Ulaanbaatar, October 14, 2025 — The Standing Committee on Budget of the State Great Khural reviewed draft laws and resolutions submitted alongside the draft Law on the 2026 State Budget of Mongolia and decided to advance them for further discussion.

Minister of Finance B. Javkhlan introduced two draft laws and two draft parliamentary resolutions developed in connection with the 2026 State Budget.

The Minister highlighted that a draft amendment to the Value-Added Tax (VAT) Law aims to reduce the tax burden on households and citizens, protect real incomes, lessen income inequality, boost business activity, improve tax compliance, and curb the shadow economy. Once approved, the amendment would grant 50–100 percent VAT relief to up to 75 percent of Mongolian citizens.

To enhance efficiency in public–private partnership (PPP) implementation, the Government also prepared a draft amendment to the Law on Public–Private Partnership. The proposed revision seeks to streamline PPP procedures, expand eligible sectors, align PPP projects with national and regional development goals, and empower local governments to independently implement smaller-scale partnerships. According to the Minister, the amendment would help reduce the fiscal burden on the state budget.

Members of Parliament raised questions and expressed their views on the proposed legislation.

Member J. Batjargal inquired about specific directions for expanding PPP cooperation under the amendments and emphasized the importance of coordinating the PPP Law with the framework for local government bond issuance.

T. Baysgalan, Director General of the PPP Department at the Ministry of Economy and Development, explained that Article 18 of the existing PPP Law defines eligibility criteria for PPP projects, including consistency with long-, medium-, and short-term development policy documents, regional development policy, and the medium-term budget framework. The amendments would enable projects reflected in the Government Action Plan 2024–2028 and in Mongolia’s 2025–2026 development plans—especially those lacking public investment financing—to be implemented under the PPP framework following preliminary evaluation.

He added that, under current provisions, only the capital and 12 aimags are authorized to implement PPP projects. The amendment would extend this right to all 21 aimags, allowing them to implement short-term PPP projects and projects valued under MNT 100 billion across six legally defined sectors, thereby expanding local-level partnership opportunities.

Member D. Batbayar noted that the proposed VAT and PPP amendments would have a direct impact on both businesses and consumers. The draft envisions that in 2026, 50 percent of VAT on purchases up to MNT 1 million would be refunded, and 20 percent for purchases above that threshold. From 2027, purchases up to MNT 500,000 would be eligible for a full VAT refund. He asked whether studies had been conducted on purchase registration and on potential effects on citizen benefits and business obligations.

B. Telmuun, Head of the Tax Policy Department at the Ministry of Finance, responded that about 1.4 million citizens benefited from VAT refunds in 2024. Among them, 372,000 people (25 percent) accounted for 75 percent of total purchases worth MNT 14.7 trillion, while 1.1 million people (75 percent) accounted for 25 percent of purchases worth MNT 5.2 trillion. Based on these figures, the proposed reform would refund 5 percent VAT for purchases up to MNT 1 million—benefiting roughly 75 percent of citizens next year—and fully refund VAT for purchases up to MNT 500,000 from 2027, covering about 51 percent of the population.

He added that under the reform, about half of all citizens making purchases up to MNT 500,000 and registered through the E-Receipt system would effectively bear no VAT burden. The ultimate goal is to raise VAT compliance to around 90 percent, automate the recording of electronic payment receipts, and integrate inter-business transactions directly into the E-Receipt system—expected to generate an additional MNT 100 billion in state revenue.

After deliberation, the committee voted in favor of discussing the draft laws and resolutions in principle. The Standing Committee’s conclusions and recommendations will be submitted to the plenary session of Parliament for consideration.