Frequently Asked Questions
How to incorporate a company in Mongolia?
Under Law on Investment of Mongolia, the "business entity with foreign investment" means a business entity incorporated according to the legislation of Mongolia and not less than 25 percent of the total share capital is held by a foreign investor, and the investment amount by each foreign investor equals or more than USD 100,000 or its equivalent in Mongolian tugrugs.
Investments in Mongolia shall be implemented in the following forms: 1/ an investor may establish a new business entity (LLC) solely or jointly (Joint Stock Company or LLP) with other investors; 2/ to invest by consolidating or merging companies; 3/ others; Also the investor can invest by opening a branch of its parent company abroad as Representative Office in Mongolia.
When registration, a client (an investor) shall pay stamp duty for registration activities in connection with formation of a legal entity or Representative office in the following amounts: for state registration of legal entities with foreign investment shall be 750 000 tugrugs and for registration of a branch or a representative office of foreign legal entities shall be 1 100 000 tugrugs, respectively.
Visas and residency for the investors
Investment visas are issued in the following categories: B1: to Investors of foreign invested enterprise
B1-1: to a person related to an investor of foreign invested enterprise
B2: to a foreign citizen who appointed as a representative or executive management of an investor of foreign invested enterprise
B2-1: to a person related to a representative or executive management of an investor of foreign invested enterprise
B3: to a foreign citizen who will work as executive management of the representative office of legal entity abroad
B3-1: to a person related to a foreign citizen who will work as executive management of the representative office of legal entity abroad
The residence permits related to the above visas are issued for a period of up to 1 year and can be extended each time for a period of up to 3 years, by the Authority for Immigration of Mongolia.
Taxes and support to a foreign invested enterprise
The stabilization of the investment environment for a foreign invested legal entity who is implementing an investment project, is carried out through tax policy in law. According to the law, the following tax, its percentage and amounts shall be stabilized under the stabilization certifications during their validity period: corporate income tax, customs duty, value-added tax and mineral resource royalty. But, main mineral deposit shall not include royalties for mineral products extracted from derivative deposits. The investment promotions for investors shall consist of tax and non-tax incentives.
Tax incentives shall be provided to investors in the following types: -exempt from taxes, -discount tax, calculate the depreciation expense to be deducted from the taxable income under the accelerated method, -calculate the loss to be deducted from the taxable income by a loss carryforward, -educt the employee training expense from the taxable income. In the following cases, imported technical equipment may be exempted from the customs duty and value added tax rate may set to zero-rate during the construction works: -to build a factory for construction materials, petroleum and agricultural plant and products for exporting, -to build a factory for products that contained nano, bio and innovation technologies, -to build a power plant and railway.
The non-tax incentives may be provided to investors in the following forms: -to put land possession or use for up to 60 years on the basis of a contract and to renew the contract duration once for up to 40 years with the contract's primary conditions, -to promote the investors who are to invest into the activities in free zones, industrial and technology park and to serve with a simplified regime of registration and checkpoint, -to support the implementation of development projects in the infrastructure, industry, science and educational sectors, to increase the number of foreign workforces and specialists, to exempt them from employment fees and to issue the required permits at a simplified regime, -to support the financing of the innovation projects and to guarantee the financing to produce export-oriented innovation products, to grant foreign investors, who have made investment in Mongolia, and their family members with multiple visas and residential permits under the applicable legislation. Non-tax investment incentives shall be regulated in accordance with the Law and Land, the Law on Free Zones, the Law on Legal Status of Industrial and Technology Parks, the Law on Innovation and the Law on Labor Force Migration and other relevant legislation.
Labour Law and Human Resource Management
The revised Labor Law was adopted on July 2, 2021 and came into force in 2022. According to this law, there are some points for your attention to employment contract: -An employer is obliged to execute an employment contract in writing for signing of the parties and give one copy of the employment contract to the employee.
-If an employment contract is not executed in writing for a valid reason, an employer is obliged to execute it in writing within 10 business days of the employee's commencement of work. If an employer in violation of this shall be subject to the liabilities specified in Law on Offense of Mongolia.
-Employment relations shall be deemed commenced as of an employee starts performing the job duties, regardless of failing to execute the employment contract in writing.Human Resource
The employer may hire and work an employee from the Labor supplier under a labor supply contract in the following cases:
-performing a temporary job for the period of 6 months at a maximum;
-working as a replacement of the employee whose position is being retained, except the employee is concluding a collective agreement, holding negotiations, or participating in trade union's activity and lawful strike;
-performing the work and services ancillary to the core operations of a business entity or organization;
-to prevent from catastrophe, natural disaster or accident, or take immediate actions to eliminate the consequences thereof;
-to perform unforeseen works which are needed to be performed urgently to prevent and eliminate a potential disruption of the normal functioning of a business entity or organisation, its branch or unit.
Legislation for Intellectual Property
According to the Constitution Law of Mongolia, intellectual valuables produced by citizens shall be the property of their authors and the national wealth of Mongolia. Law on Intellectual property of Mongolia, was adopted on Jan 23, 2020 and came into force from Dec 01, 2020. Pursuant to this law, the Authority for Intellectual Property is obliged to cooperate with citizens and legal entities to protecting interest of copyright and related rights holders, supporting their creative activities, and protecting folk art works.