Starting a Business Abroad as an Expat: The Special Case of a Project in Mongolia

Published on April 28, 2026 and written by Cyril Jarnias

Setting up and growing a business in Mongolia is no exotic whim. The country is now one of Asia’s most promising frontier markets, with sustained growth, a young population, a diversifying economy, and an increasingly structured legal framework for foreign investors. For an expatriate, it’s both a rare opportunity… and a terrain that demands meticulous preparation.

Understanding the Economic and Cultural Playing Field

Before diving into forms and share capital, it’s essential to situate your project within its economic and human environment. In Mongolia, the logic of numbers coexists with that of relationships and traditions.

Mongolia is a vast, landlocked country between Russia and China, with a population of about 3.5 million people, heavily concentrated in the capital, Ulaanbaatar. Over 60% of the population is under 35, making it a young, relatively well-educated, and increasingly tech-savvy society. The economy, once based on livestock and agriculture, is now driven by mining resources (coal, copper, gold, rare earths…) and rapidly growing services, particularly in tourism, telecom, finance, and IT.

Culturally, you are entering a society that is both modern and deeply attached to its nomadic heritage. Personal relationships, patience in negotiations, respect for elders and hierarchies remain key. You must accept that change is gradually adopted here, that a failure can durably tarnish your reputation, and that trust is built over time, often over tea, a dinner, or a trip to the steppe, more than in an air-conditioned meeting room.

A Legal Framework Increasingly Welcoming to Expatriates

In 2013, Mongolia adopted an investment law that profoundly clarified the rules for foreign capital. The spirit of the text is to open the market broadly, avoid discrimination between local and foreign investors, and offer tax predictability, notably through tax stabilization certificates.

The legal system is civil law (continental law), which can reassure European entrepreneurs: primacy of written law, importance of contracts, and the possibility of international arbitration. In practice, many investors insert arbitration clauses in their contracts, even though the actual enforcement of these decisions sometimes requires educating certain administrative bodies.

The Role of Different Authorities

To create and run your business, you will deal with several key institutions:

There are also sectoral authorities (mining, energy, media, etc.) and, for free zones, the administration of the relevant Free Economic Zone.

Choosing the Right Structure: LLC, Representative Office, Branch…

For an expatriate looking to conduct commercial activity, the primary form remains the private limited liability company, often called an LLC (Private Limited Liability Company). But it’s not the only option.

The Foreign-Invested LLC: The Main Tool

The LLC is the most common structure in Mongolia, for both local and foreign investors. It combines great flexibility in internal organization, limited liability for shareholders, and good banking and administrative acceptability.

This 100,000 USD threshold per foreign investor is one of the main hurdles for small expatriate projects. It must be integrated very early into structuring: two foreigners setting up an LLC together must each bring at least 100,000 USD of qualifying investment.

Representative Office: For “Being Present” Without Invoicing

The Representative Office allows a foreign company to have a presence in Mongolia without creating a separate legal entity. It can carry out representation, marketing, prospecting, or liaison activities, but cannot legally engage in revenue-generating activities locally.

Branch and Permanent Establishment: Less Common Alternatives

A branch replicates all or part of the parent company’s functions but remains legally attached to it. In Mongolia, its registration is possible but rarely used in practice. Tax-wise, it generally constitutes a permanent establishment.

A permanent establishment, in the tax sense, refers to a fixed place of business (construction site, office, dependent personnel…) through which a non-resident company carries out activities in Mongolia. If you operate through a service contract of significant duration and nature without creating a local company, you may need to register a permanent establishment with the tax authorities.

Capital and Investment Requirements: A Major Filter

For purely local entities, the law generally does not set a significant minimum share capital. Conversely, for an LLC with a foreign investor, a minimum investment level is clearly established.

This amount, converted into Tugrik (approximately 360 million MNT), must be evidenced by bank statements, in-kind contribution agreements, or other documents at the time of registration. You should therefore plan a payment schedule compatible with your budget while meeting the evidence requirement at incorporation.

Legally Setting Up Your Company: Steps, Timelines, and Documents

The procedure for creating an LLC in Mongolia is relatively fast compared to other countries, but it involves several administrative bodies and requires documentary rigor, especially for foreigners.

Typical Registration Process

In practice, expect about two to four weeks from name reservation to obtaining a tax ID and opening a final bank account. Some complex cases may take up to one and a half to two months.

The main steps are as follows:

Main Documents to Prepare

For an LLC with foreign investment, the registration authority requires a fairly standardized set of documents, plus specific forms regarding beneficial ownership.

