REGULATIONS ON
TURKMENISTAN PRESIDENT DECREES "MEASURES TO IMPROVE TURKMENISTAN TAX SYSTEM" No 4828 dated September, 8, 2000 and
"SUPPLEMENTARY VALUE-ADDED TAX REMISSIONS" No 5207 dated April, 10, 2001 TO BE APPLIED REGARDING
VALUE-ADDED TAX EVALUATION AND ASSIGNMENT

The present Regulations have been worked out in accordance with Turkmenistan President Decrees "Measures to improve Turkmenistan Tax system" No 4828 dated September, 8, 2000 and "Supplementary tax remissions to value-added tax" No 5207 dated April, 10, 2001 on value-added tax to be estimated and assigned by the payment source for goods imported to Turkmenistan, as well as for foreign legal entities, performing operations and rendering services in Turkmenistan.

1. The value-added tax is to be applied to goods, imported by Turkmenistan legal entities, foreign legal entities and individual subdivisions thereof (representative offices and branches) to the territory of Turkmenistan. The value-added tax for goods being imported to the territory of Turkmenistan is to be imposed while customs formalities are being effected. These Regulations also cover enterprises, which are taxed upon the simplified system. The simplified taxation system subjects are specified in Turkmenistan Law "Income tax" Article 6 ¹.

2. The value-added tax for goods imported is to be imposed by the customs authorities before or at the moment the customs formalities are being effected.

3. The value-added tax is to be imposed in the national currency of Turkmenistan and assigned to Turkmenistan Central Budget.

4. The amount of value-added tax, paid while customs formalities of goods imported (raw stuff or materials) are being effected, is to be taken into consideration, when value-added tax is calculated with regard to items being produced from raw stuff and materials stated in the established procedure.
The value-added tax for the wholesale and retail enterprises, which are engaged in supplying and merchandizing business, is to be also estimated for goods imported thereby while calculating the value-added tax following sale of goods imported related to value-added tax on goods being sold. If the goods specified are free of value-added tax being sold at the territory of Turkmenistan, thus, the value-added tax related to goods, which have been sold, are to be referred to the trading costs.

5. The legislative regulations, envisaging tax remissions to individual tax payers, which have been adopted before, are valid for the period such tax remissions are in force.

1. Turkmenistan legal entities, foreign legal entities and individual divisions thereof (representative offices and branches), importing cargoes, are considered to be payers of value-added tax related to goods being imported to Turkmenistan.

2. The legal entities, acting as contractors and subcontractors in accordance with Turkmenistan Law "On hydrocarbon resources" are not to be treated as value-added tax payers related to goods, being imported to Turkmenistan customs territory for petroleum operations to be held. If legal entities, acting as contractors and subcontractors in accordance with Turkmenistan Law "On hydrocarbon resources", effect import of cargoes to the customs territory of Turkmenistan, which are not intended for petroleum operations, a value-added tax is to be imposed by procedure, established by the present Regulations.

3. While cargoes are being imported by legal entities, a value-added tax is to be paid by declarant or any other entity, being in charge of assigning value-added tax jointly with other customs fees, namely, before or at the moment of customs formalities are being effected.

1. Goods being imported to Turkmenistan customs territory are to be considered as object to impose a value-added tax on.

A value-added tax is not to be imposed on below specified goods being imported to the territory of Turkmenistan while customs clearance is being effected:

• goods stated in the specific List (Annex No 1 to the present Regulations);

• goods being imported in accordance with intergovernmental agreements, governmental decrees, as well as within frameworks of the international humanitarian, fiscal and technical assistance projects and programs;

• goods being imported upon clearing operations against cargo supplies for the natural gas and electric power.

  2. Customs value of those goods is to serve as a tax basis to impose a value-added tax for goods, being imported to the customs territory of Turkmenistan, taking excise into consideration for goods being treated as excise ones.
  A tax basis to calculate value-added tax for goods being imported is to be estimated per each type of goods being imported and represents a total amount to be assigned for all goods being imported.
  The goods value estimated on the basis of a price, which has been really paid or to be paid or to be indemnified against trade-in supplies in accordance with the foreign transaction conditions, taking delivery costs into consideration (forwarding, handling, insurance), is considered to be customs value of goods, being imported in accordance with contracts, which have been registered by Turkmenistan Raw Materials and Commodity Exchange.
  If the contracts to import cargoes are not available, the customs value is to be stated, taking the market (wholesale) prices for identical (similar) good being imported into consideration.
  The goods customs value in a foreign currency is to be estimated in manats per the rate of the Central Bank of Turkmenistan on the date when goods imported to the customs territory of Turkmenistan are customs cleared.

