The package of the tax bill, which will cut the operating taxes of large-scale national mining companies, has a negative impacts such as tax inequality, among local companies, and lacks the fundamental policy reforms to support small and medium-sized enterprises, according to some officials.

The Parliament ratified the revised Tax Law independently and its accompanying bills at its session last Friday. It is believed that the bill will create room for tax evasions among foreign corporations. Also, it reduced the tax rate of foreign corporations that have subsidiaries and representative offices in Mongolia from 20 percent to 5-10 percent. Thus, it will allow foreign companies to dominate.

Mongolian National Chamber of Commerce and Industry’s (MNCCI) standpoint should not be ignored. The new President of Chamber Amartuvshin Otgondavaa has urged to reject the draft law, which is related to the social and economic development of Mongolia. He suggested the Parliament to postpone the discussion to the spring session next month. He also expressed his intention to suggest the President to veto the bill if they pass it.

He said, “A new tax law provides tax inspectors the right to penalize. As the penalty amount increases, corruption and greed will settle. The compensation for sealing tax debt was tightened. In doing so, tax inspectors have the risk of confiscating vehicles without a court's decision. In the auction, the price tax is set by a tax inspector. This is a serious indication.

“If the tax payables of an individual reaches over MNT 20 million, the person will be forbidden to leave the country. This article appears to be applied to foreigners, and discriminates against investors. If a problem arises, the court must settle it.”

As stated by the Minister of Finance Khurelbaatar Chimed, “We need to align our tax laws with international standards. The UN added Mongolia in their financial blacklist in 2017 due to the fact that Mongolia’s Tax Law allows money laundry and tax evasions, and does not comply with international standards. The Global Forum, the BEPS International fundamental principles, such as reducing base taxes and transferring profits, have been included in the tax package. The importance is to solve the activities of creating a legal environment for multinational companies to set up a direct branch in Mongolia and lowering their taxes.

The Former President of MNCCI Mr. Lkhagvasuren expressed that the package is expected to grow the economy, which is the key feature. The 27-year tax system has been putting a lot of pressure on the business community. The second feature of the tax package is that the registration and the financial statements process will be simplified. The third feature is the aim to enable companies to improve. 90 percent of 157,000 Mongolian companies today have only 1-9 workers. When we look at the process of 27 years, we are living in an environment where companies are unable to grow.