Investing

flag Tajikistan Tajikistan: Investing

FDI in Figures

With an annual average of about 15% of GDP over the past decade, total investment in Tajikistan is low by regional and international standards. According to UNCTAD’s 2022 World Investment Report, FDI inflows to the country decreased from USD 107 million in 2020 to USD 84 million in 2021 and were well below the three-year average recorded before the pandemic (USD 344 million in 2017-19). The total stock of FDI totalled USD 3.2 billion in 2021, representing around 37.7% of the country's GDP. The main investors are China (accounting for around 40% of all FDIs), Russia, the United Kingdom, Switzerland, and Iran (data U.S. Department of State). China gradually replaced Russia as the largest investor in the country, as part of its Belt and Road Initiative, including China-funded thermal and hydropower plant projects as well as a road infrastructure project between Dushanbe and Uzbekistan. Preliminary figures from the State Committee for Investment show that in the first half of 2022, FDI inflows increased by 2.1 times compared to the same period one year earlier, to USD 100.6 million. China, Switzerland, Luxembourg and Great Britain accounted for the largest share in the total volume of FDI received during the period, with 89% of it being directed towards the mining industry (owing to the opening of a new gold processing plant built by China’s Talco Gold, at a cost of around USD136 million).

Tajikistan offers a favourable environment for regional and cross-border investments, although the risk may be high. The government is directing foreign investment towards the development of new sectors while modernizing existing industries, and its National Development Strategy 2016-2030 targets to attract as much as USD 55 billion in FDI by 2030. All private investments are selected and require government approval. There are no limits on foreign ownership or control of firms and no sector-specific restrictions that discriminate against market access. The Tajik parliament continued to grant tax exemptions to Chinese firms investing in the country, but investment laws are applied inconsistently. Poor industrial productivity, complicated procedures for obtaining a building permit, difficult access to credit and poor resolution of insolvency cases, a fragile and uncertain business environment and poor infrastructure are among the factors that limit the attractiveness of the country. Under Tajik law, all land belongs to the state. The judiciary lacks independence, and many judges are poorly trained and inexperienced, while corruption is widespread (the country ranks 150th out of 180 in the latest Corruption Perception Index). Furthermore, labour regulations are not flexible enough to facilitate dynamic employment growth. Investments in certain sectors require special government permission, including aviation, defence, security, and law enforcement. Overall, the country's business environment is weak, and Tajikistan is classified at the 146th position out of 176 in the 2023 Index of Economic Freedom.

 

Country Comparison For the Protection of Investors

  Tajikistan Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 8.0 7.5 7.0 5.0
Index of Manager’s Responsibility** 6.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 6.8 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

 
Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 10784174
FDI Stock (million USD) 3,113.92,824.73,329.5
Number of Greenfield Investments* 9.08.03.0
Value of Greenfield Investments (million USD) 36727718

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

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Tax Rates

Value added tax (VAT)
18% (standard rate)
Reduced rates apply as follows: 7% for companies engaged in the catering and construction services; 5% for companies engaged in educational services.
Exports are zero-rated, except for precious metals and stones.
Exempt items include jewellery made from precious metals and stones, primary aluminium and ore concentrate, ferrous and non-ferrous metal scrap, ginned cotton, cotton yarn and raw cotton and goods manufactured in Free Economic Zones.
Company Tax
23% (13% for enterprises producing goods)
Withholding Taxes
Dividends: 12%; Interests: 12%; Royalties: 15%.
Social Security Contributions Paid By Employers
25%
Other Domestic Resources
Ministry of Economic Development and Trade
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 
 

Individual Taxes

Personal income tax Progressive scale from 0% to 13%
Employment income of the non-residents 25%
 
 

Country Comparison For Corporate Taxation

  Tajikistan Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 7.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 224.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 67.3 36.5 36.6 48.8

Source: Doing Business - Latest available data.

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Investment Opportunities

Tenders, Projects and Public Procurement
Asian Developement Bank, Proposed Projects in Asia
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Tajikistan.
Useful Resources
 
 

Business Setup Procedures

Setting Up a Company Tajikistan Eastern Europe & Central Asia
Procedures (number) 3.00 5.26
Time (days) 7.00 11.78

Source: Doing Business.

 
 
 

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Latest Update: November 2023