‘Citizens bear consequences when courts fall under political influence’ www.ubpost.mn

In the following interview, researcher and legal expert at the Intellectual Innovation NGO P.Battulga shared his perspective on how court decisions are implemented in practice, the systemic distortions affecting the judiciary, and the broader question of judicial independence. He is the author of more than 20 academic reports, articles and research papers on administrative law and judicial power.

The Law on Courts defines a court as a body established under the Constitution to hear and resolve cases and disputes. Why, then, do some high-ranking officials fail to comply with court decisions that are legally binding?

The process of issuing a court decision is governed by the Law on Judicial Procedure, and such decisions are formally delivered in written form. Once a ruling is made, however, its enforcement is handled not by the court itself but by a separate body, typically a government agency. In practice, it is not always clear whether courts treat high-ranking officials differently, or what kinds of errors and shortcomings may arise in the enforcement process. What is clear, however, is that a court decision must not remain merely on paper, it must be carried out in reality.

Concerns about weak or inconsistent enforcement are frequently raised. The judicial process does not end when a ruling is issued. For those directly involved in a case, what matters most is whether the decision is actually implemented, whether damages are paid, salaries are compensated, or individuals are reinstated to their jobs or positions. Effective enforcement is essential to building public trust in the judiciary. When decisions are left unimplemented, citizens are left with the impression that the courts are not functioning and that justice is not being delivered. For this reason, improving the enforcement of court decisions remains a pressing priority. In response, the Ministry of Justice and Internal Affairs is currently working to revise the Law on the Enforcement of Court Decisions.

The Judicial Index shows a slight increase from 51.9 in 2021 to 53.2 in 2023. Given that this is a limited improvement, how do you interpret these results?

The Intellectual Innovation NGO, in collaboration with the Open Society Forum, has published the Mongolian Court Index for 2021 and 2023, and is currently preparing the 2025 edition. One of the key indicators used in the Index is the extent to which court decisions are enforced, as well as the speed of their implementation. Findings from both 2021 and 2023 show a relatively positive perception that more than 50 percent of respondents in public opinion surveys, and over 60 percent of experts and legal professionals, believed that court decisions are generally enforced. Official data from the court decision enforcement agency presents a more nuanced picture. According to these figures, more than 60 percent of enforceable decisions in criminal cases are implemented, compared with around 50 percent in civil cases and just over 40 percent in administrative cases. As for 2025, preliminary data suggests that enforcement rates have not significantly improved and remain at roughly 50 percent on average.

For instance, in 2025, the enforcement agency collected only 38 percent of monetary payments due in civil proceedings, 10.8 percent in criminal cases, and 11.7 percent in administrative cases. Ideally, enforcement rates should reach at least 70 to 80 percent. Achieving full, 100 percent enforcement is not always realistic, as it often depends on the financial capacity of individuals or entities ordered to pay damages. Moreover, enforcement proceedings are widely criticized for being slow. This is partly due to gaps in the legal framework. During the enforcement process, certain actions taken by the enforcement agency can be challenged by the parties involved, which may lead to the suspension of proceedings. For example, disputes over the valuation of property during auction processes can halt enforcement, sometimes resulting in delays of several years after a court decision has been issued. In administrative cases, there are also frequent instances where rulings, particularly those ordering reinstatement, are not carried out. This points to a lack of accountability among public institutions and officials who fail to comply with court decisions.

Let me return to the question raised at the outset. If a three-tier court has already­ issued a final judgment against MP D.Tsogtbaatar, does the continued passage or application of laws in this context amount to disregarding a court decision? In such a situation, what actions should be taken within the framework of the law?

This is ultimately a matter that must be resolved in accordance with the Constitution. Section 29.3 clearly states that if a court determines that a member of Parliament has committed a crime, that individual shall be removed from office. In this case, the court has already issued its decision. Following such a ruling, the issue of removal should be addressed in line with th Act of Parliament and the Law on Parliamentary Procedure. However, the problem, as I see it, is that this matter is not being formally discussed or acted upon.

