Guide For Doing Business in Mongolia

Boing Business uuiue 2u1u - 2u11
www.pwc.comJmn
Doing Business Guide
in Mongolio
zo1z - zo1
www.pwc.comJmn
in Mongolio
zo1z - zo1
www.pwc.comJmn
in Mongolio
zo1z - zo1
Boing Business uuiue 2u12 - 2u1S
PwC 2
CONTENTS
KEY STAT1ST1CS............................................................................................................................. S
1. MONGOL1A - APRO11LE..................................................................................................... 6
1.1 nLroducLIon.................................................................................................6
1.z GovernmenL sLrucLure.................................................................................. 8
1. LeguI SysLem................................................................................................ 9
1.q PeopIe ..........................................................................................................9
1. Economy ....................................................................................................11
1.6 ForeIgn Trude ............................................................................................ 13
1.; MInIng In MongoIIu.................................................................................... 13
z. BUS1NESS ENV1RONMENT........................................................................................... 1S
z.1 BusIness CIImuLe........................................................................................ 15
z.z. Free Trude Zones...................................................................................... 16
z. nLernuLIonuI AgreemenLs.......................................................................... 16
z.q LeguI EnvIronmenL .................................................................................... 16
z.6 ProperLy MurkeL ........................................................................................ 18
j. 1ORE1GN 1NVESTMENT................................................................................................... 19
.1 ForeIgn nvesLmenL.................................................................................... 19
q. BANK1NG AND 11NANCE................................................................................................ 2u
q.1 BunkIng SysLem ......................................................................................... 20
q.z ForeIgn Currency MurkeL und ForeIgn Currency RuIes ............................. 21
q. nvesLmenL nsLILuLIons ............................................................................. 21
q.q CupILuI MurkeLs ......................................................................................... 21
q. nsurunce...................................................................................................21
g. 1MPORT1NG AND EXPORT1NG.................................................................................. 2S
.1 Trends In CusLoms PoIIcy........................................................................... 23
.z mporL ResLrIcLIons ................................................................................... 23
. CusLoms DuLIes.......................................................................................... 23
.q Temporury mporL ReIIeI........................................................................... 24
. CusLoms DuLIes ncenLIves......................................................................... 24
.; WurehousIng und SLoruge.......................................................................... 25
o. BUS1NESS ENT1T1ES........................................................................................................... 2S
6.1 LeguI Frumework ....................................................................................... 25
6.z JoInL SLock Compuny (JSC) .......................................................................26
6. LImILed LIubIIILy CompunIes (LLC) ........................................................... 27
6.q PurLnershIps .............................................................................................. 29
6. RepresenLuLIve OIIIces ............................................................................... 29
6.6 RegIsLruLIon Process In GeneruI.................................................................29
;. LABOUR RELAT1ONS AND SOC1AL SECUR1TY............................................ Su
;.1 Lubour MurkeL ........................................................................................... 30
;.z Lubour ReIuLIons ....................................................................................... 30
;. WorkIng CondILIons................................................................................... 30
;.q SocIuI SecurILy SysLem............................................................................... 30
;. ForeIgn PersonneI...................................................................................... 30
S. ACCOUNT1NG AND AUD1T REQU1REMENTS................................................ S1
8.1 AccounLIng.................................................................................................31
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8.z ChurL oI AccounLs ...................................................................................... 31
8. AudIL RequIremenLs .................................................................................. 32
q.1 Tux SysLem.................................................................................................32
q.z DIrecL und ndIrecL Tux Burden.................................................................32
q. PrIncIpuI Tuxes .......................................................................................... 32
q.q LegIsIuLIve Frumework .............................................................................. 32
q. ncome Tux................................................................................................ 33
q.6 Tux TreuLIes............................................................................................... 33
q.; Tux ReLurns und PuymenLs ........................................................................ 33
q.8 AssessmenLs .............................................................................................. 33
q.q AppeuIs......................................................................................................33
q.1o WILhhoIdIng Tuxes................................................................................... 34
q.11 Tux AudILs ................................................................................................ 34
q.1z PenuILIes ..................................................................................................34
q.1 Advunce Tux CIurIIIcuLIon ........................................................................ 34
1o TAXAT1ON O1 CORPORAT1ONS............................................................................... S4
1o.1 CorporuLe Tux SysLem .............................................................................. 34
1o.z ncenLIves ................................................................................................ 35
1o. TuxubIe ncome ....................................................................................... 35
1o.q DeducLIbIIILy oI Expenses ........................................................................ 35
1o. ReIuLed PurLy TrunsucLIons ......................................................................36
1o.6 ForeIgn Exchunge .................................................................................... 36
1o.8 Tux CompuLuLIons ................................................................................... 36
1o.q OLher Tuxes ............................................................................................. 37
1o.1o Brunch Versus SubsIdIury ......................................................................38
1o.11 Group TuxuLIon....................................................................................... 38
1o.1z SpecIuI TuxuLIon RegImes.......................................................................38
11. TAXAT1ON O1 1ND1V1DUALS.................................................................................... S9
11.1 TerrILorIuIILy und ResIdence......................................................................39
11.z Gross ncome ........................................................................................... 39
11. DeducLIons ............................................................................................... 39
11.q Tux CredILs ............................................................................................... 40
11. OLher Tuxes .............................................................................................. 40
11.6 Tux AdmInIsLruLIon .................................................................................. 40
11.; Tux RuLes ..................................................................................................41
1z. VALUE ADDED TAX (VATJ........................................................................................... 41
1z.1 nLroducLIon............................................................................................. 41
1z.z Scope oI VAT............................................................................................ 42
1z. Zero-RuLIng.............................................................................................. 42
1z.q ExempL SuppIIes ...................................................................................... 43
1z. TuxubIe AmounL....................................................................................... 44
1z.6 Non-DeducLIbIe npuL VAT......................................................................44
1z.; VAT ncenLIves......................................................................................... 45
1z.8 VAT SImpIIIIcuLIon................................................................................... 45
1z.q VAT CompIIunce ...................................................................................... 45
PR1CEWATERHOUSECOOPERS 1N MONGOL1A............................................... S2
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APPEND1X A - MACROECONOM1C 1ND1CATORS O1 MONGOL1A...... 47
APPEND1X B - T1PS 1OR BUS1NESS V1S1TORS................................................. 48
APPEND1X C - TAX RATES.................................................................................................. S6
APPEND1X D - DOUBLE TAX TREAT1ES................................................................. S7
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KIY STATISTICS
Mongolio
Totul Areu: 1,6q,116 sq. km
Istimuted Populution: z,8oo, 1oo (AugusL zo1z)
Cupitul: UIuunbuuLur
Lunguuges:
MongoIIun (oIIIcIuI Iunguuge),
Kuzukh (In some purLs oI MongoIIu)
Neighboring Stutes: RussIu und ChInu
Currency: MongoI TugrIk (MNT)
Ixchunge Rute: MNT 1,6= USD 1 (1 AugusL zo1z)
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1. MONGOLIA - APROIILI
1.1 Introduction
Georcph cnJ Climcte
MongoIIu Is u IundIocked counLry In EusL und CenLruI AsIu. L borders RussIu Lo Lhe norLh und
Lhe PeopIe's RepubIIc oI ChInu Lo Lhe souLh, eusL und wesL. AILhough MongoIIu does noL shure
u border wILh KuzukhsLun, ILs wesLern-mosL poInL Is onIy 8 kIIomeLers (zq mI) Irom
KuzukhsLun's eusLern LIp.
AL 1,6q,116 squure kIIomeLers (6o,qoq sq mI), MongoIIu Is Lhe 1qLh IurgesL und Lhe mosL
spurseIy popuIuLed IndependenL counLry In Lhe worId, wILh u popuIuLIon oI uround z.8 mIIIIon
peopIe. L Is uIso Lhe worId's second-IurgesL IundIocked counLry uILer KuzukhsLun. The counLry
conLuIns very IILLIe urubIe Iund, us much oI ILs ureu Is covered by sLeppes, wILh mounLuIns Lo
Lhe norLh und wesL und Lhe GobI DeserL Lo Lhe souLh.
The geogruphy oI MongoIIu Is vurIed wILh Lhe GobI DeserL Lo Lhe souLh und wILh coId und
mounLuInous regIons Lo Lhe norLh und wesL. Much oI MongoIIu consIsLs oI sLeppes. The
hIghesL poInL In MongoIIu Is Lhe KhuILen Peuk In Lhe Tuvun bogd mussII In Lhe Iur wesL uL
q,;q m (1q,o IL). The busIn oI Lhe Iuke Uvs Nuur, shured wILh Tuvu RepubIIc In RussIu, Is u
nuLuruI WorId HerILuge SILe. MosL oI Lhe counLry Is hoL In Lhe summer und exLremeIy coId In
Lhe wInLer, wILh Junuury uveruges droppIng us Iow us -o C (-zz.o F).
The counLry Is uIso subjecL Lo occusIonuI hursh cIImuLIc condILIons known us zud. UIuunbuuLur
hus Lhe IowesL uveruge LemperuLure oI uny nuLIonuI cupILuI In Lhe worId. MongoIIu Is hIgh,
coId, und wIndy. L hus un exLreme conLInenLuI cIImuLe wILh Iong, coId wInLers und shorL
summers, durIng whIch mosL oI ILs unnuuI precIpILuLIon IuIIs. The counLry uveruges z;
cIoudIess duys u yeur, und IL Is usuuIIy uL Lhe cenLer oI u regIon oI hIgh uLmospherIc pressure.
PrecIpILuLIon Is hIghesL In Lhe norLh (uveruge oI zoo Lo o mIIIImeLers (;.q Lo 1.8 In) per
yeur) und IowesL In Lhe souLh, whIch receIves 1oo Lo zoo mIIIImeLers (.q Lo ;.q In) unnuuIIy.
The exLreme souLh Is Lhe GobI, some regIons oI whIch receIve no precIpILuLIon uL uII In mosL
yeurs.
The nume "GobI" Is u MongoI Lerm Ior u deserL sLeppe, whIch usuuIIy reIers Lo u cuLegory oI
urId rungeIund wILh InsuIIIcIenL vegeLuLIon Lo supporL murmoLs buL wILh enough Lo supporL
cumeIs. MongoIs dIsLInguIsh GobI Irom deserL proper, uILhough Lhe dIsLIncLIon Is noL uIwuys
uppurenL Lo ouLsIders unIumIIIur wILh Lhe MongoIIun Iundscupe. GobI rungeIunds ure IrugIIe
und ure eusIIy desLroyed by overgruzIng, whIch resuILs In expunsIon oI Lhe Lrue deserL, u sLony
wusLe where noL even BucLrIun cumeIs cun survIve.
Histor
mporLunL prehIsLorIc sILes ure Lhe PuIeoIILhIc cuve druwIngs oI Lhe KhoId TsenkherIIn AguI
(NorLhern Cuve oI BIue) In Khovd ProvInce und Lhe Tsuguun AguI (WhILe Cuve) In
Buyunkhongor ProvInce. A NeoIILhIc IurmIng seLLIemenL hus been Iound In Dornod ProvInce.
ConLemporury IIndIngs Irom wesLern MongoIIu IncIude onIy Lemporury encumpmenLs oI
hunLers und IIshers. The popuIuLIon durIng Lhe Copper Age hus been descrIbed us
puIeomongoIId In Lhe EusL oI whuL Is now MongoIIu, und us europId In Lhe WesL.
n Lhe second mIIIennIum B.C, durIng Lhe Bronze Age, wesLern MongoIIu wus under Lhe
InIIuence oI Lhe Kurusuk cuILure. Deer sLones und Lhe omnIpresenL keregsurens (smuII
kurguns) probubIy ure Irom LhIs eru; oLher LheorIes duLe Lhe deer sLones us ;Lh or 8Lh
cenLurIes BCE. A vusL Iron-uge burIuI compIex Irom Lhe Lh-rd cenLury, IuLer uIso used by Lhe
XIongnu, hus been uneurLhed neur UIuungom.
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MongoIIu, sInce prehIsLorIc LImes, hus been InhubILed by nomuds who, Irom LIme Lo LIme,
Iormed greuL conIederuLIons LhuL rose Lo promInence. The IIrsL oI Lhese, Lhe XIongnu, were
broughL LogeLher Lo Iorm u conIederuLIon by Modun Shunyu In zoq BC. Soon Lhey emerged us
Lhe greuLesL LhreuL Lo Lhe QIn DynusLy, IorcIng Lhe IuLLer Lo consLrucL Lhe GreuL WuII oI ChInu,
ILseII beIng guurded by up Lo uImosL oo,ooo soIdIers durIng MurshuI Meng TIun's Lenure, us
u meuns oI deIense uguInsL Lhe desLrucLIve XIongnu ruIds.
AILer Lhe decIIne oI Lhe XIongnu, Lhe Rourun, u cIose reIuLIve oI Lhe MongoIs, cume Lo power
beIore beIng deIeuLed by Lhe GokLurks, who Lhen domInuLed MongoIIu Ior cenLurIes. DurIng
Lhe ;Lh und 8Lh cenLurIes, Lhey were succeeded by Uyghurs und Lhen by Lhe KhILuns und
Jurchens. By Lhe 1oLh cenLury, Lhe counLry wus dIvIded InLo numerous LrIbes IInked Lhrough
LrunsIenL uIIIunces und InvoIved In Lhe oId puLLerns oI InLernuI sLrIIe.
n Lhe chuos oI Lhe IuLe 1zLh cenLury, u chIeILuIn numed TemuujIn IInuIIy succeeded In unILIng
Lhe MongoI LrIbes beLween MunchurIu und Lhe AILuI MounLuIns. n 1zo6, he Look Lhe LILIe
GenghIs Khun, und wuged u serIes oI mIIILury cumpuIgns - renowned Ior LheIr bruLuIILy und
IerocILy - sweepIng Lhrough much oI AsIu, und IormIng Lhe MongoI EmpIre, Lhe IurgesL
conLIguous Iund empIre In worId hIsLory. Under hIs successors IL sLreLched Irom presenL-duy
PoIund In Lhe wesL Lo Koreu In Lhe eusL, und Irom SIberIu In Lhe norLh Lo Lhe GuII oI Omun und
VIeLnum In Lhe souLh, coverIng some ,ooo,ooo squure kIIomeLers (1,ooo,ooo sq mI) (zz%
oI EurLh's LoLuI Iund ureu) und huvIng u popuIuLIon oI over 1oo mIIIIon peopIe.
AILer GenghIs Khun's deuLh, Lhe empIre wus subdIvIded InLo Iour kIngdoms or KhunuLes whIch
evenLuuIIy becume quusI-IndependenL uILer Mongke`s deuLh In 1zq. One oI Lhe khunuLes, Lhe
"GreuL KhuunuLe", consIsLIng oI Lhe MongoI homeIund und ChInu, becume Lhe Yuun DynusLy
under KubIuI Khun, Lhe grundson oI GenghIs Khun. He seL up hIs cupILuI In presenL duy
BeIjIng buL uILer more Lhun u cenLury oI power, Lhe Yuun wus repIuced by Lhe MIng DynusLy In
168, wILh Lhe MongoI courL IIeeIng Lo Lhe norLh. As Lhe MIng urmIes pursued Lhe MongoIs
InLo LheIr homeIund, Lhey successIuIIy sucked und desLroyed Lhe MongoI cupILuI Kurukorum
umong oLher cILIes, wIpIng ouL Lhe cuILuruI progress LhuL wus uchIeved durIng Lhe ImperIuI
perIod und Lhus LhrowIng MongoIIu buck Lo unurchy.
The MongoIs reLurned Lo LheIr eurIIer puLLern oI consLunL InLernuI conIIIcL und occusIonuI
ruIds on Lhe ChInese borderIunds. n Lhe 16Lh und 1;Lh cenLurIes, MongoIIu cume under Lhe
InIIuence oI TIbeLun BuddhIsm. AL Lhe end oI Lhe 1;Lh cenLury, mosL oI MongoIIu hud been
IncorporuLed InLo Lhe ureu ruIed by Lhe QIng DynusLy. DurIng Lhe coIIupse oI Lhe QIng DynusLy
In 1q11, MongoIIu decIured Independence, buL hud Lo sLruggIe unLII 1qz1 Lo IIrmIy esLubIIsh Je-
jccto Independence Irom Lhe RepubIIc oI ChInu, und unLII 1qq Lo guIn InLernuLIonuI
recognILIon.
MongoIIu subsequenLIy cume under sLrong RussIun und SovIeL InIIuence; In 1qzq, Lhe
MongoIIun PeopIe's RepubIIc wus decIured, und MongoIIun poIILIcs begun Lo IoIIow Lhe sume
puLLerns us Lhe SovIeL poIILIcs oI Lhe LIme. AILer Lhe breukdown oI communIsL regImes In
EusLern Europe In IuLe 1q8q, MongoIIu suw ILs own DemocruLIc RevoIuLIon In eurIy 1qqo,
whIch Ied Lo u muILI-purLy sysLem, u new consLILuLIon In 1qqz, und Lhe (ruLher rough)
LrunsILIon Lo u murkeL economy.
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1. Government structure
Dtertieu
:
MongoIIu Is u purIIumenLury repubIIc. The purIIumenL Is eIecLed by Lhe peopIe und In Lurn
eIecLs Lhe governmenL. The presIdenL Is eIecLed dIrecLIy. MongoIIu's consLILuLIon guurunLees
Ireedom oI expressIon, reIIgIon, und oLhers rIghLs. MongoIIu hus u number oI poIILIcuI purLIes,
Lhe bIggesL ones beIng Lhe MongoIIun PeopIe`s PurLy (Iormer MongoIIun PeopIe`s
RevoIuLIonury PurLy) und Lhe DemocruLIc PurLy (DP). MongoIIun poIILIcs cun be LurbuIenL,
wILh IrequenL chunges In cubIneL members und couIILIon purLners.
The PresiJent
z
MongoIIu's presIdenL hus u IurgeIy symboIIc roIe, buL cun bIock Lhe PurIIumenL's decIsIons
Lhrough veLo powers, whIch requIres u Lwo-LhIrds mujorILy oI purIIumenL Lo overrIde.
MongoIIu's consLILuLIon provIdes Lhree requIremenLs Ior LukIng oIIIce us presIdenL; Lhe
cundIduLe musL be u nuLIve-born MongoIIun, be uL IeusL q yeurs oI uge, und huve resIded In
MongoIIu Ior IIve yeurs prIor Lo LukIng oIIIce. The presIdenL Is uIso requIred Lo IormuIIy resIgn
hIs or her purLy membershIp.
The Stcte Grect Khurcl - the Pcrlicment
MongoIIu uses u unIcumeruI purIIumenLury sysLem In whIch Lhe presIdenL hus u symboIIc roIe
und Lhe governmenL exercIses execuLIve power. The IegIsIuLIve urm, Lhe SLuLe GreuL KhuruI,
hus one chumber wILh ;6 seuLs und Is chuIred by Lhe speuker oI Lhe PurIIumenL. L eIecLs ILs
members every Iour yeurs by generuI eIecLIons.
Prime Minister cnJ the Ccbinet
(
The PrIme MInIsLer oI MongoIIu Is uppoInLed by Lhe SLuLe GreuL KhuruI. The mInIsLers oI euch
oI Lhe MInIsLrIes consLILuLe Lhe prIme mInIsLer's cubIneL. The cubIneL Is nomInuLed by Lhe
prIme mInIsLer In consuILuLIon wILh Lhe presIdenL und uppoInLed by Lhe SLuLe GreuL KhuruI.
Recent Politics
The MPP (Iormer MPRP) Iormed Lhe governmenL oI Lhe counLry Irom 1qz1 Lo 1qq6 (unLII 1qqo
In u one-purLy sysLem) und Irom zooo Lo zooq. From zooq Lo zoo6, IL wus purL oI u couIILIon
wILh Lhe DP und Lwo oLher purLIes, und beLween zoo6 und zo1z IL wus Lhe domInunL purLy In
Lwo IurLher couIILIons. The DP wus Lhe domInunL Iorce In Lhe ruIIng couIILIon beLween 1qq6
und zooo, und uIso un upproxImuLeIy equuI purLner wILh Lhe MPP (Iormer MPRP) In Lhe
zooq-zo1z couIILIon.
The IusL purIIumenLury eIecLIons were heId In June zo1z. The DP won 1 seuLs ouL oI ;6
resuILIng In Lhe IormuLIon oI u couIILIon wILh Iour smuIIer purLIes Ied by ex PresIdenL
Numburyn Enkhbuyur`s MPRP. A new cubIneL wus Lhen chosen, Ied by Lhe DP NorovIIn
AILunkhuyug us PrIme MInIsLer. The DP Is expecLed Lo comprIse ;% oI Lhe new cubIneL.
A number oI demonsLruLIons Look pIuce In zo11 und zo1z, prompLed, umong oLher LhIngs, by
unger IInked Lo Lhe sepuruLIng oI MPRP Irom MP In zo11 und Lhe corrupLIon InvesLIguLIon und
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Contributed by MahoneyLiotta LLC
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urresL oI ex PresIdenL Numburyn Enkhbuyur. However, Lhe counLry`s poIILIcs huve generuIIy
been sLubIe, und recenL proLesLs huve been on u much smuIIer scuIe Lhun, Ior exumpIe, Lhose
reIuLed Lo Lhe zoo8 eIecLIon resuIL.
The nexL purIIumenL eIecLIon wIII Luke pIuce In Lhe summer oI zo16 und PresIdenLIuI eIecLIon
wIII Luke pIuce In Lhe summer oI nexL yeur.
1. Legul System
Leislctite Ircmeuorl
The IeguI sysLem oI MongoIIu hus chunged wILh Lhe governmenL sInce Lhe democruLIc
revoIuLIon oI 1qqo und Is purL oI Lhe ConLInenLuI (Romuno-GermunIc) IeguI LrudILIon. The core
oI MongoIIun Iuw Is Lhe ConsLILuLIon LhuL wus enucLed In 1qqz. The provIsIons oI Lhe
ConsLILuLIon, Lhe Iuws correspondIng Lo IL, oLher reguIuLory IeguI ucLs, InLernuLIonuI LreuLIes
und oLher commILmenLs oI MongoIIu us weII us reguIuLory resoIuLIons oI ConsLILuLIonuI CourL
(TseLs) und Lhe Supreme CourL comprIse Lhe IuncLIonIng Iuw In MongoIIu.
nLernuLIonuI LreuLIes ruLIIIed by MongoIIu huve equuI weIghL us ILs domesLIc Iuws und ure
dIrecLIy ImpIemenLed excepL In cuses when Lhe uppIIcuLIon oI un InLernuLIonuI LreuLy requIres
Lhe promuIguLIon oI u Iuw. AccordIng Lo Lhe ConsLILuLIon oI MongoIIu, InLernuLIonuI LreuLIes
und oLher IeguI documenLs LhuL conLrudIcL Lhe ConsLILuLIon shouId noL be IoIIowed.
Courts
The courL sysLem oI MongoIIu IncIudes Lhe Supreme CourL, regIonuI courLs und oLher courLs,
esLubIIshed by Iuw (e.g. specIuIIzed by Lypes oI cuses).
The Supreme CourL oI MongoIIu Is Lhe hIghesL courL In Lhe judIcIury sysLem oI MongoIIu. The
Supreme CourL heurs uppeuIs oI Iower courL decIsIons us weII us humun rIghLs cuses reIerred
Lo IL by Lhe ProsecuLor GeneruI or Lhe ConsLILuLIonuI CourL oI MongoIIu. The Supreme CourL
InLerpreLs uII MongoIIun Iuws excepL Ior Lhe ConsLILuLIon, whIch Is Lhe provInce oI Lhe
ConsLILuLIonuI CourL.
1uJicicl AJministrction
WILhIn Lhe JudIcIuI AdmInIsLruLIon, judges oI Lhe Supreme CourL und oLher courLs ure
uppoInLed by Lhe PresIdenL oI MongoIIu. The nomInuLIons Ior judges ure mude Irom Lhe
CourL`s GeneruI CouncII, whereus Lhose Ior judges oI Lhe Supreme CourL shouId uddILIonuIIy
be upproved by Lhe SLuLe GreuL KhuruI. The Supreme CourL seIecLs one oI ILs members Lo be
ChIeI Judge, whose uppoInLmenL Is mude by Lhe PresIdenL Ior Lhe sIx yeur Lerm.
