information on IMPLEMENTATION and administration
of the agreement on customs valuation

Check-list of Issues

Mongolia

The following communication, dated 5 July 2024, is being circulated at the request of the delegation of Mongolia.

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1._           Questions concerning Article 1:

(a)_         Sales between related persons:

(i)_          Are sales between related persons subject to special provisions?

Articles 10.8, 10.9 and 10.10 of the Law of Mongolia on Customs Tariffs and Customs duties provides the sales between related persons, as set out in Article 1 and the Interpretative Note to Article 1 of the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (hereinafter "CVA").

(ii)_         Is the fact of intercompany prices prima facie considered as grounds for regarding the respective prices as being influenced?

No, Article 10.9 of the Law of Mongolia on Customs Tariffs and Customs Duties requires that, depending on the nature of the imported goods, the nature of the industry itself, the season in which the goods are imported and the differences in value, where a value of the sale between related persons specified in 10.8 of this Law closely approximates to one of the test values specified in provision 10.9.1 or 10.9.2 of occurring at or approximate time, the transaction value method shall be used.

In addition, according to Article 8.1 of the Law, the customs authority makes a decision by checking the method of determining the customs valuation and whether the declarant accurately and objectively determined the customs value. Also, in accordance with Article 8.2 of the Law, if the documents submitted by the declarant are not sufficient to make a decision after checking the customs value, the customs authority may collect additional information and documents from the declarant.

(iii)_       What is the provision for giving the communication of the afore-mentioned grounds in writing if the importer so requests? (Article 1.2(a))

Article 8.5 of the Law of Mongolia on Customs Tariffs and Customs Duties states that if the Customs determined the Customs value, specified in 8.3 of this Law, a declarant may get an explanation upon a written or electronic request to Customs.

(iv)_        How has Article 1.2(b) been implemented?

Articles 10.9 and 10.10 of Law of Mongolia on Customs Tariffs and Customs Duties defines as following:

Depending on the nature of the imported goods, the nature of the industry itself, the season in which the goods are imported and the differences in value, where a value of the sale between related persons specified in 10.8 of this Law closely approximates to one of the following test values occurring at or approximate time, the transaction value method shall be used:

10.9.1. The transaction value in sales of identical or similar goods imported by the person specified in 10.8 of this Law which closely approximates to the transaction value in sales between unrelated persons;

10.9.2. The transaction value in sales of identical or similar goods imported by the person specified in 10.8 of this Law, which is determined by the transaction value method in accordance with the Customs value previously accepted by Customs office.

10.10. To make a comparison with the test values referred to in 10.9 of this Law, due account shall be taken with regard to commercial levels, quantity levels and the costs referred to in 10.3 and 10.4 of this Law.

(b)_         Price of lost or damaged goods:

            Are there any special provisions or practical arrangements concerning the valuation of lost or damaged goods?

Article 42.1 of the Law of Mongolia on Customs Tariffs and Customs Duties specifies that an abatement of Customs duties or other taxes may be allowed by Customs in case where there is a documentary evidence that a goods, while being under Customs control, has suffered a loss in volume (quantity) or weight, a damage or a deterioration or no longer fits for its intended use.

2._           How has the provision of Article 4 to allow the importer an opinion to reverse the order of application of Articles 5 and 6 been implemented?

Article 9.2 of the Law of Mongolia on Customs Tariffs and Customs Duties says that at the request of a declarant the sequences of the deductive method and the computed method may be reversed.

3._           How has Article 5.2 been implemented?

In Article 11.3 and Article 12.4 of the Law of Mongolia on Customs Tariffs and Customs Duties specifies that when determining the transaction value by the transaction value method of identical goods, or similar goods the transaction value of the identical or similar goods imported at the same commercial level and in approximately the same quantity shall be used. In Article 11.4 and 12.5 says that where the identical or similar goods were imported in different quantity or at a different commercial level than those referred to in Article 11.3 or 12.4 of this Law, a declarant must make appropriate adjustments and justify their grounds by documentary evidences taking into account such differences.

