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Company incorporation

Establishing a legal presence in Mongolia

In Mongolia, foreign investors conduct their activities by acquiring new or existing company shares or establishing their legal presence. The most common types of establishments by foreign investors are a foreign-invested limited liability company, a representative office or a permanent establishment.

Comparison of common types of legal establishments

Incorporation procedure

The incorporation of a limited liability company (LLC) in Mongolia is required to be registered with LERO. The registration procedure with the LERO takes 10 business days. After establishing an LLC, it is mandatory to register with respective tax and social insurance offices. A foreign-invested LLC incorporation procedure is as follows:

Considering the preparatory stage (preparation and formalization of the required documents) and post-registration actions (collection of the registration certificates from the LERO), the incorporation of the LLC usually takes about one month.


List of documents required for establishing anLLC in Mongolia:

  • Application forms;
  • Name verification sheet of a company;
  • Receipt of paying state stamp duty fee (MNT 750,000 (approx. USD 220) for a foreign-invested company);
  • Founding resolution and meeting minutes (if it has two or more shareholders);
  • Charter;
  • Shareholders Agreement (if it has 2 or more shareholders);
  • Document proving the official address of the company (it can be a copy of a certificate of immovable property or lease agreement);
  • Evidence of investment (for the foreign-invested company, the minimum share capital amount is 100,000 USD per foreign investor);
  • Passport copy of shareholders, ultimate beneficial owners and executive director; and
  • Power of attorney (where an authorized representative files an application).

If the required documents are executed in a foreign country, they must be apostilled.

Please refer a List of signatory countries of the Hague Convention (Apostille Treaty). In the case of non-signatory nations to the convention, a legalization of documents at the Mongolian diplomatic mission abroad is required.

Signatory Countries to the Apostille Treaty

Incorporation procedure

Post registration actions

After incorporating a foreign-invested company, it is mandatory to register with the respective tax and social insurance offices. The following key documents are required for the registration:

  • An official request;
  • A copy of the state registration certificate, and charter;
  • A passport copy of an executive director; and
  • A power of attorney (authorizing an authorized representative to apply). 

Changes related to the registration of a company

Companies in all forms are required to notify and register changes of certain corporate information of the company with the LERO within 15 business days from the date of relevant decision. 

Examples of information changes:

  • Where share capital amount is changed by transfer of equity shares by an investor or capital reduction;
  • Where the company name, business activity, and company address are changed;
  • Where the ultimate beneficial owner information is changed; and
  • Where the shareholder is changed etc.

Tax Legislation

General tax law

The purpose of the General Tax Law (the Tax Law) in Mongolia is to:

  • Establish legal grounds for the introduction, establishment, imposition, reporting, payment, control and collection of taxes in Mongolia.
  • Define the rights, duties and liabilities of taxpayers and tax authorities.
  • Regulate relations arising between taxpayers and tax authorities.

All other laws and regulations relating to taxation in Mongolia should be read in conjunction with the Tax Law.

The Mongolian tax system consists of taxes, fees and payments, and categories include state and local taxes.

Major taxes in Mongolia include the following:

  • Corporate income tax (CIT);
  • Value added tax (VAT);
  • Personal income tax (PIT).

Other taxes include the followings:

  • Immovable Property Tax
  • Customs Duty
  • Excise Tax
  • Stamp Duty Fee
  • Mineral Royalty Fee
  • Mining and Exploration License Fee
  • Land fee
  • Air Pollution Payment
  • City tax

Rights and duties – taxpayers and tax authorities

The Tax Law sets out the responsibilities of taxpayers which include:

  • Registration with the tax authority
  • Providing required information and documentation to the tax authority
  • Accurately maintaining records
  • Withholding taxes
  • Timely payments and filings

In addition to the above, there are a number of specific requirements which a good Mongolian accountant should be aware of, such as the need to use a cash register that meets certain standards. The Tax Law also confers on taxpayers the right to carry out their activities without undue interference from the authorities and to have their confidentiality respected. However, information may be published by the tax authority in relation to taxpayers proven to have evaded taxes, violated tax legislation, or who are being sought in relation to such offences. Further, taxpayers have the right to:

  • Obtain information and advice from the tax authority
  • Demand refunds or deductions on overpaid taxes
  • Make complaints and obtain explanations from the authorities
  • Demand compliance from the authorities
  • Obtain advice and assistance from legal tax consultants

The tax authority and state tax inspectors are required, under the Tax Law, to assist taxpayers in their duties by providing services such as public information, instructions and training. The time limit for the tax office to impose taxes in arrears, fines and penalties is five years (however, this varies depending on the type of tax and when the return or payment was due).

