Mongolia is an East Asian landlocked nation bordered by Russia to the north and China to the south. It has a population of 3.3 million people and an area of 1,564,116 square kilometers (603,909 square miles), making it the world's most sparsely inhabited sovereign country. Mongolia is the world's biggest landlocked nation without a closed sea, with grassland steppe covering most of its territory and mountains to the north and west and the Gobi Desert to the south. Ulaanbaatar, the country's capital and biggest city, is home to about half of the population.
Various nomadic dynasties, including the Xiongnu, Xianbei, Rouran, and the First Turkic Khaganate, controlled the land of modern-day Mongolia. Genghis Khan established the Mongol Empire in 1206, which grew to become the world's greatest continuous land empire. Kublai Khan, his grandson, invaded China and established the Yuan dynasty. Except during the reigns of Dayan Khan and Tumen Zasagt Khan, the Mongols fled to Mongolia after the Yuan's demise and resumed their previous pattern of factional struggle. Tibetan Buddhism extended to Mongolia in the 16th century, aided by the Manchu-founded Qing dynasty, which annexed the nation in the 17th century. By the early twentieth century, Buddhist monks made up almost one-third of the adult male population. Mongolia proclaimed independence after the fall of the Qing empire in 1911, and obtained genuine independence from the Republic of China in 1921. Shortly after, the nation became a satellite state of the Soviet Union, which had helped it achieve independence from China. The Mongolian People's Republic was established as a socialist state in 1924. Following the 1989 anti-communist uprisings, Mongolia had its own peaceful democratic revolution in early 1990. This resulted in a multi-party system, a new 1992 constitution, and the shift to a market economy.
Approximately 30% of the population is nomadic or semi-nomadic, and horse culture is still important. The dominant religion is Buddhism, with the nonreligious being the second-largest group. Islam is the second-largest religion, mostly practiced by ethnic Kazakhs. The majority of people are ethnic Mongols, with Kazakhs, Tuvans, and other minorities accounting for around 5% of the population, with a concentration in the west. Mongolia is a member of the UN, the Asia Cooperation Dialogue, the G77, the Asian Infrastructure Investment Bank, the Non-Aligned Movement, and a NATO worldwide partner. Mongolia joined the World Trade Organization in 1997 and aims to increase its engagement in regional economic and trade organizations.
Employees are given 15 days of paid annual leave per year to begin with, with the number of days increasing with years of service.
New Year’s Day
Lunar New Year
International Women’s Day
Mother and Child Day
Naadam
Day of the Proclamation of the People’s Republic
Mongolian People’s Revolution
Employees are entitled to as much sick time as they require.
Maternity leave is granted to female employees for 120 days. It begins 60 days before the child's birth and concludes 60 days after the child's birth. Mongolia's social insurance scheme provides payouts to eligible employees. Employees are eligible for benefits if they have made at least 12 contributions in the six months before to taking maternity leave, and those contributions have been continuous. Employees who qualify earn 70% of their average wage and income for the previous 12 months.
Male employees do not receive paternity leave.
Mothers and single dads with children under the age of three are entitled to childcare leave. During this time off, the employer is responsible for paying the employee's social insurance.
Mongolia makes a distinction between collective bargaining agreements and collective bargaining contracts. Termination conditions and requirements differ according to the type of agreement or contract. An employment agreement may be terminated in the following circumstances: by mutual agreement of the employer and employee; upon the death of either the employer or employee; upon the expiration of the employment agreement without extension; if required by law; an improperly dismissed employee is reinstated to the position (the displaced employee must be provided with another job if possible); the employer and employee mutually agree; the employer and employee mutually agree; the employer and employee mutually agree; the employer and employee mutually agree; the employer and employee mutually agree. Unless otherwise agreed, an employee must offer 30 days' notice to an employer.
Employers may terminate employment agreements for the following reasons: the business is liquidated; the employee does not meet the job requirements due to a lack of professional qualifications or skill, or due to health reasons; the employee has reached retirement age and is eligible for a pension; the employee has repeatedly violated the employer's disciplinary rules or committed a serious offense.
Unless otherwise agreed, an employee must provide 30 days notice to an employer.
Employers must provide 30 days' notice to employees who are terminated due to the business's liquidation or inability to fulfill job requirements. Employers must give 24 days' notice to an employee's representative, such as a union, if they are dismissing an employee due to the business's dissolution.
In Mongolia, probationary periods of up to six months are allowed.
Severance pay is one month's wages if the employee is terminated due to military duty, the business's liquidation, or the employee reaches retirement age.
The typical workweek is 40 hours, with an eight-hour workday. Employees are entitled to two days of rest in a row, which are typically Saturday and Sunday.
On a regular day, overtime is paid at 150 percent of the basic rate; however, if an employee works on a public holiday and is not given another day off, overtime is paid at 200 percent of the basic rate.
Employees who work nights are entitled to overtime compensation, as determined by a collective bargaining agreement.
The minimum monthly salary is 420,000.00 MNT.
Healthcare is usually financed by the government, although depending on the treatment, people may be required to make co-payments.
Mandatory benefits postulated by law include a probationary period, pay on annual leaves, public holidays, sick leaves, maternity leave, paternity leave, and overtime pay. Statutory benefits also include social security benefits.
Mongolian resident economic enterprises are taxed on their whole yearly revenue generated around the globe. Non-resident economic entities doing business in Mongolia are taxed on revenue generated on Mongolian territory and from Mongolian sources.