4._           How has Article 6.2 been implemented?

Mongolia became the WTO Member in 1997 and acceded to all its agreements other than its Plurilateral Trade Agreements. Article 2.2 of the Law on Customs Tariffs and Customs Duties says that if the provisions of any international treaties of Mongolia differ from those specified in this Law, the former shall prevail.

Therefore, all provisions of the Customs Valuation Agreement are applied and implemented in Mongolia together with the Article 6.2.

5._           Questions concerning Article 7:

(a)_         What provisions have been made for making value determinations pursuant to Article 7?

The CVA Article 7.1 says that if the customs value of the imported goods cannot be determined under the provisions of Articles 1 through 6, inclusive, the customs value shall be determined using reasonable means consistent with the principles and general provisions of this Agreement and of Article VII of GATT 1994 and on the basis of data available in the country of importation.

In the provisions regarding to customs valuation of the Law of Mongolia on Customs Tariffs and Customs Duties, the following clauses which stipulated in Article 15.1 and 15.2 are applied based on the general principles of the WTO Customs Valuation Agreement and international trade practices and other trade data. Article 15.1 says that the fallback or residual method of Customs valuation shall be applied where it is impossible to determine the Customs value of imported goods by methods referred to in Articles 10-14 of this Law and it shall be final valuation method. The Customs value is determined by way of applying conditions or considerations prescribed for each method referred to in Articles 10-14 of this Law in a soft manner described in Article 15.2.1.

For implementation of CVA Article 7.2 all provisions of this Article are set out in the Article of 15.3 of the Law of Mongolia on Customs Tariffs and Customs Duties.

(b)_         What is the provision for informing the importer of the customs value determined under Article 7?

Article 8.5 of the Law of Mongolia on Customs Tariffs and Customs Duties says that in case where the Customs determines the Customs value in accordance with Article 8.3, a declarant may get an explanation upon a written or electronic request to Customs. This paragraph covers all cases where the Customs value is determined by a method other than that applied by a declarant.

(c)_         Are the prohibitions found in Article 7.2 delineated?

Article 15.3 of Law of Mongolia on Customs Tariffs and Customs Duties delineated prohibitions in Article 7.2 of CVA as following:

15.3. When determining the Customs value by the fall back method the following prices shall not be based on:

15.3.1. The selling price in domestic market of goods produced in Mongolia;

15.3.2. A system, which provides for the acceptance for Customs purposes of the higher of two alternative values;

15.3.3. The domestic market price of the country of exportation excluding the price of imported goods in case of cross-border trade;

15.3.4. The cost of production incurred in cases other than the cases where computed values for identical or similar goods are determined;

15.3.5. The price of goods for export to a country other than Mongolia;

15.3.6. Arbitrary or fictitious values; and

15.3.7. The lowest Customs value.

6._           How have the options found in Article 8.2 been handled? In the case of f.o.b. application, are ex-factory prices also accepted?

The CVA Article 8.2 says that in framing its legislation, each Member shall provide for the inclusion in or the exclusion from the customs value, in whole or in part, of the cost of transport of the imported goods to the port or place of importation.

Article 10.3 of the Law of Mongolia on Customs Tariffs and Customs Duties states that in determining the Customs value by the method specified in 10.1 of this Law, the following costs or charges based on quantifiable and objective data on foreign trade, finance or accounting shall be included, if they are not included into the transaction value or that, they are distinguished from the transaction value:

10.3.1. The following costs associated with transportation of the goods concerned up to the national border of Mongolia:

10.3.1.1. The cost of transport, expenses incurred with completion of transportation and exportation documents and charges for use or lease of means of transport or container;

10.3.1.2. Loading, unloading, storage, transhipment and handling charges incurred in the course of transportation; or

10.3.1.3. The cost of insurance.

7._           Where is the rate of exchange published, as required by Article 9.1?

In the Law on currency regulation Article 2 says, the Bank of Mongolia shall fix and publicly announce the exchange rate of the tugrug in relation to currencies which are bought and sold on the currency market by commercial banks on a comparative basis with a stable foreign currency used in foreign commerce by a majority of that country.