1.q People
Populction
MongoIIu's LoLuI popuIuLIon uccordIng Lo Lhe WorId Bunk Is z,8oo,1oo. AbouL ; % oI Lhe LoLuI
popuIuLIon Is ubove 1 und z;% ure under 1q. ApproxImuLeIy z% oI Lhe popuIuLIon Is
nomudIc or semI-nomudIc. UIuunbuuLur, Lhe cupILuI und IurgesL cILy, Is home Lo ubouL q% oI
Lhe popuIuLIon.
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SInce Lhe end oI socIuIIsm, MongoIIu hus experIenced u decIIne oI LoLuI IerLIIILy ruLe (chIIdren
per womun) LhuL Is sLeeper Lhun In uny oLher counLry In Lhe worId, uccordIng Lo recenL UN
esLImuLIons: In 1q;o-1q;, IerLIIILy wus esLImuLed Lo be ;. chIIdren per womun, buL In zoo-
zo1o IL wus 1.8; (q LImes Iess).
ELhnIc MongoIs uccounL Ior ubouL 8% oI Lhe popuIuLIon und consIsL oI KhuIkhu und oLher
groups, uII dIsLInguIshed prImurIIy by dIuIecLs oI Lhe MongoI Iunguuge. The KhuIkhu muke up
8z.q% oI Lhe eLhnIc MongoI popuIuLIon. The remuInIng 1;.6% IncIude BuryuLs, DurbeL
MongoIs und oLhers In Lhe norLh und DurIgungu MongoIs In Lhe eusL. TurkIc peopIes (Kuzukhs,
Tuvus, und ChunLuu (Uzbek) consLILuLe q.o;% oI MongoIIu's popuIuLIon, und Lhe resL ure
TungusIc peopIes, ChInese, und RussIuns.
Reliion
AccordIng Lo Lhe zo1o cupILuLIon Irom NuLIonuI SLuLIsLIcs OIIIce oI MongoIIu, % oI
MongoIIu's popuIuLIon IoIIows Lhe TIbeLun BuddhIsm, 8.6% ure IIsLed us huvIng no reIIgIon
.q% ure ShumunIsL, Baha'i und ChrIsLIun, und % ure MusIIm.
VurIous Iorms oI ShumunIsm huve been wIdeIy prucLIced LhroughouL Lhe hIsLory oI whuL Is
now modern duy MongoIIu; us such beIIeIs were common umong nomudIc peopIe In AsIun
hIsLory. Such beIIeIs gruduuIIy guve wuy Lo TIbeLun BuddhIsm, buL ShumunIsm hus IeIL u murk
on MongoIIun reIIgIous cuILure, und conLInues Lo be prucLIced. AmongsL Lhe MongoI eIILe oI
Lhe MongoI EmpIre, sIum wus generuIIy Iuvored over oLher reIIgIons, us Lhree oI Lhe Iour
mujor khunuLes udopLed sIum.
ThroughouL much oI Lhe zoLh cenLury, Lhe communIsL governmenL ensured LhuL Lhe reIIgIous
prucLIces oI Lhe MongoIIun peopIe were IurgeIy repressed. KhorIoogIIn ChoIbuIsun compIIed
wILh Lhe orders oI Joseph SLuIIn, desLroyIng uImosL uII oI MongoIIu's over ;oo BuddhIsL
monusLerIes und kIIIIng Lhousunds oI monks. The number oI BuddhIsL monks dropped Irom
1oo,ooo In 1qzq Lo 11o In 1qqo.
The IuII oI communIsm In 1qqo resLored Lhe IeguIILy oI pubIIc reIIgIous prucLIce, und TIbeLun
BuddhIsm, whIch hud been Lhe predomInunL reIIgIon In Lhe regIon beIore Lhe rIse oI
communIsm; uguIn rose Lo become Lhe mosL wIdeIy prucLIced reIIgIon In MongoIIu. The end oI
reIIgIous repressIon In Lhe 1qqos uIso uIIowed Ior oLher reIIgIons, such us sIum, Buhu'I FuILh
und ChrIsLIunILy, Lo spreud In Lhe counLry. AccordIng Lo Lhe ChrIsLIun mIssIonury group
Burnubus Fund, Lhe number oI ChrIsLIuns grew Irom jusL Iour In 1q8q Lo uround q1,11; us oI
zoo8.
Lcnuces
The oIIIcIuI Iunguuge oI MongoIIu Is KhuIkhu MongoIIun, und Is spoken by 8z.q% oI Lhe
popuIuLIon. A vurIeLy oI dIIIerenL dIuIecLs ure spoken ucross Lhe counLry. These dIuIecLs ure
IncIuded In Lhe MongoIIc Iunguuges. MongoIIc Is IrequenLIy IncIuded In Lhe AILuIc Iunguuges, u
group oI Iunguuges numed uILer Lhe AILuy MounLuIns LhuL uIso IncIudes Lhe TurkIc und
TungusIc Iunguuges.
Toduy, MongoIIun Is wrILLen usIng Lhe CyrIIIIc uIphubeL, uILhough In Lhe pusL IL wus wrILLen
usIng Lhe MongoIIun scrIpL. An oIIIcIuI reInLroducLIon oI Lhe oId scrIpL wus pIunned Ior 1qqq,
buL hus noL yeL Luken pIuce us oIder generuLIons` encounLered prucLIcuI dIIIIcuILIes. The
LrudILIonuI uIphubeL Is beIng sIowIy reInLroduced Lhrough schooIs.
n Lhe wesL oI Lhe counLry, Lhe Kuzukh und Tuvun Iunguuges, umong oLhers, ure uIso spoken.
The RussIun Iunguuge Is Lhe mosL IrequenLIy spoken IoreIgn Iunguuge In MongoIIu, IoIIowed
PwC 11
by EngIIsh, Lhough EngIIsh hus been gruduuIIy repIucIng RussIun us Lhe second Iunguuge.
Koreun hus guIned popuIurILy us Lens oI Lhousunds oI MongoIIuns work In SouLh Koreu.
nLeresL In ChInese, us Lhe Iunguuge oI Lhe oLher neIghborIng power, hus been growIng.
Jupunese Is uIso popuIur umong Lhe younger peopIe. A number oI oIder educuLed MongoIIuns
speuk some Germun, us Lhey sLudIed In Lhe Iormer EusL Germuny, whIIe u Iew speuk oLher
Iunguuges Irom Lhe Iormer EusLern BIoc. Some younger MongoIIuns ure IIuenL In Lhe WesLern
Europeun Iunguuges us Lhey sLudy or work In IoreIgn counLrIes IncIudIng Germuny, Frunce
und LuIy.
EJucction
DurIng Lhe sLuLe socIuIIsL perIod, educuLIon wus one oI Lhe ureus oI sIgnIIIcunL uchIevemenL In
MongoIIu. IIILerucy wus vIrLuuIIy eIImInuLed, In purL Lhrough Lhe use oI seusonuI bourdIng
schooIs Ior chIIdren oI nomudIc IumIIIes. FundIng Lo Lhese bourdIng schooIs wus cuL In Lhe
1qqos, conLrIbuLIng Lo sIIghLIy Increused IIIILerucy.
PrImury und secondury educuLIon IormerIy IusLed 1o yeurs, buL wus expunded Lo 11 yeurs.
SInce Lhe zoo8-zooq schooI yeurs, new IIrsL gruders ure usIng Lhe 1z yeur sysLem. As such, IuII
LrunsILIon Lo Lhe 1z-yeur sysLem wIII noL huppen unLII Lhe zo1q-zozo schooI yeur, when Lhe
currenL IIrsL gruders gruduuLe.
MongoIIun nuLIonuI unIversILIes ure uII spIn-oIIs Irom Lhe NuLIonuI UnIversILy oI MongoIIu und
Lhe MongoIIun UnIversILy oI ScIence und TechnoIogy.
The broud IIberuIIzuLIon oI Lhe 1qqos Ied Lo u boom In prIvuLe InsLILuLIons oI hIgher educuLIon
uILhough Lhere Is u wIde runge In LheIr quuIILy.
Litin StcnJcrJs
WILh u Humun DeveIopmenL ndex (HD) oI o.6 ouL oI 1.ooo, MongoIIu hus u runk oI 11o
Lh
umong 18; counLrIes (Improved Irom 11
Lh
In Lhe prevIous yeur), compured Lo RussIu`s HD oI
o.; und ChInu`s oI o.68;. BeLween zooo und zo1o MongoIIu's HD rose by uImosL 1.;%
unnuuIIy, reIIecLIng Lhe progressIve growLh oI Lhe Index In mosL regIons oI Lhe worId. Euch
yeur UNDP`s Humun DeveIopmenL ReporL pubIIshes Lhe humun deveIopmenL Index (HD)
whIch Iooks beyond GDP Lo u brouder deIInILIon oI weII-beIng. By IookIng uL some oI Lhe mosL
IundumenLuI uspecLs oI peopIe`s IIves und opporLunILIes Lhe HD provIdes u much more
compIeLe pIcLure oI u counLry's deveIopmenL Lhun oLher IndIcuLors, such us GDP per cupILu.
The IIvIng sLundurds In MongoIIu ure, however, noL Lhe sume ucross Lhe popuIuLIon und Lhe
counLry. AccordIng Lo Lhe UNDP`s duLu, Lhe poverLy IeveI oI Lhe ruruI popuIuLIon (q%) Lends
Lo be much hIgher Lhun LhuL oI Lhe urbun popuIuLIon (o%) whIIe uround zz% oI Lhe
MongoIIu`s popuIuLIon IIves on $1 or Iess u duy.
1.g Iconomy
Genercl Dtertieu
MongoIIu`s currency, Lhe LugrIk, IeII shurpIy uguInsL Lhe US doIIur IoIIowIng u IuII In
commodILy prIces In IuLe zoo8, und hus experIenced conLInued ups und downs sInce Lhen on.
By Lhe begInnIng oI AugusL zo1z Lhe exchunge ruLe hud reuched USD 1: MNT 1,6, compured
wILh USD 1: MNT 1,z In AugusL zo11 und USD 1: MNT 1,z uL Lhe end oI Februury zooq,
when Lhe currency wus uL ILs weukesL.
PwC 12
The sLrengLhenIng oI Lhe exchunge ruLe Is IurgeIy reIuLed Lo Lhe rebound In copper und goId
prIces sInce eurIy zooq. The sLubIIIsuLIon oI Lhe exchunge ruLe hus uIIowed Lhe CenLruI Bunk oI
MongoIIu (Lhe cenLruI bunk) Lo conLInue Lhe process oI rebuIIdIng Lhe counLry`s IoreIgn-
exchunge reserves, whIch IeII shurpIy In eurIy zooq us Lhe cenLruI bunk LrIed Lo supporL Lhe
currency by seIIIng ILs reserves oI IoreIgn currency. By June zo11, LoLuI IoreIgn-exchunge
reserves hud recovered Lo uround USD z.bn, doubIe LhuL oI zooq.
The economy grew by 6.1% In zo1o IoIIowIng u conLrucLIon oI 1.% In zooq. The IusL quurLer
oI zo1o ended wILh u broud-bused recovery, supporLed by LrunsporLuLIon und consLrucLIon. On
u 1z-monLh roIIIng busIs, Lhe budgeL surpIus Increused Lo z.q% oI GDP In Murch zo11, up Irom
u % deIIcIL In Murch zo1o. The zo11 budgeL oI MongoIIu predIcLs u sLeep Increuse In
governmenL spendIng Lo un un-precedenLed ;;q bIIIIon MNT, equuI Lo z% oI GDP, uccordIng
Lo Lhe WorId Bunk.
FurLhermore, ImporLs Increused Lo record IeveIs oI 86%, wIdenIng Lhe Lrude deIIcIL Lo US$ 6q6
mIIIIon, whereus exporLs wenL up Lo ;1%. ThIs wus supporLed by Lhe upwurd drIve In meLuI
prIces und Iurge couI und copper ImporLs by ChInu, who ubsorbs qo% oI MongoIIu`s exporLs.
Trcnsportction
MongoIIu hus u number oI domesLIc uIrporLs. The onIy InLernuLIonuI uIrporL Is Lhe ChInggIs
Khuun nLernuLIonuI AIrporL In UIuunbuuLur. DIrecL IIIghL connecLIons exIsL beLween MongoIIu
und SouLh Koreu, ChInu, Jupun, RussIu, Germuny und Turkey. MAT Is MongoIIu's IurgesL
currIer In MongoIIu und provIdes boLh domesLIc und InLernuLIonuI IIIghLs.
The Truns-MongoIIun RuIIwuy Is Lhe muIn ruII IInk beLween MongoIIu und ILs neIghbors. L
begIns uL Lhe Truns-SIberIun RuIIwuy In RussIu uL Lhe Lown oI UIun Ude, crosses InLo
MongoIIu, runs Lhrough UIuunbuuLur und Lhen pusses InLo ChInu uL ErenhoL where IL joIns Lhe
ChInese ruIIwuy sysLem. A sepuruLe ruIIroud IInk connecLs Lhe eusLern cILy oI ChoIbuIsun wILh
Lhe Truns-SIberIun RuIIwuy; however, LhuL IInk Is cIosed Lo pussengers uILer Lhe MongoIIun
Lown oI ChuIuunkhorooL.
MosL overIund rouds In MongoIIu ure onIy gruveI rouds or sImpIe cross-counLry Lrucks. There
ure puved rouds Irom UIuunbuuLur Lo Lhe RussIun und ChInese border und Irom Durkhun Lo
BuIgun. Some roud consLrucLIon projecLs ure currenLIy underwuy und some huve uIreudy been
compIeLed-Ior exumpIe, consLrucLIon oI Lhe eusL-wesL so-cuIIed MIIIennIum Roud.
Telecommunicctions
MongoIIu`s LeIephone neLwork Is ImprovIng wILh InLernuLIonuI dIrecL dIuIIng uvuIIubIe In muny
ureus. A IIber-opLIc neLwork hus been InsLuIIed LhuL Is ImprovIng broudbund und
communIcuLIon servIces beLween mujor urbun cenLers wILh muILIpIe compunIes provIdIng
InLer-cILy IIber-opLIc cubIe servIces. The IIxed-IIne LeIephone sysLem hus u very Iow LeIe-
densILy wILh u decreusIng number oI muIn IInes. There were uround 1q1,ooo IInes In use by
Lhe end oI zooq, u ;% drop compured Lo Lhe precedIng yeur. n conLrusL, Lhe mobIIe phone
subscrIbershIp servIced by Iour provIders Is IncreusIng rupIdIy reuchIng z.z mIIIIon In zooq.
AccordIng Lo Lhe NuLIonuI SLuLIsLIcs OIIIce, every soum (udmInIsLruLIve unIL In MongoIIu) Is
now covered by ceIIuIur servIce.
ExpunsIon oI nLerneL use hus been IImILed by Lhe reIuLIveIy Iow ownershIp oI compuLers In
MongoIIu. MosL users uccess Lhe nLerneL uL pubIIc or work IucIIILIes. Usuge Is concenLruLed In
UIuunbuuLur. n zo1o, ;oq,6z (z.;%) peopIe were usIng Lhe nLerneL.
PwC 1S
1.6 Ioreign Trude
n zo11, MongoIIu`s exporLs und ImporLs Increused by z% und 6% respecLIveIy compured Lo
Lhe correspondIng umounLs In zo1o, Lhereby IncreusIng Lhe counLry`s Lrude deIIcIL by ;.q%.
The muIn exporL commodILIes were copper concenLruLes z.q%, couI .;%, Iron ore q.z%,
crude oII .%, ruw cushmere .z%, zInc ore concenLruLes q.1%, goId .q%, IIuorspur ore
concenLruLes z.o%, moIybdenum ore concenLruLes 1.% und oLhers 6.q%.
MongoIIu`s ImporLs ure domInuLed by mIneruI producLs (mosL oI whIch ure oII producLs),
muchInery und equIpmenL us weII us LrunsporL vehIcIes. mporLs Irom RussIu ure IurgesL,
IoIIowed by ChInu und SouLh Koreu.
1., Mining in Mongoliu
6
MongoIIu hus rIch mIneruI resources und expIoILuLIon oI Lhese hus been IncreusIng In Lhe
LrunsILIon perIod Lo Lhe murkeL economy
Strcteic Deposits
;
By deIInILIon oI Lhe Luw on MIneruIs, mIneruI resources nuLuruIIy occurrIng on und under Lhe
eurLh's surIuce In MongoIIu ure Lhe properLy oI Lhe SLuLe. ThereIore, Lhe SLuLe, us Lhe owner,
hus Lhe rIghL Lo grunL expIoruLIon und mInIng rIghLs.
The SLuLe uIso hus Lhe rIghL Lo own u cerLuIn percenLuge In u mIneruI deposIL oI sLruLegIc
ImporLunce (u deposIL whIch muy huve u poLenLIuI ImpucL on nuLIonuI securILy, nuLIonuI or
regIonuI economIc or socIuI deveIopmenL or LhuL Is producIng or hus Lhe poLenLIuI Lo produce
more Lhun % oI Lhe LoLuI unnuuI gross domesLIc producL). I Lhe deposIL quuIIIIes us u
mIneruI deposIL oI sLruLegIc ImporLunceLhen Lhe SLuLe muy ucquIre u cerLuIn percenLuge us
IoIIows. The SLuLe muy purLIcIpuLe up Lo o% joInLIy wILh u prIvuLe IeguI person In Lhe
expIoILuLIon oI u mIneruI deposIL oI sLruLegIc ImporLunce where Lhe SLuLe cun prove LhuL IL hus
conducLed SLuLe Iunded expIoruLIon und LhuL Lhe SLuLe Iunded expIoruLIon wus used Lo
deLermIne Lhe proven reserves. However, Lhe IegIsIuLIon does noL prescrIbe whuL Iorm LhIs
equILy InLeresL mIghL Luke und IL Is uncIeur whuL Lhe druILers meun by purLIcIpuLe. The
percenLuge oI Lhe SLuLe shure shuII be deLermIned by un ugreemenL on expIoILuLIon oI Lhe
deposIL consIderIng Lhe umounL oI InvesLmenL mude by Lhe SLuLe. The SLuLe muy own up Lo
q%oI Lhe shures oI un InvesLmenL Lo be mude by u IIcensehoIder In u mIneruI deposIL oI
sLruLegIc ImporLunce where proven reserves were deLermIned Lhrough IundIng sources oLher
Lhun Lhe SLuLe budgeL (non-SLuLe Iunded expIoruLIon oI u sLruLegIc deposIL). The percenLuge oI
Lhe SLuLe shure shuII be deLermIned by un ugreemenL on expIoILuLIon oI Lhe deposIL
consIderIng Lhe umounL oI InvesLmenL mude by Lhe SLuLe.
Ixplorution Ixploitution
SLuLe Iunded expIoruLIon oI u sLruLegIc
deposIL where reserves ure deLermIned
by Lhe SLuLe Iunded expIoruLIon
SLuLe muy huve up Lo o% purLIcIpuLIon InLeresL
Non-sLuLe Iunded expIoruLIon oI u
sLruLegIc deposIL where Lhe reserves ure
deLermIned by oLher meuns
SLuLe muy own up Lo q% oI shures oI un InvesLmenL
6
7
PwC 14
The MongoIIun governmenL hus IdenLIIIed u number oI Lhe IurgesL deposILs LhuL huve sLruLegIc
ImporLunce Ior Lhe counLry und where deveIopmenL oI Lhe mInIng IndusLry shouId be Iocused.
CurrenLIy, IIILeen (1) deposILs LhuL huve been cIussIIIed us SLruLegIc DeposILs (shown In Lhe
LubIe beIow). These ure currenLIy heId eILher by Lhe SLuLe ProperLy CommILLee, Lhrough
esLubIIshed sLuLe-owned enLerprIses (SOEs), or In some cuses by Lhe prIvuLe secLor. There ure
un uddILIonuI LhIrLy-nIne (q) deposILs under consIderuLIon Ior cIussIIIcuLIon us SLruLegIc
DeposILs.
LIST OI STRATIGIC IPOSITS
No
eposit
nume
Type oI
Minerul
Locution Reserves & Resources
1
Tuvun
ToIgoI
FossII couI
UmnugobI,
TsogLLseLsII
6qzo mIIIIon Lonnes couI
z
NurIIn
SukhuIL
FossII couI
UmnugobI,
GurvunLes
1z. mIIIIon Lonnes couI
Bugunuur Brown couI
UIuunbuuLur,
Bugunuur
6oo mIIIIon Lonnes couI
q
ShIvee
Ovoo
Brown couI
GobIsumber,
ShIveeGobI
6q6.z mIIIIon Lonnes couI
MurduI UrunIum Dornod, DushbuIbur 11oq Lonnes uL o.11q% UO8
6 Dornod UrunIum Dornod, DushbuIbur z8868 Lonnes uL o.1;% UO8
PwC 1S
;
Gurvun
BuIug
UrunIum Dornod, DushbuIbur 16o; Lonnes uL o.1z% UO8
8 TomorLeI ron SeIenge, Khuder zzq. mIIIIon Lonnes uL 1.1% Fe
q Oyu ToIgoI Copper, GoId
UmnugobI,
Khunbogd
z.; bIIIIon Lonnes oI ore, z.q mIIIIon
Lonnes oI copper, 1oz8 Lonnes oI goId
1o
Tsuguun
suvurgu
Copper,
moIybdenum
DornogobI, Mundukh
1o.6q mIIIIon Lonnes oxIdes uL o.qz% Cu
und o.o11% Mo, zqo.1 mIIIIon Lonnes
suIphIdes uL o.% Cu und o.o18% Mo
11 ErdeneL
Copper,
moIybdenum
Orkhon, Buyun-
ondor
1.z bIIIIon Lonnes uL o.1% Cu und
o.o1z% Mo
1z Burenkhuun Phosphor
KhubsuguI, AIug-
Erdene
1qz.zq mIIIIon Lonnes uL z1.1% PzO
1 Boroo GoId SeIenge, BuyungoI zq. Lhousund Lonnes uL 1.6gJLonn Au
1q
TomorLeIn
Ovoo
ZInc
SukhbuuLur,
SukhbuuLur
;.; mIIIIon Lonnes uL 11.% Zn
1 AsguL SIIver
Buyun-UIgII,
Nogoonnuur
6.q mIIIIon Lonnes uL 1.o8gJLonn Ag
. BLSINISS INVIRONMINT
.1 Business Climute
MongoIIu Is conLInuIng Lo deveIop ILs sysLems oI busIness Iuw, LuxuLIon, bunkIng, und exLernuI
IInks Lo Lhe InLernuLIonuI busIness communILy und, mosL ImporLunLIy, u murkeL economy.
EnLerIng MongoIIu presenLs, however, u unIque chuIIenge Lo busIness peopIe when uLLempLIng
Lo ussess reuI busIness rIsks und Lo muke reuIILy-bused decIsIons ruLher Lhun reIyIng on
percepLIons. AbundunL nuLuruI resource weuILh und ugrIcuILuruI producLIon muke MongoIIu's
popuIuLIon one oI Lhe poLenLIuIIy rIchesL counLrIes per cupILu In Lhe regIon. However,
converLIng LhIs poLenLIuI InLo reuIILy requIres muny crILIcuI IucLors Lo IuncLIon In concerL.
ALLrucLIng und proLecLIng InvesLors Is umong Lhe mosL crILIcuI oI Lhese IucLors.
The quesLIon wIII be wheLher MongoIIu's IeguI und busIness InIrusLrucLure wIII be ubIe Lo keep
puce wILh Lhe demunds InherenL Lo InvesLmenL deveIopmenL. MongoIIu hus successIuIIy
InLroduced concepLs oI properLy ownershIp, humun rIghLs, envIronmenLuI proLecLIon und
InvesLmenL proLecLIon. n so doIng, MongoIIu hus Luken u gIunL sLep In meeLIng Lhese
deveIopmenL needs. New Iuws LhuL uppeur Lo be consIsLenL wILh Lhe InLenL oI Lhe consLILuLIon
ure IrequenLIy druILed und udopLed. However, u number oI operuLIonuI reguIuLIons und IeguI
prucLIces ure bused on or derIved Irom Lhe pre-1qqo perIod.
DespILe Lhe recenL gIobuI crIsIs und recenL poIILIcuI evenLs In Lhe regIon, IoreIgn InvesLors ure
IocusIng more cIoseIy on CenLruI AsIu us u whoIe.
nvesLors wheLher muILInuLIonuI mInIng compunIes or smuII LrudIng compunIes, conLInue Lo
weIgh Lhe rIsks ussocIuLed wILh MongoIIu InvesLmenLs und ure mIndIuI oI Lhe ImpucL LhuL u
IIucLuuLIng commodILy prIce, IIke copper und couI, cun huve on LhIs emergIng economy LhuL
depends heuvIIy on ILs nuLuruI resources.
