Company Establishment and Tax Rates in Mongolia 2026

Establishing a Company in Mongolia and Corporate Tax Rates for 2026: A Roadmap for Foreign Investors

Mongolia has increasingly come under the radar of foreign investors in recent years due to its natural resources and access to Asian markets.
Simplified company establishment procedures, relatively competitive corporate tax rates, and tax incentives supporting SMEs present a remarkable alternative for doing business as we prepare for 2026.

In this guide, you will examine the types of companies in Mongolia, the step-by-step establishment process, corporate tax rates, and planned tax reforms in detail from the perspective of 2026.
You will also see how companies based in Turkey or operating globally can optimize their payroll and employee mobility aspects, and how Corpenza adds value in this regard.

Types of Companies for Foreign Investors

The most commonly used structure for foreign investors in Mongolia is the Limited Liability Company (LLC) model.
However, depending on the scale, sector, and strategy, you can also opt for different legal structures.

1. Limited Liability Company (LLC)

LLC is the standard corporate vehicle for both SMEs and foreign investors:

• Separate legal entity: The liability of the partners is limited to their capital contribution.
• Foreign ownership: 100% foreign partnership is possible.
• Minimum number of partners: At least 1 partner (individual or legal entity) is sufficient.
• Management: At least 1 manager/director is required; additional requirements for resident managers may arise in some licensed sectors.

Due to its corporate flexibility, relatively low minimum capital expectations, and openness to foreign capital, the LLC is practically the most sensible option for initial entry into Mongolia.

2. Joint-Stock Company (JSC)

The Joint-Stock Company (JSC) format is suitable for larger-scale operations and plans for public offerings or raising capital from investors:

• It has stricter corporate governance and disclosure obligations.
• It may be necessary if shares are planned to be publicly offered or traded on the stock exchange.
• If applicable, it can provide advantages in structuring investment rounds with local funds or international investors.

3. Representative Office

The Representative Office structure is used for those who want to conduct market research in Mongolia or represent the parent company:

• It cannot generate commercial income on its own and cannot issue invoices.
• Its main activities are limited to promotion, marketing, customer relations, and communication with the parent company.
• It can be a first step for companies wanting to test the market but not yet fully engaged in commercial activities.

4. Sole Proprietorship

Sole proprietorships, referred to in Mongolian as “Хувь хүн бизнес”:

• It is fundamentally a structure aimed at Mongolian citizens.
• Foreigners must have a valid residence permit and local registration to operate in this format.
• While it is simple and low-cost, it does not provide limited liability; thus, personal assets are at risk.

The sole proprietorship model is generally not preferred for foreign investors due to both the level of risk and residency & permit requirements; LLC is safer and more flexible in most scenarios.

Step by Step: Establishing an LLC in Mongolia as We Prepare for 2026

The company establishment in Mongolia is primarily shaped around three main institutions:

• Legal Entities Registration Office (LERO) – Registration of legal entities
• District Tax Office – Tax liability registration
• District Social Insurance Office – Social security registration for employees

When the necessary documents are properly prepared, it is possible to complete the establishment in approximately 1–3 weeks.

1. Preliminary Decisions: Legal Structure, Capital, and Management

Before the establishment, clarity should be achieved on the following topics:

• Type of company: LLC, JSC, or just a representative office?
• Company name (including Mongolian spelling) and branding strategy
• Registered address in Mongolia (lease agreement or ownership document required)
• Partnership structure and capital amount
• Determination of manager(s) and authorized signatory(ies)

In regulated sectors such as mining, finance, and insurance, licensing regulations may impose additional requirements such as minimum capital and resident manager conditions.

2. Company Name Research and Reservation

The first official step is to check and reserve the company name with LERO:

• The selected name must not conflict with existing registered companies and must be distinguishable.
• After reservation, you are expected to complete the establishment application within a certain period.

3. Preparation of Founding Documents

The basic documents for a standard LLC are as follows:

• Articles of Association / Charter
  • This document includes the subject of activity, capital structure, governing bodies, general assembly processes, profit distribution, and decision-making rules.
• Founders’ Decision
  • A decision regarding the establishment of the company, share distribution, and appointment of managers.
• State registration application form
• Copies of the passports/identities of the founder(s) and manager(s)
• Lease agreement or title deed regarding the registered address in Mongolia

If the founding partner is a foreign company, additionally:

• The founding company’s trade registry certificate/incorporation document (notarized)
• The founding company’s current articles of association
• A registry reference or similar official registration letter covering generally the last 2 years

Documents coming from abroad usually require notarization and Mongolian translation.
In some cases, apostille or consular approval may also be required; this depends on the relationship of the issuing country with Mongolia and domestic regulations.

4. Application to LERO and State Registration

When all files are prepared, the application is made to the Legal Entities Registration Office:

• All necessary forms and company documents are submitted.
• The state registration fee is paid, which varies according to the type of company and capital amount.
• After approval, the company receives a State Registration Certificate (Certificate of Incorporation) and gains legal entity status.