Tax audits

From 2020, a tax audit is conducted generally based on the risk assessment criteria in addition to certain cases subject to compulsory tax audits such as the liquidation of a company or validation of VAT refund . A statutory limitation period for tax reassessment, fines, penalties, utilization of a tax credit, tax loss carry forward and validation of the VAT assessment is 4 years. 

Debt collection

Tax Law also prescribes tax registration and settlement, collection of overdue taxes and penalties for non-compliance. Essentially, the tax authority is responsible for registering all income and refunds due. Any late tax payments, penalties and fines, are classified as ‘tax debts’ (which are required to be settled in a particular order). Fines are imposed on late tax payments, as well as overpayments made through the fault of the tax authorities. The fine rates are approved by the Government of Mongolia on an annual basis.

To settle ‘tax debts’ the tax authority may recover the amount owing from the taxpayer’s bank account, deduct from the taxpayer’s income or sell the taxpayer’s assets (or use them as collateral). Ultimately, the tax authority may file a claim with the courts.

The penalty for late payment is currently 0.1% of the outstanding balance per day. The penalty for concealing taxable income through negligence or fraud (where criminal charges are not brought) is 30% of the tax payable.

Licenses and permits

In Mongolia, a company may undertake business activities freely unless a certain activity is prohibited by law or subject to a license or permit according to the Permits Law (2022). The Permits Law aims to regulate all licenses and permissions under one legislation to the effect that business activities that require a license or a permit are listed under Articles 8.1 and 8.2 of the Permits Law, respectively. In general, licenses and permits can be granted to Mongolian registered companies that meet the respective requirements except few cases stated in the Permit Law. The law prohibits creating or requiring new types of licenses or permits by state authorities unless an amendment is made to the Permits Law after being discussed and recommended by a council consisting of representatives of the state authorities, private sectors, and non-governmental organizations. Licenses and permits cannot be transferred unless otherwise provided by laws.

The Permits Law does not apply to issuance of the following rights/permits:

  • Land ownership rights
  • Visas and immigration-related permits
  • Intellectual property rights
  • Permits required for organizing meetings, gatherings, demonstrations and other public events
  • Establishment of churches or other religious organizations, RO or branch of an international or foreign registered NGO 

The Permits Law classifies all permits depending on their purpose, terms and conditions, characteristics of business operations, and risk level into a license and a permit as follows:


The Permits Law provides a list of business activities that requires a license classified by economic sector as well as an authority competent to grant such a license.

  • Activities that pose a risk to national security, public interest, public health, environment or financial stability
  • Professional activities requiring special conditions and terms
  • Activities requiring limited use of natural resources and public property for profit and industrial purposes 


The Permits Law provides a list of permits required for business activities enabling a business owner to check whether its activity is subject to certain permits in Mongolia.

  • One-off activities
  • Additional activities to be conducted based on a license
  • Activities requiring limited use of natural resources and public property for household purposes 

Term of licenses and permits:

With regards to the terms, unless otherwise provided by the law specifically governing a certain industry, a license will be granted for at least 5 years and a permit for at least 3 years where they are extendable for the period equal to their original term, in general.

The majority of licenses can be issued or extended via the License MN portal. A few permits can be processed via other Government initiated electronic platforms.

License MN portal

License MN is a business licensing portal aiming to deliver an efficient business licensing experience. Currently, the following 19 state authorities process request for licenses and or license extensions from businesses through the License MN portal:

  • Ministry of Finance
  • Ministry of Mining and Heavy Industry
  • Ministry of Justice
  • Ministry of Construction and Urban Development
  • Ministry of Environment and Tourism
  • Ministry of Education and Science
  • Ministry of Culture
  • Ministry of Labor and Social Welfare
  • Ministry of Energy
  • Ministry of Road and Transportation
  • Ministry of Food, Agriculture and Light Industry
  • Ministry of Defense
  • General Customs Agency
  • Bank of Mongolia
  • Financial Regulatory Commission
  • Municipality of Ulaanbaatar
  • Communication Regulatory Commission
  • Energy Regulatory Commission
  • General Civil Aviation Agency

It is expected that remaining license issuers make their services available on the License MN portal in the near future.

