The Personal Income Tax Law of Mongolia (the Personal Tax Law) regulates matters related to personal income.
Taxpayers
Resident and non-resident taxpayers are the two classifications for personal taxpayers in Mongolia. A resident taxpayer of Mongolia is a taxpayer who has either:
- Permanent place of residence in Mongolia
- A presence in Mongolia for a period and/or periods exceeding 183 days in a given tax year
- Mongolian state officials currently appointed in a foreign country
A non-resident taxpayer is a person who does not have a permanent place of residence in Mongolia and has not been present in Mongolia for 183 days in a given tax year. In addition, non-residents are foreigners who work for the United Nations and its affiliated organizations, embassies or consular offices.
Taxes are imposed to a resident taxpayer in Mongolia on both their taxable income earned in Mongolia and overseas income (i.e. their worldwide income). Taxes are imposed for non-resident taxpayers for only for their taxable income earned in Mongolia.
Tax rates
The Personal Income Tax Law specifies various types of personal income that are subject to the tax and applicable tax rate is established for each income type. The flat rate of 10% of Personal Income Tax (PIT) on employment and personal investment income is set for resident taxpayer.
Flat tax rate of 20% on Mongolian-sourced income (i.e. including employment income, fringe benefits, property income, dividend, business income and interest income) is applied for non-residents.
Exemptions
Depending on amount of annual taxable employment income, the personal tax credit of up to MNT 2400,000 applies. However for individuals with employment annual income more than MNT 36,000,000, no tax credit available. Tax exemptions for specific income stated in the Personal Tax Law include:
- Certain employee pensions, benefits, payments, discounts and reimbursements
- Per-diem payments
- Insurance proceeds
- Payments, interest and penalties for Government notes payable (i.e. Government bonds)
Be aware that these are examples of common tax exemption for individual income but not a complete list.
