On 9 October 2017, Turkmenistan introduced a new Law on Free Economic Zones (FEZs). The Law provides simplified administrative procedures for establishing new ventures and provides significant tax, customs, licensing, and other regulatory benefits. Members of FEZs are provided with the following benefits:
- Exemption from land lease fees for the first three years of operation of land and 50% fee exemptions for the next seven years.
- Exemption from the business licence for the duration of FEZ membership.
- Value-added tax (VAT) exemption for the duration of FEZ membership.
- Property tax exemption for the first ten years of operation at an FEZ.
- Corporate income tax (CIT) exemption for the first ten years of operation at an FEZ.
- Customs duty exemptions for both imported and exported goods.
Members of an FEZ are also allowed to attract foreign workforce without maintaining a foreign-to-national employee ratio.
Starting from 4 November 2017, the newly merged Ministry of Finance and Economy of Turkmenistan became the main tax regulating authority in Turkmenistan. The former Main State Tax Services of Turkmenistan was restructured and became the Tax Department at the Ministry of Finance and Economy of Turkmenistan. Consequently, regional and district tax services were also restructured from tax services to become tax departments.
Legal entities (qualified as small and medium enterprises [SMEs]) operating under the simplified tax regime are required to pay 2% CIT from revenue in the form of advance payments from the date when they receive revenues to their bank accounts. Banking institutions act as a tax agents and perform the withholding of 2% CIT from the taxpayer’s funds and make the respective tax payments to the State Budget of Turkmenistan.