Company registration in Tajikistan

Introduction

Tajikistan, a landlocked country in Central Asia, boasts a unique business environment characterised by its strategic location, rich natural resources, and a growing focus on economic reforms. The country is rich in minerals, hydropower resources, and has a burgeoning agricultural sector, making it an attractive destination for sponsors looking for novel opportunities.

The government of Tajikistan has been actively working to improve the business climate by implementing reforms aimed at simplifying business regulations, enhancing transparency, and fostering foreign investment. These efforts have resulted in a gradually improving ease of dealings, with particular progress noted in areas such as starting a business, registering property, and protecting minority financiers. Despite the challenges posed by its mountainous terrain and limited infrastructure, Tajikistan's commitment to economic development and diversification presents promising prospects for entrepreneurs.

Proper organisation enrolment is the cornerstone of any successful business venture in Tajikistan. Registering a company ensures that your business is recognised as a lawful enterprise, which brings several critical benefits. Firstly, it provides a legal framework that safeguards your business interests, protects intellectual property, and establishes your rights and obligations under the law. This legal recognition is essential for entering into contracts, opening bank accounts, and accessing various government and financial services.

Registration of companies in Tajikistan is regulated by the Law “On State Registration of Legal Entities”. It is the smallest state in Central Asia by area, bordering Uzbekistan, Kyrgyzstan and China. Thanks to this, the Tajik company is able to establish strong trade relations with important markets in the Middle East and Asia.

The government has taken steps to improve the investment environment, including the creation of special economic zones (SEZs). The publication explains in detail the main aspects and stages of registering a business in Tajikistan , and discusses the issues of choosing the direction and place to initiate a trade.

Opening a company in Tajikistan

If you wish to start a business in Tajikistan, you could be interested in finding out regarding the nation's economic prospects and advantages it has to offer. To begin with, Tajikistan plays a key role as a crossroads on the Great Silk Road, the historic trade route linking China with Europe. This route extends through Central Asia, providing important transport and economic links between different regions.

Tajikistan, due to its geographical territory, influences trade, logistics and cultural exchange in the region, on the basis of which new prospects are formed for launching business projects in Tajikistan . Despite its position as one of the least developed economies in Asia, potential in a value of industries opens up for those planning to register a company in Tajikistan .

The National Development Strategy until 2030 focuses on the evolution of production, infrastructure, energy resources (i.e hydropower), ICT-enabled health supports, hydropower alongside agriculture. The Republic of Tajikistan has the potential to become a key energy and trade hub on the continent with admission to imperative markets in South, East and Central Asia.

With a prime and rapidly advancing population, vast water and hydropower resources, progress in agriculture, food production, vacationing and other sectors, business registration in Tajikistan has the potential for further growth. In addition, the state authorities are taking measures to improve the tax situation for business, including impost breaks and promotions, which stimulates the creation of new enterprises in Tajikistan .

If you are looking to open a business in Tajikistan , it is useful to note that by 2030 the jurisdiction is aiming to significantly increase domestic revenues by introducing a new economic model that emphasizes private sector development. Other goals of government initiatives:

• Increasing the technological level of advancement;
• Creation of modern logistics centers and expansion of international Collaboration, conveyance, and finance corridors;
• Development of enterprise, institutional and legal conditions for the enhancement of trade activities and import substitution.

Free ports have been developed established across the nation's territory, which help lure expat  resource, expand export opportunities and create new vacancies. The merits of registering companies in free economic zones of Tajikistan are contingent on the range of function, and the company's overall strength and strategic priorities.

These areas provide a number of advantages.

• It is much easier to organize processes in FEZ ventures than in “onshore” Tajik companies , with minimum phases and less indentures.
• Absent constraints on transferring stake abroad.
• 0% CIT and 0% VAT, duty-free trade.

The only levies payable when registering companies in the FEZ of Tajikistan are employee revenue impost (from 8 to 13%) and public duty (20% of the employee's compensation).

