Because of its steady economic growth, Turkmenistan is a desirable place to do business. Forming a company here provides entry to the rapidly expanding Central Asian market and is a crucial first step in beginning business ventures. The chance to offer items to the local market and the potential for exporting to adjacent states highlight the importance of this procedure.
This article provides an overview of the main aspects and steps for business registration in Turkmenistan, including the legislative framework, types of companies, in-depth breakdown of the registration steps and subsequent commitments for businesses under this jurisdiction. It also addresses issues of selecting the direction and location for launching a business within the territory of Turkmenistan.
Economic indicators of Turkmenistan
Situated in the heart of Central Asia, Turkmenistan exhibits several economic characteristics that render it appealing for business ventures. Stable economic growth, bolstered by substantial natural resources, particularly natural gas reserves, provides a foundation for economic resilience and opportunities.
In recent years, this nation has exhibited a positive trajectory in the growth of its Gross Domestic Product (GDP). According to global economic reviews, the country showcases a steady GDP growth rate of 5-6% per annum, which stands as one of the best indicators among regional nations. This sustained economic expansion fosters favorable conditions for those intending to incorporate enterprises in Turkmenistan.
Turkmenistan presents a market with substantial potential for entrepreneurs and investors, particularly in light of ongoing economic and political reforms. The Turkmen authorities are actively working on enhancing the investment climate to attract foreign investments into various economic sectors. The government has implemented a series of economic reforms aimed at simplifying the procedures for company formation and investment. These changes bolster international investors' confidence and increase interest in the country's economic potential.
Turkmenistan is distinguished by a high degree of political stability, significantly mitigating business risks. State support for entrepreneurship and direct investments into the economy create favorable conditions for establishing companies in the country. To stimulate investments, the government offers a range of incentives, including grants, land use benefits, and customs privileges. These initiatives are aimed at attracting business interests to the country and facilitating market entry processes.
The state is taking measures to optimize the tax burden on businesses. For instance, low profit tax rates for specific sectors and tax incentives for new enterprises contribute to a favorable tax climate. This encourages entrepreneurs to establish new ventures in the priority sectors of Turkmenistan.
Industries with high potential for starting a business in Turkmenistan
Turkmenistan has traditionally relied on the oil and gas industry, which serves as the foundation of its economic stability. Nevertheless, there has been a recent trend towards economic diversification, with a focus on developing the agricultural sector, textile industry, and tourism sector. These changes open up new prospects for entrepreneurs interested in establishing enterprises in these domains within Turkmenistan.
In Turkmenistan, the development of agricultural production is facilitated by its significant land resources. This sector benefits from various government incentives, such as tax exemptions and subsidies for farmers, which bolster its strength. Of particular focus are the cultivation of cotton, cereals, and horticultural products. High returns can be achieved through investment in agriculture and the establishment of enterprises for processing agricultural products in Turkmenistan, thanks to supportive government programs.
In Turkmenistan, the light industry sector encompasses the production of textiles, clothing, and leather goods. Through production modernization and export incentives, the government promotes the development of this sector. Establishing a company in Turkmenistan's light industry sector offers access to high-quality raw materials and low operational costs, while also presenting opportunities for exporting goods to Asian and European markets.
The prioritized direction of development in Turkmenistan is tourism. The country boasts unique natural and cultural attractions, such as the ancient city of Merv, the Karakum Desert, and the Caspian coast. Infrastructure investments in the tourism sector, including hotel construction and transportation accessibility enhancements, are actively pursued by the state. With appropriate positioning and marketing, establishing a Turkmen hospitality or tourism services firm could yield lucrative capital investments.
Although the IT sector in Turkmenistan is still in its developmental stages, the government is beginning to acknowledge the significance of digital economy and the implementation of modern technologies. Investments in establishing IT companies, software development, and provision of IT services can ensure substantial growth, especially considering governmental support in the form of tax incentives and workforce training programs.
In addition to its traditional reliance on the oil and gas sector, Turkmenistan aims to develop alternative sources of energy. Solar and wind energy in the region holds significant potential due to high levels of solar insolation and favorable wind conditions. Registering a company in Turkmenistan in the field of renewable energy could become a promising direction considering the global trends towards transitioning to eco-friendly energy sources.
Choosing a location to create a company in Turkmenistan
The selection of the correct location is a pivotal aspect when initiating business operations in Turkmenistan. Various regions and cities within the country offer distinctive opportunities for commercial endeavors contingent upon sectoral activity, infrastructure, resource availability, and governmental backing.
