in the nuclear energy sector, which are governed by the Nuclear Energy Law.
The Invest Mongolia Agency may extend by two years the time period within which the investment must be made, upon an investor’s ap- plication. Furthermore, the duration of the Stabilization Certificate may be extended by 1.5 times.
If in the Agency’s opinion:
- The investment project plans to produce or manufacture goods for import or export that will contribute to Mongolia’s long term sustainable social and economic development. In addition, the planned investment value, based upon a feasibility study, must exceed MNT 500 billion and the project development must be expected to last for more than 3 years.
- The investment project produces value added goods for export.
Tax returns can be submitted electronically in www.e-tax.mta.mn
For further information on stabilization certificate, please contact Invest Mongolia Agency: www.investmongolia.com, contact info@investmongolia.com
Mongolia is continuously improving tax environment through the government`s commitment by abolishing burdens of tax.
CORPORATE INCOME TAX
Taxable income falls under the following three categories: - Income from activities which include:
- Business activities;
- Capital gains of securities;
- Gains on foreign currency exchange rates.
Income from property which includes:
- Rental;
- Royalties;
- Dividends;
- Interest
Income from the sale of property (both immovable and movable, except for shares and securities).
Mongolian corporate income tax uses the progressive rate sale of 10% and 25%.
- 10% applies to annual income of up to 3.0 billion MNT
- 25% applies to the amount in excess of 3.0 billion MNT
Certain types of income may be taxed at different tax rates.
| Source of income | Applicable tax rate |
| Dividens | 10% |
| Royalties | 10% |
| Interest | 10% |
| Gambling, betting games and lotteries | 40% |
| Sale of immoveable property (gross) | 2% |
| Sale of rights (gross) | 30% |
Mongolia is one of the countries with the lowest tax rate in the Asia Pacific region with 10% and 25% for corporate income tax, 10% for individual income tax and VAT rate of 10%.
VALUE-ADDED TAX
VAT is imposed at the rate of 10% on the supply of taxable goods and services in Mongolia and on imports into Mongolia.
Taxpayers are required to register with the tax authorities for Mon- golian VAT purposes when their taxable turnover exceeds 10,0 mil- lion MNT. Taxpayers may also voluntarily register when their taxable turnover reaches 8,0 million MNT or if they have invested more than USD$2,0 mil in Mongolia.
VAT is levied on the following in Mongolia:
- Work performed or services rendered in Mongolia;
- Goods sold in Mongolia;
- Goods imported into Mongolia to be sold or used; and
- Goods exported from Mongolia for use or consumption outside Mongolia.
10% rate of VAT is imposed on (i) the supply of taxable goods and services in Mongolia, (ii) exports from Mongolia and (iii) imports into Mongolia. Exported goods and services are taxed at 0% rate and are listed in the law.
CUSTOMS DUTY
Most imported goods are subject to 5% ad valorem Customs duty while others are subject to seasonal duties. Certain goods for export are subject to specific Customs duties. Any person (physical or legal) en- gaged in foreign trade is liable to pay Customs duties, as well as some other taxes and fees upon importation or exportation of goods.
*You can find more information from the Mongolian Customs Office at www.ecustoms.mn or through its hotline 1800-1281
PERSONAL INCOME TAX
A permanent resident taxpayer of Mongolia is subject to tax on his/ her world-wide income. A permanent resident taxpayer of Mongolia is:
- An individual who owns a residence in Mongolia; or
- An individual who resides in Mongolia for 183 or more days in a tax year.
A non-resident taxpayer of Mongolia is subject to tax on the income earned in the territory of Mongolia in a tax year. A non-resident taxpayer of Mongolia is:
- An individual who has no residence in Mongolia and has resided in Mongolia for 183 or less days in a tax year.
