On 22 March 2019, the levies bills on revising the General tax law, the commercial income levies law, the Value-added levy law, and the Personal income levy law were passed by the Mongolian Parliament. A person’s liability to Mongolian individual income duty is determined by residency status for taxation purposes and the source of income obtained by the person. Income duty is presently levied at a flat duty rate of 10 percent for Mongolian occupants, and taxpayers and 20 percent on Mongolian- sourced income for non-resident taxpayers. The tax period is the calendar year.
Income duty
Liability for income duty
Self-dependent taxpayers in Mongolia are classified as occupant and non-resident taxpayers.
- A resident taxpayer of Mongolia is a taxpayer who’s either an existent who resides in Mongolia for 183 or extra days in a successive 12-month period.
- A person who earns 50 percent or further of their salary in that country or sourced from Mongolia
- A person who is a civil servant in Mongolia was appointed to work overseas.
During the first time of appearance, a person can split occupancy status. This means that they’re considered a non-resident for levis purposes for the first 183 days spent there. Once their stay exceeds 183 days, they come to be an occupant from the 184th day and onwards. Likewise, a person who comes to Mongolia with the intention of living and working there for 183 days or further in 12 successive months, can be registered as a levy occupant of Mongolia from the date of appearance.
A resident taxpayer is needed to pay levies on both their taxable salary earned and overseas income).
Non-residents are subject to a levy on certain orders of salary from Mongolian sources under the conception of limited duty liability. However, the levy requirements are fulfilled with the withholdings, and no Mongolian levy return, if the salary from employment is subject to particular income duty withholding.
Tax rates
For occupant taxpayers, employment salary and particular investment income are presently subject to a flat 10 percent levy rate. For non-resident taxpayers, Mongolian-sourced income is presently subject to a flat 20 percent levy rate.
The below income is subject to a specific particular income levy on a gross basis and is subject to the final withholding levy;
- Income from the trade of fixed property is taxed at 2%.
- Income from gambling, quiz, and lottery is taxed at 40%.
- Income from cultural performances and sports competitions is taxed at 5%.
Double taxation treaties
Mongolia has approved levy treaties with several countries/authorities.
For the avoidance of double taxation, Mongolia proposes to use the credit system. The quantum of foreign levy paid is allowed as a credit against the Mongolian duty outstanding on the same income or capital. Still, the quantum of similar duty credit shall not exceed the quantum of duty outstanding on the same quantum of income in Mongolia.
Indirect tax
Under the vat Law, a vat payer is defined as a legal reality, an individual or a PE of a foreign reality, who sells goods, services, and works subject to Vat.
The threshold to be registered as a vat withholding agent is MNT50 million for this purpose, profit from the trade of fixed means shall not be counted. A reality that meets the threshold shall submit its operation to register as a vat withholding agent to an applicable levies authority within 10 working days.
A person or legal reality, whose deals earnings from the primary product, work, and service subject to Vat have reached MNT10 million can be registered freely.
Vat is assessed on goods imported into and exported out of Mongolia and goods produced or sold, work performed, or services offered in that country Goods and services sold or offered in Mongolia are taxed at a rate of 10%. Exported goods, workshops, and services are zero-rated for VAT.
Input Vat paid on purchases of goods, services, and works offered for the purposes of product and services, and Vat paid for goods, workshops, or services directly imported for the purpose of trade, and product.
Sales tax
Vat is assessed on goods imported into and exported out of Mongolia, as well as any goods produced or sold, work performed, or services offered in that state.
The standard Vat rate is 10% of the taxable value of the goods and services. An individual taxpayer who has a Mongolian bank account may reclaim 20% of the Vat paid (i.e. 2 percent of the purchase) during the specific year by registering on a vat refund portal and scanning in all eligible vat bills. This also gives them an automatic entry to a yearly state lottery with levy-exempted cash prizes.
Excise duty
Excise levies are assessed on:
- Alcohol.
- Tobacco.
- Gasoline and diesel energy.
- Motorcars.
- Quizzes and gambling products and actions.
