Indirect tax - Tajikistan

The Republic of Tajikistan applies VAT taxation.

The following taxpayers are recognized as VAT payers:

• a taxpayer whose total income for a maximum period of 12 full consecutive calendar months exceeds 1,000,000 somoni (approximately 84,382 Euros),
• a taxpayer carrying out taxable import of goods (import of goods) into the Republic of Tajikistan,
• a taxpayer who voluntarily applies to pay VAT, in accordance with Article 245 of the Tax Code of the Republic of Tajikistan.

The objects of value added tax are:

• supply of goods, performance of work and provision of services on the territory of the Republic of Tajikistan,
• performance of work and provision of services by non-residents on the territory of the Republic of Tajikistan,
• import of goods into the territory of the Republic of Tajikistan, in accordance with part 1 of article 246 of the Tax Code of the Republic of Tajikistan.

Adjustment of taxable turnover is carried out in the following cases:

• cancellation of an operation or change of its conditions,
• changes in the value of taxable transactions,
• a change in the agreed transaction compensation due to price changes and or for any other reason,
• full or partial return of goods to the taxpayer,
• non-acceptance of work or services performed by the taxpayer in accordance with part 1 of article 249 of the Tax Code of the Republic of Tajikistan.

The following deliveries of goods (except for the export of goods), performance of work and provision of services carried out in the Republic of Tajikistan are exempt from VAT:

• provision of financial services for a fee. Financial services include the following services:
  • Operations related to the issuance of credits (loans),
  • Operations related to the management of deposits, settlements and the execution of other debt obligations,
  • Transactions related to the circulation of currency, money and banknotes that are legal tender,
  • Operations related to the circulation of shares, bonds, certificates, bills of exchange, checks and other securities,
  • Transactions related to the execution of forward contracts, options and agreements on other derivative financial instruments (derivatives),
  • Services related to the management of investment funds,
  • Insurance and reinsurance operations, including deposits of individuals,
  • Finance lease (leasing).

Import of goods for the construction of especially important facilities, except for goods produced in the Republic of Tajikistan, the list of which is determined by the Government of the Republic of Tajikistan, are exempt from VAT, in accordance with Article 251 of the Tax Code of the Republic of Tajikistan. It should be noted that the construction of the Rogun HPP is a particularly important object, according to the Decree of the Government of the Republic of Tajikistan dated 01.08.2008 under No. 369.

The provision of transport or other services, or the performance of work related to international freight and passenger transportation, are exempt from VAT, in accordance with Part 1 of Article 252 of the Tax Code of the Republic of Tajikistan.

The import of goods into the customs territory of the Republic of Tajikistan, depending on the choice of the customs regime and subject to its conditions, is subject to taxation in the following order:

• when goods are placed under the “Temporary Import” customs regime, full or partial exemption from tax is applied in the manner prescribed by the customs legislation of the Republic of Tajikistan. in accordance with part 1 of Article 253 of the Tax Code of the Republic of Tajikistan.

If during the first year of state registration the gross income of the taxpayer calculated on a cash basis exceeds 1,000,000 (one million) Tajik somoni (hereinafter referred to as “threshold income”), then the taxpayer must inform the tax authorities about the excess of the threshold income within 10 calendar days and apply an application for transition to the general tax regime.

It should be noted that if in the first year of state registration the threshold income is not exceeded, then in the next year the taxpayer continues to operate under the same simplified taxation regime. In the future, for calculating the threshold income, any 12 full calendar months can be taken sequentially.