PwC 16
.. Iree Trude Zones
The MongoIIun governmenL Iuunched ILs Iree Lrude zone (FTZ) progrum In zooq. CurrenLIy
Lhere ure Lwo FTZ ureus IocuLed uIong Lhe MongoIIu spur oI Lhe Lruns-SIberIun hIghwuy: one In
Lhe norLh uL Lhe RussIu-MongoIIu border Lown oI AILunbuIug und Lhe oLher In Lhe souLh uL Lhe
ChInese-MongoIIu border uL Lhe Lown oI Zumyn-Uud. The porL oI enLry oI Tsuguun Nuur In
Buyun-OIgII provInce Is beIng deveIoped us Lhe sILe oI u LhIrd FTZ.
. Internutionul Agreements
S
MongoIIu Is u purLy Lo muny InLernuLIonuI LreuLIes In vurIous ureus - Irom Lhe proLecLIon oI
Lhe envIronmenL Lo Iree Lrude, Lhe proLecLIon oI IoreIgn InvesLmenLs und Lhe uvoIdunce oI
doubIe LuxuLIon. NoLubIy, IL ruLIIIed u number oI busIc InLernuLIonuI convenLIons - Lhe TreuLy
on Lhe CIvII und PoIILIcuI RIghLs (New York, 1q66) und Lhe TreuLy on EconomIcuI, SocIuI und
CuILuruI RIghLs (New York, 1q66). MongoIIu hus been u member oI Lhe WTO sInce 1qq;.
MongoIIun IegIsIuLIon recognIzes Lhe prImucy oI nLernuLIonuI TreuLIes In cuse oI u conIIIcL
wILh domesLIc IegIsIuLIon.
WILh respecL Lo IoreIgn InvesLmenL, MongoIIu Is u sIgnuLory Lo Lhe WushIngLon ConvenLIon on
Lhe SeLLIemenL oI nvesLmenL DIspuLes beLween Lhe SLuLe und NuLIonuI oI AnoLher SLuLe (1q6,
joIned In1qq6), whIch provIdes Ior Lhe seLLIemenL oI InLernuLIonuI InvesLmenL dIspuLes. L Is
uIso u sIgnuLory Lo Lhe SeouI ConvenLIon on nvesLmenL nsurunce (1q8, joIned 1qqq) und hus
been u member oI Lhe MuILIIuLeruI nvesLmenL GuurunLee Agency (MGA) sInce 1qqq, whIch
ensures Lhe eIIgIbIIILy oI IoreIgn InvesLors Ior rIsk Insurunce Lhrough MGA.
MongoIIu hus negoLIuLed bIIuLeruI ugreemenLs wILh numerous counLrIes. EncourugIng und
MuLuuI ProLecLIon oI nvesLmenL AgreemenLs huve been negoLIuLed wILh q counLrIes und
ExempLIon on DoubIe TuxuLIon AgreemenLs huve been negoLIuLed wILh q counLrIes.
.q Legul Invironment
q
The MongoIIun IeguI sysLem Is bused on Lhe Romun-Germun (conLInenLuI) IeguI sysLem. The
prIncIpuI IeguI ucL Is Lhe ConsLILuLIon (1qqz). n muny cuses, Iuws ure worded wIdeIy or
vugueIy IeuvIng IuLILude Ior uILernuLIve InLerpreLuLIons.
SLuLe bodIes cun Issue reguIuLIons, some oI whIch ure consIdered us reguIuLory IeguI ucLs.
AuLhorILIes uppIyIng reguIuLIons ure generuIIy reIucLunL In uppIyIng more generuI provIsIons
sLIpuIuLed by Iuws und ure more comIorLubIe In uppIyIng more deLuIIedJspecIIIc reguIuLIons.
The ArbILruLIon Luw oI zoo reguIuLes urbILruLIon dIspuLes. n Lhe druILIng oI conLrucLs In
MongoIIu, In mosL cuses purLIes ure Iree Lo seIecL InLernuLIonuI urbILruLIon us Lhe meLhod Ior
Lhe resoIuLIon oI dIspuLes oI cerLuIn Lypes oI InLernuLIonuI Lrude, conLrucLuuI und non-
conLrucLuuI cIvII dIspuLes. MongoIIu Is u sIgnuLory Lo Lhe New York ConvenLIon on Lhe
RecognILIon und EnIorcemenL oI ForeIgn ArbILruI Awurds (New York ConvenLIon), whIch
munduLes LhuL urbILruLIon uwurds mude wILhIn Lhe TerrILory oI MongoIIu ure enIorceubIe In
MongoIIu und oLher counLrIes LhuL ure purLIes Lo Lhe New York ConvenLIon.
The ArbILruLIon Bureuu operuLed by Lhe MongoIIun NuLIonuI Chumber oI Commerce und
ndusLry, Is someLImes regurded by MongoIIun busIness peopIe und governmenL ugencIes LhuL
deuI wILh IoreIgn InvesLors us poIILIcuIIy noL IndependenL und unIumIIIur wILh commercIuI
prucLIces, prompLIng u preIerence Ior InLernuLIonuI urbILruLIon. However, supporL Ior bIndIng
8
9
PwC 17
InLernuLIonuI urbILruLIon hus noL peneLruLed IocuI MongoIIun ugencIes responsIbIe Ior
execuLIng judgmenLs.
.g Regulutions Ior Business
1o
Iorein Currenc Reime
The MongoIIun governmenL empIoys u IImILed reguIuLory regIme Ior conLroIIIng IoreIgn
exchunge Ior InvesLmenL remILLunces und muInLuIns excepLIonuIIy IIberuI poIIcIes Ior Lhese
LrunsucLIons. Though LypIcuIIy Lhere Is no dIIIIcuILy In obLuInIng IoreIgn exchunge, wheLher Lhe
InvesLor wunLs ChInese RenmInbI, Euros, BrILIsh Pounds, RubIes, or U.S. DoIIurs, Lhere ure
LImes when IImILs urIse bused on Lhe uvuIIubIIILy oI IoreIgn currency In Lhe MongoIIun
murkeLpIuce.
n regurds Lo domesLIc LrunsucLIons, In zooq Lhe PurIIumenL oI MongoIIu enucLed IegIsIuLIon
munduLIng LhuL IocuI LrunsucLIons be expressed und seLLIed onIy In Lhe IocuI currency. As u
resuIL, uII domesLIc LrunsucLIons musL be conducLed In MongoIIu`s nuLIonuI currency, Lhe
TugrIk, excepL Lhose enLILIes uIIowed specIIIc wuIvers us deLermIned by Lhe CenLruI Bunk oI
MongoIIu und Lhe FInuncIuI ReguIuLory CommIssIon.
The MongoIIun governmenL wunLs Iunds Lo IIow eusIIy In und ouL oI Lhe nuLIon, wILh one
excepLIon. ForeIgn-heId InLeresL beurIng doIIur uccounLs remuIn subjecL Lo u zo% wILhhoIdIng
Lux, unIess Lhe Lerm Is reduced pursuunL Lo un uppIIcubIe Lux LreuLy. The bunk reLuIns zo% oI
uII such InLeresL puymenLs senL ubroud, und remILs LhIs wILhhoIdIng Lo Lhe Tux AuLhorILy oI
MongoIIu. OLherwIse, busInesses reporL no deIuys In remILLIng InvesLmenL reLurns or receIvIng
In-bound Iunds. MosL LrunsIers occur wILhIn 1- busIness duys or uL mosL u sIngIe busIness
week.
Euse oI LrunsIer usIde, IoreIgn InvesLors crILIcIze MongoIIu`s Iuck oI sophIsLIcuLed mechunIsms
Ior converLIng currencIes und purkIng money. LeLLers oI credIL ure dIIIIcuIL Lo obLuIn, und IeguI
puruIIeI murkeLs do noL exIsL In Lhe Iorm oI governmenL doIIur denomInuLed bonds or oLher
InsLrumenLs Ior purkIng Iunds In IIeu oI puymenL. Muny MongoIIun IInuncIuI InsLILuLIons Iuck
experIence wILh Lhese urrungemenLs.
Competition Lcu
The IIrsL Luw on ProhIbILIng UnIuIr CompeLILIon wus pussed In 1qq und on June 1o, zo1o Lhe
PurIIumenL upproved Lhe umended Luw On CompeLILIon.
The purpose oI LhIs Luw Is Lo provIde condILIons Ior IuIr murkeL compeLILIon umong
enLrepreneurs, Lo prevenL und prohIbIL uny ucLIvILIes LhuL uIIow murkeL domInuLIon und Iessen
compeLILIon, Lo deLermIne Lhe IeguI busIs Ior Lhe compeLILIon reguIuLory uuLhorILy und Lo
reguIuLe Lhe reIuLIons umong Lhem.
L shouId be noLed LhuL Lhe ubIIILy Ior MongoIIu Lo enguge wILh und conIronL compIex unLI-
LrusL Issues und compeLILIon cuses Is IImILed due Lhe Iuck oI reIevunL skIIIs und knowIedge oI
ILs proIessIonuIs.
Intellectucl Propert
MongoIIu hus joIned Lhe WorId nLeIIecLuuI ProperLy OrgunIzuLIon (WPO) und sIgned und
ruLIIIed mosL LreuLIes und convenLIons, IncIudIng Lhe WTO TRPS ugreemenL. The WPO
10
PwC 18
CopyrIghL TreuLy (WCT) und Lhe WPO PerIormunces und Phonogrums TreuLy (WPPT),
coIIecLIveIy known us The WPO nLerneL TreuLIes, were sIgned und subsequenLIy ruLIIIed on
JuIy z, zooz.
Under TRPS und MongoIIun Iuw, Lhe MongoIIun CusLoms AuLhorILy und Lhe EconomIc
CrImes UnIL oI Lhe NuLIonuI PoIIce (ECU) uIso huve un obIIguLIon Lo proLecL nLeIIecLuuI
ProperLy RIghLs (PRs). The MongoIIun CusLoms AuLhorILy muy deny Lhe enLry oI goods
huvIng dIspuLed PRs uL Lhe bourd, bused on u peLILIon by Lhe owner oI Lhe reIevunL PRs. The
ECU hus Lhe excIusIve power Lo conducL crImInuI InvesLIguLIons und brIng crImInuI churges
uguInsL PR pIruLes. The POM hus Lhe udmInIsLruLIve uuLhorILy Lo InvesLIguLe und seIze Iukes
wILhouL u courL order. OI Lhese Lhree, Lhe POM mukes Lhe mosL consIsLenL good IuILh eIIorL Lo
IuIIIII ILs munduLes.
Consumer Protection
The proLecLIon oI consumers Is governed by Lhe Luw "On Lhe ProLecLIon oI Consumer RIghLs",
InILIuIIy udopLed In 1qq1 und umended In zoo. ThIs Iuw reguIuLes Lhe reIuLIonshIp beLween
consumers und vendors or provIders oI work und servIces, und esLubIIshes rIghLs und
obIIguLIons. As per Lhe Iuw, consumers huve Lhe IoIIowIng prImury rIghLs Lo enjoy Lhe hIgh
quuIILy und suIeLy oI goods und servIces, Lo ucquIre producL InIormuLIon und Lo geL
compensuLed Ior Iosses und dumuges due Lo producer und vendor IuuILs.
Compcn Lcu
n IuLe zo11 PurIIumenL repIuced Lhe zooq Compuny Luw. When compured wILh Lhe zooq
Compuny Luw, Lhe zo11 Compuny Luw provIdes Ior greuLer personuI IIubIIILy oI governIng
persons, udmInIsLruLIve suncLIons Ior non-compIIunce, greuLer corporuLe governunce
reguIuLIons und InLroduces cIosed venLure compunIes. ThIs provIdes Ior reorgunIzuLIon
Lhrough merger, consoIIduLIon, sepuruLIon, dIvIsIon, LrunsIormuLIon.
.6 Property Murket
OIIIce spuce In UIuunbuuLur remuIns consIderubIy cheuper Lhun In Lhe neIghborIng counLrIes
uILhough Lhere ure un IncreusIng number oI new buIIdIngs LhuL oIIer A CIuss oIIIce spuce.
RenLIng un upurLmenL cosLs unywhere Irom USD oo u monLh Ior u reusonubIe Lwo-room
upurLmenL In Lhe suburbs Lo us much us one Is wIIIIng Lo puy Ior u IIve Lo sIx-room IIuL IuIIy
IurnIshed (wILh IocuI or IoreIgn IurnILure) In Lhe cILy's cenLre. L Is ImporLunL Lo conIIrm LhuL
Lhe person renLIng Lhe properLy hus ILs IeguI LILIe und, LhereIore, Lhe rIghL Lo Ieuse Lhe
upurLmenL. n uddILIon, proper IdenLIIIcuLIon und u sImpIe Ieuse ugreemenL In MongoIIun und
EngIIsh shouId be obLuIned. Leuses, uL u very mInImum, shouId sLuLe Lhe Lerms oI renLIng Lhe
properLy und shouId Iorm Lhe busIs Ior u workIng reIuLIonshIp und undersLundIng wILh u
IundIord. n some urrungemenLs, Lhe IundIord ugrees Lo cover uLIIILIes churges (excepL
InLernuLIonuI phone churges) und Lo curry ouL busIc repuIrs.
ForeIgners ure enLILIed Lo own buIIdIngs In MongoIIu buL noL Iund. LundIords ure unwIIIIng Lo
consIder renLuI perIods oI Iess Lhun Lhree monLhs, especIuIIy Ior resIdenLIuI uccommoduLIon.
There ure u number oI reuI-esLuLe ugencIes LhuL cun oIIer ussIsLunce In LhIs und oLher ureus Ior
u reusonubIe Iee.
AcLIvILIes ussocIuLed wILh Iund usuge und ownershIp ure reguIuLed by Lhe Lund Luw oI zooz.
PwC 19
. IORIIGN INVISTMINT
.1 Ioreign Investment
11
The Luw on ForeIgn nvesLmenL oI 1qq wus desIgned Lo encouruge IoreIgn InvesLmenL, Lo
proLecL Lhe rIghLs und usseLs oI IoreIgn InvesLors In MongoIIu, und Lo reguIuLe muLLers reIuLIng
Lo Lhe IoreIgn InvesLmenL. L uIso seLs ouL Lhe provIsIons Ior Lux sLubIIILy ugreemenLs Ior
InvesLIng enLILIes.
n generuI, MongoIIun Iuw does noL dIscrImInuLe uguInsL IoreIgn InvesLors. ForeIgners muy
InvesL wILh us IILLIe us USD 1oo,ooo cush or Lhe equIvuIenL vuIue oI cupILuI muLerIuI (oIIIce
sLock, sLrucLures, uuLos, eLc.). n boLh Iuw und prucLIce, IoreIgners muy own 1oo% oI uny
regIsLered busIness (excepL In Lhe ureus oI sLruLegIc ImporLunce us deLuIIed beIow) wILh
ubsoIuLeIy no IeguI, reguIuLory, or udmInIsLruLIve requIremenL Lo Luke on uny MongoIIun enLILy
us u joInL venLure purLner, shurehoIder, or ugenL.
PrIor Lo zo1z, Lhere wus onIy one resLrIcLIon on IoreIgn ownershIp oI shures. PursuunL Lo Lhe
WuLer Luw, onIy whoIIy owned MongoIIun enLILIes muy obLuIn IIcenses Lo conducL ucLIvILIes
such us Lhe expIoruLIon und reseurch oI wuLer resources. However, zooq und zo1z reguIuLory
und IegIsIuLIve ucLs In Lhe ureus oI IoreIgn InvesLmenL, envIronmenLuI Iuw, LuxuLIon, und
mIneruI rIghLs eIIecLIveIy nurrow MongoIIu's openness Lo FD. WhIIe mosL MongoIIun
IndusLrIuI und economIc sLruLegIes do noL dIscrImInuLe ucLIveIy or pussIveIy Ior or uguInsL
IoreIgn InvesLors, specIIIc governmenLuI ucLs regurdIng IoreIgn InvoIvemenL In secLors oI
sLruLegIc ImporLunce und In MongoIIu`s nuscenL urunIum secLor huve spurred crILIcIsm LhuL
Lhe governmenL Is curLuIIIng Lhe rIghLs oI IoreIgn InvesLors In Iuvor oI Lhe MongoIIun sLuLe.
There Is concern LhuL chunges Lo Lhe urunIum Iuw huve creuLed u precedenL Ior IurLher
resLrIcLIons on FD.
ShorLIy beIore Lhe June zo1z eIecLIons, PurIIumenL wus puL under pressure Lo enucL IegIsIuLIon
wILh respecL Lo IoreIgn dIrecL InvesLmenL In busIness enLILIes wILhIn cerLuIn secLors. n Muy
zo1z PurIIumenL enucLed Lhe Luw oI MongoIIu on Lhe ReguIuLIon oI ForeIgn nvesLmenL In
BusIness EnLILIes OperuLIng In SecLors oI SLruLegIc mporLunce (SEFL).The SEFL reguIuLes
InvesLmenL by IoreIgn InvesLors, LheIr uIIIIIuLed enLILIes or LhIrd purLIes In secLors oI sLruLegIc
ImporLunce: mIneruIs; bunkIng und IInunce; und medIu und communIcuLIons. AddILIonuI
secLors muy be udded on u cuse-by-cuse busIs. The SEFL Is more broudIy uppIIed wILh respecL
Lo sLuLe owned IeguI enLILIes, enLILIes wILh sLuLe ownershIp, InLernuLIonuI orgunIzuLIons, LheIr
uIIIIIuLed enLILIes or LhIrd purLIes. FurLher, Lhey ure reguIuLed even ouLsIde oI secLors oI
sLruLegIc ImporLunce II Lhey choose Lo operuLe In MongoIIu or InvesL InLo busInesses,
uIIIIIuLed enLILIes or LhIrd purLIes curryIng ouL busIness operuLIons In MongoIIu.
The husLy druILIng oI Lhe SEFL hus Ied Lo much conIusIon over ILs subsLunLIve und proceduruI
requIremenLs, us weII us ILs overuII enIorceubIIILy und ImpucL on Lhe IoreIgn InvesLmenL
communILy. Key concerns wILh Lhe SEFL IncIude, Lhe LImIng Ior upprovuI oI LrunsucLIons wILh
IoreIgn InvesLmenL; Lhe neguLIve ImpucL on pubIIcuIIy IIsLed compunIes or compunIes
prepurIng Lo IIsL eILher InsIde or ouLsIde MongoIIu; IImILuLIons on obLuInIng IInuncIng; Lhe
eIIecLIve Iock-up on Lhe MongoIIun purLy; ILs IuIIure Lo cIeurIy uddress coIIecLIve IoreIgn
InvesLmenL und Lhe poLenLIuI Ior Lhe SEFL Lo be u guLewuy Lo Lhe whoIesuIe bur oI cerLuIn
IoreIgn InvesLors.
11
PwC 2u
q. BANKING AN IINANCI
q.1 Bunking System
SInce 1qq1 MongoIIu hus hud u Lwo-LIer bunkIng sysLem. The Bunk oI MongoIIu Is Lhe cenLruI
bunk oI MongoIIu und represenLs Lhe upper (IIrsL) LIer oI Lhe bunkIng sysLem oI MongoIIu. AII
oLher bunks represenL Lhe Iower (second) LIer oI Lhe bunkIng sysLem.
The Bunk oI MongoIIu IormuIuLes und ImpIemenLs moneLury poIIcy by reguIuLIng money
suppIy Lhrough chunges In reserve money Lo uchIeve ILs muIn objecLIve oI currency sLubIIILy,
uccordIng Lo Lhe CenLruI Bunk Luw oI 1qq6. The BOM hus Iocused on prIce und exchunge ruLe
sLubIIILy, whIIe ensurIng udequuLe money suppIy.
The Bunk oI MongoIIu Is noL guIded by Lhe uIm oI eurnIng proIIL In perIormIng ILs Lusks.
The Bunk oI MongoIIu heuded by u Governor uppoInLed by Lhe PurIIumenL Ior u Lerm oI up Lo
sIx yeurs. The Governor oI Lhe Bunk oI MongoIIu Is uccounLubIe Lo Lhe PurIIumenL.
The bunkIng secLor oI MongoIIu Is hIghIy concenLruLed wILh Lhe Lhree IurgesL commercIuI
bunks (Khun Bunk, GoIomL Bunk, und Trude und DeveIopmenL Bunk) represenLIng more Lhun
8o% oI LoLuI usseLs (umounLIng Lo upproxImuLeIy USD ;.; bIIIIon us oI o June zo1z). The
bunkIng secLor hus been one oI Lhe mosL uLLrucLIve secLors Ior IoreIgn InvesLors In recenL yeurs
und hus uLLrucLed consIderubIe InvesLor InLeresL Irom Jupun, Lhe USA, RussIu und oLher
counLrIes. Though mosL oI Lhe mujor bunks ure IInunced In purL by IoreIgn InvesLors uL presenL
onIy Lwo IoreIgn bunks huve represenLuLIve oIIIces In MongoIIu: NG und SLundurd ChurLered
Bunk.
Bused on reguIuLIons udopLed durIng zo11, Lhe mInImum cupILuI requIremenL Ior commercIuI
bunks hus Increused Irom MNT 8 bIIIIon (upproxImuLeIy USD 6 mIIIIon) Lo MNT 16 bIIIIon
(upproxImuLeIy USD 1z mIIIIon). ThIs requIremenL Is eIIecLIve 1 Muy zo1. ForeIgn bunks muy
esLubIIsh IocuI subsIdIurIes no eurIIer Lhun one yeur uILer Lhe esLubIIshmenL oI LheIr MongoIIun
represenLuLIve oIIIces. FurLher, Lhe mInImum shure cupILuI requIremenL Ior u MongoIIun
subsIdIury oI u IoreIgn bunk Is seL uL USD o mIIIIon. As u resuIL, consoIIduLIon oI Lhe bunkIng
secLor Is expecLed In Lhe IoIIowIng yeurs.
The IurgesL commercIuI bunks ure ruLed by Lhe InLernuLIonuI ruLIng ugencIes und huve pIuns
Ior POs In Lhe IoIIowIng yeurs. Bond Issues ure expecLed Lo be u IIrsL sLep Ior esLubIIshIng
repuLuLIon on Lhe InLernuLIonuI murkeL beIore proceedIng wILh POs.
The proIILubIIILy oI bunks Is hIgh compured Lo mosL udvunced counLrIes. RIsk uversIon oI
bunkIng secLor Is reIuLIveIy hIgh, Lhough IL hus been gruduuIIy reducIng. nvesLmenLs In
IInuncIuI InsLrumenLs ure noL sophIsLIcuLed und u sIgnIIIcunL porLIon oI usseLs reIuLe Lo Lhe
InvesLmenL In cush und bIIIs Issued by Lhe CenLruI Bunk or oLher InsLrumenLs guurunLeed by
Lhe GovernmenL oI MongoIIu.
The bunkIng secLor wus uIIecLed by Lhe IInuncIuI crIsIs durIng zooq, whIch Ied Lo probIems In
recoverubIIILy oI Iouns und u sIgnIIIcunL Increuse In ImpuIrmenL provIsIon ruLes. ConIIdence In
Lhe bunkIng secLor hus been ImprovIng sInce Lhen und resuILed In u rupId growLh oI LoLuI
usseLs by o.1% In zo11, whIch wus muInIy InvesLed In growIng Lhe Ioun porLIoIIo. The growLh
wus subsLunLIuIIy IInunced by InIIows oI boLh domesLIc und IoreIgn currency deposILs, whIch
wus IueIed by Lhe deveIopmenL oI MongoIIu`s mIneruI resources. The growLh oI deposILs und
PwC 21
IendIng sIowed down durIng Lhe IIrsL huII oI zo1z, Lhough growLh ruLes In LoLuI usseLs und
IendIng Is sLIII reIuLIveIy hIgh. AL presenL Lhe muIn IucLor hInderIng Lhe growLh oI bunkIng
secLor Is Lhe Iuck oI cupILuI (purLIcuIurIy TIer ) or oLher IInuncIuI sources. n Lhe IIghL oI
upcomIng Iurge scuIe mInIng, InIrusLrucLure und housIng projecLs, und Lhe demund Ior
IIquIdILy IL creuLes, Lhe MongoIIun bunks ure currenLIy undercupILuIIzed. Compured Lo oLher
emergIng murkeLs, MongoIIu hus reIuLIveIy Iow TIer 1 cupILuI buIIers. The ruLIo oI non-
perIormIng Iouns (NPLs) Lo gross Iouns hus been sIgnIIIcunLIy reduced (q% In AprII zo1z
compured Lo 8% u yeur ugo). However, LhIs ImprovemenL Is muInIy resuIL oI Lhe rupId growLh
oI Ioun porLIoIIos. HIgh ruLes oI IendIng growLh over Lhe pusL yeur huve ruIsed concerns ubouL
Lhe quuIILy oI bunk usseLs, purLIcuIurIy LukIng InLo consIderuLIon LhuL InLernuI rIsk
munugemenL procedures und corporuLe governunce ure In deveIopIng sLuge.
q. Ioreign Currency Murket und Ioreign Currency Rules
MongoIIu Issued ILs IIrsL nuLIonuI currency, Lhe TugrIk, In 1qz, bused on u resoIuLIon Issued
by Lhe Bunk oI MongoIIu on Februury zz, 1qz.
