Cross-border electronic services provided by non-resident digital businesses to customers in Tajikistan are now subject to VAT at a rate of 18%. Obligations for compliance with these new VAT rules began on January 21, 2021 - only a month after the rules were signed into law by the President of The Republic of Tajikistan.
The Central Asian state has followed the path of neighbours Uzbekistan, and – from January 2022 – Kazakhstan as well as Azerbaijan in changing tax rules to account for the growing cross-border B2C sales of electronic services. Uzbekistan introduced its rules in January 2020 while Azerbaijan did so in January 2017.
The Tajikistan Tax Code establishes that the intended taxpayers will be “foreign entities who provide, directly or through intermediaries, electronic services to individuals, the place of sale of which is the territory of the Republic of Tajikistan.”
The Tajikistan Tax Committee maintains a list of registered businesses here.
Highlights of Tajikistan VAT rule change
The end purchasers of the electronic services can be determined if any of the following conditions are met:
- The buyer's place of residence is the Republic of Tajikistan
- The location of the credit institution or other organization in which the account used by the buyer to pay for services is opened, or the electronic money operator through which the buyer pays for services, is located in the Republic of Tajikistan
- The buyer's network address used when purchasing services is registered in the Republic of Tajikistan
- The international country code of the telephone number used to purchase or pay for services is assigned to the Republic of Tajikistan
The relevant tax period is per calendar quarter with a filing deadline no later than the 10th day of the month following the expired reporting period, e.g. for Q2 the deadline is July 10.
Affected electronic services
According to the Tajikistan Tax Code, the following electronic services supplied by non-resident businesses will be affected by the new VAT rules. Note: this list while quite lengthy is not exhaustive.
- Granting the rights to use software for electronic computers (including computer games), including by providing remote access to them, as well as their updates and additional functionality
- The implementation of advertising services, including through the use of software for electronic computers or databases as well as the provision of advertising spaces
- Provision of services for the placement of proposals for the purchase (sale) of goods (works, services) and property rights
- Provision of technical, organizational, informational and other capabilities, carried out using information technologies and systems, to establish contacts and conclude agreements (transactions) between sellers and buyers (through trading platforms operating on the Internet in real-time mode, where potential buyers offer a price for goods (works, services) through an automated procedure and the parties are notified of the sale by means of an automatically generated message);
- Provision and (or) maintenance of economic activity, as well as support of electronic resources of users, including websites and (or) pages of sites on the Internet, providing access to them for other users
- Interactive bets on gambling in bookmakers;
- Providing access to information and communication networks, as well as providing users with the opportunity to change them;
- Storage and processing of information, provided that the person who submitted this information has access to it through the information and communication network;
- Providing in real-time computing power for placing information in the information system;
- Provision of domain names, provision of hosting services;
- Provision of services for the administration of information systems, sites on the Internet;
- The provision of automated services for data retrieval. In particular, the summary of the stock exchange of securities in real time, real-time automated translation);
- Granting the rights to use e-books (publications) and other electronic publications, information, educational materials, graphic images, musical works with or without text, audiovisual works, including by providing remote access to them for viewing or listening via the Internet ;
- Provision of services for the search and (or) provision of information to the customer about potential buyers;
- Providing access to search engines on the Internet;
- Keeping statistics on sites in the Internet.
Electronic services not within scope of Tajikistan VAT rule change
Conversely, the Tajikistan Tax Code also names some electronic services that are not within the scope of the new VAT rules. These services include the following:
- The sale of goods (performance of work, provision of services), if, when ordering through the Internet, the supply of goods (performance of work, provision of services) is carried out without using the Internet; - implementation (transfer of rights to use) of programs for electronic computers (including computer games), tangible databases.
- Provision of consulting services by email.
- Provision of services for providing access to the Internet.
The President of The Republic of Tajikistan, Emomali Rahmon, signed the new law on December 17, 2020, and Article 2 of the Tax Code states that the law enters into force one month after its official publication. In this case, the rules were officially published on December 21, 2021, therefore the go-live date was January 21, 2021.
Acknowledgement: Thanks to Elvira Maratova, of GRATA International, for her help in researching this article.
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