Is there any legal mechanism to return to court after a final decision has been issued by a three-tier court?

In a three-tier court system, there is no automatic right to further appeal once all levels have issued a decision. In fact, not every case needs to go through all three levels. Many disputes can be fully resolved at the trial and appellate stages. If the parties do not file an appeal as required by law, the decision of these courts becomes final. That said, the law does provide a mechanism to review court decisions that have already entered into force. One such mechanism is a review based on newly discovered circumstances. This allows a final decision to be reconsidered if, for example, new evidence emerges that was not available to the parties during the original proceedings, if previously submitted evidence is later proven to be false, or if criminal wrongdoing is established on the part of those involved in the case, such as the judge, prosecutor, investigator, witness, or expert.

With judges increasingly overloaded and cases taking longer to resolve—often at significant cost to citizens’ time, finances, and reputation—how would you evaluate the current situation within the judiciary?

One of the key indicators in the judicial index is the workload of judges. In the capital, particularly in the six central district courts, judicial workloads have exceeded acceptable levels several times over. This situation has developed over time and has not been effectively addressed. A study commissioned by the Judiciary General Council sought to determine how many cases a judge should reasonably handle in a year. In civil matters, while workloads are relatively manageable in rural areas, judges in the six central districts of Ulaanbaatar handle more than 400 cases each annually. Recent reforms under the Law on the Establishment of Courts created a first-instance district court to deal with simpler criminal and civil cases. However, in 2025 alone, this court handled more than 1,500 civil cases, well beyond a normal workload. As a result, the system is struggling to meet its objective of resolving smaller claims quickly and efficiently. High caseloads, combined with the relatively low monetary value of many disputes, make it difficult for judges to  work effectively and deliver timely justice.

What are the negative effects of excessive judicial workload? There is growing criticism that judges may not have sufficient time to thoroughly review case files, and that some decisions may rely on incomplete or biased evidence.

Excessive judicial workloads have a number of negative consequences. For citizens, delays in resolving cases and disputes can undermine confidence in the courts. When judges are overburdened, the quality of decisions may also suffer, with less time available to produce well-reasoned rulings and a greater risk of errors. High workloads also take a toll on judges themselves, affecting both their health and their overall productivity. For these reasons, it is essential to ensure that judicial workloads are kept at a reasonable and sustainable level.

It is often observed that similar cases can result in significantly different outcomes. In corruption and bribery cases, for instance, penalties may range from minor fines to lengthy prison sentences. How do you explain these disparities, and what impact do they have on public confidence in the judiciary?

Such criticisms arise from time to time, and it cannot be denied that some court decisions are perceived this way by the public. However, those outside the judicial process often do not see the full basis on which a judge determines a sentence. Courts take into account a wide range of factors, including the nature and circumstances of the offense, whether multiple individuals were involved, whether the crime was repeated, and whether the defendant has admitted guilt. An admission of guilt and the payment of damages, for example, may serve as grounds for mitigating a sentence. That said, any reduction in punishment must remain within the limits set by the Criminal Code. It is also important to consider the role of the prosecutor, specifically, what kind of sentence the state prosecutor recommends to the court. In corruption and public office-related cases, this raises the question of whether prosecutors are seeking sufficiently severe penalties, or whether the proposed sentences are too lenient given the scale of the offense.

The Court Index addresses a related concern by asking whether judges are unlikely to impose different sentences for similar crimes or to decide comparable cases differently. The findings show that while more than 40 percent of the public agree with this statement, only a little over 30 percent of legal professionals do. In other words, a significant share of respondents believe that inconsistency in judicial decisions remains a concern. This brings us to the purpose of a three-tier court system. Its primary aim is to ensure that cases are resolved fairly and in accordance with the law to minimize errors, avoid unjust outcomes, and protect the innocent. Within this framework, it is not necessary for courts at different levels to issue identical decisions in every case. If appellate courts had no authority to amend or overturn lower court rulings, there would be little reason to maintain a multi-tiered system. That is why cases at the first instance are typically decided by a single judge, appeals are heard by panels of three judges, and higher-level review courts may involve five judges. As cases move up the hierarchy, the number of judges increases to strengthen the accuracy and fairness of decisions. At the same time, similar cases  should not be treated differently under the law. The same legal principles should apply equally to all individuals. To promote consistency in judicial practice, the Supreme Court has, since 2021, implemented a supervisory review mechanism aimed at ensuring the uniform application of the law across cases.

