Mongolia – Taxation of international executives

Taxation of international executives

Taxation of international executives

  

Income Tax

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

15 February.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Mongolia?

Mongolia operates a self-assessment tax return filing system. All tax returns are to be filed on an individual basis.

Tax returns are due to be filed with the local tax office by 15 February following the end of the tax year. The balancing payments are due by the same date. There are no available extensions to file or pay the tax due for individuals.

Residents

Residents are subject to income tax on their worldwide income. If the correct amount of personal income tax has been withheld from the individual’s employment or investment income (such as bank interest), there is no requirement to file a tax return. Residents are only required to lodge a tax return if they received income which had not been taxed in Mongolia at source (e.g. foreign investment income, Mongolian rental income etc.).

Non-residents

Non-residents are subject to tax on certain categories of income from Mongolian sources under the concept of limited tax liability. If their income from employment is subject to personal income tax withholding, and the tax obligations have already been fulfilled, then no Mongolian tax return needs to be filed.

Tax rates

What are the current income tax rates for residents and non-residents in Mongolia?

Residents

As a general rule, personal income tax is levied at a flat 10 percent rate for resident taxpayers. There are certain types of income which are either exempt or subject to final withholding tax.

The following income is subject to specific personal income tax rates:

  • Income from sale of immovable property – 2 percent final withholding tax
  • Income from gambling quiz and lottery – 40 percent final withholding tax
  • Income from artistic performance and sport competitions – 5 percent final withholding tax

Non-residents

Non-residents are subject to a flat 20 percent tax rate on any Mongolian sourced income.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Mongolia?

An individual taxpayer shall be considered a tax resident of Mongolia, if:

  • Person has resided in Mongolia for 183 days or more in consecutive 12 months period; or
  • If 50 percent or more of the taxable income includes Mongolian sourced income; or
  • Person is a Mongolian civil servant appointed to work overseas.

In first year of arrival, an individual can have a split residency status. This means that for first 183 days spent in Mongolia, they are considered as a non-resident for tax purposes. Once their stay in Mongolia exceeds 183 days, they become a resident from the 184th day and onwards.

Furthermore, an individual who come to Mongolia with an intention of living and working in Mongolia for 183 days or more in consecutive 12 months under the work permit visa, they can be registered as a tax resident of Mongolia from the date of arrival.

In connection with the COVID-19 pandemic, there is no special measures are developed in Mongolia in connection with determining residency.

Is there a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/jurisdiction for more than 10 days after their assignment is over and they repatriate.

No.

What if the assignee enters the country/jurisdiction before their assignment begins?

The number of days of the individual’s physical presence in Mongolia needs to be counted starting from their first entry to Mongolia; this includes any pre-assignment visits and business trips. Tax obligation for Mongolia-sourced income would not occur until the assignee receives the work permit and work visa.

Termination of residence

Are there any tax compliance requirements when entering or leaving the country/jurisdiction?

The individual taxpayer should be registered with the Mongolian Tax Authorities on arriving in Mongolia in order to obtain a tax reference number. It is also possible to obtain a Tax Book which may serve as evidence of tax payments made to the Mongolian Tax Authorities.

On departure from Mongolia, there are no additional tax requirements to comply with over and above the annual tax return filing process. Once all outstanding taxes have been settled with the Mongolian Tax Authorities, the taxpayer may be deregistered in Mongolia.

Departure tax

Not applicable.

What if the assignee comes back for a trip after residency has terminated?

Any post-assignment trips to Mongolia will need be included when calculating the individual’s days of presence in Mongolia for the purposes of determining the tax residence position in the year of departure.

Communication between immigration and taxation authorities

Do the immigration authorities in Mongolia provide information to the local taxation authorities regarding when a person enters or leaves Mongolia?

Yes, this information is provided where necessary. In addition, immigration documentation must be provided to the tax authorities when the individual is registered or deregistered for tax purposes. Starting from 1 January 2020, the Immigration Authority and Tax Authority were planning to use the same unique identification number for foreign nationals. At the time of this update, this is not implemented yet.

Filing requirements

Will an assignee have a filing requirement in the host country/jurisdiction after they leave the country/jurisdiction and repatriate?

