Published on and written by Cyril Jarnias
Settling in Turkmenistan to work or invest in real estate means entering a very unique tax universe. The country applies a flat income tax rate, property taxation designed primarily for commercial assets, numerous withholding taxes for non-residents, and a broad network of tax treaties, while remaining relatively closed and highly regulated. For an expatriate, understanding these rules is essential to avoid unpleasant surprises, optimize your tax burden, and stay compliant with local authorities… and with your home country.
Understanding the General Framework of Taxation in Turkmenistan
The tax system is governed by the Tax Code of Turkmenistan. The tax year corresponds to the calendar year, from January 1 to December 31. The relevant administration is the State Tax Service, under the Ministry of Finance and Economy, which handles taxpayer registration, tax collection, and audits.
All taxes are calculated and paid in Turkmen manat (TMT). Income or transactions in foreign currency must be converted at the official exchange rate of the Central Bank in effect on the transaction date. Each taxpayer has a personal tax identification number, the *hususy salgyt belgisi* (HSB), consisting of 12 digits. This identifier is mandatory for filing tax returns and for most financial operations.
The country has also developed an electronic platform, Elektron salgyt (E‑Salgyt), which allows filing certain declarations online and communicating with the tax administration — an important point for expatriates working with structured local employers.
A Flat-Rate System… But with Many Layers
Turkmen taxation relies heavily on fixed rates:
Corporate income tax rate for resident entities in Saudi Arabia, which can be reduced to 2% for certain SMEs.
Alongside these key rates, there are significant withholding taxes on payments to non-residents, high social contributions for local employees, and various specific levies (land improvement fee, advertising tax, sectoral contributions, etc.).
Tax Residency for Expatriates: The 183-Day Rule
For an expatriate, everything starts with the question of tax residency. In Turkmenistan, the main rule is simple on paper: any person present in the country for at least 183 days during a tax period is considered a tax resident. All days of physical presence count, even partial ones, except for days of simple transit.
Tax residents are taxed on their worldwide income, while non-residents are taxed only on their Turkmen-source income. This distinction is crucial for expatriates who continue to receive income from abroad (salaries, dividends, rentals, capital gains).
To determine tax residency, criteria other than the main place of stay may be considered. These include the existence of a permanent home, the location of the center of vital interests (family, assets, professional activity), habitual abode, or nationality. In practice, these criteria are essential for aligning national tax rules with the provisions of international treaties aimed at avoiding double taxation.
Diplomatic and consular personnel, agents of international organizations, and their families are expressly excluded from resident status, regardless of time spent in the country.
A Status Reviewed Annually
Tax residency is determined for each tax period. An expatriate can therefore be a resident one year and a non-resident the following year if their presence falls below the 183-day threshold. This year-to-year variation directly impacts the scope of taxable income in Turkmenistan.
Personal Income Tax for Expatriates: A Flat Rate of 10%
Turkmenistan applies a proportional rate of 10% on most personal income. This flat rate applies to both residents and non-residents, but not on the same basis: the former are taxed on their worldwide income, the latter only on local-source income.
The categories of income covered are very broad: salaries, professional or business income, interest, royalties, real estate income (including rents), capital gains on asset sales, etc. In practice, for expatriate employees hired by a local entity, the tax is generally withheld at source by the employer, who acts as a withholding agent.
Expatriate Salary: Withholding and Taxable Base
For a foreign employee on a local contract, the Turkmen company calculates the tax, applies it to the gross salary minus any allowable deductions, and remits the total to the tax administration. The taxable base is the gross income converted to TMT, reduced by a few limited deductions:
Employees in Turkmenistan benefit from a single standard deduction equal to the monthly minimum wage, set at 1,410 TMT according to the most recent update. Additional deductions are also possible for voluntary contributions to a retirement plan or health insurance.
The Turkmen system does not provide for family quotient or differences based on marital status. Allowances are considered “insignificant” in the overall architecture, meaning that for an expatriate with a comfortable income, the effective rate quickly approaches the nominal rate of 10%.
Filing and Payment Deadlines for Foreigners
Even when tax has already been withheld at source, some expatriates are still required to file an annual return, especially if they received income without withholding (foreign income, fees, rents, capital gains). For foreigners, the deadlines are specific:
– Filing the income tax return: no later than April 1 of the year following the income year;
– Payment of the balance of tax: no later than April 15.
Turkmen citizens must file their income tax return no later than January 25 and make the corresponding tax payment before February 10. It is possible to obtain a filing extension of up to 30 days, provided a provisional deposit equal to the amount of tax paid in the previous year is made.
