Stamp duties cut to lowest amount

burden made alcohol sales unprofitable

The stamp duty tax law which has been highly criticized since the first days of its approval has been revised. Business people engaged in alcohol sales and service protested that high license fees on strong drinks and services makes this kind of business impossible to operate.

The government decided to revise the law after surveying more than  3000 business entities and considered cutting-off the stamp duty taxation. A separate bill was also drafted by parliament member L.Gantumur, but it was unified with the government- drafted law.

On June 9, the revised law on state stamp duty was approved with 67.3 percent of the vote of MPs who participated in the plenary parliamentary session. During the draft law debate, some MPs argued that by  reducing the stamp duty 40 percent, there would be a budget adjustment of almost Tgs800 million.

Surprised by the principle of the law’s amendment that some taxes were cut 100 times, for example Tgs7 million stamp duty has changed to Tgs70,000 tax, member P.Altangerel advised that the cabinet to be more careful when drafting laws. “Citizens and business entities must not be imposed high taxation for their services to the state and expenses for service should only be re-accounted. This proposal was discussed during a meeting of parliamentary working group, but reducing the amount of the stamp duty was not allowed”, said MP L.Gundalai.

The stamp duty law which regulates over 500 services has widely been deliberated, especially the license fees to sell or serve with strong drinks. The amended law authorizes aimag and city governors to grant licenses for sales and services and perform stamp duty taxation as follows:

To pay Tgs600,000–1,500,000 for licenses to serve very strong spirits in the capital city,

- Tgs320,000–800,000 in aimag soum centers, Tgs200,000– 500,000 in other soums,

- Tgs200,000–500,000 to extend a service license in the capital city, 

- Tgs160,000–400,000 in aimag soum centers; and,

- Tgs80,000–200,000 in other soums.

Most MPs supported the proposal to add a provision for a tax payment of Tgs40,000–100,000 for a license to produce alcoholic drinks made from milk. It was also decided that under the state stamp duty law, the energy and power service that should be regulated by state policy, import and sales of chemical and dangerous substances, tobacco planting and production and spirit production will be taxed by parliament.

Permission fee for visa service of foreign and Mongolian citizens, for consular service, for the registration of all kinds of transport vehicles, for state registration duty of newspapers,journals, radio and television service, of legal subject state registration, finance and banking activity, special license and permits on educational activity and activities except services with an adverse environmental impact shall be given by the government under parliament restrictions.

When the draft law was discussed in parliament, MPs had priciples that special permissions for works and services indicated in the provision 35 of the acting law on state stamp should be granted by the aimag and city Citizens Representative Hurals under the framework established by Parliament, the highest rate of stamp tax collection will be made by the government’s proposed amount and the lowest to be cut by 40 percent.

The certain provisions related to reduced taxes will be followed from January 1,2011. But other provisions of the law in relation with the following activities, come into force from the day the revised law was adopted:

- The activities of higher educational establishments; for acquiring and mastering professional skills and qualifications, for granting Master and Doctor’s Degrees,

- For production and sales of fire arms; and importing them across state border;

- For license granting to export livestock breeding animals for food, agricultural and light industry purposes;

- For granting licenses for frozen animal breed fertilizers,

- For building a nuclear facility; its restructuring and operation;

- For supplying nuclear equipment

source: 'The  Mongol Messenger'

Posted in: mongolian economy