Approved by the Main state tax authorities of Turkmenistan and the Ministry of Economics and finance of Turkmenistan on May 19, 2000 No. 24

The instruction about procedure for calculation and payment in the Government budget of Turkmenistan of the income tax

List of amending documents

This Instruction is developed based on the Law of Turkmenistan of October 8, 1993. "About the income tax" and other legal acts regulating the tax matters.

According to the procedure, provided by this Instruction, the income tax (income) is paid by the companies, the organizations and other legal entities getting profit (income) from all types of business (commercial) activity.

I. Taxpayers

1. Income tax payers are recognized:

the companies, organizations and the organizations, being legal entities of Turkmenistan, performing business (commercial) activity;

the foreign legal entities performing business (commercial) activity in the territory of Turkmenistan through permanent mission or gaining income from sources in Turkmenistan.

2. The legal entities specified in Item 1, further imenuyutsyapredpriyatiya.

3. For the tax purposes the permanent mission of the foreign legal entity is understood as the permanent place in the territory of Turkmenistan through which it performs business (commercial) activity fully or partially, including activities through the authorized person (physical or legal).

In particular, treat permanent mission:

branch, department, place of management, bureau, office, agency, factory, workshop;

the mine, oil and gas wells or others the stationary, territorially moving or floating places for development and production of natural minerals. Implementation on the specified objects of supervising activities also leads to formation of permanent mission;

the building site, mounting or assembly objects existing in total more than six months. Implementation on these objects of supervising activities also leads to formation of permanent mission. The period of implementation of construction or installation works, including supervising activities, is determined from the moment of actual start of implementation of works before signature date of the act of commissioning of the object to the customer or to final stop of works. The specified period does not join time of complete suspension of construction or installation works on fault or at the initiative of the customer. On such suspension of works (and their subsequent renewal) the companies - the contractor and the customer in time no later than 10 days shall notify in writing tax authorities in the place of tax accounting of the company - the contractor.

4. The place used in the territory of Turkmenistan is not considered permanent mission of the foreign legal entity (irrespective of who uses it) for:

a) storage and goods demonstration or the products belonging to the foreign legal entity;

b) stock keepings of the goods or products belonging to the foreign legal entity for the purposes of their conversion by other person and the subsequent export from Turkmenistan;

c) purchases of goods or products;

d) information collection, implementation of any other activities of preparatory or auxiliary nature for the benefit of the foreign legal entity;

e) preparation for the conclusion or simple contract signature on behalf of the foreign legal entity on the credits, delivery of goods or products, to performance of works or provision of services;

e) implementation in complex of the types of activity specified in subitems "a" - "д".

5. Interdependence of the legal entity - the resident of Turkmenistan with the foreign legal entity performing productive and other business activity in the territory of Turkmenistan through permanent mission or otherwise does not lead to formation of permanent mission of any of these legal entities.

6. The income tax (income) from all types of business (commercial) activity is paid in currency of Turkmenistan.

7. Activities of the foreign legal entity who does not have permanent mission in Turkmenistan, but gaining income from its sources are subject to taxation on the income at source of their payment according to the procedure, stated in the Section IX of this Instruction.

II. Taxation object and procedure for calculation of leviable profit

8. The taxation object is the gross (balance sheet) profit of the company reduced (increased) by the amounts provided by this Section.

9. The gross (balance sheet) profit, represents the amount of profit (loss) from sales of products (works, services), fixed assets, other property of the companies and the income from the non-operating transactions reduced by expense amount on these transactions.

10. The profit (loss) from sales of products (works, services) is determined as difference between proceeds from sales of products (works, services), without the value added tax and excises, both the production costs and realization included in product cost (works, services).

Structure of the costs included in product cost (works, services) are determined by Regulations on structure of the costs included in product cost (works, services), the approved resolution of the President of Turkmenistan of 01.03.94 N 1676.

11. The taxable profit increases by any cash amounts if their obtaining is connected with sales of goods, performance of works, rendering services.