Residents vs. Non-Residents: Scope of Taxation
For expatriates who become tax residents, Turkmenistan taxes all income, including income received abroad (salaries from a foreign company, dividends from non-Turkmen companies, rents from properties located outside the country, securities capital gains, etc.). This income must be converted to TMT at the official exchange rate on the date of receipt and reported on the annual return.
Non-residents, conversely, are only taxable on their Turkmen-source income. This includes in particular:
– salaries for activities performed in the territory;
– professional fees billed to Turkmen clients;
– rents from real estate located in Turkmenistan;
– capital gains on the sale of Turkmen assets.
For these incomes, taxation often takes the form of a withholding tax, sometimes final, with rates that may be higher than or equal to 10% depending on the nature of the income and the recipient’s status.
Summary Table: Personal Income Tax
| Taxpayer Profile | Taxable Base | Standard Rate | Primary Collection Method |
|---|---|---|---|
| Resident (expat ≥ 183 days) | Worldwide income | 10% | Withholding + possible filing |
| Non-resident (stay < 183 days) | Turkmen-source income | 10% in principle | Withholding by local payer |
| Sole proprietor (general regime) | Net profit (revenue – expenses) | 10% | Self-assessment + filing |
| Sole proprietor (simplified regime) | Turnover (no deductions) | 2% additional (fee) | “Patent” system + specific filing |
Expatriate Sole Proprietors: Choosing Your Status and Regime
Many expatriates operate as independent contractors: consultants, IT freelancers, technical service providers. In Turkmenistan, they can remain simple individuals taxed on their fees at 10%, or register as a “sole proprietor” (hususy telekeçi).
This registration involves going to the local tax office, generally having a residence permit or permanent residency, and choosing between two main regimes.
General Regime: Income Tax + VAT
Under the general regime, the entrepreneur calculates net profit, deducting justified business expenses (office costs, travel, subcontracting, depreciation, etc.) from turnover. This profit is taxed at 10%, same as for an individual.
Under this regime, the entrepreneur is also liable for VAT at 15% on services or goods supplied in Turkmenistan. They must:
– file a VAT return twice a year (by the 20th of the month following each semester);
– pay VAT according to the set deadlines (by September 1 for the first semester, by March 1 of the following year for the second).
Maintaining full accounting records and retaining documentation is essential to justify deductions and input VAT.
Simplified Regime: “Patent” System
For certain activities, a simplified regime is offered, particularly attractive for small entrepreneurs. It replaces “classic” income tax and VAT with:
The rate of the additional fee on turnover for certain activities.
This regime greatly reduces filing obligations, but prevents deducting actual expenses. For an independent expatriate, the choice between general and simplified regimes should be made based on profit margin, client profile, and the VAT obligations of their partners.
Property Tax and Real Estate Taxation: An Impôt Mainly Aimed at Businesses
The French term “taxe foncière” does not exactly correspond to the Turkmen reality. The country applies a property tax, but it primarily targets assets used for commercial purposes.
The standard rate is 1% applied to the average annual net book value of tangible fixed assets and to the average annual value of other tangible assets used for commercial purposes located in Turkmenistan. This tax constitutes a state budget resource and is levied on pre-tax profits of enterprises.
Who Pays Property Tax?
The scope of taxpayers is broad on paper, but with many exemptions:
– resident and foreign legal entities, for assets they own that are fixed assets or commercial assets;
– state enterprises with the right of economic management over state property;
– foreign entities without a permanent establishment, for real estate they hold in Turkmenistan.
However, several categories are exempt from this tax:
Legislation may exclude certain sectors and assets from privatization programs. For example, this typically includes small and medium private enterprises wholly owned by national capital, sole proprietorships (individual entrepreneurs), as well as critical infrastructure such as railways, public roads, communication and electricity networks, bridges, and secondary gas pipelines (excluding main pipelines). Also often excluded are state reserve fund assets, assets of religious organizations, and assets of public services dedicated to housing and roads.
Enterprises operating in the hydrocarbon sector under the specific regime of the Law on Hydrocarbon Resources are not, for these activities, liable for property tax. If they also carry out other activities, they must maintain separate accounting to identify assets subject to this tax.
And for an Individual Expatriate Property Owner?
The available texts emphasize taxation of buildings in a commercial context. There is no explicit mention of an independent and annual property tax of the “tax on built property” type for individuals, as in France. The identified property tax remains this 1% rate on the book value of assets used for operational purposes.
