Corporate - Income determination

Last reviewed - 14 January 2020

Income tax is assessed on taxable income, which is the difference between gross income and allowed exemptions and deductions.

Professional participants who carry out activity on the Tajikistan stock exchange are exempt from income tax.

Inventory valuation

Inventory accounting for tax purposes follows inventory accounting for financial reporting purposes. Public companies are required to apply International Financial Reporting Standards (IFRS). Other legal entities may apply IFRS or National Accounting Standards.

For tax purposes, the following inventory methods are permitted: last in first out (LIFO), first in first out (FIFO), and weighted average. For public companies, there can be a mismatch between the tax method and the book method, as LIFO is not permitted under IFRS. For other legal entities, the tax method will match the book method if the tax accounting follows National Accounting Standards.

Capital gains

In general, capital gains on securities are taxed as business profits.

A five-year exemption is available for capital gains on the sale of securities on the Tajikistan stock exchange.

Dividend income

In general, dividends are subject to 12% income tax withheld at source. WHT exemption can only be applied to dividends paid as part of net income distribution to the government budget. Dividends withheld at source are not included in aggregate annual income.

In case dividends were not taxed at source, then such dividends should be included in annual aggregate income of a person receiving the dividends and taxed at the standard CIT rate.

Dividends received by residents and non-residents (investors) from securities listed on the Tajikistan stock exchange could be exempt from taxation for 5 years.

Interest income

The Tax Code defines interest income as income received from any fees associated with a debt obligation, including tax liability, payments for any loans, and contributions on deposit (accounts). Interest income is subject to CIT in Tajikistan and should be included in annual aggregate income.

Royalty income

Royalty income received by a resident entity should be included in the aggregate annual income and taxed at the standard CIT rate.

Royalty income received by a non-resident from a Tajikistan source is subject to WHT at the rate of 15%.

Foreign income

Tajik residents are taxed on their worldwide income. Non-residents are subject to CIT in Tajikistan only on Tajikistan-source income. There are no provisions in the Tax Code for tax deferral.

For information about Controlled foreign company (CFC) provisions, see the Group taxation section.