Doing Business 2020 Mongolia Economy Profile Mongolia Page 1 Doing Business 2020 Mongolia Economy Profile of Mongolia Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Mongolia About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Mongolia Ease of Doing Business in DB RANK DB SCORE Region East Asia & Pacific Mongolia Income Category Lower middle income 81 Population 3,170,208 67.8 City Covered Ulan Bator Rankings on Doing Business topics - Mongolia 29 25 25 50 71 75 100 143 152 150 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 86.7 78.2 55.0 74.2 80.0 74.0 77.3 60.8 61.4 30.1 Starting a Business (rank) 100 Getting Credit (rank) 25 Trading across Borders (rank) 143 Score of starting a business (0-100) 86.7 Score of getting credit (0-100) 80.0 Score of trading across borders (0-100) 60.8 Procedures (number) 8 Strength of legal rights index (0-12) 9 Time to export Time (days) 12 Depth of credit information index (0-8) 7 Documentary compliance (hours) 168 Cost (number) 1.2 Credit registry coverage (% of adults) 53.6 Border compliance (hours) 134 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 0.0 Cost to export Documentary compliance (USD) 64 Dealing with Construction Permits (rank) 29 Protecting Minority Investors (rank) 25 Border compliance (USD) 225 Score of dealing with construction permits (0-100) 78.2 Score of protecting minority investors (0-100) 74.0 Time to export Procedures (number) 17 Extent of disclosure index (0-10) 6.0 Documentary compliance (hours) 115 Time (days) 137 Extent of director liability index (0-10) 8.0 Border compliance (hours) 48 Cost (% of warehouse value) 0.1 Ease of shareholder suits index (0-10) 8.0 Cost to export Building quality control index (0-15) 14.0 Extent of shareholder rights index (0-6) 2.0 Documentary compliance (USD) 83 Extent of ownership and control index (0-7) 6.0 Border compliance (USD) 210 Getting Electricity (rank) 152 Extent of corporate transparency index (0-7) 7.0 Score of getting electricity (0-100) 55.0 Enforcing Contracts (rank) 75 Procedures (number) 8 Paying Taxes (rank) 71 Score of enforcing contracts (0-100) 61.4 Time (days) 79 Score of paying taxes (0-100) 77.3 Time (days) 374 Cost (% of income per capita) 603.5 Payments (number per year) 19 Cost (% of claim value) 22.9 Reliability of supply and transparency of tariff index (0-8) 3 Time (hours per year) 134 Quality of judicial processes index (0-18) 5.5 Total tax and contribution rate (% of profit) 25.7 Registering Property (rank) 50 Postfiling index (0-100) 49.1 Resolving Insolvency (rank) 150 Score of registering property (0-100) 74.2 Score of resolving insolvency (0-100) 30.1 Procedures (number) 5 Recovery rate (cents on the dollar) 18.2 Time (days) 10.5 Time (years) 4.0 Cost (% of property value) 2.1 Cost (% of estate) 15.0 Quality of the land administration index (0-30) 14.5 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 6.5 Page 4 Doing Business 2020 Mongolia Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is received -Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Mongolia Starting a Business - Mongolia Standardized Company Legal form Limited Liability Company (HHK) Paid-in minimum capital requirement No minimum City Covered Ulan Bator Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Procedure – Men (number) 8 6.5 4.9 1 (2 Economies) Time – Men (days) 12 25.6 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 1.2 17.4 3.0 0.0 (2 Economies) Procedure – Women (number) 8 6.6 4.9 1 (2 Economies) Time – Women (days) 12 25.7 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 1.2 17.4 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 3.5 7.6 0.0 (120 Economies) Figure – Starting a Business in Mongolia – Score 58.8 88.4 99.4 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Mongolia and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 94.4: Kazakhstan (Rank: 22) 94.1: China (Rank: 27) 93.4: Korea, Rep. (Rank: 33) 86.7: Mongolia (Rank: 100) 86.1: Japan (Rank: 106) 83.9: Regional Average (East Asia & Pacific) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Mongolia Figure – Starting a Business in Mongolia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 12 0.7 0.6 Cost (% of income per capita) 10 0.5 8 Time (days) 0.4 6 0.3 4 0.2 2 0.1 0 0 1 2 3 4 5 6 7 8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Mongolia Details – Starting a Business in Mongolia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Verify and reserve a unique company name 1 day MNT 500 Agency : Legal Entities Registration Office, General Authority for State registration The business owners must propose and reserve the name of the company with the Legal Entities Registration Office of the General Authority for State Registration of Mongolia (LERO). Upon approving the proposed name of the company, LERO will issue a name reservation slip (in writing or electronically) and a "bank account permission slip". The name reservation slip is one of the documents that needs to be supplied in original for the incorporation purposes. As such, ultimately a visit to LERO in person is required. According to the law on State Registration of Legal Entities (Art. 13.4), the newly incorporated company must be registered with LERO within 30 days from date the name reservation slip is issued. 2 Open a bank account and pay registration fee 1 day no charge Agency : Bank The company needs to have a bank account in order to register. Additionally, the registration fee (i.e. state stamp duty) needs to be paid at a commercial bank. There is no charge to open a bank account, however it is required to provide a name reservation slip and deposit the minimum balance. 3 Register the company and obtain state registration certificate 2 days MNT 44,000 Agency : Legal Entities Registration Office, General Authority for State Registration of Mongolia The following documents should be submitted at LERO in order to register incorporation and obtain a state registration certificate: 1. Completed proforma application form; 2. Bank account approval letter, and evidence of dormant account with some funds deposited; 3. Company charter; 4. Lease agreement with the company's official address; 5. Founding or shareholders' resolution; 6. Payment slip of the registration fee; 7. Name reservation slip; 8. Copies of the shareholders' passports (IDs). * For business activities that require licenses, these must be obtained first from the relevant authorities. On 21 June, 2018, the Mongolian Parliament adopted the new Revised Law on State Registration of Legal Entities which entered into force on November 1, 2018 . According to the new regulation, the Legal Entities Registration Office must process company registration within 2 business days. The same regulation also introduced online registration, which is yet to be put into practice. Upon registration of the company, the Registry automatically publishes a notice of company formation. The Registry also automatically pass the relevant documents to the tax department for the area in which the company is located. 