TURKMENISTAN LAW ON VALUE-ADDED TAX
Article 1. General provisions
A value-added
tax is a procedure for a part of an added value, being created at all stages
to produce goods (works, services) to be assigned to budget.
A value-added tax is to be assigned in the currency of Turkmenistan.
1. Entities as follows are considered to be value-added tax payers:
- legal entities, including
enterprises with foreign investments, which exercise production and other
commercial business;
- branches, affiliates, representative offices of legal entities and other
enterprise individual divisions, located at the territory of Turkmenistan,
being individually engaged in selling goods (works, services);
- international associations and foreign legal entities, exercising production
and other commercial business at the territory of Turkmenistan;
- entities, being engaged in entrepreneur business free of forming a legal
entity, provided that proceeds thereof, resulted from selling goods (works,
services) is over 10 minimum salaries per year.
2. Enterprises and organizations, specified in paragraph 1, are hereinafter referred to as the enterprise.
Article 3. Taxation objects
The taxation objects are
turnovers for goods (works, services), export-import operations inclusive, to
be sold at the territory of Turkmenistan.
Items as follows are to be taxed:
- turnovers to sell
all goods( works, services) related to own production and purchased aside;
- turnovers to sell goods( works, services) inside enterprise for own consumption,
which costs are not to be treated as production and trading costs , as well
as for the staff;
- turnovers to sell goods( works, services) free of paying cost by being
exchanged for other goods (works, services);
- turnovers to take over goods (works, services) free of charge to other
legal or physical entities;
- turnovers to sell pledge items, including transfer thereof to a mortgagee,
provided that a pledge obligation has not been fulfilled.
Article 4. Estimation of turnover to be taxed
1. A turnover to be taxed
is to be estimated on the basis of goods (works, services) being sold, taking
prices and tariffs applied into consideration, not including value-added tax
thereto.
A turnover to be taxed for retailers, suppliers and other organizations, while
imported goods (works, services) are on sale, is to be estimated, taking their
sale price into consideration.
If enterprises obtain financial assistance, funds for charity purposes, various
types of borrowing costs (except banking loan), a turnover taxed, related to
those amounts, is to be increased for taxation purposes, despite periods they
are obtained and to be repaid.
While estimating turnover to be taxed per goods (works, services) being excised,
excise amounts are to be included therein.
While fixed assets, goods (works, services) are taken over free of charge or
being partially paid, a turnover taxed is to be estimated in the way, specified
by Turkmenistan Cabinet of Ministers.
While goods (works, services) are disposed for the enterprise own consumption,
costs thereof are not to be treated as production and trading costs, and the
cost of those or similar goods (works, services), which has been estimated per
prices and tariffs applied, is to serve as a basis estimating turnover to be
taxed. The real cost price is to be taken into consideration, if no prices (tariffs)
are available.
Provided the goods are made on the basis of the give-and-take stuff and materials,
cost to process them is considered to be a turnover taxed.
The back tare cost is not to be included in a turnover taxed, except cases,
when tare is sold by the manufacturers.
2. A cost of works done and paid by customers is considered as a turnover
to be taxed for building, building-assembly and repair organizations.
3. While enterprises render intermediary services, a turnover to be taxed is
a profit earned as extra charges, remuneration and fees.
Article 5. List of goods (works, services) tax exempted
Items as follows are value-added tax exempted:
- services to transport,
to dispatch, to offload, to transship foreign cargoes via Turkmenistan territory
(transit goods);
- goods and services intended for being officially disposed by the diplomatic
and representative offices similar thereto, as well as by the diplomatic
and administrative-technical staff personal consumption of those representative
offices, including family members, living therewith;
- services of the municipal passenger traffic (except taxi);
- housing and operational services, rendered to population (including rent);
- insurance and reinsurance operations, including services related thereto,
being exercised by insurance intermediaries and agents;
- issue and hand over loans;
- operations related to monetary investments, current/settlement and other
accounts, payments, transfers, bills and other securities, except brokerage
and other intermediary services;
- operations related to the circulation of currency, funds and bank notes,
which are considered as legal payment facilities, except disposed for numismatic
purposes;
- operations related to the circulation of securities (shares, bonds, certificates,
bills, etc.), except operations to produce and store securities, which are
to be taxed;
- actions, being exercised by the specially authorized bodies, which are
to be officially taxed, as well as services, being rendered by the Bar members;
- payment for entrails;
- services to keep children in infant schools, to take care of sick and
old ones;
- funeral and cemetery services;
- payment to teach children and teenagers in hobby groups, sections, studios,
for the sport facilities, cultural and education institutions being disposed;
- for the rites and ceremonies to be held by the religious organizations,
as well as services of the religious associations;
- goods, being sold by the training-productive enterprises of the blind
and deaf;
- turnovers to merchandize values and investments, being confiscated, mismanaged
and bought up, as well as values, inherited by the state, except proceeds
of trading organizations;
- patent-licence operations (except intermediary ones), related to the industrial
property objects, as well as copyrights owned;
- research and development operations, being performed by the budget account;
- turnovers to sell Turkmenistan values to the National depository (NalDep);
- payable medical services for Turkmenistan citizens, medicines being sold
within the territory of Turkmenistan, medical items, medical techniques,
prosthetic and orthopedic items and special vehicles for invalids;
- own production of students', schools' and of other educational institutes'
dinners, and dinners of the hospital/infant and other social-cultural field
institutions and organizations, being financed by the budget account;
- services rendered by communication enterprises to deliver pensions and
allowances to the population;
- goods (works, services), being manufactured and sold by the therapeutic-production
(labor) workshops at the psychiatry and psychoneurologic institutions and
invalid public organizations;
- goods (works, services), being produced and sold by enterprises, institutions
and organizations, where invalids comprise not less than 50 percentage of
the total staff.