General procedure of granting and extending license and permit proceeds as follows:

International Trade Treaties

Mongolia is a member of World Trade Organization (WTO) and World Customs Organization (WCO). As a member of WTO, Mongolia applies Most-Favored Nation*(MFN) tariffs to WTO member states and other countries with international treaties.

The Japan-Mongolia Economic Partnership Agreement (EPA)

The Japan-Mongolia Economic Partnership Agreement (EPA) entered into force on 7 June, 2016. It was signed on 10 February, 2015 in Tokyo, following the completion of respective necessary legal procedures in both countries. The Japan-Mongolia EPA is expected to promote liberalization and facilitation of trade and investment between both countries. It is also expected to deepen the mutually beneficial economic partnership in a wide range of areas, leading to further vitalization of the economy of Japan and Mongolia.

The EPA contains 11 chapters on trade of goods and services, customs procedures, trade facilitation, electronic commerce, investment protection, movement of persons, competition, IP protection, dispute resolution and improvement of business environment.

Important aspects of the EPA include:

  • Facilitation of trade, to increase trade turnover and ease customs services between the two countries.
  • Reduction of non-tariff barriers.
  • Transfer and relocation of Japanese high technology.
  • Attraction and increase of Japanese investment, and export to Japan of value-added industrial products.

According to this EPA, Mongolia has agreed to reduce import tariffs on 5,700 types of goods, and Japan has agreed to reduce import tariffs for 9,300 types of goods from 97 groups. 

Asia-Pacific Trade Agreement (APTA)

Mongolia has ratified the APTA on 12 December 2019 which came into force from 1 January 2021. According to the offer list of Mongolia for accession, MFN duty of 5% and Margin of Preference** (MOP) of 10% – 30% apply for 366 types of products listed in the following groups.

The European Union’s Generalized Scheme of Preference (EU GSP+)

In 2005, EU GSP+ status was granted to Mongolia based on the ratification of the international conventions on human rights, labor rights, protection of the environment and good governance. Mongolia enjoyed a preferential rate on trade and tariff from 37 developed countries based on the certificate of origin. According to GSP+ assessment by EU commission, Mongolia’s GSP+ preferential exports to the EU mainly consist of apparel and clothing, furniture and toys, wool and fish. Apparel is the most dominating export good to EU, accounting for 95% of the exports using GSP+ preferences.

*Normal non-discriminatory tariff charged on imports (excludes preferential tariffs under free trade agreements and other schemes or tariffs charged inside quotas).

**Percentage of tariffs, by which tariffs are reduced on imports from one contracting parties to another as a result of preferential treatment.


Customs clearance procedure

The Law of Mongolia on Customs (Customs Law) regulates the export and import clearance procedure. Customs declarations are processed through Customs Portal However supporting documents must be submitted in hard copies with the customs authority.

*According to the Customs Law, the clearance of goods and transportation entering the border may be delegated to a customs broker or specialists on a contractual basis. There are 48 licensed customs broker companies assist declarants on customs clearance process. Please visit the Customs Portal at more detailed information on customs brokers and specialists.

Customs duty exemption

Import duties are levied on the purchase price of imported goods in addition to transportation cost, in general. There are some exceptions. Export duties apply to only certain goods including but not limited to unprocessed wool and wood. Customs duty varies from 5% –20% depending on the type of goods.

According to the Customs Law, the following goods and among others are exempt from import tariff:

Labor legislation

Regulatory environment

The Labor Law was revised and adopted in July 2021 and become effective from 1 January 2022.  The Labor Law is the key legislation regulating employment relationships in Mongolia.

The Labor Law has a territorial application and applies to employment relationships arising from work performed or services provided in the territory of Mongolia.

Employment contract type

There are eight types of employment contract:

  1. full-time employment contract,
  2. part-time employment contract;
  3. probation contract;
  4. internship contract;
  5. apprenticeship contract;
  6. employment contract with special conditions;
  7. work from home contract; and
  8. remote work contract.

 Employment contract key terms

The employment contract must contain job title, work and duties to be performed as specified in the job description, place of work, remuneration, and working conditions.

 Employment contract duration

The employment contract can be concluded either for an indefinite term or a fixed term. However, certain conditions apply for concluding fixed term contracts.

