Seven types of tax rates to be raised following budget amendmentsEconomy
Ulaanbaatar /MONTSAME/ Amendments to the 2017 State Budget, which were approved by the Parliament yesterday, April 13, laid out to raise seven types of taxes, as the Government agreed with the International Monetary Fund in the scope of a three-year Extended Fund Facility. Tax rate increase of four types of taxes will come into effect starting May 01. Those include individual income tax, tax on interest of bank savings, customs tax on imported cigarettes and excise tax on passenger cars.
Individual income tax will have tax brackets and five per cent of tax will be imposed on a monthly income of more than MNT1.5 million. Five per cent tax will be levied on interest of bank savings newly, bringing the planned effective date of January 1, 2018 closer. Customs duty on imported cigarettes and tobacco will be 30 per cent. Excise tax on passenger car will be increased depending on its date of manufacturing and cylindrical capacity. However, excise tax on hybrid, electric and gasoline vehicles will be eased by 50 per cent, while currently they are fully exempted from the tax.
Excise taxes on fuel has been lowered twice to keep the fuel price stable and the decrease made the tax revenue drop by MNT210 billion. Therefore the Government considered it proper to raise the tax rate back to the previous level in two stages: from July 01 and October 01.
Rates of two types of taxes will be raised in three stages. Social insurance contributions of 10 per cent paid by employer and 10 per cent by insured person will be raised by 1 point respectively from the beginning of next year, by 0.5 points from 2019 and by another 1 point from 2020.
Excise taxes on cigarettes, tobacco and vodka, alcoholic beverages and similar items will be raised by 10 per cent in 2018, by 5 per cent in 2019 and 2020 respectively.