4 Obtain the unique seal number 1 day no charge Agency : Legal Entities Registration Office, General Authority for State Registration According to the Order A/216 of the Minister of Justice dated 19 November 2018, a unique number is assigned for seal of a company, and such number must be inscribed in the seal. In order to obtain the unique number, a request (in the pro-forma form) and the original state registration certificate must be submitted to LERO. The unique number has ten digits, which reflect the following rules: - the first two digits are an index of the registration office which issued the seal number - the second two digits are the last two digits of the year of the number issuance - the last six digits are assigned by the state registration system. The surface of the seal must contain i) the name of the entity, ii) the registration number, iii) the code of the seal maker, iv) unique number. Page 8 Doing Business 2020 Mongolia 5 Register with the local tax office 1 day no charge Agency : Local (district) tax office According to the ''Information Exchanging Regulation'' between General Authority of State Registration and General Department of Taxation, General Department of Taxation receives information about registration of new legal entity in State Registration in electronic format. Under the General Tax Law of Mongolia, Article 13.2., a newly established legal entity is obligated to register as a tax payer within 14 days after they have registered with the LERO and received the registration certificate. Company must submit the following documents: • Completed pro-forma TB-01 and TB-02 application forms; • a copy of the State Registration Certificate of the company; • a copy of the Charter of the company; • a copy of the completed founders (i.e shareholder) form and ID card; • bank account details of the company; • a copy of the form or ID card of the executive director; and • a copy of lease contract (if any). 6 Apply for Social Security Code 1 day no charge Agency : District Social Insurance Department Upon incorporation of the company and once a company has employee(s) it must register with relevant social insurance department. The registration is done in person, and the District Social Insurance Department assigns a social insurance code to the company. The service is free of charge. It is no longer necessary to obtain a paper certificate of social insurance registration. The following documents should be submitted: 1. Registration Certificate of Company; 2. Official letter of Company; 3. Social Insurance report which must be filled in the official form of No. ND7 and ND8; and 4. Payment slip showing social insurance payment of the current month. 7 Make a seal 1 day MNT 59,800 (rush delivery Agency : Sealmaker fee) The company must first obtain a unique seal number form LERO. Then, the company must provide a copy of its state registration certificate to the seal maker. Currently, there are 19 seal makers who are registered with Ministry of Justice, which can be found here: https://mojha.gov.mn/newmojha/?page_id=350 8 Register for VAT 4 days no charge Agency : VAT office When a company reaches a threshold of MNT 10,000,000 in operational sales income, it is eligible to register for VAT on a voluntarily basis (Art. 6.5 of the VAT Law). When the threshold of MNT 50,000,000 in operational sales income is reached, the VAT registration is mandatory (Art. 5.2 of the VAT Law), and needs to be applied for within 10 days from reaching the threshold. VAT registration is done in person at the relevant district VAT office. The following documents need to be submitted in order to register for VAT: - Completed application form (available at http://www.legalinfo.mn/annex/details/7217? lawid=11811); - Copy of the State Registration Certificate; - Request letter to Tax office; - Proof that operational sales income reached the threshold (i.e., bank statement, receipts, contracts). Takes place simultaneously with previous procedure. Page 9 Doing Business 2020 Mongolia Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: • Procedure is considered completed once final document is - Will be used for general storage activities, such as storage of books or stationery. received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage • Quality control after construction (0-3) infrastructure, a septic tank in the smallest size available will be installed or built. - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 10 Doing Business 2020 Mongolia Dealing with Construction Permits - Mongolia Standardized Warehouse Estimated value of warehouse MNT 450,936,428.10 City Covered Ulan Bator Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 17 14.8 12.7 None in 2018/19 Time (days) 137 132.3 152.3 None in 2018/19 Cost (% of warehouse value) 0.1 3.2 1.5 None in 2018/19 Building quality control index (0-15) 14.0 9.4 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Mongolia – Score 52.0 68.0 99.5 93.3 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Mongolia and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 84.4: Korea, Rep. (Rank: 12) 83.1: Japan (Rank: 18) 78.2: Mongolia (Rank: 29) 77.3: China (Rank: 33) 76.5: Kazakhstan (Rank: 37) 70.0: Regional Average (East Asia & Pacific) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 11 Doing Business 2020 Mongolia Figure – Dealing with Construction Permits in Mongolia – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.045 120 0.04 Cost (% of warehouse value) 0.035 100 0.03 Time (days) 80 0.025 60 0.02 0.015 40 0.01 20 0.005 0 0 1 *2 3 4 *5 *6 7 8 9 10 11 12 13 14 15 16 17 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 12 Doing Business 2020 Mongolia Figure – Dealing with Construction Permits in Mongolia and comparator economies – Measure of Quality 16 15.0 14.0 14 13.0 13.0 12.0 Index score 12 10 9.4 8 6 4 2 0 Mongolia China Japan Kazakhstan Korea, East Rep. Asia & Pacific Details – Dealing with Construction Permits in Mongolia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain environmental impact assessment from the City Environmental Office 28 days no charge Agency : City Environmental Office Article 7.4 of the Law on Environmental Impact Assessment, revised in 17 May, 2012, provided that authorized investigators will make an general environmental impact assessment within 14 days. If necessary, the related state authority may extend this time by 14 days. In practice, this takes on average 28 -- 30 days. 2 Notarize a copy of the land possession agreement 1 day MNT 10,000 Agency : Notary BuildCo already has the land possession agreement but the copy of the agreement must be notarized at a notary. 3 Request and obtain approval of preliminary drawings from the Municipal Planning Agency 14 days no charge Agency : Urban Development Department 3 documents are submitted at the MPA to obtain the approval of the preliminary drawings: an application, notarized copy of the land possession agreement, copy of the cadastral maps. The cadastral maps for the land are already in the possession of the owner of the land, he does not need to renew it. MPA meets once every 2 weeks to review these requests and approves the preliminary drawings if they are in line with the existing construction norms and regulations. With this approval, contractor can start preparing the detailed drawings. 4 Request and obtain technical conditions for electricity 15 days MNT 156,000 Agency : Ulaanbaatar Electricity Distribution Network (UBEDN) Technical conditions for electricity are mandatory in order to obtain a building permit. It can be obtained in parallel with other technical conditions. 