Probation period

The probation period is up to 3 months subject to potential extension of up to 3 months as agreed by the parties. The key purpose of the probation period is for an employer to test/verify whether the employee meets the requirements of the job position.

Working hours

The Labor Law sets the standard working hours and overtime limitations.

Day offs and Holidays

Annual leave

The minimum annual leave is 15 business days. For minors and employees with disabilities, the minimum annual leave is 20 business days. Depending on the length of employment, additional days are granted. 

Public holiday

An employee is entitled to take paid public holiday leaves.


Salary consists of base salary, extra pay, additional pay, bonuses and annual leave salary.

Base salary

Base salary is agreed by parties of employment contracts. The base salary must not be lower than the minimum wage.

Overtime Work, Night time Work, and Holiday work pay

An employee is entitled to additional pay in case of working overtime, night hours, or public holidays unless time off in lieu is provided.

Additional pay is calculated differently depending on the nature of non-standard work as follows:

  1. 5 times the average salary for the overtime work;
  2. 2 times the average salary for the night time work; and
  3. 2 times the average salary for the public holiday work. 

Salary payment

Salary shall be paid in national currency.

Date of payment

Monthly salary shall be paid in two installments on fixed days.

Parental leaves

Maternity leave

Maternity leave for an employee is 120 days, however, leave for mothers who gave birth to twins is 140 days. Maternity benefits are calculated based on the average salary of the last 12 months and paid by Social Insurance General Office for 4 months. During the time of maternity leave, employer is obliged to retain employee’s position and pay employer’s social insurance contributions.

Paternity leave

Paternity leave for new fathers is 10 business days.

Childcare leave

An employee with a child under 3 years old regardless of gender is entitled to take a childcare leave until the child reaches 3 years old.

Employment of foreign nationals

Employment of foreign nationals is regulated by Labor Law, Labor Migration Law and Law on the Legal Status of Foreign Citizens According to the Labor Migration Law, foreign employees’ quota per economic sector is annually determined by the Cabinet The quota for 2023 ranges from 28000 foreign employees depending on a sector.

Total 20351 foreign employees are expected to work in 2023.

Quota for foreign employees in selected sectors:

As of the first quarter of 2023, 5.7 thousand foreign citizens from 99 foreign countries were working in Mongolia The number of foreign workers increased by 1.8 thousand 45.6 from the previous quarter and the largest change is observed in the construction sector by increase of 422 foreign employees 2.8 times)

 Number of foreign employees by selected sectors (Q1 2023):

In relation to employment of foreign nationals, the local employer is required to pay workplace fee equal to 2 times the minimum wage monthly basis. Furthermore, the local employer is responsible for paying employer’s contribution as well as withholding and reporting social and health insurance premiums monthly basis.

Social and health insurance

Social and health insurance contribution is mandatory for both employer and employee. Furthermore, It is applicable for non-residents too.

The base for accruing compulsory social and health insurance contribution is

  1. wages and allowances provided as per the Labor Law or
  2. remuneration under services or work contracts.

The Social insurance fund provides pensions and benefits including maternity allowance, sickness allowance, occupational accident allowance, unemployment benefits and pensions to employees.

Social and health insurance contribution rates

The employee’s social and health insurance contribution rate is 11.5%. However, the maximum social and health insurance contribution of employee is capped at MNT 632,500 per month.

An employer’s social and health insurance contribution rate per employee is 12.5% -14.5% from the gross salary of the employee depending on the business sector and there is no cap.  Furthermore the employer is obliged to deduct an employees’ portion of social insurance contribution from an employee’s monthly gross salary and pay it to the Social Insurance Fund. Details of social and health insurance contributions are shown below:

Social and health insurance contribution rates:

Deadline for reporting and payment

Investment law and regulations

The key legislation regulating foreign investment in Mongolia is the Investment Law (2013) sets out a legal framework and regulates, among others, the protection of the interest of investors, legal protection of investors, provision of tax and non-tax incentives to investors as well as rights and obligations of government authorities and investors.   

Under the Investment Law, an investor means both a domestic investor and a foreign investor, the latter of which is defined as a foreign person, legal or natural person (a citizen of a foreign state or stateless person who does not permanently reside in Mongolia or a Mongolian citizen who resides permanently in a foreign state), investing into Mongolia.   

