TAX EASING LAWS TO BE SUBMITTED TO PARLIAMENT

Ulaanbaatar /MONTSAME/ The cabinet meeting Saturday agreed to submit a draft law to amend the law on VAT and the law on Corporate income tax. The above decision follows the Government’s inclusion of tax reforms in its action plans for 2012-2016, aiming at business promotion. Amendments in the said tax laws have been deemed necessary due to a need to update the sales income threshold for taxpayer’s registration in accordance with ongoing economic growth and increased commodity prices. The new draft law on Value added tax (VAT) brings the income threshold to 50 million togrog from 10 million togrog, which has been observed since the first adaptation of the law in 1998. It means enterprises generating sale income more than 50 million now have to pay VAT. This new threshold is expected to release almost half of the SMEs from VAT duties. Most of VAT payers have generated sales income between 50 million to 1.5 billion togrog in 2013, the Finance Ministry estimates. In the last ten years, Mongolia’s economy has seen a growth measured in many folds, including three years’ increase of GDP calculated as 14 times from that of 2000 measured at 1.2 trillion. During that time, national tax income increased 23 times. An amendment in the law on corporate income tax foresees annual income tax return of 90% to those who has generated sales income less than 1.5 billion togrog. However, the tax return excludes those who run business in industries such as mining, minerals, oil import or export, cellular services, alcoholic beverages and tobacco.