The 2018 Extractive Industry Transparency Initiative report was disclosed in January this year. Under the initiative, the extractive industry, including minerals, oil, and gas, firms transparently disclose the taxes, fees, and payments to the state and local budgets, as well as the donations to non-governmental organizations. The Government also reports on the income from companies, which is authenticated by an independent audit. This is the 13th edition of the report for Mongolia.
The Cabinet has reportedly received taxes and other forms of deductibles from 2,042 companies in the extractive industry, which sums up to MNT 2.8 trillion. Audits, on the other hand, have conducted independent audits on 202 companies that paid over MNT 200 billion on the report. As reported by the Cabinet, those 202 firms paid MNT 2.8 billion to taxes in total, which makes up about 98.4 percent of mining and oil firms in the sector. From this sum, MNT 180 billion was allocated to local budgets.
From among the 202 firms, the taxes paid by 20 companies, which reimbursed over MNT 10 billion in tax payments, exceeded 461 billion and made up about 86.3 percent of total taxes. In other words, these 20 companies accounted for 26.3 percent of the budget performance of Mongolia that year.
While the copper concentrate firms led the Top 20 companies, half of them are coal companies. The fact that Mongolia’s coal export saw a growth in 2018 and the hike in coal prices are having a positive effect on companies in this sector. But none of the gold companies paid over MNT 10 billion to taxes. The highest tax-paying gold firms were “Uuls Zaamar” LLC /MNT 7.7 million/, “Bayan Airag Exploration” LLC /MNT 7.6 million/, and “Eco Altan Zaamar” LLC /MNT 6.3 million/.
In terms of tax categories, royalties made up 39 percent of the total taxes of the above-mentioned 202 companies, which equals MNT 1 trillion. The total sum of corporate income tax payments was MNT 648.7 billion, social insurance premium - MNT 205.9 billion, and the Government’s portion of the oil sales income reached MNT 222.5 billion.
The tax revenue from mining companies in local budgets accumulated to MNT 180 billion in the reporting period. This includes taxes, fees, and payments to local authorities, as well as the donations to both governmental and non-governmental organizations.
In regional areas, 10 companies paid over MNT 1 billion in taxes, and the list is led by “Oyu Tolgoi’ LLC - MNT 46.1 billion, and “Erdenet Mining Corporation” - MNT 33.9 billion. As for the locally owned “Tavantolgoi” JSC, the company allocated MNT 64 billion to Umnugobi province in dividends. Although the net taxes of “MoEnKo” LLC was low, the contribution within the cooperation agreement remains high. While the state-owned “Erdenes Tavan Tolgoi” JSC paid only MNT 581 million to local and state budgets.
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