AccordIng Lo MongoIIun IegIsIuLIon, LrunsucLIons beLween MongoIIu IeguI enLILIes shouId be In
TugrIk. AILernuLIveIy, LrunsucLIons beLween u MongoIIun IeguI enLILy und u IoreIgn IeguI enLILy
cun be denomInuLed In uny currency. ThIs wus enucLed on JuIy q, zooq In Lhe Luw oI
MongoIIu on ConducLIng SeLLIemenL In NuLIonuI Currency.
q. Investment Institutions
1
The NuLIonuI nvesLmenL Bunk oI MongoIIu (NBunk) wus esLubIIshed In zoo6 und wus Lhe
IIrsL IormuI InvesLmenL InsLILuLIon In MongoIIu wILh joInL InvesLmenLs Irom MongoIIu, Jupun
und Lhe USA. Ls servIces IncIude boLh commercIuI und InvesLmenL bunkIng producLs.
n Muy zo11, Lhe MongoIIun governmenL oIIIcIuIIy Iuunched Lhe DeveIopmenL Bunk oI
MongoIIu, u sLuLe-owned poIIcy bunk wILh u munduLe Lo provIde medIum und Iong-Lerm Iouns
Lo Lhe sLruLegIcuIIy ImporLunL secLors (such us InIrusLrucLure, IndusLry, energy eLc.). The
bunk`s roIe Is uIso expundIng cooperuLIon wILh Lhe InLernuLIonuI deveIopmenL bunks und
orgunIzuLIons, und uLLrucLIng domesLIc und IoreIgn cupILuI Ior Iurge scuIe prIorILy projecLs LhuL
heIp Lo ucceIeruLe Lhe economIc growLh oI MongoIIu. n Murch zo1z, Lhe bunk successIuIIy
pIuced -yeur USD 8o mIIIIon sovereIgn-guurunLeed noLes Lo InLernuLIonuI InvesLors under
Lhe Euro MedIum Term NoLe Progrumme. The noLe Issue Is IuIIy guurunLeed by Lhe MongoIIun
governmenL und Is ruLed B1 by Moody`s und BB- by S&P, equuI Lo MongoIIu`s credIL ruLIng.
The noLes were pIuced uL .;% Lo 6.o% p.u. beIow Lhe InILIuI guIdunce due Lo hIgh demund.
There ure severuI mechunIsms Lhrough whIch IncenLIves Lo InvesLors ure oIIered, In Lhe Iorm
oI InvesLmenL ugreemenLs (under eILher Lhe ForeIgn nvesLmenL Luw or Lhe MIneruIs Luw),
whIch ure muInIy Ior Lux sLubIIILy, und Lhe ConcessIons Luw, whIch provIdes Ior Lux
concessIons In prIorILy secLors oI Lhe MongoIIun economy.
q.q Cupitul Murkets
1
The MongoIIun SLock Exchunge (MSE) wus esLubIIshed In 1qq1 us u vehIcIe Lo ImpIemenL Lhe
governmenL's pIun Ior prIvuLIzuLIon oI Iurge sLuLe-owned enLerprIses. n un uLLempL Lo ensure
un equILubIe dIsLrIbuLIon oI usseLs, Lhe MongoIIun governmenL chose Lo InILIuLe u voucher-
bused scheme; one bIue voucher worLh MNT ;,ooo wus Issued Lo every cILIzen born beIore 1
Muy 1qq1 Ior Lhe purchuse oI shures In Iurge enLerprIses und red vouchers worLh MNT ,ooo,
12
13
PwC 22
whIch couId be used Lo purchuse usseLs In smuIIer enLerprIses noL IIsLed on Lhe exchunge.
AucLIons oIIIcIuIIy begun on Februury ;, 1qqz.
DurIng LhIs IIrsL phuse, LrudIng wus onIy open Ior Lwo hours, one duy per week. n 1qq,
purIIumenL pussed Lhe 'Luw on SecurILIes`, uIIowIng Lhe MSE Lo operuLe us u reguIur sLock
exchunge open Lo boLh domesLIc und IoreIgn InvesLors. ThIs uIso esLubIIshed Lhe Lwo LIered
exchunge wILh Lhe prImury murkeL Ior POs und Lhe secondury murkeL Ior subsequenL LrudIng.
TrudIng Is now open beLween 11.oo und 1.oo every weekduy Ior Lhe boLh prImury und
secondury murkeLs. TrudIng cun uIso be done over Lhe InLerneL.
The revIsIon Lo Lhe SecurILIes und Exchunge Luw udopLed by Lhe PurIIumenL In December
zooz, LrunsIormed MSE InLo u 1oo per cenL sLuLe owned compuny. The MSE sIgned
'memorundu oI undersLundIng` wILh Lhe Koreun, SInguporeun und Hong Kong SLock
Exchunges, Lo heIp wILh ILs deveIopmenL und uLLrucL more IoreIgn InvesLmenL. n AprII zo11,
Lhe MSE IormuIIy ugreed Lo u purLnershIp wILh Lhe London SLock Exchunge (LSE) uImed uL
LrunsIormIng MSE Lo operuLe on un InLernuLIonuI scuIe. The purLnershIp ugreemenL provIdes
Ior Lhe deveIopmenL oI sysLems InIrusLrucLure, Lhe supporL oI senIor experIenced peopIe Lo
munuge Lhe LrunsIormuLIon und skIIIs und poIIcy deveIopmenL. The InLenLIon Is Lo Increuse Lhe
ubIIILy Lo Lrude und Lo muke IL un uLLrucLIve opLIon Ior MongoIIun compunIes und overseus
InvesLors. There ure currenLIy uround q1o compunIes IIsLed on Lhe MSE, over one-IIILh oI
whIch ure InvoIved In mInIng, Lhe mosL common secLor Ior IoreIgn InvesLmenL. As oI yeL Lhere
Is no resLrIcLIon on IoreIgn ownershIp oI shures, uILhough In Lhe urunIum secLor, Ior exumpIe,
ownershIp musL be upproved by Lhe NucIeur Energy Agency, whIch couId In Lheory reIuse Lhe
LrunsIer oI shures Lo u IoreIgn enLILy. n uccordunce wILh Lhe purLnershIp ugreemenL, MSE hus
Iuunched new Lrude und puymenL sysLem In cooperuLIon wILh London SLock Exchunge In JuIy
zo1z.
q.g Insurunce sector
nsurunce ucLIvILIes In MongoIIu ure reguIuLed by Lhe nsurunce Luw oI MongoIIu, whIch wus
upproved In zooq und upduLed In zoo. Under LhIs Iuw, Lhe FInuncIuI ReguIuLory CommIssIon
oI MongoIIu (FRC) Is responsIbIe Ior reguIuLIng Insurunce compunIes Lhrough ILs udopLIon oI
reguIuLIons und IssuIng Insurunce IIcenses, us weII us Ior supervIsIng Insurunce compunIes
operuLIng In MongoIIu. Under Lhe currenL Iuw, compunIes regIsLered In MongoIIu ure noL
uIIowed Lo enLer InLo Insurunce conLrucLs wILh Insurunce compunIes LhuL huve noL obLuIned u
IIcense Irom Lhe FRC, IncIudIng IoreIgn Insurunce compunIes, unIess FRC upprovuI Is
obLuIned. AL presenL Lhe reguIuLory mInImum shure cupILuI Is MNT 1 bIIIIon (upproxImuLeIy
USD ;o Lhousund), IncreusIng Lo MNT z bIIIIon (upproxImuLeIy USD 1, mIIIIon) Irom 1
Junuury zo1.
The MongoIIun Insurunce murkeL Is uL un eurIy sLuge oI deveIopmenL wILh Insurunce
peneLruLIon (premIum Income us u shure oI GDP) oI onIy o.%, Lhough IL Is growIng uL IusL
ruLe. n Lhe IusL IIve yeurs LoLuI usseLs huve more Lhun LrIpIed, whIIsL Lhe gross wrILLen
premIum hus doubIed. AL presenL Lhe Insurunce secLor consIsLs oI 1; Insurunce compunIes: 16
generuI Insurunce und one IIIe Insurunce compuny. The Lop IIve IurgesL Insurunce compunIes
represenL more Lhun ;o% oI gross wrILLen premIum. The mujorILy oI Insurunce producLs cover
properLy und IIubIIILy Insurunce. As Lhe sIze und IInuncIuI sLrengLh oI MongoIIun Insurunce
compunIes Is IImILed, hIgh rIsk und hIgh vuIue Insurunce poIIcIes ure usuuIIy reInsured wILh
InLernuLIonuI reInsurunce compunIes.
MInIng secLor growLh Is expecLed Lo be Lhe key drIvIng Iorce behInd Lhe expunsIon oI Lhe
MongoIIun Insurunce IndusLry. Workers, equIpmenL, InIrusLrucLure, und mInes LhemseIves
wIII uII need Lo be covered us projecLs become operuLIonuI. FurLher, IegIsIuLIon munduLIng LhuL
every drIver wILhIn Lhe counLry musL be Insured by 1 OcLober zo1z wus InLroduced In zo11.
ThIs Is esLImuLed Lo resuIL In u o% Increuse In Lhe sIze oI Lhe Insurunce murkeL. RupId
expunsIon pIunned Ior Lhe IoIIowIng yeurs, however, necessILuLes IurLher ImprovemenLs In
PwC 2S
cupILuI munugemenL, us weII us Insurunce und IInuncIuI rIsk munugemenL und oLher InLernuI
process oI Insurunce compunIes.
g. IMPORTING AN IXPORTING
1q
g.1 Trends in Customs Policy
SeveruI mInIsLrIes und ugencIes, In consuILuLIon wILh represenLuLIves oI Lhe prIvuLe secLor, ure
InvoIved In Lhe IormuIuLIon und ImpIemenLuLIon oI Lrude poIIcIes. The MInIsLry oI ndusLry
und Trude Is Lhe muIn governmenL ugency responsIbIe wILh monILorIng und In purLIcuIur IL`s
Trude PoIIcy und CooperuLIon DepurLmenL Is responsIbIe Ior coordInuLIng Lrude poIIcy. The
MInIsLry Is uIso responsIbIe Ior uII Issues reIuLed Lo Lrude promoLIon, Lrude IucIIILuLIon und
exporL deveIopmenL. mporL und exporL ucLIvILIes ure reguIuLed by Lhe CusLoms Luw oI zoo8.
n 1qq1, MongoIIu becume u member oI Lhe CusLoms Co-operuLIon CouncII, whIch chunged ILs
nume Lo Lhe WorId CusLoms OrgunIzuLIon In 1qqq. SInce Junuury 1, zoo, MongoIIu hus used
Lhe hurmonIzed commodILy descrIpLIon und codIng sysLem (HS zooz) uL un eIghL dIgIL IeveI.
As u WTO member, MongoIIu muy oIIer mosL Iuvored nuLIon (MFN) LreuLmenL Lo ImporLs
Irom uII LrudIng purLners, IncIudIng non-WTO members.
g. Import Restrictions
No upprovuI Is requIred Lo ImporL goods InLo MongoIIu, buL Lhe ImporLer musL be regIsLered
wILh Lhe Lux uuLhorILIes und Lhe SLuLe RegIsLry OIIIce. mporLs Lo MongoIIu ure noL subjecL Lo
resLrIcLIon, wILh Lhe excepLIon oI ImporL IIcensIng, whIch uppIIes Lo onIy u Iew producLs, us
weII us oLher producLs subjecL Lo ImporL prohIbILIon.
PursuunL Lo u serIes oI governmenL resoIuLIons, In generuI, Lhe IImILed IIcensIng sysLem In
pIuce Is Ior Lhe proLecLIon oI humun heuILh, unImuI und pIunL heuILh und suIeguurdIng
nuLIonuI securILy. mporL IIcenses ure requIred Ior ImporLs oI cerLuIn producLs, IncIudIng
chemIcuIs, humun bIood und orguns, expIosIves und guns. mporL IIcenses Ior resLrIcLed
producLs ure Issued by Lhe secLoruI mInIsLrIes, such us Lhe MInIsLry oI EnvIronmenL, MInIsLry
oI EducuLIon, CuILure und ScIence, MInIsLry oI Food und AgrIcuILure und Lhe MInIsLry oI
HeuILh.
ProducLs prohIbILed Ior ImporL InLo MongoIIu IncIude cerLuIn drugs, nurcoLIcs und spIrILs.
g. Customs uties
CusLom duLIes musL be puId IoIIowIng Lhe compIeLIon oI Lhe IInuI cusLoms cIeurunce. Under
Lhe CusLoms TurIII Luw oI zoo8, MongoIIu`s cusLoms LurIIIs consIsL oI generuI, mosL Iuvored
nuLIon (MFN) bound und uppIIed. CusLoms LurIIIs ure cuIcuIuLed ud vuIorem on c.I.I. vuIues oI
ImporLs. An cJ tclorem MFN LurIII ruLe oI per cenL Is uppIIed Lo mosL ImporLed goods.
However, u zero LurIII ruLe Is uppIIed Lo qq oLher LurIII IInes, IncIudIng IIve unImuIs Ior
breedIng, horses, cows, pIgs, sheep, gouLs, InIormuLIon dIssemInuLIon equIpmenL und ILs spure
purLs, oLher muchInes Ior InIormuLIon deveIopmenL, LrunsIsLor dIodes und sImIIur LrunsIsLors
und vurIous medIcuI equIpmenL. A seusonuI ImporL duLy ruLe oI 1 per cenL Is uppIIed on IIour
und vegeLubIes Lo proLecL domesLIc producers beLween 1 AugusL und 1 AprII. OuLsIde oI LhIs
perIod Lhe ruLe Is per cenL. MongoIIu bound uII ILs LurIIIs uL zo per cenL Ior mosL LurIII IInes.
14
PwC 24
The runge oI uppIIed MFN ruLes Is zero Lo 1 per cenL. MongoIIu does noL grunL uny
preIerenLIuI LurIIIs.
The Lux buse Is Lhe prIce deLermIned by CusLoms In conIormILy wILh Lhe CusLom TurIII Luw,
pIus cusLoms duLy, excIse Lux, und oLher Luxes.
The ExcIse Tux Luw oI zoo6 provIdes LhuL, In generuI, excIse Luxes ure IevIed on goods
consIdered Lo be dumugIng Lo heuILh or Lhe envIronmenL. L Is uIso IevIed on Iuxury ILems und
on ILems reIuLed Lo gumbIIng, uIcohoIs, cIgureLLes, peLroIeum und curs. ExcIse Luxes uppIy Lo
Lhe ubove goods produced In MongoIIu us weII us Lo ImporLs und ure cuIcuIuLed eILher by
quunLILy, or us u percenLuge oI Lhe vuIue oI Lhe duLIubIe goods.
g.q Temporury Import RelieI
The CusLoms Luw conLuIns provIsIons on Lemporury udmIssIon oI muchInery und equIpmenL.
L cun be ImporLed LemporurIIy Ior re-exporL under Lhe condILIon LhuL Lhe goods ure ImporLed
Ior use In demonsLruLIons or exhIbILIons und wIII be re-exporLed wILhIn one yeur. I Lhe
ImporLer obLuIns un ImporLJexporL permIL, such Lemporury ImporLs ure exempLed Irom
cusLoms duLIes.
g.g Customs uties Incentives
PursuunL Lo Lhe CusLoms Luw oI zoo8, Lhe IoIIowIng ILems ure exempL Irom CusLoms duLIes In
MongoIIu:
uppIIunces Ior specIuI use by Lhe dIsubIed und urLIIIcIuI orguns und uccompunyIng spure
purLs;
goods Ior humunILurIun ussIsLunce und sImIIur donuLIons;
equIpmenL, IucIIILIes, muLerIuIs, ruw muLerIuIs, uppIIunces, peLroIeum, dIeseI IueI Ior oII
expIoruLIon, expIoILuLIon und use uccordIng Lo un ugreemenL mude wILh Lhe GovernmenL
on producL shurIng In oII secLor;
MongoIIun nuLIonuI currency munuIucLured In IoreIgn counLrIes;
goods Ior oIIIcIuI use by IoreIgn dIpIomuLIc mIssIons, consuIuLes, Lhe UnILed NuLIons und
ILs specIuIIzed ugencIes;
LruveIers' personuI eIIecLs;
bIood, bIood producLs, body und orguns Lo be used Ior medIcuI purposes;
gus IueI, desIgnuLed conLuIners, equIpmenL, specIuI muchInery, IucIIILIes und equIpmenL;
CIvII uvIuLIon uIrcruILs und uccompunyIng spure purLs; und
PersonuI ILems Ior use by Lhe heud oI Lhe IoreIgn dIpIomuLIc mIssIons, dIpIomuLIc,
LechnIcuI und servIce sLuII und LheIr IumIIy members deemed necessury Lo move InLo Lhe
hosL counLry.
g.6 ocumentution und Procedures

n order Lo IucIIILuLe Lhe Lrude process one-sLop servIces huve been provIded uL Lhe mujor
cusLoms poInLs oI Lhe counLry. These servIces ure InLended Lo muke IL possIbIe Lo compIeLe uII
Lhe necessury cusLoms documenLuLIon und procedures In one IocuLIon.
These procedures IncIude processIng oI documenLs by cusLoms uuLhorILIes, cusLom vuIuuLIon,
puymenL oI cusLoms duLIes und uII Luxes und cusLoms exumInuLIon. SInce zoo1, MongoIIu hus
InLroduced Lhe AuLomuLed SysLem Ior CusLoms nIormuLIon MunugemenL (GAMAS), whIch
permILs Lhe cusLoms cIeurunce und puymenL oI cusLoms duLIes und Luxes Lo be done onIIne.
mporLers ure uIso ubIe Lo use Lhe servIces oI cusLoms brokers who go Lhrough uII
documenLuLIon und oLher IormuI procedures on LheIr behuII. ReguIuLIons on Lhe operuLIon oI
cusLoms brokers ure Issued by Lhe CusLoms GeneruI AdmInIsLruLIon.
PwC 2S
CusLoms documenLs submILLed In IoreIgn Iunguuges ure uccepLed uL Lhe dIscreLIon oI Lhe
cusLoms oIIIcer. I such documenLs ure Iound Lo be InudequuLe or IIIegIbIe, u MongoIIun
LrunsIuLIon wIII be requIred. MosL documenLs requIred Ior cIeurunce ure wrILLen In EngIIsh und
RussIun und cusLoms oIIIcIuIs generuIIy huve uL IeusL u workIng knowIedge oI boLh Iunguuges.
g., Wurehousing und Storuge
mporLed goods muy be requIred Lo be puL InLo u bonded wurehouse In MongoIIu In order Ior
Lhe proper documenLuLIon Lo be prepured und duLIes und oLher Luxes Lo be coIIecLed. Goods
cun be sLored Ior u muxImum oI Lwo yeurs wILh Lhe possIbIIILy oI u one yeur exLensIon.
A vurIeLy oI ucLIons ure uIIowed In bonded wurehouses, IncIudIng Lhe InspecLIon oI Lhe goods,
unpuckIng, sorLIng und repuckugIng oI goods, Lhe repuIr oI goods, LukIng sumpIes Ior Lhe use
oI cusLoms, und oLher ucLIons deemed necessury by Lhe governmenL.
Temporury cusLoms wurehouses uIso exIsL Ior Lhe Lemporury sLoruge oI goods under cusLoms
conLroI. Goods LhuL huve noL cIeured cusLoms wILhIn Lhree duys muy be sLored In Lhese
Lemporury wurehouses Ior up Lo Lwo monLhs.
6. BLSINISS INTITIIS
1g
6.1 Legul Irumework
EconomIc und busIness ucLIvILIes In MongoIIu ure reguIuLed by u vurIeLy oI Iuws, such us Lhe
Compuny Luw oI OcLober 6, zo11, Lhe CIvII Code oI Junuury 1o, zooz, Lhe Luw on ForeIgn
nvesLmenL oI Muy 1o, 1qq, Lhe Luw on ReguIuLIon oI ForeIgn nvesLmenL In BusIness
EnLILIes OperuLIng In SecLors oI SLruLegIc mporLunce oI Muy 1;, zo1z und muny oLhers.
AccordIng Lo Lhe Compuny Luw und ForeIgn nvesLmenL Luw, IncorporuLIon In MongoIIu cun
Luke Lhe Iorm oI eILher u busIness enLILy wILh IImILed or no IoreIgn InvesLmenL (BELF), or u
busIness enLILy wILh IoreIgn InvesLmenL (BEF). A BEF Is deIIned us u compuny huvIng usseLs
worLh more Lhun 1oo,ooo USD (or ILs equIvuIenL In MNT) oI whIch noL Iess Lhun z% ure
owned by IoreIgn InvesLors. A BELF Is converLed InLo u BEF uL Lhe poInL In whIch u IoreIgn
InvesLor ucquIres z% or more oI Lhe shures oI u BELF Lhrough Lhe suIe, Issuunce, dIvIdend,
or oLherwIse, oI such shures. CurrenLIy, MongoIIun IegIsIuLIon uIIows Ior Lhe IncorporuLIon oI
joInL sLock compunIes und IImILed IIubIIILy compunIes, or Lhe esLubIIshmenL oI represenLuLIve
oIIIces.
There ure muny IInuncIuI, IeguI, commercIuI und Lux ImpIIcuLIons urIsIng Irom Lhe choIce oI
vehIcIe. For exumpIe, represenLuLIve oIIIces cunnoL conducL commercIuI Income-generuLIng
ucLIvILIes und ure noL consIdered IeguI enLILIes. ForeIgn compunIes LhuL InLend Lo enguge In
commercIuI Income-generuLIng busIness ucLIvILIes In MongoIIu LypIcuIIy sLrucLure LheIr
presence Lhrough u IImILed IIubIIILy compuny.
BeIow we ouLIIne Lhe muIn IeuLures oI Lhe mosL common Iorms oI busIness enLILIes.
15
PwC 26
6. Joint Stock Compunies {JSC)
Genercl
A JSC muy be eILher un open JSC or u closeJ JSC GeneruIIy, un open JSC Is u compuny whose
cupILuI InvesLed by Lhe shurehoIders Is dIvIded InLo shures, whIch ure regIsLered uL Lhe
MongoIIun SLock Exchunge und whIch muy be IreeIy Lruded by Lhe pubIIc wILhouL regurd Lo
preempLIve rIghLs oI Lhe shurehoIders. A cIosed JSC Is u compuny whose cupILuI InvesLed by
Lhe shurehoIders Is dIvIded InLo shures, whIch ure regIsLered uL Lhe SecurILIes CIeurIng House
und CenLruI DeposILory oI MongoIIu (SCH&CD), und whIch ure Lruded ouLsIde oI Lhe
MongoIIun SLock Exchunge by meuns oI cIosed subscrIpLIon.
Open JSCs ure requIred Lo reporL Lo Lhe FInuncIuI ReguIuLory CommIssIon (FRC) on IInuncIuI
und corporuLe muLLers.
Estcblishment
BoLh cIosed und open JSCs musL be regIsLered wILh Lhe SLuLe RegIsLruLIon OIIIce Lo ucquIre
proper IeguI sLuLus In MongoIIu. To regIsLer u JSC, Lhe IoIIowIng documenLuLIon musL be
submILLed Lo Lhe SuLe RegIsLruLIon OIIIce:
- AppIIcuLIon Iorm und requesL IeLLer;
- ChurLer;
- DocumenL conIIrmIng Lhe uddress;
- MInuLes oI Lhe IounduLIon meeLIng;
- BuIunce sheeL conIIrmIng Lhe requIred mInImum umounL oI owner`s equILy;
- DocumenLs conIIrmIng Lhe IdenLILy oI Iounders und puymenL oI Lhe requIred Iee Ior
sLuLe regIsLruLIon; und
- LeLLer oI ApprovuI Irom Lhe FRC.
