Editorial of the Mongolianviews: Will Ivanhoe Mines and Rio Tinto really pay 68% windfall profits tax?

According to the Minister of Finance Bayartsogt Sangajav, the miners agreed to pay all taxation of Mongolia including the controversial windfall profits tax. The minister added that the windfall profits tax law fulfilled its role and now it is time to move on and abolish the tax.
How many taxes are there in Mongolia?
There are Corporate tax, Customs duty (tax percent will depend on type of import), value added tax (ten percent), Excise tax, Mineral Royalty (five percent) and Mining license fee, Real Estate Tax, Water Tax, Land Use fee.Highest tax is Corporate tax which is twenty five percent.
According to Mongolian Corporate tax law passed in 2006, "taxable income of 0-3.0 billion Tugrigs is taxed at the rate of ten percent and any income exceeding 3 billion Tugrigs, it it 300 million Tugrigs plus twenty five percent tax.
Production of the Oyu Tolgoi mine will not start at least five or six years until mining infrastructure building is completed. That will be over Jan 1, 2011 when the Windfall Profits tax law is expected to be abolished.
It is very likely that the miners will not pay the windfal tax as production of the Oyu Tolgoi mine might begin by 2015. It is also questionable if the Khural will agree with this scenario and abolish the tax until the tax is substituted with other taxes or increased Royalty tax rate.
We will wait and see when the Khural starts by next week?



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