A statement released by the European Union following the 9th meeting of the Cooperation Council between the European that was held via video conference last Friday, in particular, says that the EU welcomed the ongoing public consultation on the new Tax Code in Tajikistan.

The European Union also reiterated the importance of a stability-oriented macroeconomic policy and further progress in Public Finance Management as ways to improve the business environment and attract foreign investment with the potential to bring innovative, green solutions and build back better.

Recall, developed by the working group in cooperation with international and domestic experts, a draft new Tax Code of Tajikistan has been put up for public discussion ad it is now available on the website www.itcmf.tj/kodeks

The draft Tax Code was posted on www.itcmf.tj/kodeks on February 8 and it will be available for public consultations until February 26. 

Citizens of Tajikistan may send their comments and proposals on the draft Tax Code to the Tax Committee through the abovementioned website.  

President Emomali Rahmon initiated development of a new tax code in late May 2019.  He ordered to take into consideration interests of business entities and citizens of the country while developing the new tax code.

The Minister of Finance Faiziddin Qahhorzoda told reporters in Dushanbe in February last year that the new tax code should be adopted before September 2020 so that the national budget for 2021 would be worked out on the basis of it.

Qahhorzoda emphasized that members of the working group for development of the new tax code also included specialists of the World Bank and the working group had taken into consideration proposals of tax payer and representatives of the private sector while developing the new tax code.

In a statement delivered at a joint session of both houses of parliament, President Emomali Rahmon on January 26 ordered relevant ministries and agencies to complete the country’s tax code in new reading until March this year and submit it for consideration to the government.

Meanwhile, the Asian Development Bank (ADB)’s Asian Development Outlook (ADO) 2020 notes that heavy infrastructure spending has created pressure to mobilize more revenue.  Tax revenue reportedly averaged the equivalent of 22.2% of GDP during 2015–2019 and provided nearly 70% of total revenue, above the average for low-income developing countries.

Much of the burden falls on companies, for which the effective tax rate including required pension and insurance contributions averages 67% for a typical firm, according to the report.  This is more than double the norm for transitional economies in Europe and Central Asia, according to the World Bank’s Doing Business 2020 website.

The unfavorable tax regime makes tax compliance costly and time consuming, prompting firms to relocate to neighboring countries. The report says Tajikistan must reconsider how to make its tax policy more business friendly while finding other ways to increase revenue in order to improve the investment climate.