VAT
- VAT is a tax on consumption of goods and services. For goods, VAT is imposed and paid at each step of the manufacturing process: purchase of raw materials, processing of the raw materials, wholesaling of the goods, and retailing of the goods.
- The name of the tax comes from this concept as each of these steps “add value” to the ultimate product. For services, VAT is generally computed only at the point of sale to the final consumer.
- Unlike the corporate income tax, regardless of the size of the entity there is only one basic VAT rate (15%). Like other countries, there are certain other provisions and exemptions within the law that are designed to encourage and support various consumers and producers.
- Like most VAT's, the Mongolian VAT specifies a threshold (10 million MNT) of taxable sales revenue above which businesses are required to register for VAT. It also explicitly permits businesses below the threshold to register voluntarily provided they have proper bookkeeping and are not engaged exclusively in exempt activities.
Selected VAT Exemption
- Residential Rent
- Educational Services/ Medical Service
- Official Development Assistance (ODA) Projects
- Heavy Equipment for Priority Industries
- Agricultural Producers
- Gold Sales
- Tour Operator
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