5 Request and obtain technical conditions for heating 14 days no charge Agency : Ulaanbaatar Dulaany Shugam Suljee JSC BuildCo needs to obtain approval from water, electricity and heating agencies. Each agency takes about 14 days to review the request and the general drawings and issue technical conditions. Obtaining of technical conditions can be done simultaneously. The technical conditions are issued free of charge. 6 Request and obtain technical conditions for water and sewage 14 days MNT 165,000 Agency : Water Department of Ulan Bator Municipality BuildCo needs to obtain approval from water, electricity and heating agencies. Each agency takes about 14 days to review the request and the general drawings and issue technical conditions. Obtaining of technical conditions can be done simultaneously. The technical conditions are issued free of charge. 7 Request and obtain approval of final drawings from the Fire Department 1 day no charge Agency : Fire Department For a building of less than 3,000 sq. m., this approval is obtained from the city's Fire Department. 8 Request and obtain approval of final drawings by the Ulan Bator Construction 7 days MNT 60,000 Development Center Agency : Ulan Bator Municipality Before obtaining the permission to start building from MPA, contractor needs to get the final drawings approved by the Construction Development Center where a committee of several certified architects review the final drawings and issue an official conclusion that all is set according to building regulations. The also stamp the drawings. 9 Request and obtain a building permit 21 days MNT 30,000 Agency : Municipal Planning Agency To start the actual construction, BuildCo must obtain a building permit from the Municipal Planning Agency. Once all the necessary approvals are obtained, the final drawings are submitted back to MPA to obtain the license or right to start construction. Page 13 Doing Business 2020 Mongolia 10 Receive a foundation inspection by the Municipal Planning Agency 1 day no charge Agency : Municipal Planning Agency The Municipal Planning Agency is obligated to monitor construction activities. No fees are charged for this inspection. The representative of the construction company should be present on the site. 11 Receive inspection during construction from Municipal Planning Agency 1 day no charge Agency : Municipal Planning Agency The Municipal Planning Agency is obligated to monitor construction activities. No fees are charged for this inspection. The representative of the construction company should be present on the site. 12 Request water and sewage connection 1 day no charge Agency : Water Authority of Mongolia The Water Authority of Mongolia receives application for new water and wastewater connections. 13 Receive inspection from the Water Authority 1 day no charge Agency : Water Authority of Mongolia The Water Authority of Mongolia verifies the technical conditions for the water and sewerage connection through an on site inspection. 14 Connect to water and sewage services through the Water Authority 3 days no charge Agency : Water Authority of Mongolia The Water Authority of Mongolia installs the new water meter approximately three days after the final inspection for water connection is conducted 15 Request and receive a final inspection from the Technical Committee 15 days no charge Agency : Technical Committee The final inspection is conducted 14 days after submitting the request to the Technical Committee. 16 Obtain approval of the building by the Technical Committee 14 days no charge Agency : Technical Committee The Technical Committee will review the results of the inspection and will issue its approval or "the official act" after 14 days from the day of the final inspection. The official act would include the signature of all members of the commission. 17 Register the building in the Real Estate Registry 14 days MNT 45,094 Agency : Real Estate Registry The Real Estate Registry registers the right of ownership within 14 days of the application date and issues a certificate of ownership. The registration fees to be paid are equal to 0.01% of the value of the real property. Takes place simultaneously with previous procedure. Page 14 Doing Business 2020 Mongolia Details – Dealing with Construction Permits in Mongolia – Measure of Quality Answer Score Building quality control index (0-15) 14.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 1.0 house engineer; Unscheduled inspections; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency; Yes, in-house engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 2.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or Construction 1.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) company. Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 2.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering; Being a registered architect or engineer; Passing a certification exam. Page 15 Doing Business 2020 Mongolia What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 2.0 2) years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer; Passing a certification exam. Page 16 Doing Business 2020 Mongolia Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts • Tools to monitor power outages (0–1) (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 17 Doing Business 2020 Mongolia Getting Electricity - Mongolia Standardized Connection Name of utility Ulaanbaatar Electricity Distribution Network (UBEDN) Price of electricity (US cents per kWh) 5.6 City Covered Ulan Bator Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 8 4.2 4.4 3 (28 Economies) Time (days) 79 63.2 74.8 18 (3 Economies) Cost (% of income per capita) 603.5 594.6 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 3 4.0 7.4 8 (26 Economies) Figure – Getting Electricity in Mongolia – Score 16.7 73.5 92.5 37.5 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Mongolia and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 99.9: Korea, Rep. (Rank: 2) 95.4: China (Rank: 12) 93.2: Japan (Rank: 14) 81.6: Kazakhstan (Rank: 67) 75.1: Regional Average (East Asia & Pacific) 55.0: Mongolia (Rank: 152) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Mongolia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 700 70 600 Cost (% of income per capita) 60 500 50 Time (days) 400 40 300 30 200 20 10 100 0 0 1 *2 3 4 5 6 7 8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 18 Doing Business 2020 Mongolia reflected here, see the summary below. Figure – Getting Electricity in Mongolia and comparator economies – Measure of Quality 9 8 8 8 8 7 7 Index score 6 5 4.0 4 3 3 2 1 0 Mongolia China Japan Kazakhstan Korea, East Rep. Asia & Pacific Page 19 Doing Business 2020 Mongolia Details – Getting Electricity in Mongolia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to UBEDN and await technical conditions 15 calendar days MNT 156,000 Agency : Ulaanbaatar Electricity Distribution Network Authority Required documents: application, registration of the company, license of the company, land ownership documents, required load. A 4- or 5-member commission within the UBEDN meets to consider the request. 