Most foreign documents must be translated into Mongolian and notarized. Translation and legalization costs should be included in your initial budget.

Administrative Costs and Fees

The purely administrative cost of registration remains moderate compared to the investment ticket.

For an expatriate, using a local firm (lawyers, consultants) is strongly recommended, if only to handle translations, relationships with various administrations, and sometimes physical presence at the bank when opening an account.

Banks, National Currency, and Foreign Exchange Rules: A Specific Framework

The Mongolian economy revolves around the Tugrik (often noted as MNT or Togrog), the only currency allowed for pricing and settlement of domestic transactions. This directly impacts how you invoice, pay suppliers, or repatriate profits.

Everything Domestic Must Go Through the Tugrik

The rule is simple: all prices for goods, services, or work on Mongolian territory must be denominated in MNT. Transactions between entities registered in Mongolia must be settled in MNT, as must payments to the state or local government budget, legally fixed fees, taxes, duties, etc.

It is forbidden to publish prices, advertise, or settle transactions in foreign currency without authorization from the Bank of Mongolia (central bank). A former “legal loophole” allowing domestic transactions in other currencies was closed in 2009.

As an expatriate, this means a local contract with a Mongolian client will be in MNT. However, you can index certain amounts to a foreign currency within international contracts (e.g., exports, services to foreign entities), while respecting restrictions on foreign exchange and currency control.

Managing Currencies and International Transfers

Mongolia’s foreign exchange framework is paradoxical: very liberal regarding outflows of capital and currency transfers related to investment, but with fairly detailed regulations on flows and exchange obligations for residents.

– The Bank of Mongolia sets an official exchange rate for the MNT against major currencies daily, based on interbank transactions in scriptural currency.

– This official rate serves as a mandatory reference for calculating customs value, taxable income, and conversion to MNT for accounting.

– Permanent residents who receive income in foreign currency (cash or non-cash) must, within 60 days, either hold these amounts in an account at an authorized bank in Mongolia or sell them to the bank.

The Banking System and Its Limitations

The banking sector is dominated by a few large commercial banks. These can:

– accept deposits,

– manage accounts in MNT and foreign currency,

– carry out interbank settlements via the Bank of Mongolia,

– buy and sell foreign currency,

– grant loans in MNT or foreign currency,

– issue certain short-term financial instruments.

But there are also practical limitations that affect a foreign entrepreneur:

– letters of credit are considered difficult to obtain;

– institutions sometimes have little experience with complex international financial structures;

– banking legislation is still incomplete in some areas (access to certain types of foreign capital).

This underscores the importance of choosing your bank carefully (Khan Bank, Golomt Bank are often cited as “expatriate friendly”) and, for sophisticated transactions, getting support from a financial advisor or a specialized firm.

Taxation for Companies and Expatriates: What You Really Need to Know

Mongolia recently reformed much of its tax system, introducing measures inspired by the OECD’s BEPS project (base erosion and profit shifting), general anti-abuse rules, and special regimes for certain sectors.

Corporate Income Tax: Progressive but with Specific Rates

Resident companies (entities under Mongolian law or foreign entities with effective management in Mongolia) are taxed on their worldwide income. Non-residents only pay tax on their Mongolian-source income, either through a permanent establishment or via withholding tax.

The corporate income tax schedule is broadly as follows:

Additionally, certain incomes are taxed at flat rates on a gross or specific basis:

Tax losses can be carried forward for four fiscal years, limited to 50% of taxable income each year. There is no loss carryback mechanism.

VAT, Local Taxes, and Incentives

The standard VAT is 10% and applies to sales of goods and services in Mongolia as well as imports. VAT registration becomes mandatory when turnover exceeds a relatively low threshold (10 million MNT according to some sources, 50 million MNT according to others). Many companies choose to register voluntarily to recover VAT on their investments, especially if they inject at least 2 million USD.

In addition, various other taxes may apply depending on your sector: vehicle taxes, property taxes, mining royalties, excise duties, etc. For an expatriate in services (IT, consulting, trade, coworking…), most of these taxes will remain marginal compared to corporate income tax and VAT.

Furthermore, free economic zones offer partial exemptions on CIT, VAT, customs duties, and certain local taxes, especially for infrastructure, industrial, or export-oriented tourism activities.

Personal Income Tax for Expatriates

Resident individuals are taxed on their worldwide income with a progressive rate:

Non-residents are taxed at 20% on their Mongolian-source income. Dividends, interest, and rents are generally taxed at 10% for residents and 20% for non-residents.

