Turkmenistan

Corporate - Income determination

Last reviewed - 14 August 2020

Inventory valuation

Inventory is valued at cost, including costs relating to its acquisition. The law permits the use of the weighted average or first in first out (FIFO) methods for tax purposes.

Capital gains

Capital gains are taxable as normal business income in Turkmenistan.

Dividend income

Generally, dividend income received by residents and non-residents from Turkmen taxpayers is subject to taxation at the source of payment at the rate of 15%.

Dividend income received by residents from non-Turkmen taxpayers is subject to CIT.

Inter-company dividends

The Tax Code provides for relief from economic double taxation of inter-company dividends.

The withholding tax (WHT) rate on dividends payable by Turkmen legal entities to their foreign shareholders may be reduced under applicable double tax treaties (DTTs).

Technically, Turkmen branches of foreign legal entities may also be subject to 15% WHT on repatriation of income to their head offices. However, if the head office collects the income from its clients directly to its bank account abroad, the mechanism of collecting the dividend tax is unclear.

Interest income

Turkmenistan-sourced interest income received by non-residents that do not have PEs in Turkmenistan is subject to WHT of 15%. The above rate may be reduced under the applicable DTTs.

Interest income received by residents is subject to CIT.

Royalty income

Turkmenistan-sourced royalty income received by non-residents that do not have PEs in Turkmenistan is subject to WHT of 15%. The above rate may be reduced under the applicable DTTs.

Royalty income received by residents is included in the taxable income and is generally subject to 10% CIT rate.

Foreign income

A resident company is subject to tax on its worldwide income (including capital gains). There are no provisions for tax deferrals in Turkmenistan tax legislation.