Mongolian CIT is imposed at the following rates, based on a progressive scale ranging from 1% to 25%:
(1) 1% applies to entities with revenue of up to 300 million Mongolian tugrik (MNT) (except for those operating in mining, petroleum, alcoholic beverage, and tobacco industries).
(2) 10% applies to the first MNT 6 billion of annual taxable income.
(3) If annual taxable income exceeds MNT 6 billion, the tax shall be MNT 600 million plus 25% of income exceeding MNT 6 billion.
A Mongolian permanent resident taxpayer gets taxed on his or her global income. A non-resident Mongolian taxpayer is taxed on income generated on Mongolian territory throughout the tax year.
(1) If the source of income is the salary income, resident taxpayers are imposed a 10 percent.
(2) If the source of income is from property (i.e. dividends, royalties, interest, capital gain from sale of securities/stocks), resident taxpayers are imposed a 10 percent rate.
(3) If the source of income is the sale of immovable property (gross), resident tax payers are imposed a 2 percent rate.
(4) If the source of income is from scientific, literary, and artistic works, inventions, product designs, and useful designs (gross); income from sports competitions, art performances, and similar income (gross), resident tax payers are imposed a 5 percent tax rate.
(5) If the source of income is from from betting games, gambling, and lotteries (gross), resident tax payers are imposed an income tax rate of 40 percent.
All non-resident taxpayers are imposed a flat rate of 20 percent.
According to the VAT Law, every person (including legal organizations, individuals, and partnerships) with a sales revenue of MNT 50 million or more must register as a VAT withholder. The criterion for voluntary registration is MNT 10 million in sales revenue. The sale of fixed assets is not included against the VAT registration criteria.
VAT at the rate of 10% is levied on the supply of goods, services, and works imported, exported, and sold in Mongolia.
One distinctive aspect of Mongolian VAT law is that works and services acquired from a non-resident (regardless of whether they are provided in Mongolia or not) are liable to VAT under the reverse-charge process (the RC VAT).
Foreigners wishing to work in Mongolia must go through the visa application procedure, which must be initiated by the employer. Each year, the Mongolian government establishes a quota, which varies by industry but is normally set at between 5.00 percent and 20.00 percent of a company's entire employment in the nation, and which must be validated prior to application.
The three most often sought visas for working in Mongolia are shown below.
Foreign people with a single-entry business visa (B visa) may enter Mongolia for business purposes such as conferences and meetings. B visas are only valid for 30 days and must be sponsored by a Mongolian firm.
Foreign citizens who intend to work in Mongolia must get a work permit (HG visa). Before arriving in Mongolia, the applicant needs get an HG visa as well as a resident permission. It is the responsibility of the employer in Mongolia to apply for this visa.
Foreign investor visas, also known as T visas, are granted to foreign citizens who invest in a Mongolian firm or serve as executive directors of a Mongolian company. The visa is valid for six months or a year and may be extended.
There is a difference in Mongolia between employment agreements and employment contracts. Each has its own set of criteria and constraints, therefore the two are not interchangeable.
An employee agreement is used to outline a broad work relationship. The agreement might be indefinite or for a set amount of time. The employment agreement must be in writing, with a copy given to the employee. The work title or position, the responsibilities to be done, the compensation, and the labor conditions must all be specified in the employment agreement.
When an employee with unique or specialized abilities is hired, an employment contract is signed. The Mongolian government publishes a list of occupations that need an employment contract, which includes leadership roles such as chief executive officer, director, general manager, and other department heads. An employment contract has a maximum term of five years, although it may be extended based on the employee's performance. A written employment contract is required.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Mongolian Tugrik
You cannot establish a Mongolia subsidiary unless you have considered business issues, geography, and regional language. Begin by examining your industry, kind of company, current trade agreements, and other business objectives that may influence incorporation. Another consideration is location, since various towns or areas may have their own Mongolia subsidiary laws. Because the country's population is small, you should look for a location with a large number of people to recruit and other firms with whom you may collaborate.
Many English speakers are among Mongolia's younger population. However, all of your paperwork must still be translated into Mongolian. If you like to work with English speakers, explore the neighborhood where you want to integrate before selecting an office space to pick a location with a younger population that speaks English.
Finally, the Mongolia subsidiary formation procedure differs depending on the kind of organization selected. You have the option of forming a limited liability company (LLC), a joint stock company, or a representative office. Each structure has its own Mongolia subsidiary laws that govern how you may operate in the nation. Many businesses opt to incorporate as an LLC because it gives them the greatest independence, while a representative office gives them the least.
The following stages are involved in establishing a Mongolia subsidiary as an LLC:
1. Obtaining and retaining a distinctive business name
2. Making the registration fee payment
3. Incorporating your business requires you to register it.
4. Making a Taxpayer Registration
5. Obtaining a Social Security Number
6. Developing a corporate seal
It is essential to observe all of Mongolia's subsidiary legislation or face penalties and delays. LLCs must have one shareholder, who might be a non-resident foreign person or a firm. You'll also need one person to serve as a director. This individual does not have to be a Mongolian resident or citizen.
Before establishing the subsidiary, a shareholder with at least a 25% shareholding in the firm must deposit at least $100,000 into a Mongolian bank account. You need also create a local bank account to deposit share capital and pay personnel.
