Тоҷикӣ | Русский | English        | Site map
twitter facebook rss

Investment climate in Tajikistan


Key indicators

 

Investments with the participation of donors and international financial institutions in 2002-2012 – 2.13 billion U.S. dollars

Foreign direct investment in 1991-2013 – 2.71 billion U.S. dollars

Foreign portfolio investment and others in 1991-9/2013 – 1.84 billion U.S. dollars

Foreign direct investment in 9 months of 2013 – 208.9 mln. USD

Foreign portfolio investment in 9 months of 2013 – 277.8 mln. USD

Free economic zones – “Sughd”, “Dangara”, “Ishkashim”, “Panj”

Doing Business” in 2010-2011 - Tajikistan is in the top ten reformers

 

From the date of Tajikistan’s independence the Government was able to do a lot for the revival and development of the economy. Basic legal and regulatory framework that promotes the formation of market mechanisms was adopted. Since 2002 till present many reforms aimed at creating a favorable investment environment in top priority areas of the economy have been conducted and are being conducted in Tajikistan at the legislative level.

The key point is the adoption of new Law of the Republic of Tajikistan "On Investments", which replaced the obsolete, concerning its legal regulation, Law of the Republic of Tajikistan "On foreign investments". A distinctive feature of new Law "On Investments" is that investors mean not only foreign investors but also domestic investors, which create an incentive for domestic investment.

Additional laws of the Republic of Tajikistan were enacted at the national level to stimulate investment and create the most favorable investment environment, namely "On Privatization of State Property of the Republic of Tajikistan", "On Production Sharing Agreements", "On Concessions", "On free economic zones", "On Credit History", and "On public-private partnership" Besides, taking into account the realities of today's time is scheduled to take very important to improve the investment climate in the country the law "On investment agreements."

After the goal to establish a favorable investment climate in the country was proclaimed, the reforms to simplify the procedure of state registration of legal enterprises and individual entrepreneurs, the permit system, customs procedures, obtaining building permits, and etc. were carried out. Only in the last few years the Government of the Republic of Tajikistan has taken a number of significant measures to strengthen the legal framework for investment activity, to remove administrative barriers to facilitate business and investment activities, which have largely influenced the efficiency ratio.

Introducing the "single window" principle for business registration, reducing the required number of licenses and all sorts of permits, reducing the number of inspection services and regulation of audits, improving bankruptcy procedures, and protection of minority shareholders are among those reforms to improve the business environment, which were duly evaluated at the international level. In the 2010/ 2011 World Bank’s annual "Doing Business" report Tajikistan is inside "top ten" of the best reformers. The activity to improve the investment climate is supported by the Consultative Council on improvement of investment climate under the President of the Republic of Tajikistan, which is composed of representatives of the Government and the private sector.

The legislation of the country establishes guarantees for the investors and investment activities; a single mode both for national and foreign investors has been created; freedom to transfer of profits and other forms of investment income are ensured, and so on. Tajikistan legislation stipulates concrete customs and tax preferences for investing. Special benefits are provided to those investors who operate in the priority sectors of the economy, such as construction of hydro power plants and enterprises involved in the full cycle of cotton processing.

At the international level, stimulating investment legal instruments ratified and recognized by the Republic of Tajikistan is “Avoidance of Double Taxation Agreement” concluded with 25 countries and “Agreement on Encouragement and Mutual Protection of Investments” concluded with 18 countries worldwide. Significant factor in further improving the investment climate and increase of business activity in the country was joining of the Republic of Tajikistan to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards as of June 10, 1958

The Government of the Republic of Tajikistan being fully aware of the existing problems is implementing comprehensive reforms aimed at improving governance, macroeconomic policies, investment climate and regional cooperation.

So, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, was ratified in 2012, which came into force in October 2012, the “State Program on improvement of investment attractiveness in the mineral resources in the Republic of Tajikistan for 2012-2015” was adopted and also a number of documents on Tajikistan's joining to the Extractive Industries Transparency Initiative was signed.

In 2007-2012 the government of the Republic of Tajikistan worked on the following key questions:

  • implementation of institutional reforms;

  • reducing overall investment and business risk factors;

  • reducing barriers to market entry for investors and entrepreneurs;

  • reducing the costs associated with business and investment activity;

  • government support for business and investment.

Within 2002-2012 in the framework of public investment projects with financial support from donors and international financial institutions more than 200 project agreements were signed and implemented totaling 2.13 billion U.S. dollars, of which loans amounted to 1.614 billion U.S. dollars, grants – 371.5 million U.S. dollars, the contribution of the Government – 119.12 million and other revenues – 28.7 million dollars. The crisis 2008-2010 account for 1.038 billion U.S. dollars or 48.7% of total outstanding disbursements in the implementation of public investment projects.

