Tax revenue to increase by 607 billion MNT in 2018
In the 2018 state budget, the government expects revenue from taxes to increase by 607 billion MNT or 10.7 percent compared to the total expected revenue in 2017.
The main factors for the increase will be increases in the income tax, the social insurance fee, and the revenue from the value added tax (VAT). In 2017, seven types of taxes were increased as part of the agreement with IMF to enroll into the extended fund facility.
As part of the IMF agreement, the excise tax on alcohol and tobacco, the personal income tax, and the social insurance fee will all be increased in 2018.
The changes in the tax law means that beginning in January 1, 2018, the personal income tax or the tax imposed on any other type of personal income will be increased to up to 25 percent. In particular, those classified as high-income individuals will see the most increases in their taxes. For instance, those with a personal monthly income of 2.5 million MNT will pay a 11.2 percent income tax while those earning four million MNT will pay a 15.1 percent tax.
Currently, there are 900,000 registered taxpayers in Mongolia, 95 percent of which will be paying less than 10 percent in income tax while the remaining five percent will be paying higher than 10 percent.
In April 2017, Parliament approved an amendment to the tax law, imposing a tax on the interest rates earned by citizens saving their money in commercial banks. It is forecast that the tax on the savings interest will bring 46 billion MNT in revenue in 2017 and 67 billion MNT in 2018 to the state budget.