To open a company in Mongolia is cheaper, than in European countries, because it has very cheap utilities, transportation, rent, food and even labor (from $210). Large energy resources of the country also cause low costs for electricity and fuel.
Mongolia is located between two largest markets, such as Russia and China. Profitable trade relations have developed with them. In addition, Mongolia has signed trade agreements with Canada, Japan and United States. Mongolia included in the World Trade Organization.
English is the most widely spoken foreign language, few Mongols speak it well. But most documents must be translated into English and Mongolian, and certified translators are usually required for acceptable translation.
Draw your attention, that YB Case specialists provide clients with legal support at all stages of company registering in Asia, obtaining licenses for financial activities in Mongolia, and are ready to assist in stabilizing startup projects and provide other related legal services.
The main engines of Mongolia's economy are the extraction and export of coal, gold, copper, tin, molybdenum, tungsten, as well as the agricultural sector. It is rational to open a company in Mongolia aimed for importing products, automobiles, machinery, fuels, and chemical products.
According to the Doing Business poll conducted by the World Bank every year, Mongolia is 56th in the list of the best jurisdictions in the world, where it is beneficial to register the international company. There are no local corporate income taxes in Mongolia. An income of up to 3 billion is taxed at a rate of 10%, over this border taxed at a rate of 25%. An additional tax of 20% is levied on cash transfers from branches to a foreign head office. Mongolian sales tax is levied at the state level. The tax system can be reduced to three parameters:
- A national rate - 25%;
- A local tax rate - 0%;
- A branch rate - 25%/20%;
The specifics of taxes in Mongolia
Mongolian companies, working on investment projects, have the right to pay a fixed tax rate for a certain period. For this you need to get a stabilization certificate from the National Development Agency. Taxes, that can be stabilized over 5-10 years are corporate taxes, customs tax, royalties.
Disadvantages of registering a company in Mongolia
Each foreign shareholder (owning 25% of the shares) of a Mongolian LLC must contribute at least $100,000 of paid-up share capital before registering a business in Mongolia.
Anti-corruption laws
According to Transparency International, Mongolia ranks 72nd out of 180 on the list of least corrupt jurisdictions (comparable to Germany, Ireland, UAE).
In a company, that is engaged in mining or leasing land, any change in the ultimate owners (who directly or indirectly exercise control over management and assets) is considered to be a sale of its license and is subject to a 30% income tax. It is important to note, that a tax liability is assigned to a legal entity, that has such rights, but not to a person, who receives income from a transaction. Such a license can be canceled due to violations, such as a non-compliance with the requirements for tax assessment, a reporting/concealment of relevant documents and a provision of fake documentation for tax purposes.
How to open a company in Mongolia?
1 director and 1 shareholder can set up a company in Mongolia (both of which may be non-residents). Consequently, a Mongolian company may be 100% foreign owned. The minimum authorized capital required to open an enterprise in Mongolia is $100,000. Registering a company in Mongolia lasts six weeks.
Free trade zones in Mongolia
It is best to register a company in Mongolian free trade zones in order to enjoy reduced corporate income taxes. Such taxes vary depending on the amount of capital invested. In addition, all goods imported into in free trade zones or produced in FZ will be exempt from VAT, customs duties and excise taxes. There is no working quota for free trade companies.
In what currencies is it best to open a bank account in Mongolia?
You can open a corporate account with Khan Bank in Mongolia in all major international currencies: US dollars, euros and yens. You can also open an account in Mongolia remotely. For legal advice on opening a bank account with Mongolian bank, call YB Case experts at the phone numbers listed in the "Contact Us" section.
