New requirements registering the "ultimate holder" of a legal entity for tax purposes

 Issue 1/2018 • 12 January 2018

The Parliament of Mongolia amended the General Taxation Law of Mongolia and other several laws on December 9, 2017. Under these amendments, a concept of an "ultimate holder" of a legal entity is newly introduced for tax purposes. Any change of ultimate holders of a legal entity, which maintains a mining license or land use (or possess) right is deemed as a sale of its land right or mining license and subject to a 30% Corporate Income Tax("CIT").

Ultimate holders refer to the following types of persons who exercise control over management and assets of a legal entity directly or indirectly with a chain of ownership at one or more levels of legal entities through a number of shares, percentage of participation or a number ofvoting rights:
a.  holding a majority of voting rights of a legal entity; 
b.  holding a majority number of shares or shares with the highest market value of a legal entity; 
c.  similar others.