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Employing in Mongolia

At a glance

Employment in Mongolia

Foreign companies that employ workers in Mongolia face several challenges and must adhere to the legal and regulatory framework that is in place. Most notably, the employment landscape in Mongolia is undergoing significant change as the country strives to become more developed. In some cases, using an outsourced employer will make the process smoother, and it is recommended to use professional legal services as well.  Our guide explains Mongolian policies on leave, termination and payment of benefits.

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Payroll & Tax in Mongolia

Complying with local payroll and tax requirements is essential for a company doing business in Mongolia.  Issues such as tax rates and withholding and social security are all essential in ensuring a seamless human resources operation.  Many companies will consider outsourcing these administrative tasks to a GEO (Global Employment Organization).

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Immigration / Work Permits in Mongolia

Foreign workers are required to have the proper visas and work permits in Mongolia, as established by immigration laws.  This often requires incorporation and licensing prior to sponsoring work permits for employees, which can be a problem if your company is trying to enter the country quickly.  The most common work permit is called a HG visa.

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Incorporation

There are several business structures available for incorporation in Mongolia, and each has advantages and disadvantages.  In some cases it will depend upon the type of industry that you are in, and the scope of planned business activity.  Our guide has a comparison of the time and cost for incorporating standard company structures including Rep Office, WFOE and JV.

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GEO Solutions or DIY Employment in Mongolia?

Companies entering Mongolia must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities.  A GEO or Mongolia Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Mongolian entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in Mongolia

Payroll Mongolia
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

 
Grossed income Tax Rate (%)
All income 10%

Individuals are granted a standard personal tax credit of MNT 84,000 per annum individuals to deduct against the tax payable on
their annual income.

Tax Returns Supplied

Yes

Corporate Tax Requirements

For the sale of shares, a corporate tax return must be filed within 10 days. Taxpayers file returns and execute payments on a self-assessment basis although generally an annual return must be submitted by February 15 of each year.

Employers Social Security and statutory contributions

• Pensions: Employer contributes 7% of salary
• Medical Insurance: Employer contributes 2% of salary
• Benefit Insurance: Employer contributes from 0.4-3% of employee’s salary
• Unemployment Insurance: Employer contributes 0.2% of salary

Employees Social Security and statutory contributions

• Pensions: Employee contributes 7%
• Medical Insurance: Employee contributes 2%
• Benefit Insurance: No employee contribution
• Unemployment Insurance: Employee contributes 0.2%

Corporate Income Tax Rate

Up to MNT 3 billion, a marginal tax rate of 10% applies. Above this amount, the marginal rate is 25%.

Payroll Tax

Not specified

Sales Tax

10% although some goods such as fruits & vegetables are exempt from VAT.

Withholding Tax

Dividends, interest and royalties are all taxed at 10%. A withholding tax of 20% is applicable to all foreign entities.

Other Tax

Interestingly, there is no capital gains tax or provision for tax consolidation in Mongolia.

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