DOING BUSINESS IN TAJIKISTAN IN 2023
Since 2003, Healy Consultants Group PLC efficiently and effectively assists our Clients with business set up in Tajikistan. Our services include but are not limited to i) Tajikistan company incorporation ii) securing of government licenses iii) corporate bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.
|Compare different Tajikistan entities||LLC||Joint Stock Company (JSC)||Branch Office||Representative Office|
|Also known as||OOO||AO||Branch Office||RO|
|Best use of company?||All products and services||Business owned by its investors||Completing projects without an office||Marketing and research|
|How soon to invoice Clients?||1 month||1 month||1.5 months||N/A|
|How soon can you hire staff?||1 month||1 month||1.5 months||1 month|
|How soon can you sign lease agreement?||1 month||1 month||2 months||1 month|
|How long to supply corporate bank a/c?||2 months||2 months||2 months||2 months|
|Corporate tax rate on annual net profits?||18%||18%||18%||18%|
|Limited liability entity?||Yes||Yes||No (unlimited)||No (unlimited)|
|Government grants available?||Yes||Yes||Yes||Yes|
|Govt approval required for foreign owners?||No||No||No||No|
|Res. director/partner/legal rep. required?||No||No||Yes||Yes|
|Minimum paid-up share capital?||US$1||US$1||US$1||US$1|
|100% foreign ownership allowed?||Yes||Yes||Yes||Yes|
|Minimum share capital payable after 1 year?||US$105||US$1,050||US$1||US$1|
|Tax registration certificate required?||Yes||Yes||Yes||No|
|Does our Client need to travel?||No||No||No||No|
|Resident shareholder required?||No||No||No||No|
|Minimum directors allowed?||One||One||To mirror parent company||To mirror parent company|
|Minimum shareholders allowed?||One||One||To mirror parent company||To mirror parent company|
|Corporate shareholders/ directors allowed?||Yes||Yes||Yes||Yes|
|Tax identification (TIN) needed?||Yes||Yes||Yes||No|
|Annual financial statements required?||No||No||No||No|
|Annual audit required?||No||Yes||No||No|
|Tajikistan resident company secretary required?||No||No||No||No|
|Corporate bank account location||International Bank of Tajikistan||First MicroFinance Bank||Amonatbonk Tajikistan||Bank Eskhata|
|Can secure trade finance?||Yes||Yes||Yes||Yes|
|VAT payable on sales to local customers?||0%-18%||0%-18%||0%-18%||0%-18%|
|Regulated by?||Tajikistan Tax Authority||Tajikistan Tax Authority||Tajikistan Tax Authority||Tajikistan Tax Authority|
|Total Tajikistan business setup costs in Year 1?||US$15,850||US$15,850||US$17,700||US$14,880|
|Average total engagement period?||4 months||3 months||3 months||4 months|
Benefits and risks of doing business in Tajikistan
- Tajikistan has one of Asia’s least developed economies. That said, there is significant upside potential for ambitious, visionary entrepreneurs. Examples of industries which the government is targeting in its 2030 National Development Strategy include i) manufacturing ii) infrastructure development iii) energy resources (including hydroelectric power) iv) ICT medical services v) mining of gold, silver and coal (mostly via local-foreign joint ventures) vi) hydroelectric power and vii) agriculture.
- Tajikistan is rich in natural resources but is short on expertise on the best ways to extract and sell the gold, silver and coal lying under the Central Asian nation. Foreign engineering and mining firms therefore have an opportunity to gain access to precious resources in exchange for sharing knowledge.
- To encourage foreign investment, which remains some of the lowest in Asia, the Tajik government has built a small network of free zones across the country. These free zones offer the following benefits:
- Much easier company set up processes than for ‘onshore’ Tajik companies, with fewer steps and less paperwork.
- 100% foreign ownership.
- No restrictions on remitting money overseas.
- Zero i) corporate income tax ii) VAT and iii) customs duties on exports. The only taxes payable are employees’ income tax (between 8 and 13%) and social security tax (20% of the employee’s salary).
- Good legal protection for investors.
- Whether in a Free Zone or ‘onshore’, Tajikistan is a low-cost location from which to run a business. Office rents, land, utilities, salaries and transport costs are lower than in other Central Asian countries.
