This year, the budget expects MNT three trillion in tax revenue from the mining sector. In the first four months of 2019, the mining sector contributed MNT 981 billion to the state budget. Income generated into the state budget rose by MNT 286 billion, or 41.2 percent more compared to last year. Taxes collected and duties from minerals such as gold, coal, copper and spar have increased, whereas tax income from zinc and iron has decreased.
Despite an increase in tax revenue from gold by 13 percent from last year, the volume of gold purchased by the Bank of Mongolia fell by 43 percent. The difference between gold purchased by the BoM and tax revenues is explained by the increase of the gold royalty from 2.5 percent to five percent starting from January 2019. However, gold purchased only in April this year exceeded the amount purchased in the same month of last year. In other words, the discussions concerning the draft amendments to the Law on Minerals in parliament has prompted an 11-fold increase in gold purchases in April from the previous month.
It is also noteworthy that tax revenue from coal increased by 75 percent in January-April. In Q1 of this year, steel production in China, Mongolia’s main coking coal consumer, grew by 10 percent to 231 million tons, directly impacting coking coal prices. Coal exports increased by 11 percent to 11.5 million tons, generating USD 963 million in revenue, which is an increase of 21.1 percent from last year.
Likewise, tax revenue from copper went up by 27 percent to USD 96 billion. This is a direct consequence of high copper prices in the first four months of 2019, which fluctuated between USD 5900 earlier in the year and USD 6300-6500 by February and March.
Furthermore, the General Department of Taxation announced the top 10 taxpayers of 2018. Taxes collected from these ten leading businesses made up almost half of the total MNT 4.7 trillion in state budget income. In particular, they contributed MNT two trillion, or 41.6 percent of total tax income. Moreover, the mining industry contributed MNT 2.1 trillion to the state budget in 2018.
Among the top ten taxpayers of 2018, there were eight mining companies, whereas in 2017 there were seven. Companies operating major strategic mines especially are key contributors, suggesting their importance to the country’s economy. In brief, the figures showed how the government’s tax revenues depend heavily on only three projects. By raising incentives to invest in strategic deposits, we will have more abundance of opportunity to ensure social and economic stability.
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