With the rise of social media, public narratives around high-profile cases are often driven by incomplete or misleading information. Does this phenomenon of “trial by social media” have any influence on judicial decision-making?

It cannot be denied that information shared on social media can, at times, influence judicial decision-making. This is something that has been observed. However, it is inappropriate for individuals to post commentary on ongoing cases, intentionally or not, and present themselves as arbiters of justice. In criminal matters, the determination of guilt or innocence must rest solely with the court, following procedures established by law and based on evidence. This is a fundamental constitutional principle: only the court has the authority to make a final determination of guilt. When a court has issued its decision and imposed a lawful sentence, claims such as “I am innocent” become a matter of personal belief or opinion. Regardless of differing views, it is essential to ensure that no individual is subjected to undue pressure or mistreatment.

Could the court’s decision be considered unjust or overly harsh?

Let us assume that a final court decision has already been issued. If it is later established that the actions of those involved in the case, such as a judge, prosecutor, or investigator, were criminal, for example through the use of torture or reliance on falsified evidence, then the decision may be subject to review, as noted earlier. However, in the absence of such findings, it is difficult to conclude outright that an individual has been “repressed” based solely on public claims or discussion.

So who holds the courts accountable? Should courts be judged only by other courts?

Courts are ultimately reviewed by other courts. As mentioned earlier, decisions of the first-instance court can be reviewed by the appellate court, and appellate decisions may in turn be examined by a higher review court. This layered system ensures that judicial decisions are assessed within the judiciary itself. If authority to judge the courts were given to another body, it would undermine the very concept of judicial power and the independence of the courts. In addition, there are mechanisms in place to hold judges accountable for ethical and disciplinary violations. The Judicial Disciplinary Commission reviews complaints from citizens and officials and, where appropriate, imposes sanctions. However, if political actors are given control over the courts, it is ultimately the public that will suffer. Judicial authority does not rest on force, but on public confidence in its legitimacy and fairness. Without that trust, laws cannot be effectively enforced and justice cannot be upheld. When public trust erodes, the judiciary becomes weak and ineffective. In such circumstances, people may begin to seek justice outside the legal system. This creates space for illegitimate forces, such as corruption, violence, personal revenge, online outrage, and narrow political interests, to take hold. In such an environment, power begins to matter more than justice. Politicians may resort to populism, claiming to deliver justice, but in doing so they risk undermining judicial independence and turning the courts into instruments of political influence.

Can the appointment of judges truly be independent of political influence?

Under the Constitution, the Judicial General Council is responsible for selecting and recommending candidates for judicial appointments from among qualified lawyers and judges, and submitting those nominations to the President of Mongolia. The Chief Justice of the Supreme Court is appointed by the President upon the recommendation of the Supreme Court itself, while courts at other levels elect their own chief judges from among their members. The Council is composed of 10 members: five are nominated by judges nationwide, and five are selected through an open process and appointed by Parliament. At present, however, two of the parliamentary appointees have yet to be confirmed, meaning the Council is operating with only eight members. Civil society organizations have called on the Parliamentary Standing Committee on Justice to expedite these appointments so that the Council can function at full capacity. There have also been a number of instances in which the President has declined to appoint recommended judicial candidates.

Cabinet Approves Draft Tax Law Amendments Offering MNT 2.2 Trillion in Relief www.montsame.mn

The draft amendments to the Tax Law were discussed at the regular Cabinet meeting on April 29, 2026, and approved for submission to the State Great Khural.