Regardless of the location of companies in Tajikistan , the country is an inexpensive place to establish and operate a trade. Leases for workplaces, property, services, remunerations and transportation bills are less than in most Middle Asian nations.

Types of enterprises in Tajikistan in 2024

Additionally to the national Law on State Enterprises, the regulation of business activities in Tajikistan is regulated by the Law on Investments. Before opening a company in Tajikistan , it is paramount to decide on the legislative form, as this decision will have a significant impact on many aspects of the scheme. The lawful type of an enterprise determines not only the quantity of responsibility of the originators, but also tax obligations, capital prerequisites, the ability to lure speculations and other key factors.

Registration of a company in Tajikistan can be carried out in various forms, each of them has its own characteristics and demands. It is important to take into account the specifics of the chosen type of activity, since some areas of business, such as banking or insurance, have special regulatory requirements. Choosing the right legal form to create a company in Tajikistan will help avoid legal and financial problems in the future and ensure effective oversight. 

Wholly foreign-owned corporations

While transnational financiers are constrained in the energy, transportation, and travel sectors, complete transnational proprietorship is permitted in other trade sectors. A regional director or the region's firm secretary are not required to start a business in Tajikistan. Creating a venture does not require an initial capital investment. Foreign-owned companies face minimal taxation and the establishment procedure is comparatively simple if a Tajikistan corporation is well-structured.

Limited Liability Company.

This is the prevalent form of organization used by sponsors and businessmen wishing to start a business in Tajikistan . According to national legislation, an LLC is a form of commercial enterprise that is created by one or more creators, and the permitted stake of which is distributed into shares in conformance with the constituent indentures.

Dividing the investment to permitted assets means that each participant has a certain share, which determines their prerogatives and roles. This promotes transparency and clarity in the management of the firm, and protects the personal assets of participants from the threats linked with the schemes of the LLC.

To register an LLC in Tajikistan, a minimum of one supervisor is required (can be a firm or a corporate person). The least fund is $105, which must be paid in the first year of registration.

Joint-stock company

You can create an open or closed JSC in Tajikistan. Open JSCs allow an unlimited number of financiers, while closed JSCs are constrained to a maximum of 50. The least fund for registering a joint stock company in Tajikistan is US$210 (for a closed JSC) and US$1,050 (for an open JSC), amounts to be contributed to the corporate venture account until the end of the fiscal year.

Representative office/ branch in Tajikistan .

Transnational organisations wishing to start a business in Tajikistan are allowed to initiate a branch in this territory. The branch can participate in profitable operations, which are constrained only by the breadth of activity of the foreign company. The transnational organization bears full responsibility for the activities of the branch.

If a global company wishes to explore the trade environment and market opportunities in this country, it can open a representative office in Tajikistan . This organization is NOT allowed by statute to perform any sole venture schemes in this country, and may only involve in operations consisting of market analysis, marketing and initial client encounter.

Company registration process in Tajikistan

The process of launching a company in Tajikistan consists of several important steps, each of which plays a role in ensuring compliance with national laws. Main stages of company registration in Tajikistan :

1. Choosing a corporate structure.
2. Appointing and approval of the trade name. Note. A minimum of three titles, In grade of choice, are usually mandated to be delivered to the appropriate entity for deliberation.
3. Preparation of constituent record.
4. Compensation of the jurisdiction fee
5. Delivery of indentures and forms.

These are the core enrolment sequences. These are followed by several more important steps - registration with the national Tax Administration, opening an account in Tajikistan in the name of your corporation, obtaining licenses and certificates (reliant on the field of activity).

Opening a corporate bank account in Tajikistan 

Some of the Banks in Tajikistan:

• Orienbank
• Amonatbank.
• Bank Eskhata.
• The first microfinance bank.
• Development Bank of Tajikistan.
• Active Bank.
• Commerzbank of Tajikistan.
• Dushanbe City Bank.

In some banks you can open an account in Tajikistan remotely .

