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Tax Guide Mongolia

Tax Guide Mongolia

Personal Income Taxation in Mongolia

For permanent residents in Mongolia, aggregate income is used in order to compute personal income tax. This implies that both, income sourced within Mongolia, as well as income sourced outside Mongolia is used in order to compute personal income tax.

On the other hand, for non-residents, only that income is used for computing personal income tax that is sourced from within the periphery of Mongolia.

Personal Income Tax Rates

The following PIT rates are levied in Mongolia:

  • Salaried Income (income generated as a result of employment): The applicable rate of PIT for residents is 10%. For non-residents, the applicable rate of PIT is 20%.
  • Income from property: The applicable rate of PIT for residents is 10%. For non-residents, the applicable rate of PIT is 20%.
  • Income arising from sale of immovable (physical) property: The applicable rate of PIT for residents is 2%. For non-residents, the applicable rate of PIT is 20%.
  • Income arising from literary work, or any creative stream of work: The applicable rate of PIT for residents is 5%. For non-residents, the applicable rate of PIT is 20%.
  • Income arising from betting or gambling: The applicable rate of PIT for residents is 40%. For non-residents, the applicable rate of PIT is 20%.

Corporate Income Taxation in Mongolia

Mongolian resident entities liable to pay CIT on their worldwide income. This implies that both, income sourced from within Mongolia, as well as income sourced outside of Mongolia is used in order to calculate CIT.

On the other hand, as far as non-resident entities are concerned established in Mongolia, Mongolian sourced income is used in order to compute CIT. This includes both, income sourced from within Mongolia, as well as all other income that is directly, or indirectly sourced from Mongolian sources.

Corporate Income Tax Rates in Mongolia

Corporate Income Tax is levied at progressive rates in Mongolia. The rates vary from 1% to 25%. They are levied in the following manner:

  • 1% rate is applicable across all entities that have a revenue of up to 300 Million MNT (Mongolian Tugrik). However, this rate is not applicable for companies that are operating in mining, petroleum, or alcohol related sector.
  • 10% rate is applicable on companies for the first 6 Billion MNT (Mongolian Tugrik).
  • In the case where the annual taxable income is higher that MNT 6 Billion, the applicable tax is MNT 600 Million, in addition to 25% of the income that exceeds MNT 6 Billion.

In addition to this, there are a couple of other applicable tax rates under the Corporate Income Tax regime. They are as follows:

  • For income arising from dividends: CIT is levied at a rate of 10%.
  • For income arising from royalties: CIT is levied at a rate of 10%.
  • For income arising from interest: CIT is levied at a rate of 10%.
  • For income arising from gambling or betting: CIT is levied at a rate of 40%.
  • For income arising from sale of immovable property: CIT is levied at a rate of 2%.
  • For income arising from sale of rights: CIT is levied at a rate of 10%.

Other than this, no other taxes are applied on corporate entities in Mongolia on a local level.

Other Corporate Taxation in Mongolia

  • Value Added Tax: VAT is applicable as a consumption tax in Mongolia at a rate of 10%. This is mainly imposed on the supply of goods, services, as well as all imported goods and services.
  • Custom Duties: Custom Duty is levied in Mongolia at rates varying between 5% and 40%. This mostly depends on the type of goods that are imported within Mongolia. However, this rate is not applicable for gas condense, petroleum oils, as well as other equipment that is used for oil refineries, or extraction, in general.

Additionally, export duties are also levied on specific goods and services including unprocessed camel wool, wood, as well as other wooden materials.

  • Excise Duties: Excise Tax is mostly implied on certain goods manufactured, as well as imported within Mongolia. Examples include tobacco, alcohol, gasoline, as well as diesel fuel. The rate of goods and services on alcohol and tobacco mostly depends on the category in which it belongs. However, the general rate of classification is MNT 320, and MNT 19,140 per given liter.
  • Immovable (Physical) Property Tax: Immovable tax is levied in Mongolia at rates varying between 0.6% and 1%. This mostly depends on the underlying value of property, as dictated by the government registration authority.
  • Transfer Taxes: Mongolia does not have a separate transfer tax in place. However, in case of certain transfer of taxes, the applicable rate is around 30% under the CIT law. As far as individuals are concerned, the transfer of land right is also levied a 10% tax liability under the PIT tax regime.
  • Payroll Taxes: In lieu of payroll taxes, the employer is supposed to withhold a PIT at t a rate of 10% or 20% from the income of the employee.
  • Social Insurance Contributions: Social Insurance Contributions by the employer vary between 12.5% and 14.5%. This is an aggregate figure, which mostly comprises of 8.5% for pension, 1% for benefits, 2% for health, as well as around 2.8% for any industrial accidents.

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