The tax reform package has been presented to parliament
At a recent cabinet meeting, a decision was made to submit a large-scale tax reform project to parliament. This package includes changes to the General Tax Law, the Corporate Income Tax Law, as well as legislation concerning personal income tax and value-added tax.
The main goal of the reforms is to support economic growth while protecting citizens' incomes, promoting employment, and developing housing construction. According to the proposed changes, VAT refunds will be implemented for purchases: 100% for expenses up to ₮500,000 per month, 50% for amounts up to ₮1 million, and 20% for expenses exceeding this amount. Additionally, workers whose income does not exceed the minimum wage or is a maximum of ₮500,000 per month will be eligible for a full refund of income tax.
The bill also includes measures to simplify taxation and improve fairness. Thus, the threshold for declaring income from entrepreneurial activities will be raised to ₮400 million, and some taxpayers will be granted tax benefits. Citizens who move from Ulaanbaatar to rural areas, as well as investors in energy-efficient and environmentally friendly buildings, will be able to receive tax benefits of up to ₮15 million.
The corporate taxation reform involves reducing the corporate tax rate and increasing the threshold for the 25% tax rate from ₮6 billion to ₮10 billion, as well as reducing the profit tax for incomes in the range of ₮6 billion to ₮10 billion to 15%.
Support for small and medium-sized enterprises (SMEs) includes raising the threshold for the one percent tax from ₮1.5 billion to ₮2.5 billion for three years, as well as simplifying the VAT payment procedure for companies with an annual income of less than ₮400 million. Furthermore, companies will be able to deduct expenses for employee training and development, as well as recover VAT on certain purchases and international services.
The reform package emphasizes support for taxpayers and increasing transparency. As part of the initiative, pre-prepared tax reports, consulting services, and both online and offline training will be offered, along with a 24/7 information system based on AI.
Tax authorities will monitor compliance with tax legislation, providing opportunities for correcting mistakes and offering flexible payment schedules for conscientious taxpayers.
Taxpayers facing financial difficulties will be offered the option to freeze up to 80% of their bank accounts instead of a complete block, allowing them to continue their activities. Throughout 2025, the government and the parliamentary working group conducted extensive public consultations, gathering about 180,000 proposals from more than 13,000 citizens and businesses, of which more than half concerned tax reductions, tax exemptions, or tax deductions.
Tatar S. Maidar
source: MiddleAsianNews
