THE BCM ORGANIZES AN OFFICIAL MEETING WITH THE GENERAL DEPARTMENT OF TAXATION

THE BCM ORGANIZES AN OFFICIAL MEETING WITH THE GENERAL DEPARTMENT OF TAXATION

The Business Council of Mongolia organized an official meeting with the General Department of Taxation to discuss tax rules and procedures that will become effective starting from 1 January 2020 in accordance with new tax reforms approved by parliament in March 2019. 

The meeting was led by Mr. Khishignemekh (Nicky), Vice-Chair of the Tax, Legal and Ethics Working Group of the BCM.

On 29 November 2019, the BCM in cooperation with the Mongolian National Chamber of Commerce and Industry submitted a list of 34 proposals to the Ministry of Finance and General Department of Taxation concerning draft regulations produced to follow the package of laws on taxation, and this meeting was organized to discuss these items.

Representatives from the Mongolian offices of international auditing companies Ernst & Young, KPMG, and PwC also attended the meeting.

We had a productive meeting, and the General Department of Taxation expressed their appreciation for the significant and important ideas put forward as well as their willingness to consider them.

 MONGOLIA ECONOMIC FORUM - 2019

 MONGOLIA ECONOMIC FORUM - 2019

The MNCCI, BCM, CEO Club, and EPCRC jointly co-organized the 2019 Mongolia Economic Forum on the 30th of October, 2019. The 10th annual forum saw participation by over 200 representatives, and it was agreed that a recommendation shall be submitted to the government based on the ideas discussed.

 Five sessions were held at the forum, on the themes of:

  • Responsible Mongolia
  • Grey Mongolia
  • Creative Mongolia
  • Young Mongolia
  • MEF – Past & Future

In addition, business associations including the MNCCI, BCM, UB Chamber, CEO Club, and the IWFCI signed a Memorandum of Understanding on enhancing cooperation.

The MoU on cooperation contains 3 goals:

  • To combine forces and cooperate with government organizations in order to ensure implementation of efforts to improve Mongolia’s business environment, regulations, and investment climate, and to determine unified policies that will improve business and investment stability;
  • To cooperate in support of expanding trade and economic partnerships between Mongolian entrepreneurs and foreign and domestic organizations, introducing world class technology and business models, and exporting domestic products;
  • To cooperate on efforts to protect the common and legal interests of businesses and entrepreneurs. 

Private Sector Opportunities Workshop

Government of Mongolia, ADB Promote Private Sector Opportunities

ULAANBAATAR, MONGOLIA (11 September 2019) — The Asian Development Bank (ADB) and the Ministry of Finance of Mongolia co-hosted a private sector opportunities workshop today in Ulaanbaatar, which was attended by over 150 local and foreign private sector companies operating in the country. Mongolia’s Vice Minister of Finance Ms. Bulgantuya Khurelbaatar and ADB’s Deputy Country Director for Mongolia Mr. Declan Magee opened the event.

Representatives from ADB’s private sector teams on infrastructure, agribusiness, health and education, and early-stage ventures presented on relevant case studies, eligibility criteria, typical financing modalities, and terms, and application processes for ADB’s financing. ADB Ventures helps early-stage companies scale technology in Asia and the Pacific for sustainable development impact. ADB discussed potential future collaboration with selected companies during in-depth one-on-one sessions.

“The growth of Mongolia’s private sector is very much aligned with ADB’s new long-term corporate strategy, Strategy 2030, where ADB aims to increase its private sector operations to reach one-third of its operations by 2024,” said Advisor at ADB’s Private Sector Operations Department Ms. Hisaka Kimura. “By actively engaging with Mongolian companies across infrastructure, agribusiness, health care, and education, as well as early-stage ventures, ADB can explore opportunities to support the diversification of Mongolia’s economy.”

Through its private sector operations, ADB catalyzes and funds investments in private and state-sponsored companies across the energy, transport, water, telecom, financial, agribusiness, health care, and education sectors throughout developing Asia. The emphasis is on commercially viable transactions that generate financial returns while promoting environmentally sustainable and inclusive economic growth. In 2018, ADB committed $3.1 billion of its own funds for 32 private sector transactions and mobilized a further $7.4 billion through cofinancing partners.