In case of non-paid realization by the company of the made or goods purchased, performance of works, rendering services, implementation in their way of exchange and also in case for implementable goods, the performed works, the rendered services are applied the prices more than 30 percent lower, than when making similar transactions, revenue accepted for calculation of the income tax is determined on the basis of market prices of these (rates) or similar goods, works, services.

The proceeds from sales of remaining balance of goods of the liquidated company are determined on the basis of the actual sales prices of these goods. In case of nonequivalent exchange revenue joins any amounts of surcharges to the cost of the exchanged goods, works, services.

In case of realization by the company of fixed assets or other property at the prices is lower residual (for fixed assets and intangible assets) or initial (for other property) costs, revenue from such transactions is determined on the basis of market prices of this property, but is not lower than their residual (initial) cost.

Market price for tax purposes is understood as the price which developed in the market of the goods circulation, works, services in case of interaction of the demand and supply at the time of making of taxable transaction. Market price of goods, the performed work, the rendered service is determined on the basis of official sources of information on market prices of goods, works, services and stock exchange quotations, information base of state governing bodies, the local executive authority and local self-government.

12. In similar procedure the profit got from realization or other type of alienation of any other property of the company is subject to the taxation (or in general all company).

13. The income (expenses) from non-operating transactions the income (expenses) from the transactions which are directly not connected with production (works, services) and its realization (and also goods), according to the operating procedure for financial accounting is included.

The sums granted on the budget in the form of sanctions from non-operating transactions are not included in the expenses, and belong on reduction of profit, being at the command the companies.

14. Revenue received in foreign currency from sales of products (works, services) is converted into currency of Turkmenistan on the official rate by the established Central bank of Turkmenistan on the date of receipt of currency earnings, and considered as a part of total sales.

15. The gross profit decreases by tax amount on property, the income (dividends, percent) received according to the shares, bonds and other securities belonging to the companies on the amount of income gained from equity in activities of other companies except income gained outside Turkmenistan.

16. The gross (balance sheet) profit of the companies for the purposes of calculation of tax decreases by the amount of the profit got from holding mass concert and spectacular actions on the open areas, stadiums in Sports palaces, other rooms if the number of the viewers more than 2000 people.

17. The taxation object for the exchanges is the profit got from leasing and sale of broker places on the transactions of purchase and sale of goods made at the exchange, currency and other property, and also other types of business (commercial) activity.

18. Taxable profit of the companies which are contractors and subcontractors according to the Law of Turkmenistan of December 30, 1996. "About hydrocarbonic resources" it is determined according to provisions of this Law.

When making by such persons of the business (commercial) activity which is not relating to oil works, the taxable profit is determined by such activities in generally established procedure.

19. The state-financed and other non-profit organizations having the income from business (commercial) activity pay tax on the amount of exceeding of income over expenses gained from these activities.

The budget institutions gaining income from business (commercial) activity (including the research establishments consisting on the budget), determine the amount of excess of the income over expenses similar to the procedure established for calculation of profit.

20. In case of non-presentation by the company of calculations for the income tax (tax declaration) or if according to accounting data it is not possible to estimate tax amount, the tax authority shall estimate and determine such sum.

At the same time the tax amount is determined, proceeding from the determined tax amount for the preceding tax (reporting) period using 1,5 coefficient.

If the tax amount for the preceding tax (reporting) period cannot be determined, then the tax amount is estimated proceeding from the size of the tax base determined based on the size of the received proceeds from sales of products (goods, works, services) or the made costs in the tax (reporting) period taking into account profitability in the amount of 25 percent (for the trade and snabzhencheskosbytovy organizations - 8 percent from goods turnover).

If tax assessment on the basis of the stated above indicators is impossible, then the tax amount is estimated proceeding from number working at the company taking into account economic indicators of activities of other companies performing similar type of business activity.

If any of the evaluation methods of tax stated above cannot be applied, then its assessment can be performed based on other reasonable indicators approved with the taxpayer.