The capital of Turkmenistan, Ashgabat, offers the most developed infrastructure sector for companies. Here are located modern offices, there is high-speed internet, and the possibility of hiring qualified personnel. This makes the city an ideal location for establishing enterprises in the fields of services, IT, and global trade. Additionally, Ashgabat is the principal administrative and political center of the state, ensuring proximity to government institutions and foreign embassies.
The city of Turkmenbashi, situated on the coast of the Caspian Sea, serves as a significant logistical and transportation hub. It hosts a major seaport of Turkmenistan, rendering it a suitable location for the establishment of Turkmen firms engaged in import-export companies. Furthermore, the region actively develops its tourist infrastructure, offering promising prospects for business development in the hospitality and entertainment sectors.
Mary is an industrial and agrarian hub in Turkmenistan, where many agricultural and manufacturing enterprises are concentrated. Establishing a firm in Mary can be advantageous for businessmen interested in agribusiness and agricultural product processing within Turkmenistan. Thanks to abundant land and water resources, the region offers low costs for raw materials and production.
Balkanabat, situated within a rich hydrocarbon region, stands as a pivotal asset to the energy sector. Herein lies the opportunity to establish a company engaged in the extraction or processing of hydrocarbons, as well as providing engineering and service provisions for the oil and gas industry. The region offers access to primary resources and a specialized labor force.
Special economic zones (SEZs) of Turkmenistan
Turkmenistan is also developing a network of SEZs, offering special conditions for investors, including tax incentives, simplified customs procedures, and government support.
The primary objective of establishing SEZs in Turkmenistan is to expedite the development of specific economic sectors such as high technologies, industrial production, export operations, and tourism. SEZs are also aimed at creating new job opportunities, attracting foreign capital, and transferring advanced innovative solutions and managerial practices.
These zones are particularly suitable for manufacturing firms, export-oriented enterprises, and startups in high-tech sectors.
SEZ in Turkmenistan:
- Ashgabat SEZ is situated within the capital region and is focused on the progressive advancement of high-tech and research organizations, encompassing companies in the field of information technology.
- Turkmenbashi SEZ focuses on industries related to maritime transportation and logistics, including shipbuilding and processing of marine products.
- Balkanabat SEZ specializes in the oil and gas sector and related industries, offering optimal conditions for enterprises in the energy sector.
- Mary SEZ makes an emphasis on the agricultural sector and processing of agricultural products, supporting the export of organic food products.
Organizations registered within the SEZ of Turkmenistan derive substantial advantages:
- Tax benefits: significant reduction or complete exemption from corporate tax, property and land taxes, as well as simplification of tax reporting.
- Customs preferences: exemption from customs duties and value added tax when importing equipment and raw materials necessary for production.
- Administrative simplifications: accelerated registration of a company, reduction of bureaucratic processes and support from the administration of the SEZ.
- Infrastructure support: access to existing infrastructure, including transport networks, communications and energy resources.
Legislative framework for starting a business in Turkmenistan
The process of registering companies and managing enterprises in Turkmenistan is regulated by a complex of legislative acts, which provide legal support for operations both within the country and beyond its borders. It is extremely important to be informed about key laws and the latest modifications in legislation that affect foreign investors.
Basic laws regulating business activities in Turkmenistan:
- The Law on Enterprises establishes regulations for the operation of legal entities, encompassing aspects of incorporation, management, reorganization, and cessation of corporate activities.
- The Law on Licensing Some Kinds of Activity establishes requirements for obtaining licensing permits for specific types of activities that require special authorization.
- The Law of Turkmenistan on SEZ governs the creation and functioning of free zones within Turkmenistan.
- The Law on the State Support of Small and Medium Entrepreneurship is purposed to expedite and facilitate the progress of SMEs through governmental assistance.
Structures and lawful configurations of businesses in Turkmenistan
According to the laws of Turkmenistan, companies can be registered in various legal configurations. Each model is characterized by unique aspects of management, responsibilities of founders, and the registration process. Below are the main legal structures for conducting business in Turkmenistan.
Individual enterprises are owned by a sole natural person, who fully manages the processes and bears unlimited liability for the organization's debts. The primary document of such enterprises is their articles of association, which are approved by the owner.
Cooperatives are founded on the principles of membership and active participation of their participants. Their assets are formed from the contributions of members and other lawful sources of financing. Governance is conducted through the holding of general meetings of the cooperative.