In addition to ADB’s $2.5 billion sovereign financing for Mongolia to date, ADB has committed $371 million for private sector investments in the energy and financial sectors, including financing to local financial institutions and partner banks through ADB’s Trade Finance Program. ADB’s support for the Sermsang Khushig Khundii Solar Project signed in March 2019 was ADB’s first private sector solar financing in Mongolia and mobilized cofinancing from Leading Asia’s Private Infrastructure Fund (LEAP) into the country’s renewable energy sector.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.

 

STATEMENT

STATEMENT

STATEMENT

The clause 9.3 of the amended Law on Special Government Funds submitted in conjunction with the Law on the 2020 State Budget states that “A legal entity engaged telecommunications must pay an amount equal to 3% of their net profit into the Public Services Obligation Fund.” We consider this a violation of the PRIVATE PROPERTY of enterprises that are already paying the 25% income tax along with other taxes and fees in accordance with regulations. This clause contradicts the Constitution of Mongolia, is not reflected in the General Law on Taxation, and contradicts the principle stated in the amended Law on Special Government Funds which says “Additional obligations or expenses shall not be levied on a legal entity with existing obligations.”

Net profits are the legal private property and capital of a company and its shareholders recorded in the owner’s equity section of a financial report by subtracting expenses and taxes from the income that company earns through its activities. Clause 16.3 of the Constitution of Mongolia provides for the right to purchase, possess, and own moveable and immoveable property, and property rights are one of the fundamental human rights that must undeniably exist. The government must be responsible for guaranteeing and protecting private property and for stopping any and all attempts to illegally seize property.

Clause 3.1 of the revised version of the General Law of Mongolia on Taxation states that “only parliament has the power to create, levy, change, discount, or exempt taxes,” and also states in cases other than determining special regulations on free zones, or stabilization of taxation in accordance with an investment agreement with the government through a Stabilization Certificate in accordance Clause 3.1.7 of this law as well as the Law on Investment or Law on Crude Oil, when it comes to creating, changing, discounting, exempting, levying, or paying taxes, it is to be implemented only according to the laws on taxation.

In additional, Article 5 of the revised version of the General Law on Taxation divides taxes into the categories of taxes, fees, and payments, and the money to be paid into the Public Services Obligation Fund does not fit into any of those categories. Furthermore, the Public Services Obligation Fund is categorized as a fund whose predominant source of funding is to come from grants, aid, and donations, in accordance with the Law on Special Government Funds. Despite the legal foundation for the fund’s money being reflected as having to be accrued through voluntary donations and aid, we see the new regulation as mandating a legal entity to pay money from its private capital.

The law states that taxes must be collected only in accordance with laws and resolutions on taxes, and seizure of property can only take place through a court decision in cases of a crime committed, to fine for a violation, to uphold criminal or violation accountability, or to compensate for damages done unto others or for not fulfilling obligations of a contract.

Yet, according to the amended version of the Law on Special Government Funds, funds are being raised by taking money in an unconstitutional manner from the net profits of commercial organizations that have already paid their due taxes in accordance with relevant regulations.

In addition, year after year, cases of the fund’s money being used inappropriately have increased. For example, in recent years, around MNT 2 billion was spent on research, training, promotion, books, and manuals, in violation of the law. Relevant organizations have submitted complaints to the Primary Administrative Court of the Capital City regarding this.

A company’s net profit is the LEGAL PROPERTY of its owners, and because we view that ratification of any law that seeks to raise money for Special Government Funds by violating the property of citizens or enterprises is a direct violation of PRIVATE PROPERTY, we are hereby filing a complaint to the proper legal authority.

