Ease of Doing Business Rank: 81
Mongolia is an East Asian landlocked country.
Russia lies to the north, Kazakhstan lies to the west and China to the south and east.
The official language of Mongolia is Mongolian, spoken by 95% of the population.
Foreign languages include Russian, German, English and Korean.
The 2020 population estimate is 3.26 million.
According to 2010 data, Ulaanbaatar is the largest city (1.14 million), followed by Erdenet (83,379) and Darkhan (74,738).
The top industries in Mongolia are construction and construction materials, mining, oil, food and beverages, animal product processing, cashmere wool and natural fiber manufacturing.
The Legatum Prosperity Index ranks Mongolia’s educational system 58th out of 167 countries.
The most common type of business entities in Mongolia are Limited Liability Company, Joint Stock Company and Partnership.
The majority of businesses are in the form of a Limited Liability Company.
Mongolia offers a 90% tax credit to qualifying companies operating in particular industries up to a maximum of MNT 1.5 billion. Industries include food, agriculture, farming and livestock as well as fabric, clothing and construction materials.
The country also offers corporate income tax exemptions on interest earned on government bonds. Small and medium-sized businesses may also enjoy a CIT exemption on income earned on the production and/or sale of produced equipment and spare parts. Mongolia also offers a CIT exemption on green initiatives.
Businesses operating in the mining sector may offset tax payable by losses for up to eight years. The country also provides a tax payable discount for donations of up to MNT 1 million to non-governmental organizations founded by citizens with developmental disabilities.
Additionally, Mongolia offers a 50% reduction on corporate income tax to companies that grow specific crops or produce specific food products.
Companies qualifying for a stabilization certificate may enjoy fixed or no CIT, VAT, custom duties and mineral royalties for up to 18 years, depending on investment amount, industry, and location. In some cases, certificates can be extended.
Mongolia also has Free Trade Zones that offer many benefits. Companies investing USD $500,000 or more in infrastructure enjoy a 50% corporate income tax reduction based on invested capital. Companies investing USD $300,000 or more on warehouses, logistics facilities, hotel, tourism and other activities may also qualify for a 50% CIT reduction based on invested capital.
Qualifying entities involved in innovative or enhanced technology are exempt from CIT for the first 5 years of operation.
Companies importing domestic goods into the FTZ do not pay VAT, customs or excise taxes. Businesses do not pay VAT on goods and services manufactured and sold by FTZ members either.
Individuals and businesses may also qualify for land possession and usage right payment exemptions for the first 5 years and up to 50% for the following 3 years. Infrastructure projects within the FTZ may enjoy an exemption for 10 years. As well, registered FTZ buildings and facilities are exempt from immovable property tax.
The country also offers a foreign tax credit to offset taxes paid abroad, up to the total Mongolian tax liability amount if the region has a DTT with Mongolia.
Ulaanbaatar is the capital and financial center of the country.
Mongolia includes a diverse blend of culture and a fascinating history. It has 5 UNESCO World Heritage Sites including the area of the Orkhon Valley with numerous archaeological sites dating back to the 6th century.
This region served as a major religious, cultural, political and trade center and linked East and West. Kharkhorum, the capital of Genghis Khan’s vast Empire is found here too.
In the north-east part of the country lies Burkhan Khaldun, with sacred mountains, rivers and rock cairns. It is believed to be the birthplace and burial site of Genghis Khan and was the region that unified shamanic and Buddhist practices.
Mongolia is also home to the Gobi desert. The last two-humped camels in the world live here as well as the endangered Gobi bear.
The country also has a biosphere reserve with one of the largest intact grassland ecosystems in the world. Rolling steppes, mountains, and sand dunes house Siberian taiga, Mongolian gazelle and flora unique to the region. Less than 12,000 people live here and still maintain their pastoral lifestyle and rich culture.
Conversely, Ulaanbaatar is a bustling city with over a million residents. It blends history with modern buildings, restaurants, nightlife, shopping and many fine museums.
Mongolia’s early history is dominated by nomadic tribes that periodically formed confederations. However, in 1206 Genghis Khan founded the Mongol Empire which eventually became the largest empire in history.
After Khan’s death in 1227, the empire became four kingdoms. By 1260, Khan’s grandson ruled the kingdom that includes present-day Mongolia and China. In 1271, he established the Yuan Dynasty which ruled over both regions until the Ming dynasty reclaimed the Chinese region in 1368.
The Mongol court returned to its native land, but they were weakened and eventually fell to a Chinese between 1636 and 1691. Mongolia remained under Chinese rule until 1911. Revolution in China led to Outer Mongolia declaring independence that year.
However, Mongolians feared a Bolshevik invasion after the Russian Revolution of 1917 and the Russian Civil War a year later. They reluctantly requested Chinese assistance. When the invasion did not occur, the Chinese did not withdraw in hopes of restoring Chinese sovereignty over Mongolia. By 1919, the Chinese abolished Mongolian autonomy.
Meanwhile, Russian expatriates headed by Bolshevik sympathizers reached out to the Mongolians and promised assistance. This led to the formation of the Mongolian People’s Party. In 1920, the Russian White Guard which supported democratic socialism invaded Mongolia.
In 1921, Mongolian revolutionaries assisted by the Soviet Red Army drove the White Guards out during the Mongolian Revolution. The region became the Mongolian People’s Republic in 1924.
Mongolia remained under Soviet communist control until the fall of the Soviet Union in 1989. By 1990, a peaceful democratic revolution led to the first free, multi-party elections.
Today, Mongolia operates under a parliamentary republic. They have a market economy.
According to 2010 data, most inhabitants identify as Mongol (96%) followed by Kazakh (4%).
The majority of Mongolians practice Buddhism (53%), or do not practice a religion (38.6%), followed by Islam (3%), Shamanism (2.9%), Christianity (2.2%) or other faiths (0.4%).
According to Forbes’ 2019 Best Countries for Business, Mongolia is the 86th best country in the world for conducting business.
The 2019 Index of Economic Freedom rates Mongolia 126th globally and states, “The current government has tried to restore investor confidence, which has been weakened by the persistence of large budget deficits and sizeable government debt. Weak rule of law and lingering corruption are additional drags on the economy.”
World Bank’s “Doing Business” rankings rate Mongolia 81st for ease of doing business in the world.