Tajikistan’s ranking improved from last year’s 130 to 128 in the World Bank Group’s ease of doing business report, released on October 25, 2016.
According to the Doing Business 2017: Equal Opportunity for All over the past year, Tajikistan made paying taxes easier by introducing electronic invoices and expanding the electronic system for filing and paying taxes to include road tax. It also made paying taxes less costly by reducing profit and road tax rates.
“It is good to see Tajikistan has improved its ‘doing business’ rating, especially given the continued economic challenges and the urgent need to create more domestic jobs,” said Patricia Veevers-Carter, World Bank Country Manager for Tajikistan. “The World Bank Group will continue working with the Government of Tajikistan to further improve the tax system with a greater emphasis on a business friendly tax policy. We will also continue supporting other reforms beyond taxation to promote a favorable environment for private investments.”
The World Bank Group has been supporting tax administration in Tajikistan through its Tax Administration Reform Project, which works to improve the quality of taxpayer services and the Central Asia Tax Project, which focuses on reducing tax compliance costs for businesses. While there are significant improvements in tax administration, reducing discretion and increasing transparency of tax policy remains an important goal.
A recent World Bank study on taxation has found that there are provisions in the Tax Code, which would need to be reformed to both improve effectiveness of tax policy in terms of revenue collections, and ensure taxation does not impose a negative burden on the business environment. It is proposed that the government considers introducing provisions for providing more transparency in the administration of tax incentives, and reform tax policy pertaining to the collection of “accelerated payments” in VAT and pre-payments in profits tax.
The Doing Business report also found that over the past year, Tajikistan made starting a business more difficult by requiring that companies with annual revenues of more than 500,000 Tajik Somoni register as a VAT payer. In order to be eligible for VAT registration, the businesses have to operate at least 12 months and have turnover more than 500,000 Tajik Somoni. Since there is no option for voluntary VAT registration for businesses with turnover less than 500,000 Somoni, newly established businesses are not able to register and benefit from VAT refunds, in particular businesses involved in export operations.
Doing Business 2017: Equal Opportunity for All, a World Bank Group flagship publication, is the 14th in a series of annual reports measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies.
