The taxable period comprises a calendar year (i.e. 1 January to 31 December).
Reports are generally filed quarterly within the month following the reporting quarter. Annual income tax declaration and financial statements of branches of foreign legal entities are due by 20 March of the year following the reporting one.
Tax agents must file WHT reports not later than the 20th day of the month following the one when the respective tax liability occurred.
Payment of tax
Advance CIT payments under the standard tax regime are made before the 13th and 28th days of each month (unless agreed otherwise with tax authorities). Final payments upon results of the first quarter, first half-year, nine months, and tax year are made within five days from the reporting deadlines.
Under the petroleum law tax regime, CIT is reported and paid once annually based on dates indicated in the respective Product Share Agreement (PSA).
Tax audit process
Tax audits may be of two types: ‘cameral’ (preliminary) and ‘documentary’.
Cameral tax audits are performed at the location of tax authorities within 30 days after submission of tax returns and financial statements with the aim of monitoring their accuracy and completeness. The tax authorities may request the taxpayer to amend the tax return(s) if they have revealed mistakes or inconsistencies therein.
Documentary tax audits are conducted based on a tax authorities’ order aimed at verification of the tax returns submitted by the taxpayer. During such audits, the tax authorities review the accounting records, copies of tax returns, and source documents as required. The tax authorities are to notify the taxpayer about the upcoming tax audits at least five days prior to the start of the audit. However, in cases when there is sufficient evidence of tax evasion, the tax authorities may initiate the tax audit without prior notice.
Scheduled documentary tax audits are usually carried out once in three years. There can also be un-scheduled tax audits (e.g. in case of liquidation of the enterprise) and counter tax audits (to review transactions with the enterprise’s supplier/customer, which is under the scheduled tax audit).
In cases when tax violations are revealed during tax audits, taxpayers should make necessary corrections to address those and pay respective taxes/obligatory payments and late payment interest within five days after the tax authorities’ decision is released. If accomplished within the deadline, the tax authorities’ decision on applying penalty may be cancelled. If not accomplished, the unpaid taxes/obligatory payments and late payment interest are to be withdrawn from the (i) taxpayer’s bank accounts (by issuing a tax liability claim without acceptance), (ii) taxpayer’s debtors (by issuing a tax liability claim on the debts payable to taxpayer), or (iii) taxpayer’s property (by issuing a tax liability claim upon decision of the court).
Statute of limitations
The statute of limitations for tax purposes is five years.
Topics of focus for tax authorities
The tax administration environment in Turkmenistan is form-driven; consequently, the quality of documentation supporting the deductions should be of particular importance.
Cross-border transactions are normally scrutinised by tax authorities during statutory tax audits in view of WHT and reverse-charge VAT implications.
Another area of focus for tax authorities is the deductions taken by Turkmenistan branches of foreign legal entities in respect of expenses incurred by their head offices abroad.