The assignee may be required to file the annual personal income tax return in the year of departure – see above.

Economic employer approach

Do the taxation authorities in Mongolia adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Mongolia considering the adoption of this interpretation of economic employer in the future?

No. Currently MTA is not considering the adoption of the economic employer approach. However, where an assignee is on “HG” type visa (i.e. work permit visa which is always sponsored by the resident entity), the visa sponsoring entity automatically triggers the obligation for itself to withhold PIT and Social Health Insurance from the day work permit is issued.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?

Not applicable.

Types of taxable compensation

What categories are subject to income tax in general situations?

As a general rule, almost all items of compensation and benefits received directly and indirectly for the work performed are taxable in Mongolia. The following list covers the typical items of an expatriates remuneration which are subject to Mongolian personal income tax. Please note this is not a comprehensive taxable list:

  • Base salary, additional wages, overtime pay, bonuses, assignment allowances and incentives, vacation pay, pension contributions made on behalf of the employee, and any employment allowances earned in accordance with the individual’s employment contract;
  • Any allowances provided by the employer to the individual or individual’s family member(s) ;
  • Gifts provided by the employer to an individual or individual’s family member(s) ;
  • Salaries, wages, bonuses, and any other incentives of members of a board of directors, control committees, part-time committees, task force, and any income akin to these;
  • All types of bonuses and incentives issued by both foreign and domestic business entities, citizens and other entities.

Intra-group statutory directors

Will a non-resident of Mongolia who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Mongolia trigger a personal tax liability in Mongolia, even though no separate director's fee/remuneration is paid for their duties as a board member?

No unless they visit or enter Mongolia under a C type work visa.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Mongolia?

No unless they visit or enter Mongolia under a C type work visa.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Mongolia (i.e. as a general management fee where the duties rendered as a board member is included)?

Yes, if the cost is directly charged to the company in Mongolia. Where the cost is indirectly charged through a general management fee, CIT and VAT shall be applicable.

c) In the case that a tax liability is triggered, how will the taxable income be determined?

Not applicable

Tax-exempt income

Are there any areas of income that are exempt from taxation in your country/jurisdiction? If so, please provide a general definition of these areas.

There are very few exemptions/reliefs provided for in the legislation.

A tax credit may be deductible from Mongolian personal income tax of residents who receive employment income. The amount of the tax credit is currently a maximum of MNT240,000 and is reduced for each income bracket. Individuals with annual income of MNT36 million or more are not entitled to a tax credit. In addition, certain income is tax-exempt under the Personal Tax Law, including:

  • Certain employee pensions, benefits, payments and reimbursements,
  • Income earned by disabled persons
  • Payments, interest and penalties for Government notes payable (i.e. Government bonds).

Expatriate concessions

Are there any concessions made for expatriates in your country/jurisdiction?

No.

Salary earned from working abroad

Is salary earned from working abroad taxed in Mongolia? If so, how?

Individuals resident in Mongolia are taxable on their worldwide income, including their salary earned from working abroad. Where such income has not been already taxed in Mongolia by means of employer withholding, the individual is required to file an annual personal income tax return to report the foreign salary income and remit the tax due to the Mongolian Tax Authorities.

Where there is a double taxation agreement in place between Mongolia and the foreign country/jurisdiction, a tax credit may be available depending on the terms of the treaty.

Effective from 1 January 2020, a foreign tax credit (FTC) is available under the domestic legislation where there is an Agreement on exchange of information on tax matters in place between Mongolia and the foreign country. Subject to this condition, if an individual’s income is taxed in foreign country and that income is also taxable in Mongolia, an individual may claim FTC for the taxes paid in foreign country on the same income (on a source by source basis). If the foreign tax is less than Mongolian PIT liability, then the difference shall be due. 

Taxation of investment income and capital gains

Are investment income and capital gains taxed in your country/jurisdiction? If so, how?

Dividends, interest, and rental income

Dividends, interest and net rental income are subject to Mongolian personal income tax at the flat rate of 10 percent for residents and 20 percent for Mongolian sourced income of non- residents.

Gains from employee stock option exercises

Yes.

Foreign exchange gains and losses

No.