The draft law includes tax support measures totaling MNT 2.2 trillion aimed at reducing the tax burden on citizens and businesses to a reasonable level. It also seeks to protect household incomes, support employment, and expand housing access, ensuring that economic growth benefits every citizen and household. Key provisions include:

Refunding 100 percent of personal income tax for employed individuals earning up to MNT 792,000 per month to ease the tax burden on citizens;
Setting the threshold for simplified tax reporting of business income at MNT 1 billion, allowing eligible entities to pay a 1 percent tax on sales revenue in line with the principle of tax fairness;
Exempting taxpayers from real estate sales tax when selling their owner-occupied residential property, in order to support improvements in living conditions;
Simplifying tax compliance by extending deadlines for filing tax returns and paying taxes, reported the Government Media and Public Relations Department.

Meat price crisis drives inflation spike across Mongolia www,gogo.mn

Inflation reached 7.4% nationwide in March, 2026, driven largely by a 24% spike in meat prices and rising costs for fuels. N.Urgamalsuvd, Director of the Bank of Mongolia’s Monetary Policy Department, warned that supply chain risks regarding fertilizer and fuel could continue to push food and energy prices higher in the coming months.

While Ulaanbaatar traditionally stabilizes costs through 400 "reserve meat" sales points, the recent surge has impacted the entire country. This nationwide trend has prompted a call to re-evaluate how state and capital budgets are used to manage meat reserves. Notably, the primary drivers of inflation have shifted; while price growth was previously blamed on external factors and imported goods, domestic products like meat, water, and beverages are now the leading causes.

Bank of Mongolia Governor S.Narantsogt noted that despite significant subsidies, the agricultural supply chain remains underdeveloped, with funding often concentrated among a few companies. S.Narantsogt stated the central bank will not increase the money supply or implement price stabilization programs due to environmental factors like drought, arguing that the sector must instead invest in infrastructure like irrigation. To support development, the bank may adjust reserve requirements for lenders focusing on the agricultural sector, which is slated to receive MNT 200 billion in state subsidies this year.

Direct Cooperation to Be Established with Major Global Tech Companies www.montsame.mn

The Cabinet Secretariat of the Government of Mongolia and the Communications Regulatory Committee co-organized a discussion titled “Social Media Regulation: Present Situation and Future Trends” on April 24.

The meeting brought together more than 80 representatives from 24 organizations such as the National Security Council, National Human Rights Commission, General Police Department. Participants discussed ways to improve cooperation and increase accountability of social media platforms.

During the meeting, the participants spoke about the current situation in the digital environment and key challenges. They noted that the number of internet users continues to grow, with Facebook becoming a major channel for social interaction. However, this has also led to rising negative impacts, such as the spread of contents that violate children’s rights, an increase in online fraud and cybercrime, and the spread of false information and defamation.

The Ministry of Digital Development, Innovation and Communications and the Ministry of Education introduced a draft law to regulate children’s participation on social media. The participants emphasized the need to develop the legal framework in line with international practices, including those of the UK, S.Korea, Japan, Malaysia, Kazakhstan, and Indonesia.

The General Police Department and the Communications Regulatory Commission also presented statistics on cybercrime and pointed out challenges in exchanging information with foreign platform companies. They stressed that regulating the digital environment requires coordinated efforts among government agencies.

At the end of the discussion, they agreed on the need to establish direct cooperation with major global technology companies such as Meta, Google, and TikTok. In addition, the participants discussed creating legal conditions to allow these companies to have local representatives in Mongolia and to strengthen inter-agency coordination. 

‘EU Day 2026’ to Be Held in Local Area for the First Time www.montsame.mn

 Prime Minister Uchral Nyam-Osor received the Ambassador of the European Union to Mongolia, Ina Marciulionyte, on April 28.

