The Legal System
Mongolia has a civil law system that originates from the Romano-Germanic legal system and is divided into branches of law including constitutional, administrative, criminal, civil and international law. Three positions have the right to initiate laws. These are the President, members of Parliament, and a member of Government Cabinet. The Ministry of Justice has an important role in the drafting of laws.
Business and Investment related Laws
The main laws regulating business and investment is Banking law, Company Law , Foreign Investment Law , Law on Taxation , Personal Income Tax Law, Minerals law, Customs tariff law, and VAT law. Mongolia has been definitely been moving towards a more investor friendly country over past few years. Although Windfall Profit Tax brought some difficulties, this law is going to be abolished in Jan 1, 2011.
2002
2003
2004-2005
2006
2007-2009
CIT Threshold
15%/40%
100 million ₮
15%/30% 100 million ₮
10%/25%(for excess)
3 billion ₮
Personal Income tax
10%/20%/30%
200 thousand/400 thousand
10% all
VAT
15%
0%
10%, gold 0%, Other mining products defined by Government 0%
Royalty
2.50%
2.5%/7.5%
2.5% for coal and commonly occured minerals, 5% for others
Windfall Profits Tax
68%
Immovable Property tax
0.6%
Foreign Investment Incentives and Protection
Mongolia has been a member of the WTO since 1997. Foreign investors are guaranteed legal protection under Mongolia’s laws and international treaties signed by Mongolia. The government created a “One stop service” system to make the administrative process easy for foreign investors. Foreign investment may take place in all areas of production and all services other than those prohibited by the laws of Mongolia.
Legal protection and rights guaranteed to foreign investors are: to possess, use, and dispose of their property including the repatriation of investments which contributed to the equity of a business entity with foreign investment; prohibition of nationalization and illegal confiscation of assets and capital of foreign investors (full compensation should be paid in case of confiscation in emergency); non-discriminatory treatment (compared to local investors); transfer of profits and dividends. The Government of Mongolia may sign agreements with investors as a legal guarantee for a stable environment to conduct business activities.
The Government has concluded 34 Agreements on the Avoidance of Double Taxation and with 39 countries concluded the Agreements on the Promotion and Mutual Protection of Investment. Mongolia became a Member of the Washington Convention on the Settlement of Investment Disputes in 1996 and became a Member of Seoul Convention on the Establishment of Multilateral Agency of Investment Insurance in 1999. Mongolia is also a member of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group since 1999.
Below are English translations of Mongolian Laws. (Please keep in mind that Mongolian versions prevail)