Principal residence gains and losses

Total proceeds, as opposed to a gain, from the sale of immovable property are subject to Mongolian personal income tax at a flat rate of 2 percent. There is no principle residence exemption in Mongolia.

Capital losses

The Mongolian legislation does not specifically discuss availability of capital losses; in practice, any capital losses (e.g. on the sale of shares) may be utilized to reduce the capital gains made in the same tax year, however, there is no facility to carry forward the losses to subsequent tax years.

Personal use items

No.

Gifts

There is no inheritance or gift tax in Mongolia.

However, note that employment income includes also gifts made by an employer to an employee or employee’s family member. For taxation of employment income see comments above.

Foreign property reporting

No.

Non-resident trusts

No.

Additional capital gains tax (CGT) issues and exceptions

Are there capital gains tax exceptions in your country/jurisdiction? If so, please discuss.

Pre-CGT assets

No.

Deemed disposal and acquisition

No.

General deductions from income

What are the general deductions from income allowed in your country/jurisdiction?

The employee Social Security contributions (maximum MNT5,796,000 per tax year) are deductible in arriving at the individual’s taxable employment income for resident taxpayers. The social security contributions are not deductible when calculating taxable employment income for non-resident taxpayers.

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in your country/jurisdiction?

The most common form of tax reimbursement is current year gross-up. This enables the tax payable by the employer and the income to which it relates to be dealt with together in the same year’s tax calculation.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in your country/jurisdiction? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

Currently no tax estimates or prepayments are required in Mongolia as the tax rate is a flat 10 percent rate or a flat 20 percent rate. Personal Income Tax is withheld from the individual’s salary by the employer and remitted to the Mongolian Tax Authorities on a monthly basis.

When are estimates/prepayments/withholding of tax due in your country/jurisdiction? For example, monthly, annually, both, and so on.

Withholding tax payment due on monthly basis.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in your country/jurisdiction? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Mongolia currently has double taxation agreements with the following countries/jurisdictions:

  • Austria
  • Belarus
  • Belgium
  • Bulgaria
  • Canada
  • Czech Republic
  • Democratic People’s Republic of Korea
  • France
  • Germany
  • Hungary
  • India
  • Indonesia
  • Kazakhstan
  • Kyrgyzstan
  • Malaysia
  • People’s Republic of China
  • Poland
  • Republic of Korea
  • Russia
  • Singapore
  • Switzerland
  • Turkey
  • Ukraine
  • United Kingdom

General tax credits

What are the general tax credits that may be claimed in your country/jurisdiction? Please list below.

Following tax credit is deductible from Mongolian personal income tax of resident who receive Mongolian employment income:

Annual taxable employment - income (MNT)

2019 credit

2020 credit

2021 credit

Up to 6,000,000

240,000

240,000

240,000

6,000,001 – 12,000,000

220,000

216,000

216,000

12,000,001 – 18,000,000

200,000

192,000

192,000

18,000,001 – 24,000,000

180,000

168,000

168,000

24,000,001 – 30,000,000

160,000

144,000

144,000

30,000,001 – 36,000,000

140,000

120,000

120,000

Over 36,000,000

-

-

-

Sample tax calculation

The sample tax calculation assumes that the individual is resident in Mongolia during their assignment which runs from 1 January 2021 to 31 December 2021, in US dollars (USD).

 

2019

USD

2020

USD

2021

USD

Salary

100,000

100,000

100,000

Bonus

20,000

20,000

20,000

Cost-of-living allowance

10,000

10,000

10,000

Housing allowance

12,000

12,000

12,000

Company car

6,000

6,000

6,000

Moving expense reimbursement

20,000

0

20,000

Home leave

0

5,000

0

Education allowance

3,000

3,000

3,000

Interest income from non-local sources

6,000

6,000

6,000

Exchange rate used for calculation: USD1.00 = MNT2,800.00.

Other assumptions

  • All employment income is attributable to Mongolia. All allowances are paid gross and in cash.
  • The individual is resident in Mongolia throughout their assignment.
  • All moving expenses can be substantiated with appropriate receipts or invoices. All numbers provided in the calculations are rounded up to closest MNT1,000.

