Government Offers Tax Breaks For Tech Startups & Financial Sector

As the 2023 budget debate is ongoing at the parliament, the government is proposing to reduce several taxes (including withholding taxes) for startups, investment funds, and IT enterprises. The government also wants to boost the financial industry by removing capital gains tax in the securities market.

What’s more, non-mining companies listed on stock exchanges are expected to enjoy lower withholding tax - from 20 to 5 percent.

The 2023 tax relief is in addition to a one percent income tax for micro-enterprises earning less than MNT 300 million ($90,000) and a 10% corporate tax on profits no more than MNT 6 billion ($1.8 million).

Despite all of these incentives, the government is signaling it would be tough on bad actors. For instance, the justice ministry is investigating coin issuers who allegedly defrauded ordinary citizens last year when a cryptocurrency frenzy swept the country.

But the mining industry, which is critical to the national economy and wealth, is not expected to receive any tax preferences in 2023. On the contrary, the finance ministry officials are preparing to go after 40 percent of the mining sector that does not report their taxes and operates in the shadow economy.

Miners’ concern about hefty royalty payments will likely be treated with silence during the 2023 budget.

The 2023 tax policies signal that the government will continue to prioritize non-mining industries for the diversified economic development of the country.