Corporate tax in Mongolia

 
The package of new tax laws adopted by Parliament is in effect from January 1, 2007. It is a pleasure to present to you in this brochure the Economic Entity Income Tax Law of Mongolia from the package. It is important to note that the content of this new law is greatly changed from the previous one.

Corporate Income Tax payers

• Domestic and foreign companies, partnerships, and cooperatives
• Enterprises with state and local property registered with the state register that conduct business activities

Resident

• Economic entity formed within the laws of Mongolia
• Foreign economic entity with headquarters in Mongolia

Non-resident

• Foreign economic entity conducting activities via a representative office:
  • Branch
  • Plant
  • Trade/service provider
  • Oil well, gas well, mine
• Foreign economic entity otherwise earning income in Mongolia

Residency Effects

• Taxpayers reside permanently in Mongolia are taxed on domestic and foreign income
• Taxpayers do not reside permanently in Mongolia are taxed only on income earned in the territory of Mongolia

Related Parties

• Related parties are those:
  • Holding 20+% of common stock; or
  • With right to receive 20+% of dividends; or
  • With right to appoint 20+% of management or otherwise able to determine policies
• Transactions valued based on similar transactions between non-related parties (benchmark prices)
• Methodology for establishing benchmark prices approved by Ministry of Finance

Gross Taxable Income

• Income from activities:
  • Production/sale of work and services
  • Sale of rights
  • Sale of shares and securities
  • Quizzes, gambling and lotteries
  • Sale /rental of erotic materials
  • Erotic performances
  • Income in kind
  • Sale of intangible assets
  • Technical, management, consulting or other services
  • Interest and penalties for nonperformance and compensation for damages
  • Realized foreign currency exchange rate gain
  • Other similar income
• Income from property:
  • Leases of movable and immovable property
  • Royalties
  • Dividends
  • Interest
• Income from sale of movable and immovable property

Deductible Expenses

• All types of inventories
• Salaries, wages and additional wages on which social and health insurance premiums and personal income tax are imposed
• Social and health insurance premiums
• Employee bonuses, incentives and allowances for housing, transport, meal and fuel
• Depreciation/amortization of non-current assets
• Regular maintenance
• Loan interest if loan borrowed to carry out primary and auxiliary production, work and services
• Realized foreign currency exchange losses
• Work and services performed by others
• Lease payments
• Interest portion of finance lease payments
• Subscriptions to professional publications
• Mandatory/voluntary insurance premiums
• Taxes:
  • Excise
  • Immovable property
  • Windfall profits
  • Customs duties
  • Transport vehicles
  • Land and natural resource fees and payments
• Accumulated loan risk funds of savings/loan cooperatives, other cooperatives, banks and non-banking financial institutions
• Advertising
• Employee training and retraining
• Seed, fertilizer, livestock and animal fodder
• Transportation
• Short-lived and low-value assets
• Labor safety expenses
• Communication, stationery, cleaning and security
• Mitigation of disaster damages in compliance with Disaster Management Law
• Normal wear and tear of inventory
• Environmental rehabilitation funds established in accordance with Minerals Law

Limited Deductible Expenses

• Immovable asset maintenance to 2% of book value
• Movable asset maintenance to 5% of book value
• Voluntary insurance premiums to 15% of taxable income
• Per diem to twice the civil servant norm
• Interest on investor’s debt exceeding three times investment

Non-deductible Expenses

• For all taxpayers:
  • Expenses incurred in connection with exempt income
  • Undocumented expenses
  • Expenses subject to withholding when tax was not withheld
  • Finance lease payments
  • Fines and penalties
  • Interest payments to controlling resident individual
• For non-resident taxpayers:
  • Expenses incurred out of Mongolia
  • Management/administrative expenses not related to producing income

Depreciation and Amortization

• Straight-line method in accordance with schedule
  • Buildings: 40 years
  • Machinery and equipment: 10 years
  • Computers and software: 3 years
  • Other assets: 10 years
  • Intangible assets: 10 years or useful life
• Depreciable value includes balance of maintenance expense over limitations
• Mining production and social infrastructure assets over useful life
• Unused assets are assumed sold
• Includes assets under financial lease
• Interest during construction is capitalized
• Land and inventories not depreciable

Exempt Income

• Government bond interest
• Oil production-sharing income for non-resident taxpayers
• Cooperative income for intermediary services

Tax Rates

• 10% on first 3 billion MNT/ 25% on balance
• Dividends 10%
• Royalties 10%
• Quizzes, gambling and lotteries 40%
• Sale /rental of erotic materials 40%
• Erotic performances 40%
• Gift or disposal of immovable property 2% of gross
• Interest 10%
• Sale of rights 30%
• Foreign entity’s income transferred abroad 20%
• Non-resident Mongolian income 20%, including:
  • Dividends
  • Interest
  • Royalties, rents, leases
  • Payment for management and administrative expenses
  • Goods and services sold in Mongolia

Tax Credits

• Production of cereals, potatoes and vegetables, milk, fruits and berries and fodder plants 50% exempt
• 10% Investment tax credit with 3 year carryforward provided investment is:
  • Non-current asset
  • For purpose of starting new production or expanding or renovating existing production in priority sectors
  • Made subsequent to 1 January 2007
• Proportionate credit based on the percentage of disabled employees to total number of employees
• Foreign tax paid if country is party to a double taxation treaty with Mongolia

Loss Carryforward

• Tax statement loss carried forward to two subsequent years:
  • Annual amount used may not exceed 50% of taxable income in the tax year
  • Lost must be incurred subsequent to 1 January 2007

Tax Holidays: 10 years 100%, 5 years 50%

• None

Tax Holidays: 5 years 100%, 5 years 50%

• None

Tax Holidays: 3 years 100%, 3 years 50%

• None

Tax Holidays: 1 year 100%, 2 years 50%

• None

Tax Holidays: 1 year 100%, 2 years 75%

• None

Tax Holidays: 2 year 100%, 1 years 50%

• None

General

• Tax statements must be prepared on accrual basis
• Taxes due monthly in advance by the 25th
• Quarterly tax statements due by the 20th of following month
• Annual tax statements due 10 February

Users' Comments (2) Comment language: mn (0), jp (3), en (2), ru (70)

Posted by best free mmorpg 24-02-2011 06:41,   best free mmorpg 2011 Heya   can any individual advise me?   I want a free Mmo that has a number of players and they (well many) can talk English. It's vital that the actual servers have a very lot of gamers. I am searching for similar to Diablo or possibly World of warcraft. I am additionally not willing to spend money as I simply have some time to kill right now. It's alright if the particular game is free with premium content. I've looked a lot regarding MMORPGs but none from the web sites actually say how much gamers are usually on-line.   appreciate it   » Reply to this comment...   Posted by iphone 5 05-03-2011 02:36,   iphone 5 release When is the iphone five likely to be released? I've got verizon and would like to have the i phone when my own agreement expires in April, I'd like to find out if the i phone five is arriving out anytime in the near future, for the reason that if so, I might stick it out lengthier to receive that instead of the iphone 4.   » Reply to this comment...

Comment an article   Name   E-mail    Title Available characters: 600  Notify me of follow-up comments

< Prev		Next >