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Mongolia, IMF To Develop Blueprint For Tax Reform www.tax-news.com
Mongolia is to work with the International Monetary Fund from August to review the tax settings for the country's mining sector and to reform the value-added tax regime.
The IMF said it will provide technical assistance to help make changes to the country's tax on mining "revenue-neutral or revenue-enhancing" and more efficient.
Explaining the issues being considered, the IMF said: "An appropriate tax regime for mining is... important, with the aim being to continue to incentivize participation by foreign companies, with their specialized expertise, while allowing Mongolia to gain the benefits from its resource endowment. Mining is a relatively capital-intensive sector with limited spillovers, and it will principally be by channeling tax revenues from the sector into the economy that the country will be able to make progress. While existing agreements will be respected, the mining tax regime for future projects will be considered as part of a comprehensive review of the tax system that the authorities are undertaking."
An IMF working group will submit its report by end-December 2017. It will cover value-added tax reform also and, to a lesser extent, business taxation.
In 2014, Mongolia's parliament approved a sharp reduction in the country's tax on gold mining, as well as the elimination of its royalty rate, in an attempt to cut smuggling and illicit mining. The gold mining tax was reduced from 10 percent to 2.5 percent for those gold miners that sell their production via the central banks or approved commercial banks.
Discussing policies outside the mining sector, Mongolian authorities told the IMF that it intends to review petroleum tax rates; increase excise duties on vehicles and tobacco; make the personal income tax regime more progressive; withholding tax will be applied more broadly; and social security contribution rates will be hiked significantly over three years until 2020.
Published Date:2017-06-09
