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http://zgm.mn/post/2782/

Mongolia faces needs to boost budget revenue

Experts see possibilities to increase tax income

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http://zgm.mn/post/2782/


Budget revenue of Mongolia is at risk due to tax deficit, deduction, and discounts for mining investors. Furthermore, the Extended Fund Facility program will expire in the coming year, threatening the budget decrease. As a result of the need, officials propose the possibility to increase budget revenue by setting up the right tax policy.

One out of every MNT 10 of Mongolia’s tax revenue goes to discounts and exemptions. In the last four years, tax deduction and exemptions to citizens and entities of Mongolia equal to nearly four trillion tugriks. The volume has increased, and exceeded one trillion tugriks this year. This number is expected to reach MNT 1.2 trillion next year, according to the 2019 budget. Currently, there are over 40 discounts and 180 exemptions nationwide.

As of 2018, there are 1.2 million working population in Mongolia

Taxes are the main source of Mongolia’s budget revenue, which accounts for 80 percent of it. However, the country can not fully obtain its tax. The tax deficit equals MNT 800 billion. As of 2018, there are 1.2 million people, who are working in Mongolia of which 650,000 are paying social insurance. The rest of the working people are receiving social and civil services without paying social insurance. This may lead the country to inequality of social allocation.

More specifically, government revenues are mainly generated from taxation and royalties from the mining industry, but the country provides benefits to direct mining investors by showing VAT and profit discounts. International organizations have also warned the need to organize such tax breaks. According to the World Bank, the detailed study of these preferences, goals, and economic feasibility is required.

In 2017, Mongolia received an extensive bailout package from the International Monetary Fund (IMF) under its Extended Fund Facility (EFF). Since taking the IMF loan, Mongolia has had a good economic situation. When the three-year financial program expires in 2020, the revenue sources will decrease gradually and spell risk to the budget.

In order to expand budget revenue, Mongolia needs the policy which enables the government to identify unregistered and potential taxpayers and enhance accountability in tax administration. The experts also underscored the importance of simplifying tax payments, using electronic invoices, improving taxation and information strategies.

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President bans parliament decree on constitution

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The President of Mongolia has banned the Parliament decree on adopting the referendum and accepting the Constitution of Mongolia. The official note was sent to Parliament Speaker Zandanshatar Gombojav. President said that the amendment to the Constitution did not meet the requirements of the Constitution of Mongolia’s amendments and the Act was violated.


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APU JSC’s share price decreases

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The share price of APU JSC, one of the companies that have the highest market value, has fallen 22 percent since 2019. Due to the drop, the company’s stock became losers among the MSE tier-I listedcompanies of Top-20 Index. The company had a market value of MNT 687.2 billion at the beginning of the year, and by September 19, the value lowered by MNT 151.9 billion to MNT 535.3 billion. Compared to the financial performance of the first half of 2018, the company’s sales revenues have increased, but net income decreased by MNT 4.5 billion. The decline in market capitalization was major factor for the decrease. Even though the share prices have fallen, lower stock options among investors is increasing the number of shareholders. Specifically, the number of small shareholders in APU has increased by 7.4 percent to 6,000.

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India pledges additional USD 236 million for oil refinery

India to fund oil refinery with USD 1 billion in Mongolia

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President of Mongolia Battulga Khaltmaa met with Indian President Ram Nath Kovind and the sides released a joint statement on Strengthening Mongolia-India Strategic Partnership during a five-day visit in the country. It is the first visit by the head of state of Mongolia to India in the last decade.

Mr. Battulga said, “During the visit of Prime Minister Narendra Modi to Mongolia, India extended soft loan credit line of one billion dollars for the construction of oil refinery in Mongolia. We are concluding the construction of roads, railways and power line for the refinery. The construction of refinery provides many opportunities for Mongolian and Indian entrepreneurs”. 

The USD 1 billion oil refinery being built with Indian aid in Mongolia will be completed by December 2022 and will produce about three-fourths of Mongolian oil consumption, Indian Union Minister said.

India further agreed to extend an additional Line of Credit of USD 236 million for the project, taking India’s total commitment for the project to USD 1.2 billion. Both sides also agreed to train engineers and technicians to be employed at the “Mongol Refinery Project” in India through Scholarship from the Indian Government under the existing Indian Technical and Economic Cooperation (ITEC) program.

During his visit to the Taj Mahal, President Battulga and Prime Minister Narendra Modi jointly unveiled a statue of Buddha and his two disciples, installed at the Gandan Tegchenling Monastery in Ulaanbaatar, at a function in New Delhi on Friday. 2020 will mark the 65th anniversary of the diplomatic relationship between Mongolia and India.



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ERD commences second phase of Khundii Gold Project

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Erdene Resource Development Corp. announced its commencement of the second phase of the 2019 drill program at its 100 percent owned Khundii Gold Project.

During the second quarter of 2019, the company started drilling and discovered high gold mineralization from the undiscovered section of the Bayan Khundii area. ERD also had reported that they found 5.9 grams of gold per ton of soil at the time. The new drilling will continue on the Bayan Khundii’s special licensed field.

“The current drill program will follow up on our Q2 2019 program, which discovered high-grade gold in a previously untested area of the Bayan Khundii deposit and intersected 112 meters grading 5.9 g/t gold at Midfield, confirming the continuity of high-grade mineralization from near-surface in the heart of the Bayan Khundii deposit,” said Peter Akerley, Erdene’s President and CEO. “Exploration drilling will test the high-priority Khundii North and CSZ targets, as well as the newly discovered Khundii South zone of the Bayan Khundii Mining License.”

ERD’s share price rose 13.5 percent, to CAD 0.21 on the Toronto Exchange Exchange (TSX).