About: Business, FIFTA, Foreign, Foreign Invested Company, Investment, Mongolia
To any newly arrived foreign businessman, Ulaanbaatar is a confusing jungle of ministries, administrations, regulations and poker faced bureaucrats. It is only after living in Mongolia for a few years that it all starts to make sense and clearings in the administrative jungle starts to appear.
One of the first needs of a foreign businessman in Mongolia is incorporating a foreign invested company. This is a tricky lengthy and stressful process under the best of conditions.
What are the requirements?
The first and biggest requirement is the need for a 100,000USD in spare capital in Mongolia; once this is secured you can start the process. (There are rumors that soon 250,000USD will be required).
You need to have the intention of starting a business in Mongolia and have a current business plan to prove it.
You need to physically be in Mongolia to complete the process, with passport, photos and all the relevant documents.
You cannot have any pending legal proceedings against you or have a criminal record in Mongolia.
What do I have to do to open my company?
Initially you will need to go and register your business name at the business name registration office. This is a simple and cheap process, you just need to come up with a few names and submit them, if they are accepted, a receipt is given to you and you can move on to the next process.Please note that you cannot use Ulaanbaatar, Mongolia or generic names (such as restaurant, shop, internet etc…) in your business name.
Once completed, a joint venture agreement needs to be drawn up and notarized both in Mongolian and English.
This is followed by regular visits to the Foreign Investment and Foreign Trade Agency (FIFTA) to register the company and declare its purposes.Lots of forms have to be filled in and lots of queues have to be followed. Once your dossier is full, it will be reviewed by a board of people within FIFTA who will agree to the company formation or not.
A Mongolian business bank account will also need to be created and the 100,000USD minimum capital for the company deposited within it. This can only be done once the joint venture agreement has been submitted to FIFTA. This capital needs to stay in its entirety in the bank for a minimum of 10 working days in order for the bank to issue a statement which can then be shown to the relevant authorities tax and company incorporation authorities.
A business also needs a business address, an office needs to be rented in Mongolia and a notarized rental contract needs to be shown to the company registration office. Beware that taxes will have to be paid on that property!
The last stage is to open a file with the Mongolian National Tax Authorities and obtain a FIFTA card. The entire process takes from 10 working days to months on depending who does it and how familiar they are with the process.
Once the full process is completed, you will be issued with a Tax certificate, a FIFTA certificate, a stamp and a FIFTA card, along with copies of all your documents.
Why do I need a foreign invested company in Mongolia?
If you are a foreign investor and you want to do any sort of business in Mongolia under your own name, you will need a foreign invested company, you can do a joint venture with a Mongolian Company but you then rely on your Mongolian Partner for your visa and you do not benefit from the same levels of legal protection as with a FIFTA registered company.
Owning more than 30% of a foreign invested company can also guarantee a yearlong multi-entry investor’s visa to Mongolia but tax returns and company certificates have to remain up to date for this to be valid.
Tax reports have to be filled every 3 months with the MNTA (Mongolian National Tax Authority) and the use of the 100,000USD capital may have to be proven at those times.
While the process seems complicated for the first time, there are people and companies happy to help the process (for a small fee of course) and take the stress out of it. You may contact me for more info and assistance in this matter.
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Please Note: This article is written in good faith and is intended to be a helpful tool, the author makes no guarantees as to its accuracy nor takes responsibility if the process this information relates to has changed. It is always advisable that you do your own research and find various sources of information, in particular pertaining to laws and regulations.
If you have recently gone through this process yourself and would like to add or comment to the text above, please contact me so that I may make the necessary changes.
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About: Business, FIFTA, Foreign, Foreign Invested Company, Investment, Mongolia