The churLer oI u JSC musL be noLurIzed und shouId generuIIy specIIy: IuII und brIeI nume oI Lhe
compuny, Lhe number oI uuLhorIzed, Issued und ouLsLundIng shures und LheIr pur vuIue, Lhe
number oI members oI Lhe Bourd oI DIrecLors (mInImum q members, one-LhIrd oI whIch shuII
be IndependenL members), procedures Ior Lhe IounduLIon, compeLency und ucLIvILIes oI Lhe
compuny`s bodIes, IncIudIng procedures Ior convenIng u generuI meeLIng, prepuruLIon Ior und
hoIdIng u generuI meeLIng oI shurehoIders und meeLIngs oI coIIecLIve bodIes, procedures Ior
InIormIng shurehoIders on Lhe ucLIvILIes oI Lhe ucLIvILy, u IIsL oI governIng posILIons,
munduLory uppoInLmenL oI un uudILor, Lerm oI Lhe IIscuI yeur oI Lhe compuny IIscuI, eLc.
nILIuI cupILuI Is provIded by conLrIbuLIons Irom subscrIbers und muy Luke Lhe Iorm oI cush or
oLher properLy und properLy rIghLs ussessed In moneLury equIvuIenL. The mInImum umounL oI
churLer cupILuI Ior IIsLIng u JSC uL Lhe MongoIIun SLock Exchunge Is MNT 1o mIIIIon, wILh Lhe
excepLIon oI bunks und Insurunce compunIes whIch musL huve u hIgher churLer cupILuI.
JSCs LhuL wIII enguge In mIneruI resources, bunkIng und IInunce or medIu und communIcuLIon
ure subjecL Lo Lhe upprovuI oI Lhe GovernmenL oI MongoIIu, und In some cuses PurIIumenL,
under Lhe Luw on ReguIuLIon oI ForeIgn nvesLmenL In BusIness EnLILIes OperuLIng In SecLors
oI SLruLegIc mporLunce.
A cIosed JSC Is Iormed Lhrough cIosed subscrIpLIon, where Lhe shures ure oIIered onIy Lo u
cerLuIn group oI peopIe Lhrough u subscrIpLIon Iorm. Upon compIeLIon oI Lhe subscrIpLIon
perIod, Lhe subscrIbers Issue Lhe compuny churLer und decIsIon oI Lhe Iounders. LeguI sLuLus
Is ucquIred onIy when regIsLered wILh Lhe SLuLe RegIsLruLIon OIIIce und Lhe SCH&CD. As oI
JuIy zo1z, Lhe deLuIIed procedure Ior Lhe esLubIIshmenL und regIsLruLIon oI cIosed JSCs Is yeL
PwC 27
Lo be enucLed by Lhe FRC. Open JSCs huve Lhe uddILIonuI requIremenL oI huvIng LheIr shures
regIsLered wILh Lhe FRC.
The mosL common prucLIce oI IormIng un open JSC Is Lhrough re-orgunIzuLIon oI u IImILed
IIubIIILy compuny. The shurehoIders oI Lhe IImILed IIubIIILy compuny muke u decIsIon on such
re-orgunIzuLIon by u mInImum Lwo-LhIrds voLe. FoIIowIng such resoIuLIon, Lhe newIy Iormed
open JSC Is regIsLered wILh Lhe SLuLe RegIsLruLIon OIIIce us sLuLed ubove, provIded however
LhuL Lhe FRC hus upproved such re-orgunIzuLIon und regIsLered ILs securILIes.
The IegIsIuLIon oI MongoIIu does noL excIude Lhe possIbIIILy oI IoundIng u JSC by u cILIzen wILh
Lhe upprovuI oI Lhe FRC und pursuunL Lo Lhe generuI procedures provIded ubove. However,
Lhere Is no prevIous experIence oI such esLubIIshmenL oI u JSC.
Shcres cnJ Rihts
The Issuunce oI shures In un open JSC musL conIorm wILh Lhe MongoIIun securILIes IegIsIuLIon
und musL be regIsLered wILh Lhe FRC. WILh regurds Lo cIosed JSCs, Lhe Issuunce oI shures
musL be regIsLered wILh Lhe SCH&CD. There ure Lwo Lypes oI shures - ordInury und preIerred.
There Is no IImIL Lo Lhe number oI preIerred shures LhuL cun be Issued.
The hoIdIng oI preIerred shures grunLs prIorILy rIghLs Lo receIve dIvIdends und uIso (us
deLermIned by Lhe compuny`s churLer) Lo purLIcIpuLe In prIor dIsLrIbuLIon oI properLy In Lhe
evenL oI IIquIduLIon. A hoIder oI u preIerred shure hus no rIghL Lo Luke purL In Lhe
munugemenL oI u JSC, excepL Ior cerLuIn cuses provIded by Lhe Iuw.
DIvIdends muy be puId In moneLury Iorm, In properLy or In Lhe Iorm oI securILIes. The
decIsIon on wheLher dIvIdends wIII be dIsLrIbuLed musL be mude by Lhe compuny`s bourd
wILhIn o duys uILer Lhe end oI Lhe compuny`s IIscuI yeur.
The MongoIIun Compuny Luw recognIzes Lhe concepL oI "goIden" shures buL onIy In Lhe cuse
oI prIvuLIzuLIon oI u sLuLe-owned compuny or u compuny In whIch Lhe sLuLe Is Lhe mujorILy
shurehoIder. The GovernmenL muy hoId one "goIden" shure whIch does noL Iorm purL oI Lhe
shure cupILuI und whose hoIder does noL receIve dIvIdends. The hoIder oI Lhe "goIden" shure
purLIcIpuLes In Lhe munugemenL oI Lhe JSC Lhrough Lhe rIghL oI veLo mujor decIsIons Lo be
mude by generuI meeLIngs, Lhe bourd oI dIrecLors und Lhe execuLIve body. A goIden shure cun
onIy be heId by Lhe governmenL Ior u specIIIed perIod oI LIme.
Terminction
A JSC muy be LermInuLed In Lhe IoIIowIng cIrcumsLunces:
- By ugreemenL oI ILs shurehoIders; or
- Under u courL decIsIon us provIded by IegIsIuLIon, IncIudIng Ior InsoIvency.
TermInuLIon muy occur Lhrough reorgunIzuLIon or IIquIduLIon. LIquIduLIon Is currIed ouL by u
IIquIduLIon commILLee uppoInLed by Lhe generuI shurehoIder`s meeLIng, or In cuse oI
InsoIvency, by Lhe courLs.
6. Limited Liubility Compunies {LLC)
Estcblishment
A LLC Is Iormed on Lhe busIs oI u churLer und u decIsIon oI ILs Iounders. nILIuI cupILuI Is
provIded by conLrIbuLIons Irom shurehoIders und muy Luke Lhe Iorm oI cush or oLher properLy
und properLy rIghLs ussessed In LheIr moneLury equIvuIenL. LLCs muy be Iounded by one or
more IndIvIduuIs or IeguI enLILIes.
PwC 28
LLCs musL be regIsLered wILh Lhe sLuLe Lo ucquIre IeguI sLuLus, und II operuLIng In mIneruI
resources, bunkIng und IInunce or medIu und communIcuLIon secLors, muy need upprovuI
Irom Lhe GovernmenL or PurIIumenL. To regIsLer un LLC, Lhe IoIIowIng documenLuLIon musL
be submILLed Lo Lhe SLuLe RegIsLruLIon OIIIce und, us uppIIcubIe, Lo Lhe ForeIgn nvesLmenL
und ForeIgn Trude Agency (FFTA):
- AppIIcuLIon Iorm und requesL IeLLer;
- ChurLer;
- DocumenL conIIrmIng Lhe uddress;
- MInuLes oI Lhe IounduLIon meeLIng;
- Bunk conIIrmuLIon IeLLer conIIrmIng Lhe requIred mInImum umounL oI owner`s equILy
und Lhe sLurLIng buIunce;
- LeLLer Irom bunkIng InsLILuLIon sLuLIng Lhe shurehoIder hus muInLuIned ILs uccounLs In
good sLundIng;
- FeusIbIIILy sLudy or busIness pIun;
- And documenLs conIIrmIng Lhe IdenLILy oI Iounders und puymenL oI Lhe requIred Iee
Ior sLuLe regIsLruLIon.
The churLer oI un LLC shouId generuIIy specIIy: IuII und ubbrevIuLed nume oI Lhe compuny, Lhe
number oI uuLhorIzed shures, Lhe number oI Issued und ouLsLundIng shures und Lhe pur vuIue,
Lhe number oI members oI Lhe Bourd oI DIrecLors (u Bourd oI DIrecLors Is noL munduLory Ior
LLCs), procedures Ior IounduLIon und compeLency und ucLIvILy oI Lhe compuny`s bodIes,
IncIudIng Lhe procedure Ior convenIng generuI meeLIngs, prepuruLIon Ior und hoIdIng u
generuI meeLIng oI shurehoIders und meeLIngs oI coIIecLIve bodIes, procedures Ior InIormIng
shurehoIders on Lhe ucLIvILIes oI Lhe compuny, u IIsL oI governIng posILIons wILhIn Lhe
compuny, sLurL und end duLes oI Lhe IIscuI yeur oI Lhe compuny, eLc.
The mInImum umounL oI churLer cupILuI Ior u IoreIgn InvesLed LLC (BEF) Is USD 1oo,ooo,
whIch musL be puId prIor Lo regIsLruLIon. There Is no mInImum umounL oI churLer cupILuI Ior u
LLC wILh IImILed or no IoreIgn InvesLmenL (BELF).
Shcres cnJ Rihts
There ure Lwo Lypes oI shures - ordInury und preIerred. There Is no IImIL Lo Lhe number oI
preIerred shures LhuL cun be Issued. The hoIder oI un ordInury shure hus Lhe rIghL Lo voLe uL
Lhe generuI meeLIng oI shurehoIders und Luke purL In Lhe eIecLIon oI munugemenL bodIes. The
hoIder oI preIerred shures hus prIorILy rIghLs Lo receIve dIvIdends und uIso (us deLermIned by
Lhe compuny`s churLer) Lo purLIcIpuLe In prIor dIsLrIbuLIon oI properLy In Lhe evenL oI
IIquIduLIon. A hoIder oI u preIerred shure hus no rIghL Lo Luke purL In Lhe munugemenL oI u
LLC, excepL Ior cerLuIn cuses provIded by Iuw.
ShurehoIders muy eIecL Lo dIsLrIbuLe dIvIdends II Lhe compuny Is soIvenL uILer such
dIsLrIbuLIon. DIvIdends muy be puId In moneLury Iorm, In properLy or In Lhe Iorm oI
securILIes.
Terminction
A compuny muy be LermInuLed In Lhe IoIIowIng cIrcumsLunces:
- By ugreemenL oI ILs shurehoIders; or
- Under Lhe courL decIsIon us provIded by IegIsIuLIon, IncIudIng Ior InsoIvency reusons.
TermInuLIon muy occur Lhrough reorgunIzuLIon or IIquIduLIon. LIquIduLIon Is currIed ouL by u
IIquIduLIon commILLee uppoInLed by Lhe generuI shurehoIder`s meeLIng, or In cuse oI
InsoIvency, by Lhe courLs.
PwC 29
6.q Purtnerships
There ure Lwo Lypes oI purLnershIp seL ouL In Lhe Luw on PurLnershIps: LImILed und UnIImILed.
n u IImILed purLnershIp, Lhere Is uL IeusL one purLner who hus unIImILed exposure Lo Lhe
IIubIIILIes oI Lhe purLnershIp und Lhe resL huve LheIr IIubIIILy IImILed Lo LheIr cupILuI
conLrIbuLIon. n un unIImILed purLnershIp, Lhe purLners ure joInLIy und severuIIy IIubIe Ior Lhe
obIIguLIons oI Lhe purLnershIp, wILhouL IImIL Lo LheIr cupILuI conLrIbuLIon und personuI
properLy.
PurLnershIps ure requIred Lo regIsLer wILh LheIr IocuI SLuLe RegIsLruLIon OIIIce, ure ubIe Lo
Lrude InLernuLIonuIIy und merge or be IIquIduLed.
PurLnershIps ure noL u common sLrucLure Ior IoreIgn InvesLors gIven Lhe InubIIILy Lo uvoId
unIImILed IIubIIILy Ior uL IeusL one oI Lhe purLners.
6.g Representutive OIIices
Under Lhe ForeIgn nvesLmenL Luw, IoreIgn InvesLors muy esLubIIsh represenLuLIve oIIIces,
whIch ure noL sepuruLe IeguI enLILIes, buL ruLher un exLensIon oI LheIr heud oIIIce. A
represenLuLIve oIIIce Is onIy uIIowed Lo underLuke represenLuLIve IuncLIons und Lhe proLecLIon
oI Lhe InLeresLs oI ILs heud oIIIce. RepresenLuLIve oIIIces do noL huve churLer cupILuI und,
uccordIngIy, IL Is Lhe heud oIIIce LhuL Is IeguIIy responsIbIe Ior IIubIIILIes Lo LhIrd purLIes.
The regIsLruLIon procedures Ior represenLuLIve oIIIces ure sImIIur Lo Lhose Ior MongoIIun IeguI
enLILIes. n uddILIon Lo one or Lwo ugencIes, dependIng on Lhe Lype oI ucLIvILIes, represenLuLIve
oIIIces oI u IoreIgn enLILy ure requIred Lo be regIsLered wILh Lhe FFTA. The regIsLruLIon Iees
Ior u represenLuLIve oIIIce ure consIderubIy more Lhun Ior u LLC.
6.6 Registrution Process in Generul
The regIsLruLIon oI new BEF In MongoIIu Lukes pIuce uL Lhree ugencIes:
ForeIgn nvesLmenL und ForeIgn Trude Agency ;
The SLuLe RegIsLruLIon OIIIce ; und
DIsLrIcL Tux OIIIce.
CurrenLIy Lhe regIsLruLIon uL Lhese ugencIes Lukes pIuce sepuruLeIy. Compuny regIsLruLIon Ior
BEFs begIns wILh FFTA. AII BEFs ure Issued u FFTA cerLIIIcuLe, whIch musL be exLended
on un unnuuI busIs. RegIsLruLIon uL FFTA wIII Luke upproxImuLeIy IIve busIness duys.
RegIsLruLIon Lhen conLInues uL SRO. DurIng SRO regIsLruLIon Lhe compuny musL uIso regIsLer
wILh Lhe Lux oIIIce oI Lhe dIsLrIcL In whIch IL Is IocuLed, uccordIng Lo Lhe compuny`s regIsLered
uddress. The compuny musL show prooI oI regIsLruLIon uL Lhe Lux oIIIce Lo SRO beIore
regIsLruLIon cun be compIeLed. RegIsLruLIon uL SRO Lukes un uddILIonuI IIve duys. TukIng InLo
uccounL regIsLruLIon documenL prepuruLIon, obLuInIng u chop, openIng u bunk uccounL uL u
MongoIIun commercIuI bunk, LrunsIuLIon LIme und possIbIe ugency deIuys LoLuI regIsLruLIon
LIme Ior u new BEF Is upproxImuLeIy Iour weeks.
PwC Su
,. LABOLR RILATIONS AN SOCIAL SICLRITY
16
,.1 Lubour Murket
AccordIng Lo Lhe WorId Bunk, MongoIIu`s unempIoymenL ruLe wus q.q% us oI Murch zo1z.
However, Lhe unoIIIcIuI unempIoymenL ruLes ure esLImuLed Lo be much hIgher. The LoLuI
number oI regIsLered unempIoyed persons us oI Murch zo1z Is upproxImuLed o,ooo.
,. Lubour Relutions
Lubor reIuLIons In MongoIIu ure IurgeIy reguIuLed by Lhe Lubor Luw oI MongoIIu oI Muy 1q,
1qqq.
,. Working Conditions
AccordIng Lo Lhe Lubor Luw, empIoymenL conLrucLs or empIoymenL ugreemenLs (deLermIned
by posILIon or by Lhe Lype oI work perIormed) deIIne Lhe Lerms oI empIoymenL. SLundurd
workIng hours ure qo hours u week, wILh specIuI provIsIons Ior seusonuI shIIL work, such us
Lhe exLrucLIve IndusLrIes or ugrIcuILure. SuIurIes ure esLubIIshed by Lhe empIoyer
IndependenLIy buL muy noL be Iower Lhun Lhe mInImum wuge us esLubIIshed by MongoIIun
IegIsIuLIon. The mInImum monLhIy wuge wus udjusLed In zo11 Lo MNT 1qo,qoo. Wuges Ior u
skIIIed worker wILh EngIIsh Iunguuge skIIIs und u degree Irom u WesLern unIversILy ure
sIgnIIIcunLIy hIgher.
,.q Sociul Security System
CILIzens oI MongoIIu, IoreIgn cILIzens und sLuLeIess persons empIoyed on u conLrucL busIs by uII
Lypes oI economIc enLILIes, orgunIzuLIons, governmenL, reIIgIous or oLher orgunIzuLIons und
IoreIgn economIc enLILIes curryIng ouL ucLIvILIes In MongoIIu ure subjecL Lo Lhe compuIsory
Insurunce, whIch Is deducLed Irom Lhe gross suIury
EmpIoyee ruLes ure 1o% buL ure cupped uL MNT 1qo,ooo per monLh. EmpIoyer churges runge
Irom 1o% Lo 1% dependIng upon LheIr IndusLry und ure noL cupped.
,.g Ioreign Personnel
AII IoreIgn empIoyees, upurL Irom empIoyees oI embussIes or orgunIzuLIons seL up Lhrough
specIuI LreuLIes, musL be puId In MongoIIun LugrIk InLo LugrIk bunk uccounLs In MongoIIu, per
Lhe Luw oI MongoIIu on ConducLIng SeLLIemenL In NuLIonuI Currency oI JuIy q, zooq. ForeIgn
workers ure Iree Lo LrunsIer LheIr suIurIes overseus.
CurrenLIy, work permILs musL be obLuIned Ior uII IoreIgn empIoyees In compunIes und
represenLuLIve oIIIces. ObLuInIng work permILs cun be LIme-consumIng, generuIIy LukIng Iour
weeks beIore enLry und un uddILIonuI Lwo weeks uILer enLry. BeIore urrIvuI u sIngIe enLry work
vIsu musL be uppIIed Ior uL uny MongoIIun embussy worIdwIde. PrucLIce vurIes Irom embussy
Lo embussy.
AILer enLry Lhe IoreIgn worker musL be regIsLered wILhIn seven cuIendur duys uL Lhe
mmIgruLIon OIIIce or Iuce u IIne oI up Lo MNT 1,ooo,ooo. The uppIIcuLIon process Ior Lhe
work permIL und vIsu wIII uIso conLInue uILer Lhe empIoyee enLers. WhIIe provIsIonuI upprovuI
Ior u work permIL musL be uppIIed Ior und obLuIned beIore enLry, once Lhe IoreIgn worker hus
enLered un ucLuuI work permIL musL be obLuIned Irom Lhe Lubor OIIIce oI Lhe MInIsLry oI
16
PwC S1
Lubor und SocIuI WeIIure. A work pIuce Iee In Lhe umounL oI MNT z8o,ooo per monLh oI Lhe
work permIL musL uIso be puId In udvunce Lo Lhe Lubor OIIIce.
Once Lhe work permIL hus been obLuIned Lhe sIngIe enLry work vIsu musL be exLended Lo u Iong
Lerm muILIpIe enLry vIsu. AddILIonuIIy u Iong Lerm resIdency permIL musL uIso be obLuIned
Irom Lhe mmIgruLIon OIIIce.
ndIvIduuI (noL corporuLe) shurehoIders or Lhe regIsLered ExecuLIve DIrecLor oI u IoreIgn
InvesLed compuny do noL need Lo hoId work permILs In order Lo work In MongoIIu. These
cuLegorIes oI empIoyees quuIIIy Ior un nvesLor`s Curd Irom FFTA und Lhe uccompunyIng T-
Lype vIsu und u Iong Lerm resIdency permIL. HoIders oI u T vIsu ure noL requIred puy Lhe work
pIuce Iee.
The GovernmenL oI MongoIIu seLs IoreIgn worker quoLus, Ior boLh IocuIIy owned und IoreIgn
InvesLed compunIes operuLIng In MongoIIu. DependIng on Lhe secLor, Lhe quoLu runges Irom
% Lo 8o%. The LoLuI umounL oI InvesLmenL und LoLuI number oI empIoyees oI u compuny wIII
uIso InIIuence ILs quoLu. The deIuuIL busIness ucLIvILy oI uII IoreIgn InvesLed compunIes Is
IoreIgn Lrude whIch uLLuches u quoLu oI %. ThIs meuns LhuL u compuny musL muInLuIn zo
MongoIIun empIoyees Ior every 1 IoreIgn empIoyee. QuoLus muy Increuse dependIng on Lhe
secLor. For InsLunce, compunIes huvIng u mInIng or expIoruLIon IIcense huve u quoLu oI 1o%
whIIe u compuny exLrucLIng oII or nuLuruI gus muy muInLuIn u workIorce comprIsed oI IoreIgn
empIoyees up Lo 8o%.
S. ACCOLNTING AN ALIT RIQLIRIMINTS
S.1 Accounting
The SLuLe kh KhuruI (Lhe PurIIumenL) upproved Lhe Luw on AccounLIng on 1 December
zoo1. The IIscuI yeur ends on 1 December. EnLILIes shouId IIIe LheIr unnuuI uudILed IInuncIuI
sLuLemenLs wILh Lhe reIevunL sLuLe reguIuLory ugency by Murch 1, und musL uIso submIL
quurLerIy IInuncIuI sLuLemenLs by zoLh oI Lhe IoIIowIng monLh In uccordunce wILh specIIIc
Iorms upproved by MInIsLry oI FInunce.
FInuncIuI sLuLemenLs shouId be prepured In uccordunce wILh nLernuLIonuI FInuncIuI
ReporLIng SLundurds (FRS). ChIeI uccounLunLs oI sLuLe owned compunIes or compunIes wILh
sLuLe ownershIp ure requIred Lo hoId u nuLIonuI CPA quuIIIIcuLIon.
S. Churt oI Accounts
CurrenLIy, economIc enLILIes In MongoIIu ure requIred Lo uppIy Lhe ChurL oI AccounLs Issued In
December zooo by Lhe MInIsLry oI FInunce und Economy. NGOs huve u sImIIur buL
specIuIIzed ChurL oI AccounLs whIch wus udopLed In December zoo. PrIncIpuIIy, Lhe ChurL oI
AccounLs seLs Lhe IIrsL Lwo dIgILs oI buIunce sheeL und proIILJIoss uccounLs whIch ure Lo be
used. EnLILIes cun decIde on Lhe number und urrungemenL oI sub-dIvIsIons oI uccounL codes
LhemseIves.
On o OcLober zoo, Lhe Bunk oI MongoIIu (MongoIIu`s cenLruI bunk) udopLed u ChurL oI
AccounLs uppIIcubIe Ior bunkIng InsLILuLIons, whIch seLs Lhe busIc cIussIIIcuLIon sysLem Lo be
used by bunks Ior Lhe purpose oI LheIr IInuncIuI reporLIng und reporLIng Lo Lhe CenLruI Bunk.
GovernmenL orgunIzuLIons huve LheIr own sepuruLe ChurL oI AccounLs.
PwC S2
S. Audit Requirements
n uccordunce wILh Lhe MongoIIun Iuw on AudILIng, Lhe IoIIowIng orgunIzuLIons ure requIred
Lo huve LheIr IInuncIuI sLuLemenLs uudILed In uccordunce wILh nLernuLIonuI SLundurds oI
AudILIng (SAs):
LIsLed compunIes;
CompunIes uppIyIng Ior IIsLIng on Lhe sLock exchunge;
EnLILIes wILh LoLuI usseLs over over o mIIIIon TugrIks;
EnLILIes beIng resLrucLured, IIquIduLed, or InLended Lo seII uII ILs cupILuI by uucLIon;
I noL oLherwIse sLIpuIuLed by Lhe Iuw und InLernuLIonuI LreuLIes oI MongoIIu, IoreIgn
InvesLed busIness enLILIes und orgunIzuLIons (where IoreIgn InvesLmenL exceeds z%);
CooperuLIves conducLIng suvIngs und Ioun dIsbursemenL ucLIvILIes;
BunkIng, IInuncIuI und Insurunce orgunIzuLIons;
SecurILIes compunIes curryIng ouL brokeruge und deuIer ucLIvILIes und compunIes runnIng
InvesLmenL Iunds;
Funds descrIbed under ArLIcIe 6, purugruph z oI Lhe CIvII Code;
PoIILIcuI purLIes; und
OrgunIzuLIons sImIIur Lo Lhe busIness enLILIes und orgunIzuLIons ubove.
