Comments on: Mongolian Currency Law – Transactions MUST Be in Tugrugs

By: Bobby

Bobby — Wed, 26 Aug 2009 04:44:40 +0000

Hi Mergen,
Any law is going to override currently executed contracts. I am afraid contracts/agreements are going to need to be re-executed to be expressed in tugrug and all settlements, including salaries, in Mongolia must be done in tugrug. Previous Mongolian law stated that all prices should be expressed in tugrug, but it was not enforced. Now that the Currency Law is in effect I think the tax authority are going to be much more strict, although it is impossible to say how the law will be enforced or interpreted in the future since it only went into effect this month.

By: Mergen

Mergen — Wed, 26 Aug 2009 04:36:09 +0000

Bobby, thanks for the reply. My question is this – what do we do with contracts that were signed prior to the law was passed? What if the current contract had pricing in USD?

Redoing all the contracts is excessively burdensome. At the same time, pricing can’t be in USD or even be based on foreign currency.

By: Mongolian Currency Law Taking effect on August 9 - Transactions … | Headlines Today

Mon, 24 Aug 2009 16:09:41 +0000

[...] happen in the next few months as regulators start to tighten on this. … View original here: Mongolian Currency Law Taking effect on August 9 – Transactions … Share and [...]

By: Bobby

Bobby — Tue, 11 Aug 2009 01:05:22 +0000

Thanks Mergen and Mwisunji for the comments. It is reasonable to think there may be some sort of grace period, but the fact is the law went into effect Sunday, August 9, 2009 and as far back as Dec 08/Jan 09 TV stations were running banners across the screen for people to report businesses that were charging in dollars. When it comes time for audits to happen in the next year or two don’t look for the tax auditors to have much mercy.

I think it is better to be safe than sorry and to comply with the law as quickly as possible. I know from first-hand accounts the tax authorities going after businesses and individuals who they feel are not paying taxes (whether they are valid charges or not), and I do not think they will miss this opportunity to penalize those who have violated the Currency Law. I am not trying to fear-monger, I just want to be realistic.

By: Mwisunji

Mwisunji — Mon, 10 Aug 2009 17:39:39 +0000

I think the regulators will provide some grace period for businesses to make the switch. Anyway lets see how it goes.

By: Mergen

Mergen — Sun, 09 Aug 2009 10:29:55 +0000

As of right now, there still are many Mongolian business websites with prices in USD or in USD based rates. Interesting to see what will happen in the next few months as regulators start to tighten on this.

Companies will probably see some leniency over the next few months as companies update their pricing information. The last time government passed a law, I remember the regulators showing extreme mercy and leniency for a couple of months.