Tajikistan Business Enabling Environment Project
“Now I come, and pay taxes every
month, and feel peaceful.”
- Nurali Sharipov
Paying Taxes in Tajikistan is Now Easier
for Almost 100,000 Entrepreneurs:
The new Patent combines 3 taxes into
one simple payment
Paying taxes is a complicated process for Tajikistan’s 115,000 individual entrepreneurs. A third of them describe
the process as complicated or very complicated.
These sole proprietorships have two options: the Patent or the Certificate. In 2006, more than 90% of
entrepreneurs chose the Patent system of taxation.
While the Patent eased reporting burdens for personal income tax, entrepreneurs still needed to calculate social
tax and retail trade tax obligations.
These required keeping meticulous accounting records for tax inspectors, who visit the average individual
entrepreneur 9 times a year.1
IFC recommended simplifying the Patent system further, and these suggestions were incorporated into the Tax
Code amendments of April 2008.
In July, a new Patent came into force. The new Patent combines all of the Patent-holder’s tax obligations into
one lump-sum payment, incorporating personal income, social and retail trade taxes.
The Patent is available for sole proprietorships, with less than 200,000 TJS annual turnover (about $63,000), who
work in one of 169 spheres of economic activity.
Tajikistan’s SME sector at-a-glance
-- 74%
are individual entrepreneurs (90% of these work under Patent)
-- 21%
are privatized farms
-- 5%
are small and medium companies
Nurali Sharipov, a hairdresser. “I am working as a hairdresser for many years now. I always pay taxes, even
when it’s difficult, because I know that it’s everyone’s
duty. Before I would work on the basis of certificate, and
each time I would present either quarterly or monthly
reports to the tax inspection. Also there were additional
expenses because I had to fill out the declaration. When
the new Patent became available in July, I received it.
The Patent simplifies the report presentation process for
me: I shouldn’t worry about this stuff anymore. I completed all formalities in the regional tax inspection and
done! Ready for work! Now I come, and pay taxes every
month, and feel peaceful. By the way, before I would spend 100 somoni per month for all those formalities…or even more. Now I pay 60 somoni for Patent according to the established price. So, today I’m going to pay for October and November!”
Davlatkhonim Kendjaeva, communication services.
I have a telephone box. I work in Ispechak district. I started working under Patent two years ago. When I
came to receive a Patent in the tax inspection, all formalities were finished during a couple of hours. I was
surprised. Today I came to pay taxes for October. For me 60 somoni is a reasonable price. But what is more
important, I do not have to spend my time in lines anymore.
1
All figures from IFC’s Survey, “The Business Environment in Tajikistan as Seen by Small and Medium Enterprises, 2006.”
Tajikistan Business Enabling Environment Project
Khurshed Azizov, a taxi driver.
“I have recently come back from Russia and bought a car. I will
work as taxi driver in Dushanbe. Today I came to register the Patent for my activity. When I asked why the Patent is so expensive,
96 somoni, I was explained, that it combines three taxes. Perhaps,
it’s going to be a little hard for me to pay this sum now, but, I think
in the end it’s going to be good. The amount of Patent covers
also social tax, which is transferred on my personal account. I
guess, this is the main priority of the Patent! Today I paid for the
first month. Look, how many people are looking for Patent today.
If only the price for the taxi license were less...”
What is the Patent?
--
The Patent is a simplified taxation regime for individual
entrepreneurs.
--
In 2005, 92% of individual entrepreneurs worked under (the old)
Patent. Their total tax burden was between 5 and 7% of profits.
--
The cost of a Patent is fixed, according to type of activity engaged
in by the entrepreneur. The new Patent expands the scope of
economic activities available to Patent holders.
--
Holders of the new Patent pay one lump-sum tax consolidating an
entrepreneur’s obligations related to personal income, retail trade
and social tax. Patent holders do not pay VAT or the road users’ tax.
Patent before April 2008 Tax
Amendments
New Patent, effective from July 1, 2008
Clearer issuance
No clear information about required
Government resolution specifies documents and
procedures
documents and procedures
procedures required for obtaining the Patent
Patent rate covers all tax
Fixed price, including only income tax.
Fixed rate, including: (1) income, (2) social and
obligations
Entrepreneur must pay social and retail
(3) retail trade taxes
trade taxes separately.
Tax inspectors verify only
(1) Possession of Patent and receipt
(1) Possession of Patent and receipt confirming its
purchase of Patent
confirming its payment
payment
(2) Turnover (for trade)
(3) Logbook for incomes and expenses
(4) Usage of cash machine
Higher cost of Patent (as
now includes
From 7 somoni (informative activities,
From 30 somoni (transportation by motor-scooter)
2 other taxes)
cleaning of shoes and souvenirs) to 60
to 240 somoni (transportation of oil, condensed
somoni (transportation of passengers by
gas and specialized transport)
vehicle with more than 30 seats)
20% discount on multiple
None
Entrepreneur pays full cost of most expensive
Patents
Patent, then 20% of the rate for any other activity
category
Patents broaden scope
70 Patents; 1 for each sub-activity of 49
28 Patents; 1 for each category encompassing
of activity
categories.
169 sub-activities.
Prohibited activities
- employment of staff
- employment of staff
- foreign trade activity
- foreign trade activities
- work at free-standing, permanent
- activities subject to licensing (except passenger
premises
transportation)
7 Abdullo Komandir Street | Dushanbe, 734001 Tajikistan
T: (992 48) 701 14 47 | F: (992 48) 701 14 53
ifc.org/tajikistan/sme
2008