Parliament approved an amendment to the Corporate Income Tax Law on February 2, green lighting an amendment to decrease taxes by 90 percent for businesses in certain sectors to foster growth.
Businesses engaged in the production of food products, clothing, textiles, and construction materials, as well as select agricultural businesses, will be eligible for the tax break. These tax breaks are mainly being offered to businesses that produce finished products, and only companies in the designated sectors with an annual income of less than 1.5 billion MNT will be eligible for the 90 percent tax break. The normal income tax rate for these businesses is ten percent, but companies who qualify for the tax break will pay a one percent income tax.
During the discussion of the amendment, there were proposals by Members of Parliament to increase the number of sectors eligible for the one percent tax. However, due to massive budget deficits, the decision to approve the amendment as it was presented was supported by the Standing Economic Committee on Budget and Parliament.
In some sectors, the new tax rate will be applied immediately. Businesses will be able to benefit from the new rate until January 1, 2021.