Minister of Finance Ch.Khurelbaatar introduced the changes to taxes specified in the recently-enacted Package Tax Law at a press conference on Monday.
The package law, passed on March 22, includes the General Taxation Law, Personal Income Tax Law and Corporate Income Tax Law. These revised laws will become effective on January 1, 2020.
“Two amendments proposed by Cabinet were approved at the parliamentary irregular session. One of them is the Package Tax Law and the other is the Tender Law,” said Ch.Khurelbaatar. “Since 2006, the economic and business relations have expanded and diversified. This led to the need to make the Tax Law even more specific. It could be said that we renewed the Tax Law, which was like an old road with many potholes. There was also a need to renew the Tax Law as many Mongolian multinational corporations have been established.”
Changes related to tax rate:
Entities and individuals with an annual income of up to 50 million MNT will have to report on their tax payment once a year and pay one percent of their sales income as income tax.
Businesses that have sales income of up to 300 million MNT a year must report on their revenue twice a year and pay one percent income tax.
Businesses that annually earn 300 million MNT to 1.5 billion MNT in sales must report on their revenue twice a year and pay 10 percent income tax. They will be eligible to refund 90 percent of their income tax.
Businesses that annually earn higher than three billion MNT used to pay 25 percent in income tax, but the revised Package Tax Law changed this to six billion MNT. There are 164 such entities at present.
Changes in the Personal Income Tax Law:
An individual who built or bought a property for living purposes used to be entitled to up to three million MNT in tax refund but now it has been increased to up to six million MNT.
An individual who purchased a property for the first time through mortgage loan can now get tax refund. The current mortgage loan interest rate is eight percent but if an individual buys a property with a commercial loan with interest rate higher than eight percent, the difference will be refunded as well.
Changes related to tax discount:
Individuals and entities operating 500 kilometers from Ulaanbaatar will be entitled to a 50 percent income tax discount and those operating farther than 1,000 kilometers from Ulaanbaatar will be entitled to a 90 percent income tax discount. It was estimated that 11,600 individuals and 141 entities are entitled to a 50 percent tax discount, while 8,100 individuals and 55 entities are entitled to a 90 percent tax discount.
Minister Ch.Khurelbaatar reported that 45 regulations and procedures will be developed in relation to the new Package Tax Law. Associated agencies have started drafting these regulations and procedures.