AudIL IIrms musL be IIcensed by Lhe MInIsLry oI FInunce oI MongoIIu Lo provIde un uudIL
reporL Ior u MongoIIun compuny und hus Lo be regIsLered wILh FInuncIuI ReguIuLory
CommILLee oI MongoIIu Lo be ubIe Lo uudIL Insurunce compunIes und IIsLedJLo be IIsLed
compunIes.
q. TAX SYSTIM AN AMINISTRATION
q.1 Tux System
The NuLIonuI Tux AdmInIsLruLIon Is comprIsed oI Lhe SLuLe udmInIsLruLIve body (GeneruI
DepurLmenL oI TuxuLIon) whIch Is In churge oI LuxuLIon, Lux ugencIes und oIIIces oI cupILuI cILy,
provInce, dIsLrIcL; und Lux brunches oI soum und sLuLe Lux InspecLors.
q. irect und Indirect Tux Burden
AII Luxes ure subdIvIded InLo dIrecL und IndIrecL Luxes. VAT und excIse Lux ure recognIzed us
IndIrecL Luxes.
q. Principul Tuxes
Tuxes on corporuLe Income (IncIudIng wILhhoIdIng Lux und cupILuI guIns Lux)
PersonuI ncome Tux
SocIuI nsurunce Tux
VuIue-udded Tux
CusLoms und ExcIse DuLIes
mmovubIe ProperLy Tux
MInIng Tux (IIcense Iees und royuILIes)
q.q Legislutive Irumework
The muIn Tux Iuws ure seL ouL ubove uIso IncIudes IegIsIuLIon governIng specIIIc Lypes oI
ucLIvILIes:
PwC SS
Luw on ForeIgn nvesLmenL
Luw oI reguIuLIon oI ForeIgn nvesLmenL In SLruLegIc SecLors; und
Luw on MIneruIs.
DespILe severuI rounds oI umendmenLs oI vurIous IegIsIuLIon over Lhe pusL Iew yeurs, Lhe
IegIsIuLIon remuIns In ILs InIuncy und compIIcuLed Issues ure noL deuIL wILh cIurILy.
ThereIore, IL Is ImperuLIve Lo obLuIn udvIce on Lhe InLerpreLuLIon, ImpIemenLuLIon und prucLIce
udopLed by Lhe Lux uuLhorILIes us weII us ensurIng LhuL Lhe mosL recenL IegIsIuLIon Is beIng
consIdered.
q.g Income Tux
MongoIIun corporuLe Income Lux uses Lhe progressIve ruLe scuIe Irom 1o%-z%:
1o% shouId uppIy Ior unnuuI Income up Lo bIIIIon MongoIIun TugrIk ("MNT") (upprox.
USD z,z mIIIIon); und
z% shouId uppIy Ior uny excess oI bIIIIon MNT.
Clcsses oj Tcxpcer
n generuI, MongoIIun resIdenLs ure LuxubIe on LheIr worIdwIde Income whIIsL non resIdenLs
ure onIy LuxubIe on Lhe MongoIIun source Income. ThIs uppIIes Lo boLh nuLuruI persons und
IeguI enLILIes.
Tcxcble Income
TuxubIe Income Is deIIned us uggreguLe unnuuI Income Iess uIIowubIe deducLIons.
q.6 Tux Treuties
MongoIIu hus currenLIy concIuded DoubIe Tux TreuLIes wILh o counLrIes. n uddILIon Lhere
ure IIve whIch ure pendIng. For Lhe IIsL oI DoubIe Tux LreuLIes, pIeuse see AppendIx D.
There huve been cerLuIn ucLIons Luken by Lhe GovernmenL oI MongoIIu In Lhe ureu oI
InLernuLIonuI LuxuLIon und uppIIcuLIon oI Lux LreuLIes. To InILIuLe LhIs, Lhe MInIsLry oI FInunce
hus prepured u proposuI Lo Lhe MInIsLry oI JusLIce und MInIsLry oI ForeIgn AIIuIrs Lo cunceI
some uL Lhe DTTs LhuL MongoIIu currenLIy hus In Iorce. The DDTs LhuL huve been IdenLIIIed
ure NeLherIunds, Luxembourg, UAE und KuwuIL.
q., Tux Returns und Puyments
Tux reporLs ure compIIed by Lhe Luxpuyer, Lux ugenL or LheIr represenLuLIve. The reporLs musL
be submILLed In puper IormuL und eIecLronIcuIIy und musL be In MongoIIun; supporLIng
documenLuLIon musL uIso be In, or LrunsIuLed InLo, MongoIIun. RecenLIy, Lhe Lux
udmInIsLruLIon sLurLed Lo ImpIemenL un e-IIIIng onIy sysLem. From Muy zo1z, enLILIes ure
uIIowed Lo submIL eIecLronIc Lux reporLs once Lhey obLuIn Lhe e-sIgnuLure.
q.S Assessments
Tux reporLs, once submILLed, ure subjecL Lo un udmInIsLruLIve check Lo ensure LhuL Lhey compIy
wILh Lhe requIremenLs Ior compIeLIng Lhe reporL. A LechnIcuI revIew oI Lhe Lux posILIon Luken
und Lhe underIyIng documenLuLIon Iorms purL oI u Lux uudIL whIch muy be currIed ouL In Lhe
IuLure. Upon Lhe concIusIon oI un uudIL Lhe Lux uuLhorILIes wIII Issue un 'ucL` seLLIng ouL LheIr
IIndIngs.
q.q Appeuls
PwC S4
Where u Luxpuyer objecLs Lo u decIsIon oI Lhe Lux InspecLor, Lhe IeguI depurLmenL oI Lhe Lux
udmInIsLruLIon wIII InvesLIguLe Lhe dIspuLe und gIve un opInIon. n cuse Lhe dIspuLe cunnoL be
resoIved by Lhe IeguI depurLmenL, Lhe cuse Is revIewed by Lhe Tux DIspuLe CouncII consIsLIng
oI sIx persons und Is chuIred by Lhe heud oI Lhe Revenue DepurLmenL oI Lhe MInIsLry oI
FInunce. I Lhe Luxpuyer dIsugrees wILh Lhe resoIuLIons oI Lhe CouncII, Lhe cuse cun be Luken Lo
Lhe GeneruI CourL.
q.1o Withholding Tuxes
MongoIIun enLILIes ure requIred Lo wILhhoId Lux on dIvIdends, royuILIes Lo economIc enLILIes
resIdenL In MongoIIu und jusL on royuILIes Lo IndIvIduuIs us dIvIdends ure exempL Irom
LuxuLIon Ior IndIvIduuIs unLII zo1. n boLh cuses Lhe ruLe Is 1o%. WILhhoIdIng Lux Is uppIIed Lo
Lhe gross proceeds on Lhe suIe oI ImmovubIe properLy uL z%
Non-resIdenLs wILh no presence In MongoIIu ure subjecL Lo zo% wILhhoIdIng Lux on Income
eurned In Lhe LerrILorIes oI MongoIIu und on MongoIIun source Income. ThIs covers Lhe
IoIIowIng Lypes:
DIvIdends;
nLeresL;
RoyuILIes;
RenLuI;
MunugemenL und udmInIsLruLIve expenses;
ncome goods, work or servIces provIded In MongoIIu; und
Work or servIces provIded dIrecLIy or Lhrough eIecLronIc meuns.
q.11 Tux Audits
A Lux InspecLor Is empowered Lo exumIne IInuncIuI documenLs connecLed wILh Lhe puymenL oI
Luxes und usk or expIunuLIons. The oIIIcIuI cun LemporurIIy seIze documenLs whIch ure
evIdence oI Lux uvoIdunce und copy Lhem.
q.1 Penulties
nLeresL, cuIcuIuLed on u duIIy busIs Ior Lhe perIod beLween Lhe due duLe und Ior puymenL und
Lhe ucLuuI puymenL duLe, und penuILIes ure Imposed on IuLe puymenL oI Luxes. FIuL ruLe
penuILIes uIso exIsL Ior Lhe IuIIure Lo compIy wILh vurIous udmInIsLruLIve requIremenLs.
q.1 Advunce Tux CluriIicution
RuIIngs cun be obLuIned Irom Lhe Lux uuLhorILIes, buL Lhese ure noL IeguIIy bIndIng.
1o TAXATION OI CORPORATIONS
1o.1 Corporute Tux System
The EconomIc EnLILy ncome Tux Iuw governs Lhe LuxuLIon oI proIILs oI:
PwC SS
MongoIIun economIc enLILIes;
ForeIgn economIc enLILIes LhuL huve LheIr heudquurLers In MongoIIu; und
ForeIgn economIc enLILIes LhuL eurn Income In MongoIIu oLher Lhun vIu Lhe ubove.
L Is noL currenLIy possIbIe Ior u IoreIgn compuny Lo huve u LuxubIe presence In MongoIIu.
1o. Incentives
Tux IncenLIves or beneIILs ure uvuIIubIe Lo Lhe ugrIcuILure und mInIng IndusLrIes. ForeIgn
InvesLors muy obLuIn sImIIur beneIILs where Lhey meeL mInImum InvesLmenL IeveIs.
1o. Tuxuble Income
TuxubIe Income IuIIs under Lhe IoIIowIng Lhree cuLegorIes:
ncome Irom ucLIvILIes whIch IncIudes:
u) BusIness ucLIvILIes
b) SuIe oI shures und securILIes
c) GuIns on IoreIgn currency exchunge ruLes
ncome Irom properLy whIch IncIudes:
u) RenLuI
b) RoyuILIes
c) DIvIdends
d) nLeresL
ncome Irom Lhe suIe oI properLy (boLh ImmovubIe und movubIe excepL Ior shures und
securILIes).
The MongoIIun corporuLe Income Lux ruLe Is progressIve ruLe und runges Irom 1o%-z%:
1o% shouId uppIy Ior Lhe IIrsL unnuuI Income oI bIIIIon MongoIIun TugrIk ("MNT")
(upprox. USD z,z mIIIIon); und
z% shouId uppIy Ior uny excess oI bIIIIon MNT.
CerLuIn Lypes oI Income muybe Luxed uL dIIIerenL Lux ruLes.
Source oI income Applicuble tux rute
DIvIdends 1o%
RoyuILIes 1o%
nLeresL 1o%
GumbIIng, beLLIng gumes und IoLLerIes qo%
SuIe oI ImmovubIe properLy (gross) z%
SuIe oI rIghLs (gross) o%
1o.q eductibility oI Ixpenses
Genercl Expenses ussocIuLed wILh Lhe eurnIng oI uggreguLe unnuuI Income ure deducLIbIe Ior
corporuLe Income Lux purposes (provIded LhuL Lhey ure properIy documenLed). The Lux
IegIsIuLIon provIdes u IIsL oI deducLIbIe expenses. AnyLhIng oLher Lhun Lhose Is noL consIdered
deducLIbIe.
PwC S6
Interest Expenses nLeresL puId Lo LhIrd purLIes Is deducLIbIe. nLeresL puId Lo u shure hoIder Is
subjecL Lo u :1 debL Lo equILy resLrIcLIon. FurLher resLrIcLIons uppIy Lo InLeresL on Iouns mude
Irom u MongoIIun IndIvIduuI who conLroIs Lhe enLILy.
Depreciction DeprecIuLIon, Ior Lux purposes, Is cuIcuIuLed usIng Lhe sLruIghL IIne meLhod over
Lhe useIuI economIc IIIe oI Lhe usseL. ThIs depends upon Lhe nuLure oI Lhe usseL, rungIng Irom
yeurs Ior T equIpmenL Lo qo yeurs Ior buIIdIngs und consLrucLIons.
Disclloucble expenses GeneruIIy expenses need Lo be specIIIcuIIy sLuLed us deducLIbIe so Lhere
ure noL muny expenses sLuLed us specIIIcuIIy dIsuIIowubIe. However Lhe IoIIowIng ure noL
deducLIbIe Ior Lux purposes:
FInunce Ieuse puymenLs;
FInes und penuILIes;
Expenses Incurred Ior eurnIng exempL Income;
Expenses noL documenLed by Lhe Luxpuyer; und
PuymenLs Irom whIch Lux Is noL wILhheId buL requIred Lo be wILhheId.
1o.g Reluted Purty Trunsuctions
n generuI, LrunsucLIons ure vuIued Ior Lux purposes uL Lhe conLucL vuIue. Where LrunsucLIons
Luke pIuce beLween reIuLed purLIes ubove or beIow LhIs vuIue, Lhe Lux uuLhorILIes huve Lhe rIghL
Lo uILer Lhe vuIue used uL un urms IengLh busIs.
The CT Luw oI MongoIIu specIIIes und deLermInes reIuLed purLIes us IoIIows:
I u purLy hoIds uL IeusL zo% oI Lhe common sLock oI unoLher purLy;
I u purLy hus Lhe rIghL Lo receIve uL IeusL zo% oI dIvIdends or dIsLrIbuLIons; or
I u purLy hus Lhe rIghL Lo uppoInL uL IeusL zo% oI munugemenL or oLherwIse ubIe Lo
deLermIne ILs poIIcIes.
However Lhe GeneruI Tux Luw provIdes unoLher deIInILIon on Lhe reIuLed purLIes LhuL Is
bused on ubIIILy Lo purLIcIpuLe In munugemenL und cun be used In uddILIon Lo Lhe ubove
deIInILIon.
1o.6 Ioreign Ixchunge
ncome und expendILure In IoreIgn currencIes shouId be LrunsIuLed InLo MNT on Lhe duLe oI
Lhe LrunsucLIon. ReuIIzed guIns und Iosses Irom IoreIgn currency exchunge ruLes ure LuxubIe
und deducLIbIe respecLIveIy.
1o., Losses
Losses cun be currIed Iorwurd Ior up Lo Lwo yeurs und use oI such Iosses Is resLrIcLed Lo o% oI
Lhe LuxubIe proIIL In uny yeur Ior economIc secLors oLher Lhun mInIng und InIrusLrucLure.
For mInIng und InIrusLrucLure secLors Iosses cun be currIed Iorwurd Ior IourLo eIghL yeurs
dependIng on Lhe InvesLmenL umounL und Lhe whoIe LuxubIe proIIL cun be oIIseL In u yeur (no
o% IImIL uppIIes).
1o.S Tux Compututions
Tuxpuyers shouId submIL quurLerIy und unnuuI reLurns Lo Lhe Lux uuLhorILIes by Lhe zo
Lh
oI Lhe
monLh IoIIowIng Lhe end oI euch quurLer und 1o
Lh
Februury Ior Lhe unnuuI reLurn.
PwC S7
Bused on Lhese, Lhe Lux uuLhorILIes Issue monLhIyJquurLerIy puymenL scheduIes und puymenLs
musL be mude by Lhe zLh oI euch monLh.
n prucLIce Lhe MongoIIun Lux uuLhorILIes uIIow concessIons us IoIIows:
A compuny wILh unnuuI LuxubIe Income oI Iess Lhun MNT oo,ooo muy puy Lux on u
quurLerIy busIs; or
Where LoLuI Lux puId exceeds Lhe Lux IIubIIILy, Lhe excess cun be credILed uguInsL oLher
Luxes due or credILed uguInsL IuLure Lux puymenLs. L muy uIso In Lheory be reIunded;
prucLIce here Is Iess cIeur und consIsLenL.
WILhhoIdIng Luxes musL be puId wILhIn seven Lo Len duys oI Lhe underIyIng puymenL
(dependIng upon Lhe nuLure oI Lhe puymenL) und Luxpuyers shouId prepure quurLerIy und
unnuuI reLurns Ior submIssIon Lo Lhe Lux uuLhorILIes by Lhe zo
Lh
oI Lhe monLh IoIIowIng Lhe end
oI euch quurLer und 1o
Lh
Februury Ior Lhe unnuuI reLurn.
1o.q Other Tuxes
Excise Tcx
ExcIse Lux Is IevIed on goods munuIucLured In or ImporLed InLo MongoIIu such us Lobucco,
uIcohoI, gusoIIne und dIeseI IueI und pussenger vehIcIes. RecenL uncerLuInLy over InLernuLIonuI
suppIIes oI gusoIIne und dIeseI IueI hus Ieud Lo vurIuLIons In Lhe Ievy. ExcIse Lux Is uIso
Imposed on Lhe physIcuI unILs oI specIuI purpose LechnIcuI devIces und equIpmenLs used Ior
beLLIng gumes und gumbIIng und ucLIvILIes oI IndIvIduuIs und IeguI enLILIes LhuL conducL such
ucLIvILIes.
Immotcble Propert Tcx
mmovubIe properLy Lux Is IevIed uL o.6% oI Lhe vuIue oI Lhe ImmovubIe properLy. For Lux
purposes, Lhe vuIue used Is Lhe vuIue regIsLered wILh Lhe governmenL regIsLruLIon uuLhorILy. I
Lhe properLy Is unregIsLered, Lhe Insured vuIue Is used. n Lhe ubsence oI eILher u regIsLered or
Insured vuIue, Lhe uccounLIng vuIue Is used. From 1 Junuury zo1, Lhe ImmovubIe properLy Lux
wIII be o.6% -1% oI ImmovubIe properLy vuIue dependIng on Lhe sIze, IocuLIon, und murkeL
demund eLc.
Stcmp Dut
SLump duLy Is Imposed on Lhe IoIIowIng under Lhe Luw oI MongoIIu on SLuLe SLump DuLIes:
MonILorIng oI und decIsIons on muLLers oI IeguI sLuLus by u courL oI Iuw;
RegIsLruLIon oI busIness enLILIes und orgunIzuLIons;
PermIssIon Lo regIsLer busIness enLILIes wILh IoreIgn InvesLmenL und uIIowIng persons
Lo be empIoyed wILh represenLuLIve oIIIces oI IoreIgn orgunIzuLIons;
PermIssIon Lo curry ouL servIces und curry ouL producLIon whIch requIres specIuI
permIssIon or experLIse;
GrunL oI cerLIIIcuLIon Ior copyrIghL, puLenL or Lrudemurks;
RegIsLruLIon oI copyrIghLs;
GrunLIng oI permIssIon Lo curry ouL ucLIvILIes In respecL oI securILIes und regIsLruLIon
oI securILIes, und Ior uuLhorIzuLIon Lo Issue und regIsLer securILIes;
OLher servIces.
The umounL oI duLy vurIes uccordIng Lo Lhe Lype oI servIcesJLrunsucLIon InvoIved.
Customs Dut
PwC S8
A IIuL cusLoms LurIII oI % uppIIes In respecL Lo mosL goods ImporLed InLo MongoIIu, excepL Ior
InIormuLIon LechnoIogy, medIcuI equIpmenL und pure bred IIvesLock, whIch ure zero ruLed.
CerLuIn equIpmenL ImporLed by smuII und medIum sIze enLerprIses ("SME"), ure exempL Irom
cusLoms LurIII.
ExporL duLIes uppIy Lo cerLuIn exporLed goods such us wusLe Iron, uIumInum, copper, bruss
und IndenLured cushmere.
Air Pollution Pcment
The Luw on AIr PoIIuLIon puymenLs cume InLo eIIecL Irom JuIy oI zo1o. Produced ruw couI,
used or ImporLed orgunIc soIvenLs und vehIcIes ure subjecL Lo LhIs puymenL.
1o.1o Brunch os Subsidiury
L Is noL currenLIy possIbIe Lo esLubIIsh u brunch oI u IoreIgn compuny In MongoIIu. SLeps ure
underwuy uL Lhe MongoIIun Tux AuLhorILIes Lo uIIow PermunenL EsLubIIshmenLs Lo regIsLer us
Luxpuyers. As uL Lhe duLe oI pubIIshIng, Lhe IInuI deLuIIs huve noL been pubIIshed.
1o.11 Group Tuxution
There ure no ruIes permILLIng groupIng Ior Lux purposes In MongoIIu.
1o.1 Speciul Tuxution Regimes
Iorein Intestment
A IoreIgn InvesLor InvesLIng cerLuIn IeveI muy uppIy Ior u sLubIIILy ugreemenL Lo govern LheIr
InvesLmenL, provIdIng sLubIe Lux condILIons Lo LheIr InvesLmenL Ior u IIxed Lerm.
CurrenLIy un InvesLmenL oI up Lo USD zom wIII permIL u 1o yeur Lerm und u USD om
InvesLmenL u 1 yeur Lerm.
Minin
A mInIng sLubIIILy ugreemenL covers Lux sLubIIILy und oLher busIness rIghLs. The mInImum
InvesLmenL reIers Lo Lhe umounL InvesLed over Lhe IIrsL IIve yeurs oI Lhe projecL und wIII
provIde sLubIIILy Ior u IIxed Lerm us IoIIows:
USD om Ior Len yeurs;
USD 1oom Ior IIILeen yeurs; und
USD oom Ior LhIrLy yeurs.
AII expIoruLIon cosLs shouId be cupILuIIzed und Lhen umorLIzed on u sLruIghL IIne busIs over Lhe
IIIe oI Lhe mIne IoIIowIng Lhe commencemenL oI producLIon. LIcense ucquIsILIon cosLs ure
umorLIzed over Lhe IIIe oI Lhe IIcense.
Minin cnJ Explorction License Iee
ThIs vurIes Ior expIoruLIon und mInIng IIcenses. MInIng IIcense Iee Is ugreed up IronL und
sLuLed In Lhe mInIng IIcense. ExpIoruLIon IIcense Iees ure bused on Lhe number oI yeurs oI
expIoruLIon.
Roclt Iees
PwC S9
RoyuILy Iees ure puId on Lhe suIe oI mInIng producLs. The ruLe depends on Lhe producL beIng
mIned us weII us Lhe umounL oI vuIue udded servIces beIng perIormed In MongoIIu.
AmendmenLs were mude Lo Lhe Luw on MIneruIs LhuL cume InLo eIIecL Irom Junuury 1, zo11.
The chunges muInIy Iocus on ImposIng uddILIonuI royuILIes bused on Lhe murkeL prIce Increuse
oI mInIng producLs us weII us Lhe umounL oI vuIue udded servIces beIng perIormed In
MongoIIu.
11. TAXATION OI INIVILALS
11.1 Territoriulity und Residence
A permunenL resIdenL Luxpuyer oI MongoIIu Is subjecL Lo Lux on hIsJher worId-wIde Income.
A non-resIdenL Luxpuyer oI MongoIIu Is subjecL Lo Lux on Lhe Income eurned In Lhe LerrILory oI
MongoIIu In u Lux yeur.
A permunenL resIdenL Luxpuyer oI MongoIIu Is:
An IndIvIduuI who owns u resIdence In MongoIIu; or
An IndIvIduuI who resIdes In MongoIIu Ior 18 or more duys In u Lux yeur.
A non-resIdenL Luxpuyer oI MongoIIu Is:
An IndIvIduuI who hus no resIdence In MongoIIu und hus noL resIded In MongoIIu Ior 18
or more duys In u Lux yeur.
11. Gross Income
Emploee Gross Income
AII dIrecL und IndIrecL Income receIved Lhrough empIoymenL or reIuLed ucLIvILIes durIng u
cuIendur yeur. ThIs IncIudes boLh Luxed und unLuxed Income uL Lhe source oI puymenL.
Ccpitcl Gcins cnJ Intestment Income
Gross Income Irom suIe oI ImmovubIe properLy Is Luxed uL u ruLe oI z%. GuIn Irom Lhe suIe oI
movubIe properLy IncIudIng securILIes Is Luxed uL u ruLe oI 1o%.
DIvIdends und InLeresL Income eurned by IndIvIduuIs Is generuIIy subjecL Lo Lux uL Lhe ruLe oI
1o%, wILhheId uL source. The Lux on DIvIdends und nLeresL wIII noL come InLo Iorce unLII 1
Jun, zo1.
11. eductions
usiness DeJuctions
There ure no busIness deducLIons uIIowed Ior empIoyees. An IndIvIduuI muy cIuIm busIness
deducLIons II regIsLered us un enLrepreneur.
PwC 4u
SocIuI Insurunce churges ure deducLIbIe Ior PT purposes.
Non-usiness Expenses
There ure no deducLIons Ior non-busIness expenses.
Personcl Alloucnces
The mosL noLubIe uIIowunce Is u generuI deducLIon wuge oI 8q,ooo MongoIIun TugrIk
("MNT") per unnum (upprox. USD 6z).
11.q Tux Credits
A credIL Is uvuIIubIe Ior IndIvIduuIs who huve suIIered Lux In oLher counLrIes under Lhe Lerms
oI u DoubIe Tux TreuLy.
