Employers have several tax responsibilities, including withholding income tax from employee wages and salaries, known as Pay-As-You-Earn (PAYE) withholding. In Turkmenistan, a flat 10% personal income tax (PIT) rate is used, and this applies to all employment income, including salaries, wages, bonuses, and benefits. PAYE deductions must generally be submitted to tax authorities on a monthly basis.

Social Security Contributions

Employers also have responsibilities towards social security contributions. They must register with the social security system and contribute on behalf of their employees. The employer contribution rates appear to be around 20% of the total remuneration provided to local employees. Social security covers retirement, disability, and potentially other benefits. These contributions are typically paid monthly.

Other Potential Employer Taxes

There are also other potential taxes that employers must be aware of. One of these is the Special Purpose Duty. Employers must withhold and pay a 5 manats (TMT) special purpose duty per month for each employee. This is to support the improvement of urban and rural territories.

In Turkmenistan, all employees earning income are subject to Personal Income Tax (PIT). The calculation method for this tax is a flat rate, with Turkmenistan maintaining a PIT rate of 10% of gross income.

Special Purpose Duty

In addition to the PIT, employees are also required to contribute a fixed 5 manats (TMT) special purpose duty per month. This contribution is designed to support the improvement and development of urban and rural areas.

Turkmenistan has a standard VAT rate of 15%, which applies to most goods and services. However, some services might be exempt from VAT. These potentially exempt services may include certain financial services and specific medical and educational services.

VAT Exemptions

While a complete list of VAT-exempt services is difficult to obtain due to limited resources, some services that might be exempt include:

• Financial Services: Some financial services might be VAT-exempt.
• Healthcare and Educational Services: Specific medical and educational services might be exempt.

VAT Filing Procedures

Businesses providing taxable services with a specific turnover threshold may be required to register for VAT with the tax authorities. VAT returns are generally filed on a monthly basis. VAT payments are generally due within a certain period after the end of the taxable month.

Tax incentives are a strategic tool used by governments to stimulate economic growth and development. In Turkmenistan, these incentives come in various forms and are designed to attract both local and foreign investments.

Types of Tax Incentives

• Tax Exemptions: Businesses that meet certain qualifications may be exempted from specific taxes for a set period. This can significantly reduce the financial burden on the business, making it more profitable.
• Reduced Tax Rates: Certain investments may be eligible for reduced tax rates. For instance, the corporate income tax rate may be lowered for qualifying businesses.
• Free Economic Zones (FEZ): Some regions in Turkmenistan are designated as FEZs. Businesses operating in these zones enjoy tax breaks, which are intended to encourage investment in these areas.

Qualification Criteria

The eligibility for tax incentives in Turkmenistan is likely dependent on several factors:

• Sector: The government may prioritize certain sectors for incentives. These sectors are typically those that the government is keen on developing, such as technology, manufacturing, or agriculture.
• Investment Size and Location: The scale of the investment and its location could influence eligibility. For instance, investments located in designated areas like FEZs may be more likely to qualify.
• Job Creation: Investments that contribute to job creation may have a higher chance of qualifying for tax incentives.

Application Process

While it's challenging to find reliable English-language resources detailing the application process for tax incentives in Turkmenistan, the process likely involves the following steps:

1. Project Proposal: Businesses may need to prepare a detailed proposal outlining their proposed investment and its potential economic benefits.
2. Submission: The proposal is likely submitted to the relevant government ministries or agencies responsible for the specific investment sector.
3. Evaluation and Approval: The submitted projects are evaluated, and negotiations may take place. If the project meets the set criteria, the business may receive approval for the tax incentives.