Mr. Navrouz Odinayev, the head of the Legal Company “Himoya” offering legal services to domestic and foreign businesses, gives advices to potential investors.
To invest in another nation foreign investors must know its legislation.
The following are replies to questions that foreign businesspeople are asking most frequently:
- Foreign legal and physical entities are allowed to own 100% stake in a legal entity being established in the territory of Tajikistan;
- The government guarantees equal rights to foreign and domestic investors;
- Foreign legal and physical entities are allowed to own nonresidential real estate;
- By law investor’s property is not subject to nationalization. But in exceptional cases, expropriation of investments is allowed in connection with timely payment of compensation.
In accordance with Tajikistan’s Tax Code, entrepreneurs are divided into 3 types:
1. Small businesses – entrepreneurs with turnover up to 1 million somoni within the next 12 months. The first planned inspection is conducted after three years of activity and no more than once every two years and further no more than once every two years;
2. Medium-sized businesses – entrepreneurs with annual turnover from 1 million somoni to 25 million somoni. The planned inspections are conducted no more than twice a year;
3. Large businesses – entrepreneurs with annual turnover from 25 million somoni and more. The planned inspections are conducted no more than once a year.
Tax rates in Tajikistan:
- Income tax for residents – 13 percent. Income tax for non-residents – 25 percent (deducted by the employer from the employee's salary and transferred to the budget).
- Profit tax for production facilities – 13 percent; for other types of activity – 25 percent.
- Dividend tax – 12 percent.
- Value added tax (VAT) – 18 percent (set-off allowed).
- Reduced VAT rate (without se-off) is 7.0 percent for construction worker and those providing catering services, an 5.0 percent for those providing educational services.
- Excise taxes on certain types of goods, works and services. Rates of excise taxes are set by government’s decree No 302, which was issued on July 9, 2018.
- Social tax for employers (25 percent) and employees (1.0 percent).
- Extraction tax. Extraction tax rates depend on types of minerals and agreements.
- Tax on road users. Its rates range between 0.25 percent and 1.0 percent depending on types of activity.
- Primary aluminum sales tax – 3.0 percent.
- Simplified tax system for entrepreneurs with annual turnover less than 1 million somoni is set at the rate of 5.0 percent from gross income for production facilities and at the rate of 6.0 percent from gross income for others.
Newly-established production companies are exempted from paying profit tax:
- during two years, if their authorized capital increases during twelve months by from 200,000 USD;
- during three years, if their authorized capital increases during twelve months by from 2500,000 USD;
- during four years, if their authorized capital increases during twelve months by from 2 million USD;
- during five years, if their authorized capital increases during twelve months by from 5 million USD.
Requirements for the employment of a foreign citizen in the Republic of Tajikistan. For the employment in Tajikistan a foreign citizen needs:
- Work visa for foreign citizens needing a Tajik visa;
- Registration at the place of arrival;
- Rental contract with dwelling lessor and subsequent registration with tax inspectorate so that dwelling lessor will pay the rental income tax.
- Getting a tax identification number (TIN).
- Getting license for hiring foreign labor (issued for up to three years).
- Obtaining a work permit a work permit (issued for up to one year).
- Extension of registration at the place of arrival for the term of a work permit.
Analytical Bulletin No 2 “Asia-plus Expert”, December 2019. For bulletin subscription mail to: [email protected], or call the following phone numbers: +99237 2217220, +99293 5019805.