During the meeting, the two sides discussed the current situation of cooperation between Mongolia and the EU, projects and programs, investment opportunities, and issues requiring further attention. Prime Minister Uchral noted that expanding and developing relations with EU member countries is one of the priorities in Mongolia’s foreign policy, and introduced policies and actions implemented by the government aimed at increasing foreign investment and fostering a favorable investment environment. He also highlighted that within the framework of the “Chuluulye” (Liberate) initiative, the government is working to boost the economy and support business environments.

The Prime Minister noted that economic and business relations between Mongolia and the EU have been actively expanding in recent years, highlighting the 2025 EU-Mongolia Business and Investment Forum and the 2026 Investors’ Roundtable Meeting. He further emphasized that the signing of a EUR 1 billion Memorandum of Understanding between the government of Mongolia and the European Investment Bank was an important step forward in bilateral investment cooperation.

He also highlighted that President Khurelsukh Ukhnaa has invited a high-level representative of the European Union to attend the 17th Conference of the Parties on Climate Change (COP-17), and noted that the conference will serve as an important platform for expanding investment cooperation in the green development sector.

The European Union Ambassador, Ina Marciulionyte, expressed strong interest from European countries in investing in Mongolia, particularly in expanding cooperation in the renewable energy sector. She also mentioned that the “European Day 2026” will take place in Darkhan-Uul aimag on the May 23, emphasizing that the event will be held in a local area for the first time this year.

The parties exchanged views on deepening cooperation in areas such as environmental protection, local development, and public-private partnerships.

China begins construction of 4 GW renewable transmission project in Inner Mongolia www.alcircle.com

Construction of a 4-million-kilowatt new energy transmission project began on April 15 in Jungar Banner, located in Ordos, North China’s Inner Mongolia autonomous region, according to State Grid East Inner Mongolia Electric Power Co.

The project is part of the Mengxi–Tianjin South ultra-high voltage (UHV) transmission corridor. It will run from the 500-kV Dalu Substation to the 500-kV Buertao Substation, and further connect to the 1,000-kV Ordos UHV Substation.

The development includes two new 500-kV substations at Dalu and Buertao, along with 279 kilometres of transmission lines and 340 towers. The total investment for the project is RMB 1.94 billion (around USD 283 million).

Once completed, the project will strengthen the transmission of renewable energy from Ordos to the Beijing–Tianjin–Hebei region. It is expected to deliver around 14 billion kilowatt-hours of electricity annually, helping meet rising power demand.

The project is also expected to meet environmental goals by reducing carbon dioxide emissions by approximately 4.4 million tonnes per year.

Buryatia wants to import 5,000 tons of meat and frozen bull semen from Mongolia www.open.kg

On April 27, the Minister of Food, Agriculture, and Light Industry, Iderbat Tsagaanhuu, held a meeting with the Deputy Prime Minister and Minister of Food and Agriculture of the Republic of Buryatia, Amgalan Darmaev. During the discussion, Iderbat noted that Mongolia has joined the Temporary Agreement on Free Trade of the Eurasian Economic Union (EAEU) for the first time. Under this agreement, 90% of the 367 goods that are exempt from duties consist of agricultural products. He emphasized the importance of ensuring that exported goods meet standards, which will help stimulate trade between Mongolia and Russia. In particular, the minister pointed out the need to address issues related to veterinary medicine and quarantine for the successful export of meat and meat products from Mongolia to Russia.

The Minister of Food and Agriculture of Buryatia, Amgalan Darmaev, noted that under the Temporary Agreement on Free Trade of the EAEU, there is an opportunity to increase meat exports from Mongolia to the Republic of Buryatia to 5000 tons. In particular, the Buryat company "Myasprom" expressed its readiness to purchase 2000 tons of beef and 1000 tons of horse meat. Amgalan Darmaev also expressed the intention to develop cooperation with Mongolia in the field of animal husbandry, breeding, and the supply of meat and meat products, including the purchase of frozen bull sperm and the import of large volumes of horse meat.