Tux credILs ure uIso uvuIIubIe Ior ugrIcuILuruI producLIon und educuLIonuI Iees.
11.g Other Tuxes
Socicl Securit Tcxes
CILIzens oI MongoIIu, IoreIgn cILIzens und sLuLeIess persons empIoyed on u conLrucL busIs by uII
Lypes oI economIc enLILIes, orgunIzuLIons, governmenL servunLs, reIIgIous or oLher
orgunIzuLIons und IoreIgn economIc enLILIes curryIng ouL ucLIvILIes In MongoIIu ure subjecL Lo
Lhe IoIIowIng compuIsory Insurunce:
PensIon Insurunce (empIoyer: ;% empIoyee: ;%);
BeneIIL Insurunce (empIoyer: o. %; empIoyee: o.%);
HeuILh Insurunce (empIoyer: z%; empIoyee: z%);
ndusLrIuI uccIdenL und occupuLIonuI dIseuse Insurunce (empIoyer: 1% Lo %); und
UnempIoymenL Insurunce (empIoyer: o.%; empIoyee: o.%).
EmpIoyee deducLIons ure cupped uL MNT1qo, qoo per monLh (USD 1oq). EmpIoyer puymenLs
ure noL cupped. These churges ure deducLIbIe Ior CT purposes.
SocIuI nsurunce und HeuILh Insurunce reLurns shouId be submILLed eIecLronIcuIIy und by
puper beIore
Lh
oI Lhe IoIIowIng monLh on u monLhIy busIs. PuymenLs shouId be uIso mude by
Lh
oI Lhe IoIIowIng monLh Lo Lhe uccounL oI Lhe SocIuI nsurunce Fund.
Dblictor Pension Contributions
ncIuded In Lhe SocIuI SecurILy Tuxes.
Weclth Tcx
There Is no weuILh Lux In MongoIIu.
Loccl Tcxes
There ure no uddILIonuI IocuI Luxes on Income.
11.6 Tux Administrution
Assessment
PwC 41
The IoIIowIng Lypes oI Income ure subjecL Lo wILhhoIdIng Lux:
EmpIoymenL Income;
nLeresL;
RoyuILIes; und
DIvIdends.
PIeuse noLe LhuL dIvIdends und InLeresL ure exempL Irom LuxuLIon IncIudIng wILhhoIdIng Lux
unLII 1 Junuury zo1.
Returns
A wILhhoIder shuII submIL u quurLerIy reporL oI Lux wILhheId by Lhe zo
Lh
oI Lhe IIrsL monLh oI
Lhe IoIIowIng quurLer und Lhe unnuuI Lux reporL by Februury 1 oI Lhe IoIIowIng yeur Lo Lhe
correspondIng Lux uuLhorILy.
ncome noL covered by Lhe ubove shouId be reporLed on Lhe unnuuI Lux reLurn whIch musL be
be submILLed Lo Lhe Lux uuLhorILIes by 1
Lh
Februury IoIIowIng Lhe end oI Lhe Lux yeur whIch Is
Lhe cuIendur yeur .
Pcment oj Tcx
Tux wILhheId shouId be puId Lo Lhe Lux uuLhorILIes by Lhe 1o
Lh
oI Lhe IoIIowIng monLh.
Tux on oLher Income shouId be puId by Lhe 1
Lh
oI Lhe IIrsL monLh oI Lhe IoIIowIng quurLer.
11., Tux Rutes
Source oI income Applicuble tux rute
EmpIoymenL Income 1o%
BusIness und proIessIonuI Income
ncome Irom properLy, I.e. dIvIdends, royuILy, InLeresL, cupILuI guIn
Irom suIe oI securILIesJsLocks
SuIe oI ImmovubIe properLy (gross) z%
ncome Irom scIenLIIIc, IILerucy urLIsLIc works, InvenLIons, producL;
desIgns und useIuI desIgns (gross)
%
DesIgns und useIuI desIgns (gross)
ncome Irom sporLs compeLILIons, urL
perIormunces, und sImIIur Income (gross)
ncome Irom beLLIng gumes, gumbIIng und IoLLerIes (gross). qo%
1. VALLI AI TAX {VAT)
1.1 Introduction
PwC 42
VAT uL Lhe ruLe oI 1o% Is Imposed on Lhe suppIy oI LuxubIe goods und servIces In MongoIIu,
und on ImporLs InLo MongoIIu.
Tuxpuyers ure requIred Lo regIsLer Ior MongoIIun VAT purposes when LheIr LuxubIe Lurnover
exceeds 1o mIIIIon MNT (USD ;.qK). Tuxpuyers muy uIso voIunLurIIy regIsLer when LheIr
LuxubIe Lurnover reuches 8 mIIIIon MNT (USD K) or II Lhey huve InvesLed more Lhun USD zm
In MongoIIu. We undersLund LhuL uL Lhe LIme oI pubIIcuLIon, Lhe MTA Is consIderIng IncreusIng
Lhe VAT regIsLruLIon LhreshoId Lo MNT om (USD ;k).
1. Scope oI VAT
VAT Is IevIed on Lhe IoIIowIng In MongoIIu:
Work perIormed und servIces rendered In MongoIIu;
Goods soId In MongoIIu;
Goods ImporLed InLo MongoIIu Lo be soId or used; und
Goods exporLed Irom MongoIIu Ior use or consumpLIon ouLsIde MongoIIu.
The provIsIon oI servIces uIso IncIudes Lhe IoIIowIng:
To provIde eIecLrIcILy, heuL, gus, wuLer, sewer, posLuI, communIcuLIons, und oLher
servIces;
To Ieuse goods or uIIow one Lo possess or use Lhem In oLher Iorms;
To renL ouL rooms In hoLeIs or sImIIur pIuces or uIIow one Lo possess or use Lhem In
oLher Iorms;
To renL ouL rooms In houses or buIIdIngs or uIIow one Lo possess or use Lhem In oLher
Iorms;
To Ieuse ImmovubIe und movubIe properLy oLher Lhun houses und buIIdIngs or uIIow
one Lo possess or use Lhem In oLher Iorms;
To LrunsIer, Ieuse, or seII InnovuLIons, producL desIgns, useIuI desIgns, copyrIghLed
works, Lrudemurks, know-how, und InIormuLIon on usseLs;
To Issue IoLLerIes, operuLe quIzzes or gumbIIng or provIde InLermedIury servIces;
To puy oII debLs by perIormIng work or provIdIng servIces;
The perIormunce oI work or provIsIon oI servIces Irom u non-resIdenL Lo u resIdenL;
und
To puy InLeresL und IInes Lo oLhers due Lo mIsconducL.
The suIe oI goods uIso IncIudes Lhe IoIIowIng:
SuIe oI rIghL Lo conducL economIc ucLIvILy;
ReLenLIon oI usseLs upon Lhe LermInuLIon oI Lrude;
SeLLIemenL oI u debL wILh goods; und
SuIe by u non-resIdenL Lo resIdenL.
1. Zero-Ruting
The IoIIowIng ure zero-ruLed Ior VAT purposes:
ExporL suIes oI goods;
nLernuLIonuI LrunsporLuLIon servIces;
ServIces provIded ouLsIde MongoIIu;
ServIces provIded Lo u IoreIgn cILIzen or IeguI enLILy noL presenL In Lhe LerrILory oI
MongoIIu durIng Lhe provIsIon oI servIces (IncIudIng Lux-exempL servIces);
PwC 4S
ServIces provIded Lo domesLIc or InLernuLIonuI uIrcruILs conducLIng InLernuLIonuI
IIIghLs;
SLuLe meduIs und coIns produced domesLIcuIIy; und
ExporL oI IInuIIzed mInIng producLs. (processed ruLher Lhun ruw muLerIuIs).
1.q Ixempt Supplies
The IoIIowIng goods shuII be exempLed Irom VAT:
Pussengers personuI ILems In umounLs upproved und permILLed by Lhe cusLoms
uuLhorILy Ior Lux-Iree enLry;
Goods ImporLed Ior Lhe use oI IoreIgn dIpIomuLIc mIssIons or LheIr oIIIcIuIs resIdIng In
Lhe LerrILory oI MongoIIu on u permunenL busIs;
HumunILurIun und non-repuyubIe uId goods;
CusLom uppIIunces Ior deveIopmenLuIIy chuIIenged persons;
Weupons und specIuI equIpmenLs ImporLed Ior urmed Iorces, poIIce, und sLuLe
securILy und judIcIuI enIorcemenL ugencIes;
CIvII uvIuLIon uIrcruILs und spure purLs;
ncome Irom suIe oI un upurLmenL und ILs purL used Ior resIdenLIuI purposes;
EquIpmenLs, muLerIuIs, ruw muLerIuIs, spure purLs, gusoIIne und dIeseI IueI ImporLed
Ior Lhe purpose oI oII expIoruLIon, exLrucLIon, und use under u producL-shurIng
ugreemenL enLered wILh governmenL In Lhe oII IndusLry;
BIood, bIood producLs, und orguns Ior medIcuI LreuLmenL purposes;
Guseous IueI und ILs conLuIners, equIpmenLs, cusLom muchInery, mechunIsms, LooIs,
und spure purLs;
MongoIIun currencIes prInLed In IoreIgn counLrIes by orders;
GoId soId;
Newspupers soId;
ProducLs resuILIng Irom scIenLIIIc reseurch
MInIng producLs oLher Lhun Lhose zero ruLed;
CerLuIn Lypes oI Iouns;
Ruw couI;
Used or ImporLed orgunIc soIvenLs, vehIcIes;
Produced or pIunLed cereuIs;
Processed meuL; und
MIIk und mIIk producLs, eLc.
The IoIIowIng servIces shuII be exempLed Irom VAT:
Currency exchunge operuLIons;
BunkIng LrunsucLIons;
nsurunce und properLy regIsLruLIon;
TrunsucLIons In sLocks und securILIes;
Louns;
TrunsucLIons concernIng Issuunce und LrunsIer oI InLeresL Ior pIucemenL oI moneLury
usseLs oI socIuI und heuILh Insurunce Iunds;
ResIdenLIuI uccommoduLIon;
EducuLIonuI servIces;
HeuILh servIces;
ServIces oI reIIgIous orgunIzuLIons;
SLuLe servIces;
PubIIc LrunsporL; und
Some servIces Lo LourIsLs.
PwC 44
Goods, work, or servIces provIded Iree oI churge, or used Ior personuI purposes oLher Lhun Ior
producLIon, shuII noL be exempLed Irom vuIue.
1.g Tuxuble Amount
VATcble Supplies
n generuI, Lhe LuxubIe umounL Is Lhe IuIr murkeL vuIue oI Lhe goods soId, work perIormed or
servIces provIded.
For ImporLed goods, LhIs shouId IncIude cusLoms duLy, excIse Lux und oLher such Luxes Lo Lhe
cusLoms vuIue oI Lhe goods. There ure u number oI meLhods Ior esLubIIshIng Lhe cusLoms
vuIue; LrunsporLuLIon, Insurunce und uny commIssIon or royuILy umounLs ure IncIuded.
Tuxpuyers shouId uccounL Ior VAT on goods, work or servIce obLuIned Irom non-resIdenLs.
TrunsucLIons In u IoreIgn currency ure requIred Lo be LrunsIuLed InLo MNT uL Lhe ruLe uppIyIng
on Lhe Lux duLe oI Lhe LrunsucLIon.
VAT Djjset
VAT puId Ior goods, work or servIces cun be oIIseL uguInsL VAT puyubIe Lo Lhe BudgeL; LhIs
musL be subsLunLIuLed by documenLury evIdence. ThIs cun onIy be done once u compuny hus
regIsLered Ior VAT.
Pro-ruLIng Is requIred where VAT Is Incurred purLIuIIy Ior exempL und purLIuIIy VATubIe
purposes Lo IucIIILuLe u recovery oI Lhe VAT npuL Tux
VAT Cclculction cnJ VAT Djjset Ccrr-IorucrJ
The VAT IIubIIILy oI u Luxpuyer comprIses OuLpuL VAT (I.e., VAT churged by u Luxpuyer) Iess
npuL VAT (I.e., VAT puId by u Luxpuyer Lo ILs suppIIers) In u reporLIng perIod.
The excess oI InpuL VAT over ouLpuL VAT muy generuIIy be currIed Iorwurd uguInsL IuLure
VAT IIubIIILIes or oIIseL uguInsL oLher Lux IIubIIILIes. n prucLIce reIunds ure dIIIIcuIL Lo obLuIn,
uILhough Lhe ruIes do prescrIbe u procedure Ior reIunds under cerLuIn condILIons.
Reterse Chcre VAT cnJ Djjset
MongoIIun compunIes ure requIred Lo uccounL Ior Reverse Churge VAT (uIso known us seII-
churge) on servIces receIved und goods J equIpmenL boughL Irom IoreIgn enLILIes.
RecenL umendmenL In Lhe VAT Iuw sLIpuIuLe LhuL Reverse Churge VAT wILhheId by MongoIIun
resIdenLs on servIces provIded, work perIormed und goods ImporLed by non-resIdenLs shouId
noL be uIIowed Ior oIIseL uguInsL OuLpuL VAT by Lhe MongoIIun Luxpuyer. As uL Lhe duLe oI LhIs
pubIIcuLIon, u number oI Luxpuyers huve chuIIenged LhIs In Lhe CourLs oI Luw, und Lhe
ouLcome hus noL been deLermIned
1.6 Non-eductible Input VAT
VuIue-udded Lux puId In Lhe course oI ImporL or purchuse oI Lhe IoIIowIng goods, work or
servIces shuII noL be eIIgIbIe Ior credIL uguInsL LoLuI vuIue-udded Luxes due by u buyer:
AuLomobIIes und ILs componenLs und spure purLs;
Goods or servIces purchused Ior personuI or empIoyees` use; und
Goods, works, or servIces ImporLed or purchused Ior specIIIc producLIon purposes.
PwC 4S
1., VAT Incentives
A number oI VAT exempLIons huve been InLroduced ouLsIde oI Lhe Iuw on VAT. These ure
LurgeLed uL specIIIc IndusLrIes us weII us specIIIc projecLs whIch huve been Iunded by
InLernuLIonuI InsLILuLIons (such us Lhe WorId Bunk) or IoreIgn governmenLs.
1.S VAT SimpliIicution
Group reporLIng Ior VAT Is possIbIe.
1.q VAT Compliunce
VAT Is uccounLed Ior on u monLhIy busIs und puId by Lhe 1o
Lh
oI Lhe IoIIowIng monLh. ReLurns
musL be submILLed by Lhe 1
Lh
oI Lhe monLh und records shouId be kepL Ior 6 yeurs.
PwC 46
PRICIWATIRHOLSICOOPIRS IN MONGOLIA
Ulccnbcctcr:
Contuct Numes Address Communicutions
Curolyn Clurke
MunugIng PurLner
curoIyn.x.cIurkeQmn.pwc.com
Alexey Iegetsyn
AudIL und Assurunce PurLner
uIexey.x.IegeLsynQmn.pwc.com
Tsendmuu Choijumts
ExecuLIve Tux DIrecLor
Lsendmuu.choIjumLsQmn.pwc.com
Gurdeep Singh
Tux DIrecLor
gurdeep.r.sInghQmn.pwc.com
Johunnu Cuve
CupILuI MurkeL und DeuIs Leuder
johunnu.x.cuveQmn.pwc.com
Buyurmuu uvuu
Executive Audit Director
bayarmaa.davaamn.pwc.com
Boldbuutur Ochirsuren
AudIL und Assurunce Munuger
boIdbuuLur.ochIrsurenQmn.pwc.com
PrIcewuLerhouseCoopersAudIL
LLC
CenLruI Tower
6
Lh
IIoor, SuILe 6o1
SukhbuuLur Squure, SBD-8
UIuunbuuLur 1qzoo
MongoIIu
MuIn oIIIce numbers
TeI: +q;6 (11) zqo8q
Fux: +q;6 (11) zz o68
PwC 47
APPINIX A - Mccroeconomic InJicctors oj Monolic
GP growth {o11): 1;.z%
InIlution {o11): q.;% (zo11)
Policy rute oI Centrul Bunk: 11% per unnum
Gross oIIiciul int'l reserves: USD z,qq.z8 mI (June zo11)
Country ruting:
S&P - BB- (Murch zo1z)
FILch - B+ (Murch zo1z)
Currency: MongoIIun TugrIk (MNT)
Ixchunge rute: MNT 1,6 = USD1 (1 AugusL zo1z)
PwC 48
APPINIX B - Tips jor usiness Visitors
Viscs
MongoIIu requIres vIsu Lo LruveI Lo Lhe counLry, wILh u Iew excepLIons, IncIudIng Lhe UnILed
SLuLes und severuI AsIun counLrIes. WhIIe Lhere ure u vurIeLy oI vIsus, Lhe uppIIcuLIon process
Is generuIIy quILe eusy. AppIIcuLIon cun Luke pIuce uL uny MongoIIun embussy worIdwIde und
noL necessurIIy In Lhe home counLry oI Lhe uppIIcunL. The uppIIcuLIon uL un embussy generuIIy
Lukes - busIness duys. MongoIIun embussIes do noL IoIIow sLundurd procedure und oILen
huve LheIr own ruIes und reguIuLIons, oILen requIrIng dIIIerenL puperwork und IssuIng vIsus Ior
dIIIerenL Lerms. For exumpIe, whIIe some embussIes muy onIy Issue sIngIe enLry work vIsus,
oLhers wIII Issue yeurIong muILIpIe enLry work vIsus. SIngIe enLry vIsus ure upproxImuLeIy
USDo whIIe yeurIong vIsus ure upproxImuLeIy USD1o. AguIn, LhIs Iee sLrucLure vurIes Irom
embussy Lo embussy. For exucL deLuIIs IL Is udvIsed Lo conLucL your IocuI MongoIIun embussy.
TrunsIL vIsus ure necessury Ior pussengers LruveIIng by LruIn Lhrough MongoIIu, uccordIng Lo
Lhe MongoIIun Luw on Lhe LeguI SLuLus oI ForeIgn CILIzens, buL u specIIIc LIme perIod Is noL
gIven. Pussengers LruveIIng vIu InLernuLIonuI IIIghLs muy LrunsIL MongoIIu Ior u perIod oI zq
hours wILhouL u vIsu.
AccordIng Lo mmIgruLIon oIIIcIuIs IL Is possIbIe Lo obLuIn u vIsu on urrIvuI II Lhe LruveIer`s
home counLry does noL huve u MongoIIun embussy or consuIuLe. ThIs Is onIy Lhe cuse Ior u
LourIsL or u busIness vIsu und noL uppIIcubIe Lo work vIsus. PrIor upprovuI musL be obLuIned
Irom Lhe mmIgruLIon OIIIce In UIuunbuuLur, whIch wIII Lhen send un upprovuI IeLLer Lo Lhe
uIrporL.
When obLuInIng u vIsu Lhrough u MongoIIun embussy or consuIuLe, un InvILuLIon Irom u hosL
orgunIzuLIon In MongoIIu, u pussporL phoLos und Lhe compIeLed uppIIcuLIon Iorm (whIch
shouId be uvuIIubIe Irom Lhe embussy) ure usuuIIy requIred. PussporLs shouId be vuIId Ior uL
IeusL Lhree monLhs Irom Lhe end oI Lhe vIsu perIod. Upon receIpL oI Lhe vIsu, conIIrm LhuL Lhe
duLes In Lhe vIsu ure correcL und cover Lhe perIod oI sLuy.
Trctel
FIve uIrIInes IIy Lo ChInggIs Khun nLernuLIonuI AIrporL In UIuunbuuLur und, LogeLher, gIve Lhe
LruveIer Lhe opporLunILy Lo IIy Lo und Irom MongoIIu on every duy oI Lhe week. FIIghLs Lo
UIuunbuuLur under Lhe currenL scheduIes ure:
PwC 49
Two nuLIonuI uIr currIers, EznIs AIrwuys und Aero MongoIIu, operuLe domesLIc IIIghLs In
MongoIIu us weII us neur desLInuLIons such us UIun-Ude In RussIu und Huh HoL In nner
MongoIIu(ChInu).
Customs
CurrenLIy, cusLoms decIuruLIons ure requIred II ILems Lo be decIured exceed USD 1,ooo,
undJor more Lhun USD ,ooo In cush, whIch musL be uccompunIed by conIIrmuLIon Irom Lhe
LruveIer`s bunkIng InsLILuLIon conIIrmIng Lhe money wus wILhdruwn Irom Lhe bunk. The
cusLoms decIuruLIon descrIbes Lhe currency und umounL oI money, vuIuubIes, und oLher ILems
beIng ImporLed. I u cusLoms decIuruLIon Is submILLed, boLh Iorms wouId be sLumped und one
wIII be reLurned. The one LhuL Is reLurned musL be submILLed upon depurLure Irom MongoIIu
LogeLher wILh u depurLure decIuruLIon. The depurLure decIuruLIon uguIn requesLs InIormuLIon
concernIng money und vuIuubIes beIng exporLed Irom Lhe counLry. TypIcuIIy, Lhe uuLhorILIes
seek Lo conIIrm LhuL vuIuubIes were noL soId und LhuL more money Is noL beIng Luken ouL oI
Lhe counLry Lhun wus broughL In. ndIvIduuIs ure noL permILLed Lo Luke more Lhun USD ,ooo
cush ouL oI Lhe counLry.
Reistrction
WILhIn seven duys oI urrIvuI In MongoIIu, IncIudIng weekends, Lhe LruveIer musL regIsLer wILh
Lhe mmIgruLIon OIIIce II Lhe person wIII sLuy In MongoIIu over o duys. FuIIure Lo do so muy
resuIL In u IIne upon depurLure oI up Lo MNT1,ooo,ooo. The regIsLruLIon sLump Is duLed Irom
Lhe duLe oI regIsLruLIon. DeregIsLruLIon Is noL necessury.
Airlines Ilights to Lluunbuutur
MAT (MongoIIun AIrIInes) From:
BeIjIng: ; duys u week
BerIIn vIu Moscow: Thursduy, Sunduy (z; Murch-z8
OcL), Tuesduy (unLII AugusL 1), SuLurduy (unLII SepL
1o)
Moscow: Thursduy, Sunduy (Murch z;-OcL z8)
SeouI: ; duys u week
Tokyo: Monduy, Tuesduy, Wednesduy, SuLurduy und
Sunduy under summer scheduIe (dIrecL IIIghLs);
Monduy und FrIduy under wInLer scheduIe (vIu SeouI)
Osuku: Tuesduy, FrIduy (JuI-Sep)
Hong Kong: Monduy, Wednesduy, Thursduy, FrIduy
und Sunduy(Summer scheduIe)
AeroIIoL, Moscow z1 Jun - zo Sep: ; duys u week
From z1 Sep: Tuesduy, FrIduy und Sunduy
(o Jun - z8 OcL: uIso on Thursduy)
AIr ChInu, BeIjIng ; duys u week (summer scheduIe)
Koreun AIr, SeouI ; duys u week (summer scheduIe)
TurkIsh AIrIIne, sLunbuI Tuesduy, Thursduy und SuLurduy (summer scheduIe)
PwC Su
AccommoJctions
There ure u number oI busIness quuIILy hoLeIs In UIuunbuuLur. The CorporuLe HoLeI,
KempInskI HoLeI Khun PuIuce, Rumudu und ChInggIs Khuun HoLeI ure newer hoLeIs In Lhe
cenLre oI Lown. The BuyungoI HoLeI, UIuunbuuLur HoLeI und The BIue Sky hoLeI ure uIso
cenLruIIy IocuLed. The TereIj HoLeI Is u IIve sLur hoLeI sILuuLed In GorkhI-TereIj NuLIonuI Purk,
cu. o km Irom Lhe cILy.