Commercial companies represent associations formed by two or more individuals for the purpose of conducting collective activities based on an agreement among the founders. Legislation also defines the required size of the authorized capital.
The oversight of the formation and functioning of corporations is conducted pursuant to the dedicated Legislation on Corporations. This legal structure enables extensive involvement and the dispersion of funds among numerous stakeholders.
Public organizations establish these enterprises with the aim of achieving the tasks set before them. Financing for such enterprises is provided through the resources of public organizations and other legitimate sources.
Comparative table of enterprises in Turkmenistan
Founders |
Control |
Financing |
Responsibility |
|
Individual enterprise |
One individual |
Business owner |
Owner's personal funds. In Turkmenistan, the minimum permissible capital requirement is 25 times the minimum salary. |
Not limited |
Cooperative enterprise |
Community of persons (individuals or legal entities) |
General meeting of members |
Funds are raised through member contributions. The authorized capital is equal to 50 times the minimum wage |
Limited to contribution amount |
Public organization enterprise |
Non-profit organizations |
Governing body |
Funds from the founding organization. The size of the authorized capital is determined to be 100 times the minimum wage |
Limited |
Economical society |
Two or more founders |
Founders meeting |
The authorized capital equals 100 multiples of the minimum wage in Turkmenistan. |
Limited |
Joint-Stock Company |
Can be one or more persons |
Board of Directors |
The authorized capital is 200 times the minimum wage in Turkmenistan |
Limited |
Foreign investors have the opportunity to establish all the previously mentioned varieties of enterprises in Turkmenistan, following the prescribed legal requirements and registration protocols. Nevertheless, it should be emphasized that involvement in particular sectors of the economy necessitates acquiring supplementary licenses or permits.
Apart from the aforementioned forms, firms in Turkmenistan's contemporary economic environment have enough prospects to broaden their sphere of influence. These options include the formation of subsidiary companies and other models of structural subdivision. By using this strategy, businesses may improve their standing in both home and foreign markets.
Business entities can also establish branches and representative offices, which don't have independent legal personality and act as extensions of the headquarters to further their interests in new markets. The legal guidelines governing branch and representative offices are outlined in the Turkmen Civil Code, and registration with the authorities is mandatory to ensure their compliant operations within existing regulations.
Turkmenistan's companies are also empowered to set up affiliates, divisions, and liaison offices abroad, operating within the legal frameworks of the host countries and Turkmenistan's international accords. This strategy fosters the incorporation of domestic businesses into the global marketplace, allowing them to broaden their footprint and solidify international partnerships.
Procedure for registering a business in Turkmenistan
Establishing a firm in Turkmenistan necessitates navigating a sequence of pivotal stages, each essential for a prosperous launch of operations. This process equips the enterprise with a lawful foundation and the competency to function in accordance with Turkmen regulations.
The first step in the business registration process involves selecting a unique brand name for your company. It's crucial to confirm that the chosen name is not already in use by another legal entity within this jurisdiction. When registering a Turkmenistan-based company's name, the use of the full terms "Turkmenistan" and "Ashgabat" is prohibited, allowing only for abbreviated versions. Availability checks can be conducted through the registration authority or a reputable online platform.
The primary documents contain the organization's charter and articles of association (in case of multiple founders). These papers must record the following information: the company's name, legal address, scope of activities, authorized capital, details of the founders, and the mechanism of enterprise management.
Before submitting registration documents, one must pay the state fee. The amount of the fee depends on the form of ownership and can be clarified at the registration chamber or on the official portal of public services.
The local enterprise registration authority facilitates the submission of papers for the formal registration of a company in Turkmenistan. You have the option of doing this in person or through a representative while in Turkmenistan.
A firm must register with the tax authorities upon its establishment in order to receive a tax identification number. This will make it possible to handle tax accounting and carry out financial transactions in compliance with national laws.
The completion timeframe for incorporating a company in Turkmenistan can fluctuate between several days and several weeks, dependent upon the intricacy of document verification, efficacy of registration entities, and comprehensiveness of the submitted documentation package. On average, the procedure culminates in approximately 7–10 business days contingent upon the complete and accurate preparation of all requisite documents.
Preparation of the necessary documentation for establishing a company in Turkmenistan
Basic documents for registering a company in Turkmenistan:
- Application form for incorporation. This is a formal application to the registration authority with a request to include your organization in the state register.
- Charter of the enterprise. The main document that describes the name of the company, its corporate address, objectives, size of the authorized capital, information about the rights and responsibilities of the founders, as well as the management structure of the enterprise.