Real wage growth lags behind nominal gains www.ubpost.mn

Wage growth has significantly outpaced inflation in nominal terms over the past decade, but real income gains remain modest, underscoring structural challenges in the labor market, according to a new study by the Ministry of Family and Human Development. The report found that wages increased by 143 percent in nominal terms over the last 10 years, yet rose by only 23 percent in real terms, highlighting the impact of inflation and productivity gaps on household income.

The study also outlined the scale of workforce expansion needed to sustain long-term economic growth. To maintain an average growth rate of 7.2 percent and meet the country’s “Vision-2050” development targets, total employment will need to exceed 1.8 million by 2035.

Labor demand is expected to be highest in the construction and manufacturing sectors. Compared to 2024 levels, the economy will require an additional 88,100 workers in construction and 69,800 in manufacturing by 2035, reflecting ongoing industrialization and infrastructure development. At the same time, the report highlighted persistently low labor force participation, particularly among young people aged 15 to 24 and women. It called for targeted policies and programs to improve access to employment, skills training, and career opportunities for these groups.

Addressing gender disparities in the labor market could also deliver significant economic benefits. A study by the World Bank estimates that reducing the gender gap in workforce participation could increase GDP per capita by up to 20 percent. The Ministry emphasized that aligning wage growth with productivity improvements will be critical to reversing the decline in labor force participation and ensuring sustainable economic expansion.

Lower the pressure instead of closing business accounts! www.ubpost.mn

The old Mongolian proverb rings true across generations: “Busy hands bring wealth”. Unfortunately, for a growing number of business owners across the country, this wisdom has curdled into bitter irony. They toil, they strive, they put in the hours, and still find themselves sinking deeper into financial quicksand. At the heart of their plight lies a punishing cycle that has ensnared companies nationwide. When businesses fall behind on tax and social insurance obligations, government authorities respond by freezing their bank accounts and seizing their assets. Revenue continues to trickle in, but owners cannot touch a single tugrug. They watch helplessly as their operational lifeline runs dry, unable to pay wages, settle debts, or even chip away at the very obligations that triggered the freeze in the first place. It is, by any measure, a catch-22 of staggering proportions.

What follows the freeze is perhaps more troubling still. Businesses describe receiving calls from tax and social insurance officials who, rather than offering a path forward, engage in what amounts to backdoor bargaining. “When and how much will you pay?” the officials reportedly ask. “Give us a clear commitment, and we’ll unfreeze your account.” For entrepreneurs already stretched to breaking point, these conversations feel less like problem-solving and more like having a boot pressed firmly on their throat. Few stories illustrate this predicament more starkly than that of LKG Engineering, a construction firm that has weathered 16 years in one of the country’s most volatile industries. Today, it teeters on the edge of collapse. 

“We are staring down the barrel of bankruptcy,” confessed a company representative, speaking with a weariness that comes from fighting a losing battle. The numbers tell a grim tale: over 200 million MNT owed in social insurance contributions and another 310 million MNT in value-added tax arrears. LKG Engineering is no faceless corporation, it is a family affair, founded by brothers and staffed by relatives who once believed that honest work would see them through. That faith has been tested to its limits. The representative laid bare the arithmetic that has bled the company dry. Social insurance alone claims 24 percent of earnings, or 12.5 percent from the employer’s pocket, 11.5 percent withheld from workers. Layer on personal income tax and value-added tax, and a staggering 44 percent of every tugrug earned vanishes into government coffers before the company sees a cent of profit. “One in every four MNT we make goes straight to contributions. Add the rest, and nearly half our revenue disappears before we can reinvest a single coin,” the representative noted. 

The crushing tax burden might have been manageable in better times. But Mongolia’s construction sector has seen better times come and go. A speculative bubble inflated property prices beyond what ordinary buyers could stomach, and now the market has gone cold. Across Ulaanbaatar, apartment blocks stand half-empty, monuments to overconfidence and miscalculation. With sales drying up, cash flow has become a trickle. Subcontractors wait months for payment. Workers’ wages arrive late, if they arrive at all. When forced to choose between paying staff and paying the taxman, most owners opt to keep their people fed. The debt to the state compounds, interest accrues, and eventually the dreaded freeze arrives.

