The Mongolia Australia Double Tax Agreement: What You Need to Know

The Mongolia Australia Double Tax Agreement aims to prevent double taxation of income and capital gains for residents of both Mongolia and Australia. This agreement, signed in 2016, provides tax relief to individuals and businesses operating in both countries.

Here are some key points to know about the agreement:

1. Scope of the agreement

The agreement applies to residents of both countries, including individuals, businesses, and other entities. It covers taxes on income and capital gains.

2. Taxation of business income

Under the agreement, income earned by a business in one country is generally taxed only in that country. However, if the business has a permanent establishment (such as an office or branch) in the other country, that country may also tax the income earned by the business through that establishment.

3. Taxation of employment income

If you are an employee working in one country but resident in the other, your income may be taxed in both countries. However, the agreement provides relief by allowing you to claim a credit for taxes paid in one country against the taxes owed in the other.

4. Taxation of capital gains

Generally, gains from the sale of assets (such as shares or property) are taxed in the country where the asset is located. However, the agreement provides that gains from the sale of shares in a company are only taxable in the country where the seller is resident, if the seller owned less than 10% of the shares at any time during the 12 months before the sale.

5. Other provisions

The agreement also includes provisions related to dividends, interest, and royalties. Generally, these payments are subject to withholding tax in the country where they are paid. However, the agreement limits the amount of withholding tax that can be imposed, to avoid double taxation.

In conclusion, the Mongolia Australia Double Tax Agreement provides relief for individuals and businesses operating in both countries by avoiding double taxation of income and capital gains. If you are a resident of Mongolia or Australia and have income or assets in the other country, it is important to understand the provisions of this agreement to ensure you are not taxed twice on the same income or gains.