Letter of the Main state tax authorities of Turkmenistan

of August 13, 2005 No. 2049/1

To the State Tax Services on welayats and Ashgabat

The main State Tax Administration of Turkmenistan reports that in connection with the questions arising during practical work on application of regulatory legal acts of the Central bank of Turkmenistan the letter No. 0154/254-6068 of 3.08.2005 made explanations concerning the transactions performed through settlement sub-accounts.

The essence of existence of sub-account consists in its auxiliary nature, it opens as amendment to the key settlement account and cannot independently exist from it. The sub-account is intended for the business entity and his divisions which do not have separate balance, and located in the places which are not entering the area of activities of organization of bank where the key settlement account is opened.

The sub-account is designed to accelerate calculations and can be used for limited circle of transactions which are determined by business entity according to its constituent documents.

Industry features of use of settlement sub-accounts and terms of money transfer on the settlement account are established only by business entities as provision of powers to the separate divisions, and has individual character.

Opening of settlement sub-account cannot be used for evasion from execution of the tax liabilities and in case of need if the mode of individual sub-account provides implementation of tax payments, bodies of the State Tax Administration are competent, to expose additional requirements on execution of the tax liability of the owner of the key account.

Considering the above, the performed transactions with use of settlement sub-account on the economic essence are equated to settlement accounts and on legal position cannot separately be considered from the key settlement account.

Except settlement sub-accounts business entities have transit sub-accounts and on these sub-accounts making of other account transactions is not provided.

To the State Tax Services on welayats and Ashgabat to take the stated explanation of the Central bank of Turkmenistan into consideration and to bring to subordinate bodies of Tax Service.

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