Moreover, in Bayangol District, small business owners are feeling the pinch of rising costs and heavy tax burdens. For many, staying afloat has become a daily struggle. In particular, D.Otgonbayar, who runs a landscaping and service company, employs about 50 to 60 seasonal workers. He admits that while their daily pay ranges between 80,000 and 100,000 MNT, most are hired on a temporary or contract basis and remain unfamiliar with how to declare or pay taxes. “When we tell them to set aside 10,000 MNT from their daily wages for taxes, many get upset. They also refuse to pay social insurance at the minimum rate. To keep them from quitting, we’ve been paying full wages without deductions. Now we’re 98 million MNT in debt, and 65 million MNT of that is for social insurance, and our account has been frozen,” D.Otgonbayar explained. He accepts part of the blame for this debt, saying the root of the problem lies in the system itself. “Both employers and employees shy away from paying because the tax rates are simply too high. People don’t see any benefit from their contributions. Many feel the government services are poor and the quality of life gets worse every day while the gap between rich and poor keeps widening,” he said. 

J.Tuvshin, who manages a small furniture factory in the same district, also tells a similar story. “We’re neck-deep in debt to the tax office, the social insurance fund, and even non-bank lenders. It’s barely manageable,” he said. His company employs 10 people, each earning about 3 million MNT a month. “Our monthly payroll comes to 30 million MNT, but over 10 million MNT of that goes straight to taxes and social insurance. When we don’t have enough cash flow, we end up postponing tax payments just to cover salaries. Skyrocketing prices for raw materials and transportation have further eaten into profits. Taxes are calculated on sales, not net profit, which makes things even harder. On top of that, we still have to pay VAT. To stay competitive, we tried offering customers the option to buy furniture with or without VAT. The tax authorities ordered us to include VAT in all sales and warned of penalties for any violations. At this point, running a small or medium-sized enterprise in Mongolia feels impossible,” J.Tuvshin shared. 

‘Account closure may be required again under the law’  

Across the country, small and medium-sized enterprises remain the lifeblood of the economy but for many, surviving under mounting tax debts and frozen accounts has become a daunting challenge. Ask any small business owner in the service sector, and their story is likely to echo the same refrain, such as unpaid taxes, overdue social insurance contributions and bank accounts locked by the authorities. The question that now hangs in the air is how to break this vicious cycle, how to ensure that businesses can meet their obligations while continuing to operate without being suffocated by debt.

An official from the Mongolian Tax Authority’s Public Relations Center explained that tax inspectors are legally empowered to freeze a company’s accounts, seize assets and demand settlement of outstanding taxes. “If the debts and payments are cleared, those measures are lifted. However, following an order from the Prime Minister earlier this month, the accounts of 12,153 enterprises were unfrozen for a period of one to two months to allow them to pay off their debts. These companies owed a collective 3.7 trillion MNT. Between April 7 and 21, 1,578 of them have already paid 43.6 billion MNT in tax. If they fail to meet their obligations within the given period, their accounts will be closed again. That’s the law,” the official said. 

According to official data, Mongolia has around 265,000 registered enterprises, but only about 117,000 are currently active, or roughly 40 percent. By the end of 2025, some 16,000 companies had their accounts sealed due to unpaid taxes. On April 7, under the Prime Minister’s directive, bank accounts of more than 12,000 tax-indebted firms and an additional 6,000 with overdue social insurance payments were reopened temporarily. Collectively, they owe about 3.7 trillion MNT to the tax authority and several trillion more to the social insurance fund. In short, only one in two registered businesses is still operating, and nearly one in 10 remains trapped in debt. The Government’s recent measure to reopen these accounts has offered a brief window of relief and a chance for recovery, which is part of a broader effort under the “Liberate” initiative to ease bureaucratic hurdles and support struggling enterprises. Whether this breathing space will be enough to bring lasting stability to the small business sector remains to be seen. For now, owners can only hope that this reprieve marks the first step toward genuine economic revival rather than just a temporary pause before the next wave of hardship.