The Business Council of Mongolia 

Mongolian National Chamber of Commerce and Industry

 

BCM co-organizes Boao Forum for Asia Ulaanbaatar Conference

BCM co-organizes Boao Forum for Asia Ulaanbaatar Conference

Under the theme of “Concerted action for common development in the new era”, Boao Forum for Asia (BFA) Ulaanbaatar Conference 2019 was held during 19th to 21st of August, 2019 organized by BFA and the Ministry of Foreign Affairs. The BCM co-organized the forum. With over 260 member companies and solid partnership with the diplomatic community in Mongolia, the BCM is privileged to take the role of co-organizer of the forum to promote the business community and investment climate of Mongolia to its Asian neighbors. As BCM strives to provide an advantageous business platform, member companies of the BCM were invited exclusively for the forum and participated in large numbers.

Over 300 distinguished local and international guests and delegates were in attendance, namely H.E. BAN Ki-moon, BFA Chairman of the Board, the 8th Secretary-General of the United Nations; U. Khurelsukh, Prime Minister of Mongolia; D. Tsogtbaatar, Minister of Foreign Affairs of Mongolia; H.E. LI Baodong, BFA Secretary General, Former Vice Minister of Foreign Affairs of China; H.E. XING Haiming, Chinese Ambassador to Mongolia; A. Alisjahbana, Executive Secretary of UNESCAP.

  1. Khurelsukh, Prime Minister of Mongolia commenced the forum with opening remarks and emphasized the importance of the forum for the economic integration of Asia.

H.E. BAN Ki-moon gave an insightful speech with great significance on the pressing issues of the new era. He touched on global warming, air pollution and urged the countries to cooperate on the common solution such as usage of clean energy. Multilateralism and free trade were also mentioned, “Mongolia is a developing country with great potential. Not only strengthening the relations with the two neighbors, but also Mongolia must enhance its policy towards multilateralism by expanding ties with other countries around the world” he said.


The Chairman of the BCM, B.Byambasaikhan delivered one of the opening remarks, cited the potential of Mongolia’s role in the interconnecting the countries of the region and said “The fact that Mongolia hosts this year’s forum manifests the growing recognition of Mongolia’s impact for the regional integrity and prosperity”. He emphasized connectivity is vital for bringing the countries in the region together and Mongolia’s vast resources in renewable energy with estimated 1.2 TW of solar and 200 GW of wind capacity will play a key role in this perspective.


The forum continued with Plenary Session under the topic of “Business Opportunities: Investment climate in Mongolia”. D. Sumiyabazar, Minister of Mining and Heavy Industry of Mongolia, delivered the first presentation on the prospect and challenges of resources sector of Mongolia which accounts for the majority of export and revenue of the nation. He stressed on the following issues:

  • Attracting investors and partnering with other countries on the exploration work
  • To finance and develop processing and refining industry which is crucial for the sector and export
  • Prospect of Tavan Tolgoi mine and its impact

CEO of “Erdenes Mongol” LLC P. Gankhuu stressed the SOE now reached at a value of USD 5.7 billion with ownership of significant shares of the nation’s strategic mineral assets. “We are aiming to creating added value of the operation of our mineral assets their and associated infrastructure development” he said. He highlights the following projects which are being implemented or planned by “Erdenes Mongol” LLC and encouraged the business delegates of the forum to form a partnership on the projects, citing “Erdenes Mongol” LLC will welcome the interested parties for cooperation:

  • “Shivee Energy” project aims to transforming coal into energy export to China as well as Northeast Asia
  • “Erdenes Steel” a subsidiary company that will produce 300 thousand tons of steel and 500 thousand tons of coke
  • Gold processing plant
  • Methane exploration with Australian investors


  1. Bayarsaikhan, Chairman of the National Development Agency of Mongolia focused on the investment environment and the current works to improve competitiveness and investment framework. He highlighted the following topics:
  • 3 Pillars Development Policy which is aligned with sustainable development – 2030 of the UN
  • Investment Protection Council and Public – Private Consultative Committee
  • Investment Reform Map and its implementation process
  • One stop service center to ease the registration and visa process for investors
  • FDI increased by 30% with over 500 registration of new companies

 

The forum continued with keynote sessions, first session on New Direction: Aligning “Belt and Road” with “Development Road” and Randolph Koppa, Vice Chairman of the BCM attended the session as one of the speakers. He spoke about the rich possibilities of Mongolia to be a part of BRI with aligned interests and its positive impacts to the economy of Mongolia.

