TURKMENISTAN: FEES AND TAXES LEVIED ON IMPORTED

UNCLAS SECTION 01 OF 02 ASHGABAT 000967 SIPDIS STATE FOR SCA/CEN; EEB E.O. 12958: N/A TAGS: ETRD PGOV ECON TX SUBJECT: TURKMENISTAN: FEES AND TAXES LEVIED ON IMPORTED COMPUTER EQUIPMENT ¶1. SUMMARY: The legislation of Turkmenistan does not provide for levying Customs duties on computer equipment imported into Turkmenistan. However, complicated procedures for getting Customs clearance and a local tax system that differentiates between types of businesses create numerous obstacles for importers of computer equipment. Post obtained detailed information about procedures and fees for importing computer equipment from officials of the State Customs Service, State Tax Service, and State Standards Inspectorate. END SUMMARY. ¶2. Importers of computer equipment into Turkmenistan do not have to pay Customs duties, but the simplicity ends at this point and more complicated issues begin. Local laws specify that the approval process and level of taxation differ for businesses depending on their legal status. Commercial importers are divided into three categories for the purpose of levying Customs fees and taxes. ¶3. One category includes individual entrepreneurs who are considered by the legislation as physical entities and have a Government-issued patent authorizing them to conduct their business activities. Individual entrepreneurs pay a 2% Customs fee when importing computer equipment and a five-manat ($1.76) admin fee for every hour that a Customs officer spends inspecting the equipment. All documents submitted to the Customs should have Turkmen translation made or certified by the State Chamber of Commerce and Industry. The translation/certification price is 11.5 manats ($4) per page. Also, individual entrepreneurs are required to certify the imported equipment through the Main State Standards Inspectorate before getting Customs clearance. The Inspectorate levies a certification fee, the amount of which depends on the cost of laboratory testing of the equipment and the amount of imported equipment. As for taxes, individual entrepreneurs selling computer equipment pay a monthly patent fee in the amount of 60 manats ($21) and a 2% monthly profit tax. ¶4. Another category is local firms that are considered legal entities in Turkmenistan. They pay a 0.2% Customs fee when importing computer equipment and the same five-manat ($1.76) admin fee for every hour that a Customs officer spends inspecting the equipment. Local firms are also required to certify the imported equipment through the State Standards Inspectorate before getting Customs clearance, and the certification fee is calculated using the same principle as for individual entrepreneurs. They also should provide Turkmen translation of each document made or certified by the State Chamber of Commerce and Industry. Local firms pay a 2% profit tax, and 1% fee deducted from the taxable profit, as well as 3% contribution to the agriculture development fund and 0.5% contribution to the city development fund deducted from the pretax profit. ¶5. The third category includes foreign firms operating in Turkmenistan, which follow the same Customs procedures when importing computer equipment as local businesses, but pay more taxes. They pay 15% VAT, 8% profit tax, 1% property tax and 1% fee deducted from the taxable profit, as well as 3% contribution to the agriculture development fund and 0.5% contribution to the city development fund deducted from the pretax profit. ¶6. COMMENT: Customs and tax regulations in the computer equipment business, as in any business in Turkmenistan, favor low-profile and local players. As a result, no foreign companies that produce computer equipment have an office in Turkmenistan. Those computer producers that sell their products in Turkmenistan operate through local distributors and dealers. END COMMENT. ASHGABAT 00000967 002 OF 002 MILES