21. If between the interdependent companies in their entrepreneurial (commercial) and financial relations conditions, other than those which would take place between the companies which are not connected by the interdependence relations are available or determined, then any profit which could be added to one of them, but was not added from - for these conditions, is subject to inclusion in its profit and, respectively, is assessed with tax.

22. In case of determination of profit of the foreign legal entity performing activities in the territory of Turkmenistan through permanent mission the following is considered:

only that part of profit of the foreign legal entity which is received in connection with activities in Turkmenistan is subject to the taxation. For the purposes of the taxation the profit of the foreign legal entity got on the foreign trade transactions performed not through permanent mission is not considered;

in cases when the foreign legal entity performs activities not only in Turkmenistan, but also beyond its limits, but at the same time does not keep the separate account of profit allowing to determine profit on the activities performed by it through permanent mission the amount of profit it can be determined on the basis of the calculation approved by the taxpayer with tax authority in the place of its tax accounting;

if it is not possible to determine directly the profit got by the foreign legal entity from activities in Turkmenistan, the tax authority has the right to calculate it on the basis of gross income or the made expenses, proceeding from profitability rate of 25 percent.

In case of determination of profit of the foreign legal entity performing activities in the territory of Turkmenistan through permanent mission the deduction of the expenses incurred for the purposes of such permanent mission irrespective of whether these expenses in Turkmenistan or beyond its limits are incurred is allowed.

23. The income tax can be estimated and be paid in centralized procedure on the conditions determined by the Cabinet of Ministers of Turkmenistan.

III. Tax rates

24. Rates of the income tax are established in the following sizes:

25 percent - for the companies, except for banks, State tovarno - the raw exchange of Turkmenistan, other exchanges and broker offices, small enterprises;

30 percent - for banks;

35 percent - for State tovarno - the raw exchange of Turkmenistan, other exchanges and broker offices, and also the companies in the part of profit received from implementation of intermediary activities.

IV. Privileges on tax

25. In case of calculation of tax the leviable profit determined according to the Section II of this Instruction decreases on:

a) cost amount, the companies performed by being at the command profit, on content which are on their balance of objects and healthcare institutions, educations, culture and sport, preschool institutions and camps of rest, retirement homes and disabled people, housing stock, and also costs for these purposes in case of equity of the companies (within the established regulations) in content of these objects and on holding nature protection actions within 30 percent to the amount of their total costs;

b) the sums granted on the ecological and improving funds listed to the companies, organizations and the organizations of education, healthcare and welfare, but no more than 5 percent of leviable profit. Taxpayers together with calculation for the income tax shall provide in the state tax authorities in the place of tax accounting of the data on transfer of such amounts in form according to the appendix N 1 to this Instruction.

All funds, the companies, the organizations and organizations which received such means upon termination of accounting year represent to tax authority in the place of the stay the report on the arrived amounts and their expenditure on the enclosed form according to the appendix N 2 to this Instruction.

In case of use by these funds and organizations of means not to destination (i.e. on the purposes which are not provided in their charters), the arrived amounts are withdrawn in the income of the Government budget of Turkmenistan;

c) the amounts directed by organizations of education it is direct for needs of providing, development and enhancement of educational process in this organization;

d) costs of the companies for construction and content of welfare objects for children and youth, the solution of other social problems of youth.

e) the profit sent by structural divisions of youth funds to these funds on implementation of their authorized activities;

e) the profit got by youth associations from the investing activities connected with implementation of the target youth programs determined by state body for youth under the Cabinet of Ministers of Turkmenistan;

g) the amount of dividends to physical persons in case of their investment in the company into production and social infrastructure;

h) the amount of all profit on realization of new types of the consumer goods and goods replacing the imported products in the first year from the moment of their release and for 50 percent of this profit in the second year. The conclusion about reference of products to importnozamenyayushchy is drawn by the Ministry of Economics and finance of Turkmenistan;

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