REGULATION TO STABILIZE PERCENTAGE AND AMOUNT OF TAX IN THE NEW LAW ON INVESTMENT OF MONGOLIA
The Parliament approved and adopted “LAW ON INVESTMENT” on 3 October 2013 in order to regulate relations related with protecting investors’ legal right and interest, setting common legal guarantee for investment, promoting investment, stabilizing tax environment, defining rights of state authorities and investor’s rights on investment and other relations related with investment in Mongolia.
Chapter 5 of the law “Stabilizing investment environment” sets that Stabilization certificate is issued to the investing legal entity if the entity satisfies certain requirements in the law and the Stabilization certificate stabilizes percentage and amount of taxes and duties within the valid period of the certificate. It is a new regulation in the law. Summary of the regulation is:
Stabilization certificate shall be issued to the following entities depending on the organization structure to implement investment project:
- If the Investment project is implemented by a sole legal entity, Stabilization certificate shall be issued to the legal entity;
- If the investment project is implemented by two or more legal entities with relationship, Stabilization certificate shall be issued to the parent company.
Following tax and duties’ percentage and amount shall be stable during the valid period of Stabilization certificate:
- Corporate income tax;
- Customs duty;
- Value added tax;
- Fee for using mineral resources;
The law sets that if the amount and percentage for 4 types of taxes stated in the Law on Investment is increased by the amendment of the law, the amendment is not valid for investors and if it is decreased, the amendment is valid for investors.
Stabilization certificate shall be issued to the investing legal entity if the project implemented by the entity in Mongolia fully satisfies following criterion:
- Total investment amount set in Business plan and Feasibility study should reach the amount set in the clause 16.2 and 16.3, article 16 of “Law on Investment”;
- To have General assessment for impact on environment conducted if required by the law;
- To create stable jobs;
- To introduce advanced technology and equipment;