- Articles of incorporation. Necessary if the company is established by two or more founders. It governs the rapport among the founders, investments into the authorized capital, ownership stakes, and the protocol for distributing profits.
- A document confirming the ownership or lease of the premises where the company will be registered.
- The decision to form a company. A paper containing the decision of the founder (or founders) to create a company, approval of the charter, determination of the executive bodies (manager, board of directors).
- Papers certifying payment of start-up capital. Receipts from a financial institution or other financial documents confirming that the founders have made contributions in the amount specified in the charter.
- Receipt for payment of the state fee for incorporation. Receipt confirming payment of the government fee required to process the registration application.
All documents must be duly certified. Notarial certification of signatures of founders and seals is also required. If any documents are drafted in a language other than the official state language, they must be translated and certified translations provided.
Issuance of permits from government authorities to conduct business in Turkmenistan
Depending on the industry targeted for company formation in Turkmenistan, specific regulatory approvals may be necessary. For example, construction companies require securing construction permits, while medical facilities necessitate medical licenses.
In order to get permissions, one must submit an application to the relevant government agency. A thorough explanation of the proposed work, details about the organization and its founders, and any other material mandated by certain regulatory standards must all be included in the application.
The submission must include the foundational papers of the company, background details on its executives and creators, along with any additional paperwork necessary for the particular license or approval.
Government agencies carry out validation of the provided paperwork and might ask for further details or documentation. Occasionally, specific examinations or evaluations are obligatory, such as inspections conducted by the public health department for dining establishments.
Upon satisfactorily concluding all inspections and fulfilling all prerequisites, the governmental authority issues a license or permit, thereby furnishing an official document sanctioning the initiation of activities.
The type of activity, the effectiveness of governmental agencies, and the thoroughness of the package of documents provided can all have a substantial impact on how long it takes to process regulatory documentation. This process often takes several weeks to many months to finish.
Tax regime for corporations in Turkmenistan in 2024
Turkmenistan's tax framework utilizes a tiered income tax structure based on business activity and company ownership. A detailed breakdown of the current fiscal year's legal entity tax rates is presented below.
Income tax
In Turkmenistan, income tax for legal entities is divided into several categories:
Basic rate: 8% applies to legal entities resident in Turkmenistan.
Exceptions and special rates:
- 20% for organizations in which the state owns more than 50% of the authorized capital.
- 20% for credit institutions and state insurance organizations.
- 20% for firms offering services in the realm of communication, standardization, metrology, and certification, along with businesses operating in the hydrocarbon sector.
- A 20% rate applies to subsidiaries of international legal entities.
Tax for other legal entities: 20% applies to other legal entities not falling under the above categories.
Benefits for youth enterprises:
- In the first year of activity, the tax rate is reduced by 50%.
- In the second and third years of activity, the tax rate is reduced by 25%.
Other fees
- 15% tax rate on income in the form of dividends and other forms of equity participation in legal entities.
- VAT is also 15% and applies to most services and products.
- Target fees:
- 1% goes to municipal and agro-industrial initiatives of Turkmenistan;
- 0.5% is charged to firms registered in Ashgabat and goes to the city's development fund.
Post-registration responsibilities of companies in Turkmenistan
In Turkmenistan, there is an obligation for companies to adhere to established accounting rules and to submit mandatory tax reports and declarations in accordance with the law. Understanding tax and reporting periods is crucial for compliance with tax legislation and prevention of potential penalties.
Tax and reporting periods
The tax period is set equal to the fiscal year, implying that the corporate income tax is computed based on the revenue accrued throughout the entire calendar year.
- First quarter
- First half of the year
- Nine month
- Full tax year
A company registered from January 1st to September 30th undergoes its initial tax period from its founding date until the last day of the same year. This period is taken into account for taxes calculated on an annual basis.
If an organization is established between the 1st of October and the 31st of December, its inaugural tax period extends from the moment of registration until the conclusion of the subsequent full calendar year.
These periods determine when businesses must file interim and annual tax returns.
Tax and reporting intervals for proceeds generated from gambling operations are set on a monthly schedule, synchronized with each consecutive month on the calendar. This requires enterprises to conduct monthly evaluations and payments of taxes, along with the submission of relevant tax documentation.
Mandatory reports and declarations
Firms in Turkmenistan are required to submit a number of documents to comply with fiscal obligations:
- The tax declaration needs to be filed in accordance with the designated schedule intervals.
