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TAX EXEMPT ON IMPORTED ENERGY FROM CHINA AND RUSSIA

TAX EXEMPT ON IMPORTED ENERGY FROM CHINA AND RUSSIA
22
Dec

TAX EXEMPT ON IMPORTED ENERGY FROM CHINA AND RUSSIA

The Parliament passed a bill on Exemption of imported electricity by Western Energy System from Customs and Value-added Tax. The Western Energy System (WES), a state owned company, imports energy from Russia and China and according to the bill the imported electricity by the company will be exempt from the taxes until January 2021.

Currently, WES pays MNT116 per kWh for import from Russia, while import from China is MNT240 per kWh, costing a total of MNT199. It is then sold to consumers at MNT102.3 per kWh, resulting in a loss of MNT96.7. Parliament had previously exempted the imported energy from the taxes in 2005, 2011 and 2016. The last decision made in 2016 will expire on January 1st of 2018. Therefore, it was crucial to limit WES’ losses by tax-exemption. The bill was formulated to exempt MNT2.3 billion in 2018, MNT2.4 billion in 2019, MNT2.6 billion in 2020, making a total of MNT7.4 billion tax exemption. After the members expressed their stands on the matter, the voting took place in which majority of members supported the enactment of the bill.