Salaries paid by a Mongolian employer are subject to withholding tax by the company. Additionally, mandatory social security contributions are due from both employer and employee.

For an expatriate managing their own company, you need to balance between salary (subject to PIT and contributions) and dividends (subject to distribution tax, possibly VAT in some honoraria cases). Double taxation treaties concluded with many countries (26 such treaties are in force) often help avoid full double taxation on the same income.

Working and Residing Legally in Mongolia as an Entrepreneur

Creating a company does not automatically authorize you to stay and work. The country has a fairly sophisticated visa system with several categories for investors, directors, and employees.

Overview of Useful Visas for an Entrepreneur

The visa system includes nine main types and 64 subcategories. For an expatriate creating or managing a company, three categories are particularly relevant:

– Investor Visa (type B/T): for foreign shareholders, their authorized representatives, managers of foreign-invested companies, and heads of representative offices. Subcategories exist for family members.

– Work Visa (category C or HG): for foreign employees hired by a Mongolian entity. Requires employer sponsorship and a quota.

– Business Visa (type B or short-term K1): for missions, meeting partners, attending trade fairs, without performing actual employment.

Mongolia has also temporarily liberalized tourist entry for many countries (including some Western states), with visa-free stays of up to 30 days, but this does not permit professional activity.

Obtaining an Investor Visa

For an expatriate structuring their project through an LLC or Mongolian subsidiary, the investor visa is often the most logical solution. The inviting company must first obtain a “visa permission” from the Ministry of Foreign Affairs and immigration services.

Typically required documents include:

– a request letter issued by the Mongolian company;

– a copy of the company’s registration certificate and, if applicable, sectoral licenses;

– a copy of the investor’s or director’s passport;

– a reference letter from the investor issued via the “Invest in Mongolia” portal;

– ID and power of attorney of the person filing the application;

– proof of payment of stamp duties.

For an “investor” residence permit, authorities look not only at the legal status but also at the actual investment made, job creation, and the company’s tax situation (declarations, payments). Once arrived, the visa holder must apply for a residence card (“Alien Card”) within 21 days, subject to daily penalties.

Employing Foreign Staff

If your project includes hiring expatriates, you must obtain, for each, a prior employment permit from the labor administration (GALWS). This permit then serves as the basis for a work visa application.

The procedure notably includes:

– an official request from the employer;

– proof of company registration and payment of social contributions;

– an employment contract with notarized translation into Mongolian;

– proof of payment of administrative fees.

After the employment permit is issued, the employer requests a visa validation from immigration, and then the employee receives a visa at a consulate or authorized border point. Once on site, the employer has about 10 days to file the complete work permit application.

The employer must also pay a monthly fee for each foreign employee, equivalent to two times the minimum wage. Some exemptions are possible for projects of national significance or state-funded.

Settling In and Operating in Ulaanbaatar: Infrastructure, Coworking, Cost of Living

The daily reality for an expatriate entrepreneur is mainly centered on Ulaanbaatar, Mongolia’s political, economic, and cultural heart. The city hosts most head offices, administrations, and the startup ecosystem.

A Capital in Transition, Still Fragile

Ulaanbaatar has about 1.4 million inhabitants. It features a mix of modern neighborhoods, office towers, shopping centers, and informal ger districts. Basic services are developing, but some weaknesses persist: variable road infrastructure quality, extremely harsh winters, and recurring severe air pollution during the cold season.

The cost of living remains significantly lower than in major Western cities. A solo entrepreneur can live comfortably on a monthly budget of around 1,000 to 1,500 USD, including housing, though international standards (high-end apartments, international schools, Western restaurants) increase the bill.

Coworking and Entrepreneurial Ecosystem

The city now has a network of coworking spaces and incubators that are gradually changing work culture. For an expatriate, these places are valuable entry points for networking, recruiting, hosting events, and finding local partners.

A few notable examples:

Prices vary widely: some spaces offer very affordable daily rates (a few thousand MNT, i.e., a few dollars), others have moderate monthly subscriptions, and true “serviced offices” position themselves in a more premium segment.

For an expatriate founder, these places also allow testing the market before committing to a standard lease and avoid immediately bumping into the Mongolian culture of the “private office” as a status symbol, which is still very prevalent.

Adapting to Mongolian Business Culture

Beyond structures and laws, the success of an entrepreneurial project in Mongolia largely depends on the ability to navigate a highly relationship-driven environment.

