The “Mongolia Investment Law 2013” is another positive step toward a secure investment climate. International investment law (1993) and Foreign Investment Law in Strategic Sectors (2012) have been replaced by legislation. It also addressed some problems faced by investors following the 2012 Strategic Sector Investment legislation.
Following the introduction of the new Investment Law, international investors have been granted the same rights as domestic investors, which provides a legal structure to protect their investments. To promote investments in Mongolia and to further encourage foreign investments, the investment law provides tax stabilization incentives and other non-tax incentives. The new law also seeks to simplify the registration process to form a company by requiring only to be registered by the General Authority for State Registration, thus, as a result, cutting down the required time needed for opening a business from entry to operation by 30 days.
The Law also contains a provision for a national investment agency (National Development Agency), which will encourage, support, and control investment activities and will grant investment stabilization certificates and track whether these certificate holders operate in accordance with the laws and regulations of Mongolia. The applicable rates of the following taxes, fees, and duties can be stabilized under stabilization certificates for a period up to 18 years and maybe extended to 27 years for qualifying projects:
- Corporate income tax
- Customs duty
- Value added tax
- Minerals royalty
As established in the laws of Mongolia, and defined under the Investment Law, the definition for foreign investment entity in Mongolia is a minimum of twenty-five percent of the share that is held by a foreign investor which also applies for Mongolian citizens who are permanently residing overseas. The registration of a foreign investment company would require a minimum initial investment of one hundred thousand dollars (100,000 USD) per foreign investor.
