Tax law amendments submitted to Parliament for discussion during the 2026 Spring Session

Mongolia • May 2026

Summary

The newly constituted Government has withdrawn the draft amendments to the tax legislation previously submitted to Parliament on 30 December 2025 and has, on 7 May 2026, submitted revised draft laws for parliamentary consideration. It is currently anticipated that these revised draft laws will be reviewed and potentially enacted during the 2026 spring session of Parliament, with entry into force expected from 2027.

Through this tax alert, we are providing a summary of the key amendments and changes reflected in the new draft laws, as well as the provisions that were removed from the draft previously submitted by the former Government on 30 December 2025.

1. Key amendments proposed to the General Tax Law:

• The extent to which a taxpayer complies with tax legislation will be determined based on the "Taxpayer Compliance Level" and assessed on a scale of up to 100 points. In determining the level, criteria such as the taxpayer's registration, filing, tax assessment, payment, and history of violations will be taken into account. Based on the resulting score, taxpayers will be classified as very good, good, average, or poor. The compliance level will be determined quarterly and annually and communicated to taxpayers through the integrated tax system.
• Penalties and fines assessed under additional tax assessment acts that are under review by the Dispute Resolution Council or the courts will not be collected from the taxpayer until a final decision is made.
• The amount of tax debt that may be recovered from funds credited to a taxpayer's frozen bank account without dispute may not exceed 80% of that income. It will be prohibited to make payments from the frozen account for dividends, payments to related parties, or expenditures connected with liabilities arising from the taxpayer's own wrongful acts.
• The total late-payment interest charged on taxes not paid within the statutory deadline may not exceed 50% of the unpaid tax amount.
• A taxpayer may amend a tax return within the following two tax years.

2. Key amendments proposed to the Corporate Income Tax Law

To reduce the corporate income tax burden on business activities, the current two-tier progressive tax rate will be changed to three tiers as follows:

3. Key amendments proposed to the Value Added Tax law

• A person whose operating sales revenue reaches MNT 400 million or more during a consecutive 12-month period shall register as a VAT withholding taxpayer.
• If a taxpayer’s tax scoring (full payment of taxes and level of legal compliance) is rated “good” or higher, upon request payment may be deferred by 1 month, and if payment performance is good, then again for up to an additional 2 months with equal monthly payments (this also applies to VAT paid on imported goods). The amount of tax eligible for deferred payment may not exceed the monthly average VAT paid on the same type of goods imported by that taxpayer in the most recent quarter.

4. Key amendments proposed to the Personal Income Tax Law

• The threshold for applying the simplified taxation regime will be MNT 1 billion. Taxable income will be imposed on the gross amount of business income.
• Personal will be fully exempted on up to MNT 9.5 million of annual income derived from a taxpayer’s business activities and employment.
• Income earned by a Mongolian citizen from the sale of a residential apartment that has been owned for at least five consecutive years and used as the citizen's principal place of residence will be exempt from personal income tax.
• The filing and payment of personal income tax will be simplified, and the deadline will be extended until the end of the following year.