2 Obtain external inspection by UBEDN for preparing technical conditions 1 calendar day MNT 0 Agency : Ulaanbaatar Electricity Distribution Network Authority The utility has to visit the site to determine the best way to connect the warehouse before the technical conditions can be prepared. 3 Await completion of project design by private firm and its approval 22 calendar days MNT 2,500,000 Agency : Project design firm The customer hires a specially licensed project design firm which develops design of the external connection. Once the design is completed the project design firm makes an appointment at the utility and takes the design for approval. In case that the connection crosses a public road, the project design company should also approve the project at the Road Department of Ulaanbaatar City. 4 Obtain approval from road authorities to lay out the cable 5 calendar days MNT 0 Agency : Road Police and Municipality The subcontractor is in charge of getting excavation permits if the line is crossing public road. In the past few years the most widespread excavation practice for laying the cables in Ulan Bator has been by using a 'shooting technique' whereby a ground puncture is made ​with a special pneumatic machine that has a different puncture tip depending on the kind of soil. The actual work does not require digging a large trench; it is sufficient to have a small sized rust of about 2-3 sq. meters where the machinery is installed. It will 'shoot' the cable on the needed distance thanks to the compressed air energy. 5 Await completion of external works by private electrical contractor 30 calendar days USD 20,373.13 Agency : Electrical Contractor The customer hires a licensed electrical contractor who carries out all the necessary external connection works in according to the approved technical conditions and the project design documentation. Among other tasks, the subcontractor installs a transformer which is required in the assumed case. The electrical contractor also installs the meter. 6 Await inspection of external and internal works by state commission 4 calendar days MNT 450,000 Agency : Inspection committee A committee consisting of an employee of the utility and an employee of the department specializing in electrical issues at government organization which includes all inspectorates for various industries visits the site. At this point the electrical contractor presents his/her license for the electrical works and technical reports on the installation ((1) working drawings (showing the electricity connections and cable layouts); (2) a statement of whether there have been any changes from the original drawings submitted; (3) a statement listing all persons that have worked on installing the electrical equipment. The purpose of this statement is to check whether the work has been done by properly licensed electricians; (4) a statement certifying that all technical work complies with safety and technical regulations). Internal wiring is also checked at this point. 7 Await sealing of the meter by UBEDN 1 calendar day MNT 0 Agency : Ulaanbaatar Electricity Distribution Network Authority When the permission for a power turn on is received, a utility employee comes to the site to seal the meter. 8 Sign supply contract with UBEDN 2 calendar days MNT 0 Agency : Ulaanbaatar Electricity Distribution Network Authority Once the customer has permission for power turn on, he/she can visit the supply department at the utility and sign a supply contract for consumption of electricity. Takes place simultaneously with previous procedure. Page 20 Doing Business 2020 Mongolia Details – Getting Electricity in Mongolia – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 3 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) 62.0 System average interruption frequency index (SAIFI) 15.0 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 5.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? No Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://ubedn.mn/public/sh ow/id/10 Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 21 Doing Business 2020 Mongolia Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. • Reliability of infrastructure index (0-8) - Has no occupants, and no other party holds a legal interest in it. • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 22 Doing Business 2020 Mongolia Registering Property - Mongolia Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Procedures (number) 5 5.5 4.7 1 (5 Economies) Time (days) 10.5 71.9 23.6 1 (2 Economies) Cost (% of property value) 2.1 4.5 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 14.5 16.2 23.2 None in 2018/19 Figure – Registering Property in Mongolia – Score 66.7 95.5 86.2 48.3 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Mongolia and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 82.4: Kazakhstan (Rank: 24) 81.0: China (Rank: 28) 76.3: Korea, Rep. (Rank: 40) 75.6: Japan (Rank: 43) 74.2: Mongolia (Rank: 50) 57.5: Regional Average (East Asia & Pacific) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 23 Doing Business 2020 Mongolia Figure – Registering Property in Mongolia – Procedure, Time and Cost Time (days) Cost (% of property value) 2.5 10 Cost (% of property value) 2 8 Time (days) 1.5 6 4 1 2 0.5 0 0 1 2 3 4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 24 Doing Business 2020 Mongolia Figure – Registering Property in Mongolia and comparator economies – Measure of Quality 30 27.5 25.5 25 24.0 Index score 20 17.0 16.2 14.5 15 10 5 0 Mongolia China Japan Kazakhstan Korea, East Rep. Asia & Pacific Details – Registering Property in Mongolia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a non-encumbrance certificate from the Immovable Property Registration Office 1 day MNT 10,000; (Service fee Agency : Immovable Property Registration Office (General Authority for Intellectual Property and for a detailed reference State Registration) regarding non- The seller obtains, before signing the contract, the mortgage-free certification from the Immovable encumbrance is MNT Property Registration Office. 5,000 (regular) and MNT 10,000 (expedited).) Administrative fees of General Authority for State Registration are determined by the Government Resolution No. 237 dated September 15, 2010, with the amendment of Resolution No.94, dated 20th March 2017 modifying articles 4.1, 4.3 and 4.7. 2 Notarization of the contract of purchase 1 day MNT 200,000; (Notary Agency : Notaries fees according to the The contract must be certified by the notary public who is authorized to operate in the district in following schedule: Value which the immovable property is situated. The parties prepare the contract. When the immovable of contract (in MNT): property is located at places other than the contract parties' jurisdiction, having a notary Notary fees (in MNT) certification may take longer time as contract parties are required to be present in a notary office 1.000,001 to 10.000,000: at the same time. All the documents to be submitted at the Immovable Property Registration MNT 10,000 Agency and needed for the transfer of the land use right shall be in original or notarized. The originals can be shown, and the officer or related agencies will only keep a copy. 10.000,001 to 25.000,000: MNT 25,000 25.000,001 to 100.000,000: MNT 50,000 100.000,001 to 300.000,000: MNT 100,000 300.000,001 to 500.000,000: MNT 200,000 500.000,001 or above: MNT 300,000) 3 Payment of Income or Transfer Tax at a commercial bank Less than one day, MNT 9,018,728.56; (2% of Agency : Commercial Bank online property value) Under Article 21.6 of the Corporate Income Tax Law, the seller shall withhold the tax imposed on income from the sale of immovable property and transfer the withholding to the Budget (relevant local tax authority) within 10 business days upon the sale of the property. However, in practice, this tax has to be paid, and a receipt acknowledging the payment of income tax has to be submitted to the Immovable Property Rights Registration Office for Procedure 4. 