Taxation of Small and medium enterprises (SME) in Tajikistan Current situation and future developments State Tax Committee of the Republic of Tajikistan

Taxation of Small and medium enterprises (SME) in Tajikistan

Current situation and future developments

State Tax Committee of the Republic of Tajikistan

Налоговый Комитет при Правительстве Республики Таджикистан

Table of contents:

•Republic of Tajikistan: general overview

•Current system of taxation in the Republic of Tajikistan

•Taxation of SME

•Future directions of development


Republic of Tajikistan: General overview

• Total area – 143,1 thousand square kilometers

• Population – 7, 5 .

• Currency – Somoni (4,4 Somoni = 1,0 USD)

• GDP – 24, 7 billion Somoni (~5,6 billion USD)

• Share of tax proceeds in GDP – 18, 8 %

• GDP per capita – 3,3 thousand Somoni (~750 USD)


Current taxation system in the Republic of Tajikistan (1)

Tax legislation

1. The Tax Code (entered into force in 2005)

2. The Law on the State Budget

3. International treaties and agreements

4. Other legal acts

Total – 21 taxes, including 17 state taxes and 4 municipal (local) taxes


Current taxation system in the Republic of Tajikistan(2)

Individual entrepreneurs

Companies Farmers

Simplified tax regimes

General system

Patent Flat fee

Confirmation on the basis of tax on

gross income (turnover)


gross income

tax on gross income (turnover)

Profit tax

Unified tax on agricultural businesses

tax on gross income (turnover)

Profit tax


Taxation of SME (1)

Small and medium enterprises (Law №46 adopted on 10.05.2002 )

Small enterprises –individual entrepreneurs and legal persons, where the share of state in the equity of the company does not exceed 25%; gross income is under 800 thousand Somoni; number of wage workers is under 30 persons (for agricultural producers – 50 persons)

Medium enterprises - individual entrepreneurs and legal persons with gross income from 800 thousand to 15 million Somoni, with wage workers from 30 to 100 persons (for agricultural producers – from 50 to 200 persons).


Taxation of SME(2)

Individual entrepreneurs

Companies Farmers

Simplified tax regimes

General system

Patent Flat fee





tax on gross income

Profit tax

Unified tax on agricultural businesses

tax on gross income

Profit tax

Regimes, applied to small and medium enterprises

Regime applicable to medium enterprises


Taxation of SME(3)

Confirmation (general system

of taxation)

Confirmation (simplified system of

taxation) Patent

Personal income tax 8%, 13% of income

Not applicable Flat amount, including income tax, social tax and tax on retail sales Minimal tax 1% of income Not applicable

Simplified tax on gross income Not applicable 4% of gross income

Tax on retail sales 3% of any retail sales

Social tax 0,2% of income

VAT 18% of value added Not applicable

Road tax 2% and 0,5% of expenditures Not applicable

Customs duties Depending on volume and type of import Not applicable

Tax on production or import of excise goods

Depending on volume and type of such goods

Not applicable

Land tax (paid by land owners) ~ 650Somoni/ha in Dushanbe

3 regimes of taxation of individual entrepreneurs


Taxation of SME(4)

Simplified tax regimes for agricultural producers (farmers) and individual entrepreneurs, who implement economic activities on the basis of patents

Agricultural producers (farmers) taxed with unified tax, are exempt from the following: - tax, paid by simplified system - Income tax - Tax on profit of legal entities - VAT;- Land tax - Minimal tax on income of enterprises - Road tax

“New patent”, introduced in 2008; patent holders pay unified flat tax, which includes: - income tax -Tax on retail sales-Social tax

From 2005 From 2008


Taxation of SME(5)

“Old patent” – challenges

-Problems in calculations and payment of taxes, especially tax on retail sales and social tax; - Large number of tax inspections, majority of which was related to calculation of taxes on retail sales

- Costs and inefficient use of resources of entrepreneurs and tax administration

In the event of unifying three taxes into single flat tax there is no requirement or need of maintaining accounting and reporting

Reduces number of tax inspections , is not requiring detailed and meticulous examination of calculations

Grouping of economic activities on the basis of their homogeneity and profitability levels into 28 groups

- Restriction of growth – “old” patent was limiting activities of entrepreneurs to 49 types of economic activities

“New patent” – solutions


Taxation of SME(6)

«Old» system of patenting

• Unified flat rate

• Includes personal income tax

• Differentiation according to types of activities

• Is bases on calculation of proceeds and income

• Need of maintaining of accounting (cash register, documentation confirming expenses)

• Unofficial payments

Patent (income tax)

Tax on retail sales

Social tax

«New» system of patenting

«New» patent

• Flat rate

• Includes personal income tax, social tax and tax on retail sales

• Promotes to fulfilling of tax liabilities

• Reduces number of tax inspections and simplifies procedures

• Simplifies tax procedures related to fulfilling of tax liabilities

• Is not requiring accounting and reporting


«New» patent – this is not achievement, but a first step to promotion of economic growth

1 stage 3 stage2 stage

• Introduction of super patent

• Reformation of legislative framework

• Research of different sectors of economy

• Revision of volumes and categories

• Simplification of other regimes

• Certificate or company

Taxation of SME(7)


Directions of further development of taxation system

1. New Tax Code needs to be elaborated and adopted

2. Improve taxation of SMEs

Legislation Administration

Achievements

Further actions

1. Simplified regime has been introduced for agricultural producers

2. New patent was introduced 3. The law on State Registration

has been adopted (introducing single window principle)

4. Program of development of tax administration for 2011 -2015 has been adopted

5. Draft concept for development of tax system

1. Registration offices started operation

2. Department for VAT taxpayers has been organized

3. Information technologies have been introduced

4. Regulations for working with taxpayers have been introduced

5. Tax procedures have been revised

1. Introduce program of development of tax administration

2. Elaborate and introduce system of risk assessment

3. Simplify procedures of receiving of tax declarations and payments


Thank you for your attention

Documents

Taxation of Small and medium enterprises (SME) in Tajikistan Current situation and future developments State Tax Committee of the Republic of Tajikistan