Tajikistan’s lower chamber (Majlisi Namoyandagon) of parliament has endorsed the construction by Dubai-based Oxus Interasia Free Zone Company (FZCO) of a tobacco factory in the Danghara Free Economic Zone (FEZ Danghara) in Khatlon province.
The resolution of the Majlisi Namoyandagon on ratification of the investment agreement for the construction of the tobacco factory in FEZ Danghara that was issued on October 2 was published on the portal of legal information of the Ministry of Justice of Tajikistan on October 26.
Recall, the investment agreement between the Government of Tajikistan and Oxus Interasia on the construction of the tobacco factory in FEZ Danghara was signed in Dushanbe on May 25, 2023.
"The investor intends to implement an investment project and for this purpose allocate the necessary financial, technological, human and other resources, and the government agrees to provide a special legal regime, including a special tax and customs regime, for implementation of the project," the agreement says.
The investor is expected to invest US$20 million in the construction of the enterprise at the initial stage. The implementation period of the first stage of the project is 18 months.
The annual capacity of the enterprise after the launch of the first stage will be 3 billion cigarettes.
The second phase reportedly involves the construction of additional facilities to increase the production of tobacco products to 6 billion cigarettes per year. The second phase of the project covers 6 years with a budget of US$7 million.
The text of the agreement states that Oxus Interasia FZCO is registered in the Jebal Ali Free Zone (UAE). The company is headquartered in Dubai City.
A Free Zone Company (FZCO) is essentially a Limited Liability Partnership (LLP) within the free zone, with the liabilities of the company limited to the paid-up capital. The shareholders of an FZCO can be from two to fifty individuals or non-individuals or a combination of both.
Jebel Ali Free Zone (Jafza) is one of the world's leading free trade zones. A DP World-owned company, the free zone was created in 1985 to promote trade and support container throughput at the Jebel Ali Port. Today it is one of the largest free zones globally and the region's most efficient logistics hub.
Meanwhile, the Law on Limited Use of Tobacco came into effect in Tajikistan on January 1, 2011. Under this law, sale of tobacco and smoking in schools, hospitals, organizations and enterprises irrespective of forms of their property, airports, train stations, recreation areas, sports and culture facilities and in public transport is banned. Additionally, sale of tobacco closer than 100 meters to kindergartens, schools, hospitals and other educational and healthcare institutions is banned. The law also bans sale of tobacco to and by teenagers. Smokers now have to use special places. Those who break the law will have to pay a fine: from 5 to 15 calculating indicators (estimates) for natural persons; and from 30 to 300 indexes for legal entities estimates. The current calculating indicator amounts to 68 somonis.
The government later worked out a regulation on raising the excise tax on the tobacco products. The excise tax on cigars, cigars need to be cut on both ends, cigarillas and cigarettes of tobacco or tobacco substitute from1.00 euros on 1,000 pieces to 2.40 euros on 1,000 pieces in 2018, to 4.00 euros in 2019 and 5.60 euros in 2020. The excise tax on tobacco containing cigarettes (with filter and without filter) was raised to 3.00 euros on 1,000 pieces in 2018, 5.00 euros in 2019, and 7.00 euros in 2020.
