As you may be aware, certain additions and amendments to several laws of Turkmenistan have been officially published on the 8th September 2020. Below are the brief summary of the most key additions and amendments related to pension insurance, labor, tax, insurance and certification laws.

 

1. Additions and amendments to the Law of Turkmenistan “About the state pension insurance”:

• For certain insured persons (namely, individual entrepreneurs and persons working for them, individuals who render professional services, farmers and persons who entered into employment relations with them, self-employed persons, and persons working for employers-individuals who use the hired labor or the work of household employees) the cases when they opt out of the mandatory pension insurance were expanded (Article 7, paragraph 5). We remind here that the previous version of this law was limited to only two cases – in cases when they are granted (1) retirement pension and (2) disability pension or state disability allowance, provided they were recognized as permanently disabled. Now, the aforesaid persons opt out of the mandatory pension insurance also in the cases when they are granted (3) service pension, (4) professional pension and (5) state social allowance. In this regard, the definitions of these terms (3-5) can be found in the Code of Turkmenistan about social protection of population.
• The base for calculation of pension insurance was added with scholarships (Article 19, paragraph 1). As per our understanding, by scholarships are meant those scholarships which are paid by employers to trainees (apprentices) during their traineeship (apprenticeship) under the training contracts as per the Article 328 of Labor Code of Turkmenistan. Also, the clarification was added that the salary for combination of job with other occupations is also included into the base for calculation of pension insurance (Article 19, paragraph 1).
• The issuance of acceptance-free payment claims to bank was previously done only in case of non-payment in time by the insured of pension contributions. Now, the acceptance-free payment claims can also be issued in the cases of untimely payment of financial sanctions and late payment penalties (Article 30).
• The period for which late payment penalties are applied has also changed. Now, late payment penalties are applied for the period not exceeding five years preceding the year in which the claim about their imposition arose. Before there was no such time limitation in the law (Article 34, paragraphs 1 and 4).
• The sequential order of payment of late payment penalties has also changed – now, late payment penalties are to be paid after the payment of pension contributions and financial sanctions (Article 34, paragraph 6). Whereas in the previous version of this law, late payment penalties had to be paid after the payment of pension contributions only.
• Also changed the scope of application of financial sanctions. Now, from the list of persons, in relation to which financial sanctions were applicable as per the previous version of this law, were excluded (1) the diplomatic missions, consular institutions of the foreign states, representative offices of international organizations situated in Turkmenistan, provided that Turkmenistan citizens, foreign citizens and stateless persons permanently living in Turkmenistan work therein, as well as (2) individuals who render professional services (Article 38).
• As is well known, in the previous version of this law, the non-provision by the insured of declaration on pension contributions for the period exceeding ninety days from the deadline date set by law was regarded as understatement of the amount of pension contributions, and in such cases financial sanctions were to be imposed (Article 40, paragraph 3). Now, this paragraph of the Article 40 was cancelled. Also, the understatement of the amount of pension contributions should now be computed from the date following the last deadline date set for submission of declaration. Previously, such understatement was to be computed from the deadline date set for submission of declaration (Article 40, paragraph 2).
• Also changed the rate for calculation of pension contributions applicable for individual entrepreneurs and individuals who render professional services. Now, the rate for these persons, for themselves, is not less than 10% of minimum salary in Turkmenistan for each month of the reporting period, irrespective of the amount of income (Article 20, paragraph 1, sub-paragraph 2). We remind here that in the previous version of this law the rate for these persons was varying depending on the size of income in the reporting period.

 

2. Additions to the Labor Code of Turkmenistan:

The introduced additions have expanded the state guarantees of labor rights of employees (Article 6). Pursuant to newly added norms, in the circumstances beyond the parties’ control, in the result of which employee cannot fulfill its work duties, the employment relations during such period are still regarded continued. The payment of salary for such period must be made in accordance with the legislation (for instance, unpaid leave, downtime, …). Notably, this addition has a retrospective effect, namely it is applicable to circumstances which arose after the 1st March 2020. We subsequently think that this revision was triggered by the world coronavirus pandemic and related international mobility limitations in the result of which some employees of enterprises, who went abroad for business trips, trainings or other purposes, were forced to stay there for an indefinite period.

 

3. Additions and amendments to the Tax Code of Turkmenistan:

• First, was added the specifying addition that the required document circulation in the tax relations can be done in the form of electronic document (Article 2). Thus, a platform was created in this law to be in line with the new realities provided for in the recently adopted Turkmenistan Law “About electronic document, electronic document circulation and digital services” (March 2020).
• A separate corporate profit tax rate was established for the state insurance organizations and credit institutions. Now, the tax rate for these taxpayers is 50% (Article 172, paragraph 1). We remind here that previously they were paying the corporate profit tax predominantly at the rate of 20%.

 

4. Additions and amendments to the Law of Turkmenistan “About insurance”:

• And again, the addition related to electronic documents. Was added the specifying addition that insurance contracts can be concluded in the form of electronic document (Article 20). Thus, a platform was created in the law to be in line with the new realities provided for in the recently adopted Turkmenistan Law “About electronic document, electronic document circulation and digital services” (March 2020).
• Another addition states that the cases when insurer may refuse the insurance indemnity payment, which are listed in the paragraph 1 of Article 29, are no longer linked to untimely notification by the insured of the occurrence of the insured event. We remind here that in the previous version of this law absolutely all these cases had a direct interrelation (not always fair and logic) with the untimely notification by the insured of the insured event, when, for instance, the insurer could not refuse the insurance indemnity payment even if the insured initially had given the insurer deliberately a false information, however notified of the occurrence of the insured event in time. Along with this revision, one more sub-paragraph was added in the paragraph 1 of Article 29, according to which the insurer may refuse the insurance indemnity payment if the insured event occurred as a result of untimely notification by the insured of the occurrence of the insured event due to which the occurrence of the insured event was not supported with documents from the health authorities, investigating, judicial and other authorities or it is impossible to determine the scope of damage and reasons of occurrence of the insured event.
• According to new revisions, the sanctions for violation of the insurance laws of Turkmenistan are now not applicable to individuals (Article 40, paragraph 2).

 

5. Additions and amendments to the Law of Turkmenistan “About certification”:

• In the light of the new revisions, the used products/goods being imported to Turkmenistan are not subject to certification (Article 14, paragraph 1).
• Also was extended the list of products/goods being imported to Turkmenistan, which are not subject to certification – this list was extended with the (1) products/goods being imported in Turkmenistan via post-offices, (2) technical and accounting documents, plans/designs, models, licenses and contracts, and (3) periodically issued and intended for advertisement the polygraphic and editorial materials (Article 14, paragraph 4).
• Also, according to new revisions, all handicrafts articles, which are made by citizens of Turkmenistan manually, are not subject to certification (Article 14, paragraph 5). We remind here that in the previous version of this law, the carpet weaving products, jewelry made from precious metals and precious stones, which were considered as handicrafts articles made by citizens of Turkmenistan manually, were subject to certification.

 

Published: September 2020