Taxes will not be increased or decreased, pointed out Prime Minister of Mongolia Ch.Saikhanbileg during an official statement made at the parliamentary session meeting last Friday.
According to the tax payment performance reported in International Finance Corporation’s 2015 entrepreneurship survey, Mongolia ranked 84th for its pleasant tax environment and became the world’s 28th country for less taxation.
The economic environment of Mongolia is growing rapidly, engaging in international economic relations. Large international-level projects and programs implemented in Mongolia have been established under transnational corporations. In order to manage the current social and economic conditions and to improve the tax environment in a timely manner, adjusting to current conditions, there is an urgent demand to renew laws and regulations on taxation, stated the Premier.
Society is calling for upgrades to the taxation environment, making it more fair, simple and understandable, meeting international standards and supporting entrepreneurship and investment, the Premier underlined. He stressed that he will adhere to a policy to keep the current taxation rate and percentages stable and will not increase them in the future.
“Some foreign countries are looking for ways to get over the economic crisis by increasing taxes. But we believe that that method will but a burden on entrepreneurs.
“Mongolia’s economy is growing, relying on consumption. Mongolia has not accumulated huge income and assets like developed foreign countries. Therefore, it is correct to keep the taxation system based on consumption tax and follow basic directions to improve it further,” he added.
“The main purpose of the tax reform is to make the Law on Taxes equal and fair. An owner of a small diner, who is not registered as an entity, pays tax of 300,000 MNT a year. Meanwhile, an employee with a daily income of 25,000 MNT pays tax of 720,000 MNT a year. This shows that the taxation system of Mongolia should be renewed quickly and should become more fair,” Ch.Saikhanbileg noted and announced that he will develop a tax law on assets directed at wealthy people, and a separate tax law directed at increasing the numbers of employed citizens with steady income.
“The tax environment will be altered to support entrepreneurship and investment. According to the International Finance Corporation survey, SMEs make up 45 percent of all jobs in developing countries and make up 33 percent of GDP. In other words, SMEs play a vital role in economic growth and employment.
“A draft law on SMEs with annual sales income of less than 1.5 billion MNT receiving returns of 90 percent of taxes paid to cover a certain period each year, has been delivered to the Parliament is expected to be discussed in the near future.
“The Government of Mongolia will register the cash in circulation using the feature of value added taxes and will educate citizens on a culture of controlling their consumption. This will help reduce the shadow economy. The role of value added tax is to increase controls on the market rather than to generate budget income. Therefore, opportunities will become available for citizens to receive returns of 20 percent of taxes paid by registering their own purchases.
“We are planning to make changes to the law to prevent tax payers from violating laws and regulations, advising them and cooperating with them, as well as notifying them in advance instead of causing a burden with audits.
“It is time to renew tax accountability and fines, the system where an entity failed to report taxable income and paid less fines than an entity that couldn’t pay taxes on time even though it submitted a tax report truthfully. Also, the current system that sentences legal bodies that avoid taxes to prison terms should be renewed eventually.”