- While Tajikistan is landlocked, mountainous and suffers from poor infrastructure, it is very close both geographically and politically to two major markets – China and Russia. A Tajik company is able to forge strong trading relationships with these two countries, as well as other important near east and Asian markets such as Kazakhstan, Pakistan and Turkey.
- Tajikistan is a member of the World Trade Organization (WTO). As a result, in theory the country enforces rules on the protection of intellectual property rights.
- It takes just one week to open a corporate bank account for a Tajikistan branch office. The Client does not need not travel to Tajikistan to complete account opening.
- Most Tajikistan-registered companies suffer a corporate tax of 18%. However, discounts are available, for example manufacturing companies pay 13% tax. Non-resident entities are subject to 18% tax.
- Tajikistan is one of the world’s most corrupt countries. This is a major deterrent for foreign investors, who fear i) they will not receive equal treatment when bidding for contracts ii) they will not receive equal treatment if they are involved in disputes with a local joint venture partners iii) they will not receive a fair hearing in local courts. Paying bribes is common everyday practice in the country and multinational Clients uncomfortable with such practices should avoid doing business in Tajikistan.
- A particular problem area in the Tajik legal system is over property ownership. The country considers all land to be the property of the government, with land use rights granted to individuals.
- Tajikistan is not a good country from which to trade. It is a mountainous, landlocked country sandwiched between China, Afghanistan, Uzbekistan and Kyrgystan. Roads are in poor shape, and railways are inefficient. Aside from poor infrastructure which slows overland imports and exports, companies in the country suffer from high tariffs, especially on consumer goods. Import and export paperwork is long and cumbersome, with many steps. Often, it is necessary to bribe border guards or customs officers to facilitate the movement of your goods.
- Few Tajiks speak English, and it is almost never spoken by staff in government departments or banks. All correspondence is in Tajik. If you do not speak Tajik, or Russian, or have a trusted local business partner, expect everyday business dealings, formalities and networking to be challenging.
- Tajikistan’s economic policies and investment practices are restrictive. Apart from Free Zones (where registration fees are high at US$5,000), there are few incentives for foreign investors. In 2021, the respected Heritage Foundation classifies the Tajik economy as being ‘unfree’. The report criticises, for example, the slow approval process for foreign investments, and the inconsistent application of investment laws.
- In accordance with the Law on Limited Liability Companies, every foreign director of a Tajik company must have a Tajikistan work permit and Personal Identification Number. It takes at least three months to secure work permit approval. To efficiently and effectively secure company registration in a timely manner, most of our Clients request Healy Consultants to appoint a temporary professional, passive nominee resident director (click link). Our resident director service fee amounts to US$7,600 per annum.
- Every foreign signatory to a Tajikistan corporate bank account must hold a Tajikistan work visa. We recommend our Clients appoint a director who will also be a temporary bank signatory. Thereafter, Healy Consultants will help our Client secure a Tajikistan work visa.
- Tajikistan is located in a volatile part of the world. The risk of violence and terrorism in the country is high, especially if instability in neighbouring Afghanistan spills over into Tajikistan.
- Most foreign investors enter Tajikistan via a joint venture. While a joint venture partner will know the local market and comfortably navigate local business practices, any commercial or legal dispute will almost certainly favour the local partner.
- Some overseas investors choose to set up a branch office in Tajikistan. Points to note about branch offices in Tajikistan include:
- Branch office registration takes between two to three months, after all required documents have been submitted to the Registrar for review and approval.
- All parent company documents must be translated from their original language into Tajik, and then notarised and apostilled/attested by the embassy in the Client’s country of origin. This can add both significant delays and cost to an engagement.
- The branch office must appoint a local accountant. This can be either i) an employee of the branch office or ii) a local accounting firm.
- A branch office must also appoint a resident director, who must be a Tajik citizen.
- Branch registration must be renewed every year.
- A branch office must submit annual financial statements to the Tajikistan tax committee by 31 March every year.
- A Tajikistan branch office is only allowed to engage in profit making activities which are limited to the scope of the parent company’s business.
Useful links for Tajikistan
Government and public authority websites:
- Ministry of Finance
- Ministry of Foreign Affairs
- National Bank of Tajikistan
- Chamber of Commerce
- Tajikistan airport