flag Mongolia Mongolia: Investing

FDI in Figures

Foreign direct investment has been the engine of Mongolian economic growth and is highly dependent on commodity prices. According to UNCTAD World Investment Report 2022, FDI flows to Mongolia amounted to USD 1.7 billion in 2020, down from USD 2.4 billion in 2019 (-29.6%), due to the global economic crisis triggered by the Covid-19 pandemic. It reached USD 2.1 billion in 2021. The total FDI stock amonted to USD 24.2 billion in 2020 and USD 26.3 billion in 2021 (UNCTAD, 2023). The key external factors that crippled the mining-led economy in 2020 and 2021 were a sharp drop in global demand for Mongolia's main commodities and the closure of the border with China. The World Bank assisted Mongolia with its capacity to apply international standards on future mining investment schemes. The assistance, dubbed Mining Infrastructure Investment Support (MINIS) Project, was completed in December 2019. Mongolia is also building its first oil refinery, which is expected to be commissioned by 2022. The project received financial and technical assistance from India in October 2019. Mongolia's main investment partners are China, Canada, Russia, Great Britain and the United States. The sectors attracting the most foreign investment are mining, oil and construction.

Tremendous mineral reserves, agricultural endowments, and proximity to Asia’s vast markets make Mongolia an attractive destination for medium to long-term foreign direct investment (FDI). In 2021, the Ministry of Economy and Development was established newly and replacing the National Development Agency of Mongolia that had been in charge of investment-related matters. The new Ministry's mission is to, among other things, improve integrated investment policy and planning, and its legal environment, ensure and oversee the implementation of relevant legislation, attract, support, and protect investment, implement comprehensive measures to develop the public and private partnership, define integrated policy for a loan, and develop national investment program action plan will be implemented from 2021-2023. The main purpose of the plan is to attract FDI to Mongolia by introducing and promoting specific sectors. The future establishment of the Foreign Direct Investment Promotion Council is expected to expand the functions of existing system supporting investors. The council will focus on FDI attraction plans for specific sectors, improvement of investment environment, investor protection, and aftercare services.

Mongolia made some progress with regards to resolving insolvency, but other countries have shown a better improvement in the business environment. However, the instability of economic policies and regulations, geographical isolation, corruption and inefficient transportation system are significant obstacles. The Mongolian government has launched a programme to improve the country's legal framework in order to boost FDI flows. In particular, it lifted the moratorium on new mineral exploration licenses and to increase the maximum duration of exploration licenses from 9 to 12 years. All sectors of the Mongolian economy are open to FDI, including raw materials, livestock and many other sectors with high development potential (mining, food processing, telecommunications, tourism). Strong inflows of mining-related FDI (about 10% of GDP) help finance the current account deficit, but are affected by the global economic situation (COFACE, 2021). Mining investments, the bulk of foreign direct investment in recent years, half of which has been in the OT project, have come to a halt. The Oyu Tolgoi (OT) copper and gold mine mine expansion project, which had already been delayed due to difficult ground conditions and government renegotiations, started in October 2022. Mongolia Foreign Direct Investment registered a growth equal to 12.9 % of the country's Nominal GDP in December 2021, compared with a growth equal to 15.3 % in the previous quarter (CEIC, 2022).

Growth depends heavily on foreign direct investment (FDI), but this is likely to fall in 2024. Mining and the broader extractive industry has been a key driver of economic growth, but its business cycle is highly volatile because it depends on FDI and PRC demand for minerals. Indeed, 72.8% of FDI stock was in mining and other extractive industries in 2010–2022.Absorbing 50%–90% of net FDI annually since 2010, Oyu Tolgoi, one of the world’s largest copper mines, will complete its underground mine project in 2023 (ADB, 2023).


Country Comparison For the Protection of Investors

  Mongolia East Asia & Pacific United States Germany
Index of Transaction Transparency* 6.0 5.9 7.0 5.0
Index of Manager’s Responsibility** 8.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 8.0 6.7 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 1,7192,1732,504
FDI Stock (million USD) 24,206.726,281.828,521.5
Number of Greenfield Investments*
Value of Greenfield Investments (million USD) 1207

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.


