At its regular session of the cabinet meeting, the government decided to submit to parliament a comprehensive draft tax reform package, including amendments to the General Tax Law, Corporate Income Tax Law, Personal Income Tax Law, Value Added Tax Law, and related legislation.
The reforms aim to stimulate economic growth while protecting citizens’ incomes, supporting employment, and promoting housing development. Under the proposed changes, citizens would receive VAT refunds on purchases: 100 percent for spending up to 500,000 MNT per month, 50 percent for spending up to 1 million MNT, and 20 percent for amounts above that. Additionally, employees earning up to the minimum wage or a maximum of 500,000 MNT per month would receive full income tax refunds.
The bill also introduces measures to simplify taxation and promote fairness. The threshold for reporting business income will rise to 400 million MNT, and certain taxpayers will benefit from tax breaks. Up to 15 million MNT in tax incentives will be offered for citizens relocating from Ulaanbaatar to rural areas and for investing in energy-efficient, accessible, and eco-friendly buildings.
Corporate tax reforms include reducing the corporate tax rate, raising the threshold for the 25 percent tax rate from 6 billion to 10 billion MNT, and lowering profits tax for income between 6 and 10 billion MNT to 15 percent. Support for small and medium-sized enterprises (SMEs) includes increasing the threshold for one-percent tax from 1.5 billion to 2.5 billion MNT for three years and allowing simplified VAT payment for businesses with annual revenue under 400 million MNT. Companies can also deduct expenses for employee training and development and offset VAT for certain purchases and international services.
The reform package emphasizes taxpayer support and transparency. Measures include pre-prepared tax reports, advisory services, online and classroom training, and a 24-hour AI-powered information system. Tax authorities will monitor compliance levels, provide opportunities to correct errors, and allow flexible payment schedules for compliant taxpayers. Taxpayers in financial difficulty may have up to 80 percent of their bank accounts frozen rather than fully blocked, ensuring business continuity. The government and the parliamentary working group conducted extensive public consultation throughout 2025, receiving around 180,000 proposals from over 13,000 citizens and businesses, with more than half requesting tax reductions, exemptions, or deductions.

Published Date:2025-12-26