Ulaanbaatar, December 13, 2023 /MONTSAME./ A Meeting to discuss the current situation of the taxation system of Mongolia and the need for reforms took place on December 12, 2023.

At the Meeting, the Chairman of the State Great Khural Zandanshatar Gobojav made a presentation on "Finance and Tax Reforms". He noted the plan to improve the VAT registration system, from which the tax reform should have started, had not been done due to time restrictions. Thus, the tax reforms should begin straight with the reform of public finances. For example, inefficient budget spending and unprofitable activities of state-owned organizations should come to an end. He stated that Mongolia's economy is under pressure from imports, welfare, double deficit, and loan interest rates. The share of imports in GDP has risen from 29.8 percent in 30 years ago to 50.8 percent in 2022 making the balance of payment deficit MNT 30.4 billion. This loss was covered by external debts and loans of USD 33.8 billion. Also, the Chairman briefly presented the flow of money from imports and the impact on the exchange rate. 

Professor of the Business School of the National University of Mongolia N. Saruultugs presented the current situation and future trends of the tax environment. Mongolia's tax burden is 5.6 points higher compared to an average of non-member countries of Economic Cooperation and Development Organizations, ranking Mongolia as a country with an average tax burden. Presenting the impact of tax policies, N. Saruultugs stated that Mongolia's economy is expanding and revenues are increasing due to the influence of tax policies. Tax environment changes have been implemented to reduce the tax burden to influence taxpayers. He noted the high level of the shadow economy has a probability to increase the burden on honest taxpayer organizations and individuals.          

Head of the Research Institute of the Mongolian National Chamber of Commerce and Industry O. Tumen-Amar presented a study of the business environment in 2023 and the tax environment. Afterward, the entrepreneurs exchanged views on tax reforms. N. Dash-Ulzii, Director of Ulzii Center LLC, noted the importance of carrying out tax reform in the direction of industrial development. The economy cannot get on the right track due to the failure to develop the industry. Firstly, goods and products that are not produced in Mongolia should be exempt from customs duties and VAT.

Executive Director of the Mongolian Food Industry Association M.Narmandakh noted that 422.5 thousand people are employed in the food chain. "Duplicative state taxation at every stage starting from the import of raw materials, production, to delivery to consumers puts a heavy burden on us. In addition, due to tax pressure and labor shortages, many manufacturers have recently gone bankrupt. Tax reforms should begin with a reduction in social insurance contributions and VAT rates," said M.Narmandakh.