Incorporation of a company in Mongolia: formation of a limited liability company with foreign investment. Service offer

Individuals and legal entities may be members of a limited liability company (LLC). The number of members is 1 to 50. There are no requirements regarding citizenship and residency; however, according to provisions of the law, if a foreign shareholder holds 25% or more of shares in the LLC, such a company is considered an LLC with foreign investment.

A business entity consisting of one person may not be the sole member of an LLC.

The minimum size of the authorized capital of an LLC with foreign investment is USD 100 000. If an LLC has more than one foreign shareholder (25% or more), the minimum size of its authorized capital is USD 100 000 per shareholder.

The authorized capital of a company must be paid during the process of the company’s incorporation to a temporary account opened with a Mongolian bank. The paid money is not blocked and may be used by the company in its activity.

A legal entity may be a company’s director. The minimum number of directors is 1. Shareholder and director may be the same person.

Incorporation of a company (LLC) in Mongolia takes 1.5 to 2 months:

• 3 to 4 weeks: completion and delivery of all necessary documents to Mongolia;
• 2 to 3 weeks: incorporation of the company and opening of an account.

Data required to incorporate a new company or purchase a ready-made company:

• when incorporating from scratch: a few name options to be checked; the name:
  • must not be analogous to the name of a legal entity that has already been incorporated;
  • must not contain inappropriate, obscene or discriminatory words and expressions;
  • must not contain the words “Mongolia”, “Bank”, “Ulan Bator”, etc.;
  • must be written in Cyrillic;

Whether a company with the chosen name may be incorporated is checked within 24 hours after the request has been received.

• notarized copies of passports of directors / founders, and information on their employment and source of funds;
• notarized power of attorney issued to a representative in Mongolia to freely interact with state authorities and the bank;
• notarized minutes of the resolution to establish the LLC and appoint director;
• signed Articles of Association of the company (will be presented after necessary amendments are approved);

The set of the above original documents will have to be sent to Ulan Bator to be translated into Mongolian and notarized.

The cost of translation depends on the amount of documentation and will be calculated after the documents are provided.

• detailed description of the company’s activity;
• information on countries where business is to be conducted;
• information on the occupation of directors / shareholders / attorneys / beneficiaries;
• information on the source of funds for the business;
• personal identification in our company’s office or by means of a video call.

In the case of absence of any of the above documents, the list of documents may be approved with your consultant at GSL.

In Mongolia, corporate income tax (CIT) is imposed on income received in Mongolia and from sources in Mongolia. Progressive tax rates apply:

• 1% applies to entities whose annual income is up to MNT 300 000 000 (~ USD 89 000), except for companies belonging to mining, oil, alcohol and tobacco industries;
• 10% applies to the first MNT 6 000 000 000 (~ USD 1 800 000) of annual profit;
• 25% applies to annual profit exceeding MNT 6 000 000 000 MNT; in respect of profit under this value, the tax will also be 10%.

Some types of income are excluded when determining annual taxable profit and taxed separately at the following rates:

• dividends, royalties, and interests – 10%;
• gambling, betting and lotteries (net profit) – 40%;
• sale of real estate – 2%.

Based on the taxable income for the previous year, frequency of the filing of corporate income tax reports is determined as follows:

• taxpayers with taxable profit of more than MNT 6 000 000 000 file reports quarterly;
• taxpayers with taxable profit of less than MNT 6 000 000 000 file reports twice a year;
• all taxpayers shall file annual reports irrespective of their taxable income.

Specialists of GSL would be happy to provide you with services in accounting, preparation of financial statements and interaction with the local tax authority on a turnkey basis.

The standard VAT rate is 10%.

The VAT base is the market value of sold goods, performed work or provided services. According to the customs tariff law, VAT imposed on imported goods must include customs, excise tax and other taxes on customs value of the goods.

The threshold of annual turnover at which a company must register for VAT purposes is MNT 50 000 000 (~ USD 15 000).

A company may voluntarily register for VAT purposes after its turnover exceeds MNT 10 000 000 (~ USD 3 000).

Compliance fee is paid in the case of incorporation of a company, its renewal, liquidation, transfer to a new agent, issue of a power of attorney to a new attorney, change of director / shareholder / beneficiary, except for a change to a nominee director / shareholder, as well as when signing documents.

[1] The service fees are effective as of November 2024. The fees do not include VAT. The complete calculation can be done after the precise order has been made and all options required to incorporate a company in each specific case have been taken into account.