The enterprise, institution and organization staff employees are to be included in the average staff list, while identifying right for the remission stated;
- agricultural enterprise own production, being sold against in kind to be paid for labor, as well as to make catering of employees, being attracted to perform agricultural works.
Article 6. Tax rates
20 percentage is to be
stated as a value-added tax rate.
While selling goods (works, services) upon prices regulated (tariffs), including
a value-added tax therein, 16,67 percentage rate is to be applied.
Article 7. Procedure to estimate tax
While
production items (works, services) are being sold at the territory of Turkmenistan
and abroad, a tax, which has been paid by suppliers for inventory holdings,
located at the territory of Turkmenistan, is to be excluded from a total amount
to be taxed and assigned to budget. The value-added tax to be assigned to
budget is to be stated as a difference between tax amounts, got from the buyers
for goods (works, services) merchandized, and tax amounts per tangible resources,
fuel, works, services, which value is really to be referred (written off)
as production costs in the period under review.
Tax amounts to purchase stuff, materials, fuel, accessories and other items,
disposed for basic operational requirements, are not to be referred to the
production and trading costs.
2. Taxes as follows are not to be excluded from the total tax amount to be assigned to budget, being paid;
- To suppliers, located
outside of Turkmenistan purchasing stuff, materials, fuel, accessories and
other items. Those amounts are to be considered in the stuff, materials,
works and services value and referred to as production and trading costs;
- for goods (works, services), being used for non-production needs, as well
as for fixed assets and intangible assets (cost of proprietary and other
rights, "know-how", licences, etc.). Tax for goods (works, services), being
used for non-production needs is to be assigned by the account of the relevant
financial sources. The fixed and intangible assets are to be accounted per
purchase value, including amount of tax paid, with its further writing-off
to the cost price via depreciation (amortization) amounts in the established
procedure;
- for goods (works, services), being used to perform operations, which are
exempted from tax in accordance with the present Law Article 5. The tax
amounts, which have been paid by suppliers for such goods (works, services)
are to be refereed to the production and trading costs.
Article 8. Procedure and time periods to pay tax
The procedure and time
periods to assign a value-added tax are to be stated by the Head National
Tax Inspectorate upon agreement with Turkmenistan Ministry of Economy and
Finance.
A value-added tax value, being assigned to budget by entities, being engaged
in entrepreneur business free of forming a legal entity in accordance with
the present Law Article 2, is to be excluded from physical entities profit,
being levied on withholding tax.
A value-added tax is to be assigned by enterprises to the relevant budgets
upon standards, being yearly stated while budget for the forthcoming year
is approved, and by entities, being engaged in the entrepreneur business,
- to the local budgets.
Article 9. Payers responsibility and tax inspectorate supervision
Regulations on Turkmenistan National Tax Inspectorate are to regulate payers' responsibilities for tax legislation being infringed, a procedure for tax inspectorate to exercise supervision and operations for tax officials to be appealed in the court.
Article 10. Final statements
A value-added tax rate,
as well as the list of tax remissions, envisaged by the present Law, may
be verified while budget for the forthcoming fiscal year is approved.
Instructions for the present Law to be applied is to be worked out and published
by Turkmenistan Head National Inspectorate upon agreement with Turkmenistan
Ministry of Economy and Finance.
Article 11. The present Law effective date
The present Law is effective since November, 1,1993.
PRESIDENT OF TURKMENISTAN
SAPARMURAT TURKMENBASHY
Ashgabat , 8, October, 1993