• The following persons are recognized as payers of value added tax:
  • a person whose total income for a period not exceeding 12 full consecutive calendar months exceeds 1.0 million somoni,
  • a person whose activities comply with the provisions of Paragraph 2 of Part 2 of Article 375 of this Code,
  • a foreign entity providing remote services in accordance with Chapter 43 of this Code; particularly the tax authority may require a provider of remote services that is subject to VAT registration but does not have a permanent place of business in the Republic of Tajikistan to do one or both of the following:
    • appoint a representative of the foreign provider of remote tax services value added in the Republic of Tajikistan,
    • ensure the payment of value added tax for remote services to the budget of the Republic of Tajikistan.
  • a foreign legal entity delivering goods, performing work on the territory of the Republic of Tajikistan, if the Republic of Tajikistan is recognized as the place of delivery of such goods, performing work,
  • a person who is the legal successor of the payer of value added tax,
  • a person recognized as a tax agent in accordance with the provisions of Article 260 of this Code,
  • a person carrying out taxable import of goods into the Republic of Tajikistan,
  • a person who voluntarily applies to pay value added tax.
• To determine the income of the persons specified in bullet paragraphs one and eight of part 1 above, the total income of related persons shall be considered.
• Voluntary registration of a person as a payer of value added tax is carried out by tax authorities only if the following requirements are met:
  •  if the place of permanent entrepreneurial activity of the person is determined,
  • if the person is engaged in entrepreneurial activity and keeps accounting records in accordance with the legislation on accounting,
  • if the person is not associated with companies that do not have activities of economic importance.

PECULIARITIES OF TAXATION OF REMOTE SERVICES OF FOREIGN PERSONS

Taxpayers are foreign persons without a place of business in the Republic of Tajikistan who provide remote services directly to individuals, as well as to individual entrepreneurs, and the territory of the Republic of Tajikistan is considered the place of provision of such services.

Non-residents providing remote services directly to individuals are registered (de-registered) electronically based on the submission of an application and other documents in the form approved by the authorized state body. An application for registration (de-registration) of foreign persons is submitted to the authorized state body no later than 30 calendar days from the date of commencement (end) of the provision of remote services.

The tax authority may require a remote service provider who is subject to registration as a value added tax payer but does not have a permanent place of business in the Republic of Tajikistan to perform one or both of the following:

• appoint a representative of a foreign provider of remote services for value added tax in the Republic of Tajikistan,
• ensure the payment of value added tax for remote services to the budget of the Republic of Tajikistan.

1. The taxpayer, except for part 2 below, is obliged for each reporting period no later than the 15th day of the month following the reporting period to submit a declaration on value added tax to the tax authority and pay tax to the budget.
2. Foreign persons providing remote services to individuals are required to submit a tax return, other documents (information) and information no later than the 20th day following the reporting period.
3. Regardless of the provisions of part 1 above, when importing goods, value added tax is charged and collected in accordance with this Code and the customs legislation of the Republic of Tajikistan.

The tax period for value added tax, except for point 2 above, is a calendar month.

For foreign entities providing remote services to individuals, the tax period is a calendar quarter.

A default surcharge penalty may be imposed by the tax authority if VAT returns are not submitted on time, or the related tax is not paid by the due date.

For the late or incorrect submission of the VAT return the legal entity can be charged a penalty in accordance with the Code on Administrative violations of the RT. The rates of penalty are different for reporting persons, individual entrepreneurs and legal entities and can range from 1 to 200 indexes for calculation (currently 75 TJS).

For late payment of the tax liabilities the interest in amount of 0.04% per day from the outstanding amount will be charged.

The VAT return consists of VAT declaration itself and a number of annexes, all of them must be filled and submitted together with VAT return.

Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules.

Civil penalties and interest can be applied for errors and omissions on tax returns, or where the tax is paid late. Penalties can also be applied where the business has failed to maintain adequate records, provide information (including additional declarations), or makes repeated mistakes.

Criminal proceedings may be brought in the case of more serious matters.

Reverse taxation

Reverse taxation is a special method of calculating VAT, according to which the calculation and payment of tax is made by the purchasing party.
Reverse taxation applies in the following cases:

1. a person outside the Republic of Tajikistan who does not have a permanent place of business in the Republic of Tajikistan (foreign supplier), has provided services or performed work to a legal entity operating in the Republic of Tajikistan,
2. the provision of services or the performance of work is carried out by a foreign supplier from the place of his activity outside the Republic of Tajikistan,
3. the provision of services or the performance of work by a foreign supplier is carried out from the place of its activity in the Republic of Tajikistan, and these operations are taxable transactions.

In the case of reverse taxation, the tax agent, that is, the PE, withholds VAT at the source of payment from the amount payable to the foreign supplier at the rate of 14%.

If the PE is registered for VAT purposes, the withheld tax is payable to the budget and is included in the VAT declaration as the amount payable for the month in which the transaction is performed (without the right to offset the VAT amount).

