2018蒙古税务简报（英文版）

International Tax Mongolia Highlights 2018 Summary

Core Content Overview

This document provides a comprehensive overview of the tax framework in Mongolia, focusing on corporate and personal taxation, withholding taxes, and other relevant tax provisions. It also outlines compliance requirements, anti-avoidance rules, and tax treaties applicable in 2018.

Corporate Taxation

Taxable Entities

• Residence: A corporation is a resident if it is incorporated in Mongolia or if its place of management is in Mongolia.
• Tax Basis: Residents are taxed on worldwide income; nonresidents are taxed only on Mongolian-source income.
• Taxable Income: Includes profits from product sales, services, asset leases or sales, share sales, and other operations.
• Dividends: Dividends received are included in taxable income.
• Capital Gains: Gains from the sale of movable and immovable property are taxed at the standard corporate income tax rates; no separate capital gains tax exists.
• Losses:
  • Businesses in mineral and infrastructure sectors may carry forward losses for 4–8 years.
  • Other businesses may carry forward losses for up to 2 years, with 50% of losses deductible against taxable profits.

Tax Rates

• Standard Rate:
  • Taxable income up to MNT 3 billion is taxed at 10%.
  • The excess is taxed at 25%.
• Surtax: Not applicable.
• Alternative Minimum Tax: Not applicable.

Tax Incentives

• Agricultural and Oil & Gas Sectors: Available tax incentives or benefits.
• Innovative Businesses: Exempt from corporate tax for three years.
• Investments Act 2013: Provides legal investment guarantees, including a guaranteed tax environment and stabilization for investments exceeding MNT 30 billion.

Withholding Taxes

• Dividends:
  • 10% on payments to residents.
  • 20% on payments to nonresidents, unless reduced by tax treaties.
• Interest:
  • 20% on payments to nonresidents, unless reduced by tax treaties.
• Royalties:
  • 20% on payments to nonresidents, unless reduced by tax treaties.
• Technical Service Fees: 20% withholding tax applies.
• Branch Remittance Tax: 20% on profit repatriation by nonresidents, unless reduced by tax treaties.
• Other Income:
  • 20% withholding tax on Mongolian-source income from nonresidents, including internet or electronic transactions.
  • 2% withholding tax on sale of real property.

Other Taxes on Corporations

• Payroll Tax: Employers must withhold income tax from employees' wages at 10%.
• Real Property Tax: Imposed at 0.6%–1% of the property's value.
• Social Security Contributions: Employers pay 13.7%–15.5% of gross salary for various insurances, which are deductible in computing corporate income tax.
• Stamp Duty: Fees are charged on certain actions, such as company registration, at various rates.
• Excise Taxes: Apply to tobacco, alcohol, gasoline, and passenger vehicles.

Anti-Avoidance Rules

• Transfer Pricing: Transactions between related parties are valued at fair market value. Tax authorities may adjust prices if they deviate from arm’s length.
• Thin Capitalization: Shareholder loans are capped at three times the equity contribution for regulated entities (e.g., banks, insurance companies).
• Controlled Foreign Companies: Not applicable.
• Disclosure Requirements: Not applicable.

Compliance Requirements

• Tax Year: Calendar year.
• Filing:
  • Corporate income tax must be filed and paid by the 20th day of the month following each quarter.
  • Annual return must be submitted by 10 February of the following year.
• Penalties: Apply for late filing, failure to file, fraudulent returns, or late tax payments.
• Tax Rulings: Available from the National Tax Administration, but not binding.

Personal Taxation

Taxable Individuals

• Residence: An individual is a resident if they reside in Mongolia for 183 or more days during the tax year, maintain a residence, or have a permanent home in Mongolia.
• Tax Basis: Residents are taxed on worldwide income; nonresidents are taxed only on Mongolian-source income.

Filing Status

• Individuals must file separate returns; joint filing is not permitted.

Taxable Income

• All gross income from any source is taxable.
• Independent Contractors: Professionals (e.g., lawyers, doctors, accountants) may deduct costs and expenses.

Tax Rates

• Employment Income:
  • Previously had progressive rates, but reverted to a flat rate of 10% effective 1 January 2018.
• Self-Employed Income: Taxed at 10%.
• Capital Gains:
  • 2% on gains from sale of immovable property.
  • 10% on gains from sale of securities, after deducting the purchase price.
• Artistic/Literary Income: Taxed at 5%.

Withholding Taxes

• Nonresident Income:
  • 20% withholding tax on Mongolian-source income (effective 1 January 2018).
  • 10% withholding tax on interest income from foreign banks (effective 1 January 2018).

Other Taxes on Individuals

• Social Security Contributions: Employees pay 12.5% of gross salary, with a monthly cap of MNT 300,000.
• Capital Duty: Not applicable.
• Transfer Tax: Not applicable.
• Inheritance/Estate Tax: Not applicable.
• Net Wealth/Net Worth Tax: Not applicable.
• Real Property Tax: Not applicable.
• Stamp Duty: Applies to actions like filing a court complaint, at various rates.

Source of Tax Law

• General Taxation Act 2008
• Corporate Income Tax Act 2006
• Personal Income Tax Act 2006
• Social Insurance Act 1994
• Value Added Tax Act 2015
• Investments Act 2013
• Excise Tax Act 2006

Tax Treaties

• Mongolia has 25 tax treaties in place.

Tax Authorities

• National Tax Administration

Contact Information

• Onchinsuren Dendevsbuu
  odendevsambuu@deloitte.com
• Tuvshin Javkhlant
  tjavkhlant@deloitte.com

Disclaimer

Deloitte provides general information and does not offer professional advice or services through this communication. Always consult a qualified professional before making financial or business decisions.