5. Tax Registration: Registration of Tax Liability

After establishment, the company must register with the district tax office within 14 days.
Generally, the following documents are required:

• Taxpayer registration application form
• Copy of the State Registration Certificate
• Original and copy of the company’s articles of association
• Application and passport copy of the founder
• Passport of the manager(s) and foreign registration information for foreigners (F register, etc.)
• If any, company bank account statements
• Lease agreement regarding the office address

When the application is approved, the company receives a taxpayer number. This number is used in all tax declarations and payments.

6. Social Insurance Registration

When the company employs staff, it must register with the local Social Insurance Office:

• It is obliged to pay social security and pension premiums for employees.
• Payroll processes and declarations are conducted according to Mongolian social security legislation.

Especially for companies sending personnel from different countries or working with the posted worker model, correctly structuring social security and tax obligations in Mongolia is critical.

7. Opening a Bank Account

To open a corporate bank account in Mongolia, banks generally require the following documents:

• Company establishment certificate
• Articles of association and founders’ decision
• Identification/passports of the manager and authorized signatories
• Address confirmation (lease contract, etc.)
• Completion of necessary bank forms

As part of compliance (AML/KYC) processes, some banks may require at least one authorized person to physically visit the branch.
For companies planning remote establishment, this aspect also requires logistical planning.

Partners, Capital, and Fundamentals of Corporate Governance

The standard framework for an LLC in Mongolia is as follows:

• Partners: At least 1; can be an individual or legal entity, generally there are no nationality restrictions.
• Manager: At least 1 manager is required. Bank applications or sector licenses may impose resident manager conditions.
• Registered Office: A physical or legally recognized address in Mongolia is mandatory and is registered in the single state registry.
• Capital: There are no very high minimum capital expectations for general LLCs; however, sector regulations in banking, insurance, mining, etc., may require higher capital.

Designing the corporate governance structure (general assembly, board of directors/single manager model, signing authorities) correctly at the time of company establishment reduces future disputes among partners and potential revision costs in license applications.

Mongolia’s Corporate Income Tax System (CIT) and 2026 Perspective

Mongolia has a progressive corporate income tax structure and offers a simplified regime based on turnover for very small businesses. The tax reform on the agenda for 2026 aims to further refine these brackets.

Current Standard Corporate Tax Rates

According to current tax guides, the standard CIT rates applied to corporate profits in Mongolia are:

• Annual taxable profit up to 6 billion MNT: 10%
• Annual taxable profit over 6 billion MNT:
  • Fixed tax of 600 million MNT for the first 6 billion MNT,
  • For amounts exceeding 6 billion MNT, 25%.

This structure supports small and medium-sized enterprises with a relatively low tax rate while taxing highly profitable companies at a higher bracket.

Simplified Turnover-Based Regime

For very small businesses, there is a separate tax regime based on turnover rather than profit:

• For businesses with annual income up to 300 million MNT and not operating in mining, oil, alcohol, or tobacco sectors, a 1% tax on turnover may apply.

Additionally, there is a 90% CIT reduction for micro-scale businesses that meet certain conditions:

• Must be established in Mongolia,
• Annual income must be below 1.5 billion MNT,
• Must not operate in mining, oil, alcoholic beverages, and tobacco sectors.

This structure aims to encourage both local initiatives and small-scale foreign investors.
If your business model is based on low margins but high turnover, a scenario-based analysis may be necessary between the standard CIT regime and this 1% turnover tax.

Types of Income Taxed on a Gross Basis

Some types of income are taxed directly on a gross amount basis rather than included in corporate profits:

• Real estate sales/capital gains: 2% on the gross sale price
• Dividends: 10%
• Interest income: 10%
• Royalties: Depending on the situation, 5% or 10%
• Insurance compensations: 10%
• Sale of intellectual property rights: 5%

For non-resident companies, a general 20% gross tax is applied on Mongolia-sourced income; however, double taxation treaties may reduce these rates. The provisions of the agreement between Mongolia and Turkey or other country agreements should be examined separately.

Planned Corporate Tax Reform for 2026

A comprehensive Tax Law reform is being discussed in Mongolia, with changes extending into 2026.
Highlighted topics in the discussions include:

• Revising the progressive CIT structure with finer profit brackets,
• Proposing a 15% CIT rate for profits in the 6–10 billion MNT range,
• Maintaining a 25% rate for profits exceeding 10 billion MNT,
• Continuing discounted rates and incentives for SMEs and micro enterprises.

Officials emphasize that the global average corporate tax rate is around 21.2%, aiming to position Mongolia as a country with a competitive tax rate on a regional and global scale.

These reforms are likely to be implemented as an evolution of the current framework by 2026; however, exact rates and brackets will be formalized when the new Tax Law comes into effect.
Therefore, companies planning to invest in Mongolia must check the current legal texts and administrative guides at the time of decision-making.

Sectoral Incentives: Mining, Renewable Energy, and Export

Mongolia offers special tax incentives for certain strategic sectors:

• Mining – Reduced rates, tax holidays, or investment-based credits may be available for large-scale and strategic mining projects.
• Renewable energy – Tax reductions and accelerated depreciation opportunities for projects such as solar and wind are on the agenda.
• Export-oriented production and industry – CIT reductions and customs facilitation may be provided for selected sectors within the framework of increasing exports.

