Corporate Tax in Turkmenistan

Turkmenistan's corporate tax system features a standard rate of 20% with a reduced rate of 8% for small businesses. Free economic zones offer 0% CIT for 5-10 years. The tax framework is administered by the Ministry of Finance and the State Tax Service.

Corporate Income Tax Rate

The standard corporate income tax rate in Turkmenistan is 20% of taxable profits. Small businesses may qualify for a reduced rate of 8%. Companies operating in free economic zones may benefit from a 0% rate for 5-10 years. This applies to all resident companies and foreign companies with a permanent establishment in Turkmenistan.

Taxable Income

Taxable income is calculated as gross revenue minus allowable deductions. The tax year in Turkmenistan follows the calendar year (January 1 to December 31). Companies must maintain proper accounting records in accordance with Turkmen accounting standards.

Deductible Expenses

• Operating expenses directly related to business activities
• Depreciation of fixed assets (straight-line method)
• Interest expense
• Rent and lease payments
• Employee salaries and social security contributions
• Professional fees and consulting costs
• Research and development expenses
• Marketing and advertising costs
• Insurance premiums

Non-Deductible Expenses

• Fines and penalties
• Dividends distributed
• Capital expenditures (must be depreciated)
• Personal expenses of shareholders
• Donations to non-approved organizations

Tax Incentives

Turkmenistan offers several tax incentives to encourage investment:

• Small Business Rate: Reduced CIT rate of 8% for qualifying small businesses
• Free Economic Zones: 0% CIT for 5-10 years in designated zones
• Priority Sectors: Reduced rates for priority sectors including hydrocarbons and textiles
• Accelerated Depreciation: Available for certain qualifying assets
• Carryforward of Losses: Tax losses can be carried forward for up to 5 years

Filing Requirements

• Annual Tax Return: Due by April 1 following the tax year
• Monthly Withholding Tax: Due by the 15th of the following month
• Annual Financial Statements: Must be filed with the tax return
• Transfer Pricing Documentation: Required for related-party transactions

Payment of Tax

Corporate tax is payable in two ways:

• Advance Payments: Quarterly installments based on the previous year's tax liability
• Balance Payment: Any remaining tax due is payable upon filing the annual return

Withholding Taxes

Companies are required to withhold tax on certain payments:

• Dividends: 10%
• Interest: 10%
• Royalties: 15%
• Service payments to non-residents: Applicable WHT rates

International Taxation

Turkmenistan taxes residents on their worldwide income. Foreign tax credits are available for taxes paid abroad on foreign-source income, subject to tax treaty provisions.