Business Environment in Tajikistan Business Environment in Tajikistan as seen by as seen by Small and Medium Businesses Small and Medium Businesses 2003 2003 Ãîñóäàðñòâåííûé Ñåêðåòàðèàò Øâåéöàðèè ïî Ýêîíîìèêå Secretariat d’Etat a l’economie State Secretariat for Economic Affairs N L A R D E Z T I W S e International Finance Corporation International Finance Corporation 39552 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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Business Environment in TajikistanBusiness Environment in Tajikistanas seen byas seen by
Small and Medium BusinessesSmall and Medium Businesses
20032003
Ãîñóäàðñòâåííûé ÑåêðåòàðèàòØâåéöàðèè ïî ÝêîíîìèêåSecretariat d’Etat a l’economie State Secretariat for Economic Affairs
NLAR DEZTIW
S eInternational Finance CorporationInternational Finance Corporation
Main Facts .............................................................................................................................................15
Tajikistan’s Small and Medium Business Sector at a Glance ...................................................19
Official Statistics of the Tajikistan Small and Medium Business Sector .............................................19
Selected SME Development Indicators in 2002 ...............................................................................21
SMEs and Financial Institutions .......................................................................................................25
Overview of the Tajikistan Banking System .....................................................................................25
Annex F. Foreign Trade Operations ..............................................................................................145
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FOREWORD
The International Finance Corporation implements a large-scale technical assistance program in the countries
of the Commonwealth of Independent States (CIS). The objectives of the program are attraction of investment
to the private sector, support for the development of small and medium business, and creation of a favorable
business enabling environment.
In September 2001, the program expanded to the Central Asia region, with support from the Swiss State
Secretariat for Economic Affairs (seco) and in cooperation with the World Bank.
Within the framework of the Swiss-IFC Central Asia Partnership, the first baseline survey of barriers to
development of small and medium business in the Republic of Tajikistan was conducted in June 2003.
The survey represents the collective view of 2000 representatives of SMEs, dehkan farmers and individual
entrepreneurs from all regions of the country and working in major sectors of the economy. The methodology
employed in conducting this survey is similar to that used for IFC surveys conducted throughout the region.
This report is based on the results of the survey and includes conclusions and general recommendations,
which can be used to further develop government policy on support for entrepreneurship in Tajikistan. The
results of discussions with representatives of the government and non-governmental organizations assisting
development of the private sector are also reflected in this report.
This report should not be considered a comprehensive catalog of all of the issues facing the small business
sector in Tajikistan, and neither should it be taken as a reflection of the opinions of IFC or seco. Rather, the
report is meant to serve as a factual representation of the views of Tajikistan’s entrepreneurs. In some cases,
entrepreneurs’ perception of the issues may not be fully aligned with the existing legal base. However, these
are nonetheless real concerns. These discrepancies, where they arise, point to a need for better communication
between the Government of Tajikistan and the private sector.
A major objective of the survey has been to create an independent baseline of indicators of the barriers facing
small business. It is the intention of the IFC that the survey be repeated on a regular basis, thus becoming a
useful monitoring tool for the reforms undertaken by the Government of Tajikistan in developing a favorable
business environment in the country.
The second, but equally important objective of the survey, is to identify priority areas which should be
addressed by the Government of Tajikistan in order to improve the enabling environment for small business.
The recommendations contained within are primarily intended as a starting point for further discussion with
the Government and with non-government organizations, in order to develop a comprehensive action plan
for addressing the problems highlighted during the survey.
We would like to extend our special thanks to the Executive Unit under the Office of the President of the
Republic of Tajikistan, Ministry of Justice, Ministry for State Revenues and Collections, Ministry of Finance,
Ministry of Economy and Trade, the State Committee on Statistics, the State Agency for Antimonopoly Policy
and Support to Entrepreneurship, National Bank of Tajikistan, the Committee on Economy, Budget, Finance
and Taxes of the House of Representatives of the Republic of Tajikistan, the Committee on Energy, Industry,
Construction and Communications of the House of Representatives of the Republic of Tajikistan, Chamber of
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Commerce and Industry of the Republic of Tajikistan, National Association of Small and Medium Businesses,
Association of Dehkans (Farmers), Center for Support to Entrepreneurship of the City of Dushanbe, and the
Center for Statistical Research «Zarkalo» for their active support. We would also like to thank our colleagues
from the World Bank Resident Mission in Tajikistan, IFC’s Country Coordinator for investment activities, and
the staff of IFC’s Private Enterprise Partnership for their invaluable contributions to this report.
This report is available in English and Russian. Hardcopies of this report can be obtained at IFC’s
Representative Offices in Dushanbe and in Moscow, and the report can be downloaded in electronic format at
www.ifc.org/centralasiawww.ifc.org/centralasia
International Finance CorporationPrivate Enterprise Partnership 36, Bolshaya Molchanovka, bld. #1
Moscow, Russia
Tel: + 7 095 411 7555
Fax: + 7 095 411 7556
International Finance CorporationSwiss – IFC Central Asia PartnershipPavlov Street, 32
Dushanbe, Tajikistan
Tel: + 992 372 24 7454
Tel/Fax: + 992 372 24 1455
International Finance Corporation (IFC) is a member of the World Bank Group and promotes sustainable
private sector investment in developing countries. This is accomplished through financing private sector
projects in collaboration with private investors as well as providing, together with donors, consultancy
services and technical assistance to governments and the private sector.
The State Secretariat for Economic Affairs (seco). Switzerland actively participates in the international
community’s efforts to help developing countries. Each year Switzerland spends approximately 1.5 bln.
Swiss franks on development aid to countries, which corresponds to about 0.34% of its GNP.
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EXECUTIVE SUMMARY
The number of small and medium-sized businesses in Tajikistan increases yearly, while the SME sector
accounts for an ever larger share of total employment and contributes substantially to the country’s GDP.
These trends display the importance of the private sector to the economic and social life of Tajikistan, and
the extent to which the development of a favorable business environment is of interest not only to the success
of small and medium businesses, but to the growth of the Tajik economy as a whole.
Recognizing the importance of small and medium business development, the Government of Tajikistan
has accorded substantial attention to issues of entrepreneurship. An important step forward in this area
was the establishment of a government agency for entrepreneurial support1 and the adoption of the State
Program for Support of Entrepreneurship for 2002-2005.2 Nevertheless, in Tajikistan, as in other transitional
economies, many administrative procedures have been inherited from a planned economic system, and were
never designed to respond to the requirements of a market economy.
In order to respond to these issues, the International Finance Corporation (IFC), with the financial support
of the State Secretariat for Economic Affairs of Switzerland (seco), commissioned an independent survey of
2,000 small and medium businesses in Tajikistan in June 2003. The objective of the survey is to study the
country’s business environment, including the key procedures used to regulate the activities of entrepreneurs.
The results of this baseline survey are two-fold: the creation of an independent set of initial business
environment indicators for Tajikistan, and assistance to the Government and other key stakeholders in
prioritizing the issues which currently confront entrepreneurs. Carried out on a regular basis, such surveys can
serve as a useful tool to monitor the effectiveness of reforms undertaken by the Government of Tajikistan.
During the survey, entrepreneurs expressed their views on a variety of issues which they encounter in
their business activities, such as business registration, obtaining permits, licensing procedures, obtaining
standards and certifying products, issues related to taxation and inspections, access to external financing,
and regulation of foreign trade operations. Respondents also assessed their relationship with government
agencies which influence business development in the country, and the quality of management in the small
and medium business sector.
The results of the survey show that entrepreneurs in Tajikistan believe that doing business is complicated.
Chart 1 summarizes respondent assessment of the complexity of administrative procedures encountered
by entrepreneurs when starting or operating a business.3 As can be seen from the Chart, over 50% of
respondents believe that all the procedures surveyed are problematic. Moreover, the following procedures
1 Resolution of the Government of the Republic of Tajikistan On the State Agency for Anti-Monopoly Policy and Support of
Entrepreneurship under the Government of the Republic of Tajikistan, No. 11, dated January 11, 2001.2 Resolution of the Government of the Republic of Tajikistan On Strengthening of Government Measures for Small Business Support
in the Republic of Tajikistan, No. 384, dated October 1, 2002. 3 Respondents were asked to evaluate the complexity of each procedure using a four-point scale: Very Complicated, Rather
Complicated, Rather Easy, and Very Easy. The dark columns in Chart 1 indicate the share of respondents who estimated each
procedure as Very Complicated or Rather Complicated, whereas the light columns reflect the share who rated each procedure as
Rather Easy or Very Easy.
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were cited as complex by over two thirds of all surveyed entrepreneurs: access to external financing, foreign
trade operations, taxation, inspections, and licensing procedures.
Between 2002 and 2003, the Government of Tajikistan initiated a number of projects aimed at improving the
country’s business environment. These projects include the following areas of focus:
Development of additional financing instruments for small and medium businesses:
Drafting and adopting a «Law on Leasing». The Tajikistan government is also evaluating the possibility
of instituting a tax system which would encourage leasing operations in Tajikistan;
Developing and reviewing legislation regulating lending mechanisms (e.g. microfinance) which are
specifically designed for small and medium businesses;
Establishing a Fund for Financial Support of Entrepreneurship under the Agency for Anti-Monopoly
Policy and Support of Entrepreneurship.
Development of enterprise support mechanisms and encouragement of a constructive dialog between authorities and SMEs:
Holding an Entrepreneurs’ Forum and a series of meetings between entrepreneurs and top government
officials;
Facilitating the creation of local centers for support of entrepreneurship;
Encouraging mass media to provide press coverage of entrepreneurial activity.
Improvement of legislation regulating specific administrative procedures:
Drafting a regulatory act that envisions the introduction of «One-Window» registration;
Developing a draft «Law on Licensing of Selected Activities», which would help to standardize the
norms and provisions that govern this process.
It is anticipated that this survey will assist the Government of Tajikistan and other organizations which
encourage the development of small and medium businesses to resolve key problems facing Tajikistan’s small
business sector, and that it will be helpful in developing appropriate action plans to improve the business
environment in the country. Follow-on surveys will monitor the results achieved through implementation of
initiatives to improve the business environment in Tajikistan.
Chart 1Chart 1Assessed Complexity of Administrative Procedures in TajikistanAssessed Complexity of Administrative Procedures in Tajikistan
% of respondents
Access to external financingAccess to external financing
100100 1001004040
Foreign trade operationsForeign trade operations
TaxationTaxation
InspectionsInspections
LicensingLicensing
Certification and standardizationCertification and standardization
Permits and approvalsPermits and approvals
RegistrationRegistration
Bank account operationsBank account operations
8080 6060 2020 00 2020 4040 6060 8080
Very complicatedVery complicated Very easyVery easy
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The rest of this section presents the main findings of the survey, and gives recommendations on next
steps that could be undertaken by the Government and organizations supporting SME development. The
proposed recommendations will need to be discussed in more detail with the Government of Tajikistan to
work out an action plan that would stipulate specific activities.
Despite the high demand for financial services in Tajikistan, confidence in the country’s banking system is limited, while external financing is scarce.
82% of respondents said they do not use bank accounts in their business activities.
Entrepreneurs have limited access to external financing: 40% of respondents said they were in need of
external financing, yet only 3.3% of them could obtain bank loans.
Microlending by international and non-government organizations increases the availability of financial
resources to entrepreneurs: 5% of those in need of external financing were financed by sectoral
associations and 13% by non-government organizations.
Every fourth respondent who received a bank loan indicated that informal payments to bank officials
were necessary, with the amounts of such unofficial payments averaging 12% of the size of the loan.
Small and medium businesses could play a much more active role in export activities.
Prior to 2004, entrepreneurs were assessed registration fees of up to US $2,000 for permission to engage
in foreign trade activities.
It is much more difficult for SMEs to export than to import: only 8% of all respondents were engaged
in export operations, whereas 29% of interviewed SMEs indicated that they were engaged in import
operations. SMEs can play a much more important and active role in this field, and become a
locomotive for growth in foreign trade operations for all small businesses in Tajikistan.
Participation of other categories of entrepreneurs in foreign trade operations is limited: only 1% of
individual entrepreneurs and 6% of dehkan farmers were engaged in export operations. Yet, for import
activities, these figures are 21% and 7%, respectively.
The 100% advance payment required for export of certain products further complicates export
procedures as indicated by 88% of respondents. This requirement is applicable to goods exported by
more than half of surveyed SMEs.
Other serious concerns related to export operations are are lengthy customs procedures, corruption
among customs authorities, and the lack of a clear-cut and unified methodology for determining the
customs value of commodities. Each of these issues was cited as problematic by over 90% of exporters.
There are two alternative methods of taxation in Tajikistan: the regular payment procedure and a simplified procedure. The key difficulties in the tax system relate to inconsistencies in tax legislation, the large number of taxes for which entrepreneurs are liable, and the practice of soliciting additional payments from entrepreneurs for «landscaping and maintenance» of municipal property.
The Simplified Tax System has resulted in a lower tax burden for individual entrepreneurs than for SMEs
and dehkan farmers. In 2002, the tax burden for individual entrepreneurs was 8% of gross revenue, as
opposed to 17% for SMEs and 14% for dehkan farmers.
While the simplified tax system reduces the number of taxes for which entrepreneurs are liable, this
number remains considerable: business entities have to pay 13 different taxes under the regular tax
system and 10 taxes with simplified tax.
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Nearly 42% of entrepreneurs had to make payments for «landscaping and maintenance» of municipal
property at the demand of local authorities; per entrepreneur, the annual sum of such payments
averages to 2% of gross earnings.
The level of tax evasion is significant: 39% of entrepreneurs stated that companies similar to theirs
evade taxes. On average, these respondents believe that entrepreneurs hide about 8% of revenue from
taxation.
Inspections conducted in Tajikistan are excessively numerous and very time-consuming for entrepreneurs, who prefer not to use official channels to regulate inspections, and consider it justifiable to solve problems through unofficial payments.
The small and medium businesses surveyed were inspected an average of 16 times in 2002. These
inspections cumulatively lasted an average of 17 days and distracted the time of approximately 1.5
employees away from their work during the course of one inspection.
In 2002, 95% of entrepreneurs interviewed underwent tax inspections, with each enterprise going
through an average 7 tax inspections over the course of year.
The legislative base defining the procedural aspects of inspections consists of more than 10 different
normative acts, of which 80% of entrepreneurs have poor or cursory knowledge.
98% of respondents admitted making unofficial payments in the course of inspections and insisted that
such payments were justifiable under existing conditions.
The use of the Inspections Registration Book (IRB) may often prevent ungrounded or unauthorized
inspections; however, the IRB is used by only 42% of small and medium businesses. Only 6% of
respondents appealed against what they perceived as wrongful actions on the part of inspecting
authorities, yet only 5% believed that they had no basis for challenging the legitimacy of an inspection.
The legislative base regulating licensing is cumbersome and non-transparent, creating problems and complications for a large number of entrepreneurs.
More than 32 types and 1,000 subtypes of business activities are subject to licensing in Tajikistan, while
licensing affects 27% of surveyed small and medium businesses.
The number of laws and regulations that govern licensing (more than 43 laws and 41 other regulatory
acts) render the process unsatisfactory and difficult to understand: more than 50% of respondents
obtaining licenses indicated that reliable information on licensing is difficult to find.
Validity periods for licenses are often left to the discretion of the licensing authorities, to establish on
a case-by-case basis.
33% of respondents obtaining licenses needed to make unofficial payments during the process.
Entrepreneurs working in the construction sector face unofficial payments more often than others –
44% paid unofficially.
Entrepreneurs view the certification and standardization processes as vague and expensive.
The products, work, and services of 20% of entrepreneurs were subject to standardization, while the
activities of 42% of entrepreneurs were subject to certification.
Most entrepreneurs have to undergo the certification process more than once a year: 75% of respondents
were issued certificates valid for less than 12 months.
More than half of respondents obtaining standards/certificates experienced difficulties with obtaining
thorough and reliable information on relevant standardization/certification procedures.
