background image
Mongolia Approves State Budget Law for 2021 — Orbitax Tax News & Alerts

Mongolia's parliament has reportedly given final approval to the State Budget Law for 2021, overriding a presidential veto on 25 November. Tax measures of the law include:

  • A VAT and customs duty exemption for the import of all types of rice and vegetable effective from 4 December 2020 to 1 July 2021;
  • The application of a reduced social and health insurance contribution rate of 10.5% for employers and employees from 1 January to 30 June 2021; and
  • The introduction of a livestock tax with effect from 1 January 2021 equal to MNT 2,000 per head of livestock per year for herders and other livestock owners, which is paid in two installments on 17 July and 15 December.

Note, a reduced rate of 7% contribution rate was previously provided from 1 October to 31 December 2020, including a 5% rate for social insurance and 2% for health insurance. The standard combined rates are 12.5% to 14.5% for employers and 11.5% for employees, which are expected to be reverted to from 1 July 2021.  

Further to the measures above, the Budget Law also includes certain amendments in relation to COVID-19 relief, including for the extension to 31 December 2020 of the corporate income tax exemption for companies with taxable income below MNT 1.5 billion in the previous tax year, which was previously provided from 1 April to 1 October 2020. Amendments are also provided for an income tax exemption from 1 February to 31 December 2020 for companies that reduced rent for their tenants operating in trade and service centers, including supermarkets and malls.