Mongolia

There have been multiple additions and amendments to the tax legislation promulgated by Mongolian Parliament as follows:

Corporate income tax (CIT)

To stimulate economic activity, a series of tax incentives were introduced in 2023 and 2024. These incentives were specifically designed to encourage businesses to:

• Relocate operations beyond city boundaries.
• Enhance employment opportunities.
• Advocate for the use of public transportation.
• Strengthen the financial market.
• Invest in projects related to heating and electric power production.
• Support start-up companies specialising in innovative products, works, and services
• Foster investment in software development.

Commencing on 1 July 2024, a series of modifications were enacted for the securities issued by the government, provinces, capital city, and resident taxpayers that are traded on the primary and secondary domestic stock markets. These changes include the following:

• The taxable income earned by non-resident taxpayers from the sale of these securities will be computed on a net basis, marking a departure from the previous practice where the tax base was the gross amount.
• Obligations of the tax withholder are assigned to the entities responsible for the central depository and custodian activities of these securities, marking a departure from the previous practice of the self-assessment basis.
• A significant tax credit is provided for the capital gain taxes on these securities. Specifically, a tax credit of 90% is applied for the years 2024-2026, and a 50% tax credit will be applied for the years 2027-2029.

In alignment with corporate social responsibility objectives, investments in fixed assets and financial support or donations provided to unrelated parties for the following activities, which are not directly related to the taxpayer's income-generated operations, are eligible for the CIT credit from September 2024 to 1 January 2035:

• Protection, enhancement, sustainable use, and restoration of natural resources, such as forest, wildlife, and water; reduction of air, water, and soil pollution; and mitigation of desertification.
• Provision of care services for the elderly, persons with disabilities, and children; protection of their rights; creation of accessible environments for persons with disabilities; and construction and operation of playgrounds, camps, and parks for children.
• Protection and restoration of cultural heritage; operation of museums and libraries; creation, performance, and dissemination of music, films, crafts, and stage arts; construction and operation, protection, and maintenance of public roads, squares, and parks; and support for public transaction development.
• Compensation for damages caused by force majeure and other similar disasters.
• Construction and operation of sports facilities; organisation of Olympic-type competitions; and financial support provided to Olympic-type sports associations registered with the Mongolian National Olympic Committee, including teams, professional athletes, and coaches.
• Scholarships provided to students studying at foreign universities in priority areas announced by the government, as well as to students at accredited domestic universities and vocational and technical education institutions.
• Scholarships provided for research purposes to universities and the Academy of Sciences.
• Operation of state and local government-owned educational and health care institutions.
• Operational of special government funds.
• Other restoration expenses.

The amount of the CIT credit shall not exceed 1% of the taxable income for the relevant tax year. It is expected that requirements and standards for the development projects, activities, and operations eligible for the CIT credit will be approved and monitored by the responsible ministries.

In connection with the previously mentioned CIT credit introduction, the following expenses shall not be deductible from taxable income:

• Financial support provided to vocational education and training institutions for the purpose of training specialists on order.
• Donations up to 10 million Mongolian tugrik (MNT) provided to non-governmental organisations established by persons with disabilities in Mongolia.
• Donations up to MNT 100 million provided to support the activities of sports associations and clubs, organise Olympic and continental competitions, and construct and operate sports facilities in compliance with international sports association standards.
• Donations and investments provided to the fund supporting vocational education and training.
• Donations provided to reduce air pollution.
• Donations provided to support cultural creative industries and protect cultural heritage, not exceeding 5% of taxable income.
• Operational expenses for social welfare and care services performed under agreements with social welfare organisations.

See the Tax credits and incentives section for details.

Customs tariffs, customs duties, and value-added tax (VAT)

From June 2024, the government is entitled to extend the payment period of customs duties and VAT for up to four years, or to allow partial payments over a four-year period, for imported building materials and equipment used in the following major projects:

• Major projects and initiatives that are consistent with the regional development policy and supported by a technical and economic feasibility study.
• Construction project included in the general and partial master plans for the development of New Zuunmod City, backed by a technical and economic feasibility study.
• Projects for sports facilities that meet the requirements for hosting Olympic and continental competitions.

Real estate income tax

• The immovable property tax (IPT) rate has been increased from 0.6% through 1.0% to 0.6% through 2.0%.
• Amendments and additions to tax exemptions have been introduced.

See the Other taxes section for details.

Revision of the Asset Valuation Act

The revision of the Law on Asset Valuation was approved by the Parliament on 17 June 2022, and it is effective from 1 January 2023. This revised legislation incorporates the principle of asset valuation for taxation purposes. In alignment with this objective, the Ministry of Finance is assigned to promulgate the procedural guidelines and standard methodology for the valuation of assets for tax considerations. However, the guidelines have not been issued yet.

Law on Minerals

On 19 April 2024, a new law pertaining to the National Treasury Fund was introduced. This law brought about amendments to several existing laws, including the Law on Minerals and the CIT Law.

The recent amendments to the Law on Minerals now prohibit any entity, whether acting independently or in conjunction with affiliated parties, from owning more than 34% of the total issued shares in a legal entity that holds a licence for a strategically important deposit. The only exceptions to this rule are legal entities that have signed an Investment Agreement with the Government of Mongolia or state-owned entities.

Effective January 2025, the Law on Minerals was amended to allow the state’s equity interest in strategic deposits to be substituted with a special royalty payment. This applies to projects where the state would otherwise be entitled to equity due to:

• exploration funded by the state,
• joint development with private entities, or
• private exploration where the state may claim a share based on the investor’s contribution.

The royalty rate will be determined by Parliament, taking into account the specific characteristics of the deposit and based on a proposal from the Government.

Furthermore, the amendments to the CIT Law impose a tax rate of 30% if the beneficial owner of a mining licence for a strategically important mineral deposit transfers, either fully or partially, the right to own and use land, as well as exploration and exploitation licences for minerals, radioactive minerals, and oil. Such transfers may occur through the gifting or bequeathing of shares, participation, or voting rights in a legal entity.