| Meeting with the Taxation Department of the Ministry of Finance |
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On February 1st, 2024, members of EuroChamber convened at the Chagdarjav conference room of the Ministry of Finance for a meeting with Mr. Telmuun, Director of the Taxation Department. During the session, companies expressed their concerns regarding taxation, and ministry officials provided responses to questions posed by EuroChamber members’ representatives. The meeting covered the following issues: - Companies often express dissatisfaction with the tax reporting platform. The ongoing digitization of the tax reporting procedure is still in progress, and the integration of government services is proceeding at a slower pace than anticipated. This situation poses challenges for the tax reporting platform.
- Government agencies are well-aware of gray importing; however, it is important for companies to report alleged instances of gray importing to trigger the initiation of criminal cases for illegal activities by the relevant government agencies.
- Complex tax disputes and financial cases often undergo lengthy legal proceedings, spanning years in court. Recognizing this issue, the relevant government bodies have initiated efforts to expedite legal proceedings for cases of small values.
- Companies often express dissatisfaction with the aggressive nature of the tax collection process, which includes measures like freezing assets and closing bank accounts, especially when there is a requirement to prepay the disputed tax debt amount. Conversely, the government adheres to the principle of prioritizing tax receivables over other types of receivables. When a tax officer imposes a penalty act on a company, the tax authority withholds the tax debt. If the company contests the penalty act in court, and the court determines that the tax officer wrongly imposed the penalty, the tax authority reimburses the deducted money for the tax debt along with its accrued interest. At the same time, the tax authority tries to avoid freezing assets and closing bank accounts while resolving tax disputes.
- Companies frequently raise concerns about local vendors not providing VAT invoices, which poses challenges for tax reporting. In response to this issue, the Ministry of Finance has suggested that companies report instances of local vendors operating in provinces and soums who fail to provide VAT invoices.
- To address misunderstandings regarding certain articles in Mongolia’s double-tax avoidance agreements with other countries, including those related to withholding tax, the Ministry of Finance officials have advised companies to seek assistance from tax consultants and refer to the commentaries on the articles of the model tax convention issued by the OECD.
- In response to complaints about the methods used to calculate tax rates for mining license transfers, softer methods have been introduced since the approval of a new procedure in October, 2023. According to the procedure, the contract value will be used to determine tax rates when the license is transferred between two entities not related to each other. If the license is transferred between two entities related to each other, alternative methods will be employed.
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| EuroChamber's 2nd podcast is now available |
| EuroChamber's podcast #2 is out! Our CEO Zandan Bilegt and Policy Director Byambakhand Luguusharav gave an update on highlights of the previous month.
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| President of the Federal Republic of Germany to Pay State Visit to Mongolia |
| At the invitation of President of Mongolia Khurelsukh Ukhnaa, the President of the Federal Republic of Germany Frank-Walter Steinmeier will pay a State Visit to Mongolia on February 7-8, 2024.
President of Mongolia Khurelsukh Ukhnaa and President of the Federal Republic of Germany Frank-Walter Steinmeier will hold official talks to discuss elevating the level of relations, cooperation, and partnership. During the State Visit, cooperation documents are planned to be signed in the energy, transportation, education, environment, legal, and archeology sectors.
Diplomatic relations between Mongolia and Germany were established on January 31, 1974, and this year marks the 50th anniversary. Federal President Frank-Walter Steinmeier visited Mongolia in 2014 as the Minister of Foreign Affairs.
Source: montsame.mn |
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| Private Sector Investment Forum Takes Place |
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The Ministry of Economy and Development and the Asian Development Bank have jointly organized a Private Sector Investment Forum today at the "Shangri-La" hotel.
The economy of Mongolia has grown by 6.8 percent as of the end of 2023, which is considerably high in the region. Mining and service sectors greatly influenced the economic growth, while the agricultural sector has decreased by 9 percent, Minister of Economy and Development Khurelbaatar Chimed emphasized in his opening speech at the Private Sector Investment Forum.