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On average, an entrepreneur pays 127 somoni to obtain all necessary standards and 192 somoni to
obtain all necessary certificates, or 25% and 37% of per capita GDP, respectively.4
The registration process is perceived as lengthy, costly, and non-transparent.
It takes an average of 18 working days to register a small or medium-sized business; this process is most
time-consuming for dehkan farmers – 36 working days.
Business registration is an expensive procedure for entrepreneurs. Registration is most expensive for
SMEs – at an average of 487 somoni or 95% of per capita GDP.5
Registration of each category of business entity is governed by separate normative acts. The absence of
a unified and transparent registration system in Tajikistan makes this process even more complicated:
55% of small and medium business people interviewed said that it was difficult to obtain thorough and
reliable information on the registration process.
After completing registration, an entrepreneur cannot launch business operations until he or she has
obtained a number of additional permits which are required before start-up.
To launch operations, entrepreneurs must obtain permits from 4 agencies, on average. The legislative framework regulating this process requires unification.
Legislation regulating permits does not stipulate a unified procedure for their issuance. The required
procedures, as well as the cost involved and timeframes for reviewing permit applications, are
established at the discretion of the issuing agency. In 2002, 21% of respondents admitted they had to re-
apply for the permits they required because issuing procedures had changed.
It takes an average of 6.5 working days for an entrepreneur to obtain one permit. In 2002, entrepreneurs
paid an average of 197 somoni, or 38% of per capita GDP,6 to obtain all necessary permits.
39% of respondents admitted they had made unofficial payments while obtaining permits.
Tajikistan’s entrepreneurs have a low level of legal awareness; therefore, small and medium businesses do not fully utilize existing enterprise support mechanisms.
Only 14% of entrepreneurs said they have good knowledge of the legislation that regulates their business
activities.
Most respondents (66%) are not aware either of the existence of the Agency for Anti-Monopoly Policy
and Support of Entrepreneurship or of the fact that the Agency is designed to protect their rights. Only
8% of those who were aware of its existence turned to the Agency for assistance.
Small and medium businesses give a poor assessment of their relationship with local authorities, and expectations for change in the business environment over the next year are somewhat reserved.
Almost two thirds of respondents (63%) indicated that there are too many bureaucratic barriers in the
relations between entrepreneurs and local authorities.
Just over half of respondents (56%) said they expected improvements in the country’s business
environment over the next 12 months.
4 Costs include reported official and unofficial payments. GDP calculations are based on official data for 2002. 5 Costs include reported official and unofficial payments. GDP calculations are based on official data for 2002.6 Costs include reported official and unofficial payments. GDP calculations are based on official data for 2002.
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The use of computer technology, the availability of a qualified workforce, and the enterprise support infrastructure in Tajikistan’s small and medium business sector are insufficient.
On average, only 8% of entrepreneurs use computers in their business activities, and only 3% of
entrepreneurs use the Internet.
88% of entrepreneurs and their personnel did not take computer training courses, with 80% of
respondents claiming that such specialized courses were not necessary.
Lack of information on existing business associations, on the one hand, and of the practical advantages
that would result from participating in such associations, on the other, are the main reasons why an
overwhelming majority of SMEs (81%) and individual entrepreneurs (94%) are not members of any
professional association.
Nearly 71% of dehkan farmers are members of the Dehkan Farmers’ Association, which can be
attributed to the government support that is provided to the Association, and also to its far-reaching
network of regional branches.
Many entrepreneurs are willing to pay for services that may be provided by business associations: legal
consultations and services aimed at protecting the rights of entrepreneurs are most in demand.
Based on an analysis of survey results, a number of recommendations have been developed to improve
government policy towards the development of small and medium businesses in the Republic of Tajikistan.
Key recommendations are listed below, in the order of the main findings of the survey.
SMEs and Financial Institutions1. Promote alternative financing mechanisms, such as leasing, and encourage the development of credit
unions and microlending institutions.
2. Develop information materials on banks and other available sources of financing, including guidelines
on how to work with such sources, and disseminate these materials among small and medium
businesses. These materials should also contain information on loan application procedures as well as
samples of relevant forms and applications.
3. Eliminate the residual «cash plan»7 practices.
Foreign Trade Operations1. Consider the possibility of applying the simplified processing schemes used in import operations to
export operations.
2. Review the appropriateness of the export/import contract registration requirement, including «expert
reviewing» of prices stipulated in import/export contracts.
3. Exert more effort to eliminate unofficial payments during customs clearance procedures.
4. Review the procedures for collection of customs duties with the goal of making customs clearance
procedures simpler, shorter, and more transparent for both exporters and importers.
Taxation1. Ensure that Tajikistan’s tax legislation contains clear-cut and understandable tax rules and regulations.
2. Introduce instruments such as hotline services to make it possible to report cases of abuse and
misbehavior on the part of local authorities, including demands for «landscaping and maintenance»
payments.
3. Enable entrepreneurs to obtain tax-related information from relevant government agencies, and obligate
these agencies to officially respond to such inquiries in writing and within an established timeframe.
7 Some banks continue to require clients regularly to submit cash flow forecasts of expected deposits and withdrawals.
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Inspections1. Review possibilities for unifying and systemizing the legislative base related to inspections so as to
clarify and itemize the functions and responsibilities of all the agencies involved.
2. Introduce inspection coordination mechanisms that would exclude the possibility of conducting multiple
inspections of one and the same small or medium business operation by different-level branches or units
of the same inspecting agency.
3. Develop a risk-based system linked to the type of activities being conducted by a business, and of the
possible impact on public safety and health. This will help authorities to determine whether a given
business entity is to be inspected on a more frequent basis or on a less frequent basis within a certain
period of time.
4. Make public the sizes of payments and fines charged for particular violations of applicable laws and
regulations for each sector of the economy.
5. Take proper measures to provide all small and medium businesses with Inspections Registration Books.
Licensing1. Consider the possibility of reducing the number of business activities that are subject to licensing, and
establish a list of activities that must be licensed on a compulsory basis, as well as the procedures for
obtaining these licenses.
2. Begin to issue long-term licenses for selected activities (banking, for example), thereby reducing
investment risks and raising the confidence of both local and foreign investors.
3. Consider the possibility of using other countries’ positive experience in eliminating the distinction
between licenses, permits, and approvals, and introduce a rule by which selected licenses will be issued
automatically, through «consent by silence».
4. Develop and disseminate information materials on licensing procedures and on the terms and conditions
for review of license applications and for issuance of licenses for small and medium businesses, with
templates of completed application forms attached.
Standardization and Certification1. Carry out a review of mandatory government certification and technical standards with the goal of
eliminating all but those necessary for the protection of public health and safety, and the environment.
2. Consider the possibility of using successful international experience in identifying necessary certification
and technical standards.
3. Consider the possibility of extending the terms of validity of certificates issued for selected products.
Registration1. Establish a unified «One-Window» registration procedure for all categories of businesses, and a clear
and unified registration mechanism to be employed in all regions of the country.
2. Develop and disseminate a standard package of documents required for registration («registration kit»)
which would enable the entrepreneur to prepare a registration application.
3. Determine and publicize the costs of registration and the procedures for making payments in the course
of the registration process.
4. Allow for a number of key permits required for starting business activities to be issued through the
«One-Window» registration office.
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Permits and Approvals1. Consider adopting a unified law on permits that would stipulate a complete list of necessary permits, as
well as include: agencies authorized to issue specific permits; the cost of obtaining a particular permit;
and a simple and transparent description of procedures required for obtaining permits, to be enforced
in all regions of the country.
2. Consider adopting the «consent by silence» principle for issuing certain key permits, e.g. if government
officials do not respond to an application within a legally established timeframe, the permit is
automatically issued to the applicant.
3. Carry out public awareness campaigns to provide entrepreneurs with detailed information on existing
procedures for obtaining permits.
Improving the Business Environment for Small and Medium Businesses1. Increase small and medium businesses’ awareness of the role of the Agency for Anti-Monopoly Policy
and Support of Entrepreneurship in protecting the rights of entrepreneurs.
2. Carry out public discussions of legislative drafts related to entrepreneurial activities, prior to the
enactment of such normative acts.
3. Review the most effective means of delivery of information to small and medium businesses, including
direct mail, workshops, mass media, and associations of entrepreneurs, and ensure that such
information materials are updated and disseminated on a regular basis.
4. Encourage the involvement of non-government organizations, such as associations of entrepreneurs,
which would openly represent the interests of entrepreneurs in the policy-making process at the local
and national levels.
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MAIN FACTS
This independent baseline survey of small and medium business is the first of its kind to be conducted by the
International Finance Corporation in Tajikistan. The goal of the survey is to reveal the key administrative
and regulatory barriers confronted by local entrepreneurs during the course of their regular business
activities. The survey results directly reflect the opinions of Tajikistan’s small and medium businesses on
a variety of administrative issues related to their development in 2002. Results obtained through regular
follow-on surveys will serve as effective tools for monitoring reforms undertaken by the Government of
Tajikistan.
REACH 2,000 small and medium-sized enterprises, dehkan farmers, and individual entrepreneurs
in all 3 provinces of Tajikistan, Regions under Republican Subordination, and in the city
of Dushanbe.
TIMING Field work was carried out in June 2003.
METHOD In-depth personal interviews covering 179 questions on the following topics: general
enterprise information, information technology, human resources, training, business
re gistration and launch of business activities, licensing, certification, standardization,
export-import operations, inspections, taxation, banking activities and the overall
business environment. Specific firm-level financial data was not sought.
SAMPLE8 The sample is representative of the entire small and medium business sector of Tajikistan.
To construct the sample, quotas for small and medium-sized enterprises, dehkan
farmers, and individual entrepreneurs were used. Within each of the quotas, the sample
was constructed to be proportionate to the number of active small and medium-sized
enterprises, dehkan farmers, and individual entrepreneurs, by sector of operations and by
region, based on official data from the State Statistics Committee (GOSKOMSTAT) of
the Republic of Tajikistan as of January 1, 2003.
RESULTS The results obtained in the course of the survey were weighed in accordance with the
parameters of the total target population of small and medium business in Tajikistan.
Thus, the results provided in the report are representative in terms of size, sector of
activity, and regional distribution of active small and medium businesses in Tajikistan.
Small and medium businesses have been classified according to the existing legislative base in Tajikistan and
data provided by the State Statistics Committee of the Republic of Tajikistan. Definitions of categories of
small and medium businesses are provided in Box 1.
8 More detailed information about the sample can be found in Annex D to this report.
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Because the legislative and regulatory base applicable to aspects of dehkan farm operations differs from legal
regulations applied to individual entrepreneurs and SMEs, the report contains relevant explanatory notes
when applicable.
Basic information on the respondents who took part in the survey is given below.
Box 1. Definitions of Categories of Small and Medium Businesses
Small and medium-sized enterprises (SMEs)
Tajik legislation does not define «small and medium-sized businesses». It does, however, define «small
entrepreneurship» as an enterprise or organization without any government ownership and with 50
or fewer employees for manufacturing and construction enterprises, and 15 or fewer employees for
enterprises in other sectors.9
For statistical reporting purposes, the State Statistics Committee of the Republic of Tajikistan uses the
following conditional definitions:
Small enterprise: a company with an average of fewer than 50 employees in the reporting period;
Medium-sized enterprise: a company with an average of 51 to 200 employees in the reporting
period.
The terms «small enterprise» and «medium-sized enterprise» are used in this report as defined by the
State Statistics Committee of the Republic of Tajikistan.
Individual entrepreneur – an individual (sole proprietor) who is involved in a business activity without
forming a legal entity, and operating on his or her own behalf and at his or her own risk.10 The business
activities of an individual entrepreneur may be carried out either independently or under the umbrella of
another individual entrepreneur.11 Current legislation does not restrict individual entrepreneurs’ ability to
contract or employ other persons.
Dehkan farm – a small scale family enterprise involved in production and sale of agricultural products
that exists without legal establishment.12 Dehkan farms are established on land parcels and on other
pro per ty belonging to the farm members.13 The number of members of a dehkan farm does not usually
exceed 15 persons.
9 Decree No. 459 of the President of the Republic of Tajikistan «On Government Support of Small Entrepreneurship in the Republic
of Tajikistan», dated April 8, 1996.10 Article 25 of the Tax Code of the Republic of Tajikistan.11 Article 24 of the Civil Code of the Republic of Tajikistan.12 Before the Law of the Republic of Tajikistan «On Dehkan Farmers», No. 48, dated May 10, 2002, was enacted, dehkan farmers had
to undergo registration procedures as per the Law of the republic of Tajikistan «On State Registration of Enterprises in the Republic
of Tajikistan», No. 498, dated December 12, 1997, whereby dehkan farmers acquired the status of legal entity.13 Article 3 of Law of the Republic of Tajikistan «On Dehkan Farmers», dated May 10, 2002, No. 48.
C h a p t e r 2
[2003] 17B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Chart 2Chart 2Small and Medium Businesses by Category and SectorSmall and Medium Businesses by Category and Sector
% of respondents
OtherOther
General business activitiesGeneral business activities
ConstructionConstruction
AgricultureAgriculture
Trade and public cateringTrade and public catering
ManufacturingManufacturing
9%9%
40%40%
15%15%
9%9%
15%15%
11%11%
SMEsSMEs
Other (1%)Other (1%)
Basic consumer servicesBasic consumer services
Transportation and communicationsTransportation and communications
9%9%
11%11%
65%65%
9%9%
Individual entrepreneursIndividual entrepreneurs
15%15%
AgricultureAgriculture100%100%
Dehkan farmersDehkan farmers
Trade and public cateringTrade and public catering
ManufacturingManufacturing
Chart 3Chart 3Respondents by Management PositionRespondents by Management Position
% of respondents
Deputy Director (3,0%)Deputy Director (3,0%)
Executive Director (1,1%)Executive Director (1,1%)
Other (4,0%)Other (4,0%)
Director/General Director (13,8%)Director/General Director (13,8%)
[2003] 18 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Note:
The basic premise of the survey is that it polls existing enterprises and entrepreneurs. Enterprises and
entrepreneurs who did not make it through registration or licensing procedures, for example, or those who
had to close their operations, could not express their views on the business environment.
Chart 4Chart 4Respondents by GenderRespondents by Gender
% of respondents
FemaleFemale
MaleMale
24,4%
75,6%
% of respondents
Table 3Table 3Respondents by Number of EmployeesRespondents by Number of Employees
Full-time employeesFull-time employees Part-time employees and contractors
Part-time employees and contractors
1 employee1 employee
From 2 to 10 employeesFrom 2 to 10 employees
From 11 to 20 employeesFrom 11 to 20 employees
From 21 to 30 employeesFrom 21 to 30 employees
From 31 to 40 employeesFrom 31 to 40 employees
From 41 to 50 employeesFrom 41 to 50 employees
From 51 to 200 employeesFrom 51 to 200 employees
Over 200 employeesOver 200 employees
No seasonal workersNo seasonal workers
41.9%41.9%
47.7%47.7%
6.0%6.0%
1.5%1.5%
0.6%0.6%
0.8%0.8%
1.3%1.3%
0.2%0.2%
--
6.2%6.2%
17.0%17.0%
3.6%3.6%
1.3%1.3%
0.3%0.3%
0.5%0.5%
0.9%0.9%
0.4%0.4%
69.9%69.9%
C h a p t e r 3
[2003] 19B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
TAJIKISTAN’S SMALL AND MEDIUM BUSINESS SECTOR AT A GLANCE
Official Statistics of the Tajikistan Small and Medium Business Sector
According to the State Statistics Committee (Goskomstat) of the Republic of Tajikistan, there were 6,050
small enterprises, 142 medium-sized enterprises, 15,463 dehkan farmers and 71,309 individual entrepreneurs
in Tajikistan as of January 1, 2003.14
Thus, there were 14.3 small and medium businesses per 1,000 residents in Tajikistan.
The number of small and medium businesses is increasing, as is their share in GDP. According to the State Statistics Committee of the Republic of Tajikistan, small and medium businesses accounted for 35.3% of GDP and 25% of overall employment in 2002.
Average growth rate in turnover in 2002 was 10.1% for SMEs, 9.8% for dehkan farmers, and 5.3% for individual entrepreneurs.
