Tax

  • Share

Your business will only achieve its true potential if you build it on strong foundations and grow it in a sustainable way. At EY, we believe that managing your tax obligations responsibly and proactively can make a critical difference. Our tax team brings you technical knowledge, business experience and consistent methodologies, all built on our unwavering commitment to quality service.

  • Tax advisory and planning
    • Our team has a detailed technical understanding of the current tax laws of Mongolia and is at the forefront of developments and trends that are critical for longer term planning in a dynamic and evolving tax environment. In addition to offering advice on interpretation and administration of tax laws, our tax planning specialists work with companies to assess the overall tax efficiency of a group’s operation. This can , help identify tax pressure points and planning opportunities to mitigate tax burdens in a transparent manner consistent with the law and defendable to the Mongolian Tax Authorities.
    • Areas of focus include:
      • Tax structuring: choice of appropriate structure (holding, financing and operating) is extremely important from a commercial as well as regulatory perspective. The type of structure adopted can determine flexibility in tax planning. Holding companies, specialist trading and service entities, finance vehicles and intellectual property entities should all be considered in order to possibly improve a company’s tax efficiency.
      • Tax effective supply chain management and transfer pricing for related party transactions; including international best practice pricing benchmarking and defence materials. Transfer pricing is becoming an increasing area of focus in Mongolia’s tax landscape.
      • Withholding tax management: Mongolia has a 20% withholding tax on most payments offshore including dividends and service fees which can be a significant cost of doing business in Mongolia.
      • Interpretation and utilisation of Mongolia’s comprehensive double tax treaty network.
      • Sharing experiences and leading practices to help with risk management and identify tax opportunities.
  • Tax policy and controversy
    • As an emerging market, Mongolia’s tax landscape is experiencing continuous change as policy makers attempt to protect strategic assets without deterring foreign investment. Controversy risks are also present as investors seek to conduct business in an environment where the tax law is not yet mature and formal rulings are often difficult to conclude. The result has been more frequent, complex and higher value matters of difference between taxpayers and taxing authorities.
    • Our team can assist with:
      • Tax audits and dispute resolutions;
      • Obtaining advanced clarifications from the Mongolian Tax Authorities;
      • Reviewing and providing counsel on specific tax positions;
      • Direct legislative engagement support; and
      • Developing long-term strategic plans that incorporate potential effects of new policy or legislation.
  • Transaction tax

    We assist companies with all levels transaction tax strategy, execution and effectiveness, including:

    • Strategy:
      • To achieve tax efficiency and flexibility of holding/funding structure
      • To minimise tax leakage on repatriation and on operating and financing cash flows
      • To match tax relief for interest on acquisition debt with the underlying profits
      • To enhance commercial synergies by making them tax efficient
      • Assistance with tax modeling and quantitative analysis
    • Execution:
      • Tax due diligence, a key ingredient in a successful deal to help ensure all material historical tax liabilities are
      • identified and quantified, which often results in crucial negotiation insights.
      • Review of tax indemnities or clauses associated with legal documentation.
      • Explaining Mongolian tax aspects of a deal to ‘non tax’ stakeholders like lending banks, deal decision makers
    • Effectiveness:
      • Effective implementation of structure
      • Post deal execution and integration
      • Tax ruling requests
      • Tax review of transaction costs and tax efficient recharging
      • Post deal review and validation of model
      • Follow up to address tax due diligence findings
      • Creating competitive tax synergies (eg. Tax efficient supply chains, IP planning, t ax enhancing financing).

    Although the focus is principally the tax considerations for buy side transactions, we similarly advise on sell side transactions, broadly providing support to help companies retain control over a transaction’s critical tax terms and structure, thereby helping to increase the value received and reduce the taxes paid in connection with a disposition. Also sell side tax due diligence services to identify and address the potential historical tax risks inherent within a company being divested – along with potential tax effective disposition strategies – with a view to providing greater transparency for both parties and ultimately realise increase value for the vendor.

  • Tax compliance and reporting
    • The Mongolian tax compliance landscape is quite comprehensive, with many different filing requirements for various taxes including corporate income tax, value added tax, withholding tax and social and health insurance. There are a minimum of 32 monthly and annual returns required for companies operating in Mongolia, and often more depending on the industry and level of complexity of an organisation – both electronic and paper filing depending on which district.
    • Our dedicated tax compliance team has experience in managing all of a company’s filing obligations, either in totality or in a review capacity, which can help manage risk. Our tax compliance process is designed to address your compliance requirements efficiently, reduce mistakes and avoid surprises. Our methodology comprises five steps: Plan, Gather, Analyse, Deliver, and Evaluate, with the critical element of continuous communication and project management being key drivers throughout our service delivery.
  • Indirect tax
    • VAT continues to be a high-risk area for companies. For Mongolian-based companies, or anyone who has trading relations with Mongolia, the main challenge with respect to Mongolian VAT is the country’s ‘grey areas’ in relation to whether transactions are subject to VAT, 0% rated or exempt, documentation standards and administration which often sees input VAT credits being challenged or denied.
    • Our team has in-depth knowledge of Mongolian VAT and customs regulations, and is ready to advise you on all indirect taxation related matters, including managing and reducing your indirect tax costs, implementing VAT and customs strategies to meet your organisation’s goals and business needs, VAT reclaim assistance for both local and foreign companies, documentation and administration challenges, and utilising all of the planning opportunities available to your group.
  • People shared service
    • Obtaining and maintaining permission for expatriates to work and reside legally in Mongolia is fundamental factor.
      • We help local companies and foreign investors comply with Mongolia’s immigration regulations and apply for relevant visa. The visa types vary depending on the purpose of expatriate visiting to Mongolia.
      • Visa types:
      • Business visa: A single-entry business visa that is ideal for visitors up to 30 days
      • Investor visa: The investor or the representative of investor (typically, for the senior management of the company) who has invested in Mongolian company or established his/her own company 
      • Work Visa: It allow  foreign visitors to work and reside in Mongolia.