Accounting Outsourcing and
Tax compliance in Turkmenistan

Turkmenistan– Accounting Outsourcing and Tax Compliance

When accounting for Taxation in Turkmenistan, it is a paramount that you understand the facts laid-out by the laws of the land. The state demands it, as a legal requirement, as a provision within the confinements of the tax laws.
Global Expansion Plus provides accounting outsourcing and tax compliance in Turkmenistan. We provide services with support of our local accountants and tax specialists. We will perform bookkeeping, accounting and filling tax return on your behalf bearing all associated compliance risks. Every state will put in place a tax system, to raise revenue. Turkmenistan is no different. Whether a resident or a non-resident, individual or corporate, there is the need to understand taxation in Turkmenistan. 

Turkmenistan in facts

  • Location: Central Asia
  • Territory: 491,210 square kilometers
  • Capital: Ashgabat
  • Official language: Turkmen
  • Currency: Turkmen New Manat (TMT)
  • Population: 5,85 million

Corporate income tax (CIT)

CIT is designed for large business entities, with a corporate status, operating in the country. It could be a foreign company or a local one, all are subject to CIT. However, the rate varies in the following ways:
  • Foreign corporates with branches in Turkmenistan pay 20% CIT.;
  • Local corporates pay a lower rate of 8%;
  • Both local and foreign companies in the oil or petroleum business, attract a 20% CIT rate;
  • Companies, where the state owns over 50% of the share capital, a 20% CIT applies.
The Turkmenistan tax laws favor the local small and medium enterprises. They are subject to an even lower CIT of 2%. This gives room for growth and a chance to compete even with the limited resources.

Value-added Tax (VAT)

Transaction of goods and services will attract a value addition tax (VAT). It is the most comprehensive tax system, as it covers almost every individual or entity in Turkmenistan. The normal rate is 15%. Nonetheless, exports are zero-rated, with the exemption of petroleum products. Also, services that relate to international transport have a zero rate VAT.
In accounting for VAT in Turkmenistan, you need to understand the technicalities involved. The input VAT, on purchases, is offset by the output tax, due to the sales. VAT relating to purchase of fixed assets, should be accounted for as an asset, as it is part of the cost of that asset. In short, it should be capitalized.

Personal Income tax (PIT)

Personal incomes, not only features individuals, but also business entities operating in Turkmenistan. It comprises of all incomes due to employment, offering professional services, interest income, royalties, capital gains and sale of property, among others. PIT is generally set at 10% and it is withheld at source.

Withholding tax

WHT varies depending on the source of income or the residency of an individual or entity. For foreign entities, operating in Turkmenistan, the rate is 15%. If the non-resident company is from a country where a double taxation treaty exists, with Turkmenistan, then a WHT relief applies. Incomes due to lease of aircraft and sea vessels attract a WHT rate of 6%. When accounting for WHT, in Turkmenistan, such facts will come in handy.

Payroll related taxation

Payroll incomes, for salaried individuals is subject to taxation. The obligation to deduct and remit the tax to the state lies with the employer. A 10% PIT rate applies plus 2 manats to go with it. The extra deduction, as a requirement by the state, is set aside for rural-urban development.

Employers also have an obligation to contribute to the pension scheme at the rate of 20%. For employees whose work is considered hazardous, they benefit from an additional 3.5% on the pension scheme. Apart from the employers’ contribution to the scheme, employees can voluntarily contribute at least 2% of their income. Expatriates nevertheless do not qualify for such.

Import/ Export related taxation

Custom duty

Duty paid for all imports in Turkmenistan qualify as tax, at the normal rate of 2%. It will however depend on the type of good coming into the country. For example, carbonic acid will attract a customs duty of 100% and 2% for products relating to cement. A 0.2% clearance fee at the point of entry will apply.

Excise taxes

Excisable products such as cars, tobacco and tobacco products, and alcohol are subject to excise duty. Whether imported or locally manufactured, most harmful products will be excisable.

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