1. Alice in Wonderland! If you are planning to invest in Tajikistan be ready to deal with difficult tax rules. Including two taxation systems (ordinary and Simplified tax system) eleven national taxes (corporate income tax, Personal Income Tax, value added tax, payroll taxes, Social tax, land tax, property tax, mining taxes, Withholding tax at the payment to non-residents, Unified tax for agricultural producers and Sales tax for ginned cotton and aluminum), two local taxes (Real estate tax and Vehicles tax) and some excise duties and Water royalties, that even the tax authorities have difficulties and disagreements in the interpretation of this law.
2. Never forget to Smile! Due to the complexity and inconsistency of tax laws and the difficulty of protest against taxes assessed, good working relationships with tax authorities is very important. Do not rely just on the mere knowledge of tax laws and remember that good relationship with the tax authorities is very important.
3. Lucky farmers! Although the land in Tajikistan as in the forgotten time of communism are not dealing, but one of the best tax exemptions in Tajikistan related to agricultural activities, particularly cotton. Tax farming unlike numerous taxes for other activities is on cumulative tax base. Mainly as agricultural tax at the time of Sassanid Empire not based on profit, but on two main fields of agriculture or horticulture, as well as Natural irrigation, mechanized irrigation and dry land and also the location of the land in which districts of the country, in the form of a lump-sum to be determined. For this reason, it is also preliminary estimates by the investor can be more accurate and tax authorities cannot effect the tax figures
4. If you have decided to invest by all force sign! Importation of anything for agricultural business, such as machinery and equipment, seeds, fertilizers and pesticides, is subject to VAT, but if these at the beginning as initial investment by the company is exempt from this tax.
5. Do not worry about future changes! To secure foreign investment, law maker considered that if any new passed rule affects a foreign company or a joint venture with foreigners after the establishment, these companies are allowed to choose the previous rules.
6. If you want to come in welcome, but you must do something! Tajikistan’s labor productivity is not too high, but salaries are incredibly low. To encourage foreign investment, Eight percent additional tax considered for foreign companies that just opened a branch in the Tajikistan, but their production activities is in another country.
7. Appetizing food on the table! Foreign investment guaranteed by the government of Tajikistan and if the investment made during the Twelve-month period from company registration , has a full tax relief period are as follows:
- Two years’ tax relief: US$ 200-500 thousand
- Three years’ tax relief: US$ 500 thousand-2 million
- Four years’ tax relief: US$ 2 million-5 million
- Five years’ tax relief: over US$ 5 million.
8. Be careful about your bank account turn over! One of the most common tax bases, is your bank account is inputs. It means that all deposit into your account assumed income taxable, and if the subsidiary in Tajikistan taken out a loan from the parent company may simply have to pay taxes on this loan.
9. Stay in your office but pay Road tax! Before the January 2017 In Tajikistan Even if your company use the roads or not, you had to pay about one percent of the total expenses as a road tax. Even more strange is that percent including all taxes and duties paid. Fortunately it must be abolishing for 2017.
10. Be careful about choosing your pair! Finance manager in Tajikistan has the legal responsibility and you need a kind of legal permit to hire or fire him. Tajik banks cannot pay company checks without both signatures of the Managing Director and finance manager. If you want to use local people, usually Russians are more qualified. If you want to work with your own countryman, previously must register his residence and work permit for him as finance manager. As a tip to choose, preferably someone knows Tajik or Russian language and Cyrillic alphabet.
*Bahman Zebardast, is a freelance tax adviser and can be reached at [email protected]