No tax amnesty 

For many small and medium-sized businesses, the weight of taxes has become unbearable. Owners across industries say they are being brought to their knees by rising VAT and mineral resource taxes. Few companies, they claim, can pay their dues in full without slipping into debt. In principle, everyone who earns income from companies and organizations to individual citizens is required to pay taxes. However, the growing mountain of unpaid dues reflects a broader failure to keep pace with economic reality.

According to A.Munkhzaya, a consultant at the financial and tax advisory firm Bodit Credit, “While wages and pensions have gone up and sales have increased, real profits have not. Inflation, a volatile exchange rate, and import dependence have eroded earnings. Unless tax amounts and thresholds are adjusted to reflect net profits, businesses won’t grow. A company that made 5 billion MNT five years ago might now record 7 to 8 billion MNT simply because of exchange-rate differences, but its actual profit hasn’t changed, and it’s taxed all the same,” she said. 

She added that inconsistencies in how VAT is applied and exemptions are granted create even more obstacles. As long as the tax environment and rates remain as they are, no amount of “preferential loans” will truly support business growth, A.Munkhzaya informed.

Economist and financial analyst Ch.Batsuuri offers a more nuanced view. He argues that rising tax and social insurance debts do not necessarily mean businesses are losing money or being crushed by taxation. “Our tax rates are not higher than the global average. But monitoring and transparency have improved, reducing the scope for hiding income and creating the perception that debt is growing. In many cases, the issue isn’t excessive taxation but tighter enforcement and clearer oversight,” he explained.

To provide relief, the Government is considering raising the threshold for small and medium-sized enterprises eligible for the 90 percent tax refund from 1.5 billion to 2.5 billion MNT, and expanding the simplified one percent VAT regime to cover businesses with annual revenue up to 400 million MNT. Plans to implement these reforms next year are included in the latest tax package proposals.

Still, most experts agree that closing bank accounts should be a measure of last resort. “Businesses won’t solve their problems simply by reopening accounts or declaring amnesty. Success depends on managing finances wisely and enforcing fair, balanced tax policies,” A.Munkhzaya warned. 

Officials at the Ministry of Finance share a similar concern. A representative emphasized that while most taxpayers meet their obligations, blanket amnesty could encourage negligence and undermine trust in the system. The official noted that previous amnesty measures had even contributed to Mongolia’s inclusion on the Financial Action Task Force’s “Gray List,” as they risked legitimizing untraceable or illicit funds. Given that risk, the Government is steering away from one-off pardons and instead focusing on structural changes to ensure fairer taxation, lower burdens, and a healthier relationship between the state and the business community. The upcoming reforms may well mark the first real step toward that goal.

Bank of Mongolia to support commercial banks securing long-term foreign funding www.gogo.mn

On April 28, G.Enkhtaivan, Deputy Governor of the Bank of Mongolia (BoM), addressed a press conference to outline new measures aimed at supporting commercial banks that successfully attract long-term external resources.

During the briefing, G.Enkhtaivan noted that foreign funding within the banking sector has been increasing, though these resources were previously excluded from mandatory reserve calculations. Following a recent decision by the Monetary Policy Committee, the central bank will now actively support banks in securing long-term foreign funding. This policy is intended to alleviate potential pressure on the tugrik exchange rate and the balance of payments, both of which remain vulnerable to volatility in international markets.

The move comes amid heightened global uncertainty, with Enkhtaivan citing Middle East instability and Brent crude oil prices hitting $110 per barrel this morning. Currently, foreign assets make up 25 percent of commercial bank resources, and the BoM aims to stabilize these holdings to ensure systemic financial health over the coming years.

To support this initiative, the central bank will facilitate currency swaps and assist in converting foreign resources with maturities exceeding 360 days into tugriks.