Calculation of taxable income

Year-ended

2019

In thousand MNT

2020

In thousand MNT

2021

In thousand MNT

Days in Mongolia during year

365

365

365

Earned income subject to income tax:

 

 

 

Salary

280,000

280,000

280,000

Bonus

56,000

56,000

56,000

Cost-of-living allowance

28,000

28,000

28,000

Housing allowance

33,600

33,600

33,600

Company car

16,800

16,800

16,800

Moving expense reimbursement

0

56,000

56,000

Home leave

14,000

0

0

Education allowance

8,400

8,400

8,400

Total earned income

436,800

478,800

478,800

Investment income

16,800

16,800

16,800

Total income

453,600

495,600

495,600

Deductions (SHI)

4,416

5,796

5,796

Total taxable income

449,184

489,804

489,804


Calculation of tax liability

Taxable income as above

449,184

489,804

489,300

Income tax (federal and provincial) thereon

44,918

48,980

48,930

Less

 

 

 

Non-refundable tax credits1

-

-

-

Total income tax

44,918

48,980

48,930

Employee contribution to Pension Plan

-

-

-

Employee contribution to Employment Insurance (SHI)

64,638

64,638

64,638

Employer contribution to Employment Insurance (SHI)2

64,638

64,638

64,638


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FOOTNOTES

1 Annual income is over MNT36 million and therefore there is no tax credit available.

2 Employer contribution to Employment insurance (SHI) row is added and calculated or completeness.

  

Special considerations for short-term assignments

Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency Rules

Are there special residency considerations for short-term assignments?

No. However note that where assignee’s original plan was to stay more than 183 days in Mongolia and has applied for a resident 10 percent tax rate. If they decide to terminate the assignment before reaching 183 days, then the assignee must perform re-calculation of their tax liability at non-resident tax rate and remit the remaining tax due. 

Payroll considerations

Are there special payroll considerations for short-term assignments?

No.

Taxable income

What income will be taxed during short-term assignments?

Provided that the assignee remains in Mongolia for 183 days or less during the tax year, only their Mongolian-sourced employment income should be taxable in Mongolia.

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in your country/jurisdiction?

No.

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Other taxes and levies

Social security tax

Are there social security/social insurance taxes in your country/jurisdiction? If so, what are the rates for employers and employees?

The Mongolian Social Security System provides for pension, health, disability and unemployment benefits, amongst others. Participation is mandatory for all Mongolian citizens, foreigners and stateless persons employed within the territory of Mongolia.

The employee contributions are capped at MNT483,000 per month whilst the employer contributions are uncapped and range from 12.5 percent to 14.5 percent of the employees’ remuneration depending on the sector.

The employers are responsible for withholding social security contributions and transferring them to the relevant authorities on a monthly basis.

Type of insurance

Paid by employer

Paid by employee

Total

Pension Insurance

8.5%

8.5%

17%

Benefit Insurance

1.0%

0.8%

1.8%

Health Insurance

2%

2%

4%

Industrial Accident Insurance

0.8-2.8%

0%

0.8-2.8%

Unemployment Insurance

0.2%

0.2%

0.4%

Total

12.5-14.5%

11.5%

26-28%

Pension Plan

Workers who have contributed to Social Security are eligible for social security benefits. Pension benefits are paid to a worker upon their retirement. Private pension plans are not typically offered by Mongolian employers. Unless specifically allowed for under the treaty provisions, pension contributions to a foreign pension plan are not typically allowed as a deduction from taxable income, and any pension contributions made to a foreign pension plan by the employer on employee’s behalf constitute part of the employee’s taxable income.

Employment insurance

Aid benefits are paid to a worker or the worker’s family upon disability, pregnancy or death. The amount of the benefit paid to a beneficiary depends on a number of factors, including their salary and the number of years they have contributed to Social Security. Health benefits are paid in case of a worker’s illness.

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in your country/jurisdiction?

No.

Real estate tax

Are there real estate taxes in your country/jurisdiction?

Immovable property tax applies to land and other immovable property at a rate between 0.6 percent and 1 percent, depending on the location, size and supply and demand of the property. The value of the property is determined in accordance with the state registry value, or insurance value, or book value in the accounting record. Tax is calculated annually and paid in either quarterly installments (in case of corporate entities) or annually (by individual taxpayers).