Article 4. Procedure to calculate and terms to pay value-added tax 

1. The value-added tax to be assigned to budget for goods being imported is to be stated (calculated and defined) by the customs body, which is effecting customs clearance, taking into consideration a tax basis, which is to be stated in accordance with article 3.2. of the present Regulations and 20 percentage value-added tax stated.

2. The value-added tax is to enter deposit account of customs body, which supervises entry thereof in accordance with bank statements. If the funds do not enter a deposit account within three working days, since the payment order has been submitted, the customs is to submit data for these amounts to be imposed by the State Tax Inspectorate for their further entry to the deposit account of customs, which has effected customs clearance.

3. The value-added tax, which entered the customs deposit accounts, is to be assigned by the banks to Turkmenistan Centralized Budget the latest next date.

4. Upon the payer request the customs body may allow value-added tax to be paid later within one month being guaranteed by the authorized bank and penalty fee to be imposed in the established procedure.

5. If the payer or authorized bank failed to fulfill guarantee obligations thereof in accordance with a value-added tax payment delay allowed, the customs body is to notify the Central Bank of Turkmenistan of VAT as well as a penalty fee per each day of delay, including date of payment, to be imposed in any way from the authorized bank, which has issued a guarantee obligation.

Amounts, being imposed by the Central Bank of Turkmenistan in any way, are to enter a deposit account of the customs body, which was effecting customs formalities, for further assignment to Turkmenistan Centralized Budget.

1. Turkmenistan Customs Authorities are to resolute on value-added tax, which has been imposed, being repaid in cases as follows:

• a value-added tax has been wrongly calculated, including that one caused by modification of a foreign trade (contractual) goods value;
• the Customs Authorities have imposed a value-added tax in accordance with customs regime.

The tax basis modification is to be exercised only if it is proved by the relevant documentation.
The value-added tax payer may claim repayment of surpluses, being assigned or imposed, from the Customs Authorities within 1 year since assignments have been effected or imposed.

2. For a value-added tax to be repaid its is required to submit documents as follows to the Customs Authorities:

• a payer application for value-added tax, which has been assigned or imposed, to be repaid;
• a cargo customs declaration made by the Customs Authorities, which serves as a basis for a value added tax to be estimated;
• a payment order of a value-added tax being paid, confirmed by the bank statement, proving acceptance and payment effected.

It is required to submit supplementary documents, confirming the amount paid as being overpaid and wrongly estimated in order for overpaid or wrongly estimated value-added tax amounts to be reimbursed.

3. The Customs Authorities are to submit to Turkmenistan Administration of Economy & Finance at the place, where the tax has been paid, a statement on the value-added tax overpaid or overimposed to be reimbursed.

4. The Ministry of Economy and Finance is to notify the tax and customs authorities at the place, where the tax has been paid, of its decision to reimburse value-added tax being overpaid, overimposed or make set-off taking future tax payments to import goods into consideration.

5. The value-added tax overpaid or overimposed is to be reimburesed in the national currency of Turkmenistan by the rate, stated by the Central Bank of Turkmenistan to account and impose customs fees at the moment of a tax being paid.

Article 6. Peculiarities to estimate and settle value-added tax at various customs regimes

1. Regulations on customs regimes are to state correspondence of a proper customs regime identified for goods.

2. The value-added tax is not to be paid while the goods are crossing Turkmenistan customs boundary in accordance with customs regimes as follows: transit, customs warehouse, free trade shop, free customs zone, free warehouse or destruction.

3. The value-added tax is to be imposed in accordance with the established procedure, if there is import of goods, which are to be processed at the customs area or upon customs control.
When ready-made products made of imported give-and take stuff are exported, a value-added tax, which has been paid for give-and-take stuff and refers to a ready-made production lot being exported, is to be paid back in accordance with the established procedure.

