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Officially recognized globally
  • EU «black list» 1
  • EU «gray list» 1
  • FATF «black list» 2
  • FATF «gray list» 2
  • OECD «black list» 3
  • OECD «gray list» 3
Recognized in Ukraine
  • Ordinance of the CMU 4
    No. 1045 of 27 December 2017
  • Ordinance of the CMU 5
    No. 143-р of 23 February 2011
General information

Turkmenistan, an independent state in Central Asia, is bordered by Afghanistan to the southeast, Iran to the southwest, Uzbekistan to the northeast, Kazakhstan to the northwest, and the Caspian Sea to the west. Turkmenistan, which achieved independence in 1991, is divided into five provinces (welayatlar), with a separate capital district for the capital city of Ashgabat. Turkmen is the official language of Turkmenistan, although Russian is still widely spoken in cities as well. The currency is the Turkmen new manat (TMT).

Turkmenistan possesses the world's fourth-largest reserves of natural gas and substantial oil resources. The Turkmenistan government is actively seeking to diversify its gas export routes beyond the existing Russian pipeline network. Turkmenistan is largely a desert country with intensive agriculture in irrigated oases. One-half of its irrigated land is planted in cotton.

From 1998 through 2005, Turkmenistan suffered from the continued lack of adequate export routes for natural gas and from obligations on extensive short-term external debt. At the same time, however, total exports rose by an average of 15% per year from 2003 through 2008, largely because of higher international oil and gas prices. New pipelines to China and Iran, which began operations in late 2009 and early 2010, gave Turkmenistan additional export routes for its natural gas. Foreign investment is encouraged.

The United Nations Conferences on Trade and Development (UNCTAD) consider Turkmenistan among the world’s top ten recipients of foreign direct investment (FDI), which were worth 12.6 billion United States dollars (USD) during the period between 2008 and 2011.

Recent declines in global energy prices, the temporary halt of natural gas exports to Russia and Iran, and the cooling Chinese economy negatively impacted the economy of Turkmenistan, resulting in slowdowns in growth of the gross domestic product (GDP). Based on official data, the GDP growth was relatively stable at 65% in 2017 as compared to the 6.2% growth attained in 2016. The economy remains challenged with external trade imbalances. Although imports decreased substantially in 2017, the current account deficit is still expected to remain significant at 9% of GDP in 2018 as energy revenues will continue to be lower. According to the International Monetary Fund (IMF) estimates, inflation rates will further increase from 8% in 2017 to 9.4% in 2018 due to the continued size of external debt and exchange rate controls on imports and international payments.

IMF forecasts growth rates will slightly decline in GDP for Turkmenistan from 6.2% in 2017 to 5.6% in 2018. As hydrocarbons represent more than 90% of exports, the current decline in energy prices and loss of natural gas clients will continue to negatively translate to export revenues. However, Turkmenistan continues to respond to external shocks proactively by promoting and encouraging the private sector for import substitution and export expansion. Turkmenistan continues to keep sufficient international reserves and continues attracting large FDI inflows.

Tax data
Corporate income tax rate (%) Domestic corp.: 8;
Foreign corp.: 20
Corporate income tax due dates
CIT return due date Return is filed quarterly within the month following the reporting quarter.
CIT final payment due date Final payments upon results of the first quarter, first half-year, nine months, and tax year are made within five days from the reporting deadlines.
CIT estimated payment due dates Advance payment is made before the 13th and 28th days of each month.
Standard VAT rate (%) 15
Withholding tax rates (%) (Dividends / Interest / Royalties)
Resident: 15 / NA / NA;
Non-resident: 15 / 15 / 15
1
The overall objective of the EU lists is to improve the proper tax settlement around the world and to ensure that the EU's international partners adhere to the same standards as the EU member states on tax transparency, fair taxation, and implementation of financial security measures. List criteria have been agreed by Member States in 2016. The "black list" includes countries that have not taken sufficient measures to change legislation and to combat tax evasion at the request of the EU. The "grey" list of the EU includes countries that do not yet meet EU requirements, but have shown that they are ready to change and comply with tax transparency and honesty. As for specific sanctions against countries and their residents, no specific EU decisions have been made, but falling into the "black list" itself can bear reputational risks. In addition, both individual EU Member States and other States and entities can introduce their own restrictive policies with respect to the jurisdictions and/or their residents listed.
2
To protect the international financial system from the risks of money laundering and terrorist financing at the international level, the Financial Action Task Force on Money Laundering (FATF) has identified a list of jurisdictions whose national anti-money laundering and terrorist financing regimes have strategic weaknesses that threaten the international financial system. This is the so-called "black list". FATF strongly recommends all states to pay special attention to their financial institutions for business relations and transactions with companies and financial institutions with a "black list" jurisdiction, as well as to the need for enhanced verification of clients when carrying out transactions with entities from these jurisdictions and related persons. The United Nations, the EU, the United States and several other countries and international organizations are taking appropriate sanctions against individuals cooperating with residents from the FATF blacklist. Banks and other financial institutions (including Ukraine) block financial transactions of clients with contractors associated with entities from the "black list" of FATF. Cooperation with contractors, whose partners are persons from these jurisdictions, can be the object of increased attention of the state supervision (control) authorities, and also attract the attention of law enforcement bodies and bear reputational risks.

