Mr. A.Munkhbat, Vice President, Ivanhoe Mines Mongolia, answered some questions from a journalist:.
Many MP’s want the draft agreement to be signed with the parent company, Ivanhoe Mines Ltd., and not with Ivanhoe Mines Mongolia Inc. What do you think of the suggestion?
The original idea, as agreed on in the draft of the agreement prepared in 2007, was to conclude the investment agreement with three companies - Rio Tinto, Ivanhoe Mines Limited, and Ivanhoe Mines Mongolia Inc. However, the current Minerals Law says that the investment agreement has to be made with a license holder and that is why only Ivanhoe Mines Mongolia was chosen. This was to preempt any criticism that the laws were being violated. I think the investors will have no problem accepting any Mongolian suggestion that the parent company be involved. The Minerals Law would also not be breached if three companies from the investor’s side, and not just the license holder, sign the agreement. This was, in any case, the original idea.
MPs have expressed concern that Ivanhoe Mines Mongolia Inc is an off-shore company. Are they right to worry?
This should not cause any worry among Mongolians. The company is properly registered in Mongolia to develop a deposit located in the territory of Mongolia. It will pay all taxes and fulfill all obligations in compliance with Mongolian laws. Being off-shore is a kind of protection to reduce the tax burden on the parent company -- that is registered in another country -- after it has paid all taxes and fees to Mongolia. The intention is not to evade tax, but to claim tax benefits in a perfectly legal manner. The Mongolian side need have no fear that we shall not pay taxes and disregard legal obligations here. All it means is that the parent company gets some tax benefits abroad. Mongolia does not lose anything because we are an offshore company.
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Posted by guido 293 days ago (http://www.mongolia-web.com)
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