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CHAPTER THREE
OPERATION OF BUSINESS
ENTITIES
WITH FOREIGN INVESTMENT
Article 2O. Income Tax Preferences.
1. A business entity with foreign investment in any of the following areas shall be granted income tax preferences as set forth below, effective from the date its production starts:
(i) power and thermal plants and their transmission network, highways, railways, aircargo and engineering constructions and basic networks of telecommunications shall enjoy 10 years of tax exemption and 50 tax relief in the immediately following 5 year period;
(ii) mining and processing of mineral resources (except precious metals), oil and coal, metallurgy, metal processing, chemical production, machinery, and electronics shall enjoy 5 years of tax exemption and 50 % tax relief in the immediately following 5 year period.
2. Should a business entity with foreign
investment which is not referred to in paragraph I of this Article export more
than 50 per cent of its output, it shall be entitled to an income tax exemption
for 3 years and 50% tax relief in the immediately following 3 year
period.
3. A business entity with foreign investment
which is not referred to in this Article, may be granted income tax preferences.
Decisions in this matter shall be adopted by the State Great Hural on a case-by-case
basis upon presentation by the Government of Mongolia.
4. Should a foreign investor reinvest its
income in the same business entity with foreign investment which produced such
income, the taxable income of the business entity concerned shall be subject
to a deduction equal to the amount of such reinvestment.
5. If the activities of a business
entity with foreign investment cover more than one of the areas referred to
in paragraph I of this Article, the income tax preferences to be granted
to such a business entity shall be in respect of the main area of activity.
6. A business entity with foreign investment
which has been established by purchasing shares or securities sold
by investment coupons under the Privatization Law of Mongolia, shall not
be eligible to preferences set forth in paragraph 1 and 2 of this Article.
Note: /According to the Parliament Resolution of January 15, 1998, the 2-nd paragraph of Article 18, and Article 19, 20 have been cancelled, and amended to the Article 7 of “Business Entity and Organization Income Tax Law”/