If the PE is not registered for VAT purposes, it is obliged to pay withholding tax to the budget within five days from the date of payment of the amount to the foreign supplier, and also submit a VAT return to the tax authority by the 15th day of the month following the reporting month, in accordance with Article 260 of the Tax Code of the Republic of Tajikistan.

According to part 1 of article 264 of the Tax Code of the Republic of Tajikistan “... For taxable transactions and taxable import the following VAT rates are set:

1. the standard rate is 14%,
2. reduced rate, excluding taxable imports and the subsequent delivery of the imported goods in relation to construction work, hotel and catering services - 7% and sales of agricultural products of domestic production, processing agricultural products, training services and medical services in sanatoriums and resorts without the right to offset - 5%,
3. zero rate, which applies to the export of goods, upon presentation of supporting documents for export, in accordance with part 2 of article 264 of the Tax Code of the Republic of Tajikistan.

The amount of VAT payable to the budget for the reporting period is the positive difference between the amount of tax calculated from the supply of goods, performance of work and the provision of services and the amount of tax allowed for offset in accordance with Article 266 of the Tax Code of the Republic of Tajikistan.

According to part 3 of article 266 of the Tax Code of the Republic of Tajikistan “... the amount of VAT is credited in the following cases, if:

• The amount of VAT payable is indicated separately on the supplier's invoices,
• The amount of VAT is indicated in the cargo customs declaration, is paid to the budget and is a non-refundable amount in accordance with the terms of the customs regime,
• The amount of VAT is indicated in the payment documents for the purchase of tickets for vehicles, including rail, air and automobile tickets,
• the amount of VAT is indicated in the payment documents of utility providers and its calculations are made through financial institutions ... "
  The VAT amount is offset in the reporting month in which the goods (work, services) were received.

According to part 6 of article 266 of the Tax Code of the Republic of Tajikistan “... Offset of paid (payable) VAT is not allowed in the following cases:

• when purchasing vehicles, except for those offered for sale or rental by a taxpayer for whom such operations are considered the main entrepreneurial activity,
• if expenses are made for charitable or social, as well as for entertainment or representative purposes,
• if the VAT amount is not indicated separately from taxable transactions in the invoices,
• if, during customs clearance of goods, the payment documents of the VAT amount do not indicate the details of the importer of goods and products (including the name, TIN, UIN),
• if expenses were incurred for geological exploration and preparation for the extraction of natural resources,
• if expenses are incurred for the acquisition, production, construction, assembly and installation, as well as for the restoration (repair) of depreciable fixed assets and depreciable intangible assets, regardless of the amount of expenses,
• if the expenses related to the purchase of goods (works, services) are registered with persons who did not actually perform such operations, except for the cases when the taxpayer submits documents confirming the payment of VAT to the budget,
• if expenses are incurred at a reduced VAT rate, except for expenses related to taxable imports,
• if a foreign person on the territory of the Republic of Tajikistan provides remote services without formation a permanent establishment.

The tax period for VAT is a calendar month, in accordance with Part 1 of Article 273 of the Tax Code of the Republic of Tajikistan.

The PE is obliged, for each reporting period, no later than the 15th day of the month following the reporting period, to submit a VAT declaration to the tax authority and pay tax to the budget, in accordance with Part 1 of Article 272 of the Tax Code of the Republic of Tajikistan.

An invoice for VAT and excises is a document developed in the form established by the authorized state body for the purpose of offsetting VAT and containing the following information:

• legal or company name and address of the taxpayer and the buyer (customer),
• identification number of the taxpayer and the buyer (customer),
• a single identification number of the taxpayer and the buyer (customer),
• number of the VAT registration certificate of the taxpayer (supplier) and the date of its registration,
• a list of delivered, shipped, transported goods (work performed or services rendered),
• advance operations,
• amount of taxable transaction,
• the amount of excise tax on excisable goods and services,
• amount of VAT,
• date of issue of the invoice for VAT and excises,
• the serial number of the invoice for VAT and excises.

Yes. All taxpayers in Tajikistan have their own personal account in electronic cabinet and all tax returns must be submitted using it.