Introduction to Mongolia Company Formation
Mongolia is consistently working hard to develop its business law, banking, taxation, and external links that the international business community needs, especially the market economy. Upon entering Mongolia, it presents a unique challenge to investors with assessing business risks. Additionally, their decisions must be based on reality instead of perceptions. Mongolia is rich in natural resources and production of agriculture, making its population one of the richest in terms of per capita. However, turning this potential into reality needs a lot of critical factors that need to function properly. Attracting and the protection of their investors are included in these critical factors. You can also register for an offshore Mongolia company formation, which could be Limited Liability Company (LLC); Representative office.
Mongolia Company Formation
The Investment Law (IL) of Mongolia has given permission to local and foreign investors to build business entities by either forming it alone or jointly. This must be done under the same regulatory and legal system, but there are exceptions imposed on foreign investors. The IL requires: (1) legally owned foreign state entity may only hold at last 33% equity stake in Mongolia’s certain sectors. Only the Government of Mongolia can grant permission; (2) if the foreign direct investments amount to at least 25% or more of business equity in Mongolia. Each one that involves a foreign investment of at least $100,000 should register with the authorities.
Domestic and foreign businesses must be registered at the General Authority for Intellectual Property and State Registration (GAIPSR). The registrants can get the UB 03-II form and other documents they require from a website and the completed documents must be completed by email. Their aim is a 2-day turnaround time for the review and process of approval, but investors report that complicated situations can take several weeks up to 3 months. After GAIPSR approves it, the company must register at the General Tax Authority of Mongolia (GTA). After hiring new employees, the company must register at the General Authority of Social Insurance (ASI). There is no need to notarize for this registration process.
- Branch opening, office, and unit representative costs $450
- Foreign-invested identity establishment costs $310
- Contract changes and by-laws registration, office, and unit representative costs $14.50
- New ID costs $8
General Tax Authority of Mongolia registration requires a filing fee of $10 and these documents:
- All business parties must sign the agreement and charter
- GAIPSR certificate of approval
- Notarized schedule that shows the equity that each partner holds
- Tugrik local bank account numbers and currency accounts that the business venture will use
- Foreign company representative passport copy
- A certificate that shows how much capital the foreign company holds in their home country
- Certificate of approval issued by the local administration of where in Mongolia the business will be based
The applicants might be required to submit additional documents or pay other fees based on the case.
Business Culture in Mongolia
Mongolians are popular being independent, proud, loyal, and self-confident in nature. It is better someone introduces you to the person you want in the meeting. In case this is not possible, writing an English formal letter or email before your visit is enough.
The Mongolians appreciate a formal greeting more, with direct eye contact and a handshake. They normally use the first name and make sure to always give a business card while greeting them. A Mongolian will expect an informal conversation before talking about business and the executives enjoy a lunch or dinner invitation to get to know an investor.
Giving small gifts after an agreement is customary in their culture. July and August are peak summer holidays in Mongolia, making it hard to arrange meetings with them. Therefore, a Mongolia company formation should process before or after these months.
Most of the businesses in Mongolia have at least 1 English-speaking person who can translate.
If you need help with the business setup in Mongolia, you can contact us, 3E Accounting, to guide you in the process. With our guidance, Mongolia company formation should not be too hard.