Bill on customs duty exemption submitted

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Minister of Food, Agriculture and Light Industry Z.Mendsaikhan handed over bills on customs duty exemption and value added tax exemption to Speaker of Parliament G.Zandanshatar on April 16.

The bills were developed to exempt and reduce customs duties on new tractors, combines, machinery, irrigation equipment, forestry and poultry machinery, fertilizers, and pesticides that are essential for agricultural production and to support entrepreneurs during the pandemic, economic crisis and currency appreciation.

The bill initiators believe that the adoption of the bills will create conditions for stabilizing the growth of agricultural production, improving the economic capacity of farmers and producers, introducing new technologies, farming in an environmentally friendly manner, supporting employment, and providing healthy and safe food to citizens.

Emphasizing that last year, a total of 536,600 hectares were used for platation nationwide, of which 364,000 hectares were for wheat, 18,600 hectares for potatoes, 9,600 hectares for vegetables, 61,100 hectares for oilseeds, and 52,700 hectares for fodder plants. The minister said that compared to the 2019 harvest, wheat increased by 7,400 tons, potatoes by 50,400 tons, vegetables by 20,400 tons, and fodder plants by 52,100 tons.

“Despite the increase in harvests and the growth of agricultural production, due to the lack of working capital for producers and high bank interest rates, technical modernization is not carried out at a sufficient level, and 100 percent of fertilizers and pesticides are imported,” he said.

In accordance with the Law on Value Added Tax approved on May 29, 2008, imported agricultural tractors, combines, machinery, flour mills and irrigation equipment, fertilizers, and plant protection products were exempted from value added tax until December 31, 2020.

The minister noted that according to statistics, a total of 1.47 trillion MNT worth of machinery, 893.4 billion MNT worth of fertilizers and pesticides have been imported since the implementation of the law, and customs and value-added tax exemptions worth 281.4 billion MNT have significantly reduced tax burden on farmers.

“On the other hand, due to the COVID-19 pandemic, the prices of machinery, equipment, fertilizers and pesticides used in agricultural production have increased by about 30 percent in foreign markets, which has a negative impact on domestic production and creates conditions for rising product prices,” Minister Z.Mendsaikhan said.

“Moreover, in 2010, there were more than 30 poultry companies, but there are currently nine operating companies. The country consumes 330 million eggs a year, 52 percent of which are produced domestically and 48 percent imported from Russia. Despite the growing domestic production of eggs, there is a need for policy support for producers,” he added.

According to the minister, the bills were submitted to Parliament for urgent discussion in accordance with Article 21.1 of the Law on Parliamentary Procedure.

Misheel Lkhasuren