{"id":7177,"date":"2023-08-24T19:08:01","date_gmt":"2023-08-24T11:08:01","guid":{"rendered":"https:\/\/chinggislaw.com\/?p=7177"},"modified":"2023-08-24T19:08:01","modified_gmt":"2023-08-24T11:08:01","slug":"mongolias-business-income-tax-law-are-businesses-enabled","status":"publish","type":"post","link":"https:\/\/chinggislaw.com\/?p=7177&lang=en","title":{"rendered":"Mongolia\u2019s Business Income Tax Law: Are Businesses Enabled?"},"content":{"rendered":"

Certainly, Mongolia\u2019s 2019 Business Income Tax Law <\/strong>aims to support small businesses and diversify investments and exports.<\/p>\n

That said, the benefits of tax laws depend on adequate guidance and supportive culture of the tax authorities as Mongolia\u2019s tax laws are complex.<\/p>\n

In addition, the expertise and integrity of courts and other dispute resolution avenues are crucial.<\/p>\n

Below, I highlight some information on Mongolia\u2019s tax system and the Business Income Tax Law:<\/p>\n

–\u00a0 \u00a0\u00a0\u00a0 Mongolia has 30 taxes.<\/p>\n

– \u00a0 \u00a0\u00a0 The country has concluded 30 DTAs (bilateral agreements which prevent double taxation).\u00a0DTA countries include Singapore, China, Korea, France, Germany, Turkey, Canada, and India.<\/p>\n

–\u00a0 \u00a0\u00a0\u00a0 Tax stabilization is provided for investors for 10-20 years.\u00a0Investment Agreements provide much longer period.<\/p>\n

–\u00a0\u00a0\u00a0\u00a0 The loss carry-forward period is 4 years and is limited to 50% of the annual taxable income.<\/p>\n

–\u00a0 \u00a0\u00a0\u00a0 The Tax Department does not issue private rulings, but it issues advisory guidelines.<\/p>\n

–\u00a0 \u00a0\u00a0\u00a0 The Ministry of Finance issues rules, for instance, on the sale and transfer of land rights and mineral licenses.<\/p>\n

Business Income Tax Rates\u00a0<\/strong><\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 1% on up to USD 86,000 annual taxable income (excludes real property, dividend and interest incomes & mining and petroleum industries)<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 2% on the sale or transfer of a real property<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 5% on interest income of an investor who purchased debt instruments issued by a Mongolian commercial bank or by a resident taxpayer not holding mineral or petroleum licences<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 5% on dividend incomes of an investor who purchased shares issued by a resident taxpayer not holding mineral or petroleum licenses<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 5% on the sale of IP rights, and royalty income remitted by a software development business to a non-resident for server renting and software license<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 10% if the taxable income is up to around USD 1.8 million<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 20% on profits transferred to a head company from a permanent establishment. The same rate applies to Mongolian-source income of unregistered non-residents.<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 25% if the taxable income is over USD 1.8 million (which may be reduced by an applicable DTA).<\/p>\n

Exempt Incomes <\/strong><\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Interest incomes from a loan securitized by IP rights<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Business income of investment funds<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Primary incomes of institutions which provide loan guarantees<\/p>\n

–\u00a0\u00a0\u00a0\u00a0\u00a0 Sales income earned under a product sharing agreement in the petroleum sector.<\/p>\n

Tax Credits <\/strong><\/p>\n