Sales/VAT tax

Are there sales and/or value-added taxes in your country/jurisdiction?

VAT is imposed on goods imported into and exported out of Mongolia, as well as any goods produced or sold, work performed, or services provided in Mongolia.

The standard VAT rate in Mongolia is 10 percent of the taxable value of the goods and services.

An individual taxpayer who has a Mongolian bank account may reclaim 20 percent of the VAT paid (i.e. 2 percent of the purchase) during the year by registering on a dedicated VAT refund portal and scanning in all eligible VAT receipts. This also gives them an automatic entry to a monthly state lottery with tax exempted cash prizes.

Unemployment tax

Are there unemployment taxes in your country/jurisdiction?

Unemployment insurance (employer: 0.2 percent, employee: 0.2 percent) is charged as part of the compulsory Social Health Insurance (see above).

Other taxes

Are there additional taxes in your country/jurisdiction that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Excise tax

Excise taxes in Mongolia are imposed on:

  • Alcohol
  • Tobacco
  • Gasoline and diesel fuel
  • Automobiles
  • Quizzes and gambling equipment and activities.

Rates vary from 0.0 percent to 15.0 percent depending on the type of product.

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?

In April 2017, Parliament approved amendments to Law on Managing and Preventing from conflict of interests in the public service. Under the law, only state and government officials are required to disclose offshore bank accounts.

There is no requirement to declare offshore assets for individuals other than government officials mentioned above.

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Immigration

Following is an overview of the concept of Mongolia’s immigration system for skilled labor.

(E.g. which steps are required, authorities involved, in-country/jurisdiction and foreign consular processes, review/draft flow chart illustrating the process)

This summary provides basic information regarding business visits to, and work authorization for, Mongolia. The information is of a general nature and should not be relied upon as legal advice.

Most foreign nationals who intend to perform productive duty in Mongolia will need a work permit, work visa and residency permit. Depending on the purpose of travel to Mongolia and the nationality of the traveler, there are different types of visas available. Without a local employer (visa sponsor), technically there are no visa categories available under the domestic legislation which would allow a foreign national to legally undertake employment in Mongolia.

International Business Travel/Short-Term Assignments

Describe (a) which nationalities may enter Mongolia as non-visa national, (b) which activities they may perform and (c) the maximum length of stay.

Mongolia also has specific agreements with several countries/jurisdictions, which allows nationals of those countries/jurisdictions to enter in Mongolia for a business purpose (“non-productive” duties) without any visa requirement. Generally, these business visitors are prohibited from engaging in employment or productive activities in Mongolia.

The nationals of the following list of countries/jurisdictions (as of May 2021) are exempted from visa to enter Mongolia:

1

 The Republic of Philippines

All passports

Up to 21 days

2

 Malaysia

All passports

Up to 30 days

3

 The Republic of Kazakhstan

All passports

Up to 90 days

4

 The State of Israel

All passports

Up to 30 days

5

 Hong Kong SAR (China)

All passports

Up to 14 days

6

 The Kyrgyz Republic

All passports

Up to 90 days

7

 Ukraine*

All passports /with official invitation/

Up to 90 days

8

 The United States of America

All passports

Up to 90 days

9

 The Republic of Cuba

All passports

Up to 30 days

10

 Macau SAR (China)

All passports

Up to 90 days

11

 The Lao People’s Democratic Republic

All passports

Up to 30 days

12

 The Kingdom of Thailand

All passports

Up to 30 days

13

 Japan

All passports

Up to 30 days

14

The Federal Republic of Germany

All passports

Up to 30 days

15

The Republic of Belarus

All passports

Up to 90 days 

16

 The Republic of Turkey

All passports

Up to 30 days

17

 The Republic of Serbia

All passports

Up to 90 days

18

 Canada

All passports

Up to 30 days

19

 The Russian Federation

All passports

Up to 30 days

20

 The Federative Republic of Brazil

All passports

Up to 90 days

21

The Republic of Singapore

All passports

Up to 30 days

22

The Argentine Republic

All passports

Up to 90 days

23

Oriental Republic of Uruguay

All passports

Up to 30 days

24

 The Republic of Chile

All passports

Up to 90 days

25

Ecuador

All passports

Up to 90 days

Please note that visa exemption stay cannot be extended in-country/jurisdiction. Furthermore, non-visa foreign nationals cannot convert the stay into work visas whilst they are in the country/jurisdiction. In order to apply for work permit and work visa, they will need to leave the country/jurisdiction and re-enter with the appropriate approvals and visas.