- Monthly financial statements for companies in the gaming sector should encompass all earnings and expenditures linked to this particular line of business.
Accounting regulations
To uphold accuracy in financial depiction and compliance with tax laws, businesses must follow the following instructions for carrying out accounting processes:
- Documentation of all business transactions in accounting registers.
- Compliance with accounting practices and accounting laws, including consistency, completeness and timeliness of records.
- Regularly review and audit accounts to ensure they are accurate and legal.
- Use of financial reporting standards adopted in Turkmenistan.
In addition to preventing fines and other legal actions, keeping correct accounting records and filing tax returns and declarations on time also promotes the enterprise's sustainable growth within the state's legal and regulatory boundaries.
Banking sector services and opening accounts for business in Turkmenistan
The banking system of Turkmenistan envisages the presence of both state-owned and private banking entities, endowed with a comprehensive array of financial solutions for organizations. State-owned banks typically boast a wider branch network and lower tariffs on basic services, whereas private banks may offer more innovative and tailored financial products.
- The State Bank of Turkmenistan (Turkmenistanbank) is the largest state financial institution offering many different services for business, including loans, deposits, and cash management services.
- Senagat Bank is another large state-owned bank that actively works with corporate clients and entrepreneurs.
- Turkmen Turk Banks, a joint venture with Turkish investors, offers modern banking services, including online banking.
- Conducting transactions with current accounts in national and foreign currencies.
- Digital platform for banking services - provides access to account management and online transactions.
- Lending – short-term and long-term loans to finance commercial enterprises.
- Deposit products – various deposit options with competitive rates.
- Payment processing services – include lending and funds transfers.
Procedure for opening a corporate bank account
Opening a corporate account for companies in Turkmenistan goes through the following stages:
- Choosing a banking organization: you need to analyze the terms of service and the range of available functions in various financial institutions to determine the best choice.
- Compilation of the required documentation package:
- Fundamental documents of the company (constituent act and regulations).
- Selection of executive management.
- Confirmation of the identity of authorized representatives.
- Papers certifying the legal registration of the enterprise and its tax identification.
- Applying to open a bank account is often done at a bank office, although some financial institutions offer to initiate the process online.
- Concluding an agreement with the bank: required after the bank has analyzed the submitted documents and approved the application, it is necessary to formalize consent to the terms of service.
- The account is activated after the contract is concluded and the initial deposit is replenished (if necessary), which makes the account available for use.
10 advantages of starting a business in Turkmenistan
Founding a company in Turkmenistan provides many significant advantages for entrepreneurs and foreign investors.
Turkmenistan offers political and economic stability, which creates favorable conditions for doing business.
Businesses in Turkmenistan can take advantage of various tax incentives, including reduced income tax rates for certain categories of enterprises and tax holidays for new investments.
Turkmenistan, located at the junction of the main trade routes between Europe and Asia, has strategic advantages for firms involved in export and import transactions.
The state directs significant investments into enhancing the infrastructure sector, thereby increasing logistics efficiency and resource accessibility.
The authorities have intensified their backing of commercial endeavors, placing emphasis on pivotal sectors such as energy, agriculture, and the tourism industry.
Recent legislative reforms aiming at enhancing the investment climate have made it easier for international investors to establish a firm in Turkmenistan.
Companies can attract foreign specialists relatively easily thanks to flexible visa policies and regulations on the employment of foreigners.
In recent times, the government of Turkmenistan has been making efforts to stimulate the private sector, providing ample opportunities for entrepreneurs from within the country and abroad.
With rich reserves of natural gas and oil, Turkmenistan provides outstanding opportunities for activity in the energy industry.
Through active participation in global economic initiatives and partnerships, Turkmenistan is improving the conditions for local companies to enter international markets.
Due to its advantageous characteristics, Turkmenistan offers a good environment for starting businesses and carrying out commercial activities. For both local and foreign investors, the strategically excellent position and wealth of natural resources provide beneficial options. Prosperous company development and expansion in a range of economic sectors are facilitated by state initiatives meant to improve the investment climate and assist entrepreneurs.
For those aspiring to establish a firm in Turkmenistan, IQ Decision offers invaluable support at every stage of business registration. From navigating the intricacies of local legislation to assisting in obtaining necessary licenses and permits, IQ Decision plays a pivotal role, ensuring smooth and efficient interaction with governmental bodies and banking institutions. With experienced consultants and a profound understanding of the Turkmen market, the company provides all the conditions for a successful launch and development.