8._           What steps have been taken to ensure confidentiality, as required by Article 10?

Article 5.1 of the Customs law of Mongolia says that information and documents on goods and means of transport required for crossing the Customs frontier in accordance with Customs legislation shall be submitted by the person concerned. In Article 5.2 of this law, it is clarified the Customs or Customs officials received the information or documents specified in 5.1 of this Law shall use them solely for the Customs purposes and not to disclose, use for personal purposes, or pass to a third party, except in those cases as specified in this Law. The Article 5.3 says the issues concerning use or storage of confidential information regarding individuals and entities or state obtained by the Customs or Customs officials shall be governed by the Law on Confidential Information.

9._           Questions Concerning Article 11:

(a)_         What rights of appeal are open to the importer or any other person?

Article 8.7 of the Law of Mongolia on Customs Tariffs and Customs Duties allows if the Customs office rejects to receive a complaint made by a declarant, specified in 8.6 of this Law, he or she may appeal in accordance with the Customs law.

Article 17 of the Customs Law of Mongolia regulates procedures on making complaints of importer or any other person in following:

17.1.1. A complaint on the decision of a Customs officer shall be submitted to a director or head of the Customs concerned;

17.1.2. A complaint against a decision of the director or head of the Customs shall be submitted to the relevant superior Customs or Customs officials;

17.1.3. A complaint against a decision of the superior Customs or Customs officials shall be submitted to a court;

17.2. A complaint against a decision of the Customs or Customs officials may be filed within 30 days from the date when a declarant it receives or becomes aware of the decision concerned.

(b)_         How is he to be informed of his right to further appeal?

Article 8.7 of Law of Mongolia on Customs Tariffs and Customs Duties states if the Customs office rejects to receive a complaint made by a declarant, specified in 8.6 of this Law, he or she may appeal in accordance with the Customs law.

Article 23 of the Customs Law of Mongolia defines, Customs official shall issue its decision on review of a complaint specified in 17.1 of this Law in writing or electronically in accordance with a form approved by the Director General of the Customs Central administration, in which should mention the information on a regulation to make complaint against a decision.

10._         Provide information on the publication, as required by Article 12, of:

(a)      

(i)_          The relevant national laws;

In the Article 43.1 of the law of Mongolia on legislation states that the legislation shall be published in the "Public Notice" bulletin (the Parliament News Release) by the Office of the State Great Khural /Parliament/.

Article 30 of the Law on international treaties states that the international treaty ratified by the State Great Khural /Parliament/ shall be published in the "Public Notice" bulletin (the Parliament News Release) along with the law on ratifying the international treaty.

Article 10.3 of the Constitution of Mongolia states the international treaties to which Mongolia is a Party shall become effective as domestic legislation upon the entry into force of the laws on their ratification or accession.

(ii)_         The regulations concerning the application of the Agreement;

The Constitution of Mongolia Article 10.3 states the international treaties to which Mongolia is a Party shall become effective as domestic legislation upon the entry into force of the laws on their ratification or accession.

Article 2.2. of Law of Mongolia on Customs Tariffs and Customs Duties states that if the provisions of any international treaties of Mongolia states otherwise from those specified in this Law, the provisions of international treaties shall prevail.

(iii)_       The judicial decision and administrative rulings of general application relating to the Agreement;

The Law on international treaties, Article 33.1 says that the court of Mongolia shall apply the officially published international treaty of Mongolia in accordance with the procedure specified in the relevant law.

The Law on courts of Mongolia, Article 12.5 of states that the court shall inform the public its decision on cases and disputes except for the information related to secrets protected by the law of the state, official, organization and personals. Article 22.8 of this law defines that unless otherwise provided by the law, courts of all levels shall upload their decisions to the unified digital database of court decisions. Court decisions can be compiled and published.

(iv)_        General or specific laws being referred to in the rules of implementation or application.

