Identifier
Created
Classification
Origin
07ASHGABAT1137
2007-10-19 13:17:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ashgabat
Cable title:
TURKMENISTAN PASSES LAWS ON NATIONAL TOURISM ZONE
how-toVZCZCXRO4252 PP RUEHAG RUEHAST RUEHBI RUEHCI RUEHDBU RUEHDF RUEHIK RUEHLH RUEHLN RUEHLZ RUEHPW RUEHROV RUEHVK RUEHYG DE RUEHAH #1137 2921317 ZNR UUUUU ZZH P 191317Z OCT 07 FM AMEMBASSY ASHGABAT TO RUEHC/SECSTATE WASHDC PRIORITY 9576 INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE RUCNCIS/CIS COLLECTIVE RUCNMEM/EU MEMBER STATES COLLECTIVE RUEHAK/AMEMBASSY ANKARA 2899 RUEHBJ/AMEMBASSY BEIJING 0720 RUEHKO/AMEMBASSY TOKYO 0596 RUEHIT/AMCONSUL ISTANBUL 1172 RHMFIUU/CDR USCENTCOM MACDILL AFB FL RUEAIIA/CIA WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RHEBAAA/DEPT OF ENERGY WASHDC RUEATRS/DEPT OF TREASURY WASHDC RHEFDIA/DIA WASHDC RUEKJCS/JOINT STAFF WASHDC RHEHNSC/NSC WASHDC RUEKJCS/SECDEF WASHDC
UNCLAS ASHGABAT 001137
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
STATE PLEASE PASS TO USTDA DAN STEIN
COMMERCE FOR HUEPER
E.O. 12958: N/A
TAGS: PGOV ECON EINV TX
SUBJECT: TURKMENISTAN PASSES LAWS ON NATIONAL TOURISM ZONE
REF: A. ASHGABAT 0968
B. ASHGABAT 0970
UNCLAS ASHGABAT 001137
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
STATE PLEASE PASS TO USTDA DAN STEIN
COMMERCE FOR HUEPER
E.O. 12958: N/A
TAGS: PGOV ECON EINV TX
SUBJECT: TURKMENISTAN PASSES LAWS ON NATIONAL TOURISM ZONE
REF: A. ASHGABAT 0968
B. ASHGABAT 0970
1. (U) Sensitive but unclassified. Not for public Internet.
2. (SBU) SUMMARY: Turkmenistan has established a new
National Tourism Zone (NTZ) instead of the Free Economic Zone
that President Berdimuhamedov had previewed in May. The
purpose of the NTZ is to promote development of tourism,
particularly in the Caspian Sea area. Tax and other
incentives designed to lure foreign investment were included
in the legislation that was passed on October 1, but will be
offered only to those willing to invest specifically in the
construction of hotels and recreational facilities. Given
the fact that foreign investors must transfer title of their
facilities to Turkmenistan, once they have made a maximum
pre-determined profit, or the lease is up, whichever comes
first, there is probably little that will draw investment
interest. END SUMMARY.
LAND FOR HOTELS
3. (U) The Free Economic Zone that was to be established on
the Caspian Sea coast is now a National Tourism Zone.
President Berdimuhamedov signed on October 1 amendments to
the Land Code, which include a provision for 40-year land
leases in the NTZ for construction and "other
non-agricultural purposes," in an effort to promote resort
facility development. The lease term for temporary retail
and service points, warehouses, and car parking lots in the
NTZ, however, will be a maximum of only five years.
TOURISM TO BE SUPERVISED FROM ABOVE
4. (U) The amended tourism law assigns new authority to the
Cabinet of Ministers, State committee for Tourism an Sports,
and local governments. The Cabinet of Ministers will not be
responsible for determining what areas have tourism potential
and what their boundaries will be. The State Committee for
Tourism and Sports will be the principle government agency
responsible for implementing the law on Tourism, assessing
tourism investment projects, and signing contracts with
foreign investors. The State Committee will develop
short-term and long-term tourism development plans.