4 Submit the application to the Immovable Property Registration Agency 1 day MNT 40,000; (Standard Agency : Immovable Property Registration Office (General Authority for Intellectual Property and service fee MNT 20.000, State Registration) rush delivery fee MNT Parties submit relevant materials to the Immovable Property Registration Agency. At the desk, the 40.000) officer will check all documents and if satisfied will receive the application; if not he will note the missing documents and reject the application. The certificate of ownership will be issued within 5 days after the Registration Agency analyzes all the documentation presented (following the normal procedure), but in 1 day if the urgent procedure is chosen. The documentation shall include: - A request for registration (fill an application form) - Original immovable property registration certificate. - A notarized copy of the contract (obtained in Procedure 2) - Notarized permission of a citizen, legal entity and authorized organization if required by law - The original tax paid slip for income taxes paid at the district tax office - Receipt of acknowledgment for the tax payment for immovable property sale (obtained in Procedure 3) - Copies of ID cards of citizens representing the parties - Copies of state registration certificates, charter and shareholders' agreement (if any) of the company - Payment slip for service fees. Page 25 Doing Business 2020 Mongolia 5 Transfer of the land use right at the City Governance Authority 7 days MNT 70,000; (for a new Agency : City Governance Authority certificate) Ownership of the land belongs to the State. When a seller company has land use right over the land where the immovable property is located, the land use right cannot be transferred to a purchasing party under relevant existing laws of Mongolia. However, in practice, land authority allows the transfer of land use right from one to another based on a transfer agreement. As the land ownership, after the transfer of the title of the immovable property, the purchaser shall make an application to the Land Department of the relevant district to transfer the Land use right to the purchaser's name. Documentation for registration of land use right transfer shall include the following: - Non-encumbrance certificate (obtained in Procedure 1) - Request of both parties, - Notarized transfer agreement of land use right, - Notarized ID card of citizen, - Notarized state registration certificate, - Charter or shareholders' agreement of a legal entity, - Copy of ID card of CEO or another authorized person of a legal entity, -Original land use right certificate with the land use agreement and the copy of governor's order, - Original cadastral map, - Land fee payment slips and settlement act, - Immovable property registration certificate (already in possession of seller) - Photo of the immovable property taken from 4 sides of the immovable property - Payslip for the service fee. - Copy of power of attorney, if required Takes place simultaneously with previous procedure. Page 26 Doing Business 2020 Mongolia Details – Registering Property in Mongolia – Measure of Quality Answer Score Quality of the land administration index (0-30) 14.5 Reliability of infrastructure index (0-8) 4.0 Type of land registration system in the economy: Title Registration System What is the institution in charge of immovable property registration? Immovable Property Registration Office (General Authority for Intellectual Property and State Registration) In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Scanned 1.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: District Land Authority and Capital Property Relations Department In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Scanned 1.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Separate databases 0.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification No 0.0 number for properties? Transparency of information index (0–6) 2.5 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Records are not 0.0 in the largest business city? publicly available Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://burtgel.gov.mn/ service/index.php/epr s-newlist Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, online 0.5 registration in the largest business city made publicly available–and if so, how? Link for online access: http://burtgel.gov.mn/ service/index.php/epr s-newlist Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: http://burtgel.gov.mn/ service/index.php/epr s-newlist Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property No 0.0 registration agency? Number of property transfers in the largest business city in 2018: Page 27 Doing Business 2020 Mongolia Who is able to consult maps of land plots in the largest business city? Records are not 0.0 publicly available Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, on public boards 0.5 Link for online access: Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, on public boards 0.5 if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the largest business city formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 8.0 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Pursuant Art. 4 of the Law on State Registration of Property Ownership Rights and Other Related Rights, if property is being transferred on the basis of an agreement, such transaction shall be considered legally binding when registered at the State registration. Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Legal basis: Art. 4 and Clause 6.1 of Art. 6 of the Law of Mongolia on State Registration of Property Ownership Rights and Other Relevant Property Rights Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Art. 37 of the Law of Mongolia on State Registration of Property Ownership Rights and Other Relevant Property Rights Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Page 28 Doing Business 2020 Mongolia Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local First Instance District businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located Court in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Less than a year 3.0 appeal)? Are there publicly available statistics on the number of land disputes at the economy level in the first instance Yes 0.5 court? Number of land disputes in the economy in 2018: 20.4% or 224 land dispute out of total 1099 disputes in 2018 Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 29 Doing Business 2020 Mongolia Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of Credit registry coverage (% of adults) movable collateral. • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 