Value-added tax (VAT)
VAT is generally payable at the rate of 15%. A zero-rate applies to exports of goods (except for oil and gas) and international transport services. Generally, contractors operating under the umbrella of the petroleum law may be exempt from this tax.
The tax base is sales turnover including excise tax. If a sale is made by state-fixed prices, then the tax base is the respective sales turnover including VAT and excise tax. The amount of input VAT incurred may be offset against the amount of output VAT. The amount of input VAT related to capital expenditures should be capitalised.
The import of goods into Turkmenistan is generally subject to 2% customs duty. The taxable base is determined as the customs value of imported goods. There is a list of certain items that are subject to specific customs duty (i.e. around 50 items), and the rates of specific customs duties may vary from 5% (e.g. products from cement) to 100% (e.g. carbonic acid) depending on the type of imported goods. In most cases, the customs duty is set on an ad valorem basis. There is also a customs clearance fee of 0.2% from the customs value of imported goods.
Excise tax is paid on goods or products that are considered in the list of excised goods or products. Normally, excised goods consist of alcoholic beverages, tobacco products, and automobiles. Excise rates vary based on the type of goods as well as by domestic production or import.
Property tax in Turkmenistan generally applies at the rate of 1% on the average annual net book value of fixed assets and average annual value of tangible assets used for business purposes and located in Turkmenistan. Generally, contractors and subcontractors operating under the umbrella of the petroleum law may be exempt from this tax.
There are no transfer taxes in Turkmenistan.
Although state duties of various amounts set forth by the government may apply to certain actions (e.g. branch registration), there is no unified stamp tax/duty mechanism as normally practiced in other countries.
Employers are obligated to withhold 10% personal income tax (PIT) as well as 5 manats (TMT) special purpose duty for improvement of urban and rural territories from employees’ salaries and compensations and pay it to the State Budget on monthly basis.
Pension insurance payments
Pension insurance is payable by employers at 20% of the total remuneration provided to local employees. Additional 3.5% obligatory professional pension insurance is levied on employers with respect to employees who work under hazardous conditions. Employees may participate in a voluntary pension insurance, the minimum rate for which is established at 2% of total remuneration. Income paid to expatriate employees should not be subject to the pension insurance payments.
Subsurface-use taxpayers are legal entities and individual entrepreneurs extracting natural resources and using land or subsoil waters for the extraction of chemical products. This tax does not normally apply to contractors and subcontractors operating under the umbrella of the petroleum law.
Taxable operations include the sale of natural resources extracted by taxpayers and utilisation of natural resources for consumption. Tax rates vary depending on the goods being extracted. Natural or associated gas extraction is taxed at 22%, and crude oil extraction is taxed at 10%. Tax rates for other mineral resources vary depending on profitability (internal rate of return) from 0% to 50%.
The Tax Code does not provide an environmental or green tax in Turkmenistan. However, there are environmental pollution charges in Turkmenistan that are imposed based on a separate regulation and apply to legal entities that discharges contaminants into the environment. The rates vary depending on the type and toxicity of each contaminant discharged.
Charges on environmental pollution are deductible for CIT purposes.
An advertising levy is imposed on the amount of expenses on commercial advertising and is to be paid quarterly at the rate of 3% to 5%, depending on the location of the payer within Turkmenistan. Generally, contractors operating under the umbrella of the petroleum law may be exempt from this levy.
Levy on sales of automobiles
Legal entities selling automobiles in the territory of Turkmenistan shall be recognised as payers of the levy on sales of automobiles.
The levy on sales of automobiles is charged at the rate of ten to forty times the basic amount for the calculation of taxes and fees established in Turkmenistan (approximately 145 to 570 United States dollars [USD]), depending on the type of vehicle sold (i.e. passenger car, lorry, or bus), its engine displacement, load capacity, number of seats. Generally, contractors and subcontractors operating under the umbrella of the petroleum law may be exempt from this tax.
Levy from vehicle owners
Legal entities who are owners of vehicles in the territory of Turkmenistan shall be recognised as payers of the levy from vehicle owners.
The levy from vehicle owners is charged at the rate of two to thirty times the basic amount for the calculation of taxes and fees established in Turkmenistan (approximately USD 30 to USD 430), depending on the type of vehicle (i.e. passenger car, lorry, or bus), its engine displacement, load capacity, number of seats. Generally, contractors and subcontractors operating under the umbrella of the petroleum law may be exempt from this tax.
Levy from car park owners
The levy from car park owners must be paid by legal entities that provide land plots for car parking for a fee.
The levy from car park owners is charged in the amount of USD 0.3 to USD 0.4 per square metre of parking space, depending on the region of Turkmenistan.