*For more information on the taxation please contact the General depart- ment of taxation: on www.mta.mn or hotline 1800-1288
| Source of income | Applicable tax rate |
| Employment income | 10% |
| Business and professional income | 10% |
| Property, i.e. dividens, royalty, interest, capital, gain from sale of securities/stocks | 10% |
|
Sale of immovable property (gross) |
2% |
|
Scientific, literacy artistic works, inventions, product; designs and useful designs (gross) |
5% |
|
Designs and useful designs (gross) |
5% |
|
Sport competitions, art performances, and similar income (gross) |
5% |
|
Betting games, gambling and lotteries (gross) |
40% |
TAX TREATIES
Bilateral foreign tax credits are only available to residents of Mon- golia. To avoid double taxation, Mongolia uses the ‘tax sparing method’. In this case, the amount of foreign tax paid is allowed as a credit against the Mongolian tax payable on the same income or capital. However, the amount of such tax credits should not exceed the amount of tax payable on the same amount of income in Mongolia.
The chart below shows the withholding tax rates (in percent) on Mongolian source dividends, interest and royalties remitted to a resident of other contracting state where the income is not connected with a per- manent establishment in Mongolia.
Mongolia has currently concluded Avoidance of Double Taxation Agreements with 25 countries. The Double Taxation Agreements with State of Kuwait were terminated. It will remain in force until April 01 2015.
TAX INCENTIVES
According to the Law on Investment of Mongolia, one of the inves- ment promotions for investors is tax incentives.
The tax incentives are granted to investors in the following types:
- to exempt from taxes;
- to render tax incentive;
- to calculate the deductible depreciation expense through the accelerated method;
- to calculate the deductible loss by carrying it forward to the future revenue;
- to deduct the employee training expenses from the taxable revenue
Imported machinery and equipment may be exempted from the customs duty and VAT during the construction works in the following cases:
- to build construction materials, oil and agricultural processing and export product plants;
- to build plants to use nanotechnology, bio technology and inno- vation technologies;
- to build power plant and railway.
Tax incentives are provided through the tax law.
TAX DECLARATION
Tax reports are submitted to the tax office by the taxpayer, tax agent or their representative. Since 2013, the tax administration has launched the e-filing online system. Taxpayers are allowed to submit electronic tax reports once they obtain the e-signature from the tax authority.
TAX STABILIZATION
The legal entity which is going to implement an investment proj- ect in Mongolia can obtain Stabilization certificate upon application if it meets the requirements specified in the Law on Investment of Mongo- lia (2013). Stabilization Certificate is a certificate issued by the Invest Mongolia Agency for the purposes of stabilizing tax rates for a specified period of time.
The rates of the following four taxes are stabilized under the stabili- zation certificates from 5 up to 18 years depending on the size and target region of investment:
- Corporate Income Tax;
- VAT;
- Customs Tax;
- Royalty.
Criteria for issuing the stabilization certificate:
- Thresholds based on the regions;
- Environmentally friendly;
- New technology & know-how; and
- Stable job creation.
The below illustrates the scope of Stabilization Certifi- cates for the minerals, heavy industry and infrastructure development sectors.
MINERALS, HEAVY INDUSTRY OR INFRASTRUC- TURE DEVELOPMENT SECTOR
OTHER SECTORS
The table below covers all other sectors. The Investment Law does not apply to investments in the nuclear energy sector, which are governed by the Nuclear Energy Law.
The Invest Mongolia Agency may extend by two years the time period within which the investment must be made, upon an investor’s ap- plication. Furthermore, the duration of the Stabilization Certificate may be extended by 1.5 times.
If in the Agency’s opinion:
- The investment project plans to produce or manufacture goods for import or export that will contribute to Mongolia’s long term sustainable social and economic development. In addition, the planned investment value, based upon a feasibility study, must exceed MNT 500 billion and the project development must be expected to last for more than 3 years.
- The investment project produces value added goods for export.
Tax returns can be submitted electronically in www.e-tax.mta.mn
For further information on stabilization certificate, please contact Invest Mongolia Agency: www.investmongolia.com, contact info@investmongolia.com