Mongolia has become increasingly reliant on the mining sector, with extensive coal, copper, gold, and uranium deposits. The mining sector contributes considerably to Mongolian government revenues, mainly through mining royalties and corporate income tax. The Mongolian mining sector scores “satisfactory” in the Resource Governance Index 2021.
Main Mining Products
What Are We Doing in Mongolia?
In August 2019, we agreed to a joint work program with finance, taxation, and mining authorities in Mongolia to help the county improve mining revenue collection.
Legal and Policy Support
We have assisted policy-makers in drafting the mineral pricing provisions for new regulations for transfer pricing, ring-fencing mining income, and valuing mining licences for capital gains tax. These regulations were enacted in January 2020. In May 2021, we responded to the government’s request for support on policy to promote the value addition of minerals before they leave Mongolia, specifically on how these policies might interact with international trade or tax treaties.
We have conducted training workshops with Mongolian officials on transfer pricing, fiscal stabilization, ring-fencing, mineral pricing, and valuing exploration and mining licences for calculating capital gains tax.
We collaborated with the Organisation for Economic Co-operation and Development and Tax Inspectors Without Borders to assist with a transfer pricing audit, leading to a milestone tax assessment on a large-scale miner from Mongolia’s tax authority. We are now helping authorities with two more audits.
- IGF-MTA-OECD-TIWB Case Study | Tackling Multinational Tax Avoidance in Mongolia: From building modern legal frameworks and mining industry expertise to a major audit outcome (English, French, Spanish, and Mongolian)
- IGF-MTA-OECD-TIWB Announcement | The Mongolian Tax Administration partners with international organizations and issues first transfer pricing tax assessment for USD 228 million
“The most useful topic for me was pricing of different types of coal using the world market price database. In Mongolia, underpricing of coal in transactions both with related parties and independent parties is a common issue.”