Describe (a) the regulatory framework for business traveler being visa nationals (especially the applicable visa type), (b) which activities they may perform under this visa type and the (c) maximum length of stay.

"K1” type visa is for a foreign national to enter and stay in Mongolia for up to 30-90 days to perform non-productive activities in the country/jurisdiction and this visa cannot be extended whilst the employee in the country/jurisdiction. Multi-entry “K1” visa is available for foreign nationals who commute regularly.

Business like activities, including:

  1. Attend conference, meeting, seminar or training
  2. Participate in exhibition / negotiation
  3. Lecturer or speaker etc.

No salary/income should be provided by Mongolian entity (no cost recharge other than expenses incidental to the visit.

In the legislation, activities that are permitted for the duration of stay is not clearly regulated.

Outline the process for obtaining the visa type(s) named above and describe (a) the required documents (including any legalization or translation requirements), (b) process steps, (c) processing time and (d) location of application.

The following steps are necessary as a Lodgment process:

Online business visa request to Immigration Authority via (https://evisa.mn/main

  • Visa permit shall be issued within 5 business days at normal service and 3 business days at express service. Visa permit code shall be sent via message.
  • Visa on-arrival shall be applied 14 days prior to foreign national entry to Mongolia if he/she comes from country where the Mongolian diplomatic missions or consulates are not designated.

Core documents for Business single entry visa (To Immigration)

  1. Invitation letter by inviting organization (i.e. visitor’s primary address and embassy address where the visitor is going to apply for a visa should be clear on this letter)
  2. Copy of the state registration certificate of the inviting organization
  3. Copy of special licenses and its appendices
  4. Online application
  5. Copy of passport of the foreign national
  6. Receipt of stamp duty (service fee 15,500 Mongolian tugrik (MNT) per person)

Are there any visa waiver programs or specific visa categories for technical support staff on short-term assignments?

There are no such specific categories available for technical support staff on short-term assignments.

Long-Term Assignments

What are the main work permit categories for long-term assignments to Mongolia? In this context outline whether a local employment contract is required for the specific permit type.

The below are the work visas available for foreign nationals to live and work in Mongolia:

  • “B” visa is an investor visa for foreign nationals of foreign invested enterprises
  • “C” visa is an employment visa for a foreign national who is to work under employment contract with Mongolian resident entity.
  • “J” visa is for a foreign national who works for a religious organization.
  • “O” visa is for a foreign national who works for a non-government organization, or an international humanitarian organization.

“C” visa is an employment visa for a foreign national who is to work under employment contract with Mongolian resident entity. Local employment letter or international assignment letter shall be required for the work permit.

Provide a general process overview to obtain a work and residence permit for long- term assignments (including processing times and maximum validation of the permit).

The following steps are necessary as a Lodgment process:

Work permit pre-approval >> C visa >> Work Permit >> Residence Permit

PRIOR TO ARRIVAL

1) Application for a work permit pre-approval

Firstly, visa sponsor organization needs to obtain a work permit pre-approval for the employee, which will be issued by the Labour and Welfare Office within 10 working days, upon submission of application. Once the pre-approval is issued, it has to be submitted physically to the Immigration Office for the next step (visa application).

2) C Work Visa application

Once the Immigration Office receives the work permit pre-approval, they confirm the work pre-approval-code to the relevant consulate where the employee will apply for their visa at.

Following this, the employee is able to apply for a C Work Visa at the respective Mongolian embassy or consulate in their country/jurisdiction of residence or in any other country/jurisdiction. 

POST- ARRIVAL

3) Registration with the immigration authorities

Where the employee will stay in Mongolia for more than 30 days, they are required to register with Immigration Authority electronically within 48 hours upon arrival.

