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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Mongolia: Interest and royalties

Interest or royalties arising in Mongolia and paid to a resident of the United Kingdom who is the beneficial owner of the interest or royalties are taxable in Mongolia at a rate not exceeding, in the case of interest, 10 per cent (7 per cent where the recipient is a United Kingdom resident bank) (Article 11(2) and (3)) and, in the case of royalties, 5 per cent (Article 12(2)), except where the interest or royalty is effectively connected (see INTM153110) with a permanent establishment or fixed base which the United Kingdom resident recipient has in Mongolia. In the latter circumstances the provisions of the Business Profits Article (Article 7) or the Independent Personal Services Article (Article 14) will apply.

Where Mongolian source interest is paid to a United Kingdom resident who is the beneficial owner of the interest, in respect of a loan made, guaranteed or insured by the United Kingdom Export Credits Guarantee Department, it is exempted from Mongolian tax (Article 11(12)).