4. When goods are imported at the temporary customs regime, the tax is to be imposed in accordance with the established procedure, as well as for goods released at the free circulation regime. When temporarily imported goods are exported from Turkmenistan, a tax being paid or imposed is to be reimbursed in accordance with the established procedure, provided that a temporary staying thereof at the territory of Turkmenistan does not exceed six months after being imported.

5. When the foreign goods, which have been declared to be re-exported, are imported to Turkmenistan customs territory, a value-added tax is to be imposed in accordance with customs regime for goods to be released for free circulation.
When goods, which have been declared to the Customs Authorities to be re-exported, are being exported outside Turkmenistan, a value-added tax paid or imposed is to be paid back in accordance with an export real volume, provided that staying thereof at the territory of Turkmenistan does not exceed six months after being imported.

6. If the payer does not follow terms and conditions of the customs regime, he is to pay a value-added tax in accordance with the customs regime to release goods for a free circulation regime, as well as fine to be estimated from the period the goods are imported till the moment the tax is paid, inclusive.

1. The payer is responsible for a value-added tax to be correct and paid in time.

2. Entities are to undertake responsibility in accordance with Turkmenistan legislation for the present Regulations to be infringed.

3. Turkmenistan Head National Inspectorate is to make monitoring of a value-added tax to be full and assigned to the State budget in time.

1. The foreign legal entities, which perform operations and render services via representative offices thereof, located at the territory of Turkmenistan, are to assign value-added tax independently, free of tax being imposed by the payment source.
A value-added tax is not to be imposed from the foreign legal entities, who are considered to be contractors and subcontractors in accordance with Turkmenistan Law "On hydrocarbon resources" related to petroleum works done and services rendered. If the legal entities being trated as contractors and subcontractors in accordance with Turkmenistan Law "On hydrocarbon resources" perform operations or render services, which are not related to petroleum operations, a value-added tax is to be imposed in the procedure, specified by the present Regulations.

2. A place, where a legal entity has been established or branch or representative office thereof has been located and through which operations are done and services rendered, is considered to be a place to perform operations and render services, besides those ones specified in paragraphs 8.3 and 8.4 of the present Regulations.

3. The place to perform operations and render services is considered to be as follows:

a) a place to perform operations and services related to real assets, where these assets are located;
b) a place to perform operations and services related to personal assets, where these works are really done and services rendered;
c) a real place to render services in the sphere of culture, arts, education, physical culture or sport or in any other similar scope of activity;
d) a place, where real freights are exercised, taking distances covered into consideration (except international freights by air or water carriers) for freight services rendered;
e) a place of dispatch for those carriers, where catering services ar the air and water carriers are rendered while international freights are performed.

4. If the service buyer is located at one state and the seller - in another one, then a place, where a legal entity, acting as a service buyer, has been established or where the branch or representative office thereof is located, is considered to be a place to render services as follows:

a) to delegate or provide any rights, including disposal of intellectual property objects and other non-property rights, to transfer into a property or to assign patents, licencies, trade marks, copyrights or any similar rights;
b) to delegate or give a rights, including those ones to dispose intellectual property items and other personal non-proprietary rights, to delegate into a property or to assign patents, licences, trade marks, copy rights or other similar ones;
c) to make advertisement;
d) to provide consultative, juridical, book-keeping, engineering services, as well as to manage, to proceed data and provide information and to hold geological surveys. The engineering services cover particular items as follows: engineering-consultative services, pre-project and project services (working out of feasibility studies, project design and similar services);
e) to provide balance sheet, banking and insurance ones, re-insurance inclusive, except rendering services on the safe rentals;
f) to provide a personnel;
g) services, rendered by an agent, who is acting on behalf and in the name of other entity, if they secure that one services stated above;
h) to lease movable tangible property, except all vehicle types of legal entities, whose basic business is to render transport services;
i) to refrain (fully or partially) from exercising above stated services upon obligations undertaken.