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Tax Rates

Value Added Tax (VAT)
10% (standard rate).
Zero-rated items include exports; services provided in a foreign country; any rendering of services to nonnresidents; any services of air navigation management, technical and fuel services, and cleaning that shall be provided for both foreign and domestic airplanes conducting international flight and sale, food and drink services provided for air crew members or passengers during flight; state medals and coins manufactured domestically on the order of the Government or the Bank of Mongolia; mining finished products that are exported.
Exempt items include passengers’ personal-use goods (subject to permitted amounts and approval by customs authority); goods received through humanitarian and grant aid from foreign governments, NGOs and international or humanitarian organizations; special purpose appliances, equipment and machinery designed for physically challenged persons; civil passenger airplanes and spare parts thereof; revenues from the sale of establishments used for housing or portions thereof; blood, blood products and organs to be used for purposes of specified treatment; gas fuel, gas fuel containers, equipment, special purpose machineries, mechanisms and related mechanics; sale of gold; experimental products related to research and scientific work; mining products other than mining finished product that was exported; cereal, potatoes, seeds, vegetables and fruits domestically grown and sold by farmers and domestically produced flour; asset-backed loan portfolio or claiming rights derived from financial leasing arrangements transferred by banks, nonbaning financial institutions (NBFI) or other legal entities to other banks, special purpose companies or mortgage corporations; imported woods, timbers, cut materials, planks, wooden pieces and semi-processed wooden materials; exported cashmere and leather that has been raw processed (cleaned and brushed); import of special purpose machinery, equipment, parts, raw materials, and chemical or explosive substances imported by contractors and subcontractors to be used for crude oil and nontraditional crude oil industry for the first five years of an exploration period or for exploration periods of less than five years; import of equipment, tools and accessories for renewable energy production and research; currency exchange; banking services, such as the receipt or transfer of money, or any dealing with money, any security for money or any note or order for the payment of money and the operation of any savings account; services of insurance, reinsurance and registration of property; the issuance, transfer or receip f any securities and shares, and underwriting of such securities; the issuance of loans; the provision or transfer of an interest related to a social and health insurance fund; loan interest, financial lease interest, dividends, loan guarantee fees or insurance premiums by banks, NBFIs, or saving and loan cooperatives; rental of residential houses and apartments; medical services; services of religious organizations; services provided by a government organization; this shall include public services provided by the government, its agencies and budgetary organizations; public transportation services; tour operating services; weapons and special equipment imported for the needs of the armed forces, police, state security, enforcement of court decisions, state special protection organizations and the anti-corruption agency.
Company Tax
Progressive rate from 1% to 25%
Withholding Taxes
Dividends: 10% (resident)/20% (non-resident); Interests: 10% (resident)/20% (non-resident); Royalties: 10% (resident)/20% (non-resident).
Bilateral Agreement
The United Kingdom and Mongolia are bound by a double taxation treaty.
Social Security Contributions Paid By Employers
Between 12.5% and 14.5% depending on the sector (8.5% for pension, 1% for benefits, 2% for health, 0.2% for unemployment, and 0.8% to 2.8% for industrial accident and occupational disease insurance).
Other Domestic Resources
Taxation Office (MTA)
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Individual Taxes

Income tax 10%
Non-residents 20%

Country Comparison For Corporate Taxation

  Mongolia East Asia & Pacific United States Germany
Number of Payments of Taxes per Year 19.0 23.4 10.6 9.0
Time Taken For Administrative Formalities (Hours) 134.0 195.1 175.0 218.0
Total Share of Taxes (% of Profit) 25.7 33.8 36.6 48.8

Source: Doing Business - Latest available data.

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Investment Opportunities

Tenders, Projects and Public Procurement
Asian Developement Bank, Proposed Projects in Asia
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Mongolia.
Useful Resources
Foreign Investment and Foreign Trade Agency (FIFTA)
Contact the Mongolian Business and Trade Council in the United Kingdom.
Contact UK Trade & Investment in Mongolia.
Contact the British Embassy in Mongolia.
Contact the Embassy of Mongolia in the United Kingdom.

Business Setup Procedures

Setting Up a Company Mongolia East Asia & Pacific
Procedures (number) 8.00 7.25
Time (days) 12.00 29.73

Source: Doing Business.


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Latest Update: November 2023

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