Ulaanbaatar
45,300 entities to benefit from exemption of social insurance contributions
Politics
Ulaanbaatar /MONTSAME/. With a view to prevent from the spread of COVID-19 pandemic, Mongolia has enacted a heightened state of alert from February 13 until April 30 and some partial lockdowns and temporary restrictions on operations of businesses have resulted in loss of household income as well as companies, especially, small and medium sized business in the field of service and manufacturing, to experience revenue decline, struggle to keep operating and lay off their workers.
Considering the economic and financial declines, the Parliament of Mongolia, as submitted by the government, adopted last week the law on economic measures to protect the health and income of people, preserve the employment and stimulate the economy.
The law outlines six-month exemption of monthly social insurance contributions paid by employees and employers, who are managing to keep their employees on payrolls despite difficulties in their operations and revenue drop, and also a monthly incentive of MNT 200,000 for 3 months to each employee of companies, whose revenue has dropped by more than 50 percent compared to the same period of last year.
On April 17, cabinet convened an irregular session to have an urgent discussion to approve regulations to implement the aforementioned law in practice. In accordance with the regulations approved today, the six-month exemption applies to all entities and nongovernmental organizations (except from state run and local-owned entities), all higher-education institutions and universities irrespective of their ownership structure, and individuals who pay voluntary social insurance contributions.
From April 1 until October 1, monthly payment equal to three-month average of social insurance contributions paid between January and March 2020 will be recorded on a record book of each eligible employee. Those who voluntarily pay social insurance contributions will be considered to have paid monthly contributions equal to monthly minimum wage during this period until October.
The employees of companies, who were forced to suspend their operations upon a decision made by emergency commissions of aimags and the capital city, or whose revenues declined by more than half in the past year are subject to the three-month monthly financial incentive.
According to preliminary estimation, the exemptions will benefit 45,300 employers and 704,600 insured employees and the exemptions and money incentives will cost MNT 940.6 billion from the state budget.
