The Government meeting on Wednesday approved the draft
amendment to the law on value-added tax. It will now be submitted to Parliament.  Minister for Finance S.Bayartsogt answers some
questions on the subject.

How many products will
the exemption cover?

First, of course, are wheat, vegetables, and factory
produced meat products so that food is cheaper.

We want to see more factories coming up, and so propose to
apply the exemption to equipment for electricity and heating distribution, for refining
copper, zinc, aluminum etc, for gas production, refining, storage, distribution,
exploration, and to specialized machinery.

There is more. To facilitate railroad construction, we
propose to extend the exemption to railway and communication devices, and also
to import of vehicles with 1500 cc engines to reduce pollution.

As for the meat products I referred to earlier, a large
amount of the meat consumed in Ulaanbaatar is supplied by private traders who
buy it from herders. Private suppliers don’t pay VAT. But factory produced meat
is subjected to VAT and is therefore more expensive. We want to stop this.

Once the law is approved, factories will be able to compete
with private meat traders with cheap but quality products.

What effect will all
this have on state revenue?

Not much, as most of the items exempted are new types and
income from them has not been included in budget estimates.