Only 22% of small and medium businesses grew faster than inflation in 2002.
The average profitability rate was 9.7% for SMEs, 9.8% for dehkan farmers and 7.6% for individual entrepreneurs.
Growth rates and profitability of small and medium businesses vary significantly from one region to another.
Most survey respondents expect an increase in sales and profitability in 2003.
14 Legislation of the Republic of Tajikistan does not define medium-sized enterprises. For the purposes of this survey, a company with
an average of 51 to 200 employees is regarded as a medium-sized enterprise.
Chart 5Chart 5Structure of Tajikistan’s Small and Medium Business Sector, 2002Structure of Tajikistan’s Small and Medium Business Sector, 2002
40%40%
80%80%
0%0%
20%20%
Individual entrepreneursIndividual entrepreneurs Small enterprisesSmall enterprises
76,6%76,6%
16,6%16,6%
6,5%6,5%
Medium-sized enterprisesMedium-sized enterprises
0,2%0,2%
Dehkan farmersDehkan farmers
60%60%
Source: State Statistics Committee of the Republic of Tajikistan
T a j i k i s t a n ’ s S m a l l a n d M e d i u m B u s i n e s s S e c t o r a t a G l a n c e
[2003] 20 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The number of individuals employed in the small and medium business sector was 456,900 or 25% of the
total employment in Tajikistan. The chart below indicates that the number of employees in the small and
medium business sector increased by about 23% from 2001 to 2002.
While the number of small and medium businesses has steadily increased over the past four years, the
structure of the sector has largely remained unchanged.
Growth rates of small and medium businesses in Tajikistan have decreased over the last two years.
Chart 6Chart 6Number of Employees in Tajikistan’s Small and Medium Business SectorNumber of Employees in Tajikistan’s Small and Medium Business Sector
Number of persons
19991999 20012001 20022002
342,5342,5
20002000
416,5416,5
372,5372,5
457457
Source: State Statistics Committee of the Republic of Tajikistan
Chart 7Chart 7Number of Active Small and Medium Businesses, by YearNumber of Active Small and Medium Businesses, by Year
Source: State Statistics Committee of the Republic of Tajikistan
19991999 20012001 20022002
5074350743
20002000
6024060240
7025470254 7130971309
Individual entrepreneursIndividual entrepreneurs
19991999 20012001 20022002
1153611536
20002000
1442814428
1167611676
1546315463
Dehkan farmersDehkan farmers
19991999 20012001 20022002
44454445
20002000
4834483453685368
60506050
Small enterprises Small enterprises
19991999 20012001 20022002
105105
20002000
122122129129
142142
Medium-sized enterprisesMedium-sized enterprises
C h a p t e r 3
[2003] 21B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The contribution of small and medium businesses to the GDP of Tajikistan continues to increase each year.
In 2002, for instance, the small and medium business share of GDP grew by 3.6% from the previous year.15
Selected SME Development Indicators in 2002
Most respondents reported an increase in nominal cash sales between 2001 and 2002. If the 10.2%16 inflation
rate is taken into account, however, it appears that only 22% of small and medium businesses grew faster
than inflation.
15 Official data of the State Statistics Committee of the Republic of Tajikistan. 16 Official data of the State Statistics Committee of the Republic of Tajikistan.
Chart 8Chart 8Growth Rate of Number of Small and Medium BusinessesGrowth Rate of Number of Small and Medium Businesses
Growth rate, %, compared against the previous year
2001200120002000
19%19%
20022002
10%10%
6%6%
Source: State Statistics Committee of the Republic of Tajikistan
Chart 9Chart 9Small and Medium Business Share of Nominal GDPSmall and Medium Business Share of Nominal GDP
19991999 20012001 20022002
29,3%29,3%
20002000
29,7%29,7%31,7%31,7%
35,3%35,3%36%36%
24%24%
12%12%
0%0%
Source: State Statistics Committee of the Republic of Tajikistan
% of GDP
Chart 10Chart 10Reported Sales Growth Rate in Nominal and Real Terms, 2001-2002Reported Sales Growth Rate in Nominal and Real Terms, 2001-2002
% of respondents reporting growth
Negative or zero growthNegative or zero growth
30% +30% +
10 to 30%10 to 30%
0%0%
1 to 10%1 to 10%
30%30%
4%4%
32%32%
60%60%
18%18%
45%45%
Inflation level (10,2%)Inflation level (10,2%)
Percent of small and medium businesses growing positively in real terms (after adjusting for inflation)
Percent of small and medium businesses growing positively in real terms (after adjusting for inflation)
Rep
ort
ed
no
min
al
gro
wth
rate
sR
ep
ort
ed
no
min
al
gro
wth
rate
s
T a j i k i s t a n ’ s S m a l l a n d M e d i u m B u s i n e s s S e c t o r a t a G l a n c e
[2003] 22 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Among all categories of small and medium businesses, SMEs and dehkan farmers performed the best in
2002, with about 29% of respondents in each category showing real sales growth compared to 2001. Only
21% of individual entrepreneurs experienced positive sales growth in 2002.
Reported rates of sales growth vary across the country’s regions. As seen in chart 11, respondents in the
Kulyab district of Khatlon province reported sales growth rates of 11% on average, while respondents in the
city of Dushanbe reported a growth of 2%.
Survey results revealed significant differences in small and medium business development across the various
sectors of the Tajik economy. The construction sector appears to be the most dynamic, with a reported
average sales growth rate of 12%. Transportation and communications is the sector with the lowest reported
average growth rate throughout the country – 4%.
Small and medium enterprises were most profitable in the Gorno-Badakhshan Autonomous Province
(GBAO), with a 10.8% average net profit margin. Profit margins in the Kurgan-Tube district of Khatlon
province were 2.5 times lower.
Chart 11Chart 11Average Nominal Sales Growth Rate, by Region in 2002Average Nominal Sales Growth Rate, by Region in 2002
Growth rate, %
0%0% 6%6% 12%12%
11%11%
10%10%
10%10%
7%7%
4%4%
2%2%Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous Province
Gorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
Regions under Republican Subordination
Regions under Republican Subordination
Chart 12Chart 12Average Nominal Sales Growth Rate, by Sector in 2002Average Nominal Sales Growth Rate, by Sector in 2002
Growth rate, %
ConstructionConstruction
AgricultureAgriculture
ManufacturingManufacturing
Trade and Public CateringTrade and Public Catering
0%0% 5%5% 10%10% 15%15%
Transportation and Communications
Transportation and Communications
12%12%
10% 10%
8% 8%
5% 5%
4% 4%
Chart 13Chart 13Average Reported Net Profit Margin, by Region in 2002Average Reported Net Profit Margin, by Region in 2002
Profitability rate, %
0%0% 6%6%
10,8%10,8%
9,4%9,4%
8,6%8,6%
8,6%8,6%
7,3%7,3%
3,9%3,9%
12%12%
Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous Province
Gorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordination
Regions under Republican Subordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
C h a p t e r 3
[2003] 23B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
There are substantial variations in profit margins across economic sectors. Profitability rates were highest in
the construction sector and lowest in the transportation and communications sector.
Of all categories of small and medium businesses, individual entrepreneurs displayed the poorest showings
across indicators in 2002.
Chart 16 considers average sales growth in combination with average profitability rates for each region of
Tajikistan.
On the whole, entrepreneurs were optimistic about the future; 71% of respondents anticipated an increase in
cash sales during 2003. At the same time, individual entrepreneurs were the most pessimistic: 33% of them
anticipated either negative or zero sales growth in 2003.
Chart 14Chart 14Average Reported Net Profit Margin, by Sector in 2002Average Reported Net Profit Margin, by Sector in 2002
Profitability rate, %
0%0% 12%12%
10,0%10,0%
8,3%8,3%
7,3%7,3%
7,1%7,1%
6%6%
11,1%11,1%ConstructionConstruction
AgricultureAgriculture
ManufacturingManufacturing
Trade and Public CateringTrade and Public Catering
Transportation and CommunicationsTransportation and Communications
Chart 15 Chart 15 Average Sales Growth Rates and Profit Margins, by Small and Medium Business in 2002Average Sales Growth Rates and Profit Margins, by Small and Medium Business in 2002
Reported Sales Growth Rate in 2002Reported Sales Growth Rate in 2002
0%0% 5%5% 10%10%
Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous ProvinceGorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican SubordinationRegions under Republican Subordination
Kurgan-Tube District (Khatlon Province)Kurgan-Tube District (Khatlon Province)
Comparison of Sales Growth and Profitability Rates, by Region in 2002Comparison of Sales Growth and Profitability Rates, by Region in 2002
T a j i k i s t a n ’ s S m a l l a n d M e d i u m B u s i n e s s S e c t o r a t a G l a n c e
[2003] 24 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
According to the results of the survey, small and medium businesses’ profit margins have grown very slowly
over the past few years. As can be seen from Chart 18, in 2003 Tajikistan’s entrepreneurs expect an increase
in after-tax profits.
The following sections of this report will consider a number of aspects of entrepreneurship in Tajikistan.
These are factors which are likely to have affected the development of small and medium businesses, and
reflected on the sales growth and profit margin of all Tajik entrepreneurs.
Chart 18Chart 18Actual After-Tax Profitability Rates in 2001 and 2002, and Forecast for 2003Actual After-Tax Profitability Rates in 2001 and 2002, and Forecast for 2003
Profitability rate, %
2002200220012001
6%6%
2003 (forecast)2003 (forecast)0%0%
6%6%
12%12%
8%8%
10%10%
Chart 17Chart 17
0%0% 40%40%24%24%
Will increaseWill increase
> 15%> 15%
by 5-10%by 5-10%
<=0<=0
8%8% 16%16% 32%32%
SMESME
0%0% 40%40%24%24%
> 15%> 15%
by 5-10%by 5-10%
<=0<=0
8%8% 16%16% 32%32%
Individual entrepreneursIndividual entrepreneurs
0%0% 45%45%27%27%
> 15%> 15%
by 5-10%by 5-10%
<=0<=0
9%9% 18%18% 36%36%
Dehkan farmersDehkan farmers
% of respondents
Will increaseWill increase Will increaseWill increase
Forecasted Sales Growth Rates for 2003Forecasted Sales Growth Rates for 2003
C h a p t e r 4
[2003] 25B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
SMEs AND FINANCIAL INSTITUTIONS
Overview of the Tajikistan Banking System
There are two fundamental legislative acts regulating the banking system of the Republic of Tajikistan: the
Law «On the National Bank of Tajikistan», No. 383, dated December 14, 1996, and the Law «On Banks and
Banking Activities», No. 648, dated May 23, 1998. The National Bank of Tajikistan, based on its legislative
responsibilities, grants licenses to commercial banks and other non-banking financial institutions. It also
supervises their operations and regulates their activities.
Tajikistan has a two-tiered banking system. In terms of numbers of banks, there is the National Bank of
Tajikistan, 13 commercial banks, one branch of a foreign bank, and four non-banking financial institutions.17
By type of ownership, the banks operating in Tajikistan can be divided into the following categories:
1 government-owned bank; 10 incorporated commercial banks; and 2 joint-ventures. Altogether, there
are 118 branches of registered banks in Tajikistan. Among the republic’s largest banks are incorporated
commercial banks such as AgroInvestBank, OrienBank, TajikSodirotBank, and the state-owned savings
bank AmonatBank.
Non-banking financial institutions are licensed to carry out operations as authorized by banking legislation.
These institutions must lend exclusively in Tajik currency.
As per the Law of the Republic of Tajikistan «On Banks and Banking Activities», No. 648, dated May 23,
1998, commercial banks are entitled to provide up to 24 types of services in Tajikistan. In practice, however,
82% of respondents indicated that they did not use bank accounts in their business transactions.
Entrepreneurs have limited access to external financing: 40% of respondents said they were in need of external financing in 2002, yet only 3.3% of them were able to obtain bank loans.
Nearly 25% of entrepreneurs who received bank loans were required to make informal payments to bank officials that were, on average, 12% of the loan size.
Several alternative financial institutions complement the existing banking system. Sectoral associations provided credit to 5% of those in need of external financing and 13% received financing from non-government organizations.
In 2002, every second respondent made investments into fixed assets.
17 As of July 1, 2003, according to the National Bank of the Republic of Tajikistan.
S M E s a n d F i n a n c i a l I n s t i t u t i o n s
[2003] 26 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
bank activities do not cover all the services in which the banks are entitled to engage, with foreign exchange
and lending operations being the primary services.
According to official data,18 the total amount of loans and credits issued in 2002 reached 119.4 million
somoni (or US $39.82 million), which is 1.3 times more than in 2001. The share of short-term loans and
credits rose 2.5% during 2002 and constituted 96% of all loans and credits issued.
While lending to entrepreneurs as a percentage of total bank lending rose in 2001, this indicator dropped by
3% in 2002. In 2002, lending to government-owned enterprises doubled.
Account Transactions
Approximately 18% of entrepreneurs use bank accounts in their business transactions. Nevertheless, this
indicator varies substantially by the type of business entity: 82.4% of small and medium-sized enterprises,
6.2% of individual entrepreneurs, and 47.3% of dehkan farmers have bank accounts.
Current legislation permits small and medium businesses to open several accounts with one or more bank.19
Most entrepreneurs surveyed had one bank account. 69% of the respondents who did not have bank
accounts said they did not need one, 9% said they did not see the practical benefits of opening an account,
and 6% cited bank bureaucracy as the reason for not having a bank account.
When asked about the complexity of using bank accounts, respondents who hold them mentioned regulatory
restrictions on cash withdrawals (14%) and bank bureaucracy (13%) as two of the most pressing problems.
18 Data provided by the State Statistics Committee of the Republic of Tajikistan.19 Article 35 of the Law of the Republic of Tajikistan «On Banks and Banking Activities».
Chart 19Chart 19Bank Lending in 1999–2002, by Type of BorrowerBank Lending in 1999–2002, by Type of Borrower
[2003] 27B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Another obstacle in bank account transactions cited was the occasional shortage of cash at the banks (8%).
Interestingly, 36% of respondents noted that they did not experience any difficulties conducting account
transactions.
Some banks require clients to submit «cash plans» (i.e. cash flow statements outlining forecasted deposits and
withdrawals) under authority granted by Instruction No. 6 of the State Bank of USSR «On Organization of
Work on Currency Circulation by Institutions of the State Bank of the USSR», dated December 3, 1986.
Banks use the cash plans to prepare their own quarterly cash flow projections with a detailed breakdown
of all possible payables and receivables, which they then submit to the National Bank. This information
informs monetary policy decision-making at the National Bank.
The policy behind such constraints lies in the Government’s intent to curb inflation by withdrawing cash
from circulation. Now that regulations limiting cash withdrawals for business entities have been removed,
the cash plan not only poses undue administrative burdens on entrepreneurs, but also enables bank officers
to abuse their positions of authority, resulting in an adverse impact on the activities of small and medium
businesses.
According to the survey results, more than half of respondents (51%) holding bank accounts reported that
their banks required the «cash plan». This percentage varies substantially, however, by type of small and
medium business. For example, SMEs had to submit «cash plans» most often (61.5%), whereas dehkan
farmers were half as likely to be required to do so (31.8%). The rationale for this variance is that farmers use
bank accounts for their transactions to a very limited extent.
Small and medium businesses are subject to other administrative burdens. For example, banks conduct
«cash flow discipline» to which 47.4% of respondents were subject. Banks also require 42% of respondents to
submit statistical data on their business activities.
«For me, it’s easier, faster, and more reliable to deal in cash – there is not as much red tape as when you operate a bank account…,»
- Focus Group participant
According to current legislation, banks may not divulge information on clients’ accounts.
