i.Overview

A national package made of seven key measures, ranging from an employment support scheme to tax exemptions, was implemented early on. It was later complemented by additional socio-economic and sectors-specific measures and laws. In September 2020, the government designed a National Action Plan 2020-21 to support economic recovery and mid-term development. The digital programme e-Mongolia has also been accelerated. The Bank of Mongolia has also played a key role by decreasing the policy rate from 11% to 9% and supporting liquidity and provision of credit to businesses. 

ii.Tax-related measures

tax exemptions on several imported food and medical items;

exemptions on CIT, PIT, and social security contributions;

exemption of rent income tax; 

exemption of customs duty and VAT on certain imported goods;

temporary exemption of tax penalties and charges on late payment;

reduced social security contribution.

iii.Tax administration practice

Governments in the region have also moved to accelerate the digitalisation of public services and tax administration, which was already under way, helping businesses connect to e-commerce platforms and creating new services.

iv.Details about the process of the national package during 2020-2021

On February 19, 2020, MNT17 billion (0.04 percent of GDP) of additional health spending was approved and allocated to epidemic prevention and control, acquisition of medical supplies and medical staff overtime salaries. This measure is being financed by the Government Reserve Fund. 

On March 27, 2020, a comprehensive set of fiscal measures was adopted to protect vulnerable household and businesses and to support the economy. These include: (1) tax exemptions on several imported food and medical items; (2) increase of child allowance and unemployment benefits; (3) exemptions on CIT, PIT, and social security contributions until the end of September 2020; and (4) an increase in credit guarantees to SMEs and soft loans from the development bank to cashmere producers. 

On May 6, 2020, a second package of fiscal measures (amounting to roughly 2 percent of GDP) was announced to protect the vulnerable groups. These include: (1) a further increase in child allowance; (2) a scale-up of food stamp allowance; and (3) an increase in social welfare pensions for the elderly, disabled, dwarfs, orphans, and single parents with more than 4 children. 

On August 5, 2020, the government announced the extension or modification of COVID-19 fiscal measures through the end of 2020 including: (1) child money allowance; (2) CIT exemption; (3) exemption of rent income tax; and (4) exemption of customs duty and VAT on certain imported goods. Modification of measures includes: (1) increased food stamp allowance; (2) increased social welfare pensions; and (3) reduced social security contribution. A supplementary budget to contain these measures (amounting to about 7½ percent of GDP in total including the previous measures) was approved by Parliament on August 28, 2020.

On November 18, 2020, the government announced further extension of selected COVID-19 fiscal measures through end-June 2021, in response to potential adverse effects of the country's lockdown associated with domestic transmissions. These include: (1) exemption of rent income tax; and (2) exemption from customs duties and VAT on certain imported goods.

On December 2, 2020, the government announced COVID-19 measures, which include (1) MNT3 billion financial support to selected provinces affected by domestic transmissions; (2) temporary exemption of tax penalties and charges on late payment; and (3) coal briquette price subsidy to ger districts in Ulaanbaatar City. 

On December 13, 2020, the government announced COVID-19 measures which will be financed by selected state-owned enterprises. The measures include (1) waiving utilities (electricity, heating, water, and waste disposal) payments to business entities and households; and (2) reducing the price of coal briquettes by 75 percent.

On April 8, 2021, the government announced a cash handout of MNT300,000 per citizen (MNT1 trillion in total equivalent to 2½ percent of GDP) to compensate an income loss associated with a renewed lockdown.

On May 5, 2021, the government announced a bonus of MNT50,000 to individuals that are fully vaccinated.

On May 27, 2021, Parliament proposed an amendment to the Law on Social Insurance to repeal the 2 percentage points increase on social insurance contribution implemented in January 2021. The reduction is expected to be implemented in July and the resulting additional financing need (estimated at MNT94 billion for 2021) to be addressed under the Anti-Pandemic Law.

On June 28, 2021, the government announced further extension of (1) the temporary increase in child money allowance and (2) waiving utilities (electricity, heating, water, and waste disposal) payments to end-December 2021. 

(Updated: May 2022)

(1) Tax exemptions on several imported food and medical items.

(2) Exemptions on CIT, PIT, and social security contributions until the end of September.

(Updated: August 2020)