BAYANGOL HOTIL
RuLes: USD 11o-qoo (IncIude 1o% VAT)
BreukIusL Is IncIuded
TeI: +q;6-11-1zz
Fux: +q;6-11-z688o
BLLI SKY HOTIL
RuLes: USD zo8-qz (1o% VAT IncIuded)
TeI: +q;6-;o1ooo
CHINGGIS KHAAN HOTIL
RuLes: USD 1z-6o
TeI: +q;6-11-18o
Fux: +q;6-11-1z;88
CORPORATI HOTIL
RuLes: USD 1;o-8o (1o% VAT IncIuded)
TeI: +q;6-11-qq11
Fux: +q;6-11-qqzz
KIMPINSKI HOTIL KHAN PALACI
RuLes: USD q8-18 (1o% VAT IncIuded)
TeI: +q;6-11-q6q6
Fux: +q;6-11-q6q6q
RAMAA HOTIL
RuLes: 1o-z;o USD (1o% VAT IncIuded)
TeI: +q;6-;o1q-1111
Fux: +q;6-;o1o-;;;;
TIRILJ HOTIL
RuLes: 11o-zo USD (1o% VAT und % ServIce churge excIuded)
BreukIusL Is noL IncIuded
Phone: +q;6-qqqqzz
Fux: +q;6-;o11-oo6;
EmuII: reservuLIonQLereIjhoLeI.com
PwC S1
LLAANBAATAR HOTIL
RuLes: USD 11o-1o (1o% VAT IncIuded)
TeI: +q;6-11-zo6zo, +q;6-;o116688
Fux: +q;6-11-zqq8
Ulccnbcctcr
UIuunbuuLur Is Lhe cupILuI und IurgesL cILy wILh u popuIuLIon oI over one mIIIIon. LocuLed In
Lhe norLh cenLruI purL oI Lhe counLry, Lhe cILy IIes uL un eIevuLIon oI ubouL 1,1o meLers
(q,oo IL) In u vuIIey on Lhe TuuI RIver. L Is Lhe cuILuruI, IndusLrIuI, und IInuncIuI heurL oI Lhe
counLry. L Is uIso Lhe cenLer oI MongoIIu's roud neLwork, und connecLed by ruII Lo Lhe Truns-
SIberIun RuIIwuy und Lhe ChInese ruIIwuy neLwork.
Due Lo ILs hIgh eIevuLIon, reIuLIveIy hIgh IuLILude, IocuLIon hundreds oI kIIomeLres Irom uny
cousL, und Lhe eIIecLs oI Lhe SIberIun unLIcycIone, UIuunbuuLur Is Lhe coIdesL nuLIonuI cupILuI In
Lhe worId, wILh u monsoon-InIIuenced, suburcLIc semI-urId cIImuLe (Kppen cIImuLe
cIussIIIcuLIon BSk) wILh brIeI, wurm summers und Iong, very coId und dry wInLers.
PrecIpILuLIon, uL un unnuuI LoLuI oI z16 mIIIImeLers (8.o In) Is heuvIIy concenLruLed In Lhe
wurmer monLhs. L hus un uveruge unnuuI LemperuLure oI -o.; C (o.; F).
Driters , Ccr rentcl
To ensure suIe und comIorLubIe LrIps In und ouLsIde UIuunbuuLur, we recommend busIness
LruveIers Lo hIre un experIenced und reIIubIe drIver wILh u reIIubIe cur. DrIvers ure uIso u
necessILy Ior IoreIgn busIness peopIe In UIuunbuuLur us busIness hours In MongoIIu cun be
Iong und someLImes IrreguIur. For LruveIs ouLsIde UIuunbuuLur jeeps wILh Iour-wheeI drIve ure
necessury, sInce mosL oI counLrysIde rouds ure noL puved. DrIvers wILh curs ure mosL eusIIy
und reIIubIy hIred Lhrough Lhe InvILIng orgunIzuLIon. Very Iew drIvers speuk EngIIsh or uny
oLher wesLern Europeun Iunguuges, however, more und more do undersLund dIrecLIons und
one shouId be ubIe Lo communIcuLe wILhouL u LrunsIuLor.
L Is possIbIe Lo hIre u cur wILh u drIver Irom SIxL MongoIIu (TeIJ Fux: +q;6-;o11 ooq
(CenLruI Brunch), +q;6-;o11 8q8z (ChInggIs Khuun HoLeI Brunch), e-MuII: InIoQsIxL.mn).
RuLes sLurL Irom USD 6q u duy Ior u shorL-Lerm renLuI.
Interpreters
AILhough muny busIness peopIe und governmenL oIIIcIuIs In MongoIIu speuk EngIIsh, Lhey
conducL mosL meeLIngs In MongoIIun. n busIness negoLIuLIons even wILh EngIIsh-speukIng
MongoIIun counLerpurLs, IoreIgn busIness peopIe someLImes IInd un InLerpreLer useIuI.
nLerpreLers couId be besL urrunged Lhrough Lhe InvILIng orgunIzuLIon. The cosL Is
upproxImuLeIy USD 1oo per duy. OuLsIde UIuunbuuLur Iew MongoIIuns speuk u IoreIgn
Iunguuge.
Appointments
AppoInLmenLs ure generuIIy kepL In MongoIIu unIess Lhere Is u good reuson Ior breukIng Lhem.
However, In Lhe busIness cIImuLe In MongoIIu, meeLIngs cun be IrequenLIy cunceIIed becuuse
oLher Issues become even more urgenL. ThereIore, one shouId Lry noL Lo scheduIe
uppoInLmenLs more Lhun Lwo duys In udvunce. I possIbIe, conIIrm Lhe uppoInLmenL un hour
beIore urrIvuI.
PwC S2
Worlin Hours
SLundurd workIng hours ure nIne Lo sIx, IIve duys u week, wILh mosL peopIe workIng u qo-hour
week. Shops Lend Lo be open IuLer on weekduys und on SuLurduy, whIIe mosL ure uIso open on
Sunduy. MosL oIIIces cIose Ior un hour or so durIng Lhe duy beLween one und Lwo p.m. Ior
Iunch. Bunks und shops ure usuuIIy open durIng Iunch-breuk LIme.
Currenc
MongoIIu hus u cush und, IncreusIngIy, u credIL economy. PIun Lo huve cush (TugrIk) In Lhe
evenL LhuL your credIL curd does noL work uL Lhe resLuurunL or shop.
There ure muny IoreIgn exchunge poInLs uround, buL IL muy be more reIIubIe Lo use Lhe bunks
or Lhe hoLeIs, where possIbIe, sInce ruLes und securILy meusures vury ucross Lhe counLry. When
chungIng money, worn or dumuged bIIIs shouId be uvoIded us mosL pIuces uccepL onIy bIIIs In
good condILIon.
AuLomuLed LeIIer muchInes (ATMs) cun now be Iound In more und more pIuces In
UIuunbuuLur. ATMs LypIcuIIy dIspense IocuI currency und usuuIIy oIIer u reusonubIe exchunge
ruLe.
Public holiJcs
BeIore InvesLIng In u round-LrIp LIckeL Lo UIuunbuuLur, IL Is prudenL Lo be uwure oI Lhe
IoIIowIng oIIIcIuI MongoIIun pubIIc hoIIduys:
z duys beLween Lhe end oI Junuury und eurIy
Murch (duLes vury every yeur)
Tsuguun Sur (Lunur New Yeur)
Murch 8 nLernuLIonuI Womun`s Duy
June 1 MoLher und ChIId Duy
JuIy 11-1 Nuudum (MongoIIun nuLIonuI hoIIduy)
November z6 ConsLILuLIon Duy
ChrIsLmus und EusLer ure noL pubIIc hoIIduys In MongoIIu. AIso, pIeuse be uwure LhuL
upproxImuLeIy one week uILer Lhe Lwo-duy Tsuguun Sur hoIIduys us weII us durIng summer
hoIIduy perIod (usuuIIy JuIy-AugusL) IL mIghL be dIIIIcuIL Lo meeL busIness peopIe und oIIIcIuIs
In MongoIIu.
Scjet
n uny cILy where dIspurILIes In Income IeveIs ure Iurge, crIme Lends Lo be LurgeLed uL Lhe
(compuruLIveIy) weuILhy und MongoIIu Is no excepLIon. VIoIenL muggIngs ure rure buL do
occur. PeLLy crIme Is common In UIuunbuuLur, purLIcuIurIy In murkeLs or oLher crowded pubIIc
pIuces. WuLch ouL Ior pIckpockeLs.
ForeIgn vIsILors ure udvIsed noL Lo dress In u IIumboyunL IushIon und Lo be dIscreeL In LheIr
conducL. L Is uIso recommended Lo drInk In moderuLIon und Lo exercIse cuuLIon when IeuvIng
nIghLcIubs und dIscos IuLe uL nIghL. n purLIcuIur, use known LuxIs or urrunge Ior u hoLeI or
compuny cur Lo pIck you up. HoLeI suIes shouId be used, where possIbIe, Lo uvoId curryIng
excess sums oI cush.
UIuunbuuLur Is no dIIIerenL Lo muny oLher bIg cILIes und cure shouId be Luken wuIkIng uIone,
especIuIIy uL nIghL, und In deuIIng wILh peopIe who upprouch you In Lhe sLreeL. When sLuyIng
In u hoLeI room or upurLmenL, never open Lhe door Ior unyone who Is unIumIIIur.
PwC SS
WhIIe In u cur, consIder IockIng Lhe doors us soon us you geL In und keepIng wIndows cIosed
even II LemperuLures ure hIgh. AvoId drIvIng IuLe uL nIghL, especIuIIy In deserLed ureus. AIwuys
be uIerL In pubIIc pIuces. I you ure uncomIorLubIe or suspIcIous oI Lhe sILuuLIon, do noL
hesILuLe Lo uILer your pIuns or rouLe.
TrcJitions
MongoIIu Is u IuscInuLIng counLry wILh u deep und vurIed cuILure. The MongoIs ure oILen
consIdered Lo be one oI Lhe IoundIng uncIenL cIvIIIzuLIons oI Lhe worId und muny oI Lhe
LrudILIons, cusLoms und eLIqueLLe Lrue uL Lhe LIme oI GengghIs Khun ure sLIII Lrue Loduy. As
wILh uny oLher cIvIIIzuLIons, cusLoms und beIIeIs ure dIIIerenL Lhun In oLher purLs oI Lhe worId,
IL Is udvIsubIe LhuL us u vIsILor Lo MongoIIu you ubIde or uL IeusL Lry Lo undersLund Lhe IocuI
cusLoms, LrudILIons und beIIeIs so LhuL you muy beLLer undersLund Lhe counLry us u whoIe. The
LrudILIons und beIIeIs oI Lhe MongoIIun PeopIe ure Iur Loo numerous Lo IIsL uII In here buL here
some suggesLIons Lo sLurL wILh. As MongoIIuns ure LoIerunL und IrIendIy peopIe, Lhey wIII noL
expecL you Lo be IumIIIur wILh uII LheIr cusLoms.
MongoIIuns ure sensILIve Lo ouLwurd uppeurunce und neuL uppeurunce Is much
upprecIuLed. ThIs cun oI course be probIemuLIc II you huve LruveIIed over huge
dIsLunces und ure IeeIIng u IILLIe druIned, buL IL Is worLh rememberIng.
As MongoIIuns were uII orIgInuIIy nomuds, hospILuIILy Is seen us exLremeIy ImporLunL
und Lhere ure some poInLs Lo remember In connecLIon wILh LhIs. The IIrsL concerns
Iood und drInk: When you ure oIIered someLhIng Lo euL or drInk, uIwuys uccepL. I In
reuIILy you ure noL keen on euLIng or drInkIng LhuL purLIcuIur LhIng, Luke u nIbbIe or
sIp, Lhen puL IL down. L Is consIdered rude Lo reIuse ouLrIghL. SImIIurIy Lry noL Lo
show uny neguLIve IeeIIngs Loo openIy II whuL hus been oIIered Is noL Lo your LusLe.
ThIs uIso uppIIes Lo beIng oIIered u shoL oI vodku: u Louch Lo Lhe IIps wIII suIIIce II you
do noL wunL Lo drInk.
Be cureIuI when vIsILIng peopIe's LenLs: MongoIIuns ure keenIy uwure oI LheIr
LrudILIons, und Lhere ure muny LrudILIons concernIng ers. Try Lo IumIIIurIse yourseII
wILh some oI Lhese LrudILIons. The IIrsL oI Lhese Is LhuL IL Is consIdered unIucky Lo sLep
on Lhe door-sLep oI Lhe door-Irume Lo Lhe ger. The second Is LhuL guesLs shouId move
Lo Lhe IeIL oI Lhe IIrepIuce on enLerIng Lhe LenL, und Lhe hosL wIII IndIcuLe u suILubIe
pIuce Lo sIL. I you huve renLed your own ger, Lhen you ure oI course Iree Lo do us you
wIsh.
Attrcctions
Even Lhough busIness In MongoIIu cun be LIme consumIng, your scheduIe muy uIIow you Lo
see someLhIng oI Lhe cILy. Here ure some Ideus Ior UIuunbuuLur:
Moncsteries
Among Lhe noLubIe oIder monusLerIes Is Lhe ChoIjIn Lumu MonusLery, u BuddhIsL monusLery
LhuL wus compIeLed In 1qo8. L escuped Lhe desLrucLIon oI MongoIIun monusLerIes when IL wus
Lurned InLo u museum In 1qqz. AnoLher Is Lhe Gundun MonusLery, whIch duLes Lo Lhe 1qLh
cenLury. Ls mosL Iumous uLLrucLIon Is u z6.-meLer-hIgh goIden sLuLue oI MIgjId JunruIsIg.
These monusLerIes ure umong Lhe very Iew In MongoIIu Lo escupe Lhe whoIesuIe desLrucLIon oI
MongoIIun monusLerIes under KhorIoogIIn ChoIbuIsun.
oJ Khcn's Winter Pclcce
OId kh Khree, once Lhe cILy wus seL up us u permunenL cupILuI, hud u number oI puIuces und
nobIe resIdences In un ureu cuIIed OndgIIn srgIIn nuLug. The JebLsundumbu KhuLughLu, who
PwC S4
wus IuLer crowned Bogd Khun, hud Iour muIn ImperIuI resIdences, whIch were IocuLed
beLween Lhe MIddIe (Dund goI) und TuuI rIvers. The summer puIuce wus cuIIed ErdmIIn duIuI
buyun chuuIgun sm or Bogd khuunII sern ord. OLher puIuces were Lhe WhILe puIuce
(Tsuguun sm or Ginguu dejIdIIn), und Lhe PundeIIn puIuce (uIso cuIIed Nuro Khu Chod sm),
whIch wus sILuuLed In Lhe IeIL bunk oI TuuI RIver. Some oI Lhe puIuces were uIso used Ior
reIIgIous purposes. The onIy puIuce LhuL remuIns Is Lhe wInLer puIuce. The WInLer PuIuce oI Lhe
Bogd Khun (Bogd khuunII nogoon sm or Bogd khuunII wIIIn ordon) remuIns us u museum oI
Lhe IusL monurch. The compIex IncIudes sIx LempIes, muny oI Lhe Bogd Khun's und hIs wIIe's
possessIons ure on dIspIuy In Lhe muIn buIIdIng.
Museums
UIuunbuuLur hus severuI museums dedIcuLed Lo MongoIIun hIsLory und cuILure. The NuLuruI
HIsLory Museum IeuLures muny dInosuur IossIIs und meLeorILes Iound In MongoIIu. The
NuLIonuI Museum oI MongoIIun HIsLory IncIudes exhIbILs Irom prehIsLorIc LImes Lhrough Lhe
MongoI EmpIre Lo Lhe presenL duy. The Zunubuzur Museum oI FIne ArLs conLuIns u Iurge
coIIecLIon oI MongoIIun urL, IncIudIng works oI Lhe 1;Lh cenLury scuIpLorJurLIsL Zunubuzur, us
weII us MongoIIu's mosL Iumous puInLIng, One Duy n MongoIIu by B. Shuruv.
Pre-1;;8 urLIIucLs LhuL never IeIL Lhe cILy sInce ILs IoundIng IncIude Lhe Vujrudhuru sLuLue
mude by Zunubuzur hImseII In 168 (Lhe cILy's muIn deILy kepL uL Lhe Vujrudhuru LempIe), u
hIghIy ornuLe Lhrone presenLed Lo Zunubuzur by Lhe KungxI Emperor (beIore 1;z), u
sunduIwood huL presenLed Lo Zunubuzur by Lhe DuIuI Lumu (c. 166), Zunubuzur's Iurge Iur
couL whIch wus uIso presenLed by Lhe KungxI Emperor und u greuL number oI orIgInuI sLuLues
mude by Zunubuzur hImseII (e.g. Lhe Green Turu).
PuzzIe Toys Museum dIspIuys u comprehensIve coIIecLIon oI compIex wooden Loys Lo be
ussembIed by pIuyers usIng sophIsLIcuLed meLhods.
Dperc House
The UIuunbuuLur Operu House, sILuuLed In Lhe cenLer oI Lhe cILy, hosLs concerLs und musIcuI
perIormunces.
Sulhbcctcr Squcre
SukhbuuLur Squure, In Lhe governmenL dIsLrIcL, Is Lhe cenLer oI UIuunbuuLur. The squure Is
1,o68 squure meLers In sIze. n Lhe mIddIe oI SkhbuuLur Squure, Lhere Is u sLuLue oI
DumdInII SukhbuuLur on horsebuck. The spoL wus chosen becuuse LhuL wus where
SukhbuuLur's horse hud urInuLed (u good omen) on JuIy 8, 1qz1 durIng u guLherIng oI Lhe Red
Army. On Lhe norLh sIde oI SkhbuuLur Squure Is Lhe MongoIIun PurIIumenL buIIdIng,
IeuLurIng u Iurge sLuLue oI ChInggIs Khun uL Lhe Lop oI Lhe IronL sLeps. Peuce Avenue (Enkh
TuIvny Urgon ChuIoo), Lhe muIn LhoroughIure Lhrough Lown, runs uIong Lhe souLh sIde oI Lhe
squure.
Zciscn Memoricl
The ZuIsun MemorIuI, u memorIuI Lo SovIeL soIdIers kIIIed In WorId Wur , sILs on u hIII souLh
oI Lhe cILy. The ZuIsun MemorIuI IncIudes u SovIeL Lunk puId Ior by Lhe MongoIIun peopIe und
u cIrcuIur memorIuI puInLIng whIch In Lhe socIuIIsL reuIIsm sLyIe depIcLs scenes oI IrIendshIp
beLween Lhe peopIes oI SovIeL UnIon und MongoIIu. VIsILors who muke Lhe Iong cIImb Lo Lhe
Lop ure rewurded wILh u punorumIc vIew oI Lhe whoIe cILy down In Lhe vuIIey.
Nctioncl Sport StcJium
NuLIonuI SporLs SLudIum Is Lhe muIn sporLIng venue. The Nuudum IesLIvuI Is heId here every
JuIy.
PwC SS
SurrounJins
GorkhI-TereIj NuLIonuI Purk, u nuLure preserve wILh muny LourIsL IucIIILIes, Is upproxImuLeIy
;o km Irom UIuunbuuLur und uccessIbIe vIu puved roud.
Sky ResorL, MongoIIu's IIrsL dedIcuLed skI ureu Is IocuLed 1 km (8 mI) Irom UIun BuLor und
opened In zooq. The resorL hus q runs oI vuryIng dIIIIcuILy, und ; IIILs. L Is IocuLed on Bogd
Khun UuI.
EJucction
The AmerIcun SchooI oI UIuunbuuLur, Lhe nLernuLIonuI SchooI oI UIuunbuuLur, Lhe EIILe
SchooI und Lhe BrILIsh SchooI oIIer WesLern-sLyIe K-1z educuLIon In EngIIsh Ior MongoIIun
nuLIonuIs und IoreIgn resIdenLs.
There ure uIso u number oI sLuLe und prIvuLe IocuI schooIs wILh InsLrucLIon In MongoIIun
(purLIy In EngIIsh In some prIvuLe schooIs). The sLundurds cun be hIgh, buL Lhe number oI
expuLrIuLe chIIdren In such schooIs Is smuII.
Heclth Ccre
More oILen Lhun noL, u chunge In dIeL und purLukIng oI Lhe IocuI cusLom, vodku, Is Lhe cuuse oI
sLomuch compIuInLs In MongoIIu. The LreuLmenL usuuIIy requIres u Iew duys Ior uccIImuLIon.
AILhough MongoIIun cILIzens muy beIIeve LhuL wuLer ouL oI Lhe Lup Is drInkubIe, IL Is noL
recommended. BoLLIed wuLer und soIL drInks ure reudIIy uvuIIubIe uL sLores und kIosks.
WhIIe MongoIIu Is presenLIy noL known Ior uny purLIcuIur dIseuses, LruveIers pIunnIng Lo
spend exLended perIods oI LIme In Lhe counLry shouId muke sure LhuL Lhey ure up Lo duLe wILh
dIphLherIu, hepuLILIs, rubIes, LeLunus, und LyphoId vuccInes. Even Ior shorL vIsILs, IL Is sLrongIy
udvIsubIe Lo be upproprIuLeIy vuccInuLed. nocuIuLIon reguIuLIons cun chunge uL shorL noLIce.
ConsuIL u docLor or u LruveI cIInIc beIore LruveIIng Lo MongoIIu, uIIowIng LIme Ior vuccInuLIon
serIes.
ForeIgners ure udvIsed Lo brIng umpIe suppIIes oI requIred medIcuLIons Ior LheIr use In un
emergency, us Lhe medIcIne suppIy In MongoIIu Lends Lo dIIIer Irom whuL IoreIgners ure used
Lo In LheIr home counLrIes.
HeuILh cure IucIIILIes uvuIIubIe Lo IoreIgners ure IImILed. AII MongoIIun hospILuIs ure very shorL
oI mosL medIcuI suppIIes, IncIudIng busIc cure ILems, drugs und spure purLs Ior medIcuI
equIpmenL. DocLors und hospILuIs muy expecL ImmedIuLe cush puymenL Ior heuILh servIces.
VIsILors ure urged Lo huve heuILh Insurunce IncIudIng cover Ior evucuuLIon Lo SeouI und Lo Luke
uny reguIur medIcuLIon wILh Lhem.
For emergency cure conLucL:
SOS MedIcu MongoIIu CIInIc
Telephone: +q;6-11-q6qzJz6Jz; Fux:+q;6-11-qq;
For uILer hour emergencIes: Cell phone: +q;6 q1q1 1zz (mongoIIun) +q;6 qq11 o
(engIIsh)
I-muil: udmInQsosmedIcu.mn
Web: www.sosmedIcu.mn
PwC S6
APPINIX C - Tcx Rctes
CIT 1o% Ior Lhe IIrsL bIIIIon MNT (USD z,zm upprox)
z% LhereuILer
1o% Ior InvesLmenL Income (royuILIes, dIvIdends, InLeresL)
VuryIng ruLes Ior oLher specIIIc Lypes oI Income
Tux epreciution SLruIghL IIne over useIuI economIc IIIe: Lo qo yeurs.
Withholding Tux ResIdenLs 1o%
Non-resIdenLs zo%
Personul Income Tux 1o%
VuryIng ruLes Ior oLher specIIIc Lypes oI Income
VAT 1o%
Immovuble Property Tux o.6%
o.6% -1% Irom 1 Junuury zo1
PwC S7
APPINIX - Double Tcx Trecties
CurrenL
AusLrIu
BeIgIum
BuIgurIu
Cunudu
ChInu (P.R.C.)
Czech RepubIIc
Frunce
Germuny
Hungury
ndIu
ndonesIu
KuzukhsLun
Koreu (R.O.K.)
KuwuIL
KyrgyzsLun
Luxembourg
MuIuysIu
NeLherIunds
PoIund
RussIu
SIngupore
SwILzerIund
Turkey
UkruIne
UnILed KIngdom
VIeLnum
UnILed Arub EmIruLes
BeIurus
LuIy
NorLh Koreu (DPRK)
PendIng
EgypL
RomunIu
UzbekIsLun
LuLvIu
ThuIIund
www.pwc.commn
2011 PwC. All rights reserved. Not for further distribution without the permission of PwC. "PwC" refers to the network of member firms of
PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member
firm is a separate legal entitv and does not act as agent of PwCIL or anv other member firm. PwCIL does not provide anv services to clients.
PwCIL is not responsible or liable for the acts or omissions of anv of its member firms nor can it control the exercise of their professional
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the exercise of another member firms professional fudgment or bind another member firm or PwCIL in anv wav
uuu.puc.com,mn
2012 PwC. All rights reserved. Not for further distribution without the permission of PwC. "PwC" refers to the network of member firms of
PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate
legal entitv and does not act as agent of PwCIL or anv other member firm. PwCIL does not provide anv services to clients. PwCIL is not responsible or liable for the
acts or omissions of anv of its member firms nor can it control the exercise of their professional fudgment or bind them in anv wav. No member firm is responsible or
liable for the acts or omissions of anv other member firm nor can it control the exercise of another member firms professional fudgment or bind another member firm
or PwCIL in anv wav.

Guide For Doing Business in Mongolia

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Boing Business uuiue 2u1u - 2u11

g.6 ocumentution und Procedures

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