These incentives are often regulated on a project basis and with additional legislation.
In high-investment areas such as mining or energy, correctly structuring the contract and incentive package from the outset directly affects the return on investment.

Other Key Business Taxes: VAT, Social Security, and Withholdings

VAT (Value-Added Tax)

While details in the legislation may vary, the basic VAT system in Mongolia can be summarized as follows:

• The standard VAT rate is at a single, relatively low rate for most goods and services.
• For businesses exceeding a certain turnover threshold, VAT liability becomes mandatory.
• There may be exemptions and reduced applications for export transactions and certain sectors (education, health, etc.).

The practical question for foreign investors is usually: “According to my sales model in Mongolia, will VAT be borne by the final consumer, the local distributor, or my company?”
Providing the correct answer to this question is critical for pricing strategy and cash flow planning.

Social Security and Payroll Obligations

When a company employs staff, both the employer and the employee are required to contribute to the social security system.
Generally:

• The employer pays a certain employer share (pension, health, unemployment, etc.) on the gross salaries of employees.
• The employee share is reflected as salary deductions on the payroll.

For companies sending personnel to Mongolia from different countries, bilateral social security agreements come into play to prevent double premium payments and optimize taxes in posted worker setups.

Withholding on Payments to Foreigners

The general framework for payments made to non-resident companies is as follows:

• Up to 20% gross tax may be applied on Mongolia-sourced income.
• Special withholding rates (e.g., 5%, 10%) apply to payments such as dividends, interest, and royalties.
• Double taxation agreements may reduce these rates or provide exemptions.

Companies with cross-border transactions such as intra-group licensing, management fees, and interest-bearing intra-group debts must evaluate the transfer pricing and withholding effects together.

Strategic Planning: Which Structure is Suitable for Which Business Model?

When entering Mongolia, the company structure and tax regime must be designed according to the business model. For example:

• Low-cost marketing/testing process:
  • It may be reasonable to observe the market with a representative office and establish initial contacts.
• Medium-scale trade or service operation:
  • The standard LLC + 10% CIT advantage in profit brackets below 6 billion MNT is attractive.
  • If turnover is low, the 1% turnover tax regime can be considered as an alternative.
• Mining, energy, or industrial investment:
  • Sector incentives, special licensing requirements, high capital needs, and potential tax holidays should be analyzed from the outset.
• Employing remote workers or field personnel:
  • Payroll, social security, residency permits, and potential permanent establishment risks must be correctly structured.

Therefore, it is essential not only to establish the company but also to correctly frame the pre-establishment business model.

Corpenza’s Solutions for Mongolia and Global Mobility

The challenges you encounter when opening up to developing markets like Mongolia generally fall into three categories:

• Choosing the legal structure and company establishment process,
• Tax planning (CIT, VAT, withholdings, incentives),
• Payroll, social security, and international employee mobility.

As Corpenza, we offer integrated solutions in:

• Company establishment and structuring,
• International accounting and payroll/EOR (Employer of Record),
• Tax and social security optimization with the posted worker model,
• Solutions for residency and citizenship through investment

Specifically for Mongolia;

• When choosing between LLC/JSC/representative office, we present the tax implications and operational risks through numerical scenarios.
• We analyze the impact of the planned 2026 Tax Law reform on your business model with different profit and turnover assumptions.
• In the processes of staff assignment from different countries to Mongolia or from Mongolia to other countries;
  • the risk of permanent establishment,
  • double taxation and social security burden,
  • individual residency and work permits

  are designed end-to-end.

In this way, you not only become a company that has “opened” but also progress on a tax-sustainably, compliant, and scalable business model.

Conclusion: What to Pay Attention to When Establishing a Company in Mongolia Before 2026?

In summary, as we prepare for 2026, Mongolia offers:

• A LLC structure open to foreign investors,
• An attractive 10% CIT rate for SMEs and a 1% turnover tax option for micro enterprises,
• Sectoral tax incentives for mining, renewable energy, and export-oriented sectors,
• A more refined tax bracket structure with the ongoing Tax Law reform

becoming a notable business establishment destination in Central Asia.

However, tax rates, VAT practices, and incentives can be updated through legal changes and administrative regulations.
Especially considering the reforms aimed at after 2026, it is crucial to check both current official sources and obtain professional consultancy specific to your business model before making an investment decision.

Corpenza can assist you in integrating the processes of company formation, tax planning, and payroll/employee mobility in your multi-country structures, including Mongolia.
Thus, while focusing on growing your operation, compliance and tax optimization are managed within a reliable framework.

Disclaimer

The information in this text is for general informational purposes and does not constitute legal, tax, or financial advice.
Tax rates, incentives, and legislative provisions may change over time.
Before making an investment or company formation decision, you should check the current regulations from official sources and obtain consultancy from an expert professional tailored to your country, sector, and structure.
Corpenza or the author cannot be held responsible for any consequences arising from decisions made based on this text.