Reform of the Mongolian Corporate Income Tax

摘要

This report reviews the Economic Entity and Organization Income Tax Law of Mongolia (effectively, the corporate income tax or CIT). In particular, it considers proposals to end the dual rate structure in the law and technical shortcomings of the law. The law currently applies a 15% tax rate to income up to 100,000,000 Tgs and a 40% tax rate to income of 100,000,000 and above. In addition to the progressive rate scale applied to general business income, specific rates apply to particular types of income. These rates sometimes apply to gross receipts and sometimes to net gains. The legislation provides two sets of specific rates, one for resident taxpayers and another (generally higher) for non-residents. An important issue that underlies concern over the dual rate system is the desirability of achieving revenue neutral reforms. Because revenues are as dependent on the base as on the rates applied to the base, consideration of rate reform necessarily entails a review of income tax base issues, particularly tax concessions.