DUSHANBE, May 28, 2013, Asia-Plus — World Bank’s
Tajikistan Partnership Program Snapshot
published in April 2013 notes the new Tax Code of Tajikistan provides an important opportunity to simplify the tax system and make it more efficient.
According to the report, an amended Tax Code became effective in 2013 and is expected to enhance incentives for private sector growth, while reducing incentives for tax avoidance.
“The revisions, among others, stipulated a reduction in the number of taxes (from 21 to 13), an increase in the VAT threshold, a cut in the corporate income tax statutory rates, the phasing out of the road user tax by 2017, and the streamlining of tax concessions. The implementation of the changes may result in potential revenue loss and debt accumulation. In this regard, more efforts should be put to further fiscal consolidation and rebuilding fiscal buffers beyond 1 percent of GDP in 2012.
“The aforementioned new Tax Code will simplify filing for small and medium enterprises (SMEs), but tax administration remains a weak point in the business environment. The new Tax Code was prepared over the past year with support from the International Monetary Fund (IMF) and the World Bank Group.
“Some key changes include the elimination of the retail sales tax, the phasing out of the road user tax by 2017, an increase in the threshold for VAT filing to be harmonized with the upper threshold of the simplified regime, a unified declaration for social and personal income tax, and simplified filing and payment procedures, such as reducing filing for some taxes from monthly to quarterly.
“Initial estimates put the compliance cost savings of the reforms at well over US$10 million annually, mostly accrued to small and medium businesses. However, despite these reforms, there is discontent with some aspects, mostly tied to the elimination of some VAT exemptions, the reduction of the threshold for patent regime filing, the elimination of deductions for business expenses paid to patent-holders, and ongoing concerns over how fairly the tax code will be implemented. Tax administration remains one of the most problematic issues in the business environment, and the State Tax Committee will soon begin a full functional review of its operations with support from the World Bank.”