Create a company in Tajikistan - indenture requirements

Documentations for registration of a legal entity in Tajikistan :

• Enrollment form.
• The initiator’s choice (summary of the executives' meeting) to create an enterprise in Tajikistan .
• A duplicate of the executive's license for the corporation being constituted.
• Duplicates of passports or additional identifying papers of each originator (person), or a duplicate of the Certificate of Incorporation or an extract from the original owner constitutes a non-resident corporation, it must be registered.
• Authorized confirmation of the enrolled location of a lawful firm in this territory. According to the legal norms of the Republic of Tajikistan, virtual addresses are not acceptable.

Understanding the statutory needs of the country you choose to register a company can be a difficult and time-consuming task, but it will provide the basis for the first step in the right direction. Business consultants of our enterprise can advise in detail on the prominent legislative aspects and provide support in registering a business in Tajikistan .

Opening a company in the free economic zone of Tajikistan

Free zones offer preferential tax regimes and simplified administrative procedures, which makes them attractive to foreign investors. As a result, companies operating in SEZs can significantly reduce costs and increase their competitiveness in international markets.

Free economic zones drive technological innovation and upskilling of the workforce. Registering a business in a free zone in Tajikistan allows you to gain access to clusters where businesses connected by supply chains and production processes can work closely together and share experiences. There are four SEZs in Tajikistan, each of which plays a key role in the fiscal prosperity of the region.

Special conditions are provided within the SEZ:

• Exemption from revenue levy for lawful enterprises, property and land imposts in the first five years of operation of the enterprise;
• Duty-free import of supply and raw materials;
• Accelerated VAT refund;
• Access to preferential loans for construction and production.

Levies in Tajikistan

The revenue levy rate is 18% (13% for manufacturing enterprises and 20% for financial institutions). Small businesses in Tajikistan whose yearly income does not exceed 1 million TJS (Tajikistan currency, approximately 93,887 USD) pay tax under a simplified system. To apply the simplified taxation system, total income is used as the tax base. The tax rate is set at 6%.

One of the key events of 2022 in Tajikistan is the adoption of a new edition of the Tax Code, where the main tax rates have been reduced. A simplified tax regime was introduced for companies participating in innovation and technology. Such companies are excluded from all levies, except public impost, individual revenue impost and dividend impost, and the import of innovative and modern equipment is excluded from the levy and trading duties.

VAT is charged at a percentage of 14%. Registration of a Tajik company as a VAT payer is mandatory if the taxable turnover exceeds TJS one million for the last 52-week period. According to the Tax Code, services related to real estate, financial services, certain types of medical support, and some others are excluded from VAT.

Tax benefits. In addition to the benefits offered to companies in a SEZ, registering or purchasing a company in Tajikistan may provide other benefits. Exemption from revenue tax is supplied to production companies whose founders have invested the specified amount in the certified stake:

• Exemption for 2 years if the investment threshold from 200,000 to 500,000 USD has been met.
• Exemption for 3 years if the investment amount was from 500,000 to 2 million USD.
• Exemption for 4 years if the investment volume is from 2 to 5 million USD.
• Exemption from 5 years if the investment threshold of 5 million USD and above has been met.

Tax benefits are provided for securities market entities:

• Revenue levy and VAT are reduced by 50% for professional participants.
• Issuers are protected from paying levy on income arising from an increase in the value of protections.
• Profits from increases in the value of stocks are protected from revenue taxes for investors.

If you are interested in registering a tourism business in Tajikistan , you can count on benefits in the form of a 5-year exemption from income tax on income received from tourism services, as well as exemption from VAT on the import of supplies, construction and other materials for the development of the tourism industry .

Apart from these incentives, incentives are available for startups in the jurisdiction. Startups in Tajikistan are driving fiscal growth. The ilmhona training center is a successful example of a startup in Tajikistan , offering programming and design training, events to promote the technology community.

Entrepreneurs wishing to set up a business in Tajikistan will have access to a 90-day incubation program (consulting, technical infrastructure, training), coaching and mentoring for startups. To be considered for the program, an applicant must demonstrate that they have a clear business concept.

