Since 2003, Healy Consultants Group has assisted our Clients with business registration in Mongolia. Our services include i) Mongolia company incorporation ii) government license registration iii) business bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.

Mongolia company registration summary

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• Advantages and disadvantages

  Advantages of Mongolia company registration

  

  1. Our Clients may enjoy certain benefits when incorporating in Mongolia including:
     • A Mongolian company can be formed by 1 director and 1 shareholder, both of whom can be non-resident nationals. Consequently, a Mongolian company can be 100% foreign owned;
     • Companies setup in the Mongolian free trade zones will enjoy reduced corporate income taxes, which will vary in accordance with the amount of capital invested. Furthermore, all goods imported into the zones or manufactured in the zones will be exempt from VAT, custom duties and excise taxes. Furthermore, there is no labour quota for FTZ companies;
     • Mongolian companies are allowed to open bank accounts in all major international currencies like USD, Euro and JPY. As a result, our Clients may easily make payments to international customers and suppliers through their Mongolian company;
     • Companies earning less than US$1.5 million per year will be subject to a reduced corporate tax rate of 10%. Furthermore, personal income tax rate is also low at 10%;
     • Compared to countries of the western world, Mongolia is very cheap including food, transport, utilities, rent, wages etc. Local salaries for semi-skilled labour can range from 7 to 10 dollars per day. The country’s abundant resources also make for cheap electricity and fuel costs;
     • While Mongolia is a landlocked country, it still sits between massive markets, with which the country enjoys beneficial trading relationship. Furthermore, Mongolia has signed trade agreements with countries like Canada, Japan and the US.
  2. Mongolian companies that work on an investment project in the country can benefit by obtaining a stabilisation certificate from the National Development Agency. This certificate enables the businesses to pay a stable tax rate for a given period. The taxes that can be stabilised for a period of 5-10 years are i) corporate tax; ii) VAT; iii) customs tax; and iv) royalties.

  Disadvantages of Mongolia company registration

  1. Every foreign shareholder (holding 25% stake) of a Mongolian LLC must deposit at least US$100,000 paid up share capital prior to business registration;
  2. Mongolia is negatively ranked as the 93^rd least corrupt jurisdiction by Transparency International in their 2018 Corruption Perceptions Index. Entrepreneurs should expect under-the-table dealings in order to expedite business operations;
  3. Mongolian is a difficult language of Turkic-Altaic origin. Most government documents must be translated in both English and Mongolian and certified translators are usually required for acceptable translation. Although English is the most common foreign language, few speak it well;
  4. Mongolia’s court system is still underdeveloped with no clear company and contract law. This ambiguity often favors locals over foreigners;
  5. Recent mistreatment of foreign companies, particularly in the mining industry, has raised some red flags. The US State Department recently warned of foreign companies facing unlawful “seizure of assets, closure of business, and detention or arrest of personnel” by government authorities looking for bribes.
  6. Mongolia is a landlocked country between major countries. The geographical location and the political pressure from these huge neighbours hindered the country to diversify its trading relations with other potential trading partners and improve its growth and infrastructural facilities. Therefore, Mongolia i) has its major trading partner in China (80% of its exports) and ii) completely relies on others for its energy imports;
  7. As a result of the above, the World Bank ranked Mongolia as the 81^st best jurisdiction in the world in their annual Doing Business survey.

• Best uses for a Mongolia company

  1. Mongolia is booming with mineral resources. Coal, copper, silver, uranium and gold are in abundant supply and projected to account for 95% of Mongolia’s exports by 2015. Over 3,000 mining licenses have been filed in the past few years. Projects like Oyu Tolgoi and Tavan Tolgoi will produce billions of dollars worth of copper and coal. The mining industry’s success creates numerous opportunities for third parties supporting the large projects.