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Outer Mongolia

Volume 448: debated on Monday 3 July 2006

To ask the Secretary of State for Trade and Industry what assessment he has made of the implications for British and other foreign investment in outer Mongolia of the recent introduction in that country of an excess profits windfall tax; and if he will take steps to impress upon the Mongolian authorities the importance of retaining a stable, reasonable, competitive, consistent and predictable tax regime for foreign companies investing in Mongolia. (80856)

The windfall tax to which the question refers is a tax of 68 per cent. on gold and copper, and was introduced by the Mongolian Parliament in May 2006. While I am not aware of any British investment in either of these sectors, this move will undoubtedly have negative implications for other foreign investors. British companies are however active in other sectors, albeit at an exploratory stage. In addition, a new minerals law is currently before the Mongolian Parliament, and as drafted, this law contains a number of provisions that in our view would discourage investment. Our embassy in Ulaanbaatar is monitoring the situation carefully, and we take every opportunity to impress upon the Government the need to provide a fair and transparent business environment in order to encourage the large-scale investment that the country badly needs.