Ulaanbaatar, Mongolia,
11 January 2021

Oyu Tolgoi LLC is consistently recognized as one of the largest taxpayers in Mongolia.

Oyu Tolgoi LLC has paid more than MNT5.8 trillion (approximately US$2.8 billion) in taxes, royalties and fees to the Government of Mongolia since 2010.

Oyu Tolgoi LLC is a major contributor to the Mongolian economy, with gross in-country spend of over US$11.3 billion, since 2010. Furthermore, Oyu Tolgoi is proud to be creating significant value for Mongolia as a large employer in the country, with a workforce of over 12,300 – 94 per cent of whom are Mongolian nationals.

In 2020, the company paid taxes and royalties, of approximately US$290 million, and accommodated some early royalty payments throughout the year to support the GoM’s actions on COVID-19.

On 22 December 2020, Oyu Tolgoi LLC received a Tax Assessment claim for MNT649 billion (approximately US$228 million) from the Mongolian Tax Authority (MTA). This Assessment relates to an audit of taxes paid by Oyu Tolgoi LLC between 2016 and 2018.

Oyu Tolgoi LLC pays all taxes and charges required under Mongolian laws and the stabilised tax environment created by the Oyu Tolgoi Investment Agreement (IA), the Underground Development Plan (UDP) and guidance letters from the MTA.Oyu Tolgoi complies with all applicable international rules and guidelines including the OECD Transfer Pricing Guidelines.

During this audited period, between 2016 and 2018, Oyu Tolgoi LLC paid approximately US$797 million[1] in taxes, royalties and fees. During that same period, Oyu Tolgoi LLC posted net earnings losses of over US$600 million.

The MTA has also sought to reduce Oyu Tolgoi’s carried-forward tax losses by MNT3.4 trillion (approximately US$1.5 billion).

Many of the matters raised by this new Tax Assessment are a continuation of the matters raised by the January 2018 penalty notice covering the period of 2013 to 2015.Those matters have been previously referred to international arbitration by joint agreement between Oyu Tolgoi LLC and the Government of Mongolia in 2020, in compliance with the dispute resolution provisions of the IA and UDP, and in order to resolve and clarify the different interpretations of the tax provisions.Oyu Tolgoi LLC will apply over the coming days to include the new matters from the latest Tax Assessment in the existing international arbitration as the matters are substantially similar and, in some cases, identical.

A spokesperson for Oyu Tolgoi LLC said, “Oyu Tolgoi LLC has a proud record of paying the taxes it owes on time and in full.Investments of the size and scale of Oyu Tolgoi LLC can only be made on the basis of a transparent and predictable tax regime.”

[1] From RT Taxes Paid reports (US$215 million in 2016, US$228 million in 2017, US$308 million in 2018)