The Law of Mongolia on the ratification of the "Protocol on the Accession of Mongolia to the Marrakesh Agreement Establishing the World Trade Organization" signed between Mongolia and the World Trade Organization on 18 July 1996 in Geneva was approved by State Great Khural on 26 December 1996.

Therefore, Article 5.2 of the Law on State Great Khural of Mongolia informs that the State Great Khural shall publish the official full texts of laws or other decisions of the State Great Khural in an electronic or hard form in its "Public Notice" bulletin (the Parliament News Release).

(b)_         Is the publication of further rules anticipated? Which topics would they cover?

No further rules are anticipated for publication at this time.

11._         Questions concerning Article 13:

Article 13 of CVA says, if in the course of determining the customs value of imported goods, it becomes necessary to delay the final determination of such customs value, the importer of the goods shall nevertheless be able to withdraw them from customs if, where so required, the importer provides sufficient guarantee in the form of a surety, a deposit or some other appropriate instrument, covering the ultimate payment of customs duties for which the goods may be liable.

In the Customs Law of Mongolia the Article 71.1, it specifies that Customs shall release the goods if customs duties and taxes are paid or security for payment is provided in accordance with the Law of Mongolia on Customs Tariffs and Customs Duties.

12._         Questions concerning Article 16:

(a)_         Does the respective national legislation contain a provision requiring customs authorities to give an explanation in writing as to how the customs value was determined?

Article 10.1 of Customs Law defines that any individual or legal body has the right to obtain information or reasons and grounds of the written and verbal or in electronic form decisions and inactions made by the Customs or Customs officials (hereinafter referred to as "decisions") violating human rights or legal interests of the former.

Therefore, Article 8.5 of the Law on Customs tariffs and customs duties states that if the Customs determined the Customs value, a declarant may get an explanation upon a written or electronic request to Customs.

(b)      Are there any further regulations concerning an above-mentioned request?

The Law on Court Proceedings of Administrative Cases Article 21.2 says that defendant shall have the obligations, particularly to provide a written response to the claim within the period specified by the court, submit demanded evidence, when participating in the case proceeding.

The Law on offences Article 2.2 states that the prosecutor shall exercise the following powers, such as to obtain explanations from citizens and officials to supervise the investigation of violations.

13._         How have the Interpretative Notes of the Agreement been included?

Mongolia became the WTO Member on 29 January 1997 and acceded to all its agreements other than its Plurilateral Trade Agreements. Article 2.2 of the Law on Customs Tariffs and Customs Duties says that if the provisions of any international treaties of Mongolia differ from those specified in this Law, the former shall prevail.

Therefore, all provisions of the CVA are applied and implemented in Mongolia together with the Interpretative Notes in its Annex I and the Notes in its Annexes II and III.

14._         How have the provisions of the Decision on the Treatment of Interest Charges in the Customs Value of Imported Goods been implemented?

For the purposes of implementation of WTO Customs Valuation Agreement and the Law of Mongolia on Customs Tariffs and Customs Duties in general and its Articles 8 to 15 in particular, the Guidelines for Checking the Customs Value of the Imported Goods and Determining the Customs Value was adopted by the Directive of the Director General of the Customs General Administration No. A/30 of 2012. Paragraph 4.7 of the Guidelines says in addition to the costs specified in Article 10.4 of the Law on Customs Tariffs and Customs Duties, the interest charges paid by the buyer to the seller for delay in payment of the imported goods shall be deducted from the transaction price in the following cases:

4.7.1. interest charge on delayed payments is separate from the price paid or payable for the goods;

4.7.2. the interest charge is specified in the contract (in writing) between the seller and the buyer;

4.7.3. the buyer must prove that the declared price of the goods is the actual price paid or payable, and that the interest charge for the payment of the goods does not exceed the interest rate used in the country.

15._         For those countries applying paragraph 2 of the Decision on the Valuation of Carrier Media Bearing Software for Data Processing Equipment, how have the provisions of this paragraph been implemented?

The Mongolia does not apply Paragraph 2 of the Decision on the Valuation of Carrier Media Bearing Software for Data Processing Equipment.

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