5. In order to estimate a value-added-tax, a place as follows is considered to be a place to sell goods:

• goods location at the moment they are taken over to the buyer, provided they are not being shipped or transported;
• goods location at the moment they started to be shipped or transported, provided they are being shipped or transported by the supplier, buyer or any other entity;
• a place of goods being installed, mounted or assemblied, provided they are not able to be delivered to the buyer by any other way, except being dismantled ot diassemblied, caused by the technical, technological or any other reasons, while an installation, mounting or assembly are being made by these goods supplier or on his behalf.

6. Turkmenistan legal entities, entrepreneurs free of forming a legal entity, who are registered in accordance with Turkmenistan legislation, branches and representative offices, as well as permanent representatives of the foreign legal entities, located at the territory of Turkmenistan, are to be treated as sources, who are to be taxed, as works and services are directly rendered thereto.

7. The value-added tax is to be withdrawn from the foreign legal entities at 16,67% rate from the payment total amount each time, when payment is effected.
The value-added tax is to be deducted from any amounts (advanced, scheduled, upon real performance of works (services), etc.), which are paid to a foreign legal entity upon agreement or contract conditions. If there is any barter (goods exchange) operations, the tax is to be paid in a similar way.

8. If a foreign legal entity has paid a value-added tax at the territory of Turkmenistan, following fulfilment of any agreement (contract) to perform works or render services, regarding purchasing stuff, materials, services or works, which value is to be treated as production and trading costs, then set-off or repayment thereof is to be effected in a way, specified by Turkmenistan Ministry of Economy and Finance.

9. The value-added tax estimation is to be submitted by entities, who are withholding tax from a payment source in accordance with annex No 2 to the present Regulations by the 20-th of a month following a reported one. The value-adde tax is to be assigned the latest 5 days after the tax has been withheld.

TO REGULATIONS ON TURKMENISTAN PRESIDENT DECREES "MEASURES TO IMPROVE TURKMENISTAN TAX SYSTEM" No 4828 dated September, 8, 2000
and "SUPPLEMENTARY VALUE-ADDED TAX REMISSIONS" No 5207 dated April, 10, 2001 TO BE APPLIED REGARDING
VALUE-ADDED TAX EVALUATION AND ASSIGNMENT

List
of goods being imported to Turkmenistan and exempt from a value-added tax while customs clearance 

1. Drugs, medical items, prosthetic-orthopedic items, specific vehicles for invalids.
2. Currency, money, banknotes, being legal payment facilities (provided they are not imported for numismatics), securities.
3. A property legitimated.
4. A property being imported, caused by requisition or confiscation.
5. Goods, being imported by the foreign diplomatic and representative offices of a similar status, located at the territory of Turkmenistan, for being officially or personally disposed by the diplomatic or administative-technical staff of those representtaive offices, family members inclusive.*
6. Goods, which are paid for by Turkmenistan Currency Reserve.
7. Goods, which are to be owned by the state, provided a tax payer refuses therefrom.
8. Machines, mechanisms, equipment, vehicles, spare parts thereto and production technical tools.**
9. Machines, mechanisms, equipment, vehicles, spare parts thereto and production technical tools.**
10. Chemical fertilizers, chemical items, lubricants, being implemented for the oil/gas and agricultural complex needs.**
11. Construction and finishing materials required to proceed construction operations (repair, reconstruction, modernization) of objects, being implemented in accordance with 12. Turkmenistan President resolutions. Turkmenistan Ministry of Construction and Building Materials Industry is to approve expediency of supplies thereof, taking technical, quality, esthetic peculiarities and value into consideration. **

___________________

* Remission specified is applied only if a similar remission is stated for the diplomatic and similar Turkmenistan representative offices operating abroad or being personally disposed by the diplomatic or administrative-technical staff of those representative offices, family members inclusive.

** The remissions stated are in force since April, 1, 2001.

TO REGULATIONS ON TURKMENISTAN PRESIDENT DECREES "MEASURES TO IMPROVE TURKMENISTAN TAX SYSTEM" No 4828 dated September, 8, 2000
and "SUPPLEMENTARY VALUE-ADDED TAX REMISSIONS" No 5207 dated April, 10, 2001 TO BE APPLIED REGARDING
VALUE-ADDED TAX EVALUATION AND ASSIGNMENT