Relationships, Trust, and Negotiations

Mongolia is a deeply relationship-oriented culture. Practically, this translates into several reflexes to adopt:

– take time for small talk at the start of every meeting, show interest in family, background, and national pride, before getting down to business;

– accept that important decisions are often made outside formal meetings, after internal consultation;

– avoid direct confrontation in public, especially with higher-ranking or older individuals;

– understand that polite expressions like “that will be difficult” or “we’ll see later” can sometimes mean a refusal.

Communication and Language

Khalkha Mongolian is the official and dominant language. In business, some interlocutors, especially younger ones or those who studied abroad, speak English. Russian is still used in certain circles. But outside large companies or international firms, do not count on widespread foreign language skills.

For important negotiations, using a professional interpreter is highly recommended. Key documents (contracts, statutes, partnership agreements) must be translated into Mongolian to be enforceable with authorities.

Management and Teamwork

Descriptions of the Mongolian hierarchy are sometimes contradictory, but a nuanced reality emerges: traditional companies often operate in a top-down manner, with strong centralization of decision-making at the director or owner level, while startups and more “Westernized” structures tend to encourage more participation and debate.

For an expatriate entrepreneur, the challenge is to find the right balance between:

– clarity of decisions and responsibilities, which is highly expected;

– openness to initiatives, to harness the energy of an educated and ambitious youth;

– respect for form, particularly toward seniors and authorities.

Sector Opportunities for an Expatriate

Even though mining dominates export statistics, the range of opportunities for an expatriate entrepreneur is much broader.

Digital Services, Fintech, and Education

The country’s digital transformation, with high penetration of smartphones and mobile payment solutions, opens gaps in fintech, online platforms, e-commerce, and digital B2B services. The government is pushing a “Digital Nation” initiative, including significant efforts in AI training and technology.

The startup ecosystem, though still immature, has already seen players emerge in:

– fintech (revenue leaders among startups);

– edtech;

– data analytics, AI;

– digital marketing and advertising.

The weakness of quality training offerings in certain fields (STEM, coding, business) also creates space for private schools, bootcamps, or online learning platforms, provided you adapt well to local purchasing power.

Agriculture, Agribusiness, and the Pastoral Value Chain

With over 70 million head of livestock, vast pastures, and global renown for cashmere wool, Mongolia has considerable potential in:

Local entrepreneurs, often supported by microfinance or development programs, have already developed inspiring examples in jams, artisanal souvenirs, sewing, etc. An expatriate can position themselves on structuring supply chains, designing products for foreign markets, international marketing, or logistics.

Tourism, Hospitality, Experiences

Mongolia positions itself as an adventure destination, still largely “off the beaten path.” Ger stays, horse treks, the Gobi Desert, national parks, and major festivals like Naadam are all assets.

– eco-friendly tourist camps;

– mid-range to upscale accommodations;

– specialized niche agencies (photo, trekking, birdwatching, etc.);

– services for digital nomads (housing, regional coworking, “work & travel” packages)

is still far from saturated, even though the pronounced seasonality and vulnerability to external shocks (like the pandemic) require cautious business models.

Renewable Energy and Infrastructure

Mongolia’s solar and wind potential is exceptional, with a very high number of sunny days per year and significant wind resources. The country has set ambitious targets to increase the share of renewables to 30% of its energy mix by 2030.

For an expatriate, it is difficult to go solo on large energy projects, but opportunities exist in:

– engineering and energy efficiency consulting;

– micro-grid solutions for remote communities;

– storage, monitoring, or maintenance technologies;

– services to large projects (logistics, training, digitalization).

Challenges to Anticipate and Best Practices for Success

Setting up your company in Mongolia as an expatriate is not something you can improvise. Several obstacles come up repeatedly in feedback.

Among the most important:

Faced with these challenges, some best practices emerge:

– work from the start with a local law firm with solid experience in foreign investment;

– leverage existing support structures (Chambers of Commerce, Business Council of Mongolia, foreign investor associations);

– allow sufficient time and budget margin for administrative procedures;

– invest in building trust with your partners, employees, suppliers, and authorities;

– avoid underestimating climatic, logistical, and infrastructure constraints when designing your business model.

Conclusion: A High-Potential Market That Requires Clarity and Local Roots

Mongolia is neither an easy promised land nor a closed environment. It is a country in rapid motion, driven by its resources, its youth, and its openness to investment, but still marked by its nomadic heritage, trust networks, harsh winters, and evolving institutions.

Mongolia offers space, literally and figuratively, to those willing to combine entrepreneurial ambition, patience, and genuine respect for a centuries-old culture. For an expatriate ready to commit long-term, it is arguably one of the most stimulating grounds in Asia today.

Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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