Guide on Property Taxes in Mongolia
Tax Rate on Rental Income |
|||
| Monthly Income | $1,500 | $6,000 | $12,000 |
| Tax Rate | 20.00% | 20.00% | 20.00% |
Nonresident individuals are generally subject to Mongolian tax on income earned in or sourced from Mongolia.
Rental Income Tax
A nonresident individual earning rental income from real estate located in Mongolia is generally subject to Mongolian personal income tax at a flat rate of 20%.
The nonresident tax is generally imposed through withholding on Mongolian-source income. Unlike the progressive regime applicable to certain income of resident individuals, nonresidents are generally subject to the flat 20% rate.
The effective income-tax burden is consequently 20% of gross rental income at all three levels, leaving approximately $14,400, $57,600 and $115,200 after income tax, respectively.
Capital Gains Tax
Special care is required when distinguishing between resident and nonresident sellers of Mongolian real estate.
For a resident individual, gross income from the sale of immovable property is generally subject to tax at 2% of the gross selling price.
However, a nonresident individual is generally subject to the nonresident 20% tax rate on gross Mongolian-source income from the sale of immovable property.
Corporate Tax
Mongolian companies are generally subject to corporate income tax on their taxable business profits.
Companies with annual revenue of up to MNT 300 million can generally qualify for a 1% corporate income-tax rate, except for businesses operating in excluded sectors such as mining, petroleum, alcoholic beverages and tobacco.
For companies outside that small-business regime, the general corporate income-tax rates are:
Corporate Income Tax |
|
| TAXABLE INCOME, MNT | TAX RATE |
| Up to MNT6 billion | 10% |
| Over MNT6 billion | 25% on band over 6 billion |
Property Buying Costs and Taxes in Mongolia
| Transaction Costs | ||
| Who Pays? | ||
| Transfer tax | 2.00% | seller |
| Notary fees | 0.10% | buyer |
| Legal fees | 0.10% - 0.50% | buyer |
| Real Estate Agent Fee | 3.00% | seller |
| Total costs paid by the buyer: | 0.20% - 0.60% | |
| Total costs paid by the seller: | 5.00% | |
| ROUNDTRIP TRANSACTION COSTS | 5.20% - 5.60% | |
| Source: Global Property Guide, PWC | ||
Property Tax
Mongolia imposes an annual Immovable Property Tax on taxable real estate.
The applicable rate generally ranges from 0.6% to 2% of the property's taxable value. The exact rate is determined by the relevant local Citizens' Representatives Khural and can depend on factors including the property's location, use, size, market demand and supply conditions.
The taxable value is generally based on the value recorded in the state registration records. If no registered value exists, the insured value can be used, followed by the accounting value where neither is available.
Certain properties are exempt. In particular, buildings and facilities constructed and registered in Mongolia's Free Trade Zones are fully exempt from Immovable Property Tax.
