TURKMENISTAN ESTABLISHES ZEF: A NEW MODEL OF INTERNATIONAL ECONOMIC RELATIONS

With the most ancestral legacy of trade in Asia, we find Turkmenistan, a peculiar country located in the heart of Central Asia, right in the middle of the Silk Road, an obligatory route for traders moving from Europe to China.

We already knew the different alternatives offered by the government of Turkmenistan to form an association, now we will know what to keep in mind in terms of control.

The regulatory framework that organizes and consolidates the legal forms of partnership in Turkmenistan is the Law on Property of Turkmenistan. The Law on Ownership of Legal Entities is subdivided into ownership of companies and ownership of business associations.

Any association, company, partnership or branches of foreign legal entities are subject to 20% income tax regardless of legal status or ownership structure.

In case companies are involved in oil and gas operations they are subject to a considerably lower tax. Turkmenistan has signed several double taxation treaties with several European countries, USA, China, India and Japan, consequently, investors can completely avoid taxation on repatriation of their profits.

Non-residents are subject to income tax only with respect to their income from Turkmenistan.

Legal entities are treated as resident for income tax (CIT) purposes if they are established in accordance with the law of Turkmenistan or if their place of effective management is located in Turkmenistan.

VAT is generally payable at a rate of 15%. Contractors operating under the umbrella of the petroleum law may be exempt from this tax.

For establishments of new companies in the field of customs, licensing and other regulatory benefits, contained in the Law of Turkmenistan on Free Economic Zones ZEF, will have the benefits of exemption from payment of taxes and trade licenses and tariffs.

This type of free economic zone aims to create a secure, transparent, competitive and reliable environment to attract foreign companies and investors to this particular country.

For more information, Foster Swiss can guide you on corporate taxes, business licenses and tariff rates. And of course we take over the whole process for you.

For more information on this topic or any other request related to our services, you can contact us directly at info@fosterswiss.com