According to data from the Tax Committee under the Government of Tajikistan, Tajikistan in 2021 earned more than 2 million somonis (equivalent to more than 159.9 million US dollars) from tax on virtual services.
Over the first six months of last year, Tajikistan reportedly received more than 1.5 million somonis (equivalent to 146 million US dollars) in the value added tax (VAT) from foreign companies offering e-services in the country.
Electronic services or e-services are services which make use of information and communication technologies (ICTs). The three main components of e-services are: service provider; service receiver; and the channels of service delivery (i.e., technology).
Tajikistan adopted a so-called Google Tax, which is designed to compel companies like Google, Facebook, Microsoft, Booking.com and others to pay taxes inside Tajikistan, in 2020. Under the provisions of the legislation, the companies are now required to register with Tajik tax authorities and pay VAT to Tajikistan’s national budget.
American multinational technology company that specializes in Internet-related services and products Google bent to tax demands in Tajikistan on March 3, 2021 following American online social media and social networking service Facebook Ireland Ltd, which filed its papers with the Tax Committee under the Government of Tajikistan on March 2, 2021.
According to the Tax Committee, twenty-one foreign companies offering e-services in Tajikistan have bent to tax demands in Tajikistan by the end of 2021.
As of August 2022, twenty-three foreign companies offering e-services in Tajikistan, including Google Commerce Limited, Meta Platforms Ireland Limited, Apple Distribution International Limited, Netflix International B.V., Amazon Web Services EMEA SARL and others, have been registered as VAT payers.
Recall, Tajikistan’s upper house (Majlisi Milli) of parliament seconded the law on amendments made to the country’s Tax Code on December 9, 2020 and the law was signed by the president on December 17, 2020. The law took effect on January 16, 2021.
The Tax Committee says the decision to tax online-giants was made following the rapid development of information technology and electronic commerce (e-commerce).
Tajik authorities reportedly studied the experience of Russia, Belarus, Uzbekistan and several European Union members while drawing up the changes to this law.
Tajikistan’s lower house (Majlisi Namoyandagon) of parliament adopted changes to the Tax Code that extend liability to international online transactions in November 2020.
Ads, products and services posted on sites of companies that will refuse to operate in accordance with Tajikistan’s tax legislation will be blocked.
The idea has been booted around for a few years now. In 2018, it was the Tax Committee that came forward with the idea of somehow forcing companies like Google, Facebook, Microsoft, Booking.com, Chinese online retail service AliExpress and others to pay tax inside Tajikistan. The Finance Ministry rejected the idea at the time. But the head of the Tax Committee, Nusratullo Davlatzoda, revived the proposal in February 2021.
“Foreign companies are making a profit by providing services to our citizens. We must create an appropriate legal framework, so that [foreign companies] are able to register and pay taxes,” Davlatzoda told reporters in Dushanbe.
For comparison, Kyrgyzstan, where the law on the so-called Google Tax took effect on January 1, last year, over the first four months of this year has received more than 58.5 million soms in VAT from foreign companies offering e-services there, which is 24,5 times more compared to the same period last year.
Russian was the first country to introduce the so-called Google tax. The Russian President signed a federal law making e-services VA Table at the location of the customer on July 3, 2016.
Belarus, Moldova and Uzbekistan have also introduced the Google tax. Belarus introduced this tax in 2018 and it reportedly received more than 60 million Belarusian rubles in Google tax. Uzbekistan introduced the Google tax in January 2021.
