United States-Turkmenistan Tax Treaty
Turkmenistan’s International Tax Compliance Rules
Quick Summary. Located in Central Asia, Turkmenistan borders Afghanistan, Iran, Uzbekistan, Kazakhstan, and the Caspian Sea. A former constituent republic of the Soviet Union, Turkey achieved independence in 1991 following the fall of the U.S.S.R. Turkey is a presidential republic comprised of five provinces (welayatlar).
Effective in late 2017, Turkey’s Law on Free Economic Zones (FEZs) provides members of FEZs with a number of tax-related benefits. Turkey’s Ministry of Finance and Economy of Turkmenistan also underwent a restructuring. Turkey provides for a simplified tax regime for certain legal entities (qualified small and medium enterprises (SMEs)).
U.S.-Turkmenistan Tax Treaty
Resident corporations are subject to tax on worldwide income, whereas non-resident corporations are subject to tax only on Turkmenistan-sourced income. Foreign branches located in Turkey are subject to an increased income tax rate of 20%.
Similarly, resident individuals are subject to tax on worldwide income; non-resident individuals are subject to tax only on Turkmenistan-sourced income.
Currency. Turkmenistan manat (TMT)
Common Legal Entities. Joint stock company, business society, sole proprietorship, branch of a foreign corporation, and representative office.
Tax Authorities. Ministry of Finance and Economy of Turkmenistan.
Tax Treaties. South Africa is party to more than 37 tax treaties.
Corporate Income Tax Rate. 8% (resident nongovernmental entities) / 20% in general (nonresidents and for all entities operating under the Petroleum Law).
Individual Tax Rate. 10% in general.
Corporate Capital Gains Tax Rate. 8% (resident nongovernmental entities) / 20% in general (nonresidents and for all entities operating under the Petroleum Law).
Individual Capital Gains Tax Rate. 0% in general.
Residence. Individuals are residents of Turkmenistan if they are physically present in Turkmenistan for 183 days or more in a calendar year, unless otherwise provided under an applicable tax treaty.
Dividends. 15% (resident company) / 10% (resident individual) / 15% (nonresident company without PE in Turkmenistan) / 10% (nonresident individual)
Interest. 0% (resident company) / 0% / 10% (resident individual) / 15% (nonresident company without PE in Turkmenistan) / 10% (nonresident individual)
Royalties. 0% (resident company) / 10% (resident individual) / 15% (nonresident company without PE in Turkmenistan) / 10% (nonresident individual)
Transfer Pricing. Transactions between related parties; transactions involving the exchange of goods, work, or services; and external trade deals are subject to the transfer pricing rules. The tax authorities are entitled to correct tax calculations where there is a divergence from the real market price of more than 20%. For contractors/subcontractors under the Petroleum Law, the divergence may not exceed 10%.
CFC Rules. No CFC rules.
Hybrid Treatment. No.
Inheritance/Estate Tax. No.
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