30 Doing Business 2020 Mongolia Getting Credit - Mongolia Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Strength of legal rights index (0-12) 9 7.1 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 4.5 6.8 8 (53 Economies) Credit registry coverage (% of adults) 53.6 16.6 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 0.0 23.8 66.7 100.0 (14 Economies) Figure – Getting Credit in Mongolia – Score 80.0 Score - Getting Credit Figure – Getting Credit in Mongolia and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 80.0: Kazakhstan (Rank: 25) 80.0: Mongolia (Rank: 25) 65.0: Korea, Rep. (Rank: 67) 60.0: China (Rank: 80) 58.0: Regional Average (East Asia & Pacific) 55.0: Japan (Rank: 94) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 31 Doing Business 2020 Mongolia Figure – Legal Rights in Mongolia and comparator economies 10 9 9 8 8 7.1 Index Score 7 6 5 5 5 4 4 3 2 1 0 Mongolia China Japan Kazakhstan Korea, East Rep. Asia & Pacific Page 32 Doing Business 2020 Mongolia Details – Legal Rights in Mongolia Strength of legal rights index (0-12) 9 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents Yes to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description Yes of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the Yes original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third Yes party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Mongolia and comparator economies 9 8 8 8 8 7 7 Index Score 6 6 5 4.5 4 3 2 1 0 Mongolia China Japan Kazakhstan Korea, East Rep. Asia & Pacific Page 33 Doing Business 2020 Mongolia Details – Credit Information in Mongolia Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and No Yes 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No Yes 1 By law, do borrowers have the right to access their data in the credit bureau or No Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online No Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 0 1,102,241 Number of firms 0 18,875 Total 0 1,121,116 Percentage of adult population 0.0 53.6 Page 34 Doing Business 2020 Mongolia Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James • Ease of shareholder suits index (0–10): Access to internal appointed 60% of the shareholder-elected members. corporate documents; Evidence obtainable during trial and - Has not adopted bylaws or articles of association that go beyond the minimum requirements. allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures • Extent of shareholder governance index (0–20): Sum of the made—that is, the transaction was not entered into fraudulently. extent of shareholders rights, extent of ownership and control - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and and extent of corporate transparency indices directors that approved the transaction. • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 35 Doing Business 2020 Mongolia Protecting Minority Investors - Mongolia Stock exchange information Stock exchange Mongolian Stock Exchange Stock exchange URL http://www.mse.mn Listed firms with equity securities 367 City Covered Ulan Bator Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Extent of disclosure index (0-10) 6.0 5.9 6.5 10 (13 Economies) Extent of director liability index (0-10) 8.0 5.2 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 8.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 2.0 2.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 6.0 2.4 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 7.0 2.6 5.7 7 (13 Economies) Figure – Protecting Minority in Mongolia – Score 74.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Mongolia and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 84.0: Kazakhstan (Rank: 7) 74.0: Korea, Rep. (Rank: 25) 74.0: Mongolia (Rank: 25) 72.0: China (Rank: 28) 64.0: Japan (Rank: 57) 49.7: Regional Average (East Asia & Pacific) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 36 Doing Business 2020 Mongolia Figure – Protecting Minority Investors in Mongolia and comparator economies – Measure of Quality Mongolia 7 8 6 6 2 8 China 6 4 10 6 5 5 Japan 5 6 7 2 4 8 Kazakhstan 6 6 9 6 6 9 Korea, Rep. 6 6 8 5 4 8 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 East Asia & Pacific 3.1 5.1 6.4 2.9 2.4 6.3 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 37 Doing Business 2020 Mongolia Details – Protecting Minority Investors in Mongolia – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 6.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of directors 2.0 excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 1.0 transaction only Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 1.0 transaction only Extent of director liability index (0-10) 8.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair or 2.0 prejudicial Ease of shareholder suits index (0-10) 8.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 2.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? No 0.0 Do shareholders elect and dismiss the external auditor? No 0.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? No 0.0 Extent of ownership and control index (0-7) 6.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? Yes 1.0 Page 38 Doing Business 2020 Mongolia Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? Yes 1.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0 Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 7.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 39 Doing Business 2020 Mongolia Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the • Collecting information, computing tax payable second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 40 Doing Business 2020 Mongolia Paying Taxes - Mongolia Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Payments (number per year) 19 20.6 10.3 3 (2 Economies) Time (hours per year) 134 173.0 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 25.7 33.6 39.9 26.1 (33 Economies) Postfiling index (0-100) 49.1 56.4 86.7 None in 2018/19 Figure – Paying Taxes in Mongolia – Score 73.3 86.9 100.0 49.1 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Mongolia and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 87.4: Korea, Rep. (Rank: 21) 81.6: Japan (Rank: 51) 78.2: Kazakhstan (Rank: 64) 77.3: Mongolia (Rank: 71) 73.6: Regional Average (East Asia & Pacific) 70.1: China (Rank: 105) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 41 Doing Business 2020 Mongolia Figure – Paying Taxes in Mongolia and comparator economies – Measure of Quality 100 95.2 93.9 90 80 Index score 70 60 56.4 49.1 50.0 48.9 50 40 30 20 10 0 Mongolia China Japan Kazakhstan Korea, East Rep. Asia & Pacific Page 42 Doing Business 2020 Mongolia Details – Paying Taxes in Mongolia Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Employer paid 12.0 48.0 12.00% gross salaries 13.54 Social insurance contributions Corporate 1.0 online 46.0 10% (25% for taxable profit 10.18 income tax taxable profit exceeding 3,000,000,000 togrogs) Property transfer 0.0 jointly 2.00% gross sales price 1.21 tax Property tax 1.0 online 0.6% - 1% property value 0.78 Tax on interest 0.0 jointly 10.00% interest income 0.26 included in other taxes Vehicle tax 4.0 varies up to MNT 0.04 100,000 Value added tax 1.0 online 40.0 10.00% value added and 0.00 not included (VAT) land sale Employee