The Reasons for Set Up Business in Mongolia
Mongolia has been steadily working towards building an attractive FDI environment and increasing business opportunities, ranking 74 out of 190 economies in the ease of doing business index by the World Bank Group in 2019. Learn the important advantages for foreign businesses when they go to set up business in Mongolia.
30 October 2013, the Mongolian government passed a new Investment Law as a positive move to encourage a more stable investment climate. The new law has provided many advantages while simplifying various procedures.
Important advantages that should be noted for foreign businesses who are interested to set up business in Mongolia are:
- They have the same rights as domestic businesses while having a legal framework set up to protect their interests, although they still need to meet local hire requirements
- Also, they have an increased quota for foreign employees
- They are treated the same as domestic businesses and hence qualify for investment incentive packages which among other benefits, include tax stabilization for a period of years
- Also, they do not face restrictions on needing to purchase from local sources, exporting a certain percentage of output, or using foreign exchange to cover exports
- The new law simplifies the registration process by creating an Intellectual Property and State Registration Office (IPSRO) and reduces the length of time required to open a business from entry to operation by 30 days
Mongolia has also established free trade zones that are still being improved. There are three FTZs in Mongolia so far: Zamiin-Uud, Altanbulag and Tsagaannuur.
Companies that set up a business in Mongolia FTZs will enjoy reduced corporate income taxes based on the amount of capital invested. All goods imported or manufactured in the zones are exempt from VAT, customs duties and excise taxes.
FTZ companies are allowed to open bank accounts in all major international currencies like USD, Euro, and JPY. They also have no labour quota restrictions to meet.
Other reasons to set up business in Mongolia also include:
- The low personal income tax rate
- Cheap electricity and fuel costs because of abundant resources
- A rapidly growing economy that is seeking diversification
- Large mineral resource base that has an advantage for value-added processing
- Neighbours two giant markets: Russia and China
- Attractive FDI environment and trade through an open policy committed to reducing bureaucracy and corruption
- Recognition of the rule of law and the importance of transparency in government regulation
- One of the highest and premium quality cashmere producers in the world
- Young and well-educated working force
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