Every year the Government of the Republic of Tajikistan adopts investment program, grants and capital construction program for the next two years. At the end of this year the Government of Tajikistan has adopted another investment program, grants and capital construction program for 2014-2016.According to the projected goals for the next two years it is provided for the implementation of 120 projects, 39 of which have already being implemented currently in the amount of $1.3 billion; over the next three years it is planned to attract more $18.8 billion.

Volume of foreign investment

Over the years of independence, the total volume of foreign direct investment, including nine months of 2013, amounted to 2271.6 million U.S. dollars worth, including the CIS countries – 855.9 million USD (37.6%), non-CIS countries – 1415.7 million U.S. dollars (62.3%). The main investors that have injected ​​direct investment in the economy are: Russia – 827.1 million USD (36.4%), China – 319.9 million USD (14.1%), Iran – 302.4 million U.S. dollars (13.3%), the United Kingdom – 210.5 million USD (9.3%).

The total volume of foreign portfolio and other investments, including nine months of 2013, amounted to 1884.3 million U.S. dollars worth, including the CIS countries – 40.9 million USD (2.17%), non-CIS countries – 1843 3 million U.S. dollars (97.8%). The main investors that have injected indirect and other investment in the economy are: China – 1093.0 million U.S. dollars (58.0%), the United States – 203.6 million USD (10.8%), the Philippines – 193.8 million U.S. dollars (10.2%), Saudi Arabia – 61.1 million USD (3.2%).

Over the first 9 months of this year the foreign direct investment in the Republic of Tajikistan amounted to 208.9 million U.S. dollars; including the CIS which invested 47.9 million U.S. dollars and non-CIS countries invested 161.9 million U.S. dollars. The main investors of the Republic of Tajikistan are: China – 92.9 million. U.S., Russia – 26.0 million U.S. dollars, the State of Qatar – 17.9 million U.S. dollars, the UK – 17.6 million U.S. dollars.

At the same time, indirect and other foreign investment in the Republic of Tajikistan totaled 277.8 million U.S. dollars; the CIS countries totaled 30.2 million dollars, and non-CIS countries invested 247.6 million U.S. dollars. The main investors for indirect investment are: China – 84.4 million U.S. dollars, Turkey – 46.0 million U.S. dollars, Russia – 26.0 million U.S. dollars, the Philippines – 20.6 million U.S. dollars and other countries.

Tax and customs privileges and preferences

1

Exemption from customs duty (customs duty rate of 5% to 15%) and value added tax (tax rate 18%).

All enterprise

Importing manufacturing equipmentand components thereof (forming a single set , i.e., without these components operation of the manufacturing equipmentis not possible) for the formation or increase of the authorized capital of the company or modernization of existing production provided that the property is used directly for the production of goods, works and services in accordance with the basic documents of the enterprise and is not classified as excisable goods, as well as personal property imported into the Republic of Tajikistan by foreign employees of enterprises with investment directly for their own needs.

Customs Code of the Republic of Tajikistan

(Article 345.4)

Tax Code of the Republic of Tajikistan (Article 211.4, part 4)

Resolution of the Government of the Republic of Tajikistan No.50 as of 23.10.03.

 

2

Exemption from value added tax (tax rate 18%) and customs duties (customs duty rate of 5% to 15%)

All enterprise

Customs duties shall not be levied when importing goods intended for implementation of target projects approved by the Government of the Republic of Tajikistan on the expenses (within) of grants and (or) credits (lending) provided by legal or natural persons, foreign states, governments of foreign states or by international organizations.

Tax Code of the Republic of Tajikistan (Article 211.4, subitem 6)

Customs Code of the Republic of Tajikistan

(Article 345. 6)

3

Exemption from value added tax (tax rate 18%) and customs duties (customs duty rate of 5% to 15%)

All enterprise

Supply of goods, works and services as humanitarian aid

Tax Code of the Republic of Tajikistan (Article 211.2 subitem 7).

Customs Code of the Republic of Tajikistan

(Article 345.3)

4

Operations taxed at a zero rate 

 

All enterprise

Exports of goods, other than raw cotton, cotton fiber, and primary aluminum, shall be subject to the value-added tax at the zero rate

 

 

 

Tax Code of the Republic of Tajikistan  (Article  214.1)

5

Exemption from income tax (tax rate of 15%. In addition to the income tax a permanent establishment of a foreign legal entity is taxed on the net profit of the permanent establishment at the rate of 8 per cent.)

