Mongolia Investment Law & Regulations
Comprehensive guide to foreign investment rules, tax stabilization, and bilateral treaties.
The Investment Law Framework
The key legislation regulating foreign investment in Mongolia is the Investment Law (2013). It sets out a legal framework that regulates the protection of investors' interests, the provision of tax and non-tax incentives, and the rights and obligations of both government authorities and investors.
Definition of an Investor: Under the law, an investor means both domestic and foreign investors. A foreign investor is defined as a foreign legal or natural person (or a stateless person/Mongolian citizen permanently residing abroad) investing into Mongolia.
Recognized Types of Investment
- 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, production sharing agreements, marketing agreements, and management agreements.
- Financial lease and franchise.
- Other forms of investment not prohibited by law.
Common Protections
The law establishes a prohibition on the illegal seizure of investors' properties, protection of intellectual property rights, and eminent domain guarantees (expropriation only for public interest with full repayment). It also guarantees the repatriation of profits out of Mongolia through dividends, liquidation proceeds, license fees, and loan payments.
Specific Requirements for Foreign Investors
While incentives apply broadly, some requirements differ specifically for foreign investors:
- Minimum Capital Investment: Each foreign investor must invest a minimum of USD 100,000 into a Mongolian registered company to hold 25% or more of the issued shares.
- State-Owned Entities: Permission from the MED must be obtained if a foreign state-owned entity (50% or more held by a foreign state) wishes to hold 33% or more of shares in Mongolian entities operating in mining, banking/finance, or media/communications.
- Land Use Rights: Non-tax incentives include granting land use or possession rights for up to 60 years (extendable once for 40 years). *Note: The Cabinet determines land tenure per the Land Law (2006), which sometimes contrasts with the Investment Law for foreign companies.*
Investment Incentives
Mongolia offers distinct tax and non-tax advantages to encourage investment.
- Exemption from taxes
- Tax reduction
- Accelerated depreciation deduction from taxable income
- Carry forward of losses
- Exemption from customs duty and value-added tax (VAT)
- Land possession / use for up to 60 years, extendable by 40 years
- Support for operations in free economic zones and industrial parks
- Support for obtaining visas and residency permits
- Provision of infrastructure guarantees
Tax Stabilization Certificates
A tax stabilization certificate aims to provide regulatory stability for investors for a certain period. It ensures the following rates remain stable: CIT, Customs Duties, VAT, and Mineral Royalty Tax (excluding derivative deposits).
Main Criteria for Obtaining a Certificate:
- Total investment reaches statutory thresholds.
- General/Detailed Environmental Impact Assessments are carried out.
- Creates permanent jobs.
- Introduces innovative technology.
Note: Does not apply to tobacco and alcohol-related businesses.
Stabilization Terms by Sector & Amount
Select a sector below to view the required investment amounts and duration (ranges from 5 to 15 years, extendable up to 1.5x under specific conditions).
| Location / Region | Investment Amount (MNT Billions) | Stabilization Duration |
|---|---|---|
| Central Region | 30 - 100 | 5 years |
| 100 - 300 | 8 years | |
| 300 - 500 | 10 years | |
| 500+ | 15 years | |
| Khangai, Western, Eastern Regions | 15 - 50 | 5 years |
| 50 - 150 | 8 years | |
| 150 - 250 | 10 years | |
| 250+ | 15 years | |
| Under-developed Region | 10 - 30 | 5 years |
| 30 - 100 | 8 years | |
| 100 - 200 | 10 years | |
| 200+ | 15 years |
| Location / Region | Investment Amount (MNT Billions) | Stabilization Duration |
|---|---|---|
| Central Region | 10 - 30 | 5 years |
| 30 - 100 | 8 years | |
| 100 - 200 | 10 years | |
| 200+ | 15 years | |
| Khangai, Western, Eastern Regions | 5 - 15 | 5 years |
| 15 - 50 | 8 years | |
| 50 - 100 | 10 years | |
| 100+ | 15 years | |
| Under-developed Region | 2 - 10 | 5 years |
| 10 - 30 | 8 years | |
| 30 - 50 | 10 years | |
| 50+ | 15 years |
Investment Agreements
An investment agreement can be concluded with the government if an investor invests MNT 500 billion or more. This agreement outlines legal guarantees, tax stability, and financial support coordination.
Investment Treaties (BITs & TIPs)
The Government of Mongolia has signed 44 Bilateral Investment Treaties (BITs), 37 of which are in force. Mongolia is also a signatory to 4 Treaties with Investment Provisions (TIPs).
Bilateral Investment Treaties (BITs)
Scroll to view the list of established agreements.
| Partner Country | Date of Signature | Status / Entry into Force |
|---|---|---|
| Austria | 2001 | In Force |
| Belarus | 2001 | In Force |
| Belgium / Luxembourg | 1992 | In Force |
| Canada | 2016 | In Force |
| China | 1991 | In Force |
| Czech Republic | 1992 | In Force |
| Denmark | 1995 | In Force |
| France | 1991 | In Force |
| Germany | 1991 | In Force |
| Italy | 1993 | In Force |
| Japan | 2001 | In Force |
| Kazakhstan | 1994 | In Force |
| Kuwait | 1998 | In Force |
| Malaysia | 1992 | In Force |
| Netherlands | 1995 | In Force |
| Russia | 1995 | In Force |
| Singapore | 1995 | In Force |
| South Korea | 1991 | In Force |
| Switzerland | 1997 | In Force |
| Turkey | 1998 | In Force |
| United Kingdom | 1991 | In Force |
| United States | 1994 | In Force |
Treaties with Investment Provisions (TIPs)
| Treaty Name | Date of Signature |
|---|---|
| Japan - Mongolia EPA | 2015 |
| Asia-Pacific Trade Agreement (APTA) | 2020 (Accession) |
| Energy Charter Treaty | 1994 |
| United States - Mongolia TIFA | 2004 |