According to the Minister, the Government will pay attention to the even growth of all sectors, maintaining steady economic growth at an average of 6 percent. Constant economic growth creates basic conditions for stable income of citizens and has an important effect on economic security, Mr. Khurelbaatar noted.
Foreign direct investment into Mongolia was USD 2.5 billion in 2022 and it intends to increase it to USD 4 billion in 2024. “The private sector, which accounts for 79 percent of GDP needs investment. ADB is making a big contribution to investment in the private sector. The Government repeatedly requested ADB and the World Bank to provide direct investment to the private sector. Consequently, ADB has invested directly in more than 10 enterprises,” said the Minister of Economy and Development.
A team of ADB officials responsible for banks, finance, credit, and investment came to the Forum from ADB headquarters in Manila, the Philippines to present priority areas, criteria, basic conditions, and application processes for ADB investment to the private sector.
Director General of ADB Private Sector Operations Department Suzanne Gaboury noted that ADB’s financing to Mongolia in 2024 will be the highest ever, as the Bank will provide financing in diverse sectors, including bank, financing, agriculture, health, renewable energy, mining and logistics. She also emphasized ADB’s intention to work on improving the regulatory environment in private sector investment in Mongolia.
Source: montsame.mn |
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| Authorities of Capital and Aimags Tasked to Build Roadmap for Regional Development |
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Members of Government, Governors of aimag and capital city, and Chairmen of Citizens Representatives Khurals convened today at the State Palace.
In the year 2023, the Government of Mongolia focused on fighting corruption, system reform, and urban and rural revival targets of the New Revival Policy, highlighted Prime Minister Oyunerdene Luvsannamsrai in his address at the meeting, expressing his gratitude to the aimag authorities for collaboration with the Government as a team over the last three years of tough times caused by pandemic and geopolitical condition, providing public services constantly to safeguard citizens’ life quality, and health.
The Prime Minister gave special attention to the rural areas, as rural revival is a key solution to unequal development in urban and rural areas. Prime Minister presented some outstanding social and economic achievements in 2023. For instance, “Last year the economic growth was 6.8 percent, gross domestic product reached MNT 63.3 trillion, the GDP per capita was USD 5.220 for the first time and the official currency reserves reached USD 4.5 billion. To maintain economic growth, we should focus on economic diversification.”
This meeting is held every year to give a common understanding of government policies, strategies, and action plans, and their implementation that the authorities of aimags and capital city should follow.
Highlighting the importance of the regional development policy in solving problems facing Ulaanbaatar and maintaining the urban and rural balance, the Premier warned the housing policy directly connects with the regional reform. Prime Minister stated that the Government will fully dedicate this year to supporting Urban and Rural Revival and tasked the authorities to build a roadmap for regional development and identify its economic priorities based on regional potential and advantages.
Source: montsame.mn |
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| As of the end of 2023, the mortgage loan balance surged by 17.8 percent, reaching 7.6 trillion MNT |
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As of the end of 2023, the total balance of mortgage loans, as reported by the Bank of Mongolia, reached 7.64 trillion MNT, reflecting a 17.8 percent increase from the previous year. The year-end figures revealed 114,814 borrowers with outstanding mortgage loans, with 85,846 participating in the program. The total balance of loans for these citizens amounted to 5.19 trillion MNT, and MNT 4 trillion were transferred to MIK Holding JSC.
The loan quality exhibited minimal change compared to the previous year, with 1 percent considered concerning and 1.1 percent classified as non-performing loans.
The Mongolian Mortgage Corporation disclosed that 115,000 citizens have received loans since the inception of the mortgage loan program over the past decade. Notably, 35 percent of these individuals transitioned from slum living to apartments.
Despite this progress, it is highlighted that 50 percent of households in Ulaanbaatar still reside in ger districts, leaving potential housing for 200,000 families in the future.
The Minister of Finance conveyed that, starting in 2024, mortgage loan resources would be more allocated to local communities. In 2023, 17.1 percent of mortgage loans, amounting to 1.3 trillion MNT, were allocated to local communities. Despite this shift, the Bank of Mongolia predicts that the total financing of mortgage loans in 2024 will not decrease from the previous year.
Source: gogo.mn |
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