Chart 21Chart 21Complexity of Using Bank Accounts Complexity of Using Bank Accounts
% of account holders indicating this issue
Difficulties with cash withdrawal from local currency account
Difficulties with cash withdrawal from local currency account
0%0% 15%15%5%5% 10%10%
Bank bureaucracy Bank bureaucracy
Periodic shortage of cash at the bankPeriodic shortage of cash at the bank
Duration of account transactionsDuration of account transactions
High commission fees High commission fees
Numerous bank requirements on account transactions
Numerous bank requirements on account transactions
Difficulty withdrawing cash from hard currency accountDifficulty withdrawing cash from hard currency account
Lengthy duration of converting national currency into foreign currency
Lengthy duration of converting national currency into foreign currency
Control over salary fundControl over salary fund
14%14%
13%13%
8%8%
7%7%
7%7%
6%6%
4%4%
4%4%
1%1%
S M E s a n d F i n a n c i a l I n s t i t u t i o n s
[2003] 28 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Box 2. Information Constituting a Commercial Secret under the Bank Secrecy Clause:20
The following information constitutes a commercial secret under the Bank Secrecy Clause:
account balances and account holders;
account numbers of depositors, clients, and correspondents of the bank;
account transactions and balances;
services provided at the instruction of the client or in favor of the client;
other information that the client requests be held confidential, and
value of cash or other items stored in safety deposit boxes, vaults, or elsewhere on bank premises.
The information listed above must be available to clients, and may be disclosed to the following:
1) Prosecutorial authorities – for investigations and legal proceedings
2) Judicial authorities – for civil and administrative lawsuits
3) Tax authorities – for investigation of tax obligations. For tax authorities to obtain this information,
a formal letter of inquiry and an executive order must be signed by the head of the relevant tax agency
authorizing the investigation.
Most of the entrepreneurs surveyed that have bank accounts said they trusted their banks. Only 16% of such
respondents indicated that their banks had released information about their accounts to third parties.
SME Financing
The dynamics of business development and the growth of entrepreneurial activities largely depend upon
periodic renewal of fixed assets, which is done through investment into new equipment or means of
transportation, reconstruction or renovation of industrial facilities, or repairs of existing equipment.
According to the results of the survey, small and medium businesses do invest actively in fixed assets: 51% of
entrepreneurs said they made various investments during the year 2002. Of all small and medium businesses,
SMEs accounted for the largest percentage of investments (62%), whereas the share of the farmers was the
lowest – about 27%. These differences can be explained by the peculiarities of SMEs’ business activities and
their proximity to sources of financing. Most of the entrepreneurs surveyed invested money in reconstruction
of buildings and acquisition of new equipment.
20 Article 32 of the Law of the Republic of Tajikistan «On Banks and Banking Activities».
Chart 22Chart 22Investments in Fixed Assets by Small and Medium Businesses in 2002Investments in Fixed Assets by Small and Medium Businesses in 2002
% of respondents
Repairs of premissesRepairs of premisses
0%0% 25%25%5%5%
New equipment New equipment
Repairs of equipment Repairs of equipment
TransportationTransportation
New constructionNew construction
10%10% 15%15% 20%20%
SMEsSMEs
IndividualentrepreneursIndividualentrepreneurs
Dehkan farmersDehkan farmers
C h a p t e r 4
[2003] 29B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Personal savings and internal funds accounted for most investments – each of these sources was cited by 44%
of respondents. Only 1% of respondents mentioned using bank loans for investment purposes.
Financing of Small and Medium Businesses by Banks
Forty percent of respondents were in need of external financing in 2002. Yet only 11% of those surveyed
actually applied for bank credits. Of those that applied for bank loans, only 31% actually received a loan. A
majority of entrepreneurs planned to use external financing to either acquire fixed assets or cover working
capital needs.
In most cases, entrepreneurs applied for short-terms loans (60%) with maturities of up to one year. Twenty-
eight percent of respondents sought medium-term loans with maturities of up to three years, and 12% of
respondents applied for long-term loans with maturities exceeding 3 years.
The key disincentives to applying for bank loans were high interest rates, collateral requirements, and bank
bureaucracy.
«Considering the existing interest rates on bank loans, we would be better off if we obtain interest-based loans from friends or acquaintances…»,
«Short-term loans are not of much benefit to entrepreneurs, especially to those engaged in agriculture because of the slow turnover of capital. Even if they switch from crop production to cattle raising, they will have to sell their businesses prematurely to repay the loan on time…»
- Focus Group participants
Chart 23Chart 23Sources of InvestmentSources of Investment
% of respondents
Internal SourcesInternal Sources
Non-bank credits directly provided by international organizations or funds
Non-bank credits directly provided by international organizations or funds
Non-bank credits from friends, relatives, acquaintances
Non-bank credits from friends, relatives, acquaintances
Local investorsLocal investors
Personal savingsPersonal savings
0%0%
Bank loansBank loans
25%25%
44%44%
44%44%
6%6%
2%2%
1%1%
1%1%
50%50%
Chart 24Chart 24External Financing of Small and Medium Businesses in 2002 External Financing of Small and Medium Businesses in 2002
% of respondents
NoNo
YesYes
60%60%
40%40%
86%86%
89%89%
11%11%
Were you in need of external financing in 2002?
Were you in need of external financing in 2002?
Did you apply for a loan in 2002?
Did you apply for a loan in 2002?
Did you receive the loan?
Did you receive the loan?
31%31%
69%69%
YesYes
NoNo
NoNo
YesYes
25%25%
50%50%
75%75%
100%100%
0%0%
S M E s a n d F i n a n c i a l I n s t i t u t i o n s
[2003] 30 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
According to the survey, the average interest rate on bank loans issued in somoni in 2002 was 29% per
annum. Given the inflation rate of 10.2% during 2002, the average real rate of interest was 18.8% per annum.
The relatively high share of entrepreneurs receiving bank loans at interest rates between 24 – 27% and 34
– 36% per annum reflects the size and maturity of the loans issued. More specifically, the 39% of respondents
obtaining loans at interest rates ranging from 24 % to 27% secured small short-term loans, whereas the 27%
of entrepreneurs receiving loans at interest rates between 34% and 36% per annum borrowed larger amounts
with longer maturities.
Collateral requirements ensure fulfillment of borrowers’ obligations under the loan agreement. Eighty-eight
percent of SMEs, 71% of individual entrepreneurs, and 62% of dehkan farmers had to provide collateral as
part of their loan applications. The value the collateral reached up to 200% of the loan principal.
As mentioned previously, the applications of only 31% of respondents applying for loans were approved
during 2002.The majority of approved loans were short-term in maturity (up to one year).
Chart 25Chart 25Reasons Small and Medium Businesses Did Not Apply for Bank LoansReasons Small and Medium Businesses Did Not Apply for Bank Loans
% of respondents who did not apply for bank loans
Collateral requirementsCollateral requirements
Lengthy notarization procedures for collateral registration
Lengthy notarization procedures for collateral registration
Bank bureaucracy Bank bureaucracy
Lack of long-term loansLack of long-term loans
High interest ratesHigh interest rates
0%0% 30%30%
Uncertainty about ability to repay the loan in the currency in which it was issued
Uncertainty about ability to repay the loan in the currency in which it was issued
10%10% 20%20%
Limitations on cash withdrawals Limitations on cash withdrawals
28%28%
22%22%
14%14%
11%11%
9%9%
6%6%
3%3%
Chart 26Chart 26Actual Interest Rates on Bank Loans Issued in National Currency to Small and Medium BusinessesActual Interest Rates on Bank Loans Issued in National Currency to Small and Medium Businesses
% respondents receiving loans in national currency
20%20%
40%40%
0%0%
10%10% 9%9%
30%30%
Under 24%Under 24% 24-27%24-27% 28-30%28-30% 31-33%31-33% 34-36%34-36% 37-39%37-39%
39%39%
7%7%
16%16%
27%27%
2%2%
C h a p t e r 4
[2003] 31B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
About 25% of the entrepreneurs who received bank loans indicated that informal payments to bank officials
were necessary. These unofficial payments averaged 12% of the size of the loan.
«I think it is the shortage of lending capital that has led to bank bureaucracy, informal payments, etc...»
- Focus Group participant
The main reasons for denial of loan applications were: insufficient collateral, unwillingness to make
unofficial payments, and poor business plans.
«Many farmers cannot obtain loans because of the high collateral requirements. Farmers simply have nothing to put up except their houses and machinery. However, banks do not accept machinery and equipment as collateral, and the price of a farmhouse is not high…»
«The law says that farmers are eligible for preferential loans, but in practice no such loans exist…»
- Focus Group participants
Chart 27Chart 27Maturity of Loans Issued to Small and Medium Businesses Maturity of Loans Issued to Small and Medium Businesses
% respondents receiving loans
30%30%
60%60%
0%0%
15%15%
55%55%
45%45%
Up to 1 year Up to 1 year From 1 to 3 years From 1 to 3 years From 3 to 5 yearsFrom 3 to 5 years From 5 to 7 years From 5 to 7 years Over 7 years Over 7 years
14%14%
11%11% 10%10% 10%10%
Chart 28Chart 28Unofficial Payments Made During the Loan Application ProcessUnofficial Payments Made During the Loan Application Process
% respondents receiving loans
NoNo
YesYes
Did you make unofficial payments in the process of obtaining of loan?Did you make unofficial payments in the process of obtaining of loan?
What was the amount of the unofficial payment made as a percentage of the amount
of the loan for which you applied?
What was the amount of the unofficial payment made as a percentage of the amount
of the loan for which you applied?
over 21% over 21%
88%88%
75%75%
25%25%
86%86%
77%77%
3%3%
19%19% from 6 to 10%from 6 to 10%
from 11 to 15%from 11 to 15%
under 5%under 5%
S M E s a n d F i n a n c i a l I n s t i t u t i o n s
[2003] 32 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
About 12% of respondents who had obtained bank loans mentioned difficulties in repaying the loan in timely
fashion. The entrepreneurs cited the following as reasons for late payments: changed market environment,
partners’ inability to fulfill their obligations, and difficulty converting somoni into hard currency.
Microfinance
Microfinance is another source of financing for entrepreneurs. Microfinance, largely seen as a poverty
alleviation instrument, encourages entrepreneurs with insufficient business experience or working capital
to apply for financial services. Microfinance services provided by several international organizations (e.g.
Aga Khan Foundation, the Agency for Cooperation and Technical Assistance (ACTED) and CARE
International), have supported the launch of many small and medium businesses over the past 5 years. Some
associations and non-government organizations also provide assistance to nascent businesses.
Chart 29Chart 29Reasons for Denial of Loan Applications Reasons for Denial of Loan Applications
% of respondents denied loans
Insufficient collateralInsufficient collateral
60%60%20%20% 40%40%0%0%
Unwillingness to make unofficial paymentsUnwillingness to make unofficial payments
Lack of initial project capitalLack of initial project capital
Project considered unprofitable Project considered unprofitable
Not a priority for bankNot a priority for bank
Poor sales planPoor sales plan
Applicant’s refusal to accept the loanApplicant’s refusal to accept the loan
Low quality of business planLow quality of business plan
52%52%
13%13%
8%8%
7%7%
2%2%
2%2%
1%1%
1%1%
Chart 30Chart 30Reasons for Untimely Repayment of LoansReasons for Untimely Repayment of Loans
% of respondents who did not repay loans on time
Partners’ inability to fulfill their obligationsPartners’ inability to fulfill their obligations
Other Other
Difficulty converting national currency into hard currency
Difficulty converting national currency into hard currency
Government regulation of the sector (e.g. limitations, licences)
Government regulation of the sector (e.g. limitations, licences)
Changed market situation (e.g. price or competition)Changed market situation (e.g. price or competition)
0%0%
Changes in taxation or customs regulationsChanges in taxation or customs regulations
10%10%
17%17%
17%17%
17%17%
16%16%
14%14%
19%19%
20%20%
C h a p t e r 4
[2003] 33B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
According to survey results, interest rates on microfinance loans issued in foreign currency averaged 15%
per annum; those issued in somoni averaged 25% per annum. The results also indicate that the probability of
obtaining a loan from a microfinance institution is higher than receiving one from a bank.
Notably, collateral was not required for 63% of entrepreneurs who received microfinance loans. By contrast,
collateral for bank loans was required in all but 29% of cases.
The results of the survey show that such factors as interest rates, collateral requirements, and the probability
of obtaining loans make microfinance institutions more attractive to entrepreneurs than regular banking
institutions. Nevethertheless, microfinance is not a sustainable alternative to bank financing due to small
loan sizes, institutional dependency on donor support, limited availability of lending capital, and short loan
maturities.
Chart 31Chart 31Microfinance Lending to Small and Medium BusinessesMicrofinance Lending to Small and Medium Businesses
% of respondents
NoNo
YesYes
80%80%
20%20%
82%82%
18%18% YesYes
NoNo
56%56%
44%44% NoNo
YesYes
Have you ever tried to obtain funds from
this source?
Have you ever tried to obtain funds from
this source?
Have you received funds from this
source?
Have you received funds from this
source?
NoNo
YesYes
59%59%
41%41%
80%80%
20%20% YesYes
NoNo
62%62%
38%38% NoNo
YesYes
Are you aware of the existence of NGOs as a source of microfinance?
Are you aware of the existence of NGOs as a source of microfinance?
Have you ever tried to obtain funds from
this source?
Have you ever tried to obtain funds from
this source?
Have you received funds from this
source?
Have you received funds from this
source?
Are you aware of the existence of sectoral
associations as a source of microfinance?
Are you aware of the existence of sectoral
associations as a source of microfinance?
Chart 32Chart 32Share of Small and Medium Businesses Receiving Loans, by Type of Lending InstitutionShare of Small and Medium Businesses Receiving Loans, by Type of Lending Institution
Agricultural machinery and equipment (except for food processing)
Agricultural machinery and equipment (except for food processing)
Construction machinery and equipmentConstruction machinery and equipment
Printing equipmentPrinting equipment
16%16%
13%13%
11%11%
11%11%
10%10%
9%9%
3%3%
3%3%
Medical equipment Medical equipment
8%8%
16%16%
2%2%
Chart 35Chart 35Sources of Financing for the Planned Acquisition of Machinery and Equipment Sources of Financing for the Planned Acquisition of Machinery and Equipment
% of respondents planning to purchase machinery and equipment
Internal sourcesInternal sources
LoansLoans
LeasingLeasing
OtherOther
0%0% 20%20% 40%40% 60%60%
56%56%
33%33%
7%7%
4%4%
C h a p t e r 4
[2003] 35B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Box 3. Leasing
In accordance with the Law «On Leasing», leasing in Tajikistan does not pertain to a specific type of
licensed activity; therefore, leasing operations are carried out by specialized leasing companies as well
as commercial banks.
By signing a lease agreement, any legal entity or individual is entitled to acquire property using one’s
own funds. A lessor can lease property to a lessee in exchange for temporary use or ownership of certain
funds within a determined period of time and under the terms and conditions stipulated in the lease
agreement. The terms may allow the lessee to acquire ownership rights of the property leased.21
Out of those respondents that were aware of leasing, only 3% (or 22 entrepreneurs) utilized leasing as an
alternative mechanism for fixed asset financing in 2002.
Those entrepreneurs who did not utilize leasing (97%) cited a shortage of lessors in Tajikistan and an absence
of need for leasing as key factors in their decision.
Preferential Financing
Methods for the government to stimulate business activities include subsidies, budget loans or bank loans,
specifically targeted to support the business activities of selected industries, companies, and individuals.
Current preferential financing of small and medium businesses from the state budget may serve as an
example of such support.22 The IFC will assess the impact of preferential financing on the development of
the small and medium business sector in Tajikistan in future studies.
Tajikistan’s banks report that foreign exchange operations account for most of their revenues,23 and that
lending operations constitute only 10% of total bank revenues. This indicates that commercial banks are not
utilizing lending instruments to the maximum extent possible. Moreover, banks continue to face challenges
attracting household clients. Attracting additional financial resources into the economy as a whole, and the
SME sector in particular, would contribute to a more rapid development of small and medium business in
Tajikistan.
21 Article 5 of the Law of the Republic of Tajikistan «On Financial Leasing».22 Resolution of the Government of the Republic of Tajikistan, dated February 20, 1998, No. 59 «On Measures Aimed at Increasing
Government Support for Small Business in the Republic of Tajikistan».23 As stated in the speech made by the Chairman of the National Bank of the Republic of Tajikistan at a meeting with top managers of
commercial banks, April 15, 2002.
