In 2005, the Mongolian Government published the statement that it “is committed to implementing tax policy reforms that will reduce the tax burden on labor and businesses, encourage private sector growth, and strengthen Mongolia’s competitiveness in the global market.” The Government stated that the specific objectives of these reforms were to: Increase country competitiveness by lowering the tax burden on businesses, enabling job creation Relieve the tax burden on workers by reducing the tax rate and labor costs on wage earners Simplify tax administration procedures to reduce compliance costs and arbitrariness, by focusing more on service to tax payers. Expand the tax base by reducing the size of the shadow economy.  Support domestic investors by removing discriminatory tax provisions. Create a sound fiscal environment by adjusting the tax system into a proper structure.

The new tax laws passed by the State Great Hural during its recent spring session represent a great stride forward in attaining these objectives. While much work remains to be done, the new personal income tax law, corporate income tax law, and value-added tax law together offer substantial incentives for businesses to invest in Mongolia and to create jobs for Mongolian citizens. Lowering the income tax rates will also encourage individuals and businesses to leave the "shadow economy", and formally contribute to Mongolia’s future.    

In addition to lowering tax rates, the State Great Hural has passed a targeted excise tax and made significant changes that bring Mongolian tax laws more in line with international best practices. These include provisions for loss carry forward, deductibility of business expenses, and tax credits for investment. These changes are similar to those recently implemented in other developing countries, changes which have proven extremely successful.  Many other countries which have similarly demonstrated the determination and political will to make these changes have been able to maintain adequate tax revenues through increases in the tax base, while also encouraging sustainable, broad-based economic growth.