Annual Reporting and Auditing

After successfully registering your company in Tajikistan, handling conformance with ongoing statutory prerequisites is crucial. Among these, annual reporting and auditing stand out as essential obligations for guaranteeing the continued legitimacy and lucidity of your endeavour operations.

Annual reporting involves the planning and submission of Fiscal reports and necessary indentures to the relevant supervisory authorities. In Tajikistan, enterprises are generally required to submit these records to the Tax Committee of the Republic of Tajikistan and additional pertinent governmental bodies.

Key components of annual reporting typically include:

• Pecuniary Statements: This encompasses monetary sheet, revenue statement, and flow of funds accounts. These documents provide a comprehensive overview of your company’s success of finances  over the past year.
• Supervisory Review: This report offers insights into the company’s operations, significant events, and future plans. It’s a narrative that complements the numerical data in the financial statements.
• Corporate Governance Record: This contains details regarding the firm's governance structure, such as details concerning the council of supervisors, managerial methods, and any modifications in governance policies.

Timely and accurate annual reporting is essential not only for regulatory compliance but also for maintaining the trust of investors, partners, and financiers. Inability to conform with monitoring obligations may culminate in consequences, mulcts, and even the suspension of your business licence.

Auditing:

In addition to annual reporting, many companies in Tajikistan are required to undergo an annual audit. An audit involves an independent examination of your company’s financial statements and practices by a certified auditor. The primary objective is to ensure that your financial statements are accurate and comply with relevant accounting standards and regulations.

The auditing process typically includes:

• Initial Planning: The auditor reviews the company’s financial records, identifies key areas of risk, and develops an audit plan.
• Fieldwork: This involves the detailed examination of financial transactions, internal controls, and supporting documentation. The auditor may also conduct interviews with management and staff to gain a deeper understanding of the company’s operations.
• Reporting: Upon completion of the fieldwork, the examiner plans and survey records highlighting their discoveries. This report may highlight any discrepancies, weaknesses in internal controls, or places for improvement.

Auditing serves several important purposes:

Assurance: It provides assurance to stakeholders that the company’s financial statements are accurate and reliable.

Transparency: Auditing enhances transparency and accountability, which are critical for maintaining investor confidence and attracting potential partners.

Compliance: It ensures that the company comforms with regional laws and international accounting standards, reducing the risk of legal issues.

Advantages of Registering a Company in Tajikistan

Starting a business in Tajikistan comes with a range of strategic benefits that can boost both efficiency and profitability. Here are some key advantages:

Tajikistan provides an advantageous environment for businesses looking to establish, optimise, reorganise, or liquidate their operations. Fast registration processes, tax optimisation opportunities, competent legal support for reorganisation, and efficient liquidation procedures are just some of the benefits that make Tajikistan an appealing destination for entrepreneurs and investors.

Limitations in Company Registration in Tajikistan

• Bureaucratic Red Tape: The registration process is complex and time-consuming due to extensive paperwork.  Hire a local legal expert to guide you through the process.
• Language Barriers: The official language is Tajik, and English is not widely used, leading to communication issues.  Use a professional translator or work with a local partner.
• Regulatory Compliance: Adhering to local laws can be daunting for foreign investors. Consult a local legal expert to stay updated on regulations.
• Finding a Reliable Local Partner: Establishing trust with a local entity is challenging but crucial.  Conduct thorough due diligence and seek recommendations.
• Economic and Political Instability: Instability can affect business operations and investment confidence.  Diversify investments and develop a risk management strategy.
• Infrastructure Challenges: Limited infrastructure can pose logistical issues.  It is paramount to plan operations considering these limitations and invest in reliable tools.

Conclusion

In Tajikistan, despite its status as a developing economy, there are opportunities for commercial development in many sectors due to its strategic geographical location and rich natural resources. Business consultants IQ Decision UK offer full support at all stages of company registration in Tajikistan , helping to understand local legislation and assisting in obtaining approvals from jurisdiction departments.