4) Work permit approval

Work permit application to be filed with the Labour and Welfare Office within 7-10 days of arrival after the employee has conducted the medical testing successfully. The work permit is issued within 3-5 working days upon submission of application.

5) Residence permit

After the issuance of the work permit, the employee has to apply for a Residence Card within 21 days. The Residence Card is to constitute a proof that the foreign national employee is residential in Mongolia, not required in order to commence work. It is issued within 5 working days (3 days with expedited service). With the Residency permit, the employee does not need to apply for a multiple entry C Visa again. While the resident permit is valid, it allows the employees to exit and enter the country.

Is there a minimum salary requirement to obtain a long-term work and residence permit for assignments? Can allowances be taken into account for the salary?

There is no minimum salary requirement to obtain a long-term work.

Is there a fast-track process which could expedite the visa/ work permit?

Not available at the moment for work permit and visa.

At what stage is the employee permitted to start working when applying for a long-term work and residence permit (assignees/ local hire)?

Technically once the work permit is issued from Labour and Welfare office upon arrival.

Can a short-term permit/ business visa be transferred to a long-term permit in Mongolia?

Short term visa cannot be converted to long term visa in country/jurisdiction.

Is it possible to renew work and residence permits?

Validity period for work permit and work visa is available for 12 months (within calendar year) and expires at 31 December each year. It is possible to renew the work permit, work visa and residence permit in country/jurisdiction.

Is there a quota or system or a labor market test in place?

Employer

There is a foreign-worker quota in Mongolia that is issued annually by the Government. While the quotas do vary, generally 5-80 percent of a company’s workforce may be represented by foreign nationals, depending on the industry and sector in which companies operate. This quota is renewed very slightly by end of each year for the following year.

In general, the employer should be able to demonstrate to be in compliance with this quota based on the actual number of employees and foreign workers (in percentage) at the time of application for the pertinent work permit.

Employee

An educational degree of the employee (minimum a bachelor´s degree or equivalent) must be submitted to request for work permit.

General Immigration Related Questions

Would it be possible to bring family members to Mongolia?

It is possible to invite family members to Mongolia.

Please note that family/dependent visa is available to married spouse, domestic partner, parents and kids to live in Mongolia.

Is it possible to obtain a permanent residence permit?

Not possible

What if circumstances change after the Work and Residence application process (e.g. change of employment or personal situation, including job title, job role or salary)

Change in terms of the employment or personal situation, including job title, job role or salary is not required to be notified unless the employee is transferring permanently to different employer in Mongolia.

How long can a permit holder leave Mongolia without their permit becoming invalid?

N/A

Must immigration permissions be cancelled by the end of the assignment/employment?

The cancellation is required for work visa and residency permit with the Immigration.

Are there any penalties for individuals and/or companies in place for non-compliance with immigration law?

Penalties could be deportation of the employees, restriction on re-entering Mongolia or monetary fines to employer and employees.

Other Important Items

In practice, some international companies second their employees to Mongolia to perform short term activities, which normally fall under “productive work” under the visa exemption or business visa, as long as the visits do not exceed 30-90 days. The reason for this is the long processing times for obtaining a C visa and work permit.

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Disclaimer

All information contained in this publication is summarized by KPMG Tax TMZ LLC, a Mongolian limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The information contained in this publication is based on

1. Personal Income tax Law of Mongolia (2019), Mongolian link: https://www.legalinfo.mn/law/details/14410?lawid=14410

2. Social Insurance law of Mongolia (1994), Mongolian link: https://www.legalinfo.mn/law/details/390?lawid=390

3. Labor code (1999), Mongolian link: http://www.legalinfo.mn/law/details/565

4. Law on Legal status of Foreign citizens (2010), Mongolian link: http://www.legalinfo.mn/law/details/211

5. Law on Sending and Receiving work force from abroad (2001), Mongolian link: http://www.legalinfo.mn/law/details/35?lawid=35

6. the Website of the Labour Welfare office, link: http://hudulmur-halamj.gov.mn/content/53

7. the Website of Immigration Authority, link: https://www.immigration.gov.mn/visa/3

8. the Consular Department of Ministry of Foreign Affairs, link: https://consul.mn/eng/index.php?moduls=23

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Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.