Personal income tax

 
The package of new tax laws adopted by Parliament is in effect from January 1, 2007. It is important to note that the content of this new law is greatly

PIT Payers

• Citizen or foreign citizen in Mongolia
• Stateless person or non-resident with Mongolian source income

Residency Effects

• Resident (183 + days in 12 months or possesses permanent home in Mongolia) or an official of the Mongolian government posted overseas: All income regardless of source
• Non-resident: Mongolian source income only

Gross Income

• Salary, wages and other similar income:
  • Includes vacation, allowances and gifts paid to employee or family member, rewards and bonuses from foreign and domestic corporate entities, organizations, individuals or other bodies
• Income from activities:
  • Professional services, production and trade income, and irregular business income
• Property income:
  • Leasing, royalties, dividends, interest, rental, patent and similar income
• Property sale:
  • Immovable and movable property, and shares and securities
• Indirect income, being goods and services paid by employer not having a direct connection with the performance of duties:
  • Transport either at no or discounted charge or cash allowance for same
  • Housing utilities, housing charges or fuel costs, or cash allowance for same
  • Cash allowances for meals or entertainment
  • Provision of domestic services, e.g. cleaner, driver, gardener
  • Repayment of debts owed
  • Loan interest if less than market rates
  • Other income similar to above

Related Party Transactions

• Transactions between related parties shall be valued based on standards prices between nonrelated parties
• Related parties are father, mother, child, grandfather, grandmother, grandchildren, brother, sister, child, spouse, in-law or party having custody of above

Determination of Taxable Income

• Total salary, wages and similar income is reduced by the amount of social and health insurance deducted from total income
• Allowances, gifts, rewards and bonuses from foreign and domestic entities, and other remuneration are taxed in total
• Income from activities is reduced by most associated documented business activities
• Leasing income reduced by associated expenses
• Royalty, dividend, interest and rental income in total
• Sale of immovable property in total
• Sale of movable and other property reduced bydocumented purchase costs
• All other income in total

Herding Income

• Calculated in accordance with number of livestock
• Tax rates vary by aimag and are applied to the number of sheep equivalents

Exempt Income

• Pension, benefit, and other payments issued in accordance with legislation
• Blood donor subsidies
• Per-diem
• Insurance proceedsGovernment interest income
• Safety clothing and supplies
• Emergency grants from others
• Foreign citizens and family members in missions and consulate offices
• Individuals having over 50 percent disability
• Payments associated with state medals and awards
• Cost of constructing or building first-time housing unit up to 30 million MNT
• Twenty sheep per family member
• Indirect income from employer:
  • In-house meals during working hours if provided to all employees
  • Lounges and other services at remote work sites
  • Transportation to/from remote work sites
  • Interest on housing loans at less than market rates
  • Medical treatment costs

PIT Rates

• 10% flat rate for earned income, income from activities and income from property
• 40% for gambling, quizzes and lotteries
• 2% for sale of immovable property
• 5% for artistic or sports performance
• 5% for scientific, literary, artistic, product design or invention and similar income

Tax Credits

• 84,000 MNT annually
• Foreign tax credit in accordance with international treaties
• 50% of the income from producing cereals, potatoes, vegetables, fruit or fodder plants

Users' Comments (7) Comment language: mn (5), jp (1), en (7), ru (2)

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