Business Council of Mongolia releases statement on tax bill controversy
Parliament held a preliminary discussion on the draft bill of the Law on Corporate Income Tax and ultimately decided not to discuss the draft bill. During the session, several MPs and the media reported that it was dismissed by Parliament due to the fact that the interests of Rio Tinto were being prioritized by several professional organizations that had a hand in drafting some of the articles in the law.
The Business Council of Mongolia (BCM) recently released a statement contesting the reports that have come out in the media recently.
“During the Parliamentary discussions and in the following days it has been misconstrued in the media that BCM and the American Chamber of Commerce in Mongolia (AmCham) have been representing the interests of Rio Tinto. This is definitely not the case for either AmCham or BCM. For clarity, Stephen J. Potter is the chairman of AmCham, not Cameron McRae. Cameron McRae currently serves as the interim chairman of BCM,” said BCM.
The statement went onto underline that BCM is not a political entity and does not engage on matters of political intrigue. It has a broad based membership consisting of 265 members with over 60 percent of the companies registered being Mongolian. Six of the nine-person executive committee are Mongolian.
BCM explained that the comments submitted to the Ministry of Finance on the draft bill were to remedy some of the negative aspects impacting future investment. It added that despite the ministry’s belief, BCM’s submission is not aimed to promote tax evasion and cause a decrease in the tax base, but to stimulate investment with positive impacts on the tax base and GDP growth.
The final version approved by Cabinet for review in Parliament was not fully supported by six business associations (AmCham, BCM, CEO Club, Mongolian National Mining Association, Mongolian Employers Federation, and the Australian Chamber of Commerce). These associations said in a joint statement that the critical issues they had raised during the consultation process had not been fully reflected in the revised version. Subsequently, the associations cosupported a submission addressed to members of the Parliamentary Economic Standing Committee and certain members of cabinet.
“This submission was a representation for both domestic and international investors and business owners. The key concern of the associations is that the revisions proposed by the ministry focused on tax evasion, would still result in a net disincentive to new investment,” BCM said.
Cameron McRae, interim chairman of BCM, also sent out a statement of clarification.
“Several news websites and social media outlets have made statements about myself in recent days. For the record, the facts are:
» I am executive director of Tarva Investment and Advisory LLC, a UB based advisory house that provides services to mining and non-mining clients in Mongolia and internationally.
» I am an honorary director on the boards of BCM, the Arts Council of Mongolia and am founder of a Mongolian NGO, the Institute of National Strategy.
» Currently, I serve as acting chairman of BCM.
» My service with Oyu Tolgoi, as president, completed in November 2013, shortly after the completion and commissioning of the Phase 1 project. Since that date I have not advised, consulted or lobbied for either Rio Tinto or Oyu Tolgoi.”
McRae went on to say that while BCM is supportive of the changes put forward by the Ministry of Finance that are positive for small and medium sized enterprises, BCM also believes that other changes directed at taxation of the exploration and mining sector, will have a negative impact on investment into mining.
“Overall this will lead to lower levels of economic growth than could potentially be achieved. The recommendations are pro-investment not anti-taxation,” McRae said.