All enterprise

New enterprises established in the manufacturing sphere, during the year of their state registration and starting with the year following their initial state registration, when their founders make investments in the following amounts to the authorized capital of these enterprises, taking into account the minimum investment amounts established by the legislation, for a period of:

- 2 years, if the investments are the equivalent of up to US$500,000;

- 3 years, if the investments are the equivalent of more than US$500,000 and up to US$2 million;

- 4 years, if the investments are the equivalent of more than US$2 million and up to US$5 million;

- 5 years, if the investments are in excess of the equivalent of US$5 million.

 

Tax Code of the Republic of Tajikistan  (Article 145. 6)

6

Exemption from value added tax (tax rate 18%), tax road users ( 2% tax rate ), tax on corporate income (tax rate 15%), the minimum corporate income tax (tax rate of 1%), land tax (tax amount ranges from 180 to 500 TJS per 1 ha. land), tax on vehicle owners (tax rate from 2 to 11 %), real estate tax, social security tax (tax rate 25%) in relation to persons directly employed in the construction of hydro power plants and are not citizens of the Republic of Tajikistan

 

Building owners and general contractor for construction

During construction hydro power plants on the territory of the Republic of Tajikistan

Tax Code of the Republic of Tajikistan  (Article 343.1)

7

Exemption from value added tax (tax rate 18%) and customs duties (customs duty rate of 5% to 15%)

All enterprise 

Import of goods for the construction of hydro power plants, which are highly important facilities of the Republic of Tajikistan

Tax Code of the Republic of Tajikistan  (Article 343. 2)

8

Exemption from value added tax (tax rate 18%) and tax on road users (the rate of 2%), social tax (25% tax rate)

Construction suppliers and subcontractors, persons directly involved in the construction of hydro power plants

Natural persons and legal entities directly involved in the construction of hydro power plants, persons who are not citizens of the Republic of Tajikistan

Tax Code of the Republic of Tajikistan  (Article 343.3)

9

Exemption from customs duty (customs duty rate of 5% to 15%) and value added tax (tax rate 18%)

Allenterprise

Imports of goods for personal use of the newly created enterprises that have full cycle of cotton processing into final products (from cotton yarn to cotton garments)

Tax Code of the Republic of Tajikistan  (Article 344.1)

10

Exemption from value added tax (tax rate 18%)

Allenterprise

Exports of goods produced by newly created enterprises that have a complete cycle of cotton processing into final products (from cotton yarn to cotton garments)

Tax Code of the Republic of Tajikistan  (Article 344. 2)

11

Exemption from income tax of legal entities (tax rate 15%), the minimum corporate income tax (tax rate of 1%), real estate tax and land tax (tax amount ranges from 180 to 500 TJS per 1 ha. Land)

All enterprise

Newly created enterprises that have a complete cycle of cotton processing into final products (from cotton yarn to cotton garments) shall be exempted from these taxes.

Tax Code of the Republic of Tajikistan  (Article 344. 3)

 

Development of free economic zones of the Republic of Tajikistan

 

Law of the Republic of Tajikistan "On free economic zones in the Republic of Tajikistan" and the "Regulation on free economic zones in the Republic of Tajikistan" were adopted to ensure favorable conditions for attracting foreign investment, technology, management expertise, and establishment of a modern social infrastructure , settlement of the problems with employment and creation of new jobs, as well as the saturation of the domestic market with products and consumer and producer goods and improving living standards. Pursuant to the Law 4 free economic zones (FEZ) "Sughd", "Panj", "Danghara" and "Iskashim" are currently created in the Republic of Tajikistan.

There isspecial legal regime of customs and taxation established in the FEZ territories pursuant to which

In the field of ​​customs regulation:

1. Free Economic Zone is part of the customs territory of the Republic of Tajikistan. The goods placed in free economic zones shall be considered as being outside the customs territory of the Republic of Tajikistan to relief from customs duties and exempt from taxes, as well as prohibitions and economic restrictions, established by the normative legal acts of the Republic of Tajikistan.

2.Importation to the free economic zone territory of foreign and domestic goods shall be carried out without exemption of customs duties and taxes, and without application of prohibitions and economic restrictions, established in accordance with the regulations of the Republic of Tajikistan.

3. Importation to the free economic zone territory zone of manufacturing and construction equipment and other necessary goods for infrastructure by the entities of the free economic zone administration shall be free from customs duties and taxes. The list of these products is approved by the Government of the Republic of Tajikistan.

4.When exporting goods from the territory of the free economic zone outside the Republic of Tajikistan taxes and duties shall not be charged, except for customs clearance fees, and the prohibitions and economic restrictions shall not be applied.

5.When exporting goods from the territory of the free economic zone to another part of the customs territory of the Republic of Tajikistan customs duties, taxes, and measures associated with prohibitions and economic restrictions established in accordance with the legislation of the Republic of Tajikistan shall be applied in accordance with the terms of the declared customs regime.