The Investment Law recognizes the following types of investment by an investor: 

  • Establishment of a legal entity solely or jointly with other investors 
  • Purchase of shares, bonds, and other types of securities 
  • Merger and acquisition 
  • Implementation of public and private sector partnership projects and entering into a production sharing agreement, marketing agreement, management agreement, and other types of agreements 
  • Financial lease and franchise 
  • Other forms of investment that are not prohibited by law 

Furthermore, the Investment Law sets out common protections for investors which include important protections such as a prohibition on the illegal seizure of investors’ properties in the territory of Mongolia, protection of intellectual property rights, eminent domain (investors’ properties can be expropriated only based on public interest as per the legally established procedure with full repayment) as well as repatriation of profits out of Mongolia through dividends, liquidation proceeds, profit from the payment of license fee and use of intellectual properties, interest and loan payment among others. 

Whilst incentives, opportunities and protections under the Investment Law apply to both domestic and foreign investors, some requirements may differ for foreign investors including:

Minimum capital investment requirement  

each foreign investor will need to invest a minimum of USD 100,000 into a Mongolian registered company if the foreign investor is to hold 25 percent or more of the issued shares in the Mongolian company according to Article 3.1.5 of the Investment Law;  

Permission for investment by a foreign state-owned legal entity  

a permission from the MED must be obtain if a foreign state-owned entity (50% or more of the shares are directly or indirectly held by a foreign state) is to hold 33% or more of the issued shares of a Mongolian registered entity operating in the mining, banking and finance, or publication, media and communication sectors; and 

Land use rights –the Investment Law provides that a non-tax incentive can be provided to investors by granting land use or possession rights for up to 60 years extendable once for another 40 years. However, the Cabinet has a right to determine land use right tenure in accordance with the Land Law of Mongolia (2006) and this may contradict with the Investment Law in case of foreign invested companies.  

To promote foreign direct investment and eliminate a differentiated treatment for foreign investors and among others the Cabinet has proposed a revised Investment Law of Mongolia with the Parliament in June 2023.


Tax stabilization certificate 

Moreover, a tax stabilization certificate to the Investment Law is aimed to provide regulatory stability and certainties  for investors in terms of tax rates for certain period of time. If obtained, the certificate ensures the following applicable tax rates remain stable: 

  • CIT,  
  • Customs duties,  
  • VAT, and  
  • Mineral royalty tax (excluding mining products produced from derivative deposits).

The period of tax rate stabilization ranges from 5 to 18 years, depending on the investment amount, industry, and geographic location in Mongolia. This period may be extended by 1.5 times for specific projects provided that certain conditions are met. A government agency in charge of investment has a mandate to review investors’ request for a tax stabilization certificate and make decisions in 30 days.  

The main criteria for obtaining a tax stabilization certificate are:  

  • The total investment amount reaches thresholds specified in the Investment Law  
  • A general environmental impact assessment should be carried out, 
  • A detailed environmental impact assessment (if applicable), 
  • The investment should have create permanent jobs, and 
  • The investment should introduce innovative technology.

Investors can also opt for more advantageous tax rates provided by general legislation during the validity of the certificate. However, tax stabilization benefits do not apply to investors involved in tobacco and alcohol-related business. 

 Details on the tax stabilization certificate 

Stabilization certificate terms for investment projects in mining, heavy industry and infrastructure sectors:

Stabilization certificate terms for investment projects in all other sectors:  

Investment agreement 

 An investment agreement can be concluded with the government if an investor invests MNT 500 billion or is granted a tax stabilization certificate for an investment project exceeding MNT 500 billion. The investment agreement sets out the following terms and conditions as outlined in the Investment Law unless otherwise specified by applicable laws:  

  • provision of legal guarantees,  
  • ensuring tax stability, and  
  • receiving coordination and financial support. 

  Investment treaties 

 As of the date of this report, the Government of Mongolia signed 44 bilateral investment treaties (BITs), 37 of which are in force. The majority of these treaties were concluded between 1991 and 2001, and approximately half of the treaties were entered with countries of the European Union countries. Moreover, Mongolia is a signatory to 22 investment-related instruments (IRIs) and 4 treaties with investment provisions (TIPs). 

 Bilateral investment agreements (BIT) – (Guidebook 2023 appendix 6 page 114-118 татах) 


Treaties with Investment Provisions (TIPs)