Tax Implications of Bankruptcy in Mongolia

1) What taxes are due during bankruptcy proceedings?

During bankruptcy proceedings in Mongolia, the bankrupt entity may be responsible for settling corporate income tax on any taxable income, value-added on applicable transactions, outstanding property taxes on owned properties, unpaid payroll taxes or social insurance premium for employees, and must also continue to file necessary tax returns. 

2) What happens to outstanding tax liabilities during bankruptcy proceedings?

During bankruptcy proceedings, the company must first pay any outstanding tax debts.

3) Are the founders (shareholders) of the bankrupt enterprise liable for the tax debts on a subsidiary basis?

The founders (shareholders) of a bankrupt enterprise are not personally liable for the tax debts of the company on a subsidiary basis.

4) What are the tax consequences of the sale of the bankrupt's assets?

There are no tax consequences from the sale of the bankrupt's assets. However, there may be tax on income from the sale and transfer of immovable property of 2%.

5) What tax risks do purchasers of the bankrupt's assets face?

Claimants' debts are settled using the proceeds from the sale of the company's assets, and there are no risks for purchasers acquiring the bankrupt's assets.

Author: Bolormaa Volodya