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Regulatory updates
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In November 2017, the Parliament of Mongolia amended the General Taxation Law, the Law on Corporate Income Tax, the Law on Personal Income Tax, the Law on State Registration of Legal Entity, the Minerals Law and the Law on Land which came into effect from 1 January 2018. Under these amendments a new concept of “ultimate owner” is introduced meaning a person who exercises control over management and assets of a legal entity, directly or indirectly, through one or more layer of ownership chain of the legal entities based on its highest number of shares or highest percentage
- f participation or highest number of voting rights. If such ultimate owner sells its shares held directly or indirectly in legal entity holding exploration
- r mining licenses and land possession rights, it shall be treated as a “sale of rights” related to exploration or mining licenses and land possession
rights, which shall be subject to a 30% withholding tax in Mongolia. Accordingly, legal entities holding exploration and mineral licenses and land rights are obliged to register the name, number of shares held, percentage of participation and voting rights of their ultimate holders to the Legal Entity Registration Office and respective tax departments before 1 June 2018. In February 2018, The Ministry of Finance proposed draft amendments to several taxation laws, such as the General Taxation Law, the Law on Corporate Income tax, the Law on Personal Income Tax and the Value Added Tax Law. Ministry of finance is conducting public consultation for a period of 30 days and the draft amendments are expected to be discussed and passed during the 2018 spring session of the Parliament.
TAXATION REGULATION
In 2017, the rate of excise duty for diesel imported through Sukhbaatar, Zamiin Uud and Altanbulag border ports were revised twice by Government Resolutions No. 207 and No. 309, on 18 July 2017 from MNT 70,000 to MNT 180,000 and on 15 November 2017 from MNT 180,000 to MNT 280,000 per tonne. On 24 January 2018, under the Government Resolution No. 26, the rate of excise duty for imported petroleum products were revised, but no change was made with regards to diesel. Therefore, rate of excise duty for diesel imported through Sukhbaatar, Zamiin Uud and Altanbulag border ports remain MNT 280,000 per tonne.
GASOLINE AND DIESEL FUEL IMPORT TAX
Starting from 1 January 2018, the cost of social insurance contribution amount to be paid by the Group increased by 1% and became 12% of the monthly salary of the employee due to the amendment made to the Law on Social Insurance on 4 July 2017. Under the amendment, the rate of pension purpose sub-component of the social insurance contribution payable by each employee and employer is increased from 7.0% to 9.5% of the salary income.
SOCIAL INSURANCE CONTRIBUTION
On 18 July 2017, the Minister of Finance issued Order No. 49 approving the regulation on setting and changing the accounting functional currency and translation of financial statements. The regulation was issued in accordance with the Accounting Law of Mongolia allowing legal entities to record transactions in foreign currency upon agreeing with the related authorities. The regulation sets the requirements and approval procedures for changing the functional currency of the legal entities.
FUNCTIONAL CURRENCY SELECTION
