CHAPTER THREE: OPERATION OF BUSINESS ENTITIES WITH FOREIGN INVESTMENT

Article 18. Stability Agreement

1. If a foreign investor undertakes to invest in any industrial sectors in Mongolia other than trading and services not less than two million USD in cash or  assets, and if the investor submits an application to enter into a  stability agreement with the Government of Mongolia, the Central Administrative Organisation in charge of foreign investment issue shall enter into such a stability agreement providing guarantees for a long term stable environment for the investor’s operations.

2. The form of the stability agreement shall be approved by the Government and shall contain provisions with respect to the stabiltity of tax rates for a definite time period, the right of the investor to export and sell its products at international market prices, a guarantee that the investor may receive and dispose of hard currency income derived from such sales, and provisions with respect to the purpose, amount and term of the investment.

3. Within fourteen (14) days following the receipt of the application and draft of the stability agreement, the Central Administrative Organization in charge of foreign investment issues shall determine whether or not further clarification is required.  If it is determined that no further clarification is required, the Central Administrative Organization in charge of foreign investment issues shall enter the stability agreement with the applicant.

4. If the amount of the initial investment is not less than two (2) million US Dollars, the term of the stability agreement may be ten (10) years. If such investment is no less than twenty (20) million US Dollars, the term of the stability agreement may be fifteen (15) years.

5. If the investor terminates its operations prior to the period  specified in the stability agreement, then its tax and other incentives previously enjoyed in accordance with laws and regulations of Mongolia shall be terminated and the investor shall be liable for any tax benefits received.