Chart 36Chart 36
% of respondents
Dehkan farmersDehkan farmers
Individual entrepreneurs Individual entrepreneurs
SMEsSMEs
100%100% 40%40%40%40% 0%0%60%60%
Have never heard of leasing
Have never heard of leasing
Have only heard the word «leasing»Have only heard
the word «leasing»
Awareness of Leasing as an Alternative Financing MechanismAwareness of Leasing as an Alternative Financing Mechanism
10%10%
80%80% 20%20% 20%20%
3%3%
10%10% 4%4%
15%15%21%21%
58%58%
61%61%
40%40%
30%30%
26%26%
25%25%
Have cursory knowledge
Have cursory knowledge
Have good knowledgeHave good knowledge
S M E s a n d F i n a n c i a l I n s t i t u t i o n s
[2003] 36 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Recommendations
1. Promote alternative financing mechanisms such as leasing and the development of credit unions and
microfinance institutions. Support political initiatives aimed at unifying legislation on issues related
to the development of microfinance institutions.
2. Develop and disseminate informational materials on sources of financing which include guidelines
on how to apply for financing from these sources. These materials should also contain information
on loan application procedures as well as samples of relevant forms and applications.
3. Eliminate the outdated «cash plan» practice which poses undue administrative burdens on
enterprises and interferes with normal business operations.
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FOREIGN TRADE OPERATIONS
Legal Basis of Foreign Trade Activities in Tajikistan
Trade activities are regulated by the Laws of the Republic of Tajikistan, «On Government Regulation
of Foreign Trade Activities» and «On the Foreign Economic Activity of the Republic of Tajikistan», the
Customs Code of Tajikistan, and other regulations.
Prior to the 2004 amendment of the Law «On the Foreign Economic Activity of the Republic of Tajikistan»,
entrepreneurs seeking to engage in foreign trade operations were required to register their intent.24,25
Depending on the legal status of the enterprise and the requested term of registration, a Certificate
of Registration cost up to US $2,00026 per year. The cost of a one-year extension was 50% of the initial
registration fee.
The procedures for conducting foreign trade operations are outlined in Diagram 1.
Prior to 2004, entrepreneurs needed to pay registration fees of up to US $2,000 for permission to engage in foreign trade.
It is much more difficult for SMEs to export than to import – only 8% of the SMEs surveyed were involved in export operations in 2002, whereas 29% of SMEs indicated that they were engaged in import operations.
Only 1% of individual entrepreneurs and 6% of dehkan farmers are engaged in export operations. By contrast, 21% of individual entrepreneurs and 7% of dekhan farmers were involved in import operations.
The 100% advance payment required for export of certain products was cited as a major obstacle by 88% of respondents engaged in export operations. This requirement is applicable to goods exported by more than half of surveyed SMEs.
The most serious concerns related to export operations are lengthy customs procedures, corruption among customs authorities, and the ad-hoc determination of the customs value of goods. Over 90% of exporters cited each of these issues as problematic.
24 On February 28, 2004, the Law «On the Foreign Economic Activity of the Republic of Tajikistan» was amended; business entities
are no longer required to register as participants in foreign economic activities.25 See Box 1, Annex F.26 The procedure for collecting fees for state registration, accreditation, and other services, provided by the Ministry of Economics and
Trade of the Republic of Tajikistan was approved by the Ministry of Economics and Trade, Resolution No. 12, dated April 4, 2003,
in conjunction with the Ministry of Finance of the Republic of Tajikistan.
F o r e i g n T r a d e O p e r a t i o n s
[2003] 38 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
In addition to registration, entrepreneurs may be required to obtain import/export licenses for products
and services.27 These licenses are issued according to product type and authorize import/export volumes
as stipulated in the relevant contracts. The Law «On the Foreign Economic Activity of the Republic
of Tajikistan» also authorizes close supervision and financial scrutiny of the import/export of designated
goods.28,29 Foreign trade operations are also governed by regulations stipulating that goods on a special
government-sanctioned list can only be sold on the Tajik Goods and Commodity Exchange.30 In these cases,
a commission fee of 0.1% is assessed on all transactions.
Tajik enterprises engaged in import/export activities are forbidden to pay their foreign partners through
foreign banks operating in Tajikistan.31 In the event that contracts denominated in foreign currencies cannot
Obtaining a Certificate of permitting participation in foreign economic activities from the Ministry of Economy
and Trade – within 15 days
Obtaining an export license (permit) from an authorized agency (in cases stipulated by law) – within 10 days
Obtaining an expert review statement from an authorized agency (depending on the type of product)*
Confirmation by the National Bank that taxes have been paid in full for exports subject to the mandatory 100% advance payment
requirement
Issuance of the transaction «passport» with an authorized Tajik Bank*
Confirmation by the Treasury Department of the Ministry of Finance that all tax payments have been deposited in the appropriate account
of the Ministry for Government Revenues and Levies*
Confirmation by the Directorate for Large Taxpayers of the Tax Department of the Ministry for Government Revenues and Levies
that sales taxes have been paid in full*
Obtaining a Certificate of Origin for the product from the Chamber of Commerce and Industry as well as a Certificate of
Compliance from TajikStandart or other authorized agency – the timeframe depends on the type of certificate and the type of
product
Confirmation by a bank (authorized by the National Bank) that the 100% advance payment has been made*
Registration of the contract for exportation of strategic goods (see List 1, Annex F) with the Directorate for Customs Supervision*
Processing of the customs declaration and payment of*:- customs duties;- VAT;- excise taxes;- fees for customs clearance, storage, and monitoring of goods; - fees for information and consulting services;- fees for making a preliminary (customs clearance) decision.
Withdrawal of the transaction «passport» from registration, as per the procedure established by law*
Obtaining a Certificate of permitting participation in foreign economic activities from the Ministry of Economy
and Trade – within 15 days
Obtaining an import license (permit) from an authorized agency (in cases stipulated by law) – within 10 days
Obtaining an expert review statement from an authorized agency (depending on the type of product)*
Issuance of the transaction «passport» with an authorized Tajik Bank*
Obtaining a Certificate of Origin for the product from the Chamber of Commerce and Industry and of a Certificate of
Compliance from TajikStandart or other authorized agency – the timeframe depends on the type of certificate required and the type
of product to be imported.
Labeling of goods in cases stipulated by law*
Processing of the customs declaration and payment of:*- customs duties;- VAT;- excise taxes;- fees for customs clearance, storage, and monitoring of goods;- fees for information and consulting services;- fees for making a preliminary (customs clearance) decision.
Withdrawal of the transaction «passport» from registration, as per the procedure established by law*
EXPORT IMPORT
Procedures for Conducting Import/Export Operations by Small and Medium Businesses Diagram 1
* There are no established timeframes for consideration and/or processing.
** As of September 15, 2003, the requirement to register import contracts (issuance of transaction «passports») was abolished by Executive Order No. 85/OP of the National Bank of Tajikistan and by Resolution No. 219 of the Ministry for Government Revenues and Levies of the Republic of Tajikistan.
27 For more information on the terms and conditions for obtaining import/export licenses see Box 2, Annex F.28 See Box 3, Annex F.29 See List 2, Annex F.30 See List 3, Annex F.31 Paragraph 7 of Decree No. 424, dated February 24, 1996, of the President of the Republic of Tajikistan, «On Liberalization of
Foreign Exchange and Export Operations» and «On Measures to Ensure Complete Repatriation of Hard Currency Earnings to the
Republic of Tajikistan».
C h a p t e r 5
[2003] 39B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
be settled by authorized Tajik banks, entrepreneurs may open accounts with banks in foreign countries. To
open such an account, an entrepreneur must apply for32 and receive permission from the National Bank of
Tajikistan.33
Tajik legislation requires import/export contracts to be registered with authorized Tajik banks for currency
regulation purposes.34 To register with banks, enterprises must apply for and receive transaction «passports»
for each contract.35
In certain cases, selected goods and services may be subject to further regulatory requirements.36
For example, selected imports must be certified37 and imports such as medications and pharmaceutical goods
and equipment38 may be subject to mandatory labeling prior to customs clearance.39 Issues related to the
certification process are described in more detail in the Chapter «Standardization and Certification».
After all goods enter the customs area, customs clearance procedures must be followed. These procedures
include submission of customs declaration forms as well as payment of customs duties, VAT, excise taxes,
and all other associated fees.
Export Operations
The importance of external trade to small and medium business in Tajikistan is evidenced by the notable
share of importers among survey respondents. Nevertheless, the share of exporters is significantly lower: only
8% of SMEs were involved in export operations in 2002, and this percentage was even lower for individual
entrepreneurs and dehkan farmers. The lack of export activity may be explained by the limited number of
domestically-produced goods which are competitive on world markets. Moreover, as seen in Diagram 1
above, export procedures are more complicated than import procedures.
According to the results of the survey, more entrepreneurs plan to engage in foreign trade activities in 2003
than in 2002.
32 See List 4, Annex F.33 «Procedure for Issuing Permits to Tajik Residents Allowing the Opening of Foreign Currency Accounts with Banks outside the
Republic of Tajikistan», approved by the Management Committee of the National Bank of Tajikistan, Resolution No. 51, dated
September 16, 1997.34 «Regulation on the Procedure for Exercising Currency Control over Repatriation of Hard Currency Export Earnings to the Republic
of Tajikistan», approved jointly by the National Bank of Tajikistan (Resolution No. 38, dated August 14, 1996) and the Customs
Committee of the Government of the Republic of Tajikistan (Resolution No. 132, dated August 14, 1996).35 See Box 4, Annex F.36 See Box 5 and Box 6, Annex F.37 See List 7, Annex F.38 Article 15 of the Law of Republic of Tajikistan «On Medications And Pharmaceutical Activities», No. 39, dated August 6, 2001.39 As per Article 220 of the Tax Code of the Republic of Tajikistan, both domestic and imported excise goods must be marked with excise
stamps. Excise goods include non-alcoholic and alcoholic beverages, vinegar, tobacco and industrial tobacco products, minerals,
fuels, crude oil and oil refinery products, natural/artificial rubber and rubber products, and overland means of transportation.
(The list was approved by the Government of the Republic of Tajikistan by Resolution No. 153, dated March 31, 2003).
F o r e i g n T r a d e O p e r a t i o n s
[2003] 40 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Most entrepreneurs cited business-specific reasons for not engaging in export operations. However, common
reasons mentioned include the absence of a need to export and financial difficulties. At the same time, it is
likely that for many entrepreneurs, the costs associated with registering as an exporter create a substantial
barrier to launching export operations.
«Many small and medium businesses could initiate export operations if they had the financial resources. However, only large companies are in a position to conduct export operations…»
- Focus Group participant
Another obstacle cited by entrepreneurs is a 100% advance payment requirement on export contracts for
a number of goods and commodities. The 100% advance payment rule is designed to streamline foreign
currency operations and ease the monitoring of hard currency export earnings. Servicing banks must ensure
that enterprises comply with the established payment procedures.
Chart 37Chart 37Export Operations in 2002 (Actual) and 2003 (Planned)Export Operations in 2002 (Actual) and 2003 (Planned)
% of respondents
0%0%
14%14%
SMEsSMEs Individual entrepreneurs
Individual entrepreneurs
Dehkan farmers Dehkan farmers
Considered the possibility of exporting in 2003
Considered the possibility of exporting in 2003
Exported in 2002 Exported in 2002
28%28%
8%8%
19%19%
1%1%
5%5%6%6%
24%24%
Chart 38Chart 38Import Operations in 2002 (Actual) and 2003 (Planned)Import Operations in 2002 (Actual) and 2003 (Planned)
0%0%
25%25%
SMEsSMEs Individual entrepreneurs
Individual entrepreneurs
Dehkan farmersDehkan farmers
Considered the possibility of importing in 2003
Considered the possibility of importing in 2003
Imported in 2002Imported in 2002
50%50%
29%29%
46%46%
21%21%
29%29%
7%7%
36%36%
% of respondents
C h a p t e r 5
[2003] 41B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Box 4. Goods and Commodities Requiring 100% Advance Payment on Export Contracts40
1. Raw cotton fiber and processed cotton products
2. Ores, concentrates, precious metals, natural precious stones and their by-products
3. Ferrous and non-ferrous metal scrap and by-products
4. Hides and leathers
5. Mineral fertilizer
6. Geranium oil
7. Natural honey
8. Mumiye and snake poison
This system of payments is especially problematic for entrepreneurs just beginning to enter foreign markets.
This is a result of the inherent difficulties in finding customers willing to purchase goods on a 100% advance
payment basis from an untested supplier.
Given the low percentage of respondents engaged in export operations, the data identified herein should not
be viewed as definitive, but as illustrative of basic trends.
Among all small and medium businesses, SMEs encountered the 100% advance payment export requirement
most often. The difficulties engendered by this requirement were mentioned by 74% of SMEs involved in
export.
Chart 40 shows an analysis of export markets for Tajikistan’s small and medium businesses. The prevalence
of the CIS and Baltic countries can be explained by geographic proximity as well as by traditionally
established trading relationships. In addition, Tajik exporters often do not meet the quality standards
necessary to be competitive on European and world markets.
40 Paragraph 4 of Decree No. 424, dated February 24, 1996, of the President of the Republic of Tajikistan, «On Liberalization of
Foreign Exchange and Export Operations and On Measures to Ensure Complete Repatriation of Hard Currency Earnings to the
100% advance payment requirement for selected goods and commodities
100% advance payment requirement for selected goods and commodities
Non-transparent methods for determining the customs value of goods
Non-transparent methods for determining the customs value of goods
Duration of customs proceduresDuration of customs procedures
Several exchange ratesSeveral exchange rates
Restrictions/ban on export of selected goods and commodities
Restrictions/ban on export of selected goods and commodities
50%50% 25%25% 25%25%
Corruption and bureaucracy among customs authorities
Corruption and bureaucracy among customs authorities
75%75% 0%0%
Very complicated Very complicated VeryVery
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In September 2003, the Tajik Government rescinded the transaction «passport» requirement for imports, in
an effort to stimulate foreign trade operations by removing administrative hurdles. Nevertheless, surveyed
entrepreneurs noted that the most difficult aspects of the import process are related to customs clearance: the
pervasiveness of corruption and bureaucracy and a lack of clear and unambiguous principles for determining
the customs value of goods. Interestingly, exporters cited exactly the same set of issues as creating the most
significant difficulties during export operations.
«After all customs duties and taxes have been paid, an imported good becomes so «precious» that it does not sell easily… The existing system just pushes you look for various ways to avoid the astronomical customs duties…»
«The Government must calculate which is more profitable: collecting customs duties and taxes on imports or collecting taxes on the profits of small and medium businesses that use imported products in their activities…»
- Focus Group participants
Entrepreneurs also mentioned difficulties with product certification. The most pressing certification issue is
the refusal of the Tajik government to accept certificates issued by the countries of origin and the subsequent
need for importers to obtain certificates from Tajik authorities. Certification procedures are described in
more detail in the «Standardization and Certification» chapter of this report.
The Government of Tajikistan has recently repealed duties on certain goods as well as the «passport»
requirement in an effort to promote import activities.