For an expatriate who buys an apartment or house to live in or rent out, several scenarios are possible depending on the legal structure:
Buying through a local company may result in the property being included in the property tax base if it is considered a commercial asset. For a purchase in one’s own name, this tax would not specifically target individuals according to some sources. In this case, the main tax levy would be on rental income, subject to personal income tax of 10%.
The information also mentions, within the framework of the tax treaty between India and Turkmenistan, an “enterprise property tax” and a “payment for land”, suggesting that levies on land ownership exist, at least for businesses.
Rental Income for an Expatriate: Taxation in Turkmenistan
Income from renting real estate located in Turkmenistan is always considered Turkmen-source income, regardless of the owner’s residence. A non-resident expatriate receiving rents on a local property will be taxable in Turkmenistan on that income, in principle at the rate of 10%, either by withholding at source or via a return if no withholding is applied.
Tax treaties generally follow the UN or OECD model: income from real estate is taxable in the state where the property is located, with the owner’s state of residence possibly also taxing, with a tax credit to avoid double taxation.
Table: Real Estate-Related Taxes for an Expatriate
| Expatriate Real Estate Situation | Main Tax or Levy in Turkmenistan | Base Rate | Comment |
|---|---|---|---|
| Owner of a commercial building via a local company | Enterprise property tax | 1% | On average annual net book value |
| Owner of a rented residential property (in own name) | Personal income tax | 10% | On net rents (limited deductions) |
| Foreign company without permanent establishment, property owner | Property tax on the building held | 1% | On the value of the building located in the country |
| Capital gain on sale of real estate by an expatriate | Income tax (including capital gain) | 10% | Capital gain is included in total income |
Withholding Taxes: Dividends, Interest, Royalties, and Technical Services
Beyond salary or local professional income, an expatriate may receive dividends, interest, or royalties from Turkmen sources. Turkmenistan has a structured withholding tax system with differentiated rates depending on the nature of the income and the recipient’s status (resident or non-resident, individual or legal entity).
For a non-resident individual:
Withholding tax rates applicable to investment income paid to non-residents.
A 10% withholding tax is applied on dividend payments.
A 10% withholding tax is applied, with an exemption for interest on bank deposits of non-entrepreneur individuals.
A 10% withholding tax is applied on royalty payments and for technical services.
For non-resident companies without a permanent establishment, the rates are often higher:
– 15% on dividends, interest, royalties, technical services;
– 6% on income from renting ships and aircraft;
– 15% generally on Turkmen-source income.
These withholdings may be reduced if a double taxation treaty applies, provided the administrative procedure is scrupulously followed.
Table: Main Withholding Taxes Applicable to Non-Residents
| Type of Income (non-resident recipient) | Individual | Company without permanent establishment |
|---|---|---|
| Dividends | 10% | 15% |
| Interest (excluding individual bank deposits) | 10% | 15% |
| Royalties | 10% | 15% |
| Technical services | 10% | 15% |
| Rental of ships and aircraft | 10% (in practice, per contract) | 6% |
These rates may be lower if a tax treaty provides a cap, but simply invoking the convention is not enough: the recipient must provide a certificate of tax residence issued by their home country and submit an application (Form 23) to the Turkmen authorities. After verification, the authorities approve or deny the benefit of the treaty rate within 10 to 30 days. To later justify in the country of residence, the taxpayer can obtain a form confirming taxes paid in Turkmenistan (Form 22).
Social Security and Pensions: Specific Treatment for Expatriates
Turkmenistan imposes significant pension contributions on the salaries of local employees:
– 20% of gross remuneration paid by the employer for pension insurance;
– an additional 3.5% for employees exposed to dangerous or harmful working conditions.
Employees can also join voluntary pension plans, contributing at least 2% of their remuneration, deductible to a certain extent.
For salaried expatriates, remunerations are not subject to mandatory pension contributions (20% employer + 3.5% employee), reducing labor costs but also local pension entitlements. Foreign self-employed workers, on the other hand, must pay a minimum monthly contribution, generally set at 10% of the minimum wage (i.e., 128 TMT, based on a minimum of 1,280 TMT).
In the absence of a social security agreement (for example between the United States and Turkmenistan), an expatriate may end up contributing simultaneously in their home country and locally for certain statuses (especially self-employed).
Other Taxes and Levies to Keep in Mind
Beyond income tax and real estate taxation, other levies may directly or indirectly affect an expatriate:
Overview of the main special tax contributions and fees applicable to individuals and businesses.
A contribution of 5 TMT per month due by each individual, generally withheld at source along with income tax, with no separate filing required.
A levy of 3% to 5% on advertising expenses, payable quarterly by companies and certain sole proprietors.
Contributions due by entities releasing pollutants, with variable rates depending on the nature and toxicity of emissions.