paid 0.0 jointly 11.00% gross salaries 0.00 withheld Social insurance contributions Totals 19 134 25.7 Page 43 Doing Business 2020 Mongolia Details – Paying Taxes in Mongolia – Tax by Type Taxes by type Answer Profit tax (% of profit) 10.2 Labor tax and contributions (% of profit) 13.5 Other taxes (% of profit) 2.0 Page 44 Doing Business 2020 Mongolia Details – Paying Taxes in Mongolia – Measure of Quality Answer Score Postfiling index (0-100) 49.1 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund per 0.0 case study scenario Time to obtain VAT refund (weeks) No VAT refund per 0.0 case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 3.5 96.3 Time to complete a corporate income tax correction (weeks) No tax audit per case 100 study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 45 Doing Business 2020 Mongolia Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about • Inspections by other agencies (if applied to more than 20% of exchange rates. shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 46 Doing Business 2020 Mongolia Trading across Borders - Mongolia Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Time to export: Border compliance (hours) 134 57.5 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 225 381.1 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 168 55.6 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 64 109.4 33.4 0 (20 Economies) Time to import: Border compliance (hours) 48 68.4 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 210 422.8 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 115 53.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 83 108.4 23.5 0 (30 Economies) Figure – Trading across Borders in Mongolia – Score 16.4 78.8 1.2 84.0 83.2 82.5 52.4 88.2 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Mongolia and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 92.5: Korea, Rep. (Rank: 36) 86.5: China (Rank: 56) 85.9: Japan (Rank: 57) 71.6: Regional Average (East Asia & Pacific) 70.4: Kazakhstan (Rank: 105) 60.8: Mongolia (Rank: 143) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 47 Doing Business 2020 Mongolia Figure – Trading across Borders in Mongolia – Time and Cost Time (hours) Cost (USD) 180 225 168 250 160 210 140 134 200 Time (hours) 115 Cost (USD) 120 150 100 80 83 100 60 64 48 40 50 20 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 48 Doing Business 2020 Mongolia Details – Trading across Borders in Mongolia Characteristics Export Import Product HS 51 : Wool, fine or coarse animal hair; horsehair HS 8708: Parts and accessories of motor vehicles yarn and woven fabric Trade partner China China Border Zamyn-Uud border crossing Zamyn-Uud border crossing Distance (km) 890 890 Domestic transport time (hours) 27 27 Domestic transport cost (USD) 594 594 Details – Trading across Borders in Mongolia – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 32.0 41.1 customs authorities Export: Clearance and inspections required by 72.0 34.0 agencies other than customs Export: Port or border handling 30.0 150.0 Import: Clearance and inspections required by 24.0 59.8 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 24.0 150.0 Page 49 Doing Business 2020 Mongolia Details – Trading across Borders in Mongolia – Trade Documents Export Import Certificate of conformity Certificate of origin Certificate of origin Commercial invoice Customs export declaration Customs import declaration Export permission Packing list Invoice Railway bill Packing list Sales contract Phytosanitary certificate Railway bill Sales contract Page 50 Doing Business 2020 Mongolia Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. Page 51 Doing Business 2020 Mongolia Enforcing Contracts - Mongolia Standardized Case Claim value MNT 15,666,406 Court name Ulaanbaatar District Court City Covered Ulan Bator Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Time (days) 374 581.1 589.6 120 (Singapore) Cost (% of claim value) 22.9 47.2 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 5.5 8.1 11.7 None in 2018/19 Figure – Enforcing Contracts in Mongolia – Score 79.2 74.4 30.6 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Mongolia and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 84.1: Korea, Rep. (Rank: 2) 81.3: Kazakhstan (Rank: 4) 80.9: China (Rank: 5) 65.3: Japan (Rank: 50) 61.4: Mongolia (Rank: 75) 53.0: Regional Average (East Asia & Pacific) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 52 Doing Business 2020 Mongolia Figure – Enforcing Contracts in Mongolia – Time and Cost Time (days) Cost (% of claim value) 700 47.2 50 Cost (% of claim value) 581.1 589.6 600 496 40 Time (days) 500 400 360 370 374 30 23.4 22.0 22.9 21.5 290 300 20 16.2 200 12.7 10 100 0 0 China East Japan Kazakhstan Korea, Mongolia OECD Asia Rep. high & income Pacific Page 53 Doing Business 2020 Mongolia Figure – Enforcing Contracts in Mongolia and comparator economies – Measure of Quality Mongolia 2 1 1 1.5 China 3 5.5 3 5 Japan 2.5 1 1 3 Kazakhstan 3 5 3 5 Korea, Rep. 3 4 4 3.5 OECD high income 2.5 3.2 2.4 3.6 East Asia & Pacific 2.2 2.2 1.3 3 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Mongolia Indicator Time (days) 374 Filing and service 14 Trial and judgment 180 Enforcement of judgment 180 Cost (% of claim value) 22.9 Attorney fees 14.9 Court fees 7.2 Enforcement fees 0.8 Quality of judicial processes index (0-18) 5.5 Court structure and proceedings (-1-5) 1.5 Case management (0-6) 1.0 Court automation (0-4) 1.0 Alternative dispute resolution (0-3) 2.0 Page 54 Doing Business 2020 Mongolia Details – Enforcing Contracts in Mongolia – Measure of Quality Answer Score Quality of judicial processes index (0-18) 5.5 Court structure and proceedings (-1-5) 1.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 0.0 2.a. Is there a small claims court or a fast-track procedure for small claims? No 2.b. If yes, is self-representation allowed? n.a. 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 1.0 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? Yes 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? No 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) No 0.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 1.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.0 1. Arbitration 1.0 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— Yes that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 55 Doing Business 2020 Mongolia 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 56 Doing Business 2020 Mongolia Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 57 Doing Business 2020 Mongolia Resolving Insolvency - Mongolia Indicator Mongolia East Asia & OECD high Best Regulatory Pacific income Performance Recovery rate (cents on the dollar) 18.2 35.5 70.2 92.9 (Norway) Time (years) 4.0 2.6 1.7 0.4 (Ireland) Cost (% of estate) 15.0 20.6 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. .. Strength of insolvency framework index (0-16) 6.5 7.0 11.9 None in 2018/19 Figure – Resolving Insolvency in Mongolia – Score 19.6 40.6 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Mongolia and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 90.2: Japan (Rank: 3) 82.9: Korea, Rep. (Rank: 11) 66.7: Kazakhstan (Rank: 42) 62.1: China (Rank: 51) 40.9: Regional Average (East Asia & Pacific) 30.1: Mongolia (Rank: 150) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 58 Doing Business 2020 Mongolia Figure – Resolving Insolvency in Mongolia – Time and Cost Time (years) Cost (% of estate) 4.5 25 22.0 4.0 4 20.6 Cost (% of estate) 3.5 20 Time (years) 3 2.6 15.0 15.0 15 2.5 2 1.7 1.7 9.3 1.5 1.5 10 1.5 1 0.6 4.2 3.5 5 0.5 0 0 China East Japan Kazakhstan Korea, Mongolia OECD Asia Rep. high & income Pacific Page 59 Doing Business 2020 Mongolia Figure – Resolving Insolvency in Mongolia and comparator economies – Measure of Quality Mongolia 4 2 0 0.5 China 6 3 2 2.5 Japan 6 3 1 3 Kazakhstan 6 3 4 1.5 Korea, Rep. 5.5 2.5 1 3 OECD high income 5.3 2.8 2.1 1.9 East Asia & Pacific 3.7 2.3 1.3 1 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Mongolia and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 92.1 90 84.3 80 70 60 50 36.9 39.8 40 35.5 30 18.2 20 10 0 Mongolia China Japan Kazakhstan Korea, Rep. East Asia & Pacific Page 60 Doing Business 2020 Mongolia Details – Resolving Insolvency in Mongolia Indicator Answer Score Proceeding liquidation (after an Bizbank as well as unsecured creditors are likely to initiate reorganization by filing a petition with the First Instance attempt at Court and once the reorganization plan is refused by the creditors, the proceeding converts into liquidation. BizBank reorganization) receives the payment through the piecemeal sale of Mirage's assets. Outcome piecemeal sale The hotel will stop operating and Mirage assets will be sold piecemeal after the liquidation proceeding. Time (in years) 4.0 A reorganization procedure that is then converted into liquidation will approximately take 4 years in total. In practice, it will take almost 1 year to prepare the creditors list, draft and vote on the plan, which would be rejected under our case study assumptions. The case will then be converted into liquidation, by taking 3 additional years for the formal conversion of the proceeding, organization of the sale and its execution. Cost (% of estate) 15.0 The costs associated with the case would amount to approximately 15% of the value of the debtor's estate. The costs incurred during the entire insolvency process mainly include: - attorneys' fees: 7%; - insolvency representative’s fees: 3%; - auctioneer's fees: 3%; - other professionals involved in the case (accountants, assessors): 2%. Recovery rate 18.2 (cents on the dollar) Page 61 Doing Business 2020 Mongolia Details – Resolving Insolvency in Mongolia – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 6.5 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (e) Other 0.5 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value of its assets Management of debtor's assets index (0-6) 4.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of No 0.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote No 0.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 0.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting No 0.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 62 Doing Business 2020 Mongolia Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 63 Doing Business 2020 Mongolia Employing Workers - Mongolia Details – Employing Workers in Mongolia Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 127.0 Ratio of minimum wage to value added per worker 0.3 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.0 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 50.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? Yes Paid annual leave for a worker with 1 year of tenure (working days) 15.0 Paid annual leave for a worker with 5 years of tenure (working days) 15.0 Paid annual leave for a worker with 10 years of tenure (working days) 18.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 16.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3 Page 64 Doing Business 2020 Mongolia Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3 Unemployment protection after one year of employment? No Page 65 Doing Business 2020 Mongolia Business Reforms in Mongolia From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Enforcing Contracts: Mongolia made enforcing contracts easier by reducing the fees that are advanced by the plaintiff to enforce a judgment. DB2018 Getting Credit: Mongolia strengthened access to credit by introducing a new Law on Movable and Intangible Property Pledges and by setting up a new collateral registry. The new law implemented a functional secured transactions system. The collateral registry is operational, unified geographically, searchable by a debtor’s unique identifier, modern, and notice based. Paying Taxes: Mongolia made paying taxes more burdensome by not allowing input VAT incurred on a business capital expenditure to be deducted as input credit. Employing Workers: Mongolia amended its legislation to reduce the maximum length of the employee probationary period. DB2017 Paying Taxes: Mongolia made paying taxes easier by introducing an electronic system for filing and payment of taxes. DB2016 Starting a Business: Mongolia made starting a business easier by reducing the number of days required to register a new company. Getting Credit: In Mongolia the credit registry began distributing data from a utility company, improving access to credit information. DB2015 Protecting Minority Investors: Mongolia strengthened minority investor protections by introducing a requirement for public joint stock companies to publicly disclose related-party transactions within 2 business days. Paying Taxes: Mongolia made paying taxes easier for companies by introducing an electronic system for filing corporate income tax, VAT and social security contributions. DB2014 Starting a Business: Mongolia made starting a business easier by eliminating the requirement to get company statutes and charters notarized as well as the requirement to register a new company with the local tax office. Dealing with Construction Permits: Mongolia made dealing with construction permits easier by eliminating the requirement for a technical review of the building plans by the state for low- and medium-risk construction projects. Getting Electricity: Mongolia made getting electricity easier by increasing the efficiency of the utility’s internal processes, enforcing time limits at different stages of the connection process and eliminating the fees for testing the installation. DB2013 Starting a Business: Mongolia made starting a business easier by eliminating the minimum capital requirement for limited liability companies. Getting Credit: Mongolia improved access to credit information by adopting a law that provides for licensing of credit reference bureaus and guarantees borrowers’ right to inspect their personal data. Protecting Minority Investors: Mongolia strengthened investor protections by increasing the disclosure requirements for related-party transactions. DB2012 Getting Credit: Mongolia improved its credit information system by eliminating the minimum threshold for loans included in the database. DB2009 Paying Taxes: Mongolia made paying taxes less costly for companies by reducing employers’ social insurance contribution rate. DB2008 Paying Taxes: Mongolia made paying taxes easier and less costly for companies by revising the tax code and reducing the profit tax rate. Page 66 Doing Business 2020 Mongolia Page 67