Chart 42Chart 42Types of Goods Imported by Tajik FirmsTypes of Goods Imported by Tajik Firms
% of respondents involved in import operations in 2002
Non-transparent methods for determining the customs value of goods
Non-transparent methods for determining the customs value of goods
Corruption and bureaucracy among customs authorities
Corruption and bureaucracy among customs authorities
100%100% 50%50%
Issuance of transaction «passports»Issuance of transaction «passports»
0%0%
Restrictions/ban on import of some commodities and raw materials
Restrictions/ban on import of some commodities and raw materials
25%25% 25%25%75%75% 50%50% 75%75%
Very complicatedVery complicated Very easyVery easy
F o r e i g n T r a d e O p e r a t i o n s
[2003] 44 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Box 5. Recent Changes in Tax, Customs, and Banking Legislation
1. VAT and customs duties were abolished for:
- production/technological equipment and parts thereof if imported into the Republic of Tajikistan
for capital investment or technological modernization of a production process necessary to carry
out an enterprise’s business activities. The abolition of VAT and customs duties does not, however,
apply to equipment classified as excise goods;42
- goods intended for use in projects approved by the Government of the Republic of Tajikistan and
implemented with financial support from international organizations, foreign governments, or
foreign legal entities and individuals;43
- goods imported for use in the construction of nationally-important facilities, as determined by the
Government of the Republic of Tajikistan.44
2. The Regulation «On the Procedure for Exercising Currency Control over Foreign Currency Payments for
Goods Imported into the Republic of Tajikistan» was repealed as of September 1, 2003. The Regulation,
which was approved by the National Bank of Tajikistan (Resolution No. 28, dated October 10, 1998) and
the Customs Committee under the Government of the Republic of Tajikistan (Resolution No. 304, dated
November 20, 1998) mandated the use of import transaction «passports».45
Despite the Government of Tajikistan’s efforts to promote foreign trade activities among small and medium
businesses, regulations continue to be complicated for entrepreneurs. Assuming that the value added by
SMEs is higher than that of other categories small and medium business, SMEs may in future become a
locomotive for increasing foreign trade activities in Tajikistan.
Recommendations
1. Apply the recent practice of simplifying procedures for import operations to export operations.
2. Reconsider the contract registration requirement, including expert reviewing of the settlement terms
for contracts.
3. Implement measures to eliminate the practice of unofficial payments during customs clearance.
4. Streamline customs clearance and duty collection procedures to make them more transparent for
both exporters and importers.
5. Prepare and disseminate materials for small and medium businesses containing detailed explanations
of import/export procedures. The documents should clearly outline the rights and responsibilities of
small and medium businesses as well as contain examples of completed forms and applications.
42 In cases in which an enterprise is liquidated or the imported items are not used within four years of the import or registration date
(re-registration due to increased capital investment) or sold to a third party, customs duties may be levied (Law No. 67, dated
December 2, 2002). 43 Law of the Republic of Tajikistan, dated December 2, 2002, No. 67 «On Introduction of Amendments to the Law On Customs
Tariffs».44 Law of the Republic of Tajikistan, dated May 3, 2002, No. 6 «On Introduction of Amendments to the Tax Code of the Republic of
Tajikistan».45 Concurrent Executive Order of the National Bank of Tajikistan (No. 85/OP, dated September 15, 2003) and the Ministry for
Government Revenues and Levies of the Republic of Tajikistan (No. 219, dated September 15, 2003).
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TAXATION
Legislative Basis
Tax legislation in Tajikistan is primarily governed by the Tax Code,46 which establishes the principles
upon which the tax system is based and serves as a foundation for other normative and legal acts which
regulate the system. With the adoption of the Tax Code, a two-tier tax system was put into place, consisting
of 15 republican (national) and three local taxes. Under the new system, issues related to republican taxes
are regulated by the Tax Code, whereas those related to local taxes are governed by regulations passed by
regional Majlisi (Parliaments) in accordance with the principles set forth in the Tax Code.47
The Government of Tajikistan’s efforts to reform the taxation system have yielded positive results.
Nevertheless, the new Tax Code – which was designed to unify the legislative base for taxation – references
many other pieces of legislation. Many focus group participants claimed that the new legislation is difficult
to understand. This complexity may well be a potential source of errors for entrepreneurs when dealing with
tax-related issues.
«The Tax Code is so complicated and intricate that even tax inspectors find it difficult to understand some articles of the Code. New and clear-cut Commentaries to the Code are needed, because the ones that exist are not precise. Besides, the existing instructions do not complement the Code and other legislation. Instead, they are largely excerpts from current laws and regulations…»
- Focus Group participant
The Simplified Tax System has resulted in a lower tax burden for individual entrepreneurs than for SMEs and dehkan farmers. In 2002, the tax burden for individual entrepreneurs was 8% of gross revenue, as opposed to 17% for SMEs and 14% for dehkan farmers.
The most pressing problems are a lack of information on the taxation system and the complexity of regulations, which are often difficult to understand.
Nearly every second respondent reported making payments for «landscaping and property maintenance» at the request of local authorities; such payments averaged 2% of annual sales per entrepreneur.
Tax evasion remains significant: 39% of entrepreneurs surveyed reported that companies similar to theirs evade taxes. Those who stated that tax evasion occurs indicated a figure of 8% of sales, which are hidden from taxation.
46 The Tax Code came into force on January 1, 1999.47 Article 1 of the Tax Code of the Republic of Tajikistan.
T a x a t i o n
[2003] 46 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The Simplified Tax System
Tajikistan’s taxation system can be divided into two categories: the simplified tax system and the standard
tax system. The Tax Code is the legal basis for the Simplified Tax, Reporting, and Accounting System, which
provides for: 1) a tax payable by small and medium enterprises;48 2) a unified tax for dehkan far mers, and
3) a tax payable by individual entrepreneurs.
Twenty-two percent of surveyed entrepreneurs reported paying taxes using the standard procedure, while
the remaining 78% indicated that they pay taxes under the simplified system. Of the 78% which follow the
simplified tax system, 63% pay taxes through the «patent» system – a process which links regular tax payments
to conducting business activities. Through this system, entrepreneurs are issued a renewal of a patent which
allows them to legally conduct operations each time tax payments are filed (see Box 3, Annex E).
The tax burden is lower for entrepreneurs that employ the simplified tax system.
Box 6. Taxes Payable by Small and Medium Businesses under the Simplified Tax System49
Taxes are based on quarterly gross revenue.
The tax rate is 5% of quarterly gross revenue.
Taxes are due on the 10th day of the month following the end of the quarter.
The Unified Tax for Dehkan Farmers
On January 1, 2003, a unified tax for dehkan farmers was introduced on a provisional basis in four
administrative divisions of Tajikistan50 – the Vanch district of the Gorno-Badakhshan Autonomous Province
48 As per Article 13 of the Tax Code of the Republic of Tajikistan, the following business entities are defined as enterprises for taxation
purposes: a) legal entities and their branches, as well as other entities or units formed by, or outsourced from, legal entities in
accordance with the legislation of the Republic of Tajikistan that have their own balance sheets and current accounts; b) corporations,
companies, firms, and other similar business entities, established in accordance with the legislation of a foreign country. 49 See Box 1, Annex Е.50 Resolution of the Majlisi Namoyandagon (Assembly of Representatives) and Majlisi Oli (Supreme Assembly) of the Republic of
Tajikistan «On Adoption of the Law of the Republic of Tajikistan On Introduction of Changes and Additions to the Tax Code of
the Republic of Tajikistan», dated March 19, 2002, No. 570, and «On the State Budget of Republic of Tajikistan for 2004», dated
December 16, 2003, No. 75.
Chart 44Chart 44Tax Burden as a Share of Revenue: Comparison of Simplified and Standard TaxTax Burden as a Share of Revenue: Comparison of Simplified and Standard Tax
0%0%
10%10%
SMEsSMEs Individual entrepreneurs
Individual entrepreneurs
Dehkan farmersDehkan farmers
under the standard taxsystemunder the standard taxsystem
under the simplified taxsystemunder the simplified taxsystem
20%20% 19%19%
14%14% 14%14%
12%12%
8%8%
percent of total revenue
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(GBAO), Nau district of Sughd province, Shakhrtuz district of Khatlon province, and Lenin district of the
Regions under Republican Subordination – and will be in effect until December 31, 2005.51
Focus group participants have noted the benefits of the unified tax for dekhan farmers, yet given the ti ming
of its introduction, it will only be possible to clearly evaluate its effects in future surveys.
«The introduction of a unified tax for farmers is a positive measure, because there will be less red tape and no need to calculate various taxes. Besides, farmers will no longer need to underreport their harvests…»
- Focus Group participant
Box 8. Taxes Payable by Individual Entrepreneurs under the Simplified Tax System53
Individual entrepreneurs are assessed income tax based on the relevant patent agreement.
The patent(s) are/is issued to the individual entrepreneur upon payment of all applicable fees and
before commencement of business activities.
The Patent is issued for a term of up to one year.
Depending on the types of business activities carried out by an individual entrepreneur, the total
monthly income tax ranges from 3 somoni to 80 somoni for each activity.
The tax burden for small and medium businesses varies significantly according to the type of business
activity being conducted. For example, the 2002 tax burden in the construction sector was about 17% of
sales, as opposed to 8% in the trade and public catering sector.
51 Resolution of the Government of the Republic of Tajikistan «On Determining the Administrative Divisions of the Republic of
Tajikistan in Which the Single Tax for Dehkan Farmers Shall be Temporarily Introduced», dated August 3, 2002, No. 319. 52 See Box 2, Annex Е. 53 See Box 3, Annex Е.
Chart 45Chart 45Tax Burden as a Share of Sales in 2002, by SectorTax Burden as a Share of Sales in 2002, by Sector
Construction Construction
AgricultureAgriculture
ManufacturingManufacturing
Transportation and CommunicationsTransportation and Communications
0%0% 20%20%
Trade and Public Catering Trade and Public Catering
16%16%
13%13%
10%10%
8%8%
10%10%
17%17%
% of total sales
Box 7. The Unified Tax for Dehkan Farmers under the Simplified Tax System52
Under Unified Tax, the area of the land parcel of a dehkan farmer is the object of taxation.
The amount of the Unified Tax is determined by multiplying the area of the land parcel by the
established tax rate.
The Unified Tax is levied as a series of regular payments over the course of the year.
Individual entrepreneurs exempt from VAT are liable for income and social taxes as per their relevant patent
agreements (with a separate patent issued for each business activity). Detailed information on the patent
system can be found in Annex E to this report.
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The Simplified Tax System does not replace all types of taxes for which entrepreneurs may be liable. For
example, if small and medium businesses are engaged in foreign trade operations, they must pay state fees,
customs duties, and excise taxes in addition to the tax payable under the Simplified Tax System. If small
and medium businesses export cotton fiber or unwrought aluminum, they also must pay sales tax on these
products.54
The largest number of taxes are paid by legal entities liable for VAT (14 types of taxes out of 17), whereas
dehkan farmers eligible for unified tax pay the fewest taxes (7 types of taxes out of 17).
Additional Payments
About 42% of entrepreneurs noted that local authorities had required them to make contributions towards
«landscaping and maintenance» of municipal property, or similar payments unrelated to their business
activities. Such payments are largely for the renovation of public buildings or for the conduct of locally-
sponsored events for the general public.
«Payments for «landscaping and property maintenance» or other similar payments are merely government racketeering practices...»
- Focus Group participant
Although the use of these practices varies from one region to another, the problem appears widespread.
In Regions of Republican Subordination, for example, 56% of entrepreneurs made various payments at the
demand of local authorities in 2002, whereas only 21% of entrepreneurs had to make such payments in the
Kulyab district of Khatlon province.
The share of such payments as a portion of sales per entrepreneur was 2.2% in the Kurgan-Tube district of
Khatlon province and 3.5% in the Regions of Republican Subordination.
54 Article 279 of the Tax Code of the Republic of Tajikistan.
% of respondents that made payments
0%0% 20%20%
56%56%
51%51%
47%47%
41%41%
24%24%
21%21%
60%60%
Share of Businesses Making Landscaping or Property Maintenance Payments at the Demand of Local Authorities, by RegionShare of Businesses Making Landscaping or Property Maintenance Payments at the Demand of Local Authorities, by Region
Chart 46Chart 46
40%40%
Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous Province
Gorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordination
Regions under Republican Subordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
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Tax Evasion
Nearly 40% of entrepreneurs noted that enterprises similar to theirs do not evade taxes. The Simplified
System of Taxation, with its clear reporting requirements, notably reduces the tax burden for the individual
entrepreneurs and SMEs who are able to report through the simplified method. The simplicity and relative
clarity of this system may be a factor influencing survey respondents who indicated that tax evasion is not
evident in Tajikistan.
According to focus group participants, however, remaining difficulties in the tax system – including
numerous tax inspections and an inefficient banking system – continue to force entrepreneurs to evade taxes
by not reflecting their total revenue in financial reporting documents. Survey results confirm this trend: 39%
of entrepreneurs surveyed believe that companies similar to theirs evade taxes. These entrepreneurs estimate
that the amount hidden from taxation averages to 8% of sales. Another 22% of survey respondents avoided
a direct answer to the question, by responding «Do not know/No answer».55
These figures indicate that, despite the efforts undertaken by the government to «create favorable taxation
conditions», such measures have so far been insufficient to eliminate all of the problems in the area of
taxation.56
55 The question is phrased in the following manner: Please estimate the share of sales that companies similar to yours hide from
taxation in the current business climate. 56 Article 23 of the Law of the Republic of Tajikistan «On Government Protection and Support of Entrepreneurship in the Republic
of Tajikistan».
0%0% 2%2%
3,5%3,5%
3,4%3,4%
3,3%3,3%
3,2%3,2%
2,7%2,7%
2,2%2,2%
4%4%
Payments for «Landscaping and Property Maintenance»as a Share of Annual Sales, by RegionPayments for «Landscaping and Property Maintenance»as a Share of Annual Sales, by Region
Chart 47Chart 47
3%3%1%1%
% of annual sales
Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous ProvinceGorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican SubordinationRegions under Republican Subordination
Kurgan-Tube District (Khatlon Province)Kurgan-Tube District (Khatlon Province)
Chart 48Chart 48Reported Share of Sales Hidden from TaxationReported Share of Sales Hidden from Taxation
[2003] 50 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Recommendations
1. Ensure that Tajikistan’s tax legislation contains clear taxation rules and regulations that are written in
an understandable manner.
2. Introduce such instruments as «hotline» services to empower entrepreneurs to report cases of abuse
and misbehavior on the part of local authorities, especially regarding demands for «landscaping and
maintenance» of municipal property.
3. Create and ensure appropriate conditions for entrepreneurs to submit enquiries about and receive
timely written clarifications of various tax procedures from the tax authorities and other relevant
government agencies within an established time period.
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INSPECTIONS
Legislative Basis for Inspections
An inspection is a one-time measure of regulatory oversight carried out by government-sanctioned
authorities to control enterprise compliance to regulations governing business activities. The inspections
process ensures firm compliance to issues of public health and safety, employee rights, the environment and
other public interests.
In Tajikistan, inspections and their procedures are regulated by a complex and ambiguous legal base,
comprised of a number of laws, normative acts, and administrative regulations. Below is only a sample of
the normative acts which regulate the process of inspections.
Surveyed small and medium businesses were inspected an average of 16 times in 2002. These inspections cumulatively lasted an average of 17 days and distracted the time of approximately 1.5 employees away from their regular work during the course of each inspection.
In 2002, 95% of entrepreneurs were subjected to tax inspections. Tax authorities inspected each small and medium business an average 7 times in 2002.
Nearly 98% of respondents openly declared making unofficial payments during the inspections process. Respondents believe such payments to be justified under existing conditions.
94% of surveyed entrepreneurs chose not to appeal the process or results of an inspection. Of those who did not file an appeal, only 5% believed that there were no grounds on which to challenge the legitimacy of the inspections.
Only 20% of entrepreneurs believe that they have good knowledge of legislation regulating inspections. Inspections are regulated by a complex and convoluted legislative base, under which over 17 agencies have the right to conduct inspections.
The Inspections Registration Book, introduced in 2001, may become an effective instrument for streamlining the inspections process and reducing the frequency of inspections. Nevertheless, not all entrepreneurs have an Inspections Registration Book, and a system auditing the entries made in such Books by a designated government agency is not in place.
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Box 9. Main Legislative Acts Regulating Inspection Procedures
Law of the Republic of Tajikistan dated December 24, 1991, «On Occupational Safety» (sets forth the
rights of the authorized occupational safety enforcement agency to carry out workplace inspections
with regard to occupational safety requirements).
Regulation «On Governmental Fire Safety Oversight», approved by Resolution No. 726 of the
Government of the Republic of Tajikistan, dated December 7, 1995 (determines the powers and
authority of fire safety oversight agencies to carry out inspections for compliance with existing fire
safety requirements, standards, and rules).