Duties applicable to certain imports, possibly including a 2% surcharge and a 0.2% fee for customs services. Exemptions for hydrocarbon-related operations.
For an expatriate investor or company director, these levies add to corporate income tax (8%, or 2% for SMEs, or 20% for branches of foreign companies or majority state-owned enterprises) and VAT at 15%.
Tax Treaties and Prevention of Double Taxation
Turkmenistan has concluded 39 tax treaties with many countries (France, Germany, United Kingdom, Russia, India, China, United Arab Emirates, Turkey, United States via the former USSR-USA treaty, etc.). These treaties are inspired by the United Nations model, sometimes with references to the OECD model for interpretation.
The Tax Code specifies that provisions of international treaties prevail over domestic law. Concretely, this means that:
Bilateral tax treaties can reduce withholding tax rates on income (dividends, interest, royalties, services). To determine tax residency in case of dual residence, they provide “tie-breaker” criteria (permanent home, center of vital interests, nationality). Finally, they avoid double taxation, generally through a tax credit or exemption for income already taxed in the other state.
Expatriates who are nationals of countries with a treaty must nonetheless follow a fairly formal procedure to benefit from it: certificate of tax residence issued by the administration of their country, specific application form (Form 23), prior validation by the Turkmen authorities, then obtaining a certificate of tax paid (Form 22) to claim in their state of residence.
Turkmenistan has not adhered to the BEPS multilateral instrument (MLI), meaning treaties must be analyzed individually, without a global coordinated update mechanism.
American Expatriates: Double US and Turkmen Constraint
US nationals living in Turkmenistan face a particularly complex situation. The United States taxes its citizens and green card holders on their worldwide income, regardless of residence. At the same time, Turkmenistan may consider them tax residents if they exceed 183 days of presence, and also tax them on their worldwide income.
The US toolkit can help limit double taxation:
US taxpayers working in Turkmenistan can benefit from three main tax mechanisms: the foreign earned income exclusion (up to about $120,000 in 2023) subject to residency conditions, the foreign tax credit to offset Turkmen tax paid, and the foreign housing exclusion.
American expatriates must also comply with foreign asset reporting obligations (FBAR, Form 8938, etc.), especially if they open local bank accounts, hold shares in Turkmen companies or real estate structures. Turkmen banks may, under certain conditions, transmit information to the IRS under international cooperation.
In the absence of a totalization agreement for social security between the two countries, a self-employed American may be required to contribute to both the US system (Self‑Employment Tax) and the Turkmen system (minimum pension contribution).
Practical Formalities for Expatriates: Registration and Tax Identification Number
Any foreigner who begins an income-generating activity in Turkmenistan must register with the tax authorities within 10 days of the tax obligation arising. Obtaining the tax identification number (HSB) is done at the competent tax office, generally upon presentation of:
– an application form;
– passport and residence permit or work permit;
– proof of local address;
– employment or business creation documents as applicable.
The administration issues the number within three days in principle. For foreign employees, it is often the employer who handles this procedure as a withholding agent.
Another number, the ÄHB (9 digits), is used in the context of pension contributions; it will be most relevant for local workers and sole proprietors.
Summary: What an Expatriate in Turkmenistan Should Remember
For an expatriate planning a move or investment, several key points emerge from the Turkmen system:
The Uzbek tax system is based on a flat personal income tax rate of 10%, with a broad base and few allowances. Tax residency is strict (over 183 days) and triggers taxation of worldwide income. Property tax (1%) mainly concerns commercial assets. Non-residents are subject to significant withholding taxes (10-15%) on passive income. Salaried expatriates benefit from reduced social contributions. A network of 39 tax treaties helps reduce double taxation, but the administration is very formalistic, requiring local advice to navigate procedures.
In this context, the right strategy for an expatriate is to plan ahead: calculate the impact of the 183-day threshold, properly structure real estate investments, check the existence and content of a tax treaty between your home country and Turkmenistan, and set up a solid accounting and documentation system to meet the demands of a tax system that, despite its apparent rate simplicity, proves in practice to be dense and demanding.
Disclaimer: The information provided on this website is for informational purposes only and does not constitute financial, legal, or professional advice. We encourage you to consult qualified experts before making any investment, real estate, or expatriation decisions. Although we strive to maintain up-to-date and accurate information, we do not guarantee the completeness, accuracy, or timeliness of the proposed content. As investment and expatriation involve risks, we disclaim any liability for potential losses or damages arising from the use of this site. Your use of this site confirms your acceptance of these terms and your understanding of the associated risks.
Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