 

Keynote session two focused on Connectivity: Expanding Horizons into Regional Cooperation and chaired by Ts. Tumentsogt, Member of the Member of the Board and Vice Chair of Energy, Infrastructure and Connectivity Working Group of the BCM. The session discussed the prospect of interconnecting Northeast Asia’s power grid with Mongolia being major exporter of solar and wind energy. Ayumi Konishi, Special Senior Advisor to the President of the ADB delivered key note speech saying “ADB has been supporting Mongolia’s initiative to interconnect the region in terms of energy and infrastructure. As “Development Road” and “NAPSI” projects move forward, it will significantly enhance Mongolia’s potential to become a bridge between Europe and Asia as well as interconnected Northeast Asia”.

Keynote session three was about Common Goal: Green Development, chaired by E. Orchlon, Member of the Board and Vice Chair of Economic Freedom and Competitiveness Working Group of the BCM. M. Bold from XACBank gave keynote speech on air pollution as a global issue and urgency of green development. Other speakers expressed their support on Mongolia’s initiatives in an effort to develop clean energy sector and discussed the frameworks for mutual cooperation.

 

Business Leaders Face to Face Dialogue session held between business representatives of over 20 local and international companies, co-chaired by Ts. Tumentsogt, Member of the Member of the Board and Vice Chair of Energy, Infrastructure and Connectivity Working Group of the BCM. They exchanged views on establishing partnerships and discussed exploring business opportunities. Numbers of BCM representatives namely B. Solongoo, Member of the Board and Chair of Tax, Legal and Ethics Working Group; Ch. Batnasan, Vice Chair of Energy, Infrastructure and Connectivity Working Group; U. Unenburen, Vice Chair of Growth and Innovation Working Group and G. Enkhtaivan CEO of Mongolian Re were in attendance.


 

About Boao Forum of Asia

Since its inception in 2001, Boao Forum has evolved into a frontier stage of discussion for common development and economic prosperity of Asia. The founding purpose of BFA was to promote economic integration in Asia. Its mission now is to pool positive energy for the development of Asia and the world. With a status of one of the founding members of the forum, Mongolia has maintained its active participation and the fact that Ulaanbaatar was named to host this year’s forum recognizes the increasing role of Mongolia as a facilitator of the connectivity in the region and Asia.

The BCM Board hosted its Members and Guests at the BCM Naadam Ger

The BCM Board hosted its Members and Guests at the BCM Naadam Ger

Following the tradition, the BCM celebrated Naadam 2019 at the BCM Ger in the Naadam Denj at Khuin Doloon Khudag. Over 500 members and guests visited the BCM Ger and enjoyed the traditional Naadam treats and festivities.
 
The guests included H.E. Mr. U. Enkhtuvshin, the Deputy Prime Minister of Mongolia and Chair of the Naadam Organizing Committee, H.E. Mr. Z. Enkhbold, Chief of Staff of the President of Mongolia; Members of Parliament, Ambassadors from Canada, European Union, France, United Kingdom, United States, Uruguay, representatives of the World Bank and other international organizations. Mongolian wresting Naadam champions and grand champions also visited the BCM Ger. 
 
This year, the BCM organized the Naadam 2019 celebrations jointly with its member Erdenes Mongol led by its CEO and BCM Board Director Mr. P. Gankhuu. 
 
The BCM also supported the public campaign “Let’s Change our Toilets”, led by Ms. Ts. Oyungerel, the author of the bestseller “Green Eyed Lama”. The BCM Ger visitors were given presentations on the deployment and use of most environmentally clean and friendly toilet technology at the Naadam Denj.
 
The BCM Secretariat thanks all the members who came celebrate Naadam at the BCM Naadam Ger. We welcome you again next year at our BCM Naadam Ger. 
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