Law of the Republic of Tajikistan dated March 11,1996, «On Prosecution Agencies» (determines the
powers of public prosecutors to conduct inspections and audits of enterprises, establishments, and
organizations that fall within their jurisdiction).
Law of the Republic of Tajikistan dated May 15,1997, «On Ensuring Uniform Measurements» (sets
forth the procedures for carrying out inspections to ensure compliance with established metrological
rules and standards and measurement requirements).
Instruction «On the Procedure for Carrying out Audits and Inspections by Tax Authorities with
Respect to Collection of Taxes and Other Obligatory Payments» approved by Resolution No. 31 of
the Tax Committee under the Government of the Republic of Tajikistan, dated November 28, 1997
(determines the procedure for conducting audits and inspections to ensure compliance with tax and
other obligatory payments).
Tax Code of the Republic of Tajikistan, dated November 12, 1998 (determines the powers of tax
authorities with regard to inspection of business entities, as well as the responsibility of taxpayers
during tax inspections).
Decree No. 542 of the President of the Republic of Tajikistan «On Introduction of the Inspections
Registration Book for Business Entities», dated March 28, 2001. (determines rationale, terms of
inspections, procedure for filling out the inspections registration book, rights and obligations of
inspectors and the inspected, and the responsibility of inspecting agencies).
Law of the Republic of Tajikistan dated May 10, 2002 «On Government Protection and Support of
Entrepreneurship in the Republic of Tajikistan», (determines basic requirements for officials who
carry out inspections).
Law of the Republic of Tajikistan dated December 2, 2002 «On Government Financial Oversight In
the Republic of Tajikistan», (determines the powers of the governmental financial oversight agency
to inspect private entrepreneurs who receive, transfer, or use government funds and/or either utilize
or manage government property).
Law of the Republic of Tajikistan dated December 8, 2003 «On Ensuring Sanitary and
Epidemiological Safety of the Population» (determines the powers of sanitary and epidemiological
agencies to carry out inspections for compliance with established sanitary requirements, rules, and
standards).
The absence of a unified law that articulates the principles for carrying out all inspections and establishes
a list of government agencies entitled to conduct inspections has fueled the lack of transparency in the
inspections process. Frequently, entrepreneurs have no idea what an inspector is entitled to demand
during an inspection and what is beyond the inspector’s authority. An analysis of current legislation
indicates that a minimum of 17 government agencies are authorized to conduct inspections in Tajikistan.
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Box 10. Government Agencies Authorized to Inspect the Activities of Small and Medium Businesses*
1. State Industrial Safety Enforcement Agency
2. Ministry of Interior/ Road Police
3. Customs Service
4. Office of Public Prosecutor
5. Tax Inspection Authority
6. Khukumats
7. Ministry of Finance
8. Anti-monopoly Authority
9. Environmental Safety Authority
10. Fire Safety Authority
11. Ministry of Health
12. Sanitary and Epidemiological Service
13. Government Financial Oversight Committee
14. Occupational Safety Enforcement Agencies
15. State Research Center for Expert Review of Medications
16. State Committee for Construction and Architecture
17. Agency for Standardization, Metrology, Certification, and Trade Inspections
* Given the lack of a unified legal base, only an approximate list of authorized inspecting agencies can be provided.
Tax authorities inspect the accuracy of an entrepreneur’s tax base calculations, timeliness of tax payments,
and all other matters related to tax collection. Nevertheless, legislation permits other agencies to be tasked
with these responsibilities.57
Box 11. Tax Inspections58
Currently, there are two ways for tax authorities to inspect the activities of business entities:
1) Examination of balance sheets, tax declarations, explanatory notes, and other documents available to
the tax authority.
2) Inspections. An inspection is authorized following a written decision by the tax authorities, stating
the purpose of and the grounds for the inspection as well as its approximate timing. An inspection
may also be conducted at the discretion of the head of the tax authority without prior taxpayer
notification provided there is prima facie evidence indicating possible tax evasion.
Inspections of entrepreneurial activities in Tajikistan may also be exercised by governmental financial
oversight agencies in cases where entrepreneurs receive, transfer, or use government funds and utilize or
manage government property.59
57 For example, in cases when the procedure for paying taxes on foreign trade operations is determined by standing customs legislation
and procedures, the customs authorities exercise control over said payments.58 Article 29 of Tax Code of the Republic of Tajikistan, dated November 12, 1998, No. 664.59 Regulation of the Committee for Government Financial Oversight of the Republic of Tajikistan, approved by Decree No. 1169 of
the President of the Republic of Tajikistan, dated October 10, 2003.
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Box 12. Inspections Carried out by Governmental Financial Oversight Agencies.60
Financial oversight agencies develop bi-annual comprehensive inspection/audit plans and annual
thematic inspection plans which are subject to approval by the President of the Republic of Tajikistan.
Ad-hoc Inspections. Ad hoc inspections are conducted at the instruction of the President or upon
issuance of an executive order by the head of the appropriate financial oversight agency in response to
a request filed by a law enforcement agency in connection with criminal proceedings.
Thematic inspections. Thematic inspections occur when cross-inspections are necessary to investigate
a specific allegation or verify a particular fact.
Upon request from a financial oversight agency, small and medium businesses must submit all
documentation concerning the operations being inspected and all related account transactions. All
banks are also obligated to submit documentation on the transfer of government funds to or from clients’
accounts to the relevant financial oversight agencies.
Inspections for compliance with existing environmental safety, fire safety, sanitary standards, and other
norms are conducted by authorities with mandates established by industry regulations.
Another factor which complicates the inspection process is the low level of legal awareness among
entrepreneurs. According to the survey results, only 20% of respondents believe they have good knowledge
of the legislation regulating inspections.
«The problem lies in our own lack of legal literacy… No one is providing us with information on the inspection procedures or the rights of inspectors. This is because inspectors are not interested in speaking with competent entrepreneurs as peers…»
- Focus Group participant
Individual entrepreneurs are the least informed of all entrepreneurs, with only 18% claiming to have good
knowledge of the legislation regulating inspection procedures.
Frequency and Duration of Inspections
The frequency of inspections is governed by applicable regulations and depends upon the number of agencies
authorized to carry out inspections, the availability of local staff, and the type of enterprise.
60 Law of the Republic of Tajikistan «On Government Financial Oversight», dated December 2, 2002, No. 66.
Chart 49Chart 49
% of respondents
Dehkan farmersDehkan farmers
Individual entrepreneursIndividual entrepreneurs
SMEsSMEs
0%0% 100%100%50%50% 75%75%25%25%
Have sufficiently good knowledgeHave sufficiently good knowledge Have cursory, poor, or no knowledgeHave cursory, poor, or no knowledge
Legal Awareness of Inspection Procedures, by Small and Medium BusinessLegal Awareness of Inspection Procedures, by Small and Medium Business
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As per the Law «On Audit Activity», (dated May 21, 1998, No.601) an audit may be conducted at any time
at the request of a business entity, if there is an established agreement between the business entity and the
auditing firm. Audits may also be conducted at the request of law enforcement or other government agencies
that are authorized to inspect selected areas of a business’ activity, irrespective of the number of prior
inspections conducted.
According to the Tax Code, a tax inspection of a business entity shall be conducted no more than once per
calendar year and no less than once every two years.61 Depending on the location of a business entity, tax
inspections may be carried out by various branches of inspecting agencies. In districts within provinces, for
example, tax inspections are conducted by district tax authorities. At the same time, however, province-
and national-level tax authorities may conduct audits of inspections carried out by district-level tax
agencies. While these audits are neither standard nor follow-up inspections, the inspectors check the same
documentation, question the same people, and revalidate the same documents and operations.62
According to the survey, almost all small and medium businesses in Tajikistan were inspected by the tax
authorities in 2002, and every second entrepreneur was inspected by the fire authority.
In 2002, each small and medium business in Tajikistan was subjected to an average of 16 inspections with a
total duration of 17 working days. The frequency of inspections, however, varies significantly according to
the category of small and medium business. On average, every dehkan farmer was subjected to 10 different
inspections in 2002. Interestingly, the highest number of yearly inspections falls on individual entrepreneurs,
who were inspected an average of 17 times over the course of 2002. The large number of inspections of
individual entrepreneurs can be explained by the nature of such businesses and an absence of stringent
legal protection. The sheer number of individual entrepreneurs and their poor legal literacy make them
particularly vulnerable to frequent inspections.
61 Article 29 of the Tax Code of the Republic of Tajikistan, dated November 12, 1998, No. 664.62 «Instruction on the Procedure for Conducting Audits and Inspections of Tax Authorities with Respect to (Collection of) Taxes
and Other Obligatory Payments», approved by the Tax Committee under the Government of the Republic of Tajikistan, dated
November 28, 1997, Resolution No. 31.
Chart 50Chart 50Share of Tajik Entrepreneurs Inspected by Authorized Agencies in 2002Share of Tajik Entrepreneurs Inspected by Authorized Agencies in 2002
% of respondents
State Tax Inspection AuthorityState Tax Inspection Authority
0%0% 100%100%25%25% 75%75%
Fire AuthorityFire Authority
Sanitary-Epidemiological ServiceSanitary-Epidemiological Service
State Standards AuthorityState Standards Authority
Ministry of Interior/Road AuthorityMinistry of Interior/Road Authority
Office of Public ProsecutorOffice of Public Prosecutor
95%95%
44%44%
35%35%
27%27%
24%24%
23%23%
18%18%
9%9%
State Industrial Safety Enforcement AgencyState Industrial Safety Enforcement Agency
50%50%
52%52%
6%6%
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According to the survey, the number of inspections conducted by tax authorities far exceeds those of other
agencies.
The frequency of inspections varies by economic activity and region. For example, activities such as
transportation, communications, and trade and public catering, which greatly impact public health and
safety, lend themselves to more frequent inspections.
The survey revealed that, on average, inspections occur most frequently in Dushanbe city and least often
in the Kulyab district of Khatlon province. These differences can be attributed to a number of factors,
including the level of concentration of both small and medium businesses and inspecting agencies in a region.
«There are more inspections in Dushanbe because each controlling agency has at least three regional-level units – city, district, and republican - entitled to conduct inspections…»
- Focus Group participant
Chart 51Chart 51Impact of Inspections in 2002Impact of Inspections in 2002
SMEsSMEs
Dehkan farmersDehkan farmers
Individual entrepreneurs
Individual entrepreneurs
19,219,2
17,417,4
6,86,8
Average duration of all inspections conducted in 2002
(number of working days)
Average duration of all inspections conducted in 2002
(number of working days)Average number of inspections in 2002Average number of inspections in 2002
1717
1313
1010
Average number of employees diverted from their duties
in the course of one inspection
Average number of employees diverted from their duties
in the course of one inspection
1,41,4
2,42,4
1,81,8
Average Number of Inspections per Entrepreneur in 2002, by Controlling AgencyAverage Number of Inspections per Entrepreneur in 2002, by Controlling Agency
Number of inspections per year
00
1,71,7
1,21,2
0,90,9
0,70,7
0,60,6
0,20,2
0,10,1
44
1,91,9
0,10,1
Tax Inspection Authority Tax Inspection Authority
Fire AuthorityFire Authority
Sanitary-Epidemiological ServiceSanitary-Epidemiological Service
State Standards AuthorityState Standards Authority
Ministry of InteriorMinistry of Interior
Office of Public ProsecutorOffice of Public Prosecutor
State Industrial Safety Enforcement AgencyState Industrial Safety Enforcement Agency
Chart 52Chart 52
88
7,17,1
Chart 53Chart 53Average Number of Inspections per Small and Medium Business in 2002, by SectorAverage Number of Inspections per Small and Medium Business in 2002, by Sector
Number of inspections per year
Transportation and communications
Transportation and communications
Trade and public cateringTrade and public catering
ManufacturingManufacturing
AgricultureAgriculture
00 55 1010 1515
ConstructionConstruction
1818
1717
1616
99
77
2020
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The results once again demonstrate the impact that local authorities have on the inspections process, as well
as the lack of clear rules regulating many aspects of inspections.
Thirty-two percent of entrepreneurs have observed an increase in the number of inspections from 2001 to
2002, while 42% of respondents have not noticed a change over the same period. According to focus group
participants, one of the reasons for the perceived increase in the number of inspections could be a rise in the
number of inspecting agencies and/or the strengthening of some agencies’ supervisory functions.
Payments during Inspections
Costs incurred by entrepreneurs during inspections may include official expenses (e.g. fines, cost of goods
seized, cost of goods forfeited) as well as unofficial payments made either during or after an inspection.
The survey revealed that almost all of the respondents made unofficial payments in the course of inspections.
One reason for the ubiquitous nature of unofficial payments made during the course of inspections may be
the magnitude of official penalties, which do not always correspond with the seriousness of the violations
committed. Failing to observe fire safety rules, for example, is regarded as a criminal offense entailing a fine
that can vary from five hundred to eight hundred times the established minimum monthly wage.63 For larger
enterprises, this measure would be unlikely to pose an undue burden. However, for individual entrepreneurs
whose annual turnover may be well less than the fine, the impact is great. In some cases, an entrepreneur,
after paying such a fine, may be forced to close his business.
63 As of January 1, 2004, from 3,500 to 5,600 somoni (or from US $ 1,207 to US $ 1,930).
Chart 54Chart 54Average Number of Inspections per Small and Medium Business and the «Time Tax», by RegionAverage Number of Inspections per Small and Medium Business and the «Time Tax», by Region
00
24,524,5
17,317,3
18,418,4
8,88,8
5,25,2
12,312,3
«Time tax» for all inspections, number of
working days
«Time tax» for all inspections, number of
working daysAverage number of inspections per small and medium businessAverage number of inspections per small and medium business
66 1212 1818 2424
2323
1414
1414
1010
99
88
Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous Province
Gorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordination
Regions under Republican Subordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
Chart 55Chart 55Unofficial Payments during InspectionsUnofficial Payments during Inspections
[2003] 58 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Because of such situations, entrepreneurs often prefer to pay off the inspectors or, in general, not attract
the attention of inspecting authorities. Focus group participants also cited the lack of legal protection for
entrepreneurs as another important factor contributing to the spread of unofficial payment practices.
«Entrepreneurs do not want to have conflicts with inspectors and cause additional problems. Therefore, they are ready to pay off the inspectors so that they disappear…»
«I do pay (unofficial payments) because I don’t want to see my business closed...»
- Focus Group participants
The survey revealed that, as a result of inspections conducted, 24% of entrepreneurs were fined and another
8% had to undergo follow-up (thematic) inspections. Half of entrepreneurs did not encounter any negative
sanctions, which suggests inspectors may have received payment to ignore infractions.
As shown in Chart 56, the survey revealed that only 1% of entrepreneurs did not make any payments in
the course of inspections. Most entrepreneurs, however, paid up to 300 somoni (US $108) in official and
unofficial payments. In 2002, SMEs paid an average of 304 somoni (US $110) in the course of inspections,
whereas farmers paid an average of 159 somoni (US $57), and individual entrepreneurs paid an average of
111 somoni (US $40). According to focus group participants, one of the reasons for making payments during
the inspections process is that entrepreneurs are not aware of the penalties for a particular violation.
«I really do not know how much the penalties are. That is why I make unofficial payments to reduce the amount of fines that might be imposed, or not to pay any fines at all. But if I knew the exact amount of the fines, maybe I would rather pay them...»,
- Focus Group participant
Comparing the data from Chart 57 to the responses of entrepreneurs interviewed about unofficial payments,
one can deduce that about half the entrepreneurs made unofficial payments only in the course of inspections,
whereas others made both official and unofficial payments to reduce the penalties for proven violations. This
is further proof that the inspection process is very complicated for small and medium businesses.