SPECIAL CUSTOMS AND TAX STATUS
5. (U) The amendments to the Tax Code passed on October 1
exempt construction and installation of tourist facilities in
the NTZ from the Value Added Tax (VAT). Tourism-related
services, including catering and accommodation, are also VAT
exempt. This does not apply to gambling businesses.
Construction equipment used in the NTZ will not be subject to
the 1% property tax. In addition, the government will not
levy income taxes related to tourist accommodations and
catering for the first 15 years. No information has surfaced
yet regarding any customs-related incentives.
6. (U) COMMENT: There is little in these amendments that
will have foreign investors excited about the Avaza tourist
resort on the Caspian (reftels). Amendments to the
legislation apply only to businesses serving tourism in
Avaza, not to all investor activities there. Investors may
be reluctant, as well, to spend money on tourist property
construction on leased land. Further, the amendments require
foreign investors to transfer title of their facilities to
Turkmenistan, once they have made a maximum pre-determined
profit, or the lease is up, whichever comes first. All in
all, there are no silver linings to the new rules that would
draw investment interest. END COMMENT.
HOAGLAND
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
STATE PLEASE PASS TO USTDA DAN STEIN
COMMERCE FOR HUEPER
E.O. 12958: N/A
TAGS: PGOV ECON EINV TX
SUBJECT: TURKMENISTAN PASSES LAWS ON NATIONAL TOURISM ZONE
REF: A. ASHGABAT 0968
B. ASHGABAT 0970
1. (U) Sensitive but unclassified. Not for public Internet.
2. (SBU) SUMMARY: Turkmenistan has established a new
National Tourism Zone (NTZ) instead of the Free Economic Zone
that President Berdimuhamedov had previewed in May. The
purpose of the NTZ is to promote development of tourism,
particularly in the Caspian Sea area. Tax and other
incentives designed to lure foreign investment were included
in the legislation that was passed on October 1, but will be
offered only to those willing to invest specifically in the
construction of hotels and recreational facilities. Given
the fact that foreign investors must transfer title of their
facilities to Turkmenistan, once they have made a maximum
pre-determined profit, or the lease is up, whichever comes
first, there is probably little that will draw investment
interest. END SUMMARY.
LAND FOR HOTELS
3. (U) The Free Economic Zone that was to be established on
the Caspian Sea coast is now a National Tourism Zone.
President Berdimuhamedov signed on October 1 amendments to
the Land Code, which include a provision for 40-year land
leases in the NTZ for construction and "other
non-agricultural purposes," in an effort to promote resort
facility development. The lease term for temporary retail
and service points, warehouses, and car parking lots in the
NTZ, however, will be a maximum of only five years.
TOURISM TO BE SUPERVISED FROM ABOVE
4. (U) The amended tourism law assigns new authority to the
Cabinet of Ministers, State committee for Tourism an Sports,
and local governments. The Cabinet of Ministers will not be
responsible for determining what areas have tourism potential
and what their boundaries will be. The State Committee for
Tourism and Sports will be the principle government agency
responsible for implementing the law on Tourism, assessing
tourism investment projects, and signing contracts with
foreign investors. The State Committee will develop
short-term and long-term tourism development plans.
SPECIAL CUSTOMS AND TAX STATUS
5. (U) The amendments to the Tax Code passed on October 1
exempt construction and installation of tourist facilities in
the NTZ from the Value Added Tax (VAT). Tourism-related
services, including catering and accommodation, are also VAT
exempt. This does not apply to gambling businesses.
Construction equipment used in the NTZ will not be subject to
the 1% property tax. In addition, the government will not
levy income taxes related to tourist accommodations and
catering for the first 15 years. No information has surfaced
yet regarding any customs-related incentives.
6. (U) COMMENT: There is little in these amendments that
will have foreign investors excited about the Avaza tourist
resort on the Caspian (reftels). Amendments to the
legislation apply only to businesses serving tourism in
Avaza, not to all investor activities there. Investors may
be reluctant, as well, to spend money on tourist property
construction on leased land. Further, the amendments require
foreign investors to transfer title of their facilities to
Turkmenistan, once they have made a maximum pre-determined
profit, or the lease is up, whichever comes first. All in
all, there are no silver linings to the new rules that would
draw investment interest. END COMMENT.
HOAGLAND