Tajikistan has implemented significant changes to its tax structure with the introduction of a new Tax Code, effective January 1, 2022, the Asia-Plus Media Group reports. Among the key amendments, the standard value-added tax (VAT) rate has been reduced to 14%, marking a pivotal shift in the country's fiscal landscape.
14% VAT rate for non-cash transactions
As of January 1, 2024, the standard VAT rate for non-cash transactions has been lowered to 14%. This reduction, stipulated in Part 1 of Article 264 of the new Code, is applicable until December 31, 2026. Subsequently, from January 1, 2027, the rate is further reduced to 13%.
Cash transactions maintain a 15% standard rate
Conversely, cash transactions retain a standard VAT rate of 15%. However, a future adjustment is on the horizon, with plans to increase the rate for cash transactions to 19% until the end of 2026, and subsequently to 20% from 2027 onwards.
Enhanced reduced VAT rate for cash transactions
The reduced VAT rate for cash transactions, effective since January 1, 2024, has been elevated from 9% to 10% starting January 1, 2027. On the other hand, the reduced rate for non-cash payments remains unchanged at 5%.
The new Tax Code, although enacted on January 1, 2022, operates with a phased approach, with certain changes becoming effective over time. Apart from the VAT adjustments, the Tax Code reduces the number of taxes from 10 to 7 and significantly lowers specific taxes, such as the tax on hotel services (from 18% to 7%) and the tax on the sale of domestic agricultural products and their processing (from 18% to 5%).
Fiscal performance and revenue projections
According to the Ministry of Finance of Tajikistan, tax revenues to the state budget for the first ten months of the current year amounted to approximately 21.2bn somonis (over $1.9bn). Notably, VAT collection during this period increased by nearly 1.4bn somonis ($128.2mn), income taxes rose by 836.4mn somonis ($76.5mn), and excise taxes grew by 362.4mn somonis ($33.2mn) compared to the same period in 2022.
Prospects and targets for 2024
Increased tax revenues and fiscal targets
Tajik authorities have set ambitious fiscal targets for 2024, aiming to raise tax revenues to the state budget by almost 15%. The total volume of tax revenues for the year is established at 26.3bn somonis ($2.4bn), indicating a 3.3bn somonis ($302.2mn) increase compared to the target for 2023.
Revenue composition and Tax Committee's role
In 2024, the expectation is to generate 18.9bn somonis ($1.8bn) through domestic taxes collected by the Tax Committee. Customs payments are anticipated to contribute 8.4bn somonis ($769.2mn), with tax revenues constituting over 61% of the total budget revenues.
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