FATF has also identified a list of jurisdictions which national anti-money laundering and terrorist financing regimes have strategic flaws subject to review by FATF in accordance with agreed milestones and deadlines. This is the so-called FATF "grey list". The FATF recommends all states to pay special attention to their financial institutions to business relations and transactions with these jurisdictions, including their companies and financial institutions, and to the need to verify the client when dealing with entities from these jurisdictions and related persons. Banks and other financial institutions (including Ukraine) conduct financial monitoring of transactions with contractors associated with entities from the FATF "grey list" and, depending on monitoring results, may block financial transactions. Cooperation with contractors partnering with persons from the specified jurisdictions may itself bear reputational risks. It is also possible that individual member states of FATF and other states and subjects of the law may impose restrictions on their own entities and/or their partners.
3
The Organization for Economic Co-operation and Progress (OECP) has produced internationally agreed standards for the exchange of information on request (EOIR) for tax purposes. OECP carries out a rating of jurisdictions on compliance with these standards and the existence of risks associated with compliance with tax laws. Cooperation with contractors, partnering with persons from jurisdiction, do not meet the specified standards (the so-called "black list" of the OECP") itself can bear reputational risks. It is also possible that individual OECP member states and other states and subjects of law may impose restrictions on their own entities and/or their partners. Sanctions against any entities due to their belonging to the OECP "grey list" (jurisdictions that partially comply with the standards of information exchange for tax purposes) and/or their partners do not exist. At the same time, cooperation with contractors, partnering with persons from jurisdiction, do not fully comply with the standards of transparency of the OECP tax information clearly can not be considered an advantage.
4
In 2017, the Tax Code of Ukraine (Article 39) clarified the calculation of income tax in transfer pricing. On Dec. 27, 2017 the Cabinet of Ministers of Ukraine adopted a new List of relevant states (territories). This list includes 63 of 65 offshore companies defined by the previous List of Offshore Companies (Order of the Cabinet of Ministers of September 16, 2015, No. 977-r was canceled), as well as a number of other states/territories (85 in total). Some of these states are not "classical offshore companies" in the conventional sense, however, belonging of the non-resident contractor to them is a sign for classifying economic transactions with it as "controlled" and applying the relevant principles of tax adjustment. Initially, Bulgaria, Georgia, Estonia, Latvia, Malta, and Hungary were included in the List, but subsequently they were excluded by the Cabinet of Ministers Decree No. 108 dated 31.01.2018, dated 11.04.2018 No. 295. In accordance with the procedure for conducting counter-checks by the controlling authorities (Cabinet of Ministers Decree No. 1232 of December 27, 2010), the controlling authorities may conduct the necessary counter-checks to obtain tax information needed when conducting taxpayer audits. In particular, regarding contractors participating in the supply chain of goods (works, services) that are the subject of controlled operations. Information obtained as the result of such checks may be the basis for conducting appropriate unscheduled inspections and/or appealing to law enforcement agencies.
5
In accordance with paragraph 1 of the first part of Article 15 of the Law of Ukraine “On Prevention and Counteraction of Legalization (Laundering) of Proceeds from Crime, Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction” to include states in the list of offshore zones in accordance with the annex of the Cabinet of Ministers "On the classification of states to the list of offshore zones" dated 23.02.2011 No. 143-r for the purposes of financial monitoring, includes some states to offshore zones.

Banks and other financial institutions of Ukraine carry out financial monitoring of transactions with contractors from these jurisdictions and, depending on the results of monitoring, have the right to stop the implementation of the financial operations for 2 business days. The State Financial Monitoring Service, in case of suspicion, may decide to suspend expenditure financial transactions for up to 5 business days. In addition, if the State Financial Monitoring Agency suspends financial operations, the law enforcement agencies authorized to make decisions in accordance with the Criminal Procedure Code of Ukraine are immediately notified. Thus, cooperation with contractors, which include individuals from the "offshore list" of Ukraine, can attract the attention of law enforcement agencies and bear reputational risks.
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