6.Determination of the country of origin in respect of goods produced in the free economic zone and imported into it shall be carried out in accordance with the laws of the Republic of Tajikistan and international legal acts recognized by Tajikistan.

7. Customs clearance and registration of goods in the territory of the free economic zone defined shall be determined by the legislation of the Republic of Tajikistan.

In the field of taxation:

1.The tax regime of the free economic zone functioning shall determine the procedures and conditions for the preferential taxation of entities in its territory.

2. Business activity on the territory of the free economic zone, regardless of ownership shall be exempt from all taxes stipulated by the Tax Code of the Republic of Tajikistan, with the exception of social tax and personal income tax.

3.Social tax and personal income tax in the free economic zone shall be calculated and paid off independently in accordance with the Tax Code of the Republic of Tajikistan.

4. Personal income tax for non-resident foreign experts of the Republic of Tajikistan shall be paid in accordance with the procedure established by the Tax Code of the Republic of Tajikistan

5. The tax authority shall exercise control of full and timely payment of social tax and personal income.

6.Profits derived by foreign investors, and the salaries of foreign workers received in foreign currency may be freely exported by them abroad, and when exported abroad it shall be tax-exempt.

7. Tax exemptions shall apply only in that part of the activities of the entities, which is carried out on the territory of the free economic zone. Taxation of activities outside the territory of the free economic zone shall be carried out on a general basis in accordance with the laws of the Republic of Tajikistan.

8.The entities of the free economic zone are taxpayers and are independent accounting financial and economic activity.

9.On the territory of the free economic zone the taxable entities not belonging to the entities of free economic zone shall be taxed in accordance with the laws of the Republic of Tajikistan.

Free economic zone "Sughd"

The zone is located in Khujand, its territory is 320 hectares. In free economic zone "Sughd" 18 entities are registered, of which 11 entities are domestic enterprises and 7 entities are joint ventures with the following countries: Poland, Russia, Cyprus, Turkey and China. Solar collectors, plastic pipes , electric wires , exterior wall paint and colors, plastic doors and windows profiles, plastic bottles for storage of fresh fruits, meat products and others are produced in free economic zone "Sughd"

In January-September 2013 nine industrial companies operated in free economic zone "Sughd". The volume of industrial output amounted to 29,422.9 thousand TJS. Including LLC "Real" – 2684.6 thousand somoni, LLC "Fucheng Mindong" –413.2 thousand somoni, LLC "Ravzana Plastic" –2419.0 thousand somoni, LLC "Nekon" – 207.5 thousand somoni, JV "Silkoat Boya" – 6167.1 thousand somoni, JV "Star Plast" – 8650.6 thousand somoni, LLC "Sohtmoni idorakuni No.1" –80.1 thousand somoni, LLC JV "Ofarin Aluminium" – 7988.8 thousand somoni, OOO "Sahi Khujand" –812.0 tys.somoni.

In January - September 2013 in free economic zone "Sughd" the construction was performed by OOO "Dusty Amirhon" in the amount of 439.2 thousand somoni, LLC JV "Skorut Touch" in the amount of 200.0 thousand somoni, LLC JV "Ofarin Aluminium" in the amount of 9076.4 thousand somoni, branch of LLC "Triad" in the amount of 1426. thousand somoni, LLC "Crystal Mosaic " in the amount of 653.0 thousand somoni, LLC "Sohtmoni idorakunii No.1" – 358.3 thousand TJS. Paid services were rendered by: LLC "Nasoskomplekt" in the amount of 736.5 thousand somoni, LLC "Hizmat" in the amount of 80.9 thousand somoni; also doods were sold by: LLC "Aziyahimprodukt" in the amount of 556.1 thousand somoni, LLC "Crystal Mosaic" in the amount of 751.5 thousand somoni.

Free Economic Zone "Dangara"

The zone is located on the territory of Dangara district in Khatlon oblast. Its territory is 521.3 hectares.In January-September 2013 in free economic zone "Dangara" CJSC "U and F Service" produced industrial products worth 265.7 thousand somoni.

Free Economic Zone "Ishkoshim"

The zone is located in the territory of Ishkashim distric in GBAO; its territory is 200 hectares. In January-September of 2012 in free economic zone of Ishkoshim district of GBAO investments in the amount of 396.6 thousand somoni were disbursed for construction of facilities.

Free Economic Zone "Panj"

The zone is located in the territory of Kumsangir distric in Khatlon oblast; its territory is 401.6 hectares. In free economic zone "Panj" 6 companies are registered, with zero sum production for the end of the year.