Chart 56Chart 56Negative Sanctions Imposed Following InspectionsNegative Sanctions Imposed Following Inspections
% of respondents
FinesFines
Follow-up inspection on the same issues
Follow-up inspection on the same issues
Suspension of enterprise activity
Suspension of enterprise activity
Seizure of goodsSeizure of goods
0%0% 6%6% 18%18% 24%24%
24%24%
8%8%
7%7%
4%4%
12%12%
C h a p t e r 7
[2003] 59B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The costs incurred by entrepreneurs in the course of inspections vary according to region, with entrepreneurs
in the Gorno-Badakhshan Autonomous Province and the city of Dushanbe making the largest payments.
As demonstrated in the chart below, the costs incurred in the course of inspections often correlate with the
frequency of inspections.
Despite the fact that about 95% of respondents perceived the actions of inspecting bodies to be illegal, few
firms had ever contested such actions.
Among those who had not contested the actions of inspection authorities, 26% indicated the uncertainty
of a favorable outcome and 24% cited the possibility of negative repercussions from controlling agencies as
deterrents.
Chart 57Chart 57Costs Incurred during Inspections*Costs Incurred during Inspections*
% of respondents
Up to 100 somoniUp to 100 somoni
From 101 to 300 somoniFrom 101 to 300 somoni
From 301 to 600 somoniFrom 301 to 600 somoni
Over 601 somoniOver 601 somoni
No answerNo answer
0%0% 14%14% 42%42%28%28%
51%51%38%38%
46%46%
12%12%20%20%
25%25%
3%3%9%9%
6%6%
3%3%15%15%
5%5%
30%30%17%17%17%17%
56%56%
Individual entrepreneursIndividual entrepreneurs
Dehkan farmersDehkan farmers
SMEsSMEs
* Includes official and unofficial payments
Chart 58Chart 58Correlation between the Frequency of Inspections and the Costs Incurred during Inspections, by RegionCorrelation between the Frequency of Inspections and the Costs Incurred during Inspections, by Region
2020
3030
00
1010
1515
2525
55
150150
250250
5050
100100
200200
0 0
# of inspections(left scale)# of inspections(left scale)
Sughd ProvinceSughd Province Regions under Republican
Subordination
Regions under Republican
Subordination
Kurgan-Tube District
(Khatlon Province)
Kurgan-Tube District
(Khatlon Province)
Chart 59Chart 59Appeals Filed Against Perceived Illegal Actions of Inspecting AuthoritiesAppeals Filed Against Perceived Illegal Actions of Inspecting Authorities
[2003] 60 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
«Appealing to higher-ranking authorities is useless. The problem is that any agency will always stand up for its staff because of the cover-up practices that exist…»
- Focus Group participant
The Inspections Registration Book
The Inspections Registration Book (IRB) was introduced in Tajikistan in early 2001.64 In theory, the IRB
should become an effective tool for small and medium businesses to achieve a measure of control over
the frequency of inspections as inspectors and the enterprise are required to record each site visit. The
effectiveness of IRBs is questionable, however, largely because no government agency is responsible for
regularly checking the entries made in the IRBs.
Box 13. Documenting Site Visits in the Inspections Registration Book
The Inspections Registration Book must be filled in by both the inspecting agency and the entrepreneur
being inspected. The inspector must fill in information including the name of the inspecting state
authority; the full name and title of all state officials participating in the inspection; information on
the grounds for the inspection; approval from the proper authority to conduct the inspection, and the
findings of the inspection. The entrepreneur is responsible for documenting agreement with or objection
to the findings or conclusions of the inspection.
If an inspector refuses to fill in the Inspections Registration Book or makes an incorrect entry in the
Book, the head of the enterprise being inspected has the right to report such violations to the relevant
controlling agency.
In cases where the inspector fails to document required information in the IRB, proceedings may be
instituted against the inspecting agents.
According to focus group participants, the Inspections Registration Book has become an effective tool for
small and medium businesses to monitor and prevent groundless inspections.
64 Decree No. 542 of the President of the Republic of Tajikistan «On Introduction of the Book of Registration of Inspections for
Business Entities in the Republic of Tajikistan», dated March 28, 2001.
% of respondents who did not appeal against actions of inspecting authorities
No confidence in positive outcomeNo confidence in positive outcome
Availability of more effective and efficient methods
Availability of more effective and efficient methods
Possibility of negative consequences from inspecting agencies
Possibility of negative consequences from inspecting agencies
0%0%
Process is too lengthyProcess is too lengthy
10%10%
26%26%
24%24%
13%13%
10%10%
9%9%
5%5%
30%30%
Reasons for Not Appealing Perceived Illegal Actions of Inspecting AuthoritiesReasons for Not Appealing Perceived Illegal Actions of Inspecting Authorities Chart 60Chart 60
20%20%
C h a p t e r 7
[2003] 61B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
«The IRB has become an effective instrument to reduce the number of inspections. Often, when entrepreneurs insist that the IRB be filled in, some inspectors – who don’t have the grounds or an authorization for the inspection – simply «retreat» and disappear…»
- Focus Group participant
Although it is obligatory for small and medium business to maintain an Inspections Registration Book, 67%
of individual entrepreneurs, 31% of farmers, and 19% of SMEs surveyed do not have IRBs. This indicates
that IRBs are not being very actively disseminated, given that they were introduced over 2 years ago.
Respondents report that inspectors generally do fill in the IRBs. Nevertheless, the relevant entries were not
made in 20% of the cases in which dehkan farmers were inspected.
One of the key reasons some entrepreneurs do not have IRBs is the absence of a government agency with
responsibility for distributing them. Some associations and other non-governmental organizations have
taken advantage of this situation by distributing IRBs to entrepreneurs for a fee.
Chart 61Chart 61Availability of the Inspections Registration BookAvailability of the Inspections Registration Book
Chart 62Chart 62Inspectors’ Documentation of Findings in the Inspections Registration BookInspectors’ Documentation of Findings in the Inspections Registration Book
% of inspected respondents holding Inspections Registration Books
Chart 63Chart 63Reasons for not Having the Inspections Registration BookReasons for not Having the Inspections Registration Book
% of respondents who cited these reasons
Unsure where to obtain oneUnsure where to obtain one
Plan to purchase one soonPlan to purchase one soon
Lack of practical benefitsLack of practical benefits
Unclear understanding of its purpose
Unclear understanding of its purpose
0%0% 20%20% 30%30%10%10%
High costHigh cost
37%37%
27%27%
21%21%
9%9%
4%4%
40%40%
I n s p e c t i o n s
[2003] 62 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Entrepreneurs have begun to understand that increasing their regulatory awareness may help reduce the
number of inspections. Nevertheless, entrepreneurs still tend to rely on the government to improve matters.
For example, many entrepreneurs believe that the government should strengthen control over inspection
agencies, establish a more transparent system of inspections, and improve coordination between the
inspection agencies.
«Increasing the legal awareness of entrepreneurs so that they are able to assert their rights, as well as establishing effective control over inspecting agencies and enforcing relevant laws will help reduce the number of inspections…»
- Focus Group participant
The survey has revealed that the inspection process is one of the most complicated administrative procedures
for small and medium businesses. This is due to the large number of inspection agencies, poor coordination
between these agencies, severe penalties for violations, a low level of legal awareness of entrepreneurs, and
the absence of effective mechanisms to protect entrepreneurs’ rights.
Recommendations
1. Conduct a comprehensive comparative analysis of the functions performed by inspecting agencies to
determine which agency functions should be reorganized or eliminated.
2. Conduct a systematic review of the laws and regulations governing inspections with the goal of
developing a unified law which clarifies the functions and responsibilities of each agency authorized
to conduct inspections.
3. Introduce coordination mechanisms to eliminate multiple inspections of small or medium business
activities by various branches of the same inspecting agency.
4. Develop a risk-based system linked to firm activities and their relative importance to public health
and safety. This will give the government a mechanism for determining the frequency of inspections
required for a particular enterprise from a particular inspecting agency.
5. Disseminate Inspections Registration Books and encourage effective use of the books.
6. Disseminate, through media and public announcements, information regarding the current fees
and fines levied for various violations of rules and regulations covering business activities. This will
promote transparency and discourage unofficial payments.
7. Continue the program of increasing the legal awareness of entrepreneurs through mass media,
training courses, and workshops.
8. Enable entrepreneurs found in violation of regulations to appeal fines or other sanctions.
9. Consider providing regular training for inspecting officers to raise their level of competence, and
regularly testing inspector qualifications.
Chart 64Chart 64Perceptions of What Can Help Reduce the Number of InspectionsPerceptions of What Can Help Reduce the Number of Inspections
Coordinating activities of the inspection agencies
Coordinating activities of the inspection agencies
195195
FirstpriorityFirstpriority
SecondprioritySecondpriority
ThirdpriorityThirdpriority
34%34% 13%13% 6%6%
13%13%
9%9%
5%5%
6%6% 9%9%
20%20%
5%5%
8%8%
8%8%
8%8%
18%18%
13%13%
10%10%0%0% 20%20% 30%30% 40%40% 50%50% 60%60%
C h a p t e r 8
[2003] 63B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
LICENSING
Legislative Basis for Licensing
A license is a permission to carry out specific operations, with mandatory observance of requirements and
conditions established in legislation. Licensing incorporates a set of processes, carried out in compliance
with existing legal and regulatory acts, for issuance, re-issuance, suspension, termination, and revocation of
licenses.
Not all business activities are subject to licensing – the licensing process is directed at those activities which
may jeopardize the rights or the health and safety of the public or the defense capability and security of the
State.66 According to Article 49 of the Civil Code of the Republic of Tajikistan, the list of business activities
which are subject to licensing must be set out in a single law.67 The types of business activities presently
subject to licensing are listed in more than 43 laws and 41 additional normative acts,68 such as presidential
decrees and resolutions of the Tajik government, as well as executive orders and directives issued directly by
the ministries and agencies which issue licenses to business.
27% of respondents went through the licensing process in 2002. This is likely related to the large number of activities that are subject to licensing; there are more than 32 types and 1,000 subtypes of business activities requiring licenses:- as an example, the official «Classification of Types of Construction Work Subject to
Licensing»65 consists of 44 sections, which cover more than 300 types of activities.
The absence of a unified law on licensing, combined with the more than 43 laws and 41 normative acts governing the licensing process, has resulted in a non-transparent and cumbersome licensing process.
More than half the respondents who obtained licenses encountered difficulties acquiring comprehensive and reliable information on the application process.
In cases where established license fees are not dependent on the term of the license, agencies tend to issue licenses with short validity periods.
33% of respondents who obtained licenses made unofficial payments in the course of the licensing process. Entrepreneurs operating in the construction sector made unofficial payments most often.
65 The Classifier was approved by the Chairman of the Committee for Architecture and Construction under the Government of the
Republic of Tajikistan on July 5, 1997.66 Article 19 of the Law of the Republic of Tajikistan dated May 10, 2002, No. 46, «On Government Protection and Support of
Entrepreneurship in the Republic of Tajikistan».67 The Law is currently in the process of being ratified. 68 See Attachment B.
L i c e n s i n g
[2003] 64 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Existing laws only provide for the basics of the licensing process,69 while specific conditions governing
licensing procedures are generally regulated by government resolutions.70 In some cases, however, the
terms and conditions for obtaining licenses are set forth in the instructions of agencies authorized to issue
particular types of licenses.71
In Tajikistan, more than 30 ministries and agencies are authorized to issue licenses for more than 32 types
of business activities.72 These types of activities are often broken down by type and subtype, with the total
number of classifications exceeding 1,000. For example, the official ‘Classification of Types of Construction
Work Subject to Licensing’ contains 44 sections, subdivided into more than 300 types of works that may be
carried out. The large number of types and subtypes of business activities subject to licensing has contributed
to increasing the reach of the process and the number of businesses affected.
Box 14. Excerpt from the «Classification of the Types of Construction Work Subject to Licensing»
A separate license is issued for each type of construction work to be conducted.
Section 8. Architectural Design
Types of work:1. General plans for buildings and/or facilities
2. Residential buildings
3. Civic buildings and facilities
4. Industrial buildings and facilities
5. Agricultural facilities
6. Hydrotechnical facilities
7. Power stations and facilities
8. Transport infrastructure
9. Restoration of architectural monuments
10. Reconstruction of buildings and facilities
11. Alignment and adjustment of standard designs
Section 9. Construction Design and Engineering
Types of work:1. Residential and civic buildings and facilities
2. Production and utility buildings of industrial enterprises
3. Engineering infrastructure: pipes, tanks, utility lines, and traffic overpasses
4. Agricultural buildings and facilities
5. Transport infrastructure: railways, motorways, tunnels, bridges, and airfields
6. Hydrotechnical and land improvement infrastructure: dams, water reservoirs, tunnels, drainage and irrigation systems
7. Power stations and facilities: local power plants, thermal plants, and hydropower plants
8. Reconstruction of buildings and facilities
9. Restoration of architectural monuments
10. Alignment and adjustment of standard designs
69 Licensing issues in industry laws are normally regulated by one article only. For example, the Law of the Republic of Tajikistan dated
September 3, 1999, No. 824 «On Tourism» states «Tourism activities shall be carried out on the basis of a license. The procedure for
licensing tourism activities in the Republic of Tajikistan shall be determined by the Government of the Republic of Tajikistan».70 For example, Resolution No. 497 of the Government of the Republic of Tajikistan «On Approving the Regulation on Licensing
Transportation and Transportation Support Services in the Republic of Tajikistan», dated December 8, 1998, establishes the
procedure for obtaining licenses to render transportation and transportation support services.71 E.g., Instruction «On the Procedure for Issuing Licenses for Professional Securities and Exchange Activities» approved by the
Ministry of Finance of the Republic of Tajikistan, No. 9/1-2, dated April 20, 1993.72 See Attachment B.
C h a p t e r 8
[2003] 65B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Current legislation73 holds that that legal and regulatory acts issued by ministries, state committees, or
other public administration bodies at all levels will enter into force only after they have been examined for
compliance with existing laws and regulations, registered with the Ministry of Justice, and officially published
in the mass media. Despite these requirements, many acts – including the «Classification of the Types of
Construction Work Subject to Licensing» – have not been vetted through the process described above. When
coupled with a low legal awareness amongst entrepreneurs, and a lack of availability of information, such
acts, having no legal jurisdiction, create significant administrative barriers for small and medium businesses
needing to obtain licenses.
Access to Information
Twenty seven percent of entrepreneurs surveyed were required to obtain licenses in 2002. The information
presented below is based on their responses.
Entrepreneurs cited a lack of access to information on the application process as a key challenge: more
than half of respondents who obtained licenses noted that the process of obtaining relevant information
was difficult and complicated. Dehkan farmers encountered the most significant difficulties in accessing
information, with 83% of respondents citing this as an obstacle to doing business.
The availability of comprehensive and reliable information also varies by industry sector. When looked at
from a sectoral standpoint, entrepreneurs engaged in agriculture and manufacturing encountered the most
difficulties in obtaining information.
It is most difficult for entrepreneurs to obtain information on licensing procedures from the Ministry of
Communications, the Ministry of Justice, and Khukumats.
73 Law of the Republic of Tajikistan No. 698, dated November 12, 1998 «On Standard Legal Acts» and Law of the Republic of
Tajikistan No. 54, dated December 8, 2003 «On Standard Legal Acts».
Chart 65Chart 65Perceived Difficulty of Obtaining Information on the Licensing Process, by SectorPerceived Difficulty of Obtaining Information on the Licensing Process, by Sector
AgricultureAgriculture
ManufacturingManufacturing
ConstructionConstruction
Transportation and CommunicationsTransportation and Communications
90%90% 60%60%
Trade and Public CateringTrade and Public Catering
0%0%60%60% 30%30% 30%30%
Very difficultVery difficult Very easyVery easy
% of respondents obtaining licenses
L i c e n s i n g
[2003] 66 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The Licensing Process
The survey revealed that entrepreneurs encounter difficulties throughout the licensing process. Among the
main barriers are the high cost of the process, its lengthy duration, and the large number of documents
required.
The perceived difficulty of licensing for an entrepreneur displays a correlation with the types of activities he
or she is engaged in, as well as with the entrepreneur’s level of legal literacy. For example, obtaining a license
was most problematic for dehkan farmers – 85% of farmers who obtained licenses experienced problems
during the process. In addition, 53% of individual entrepreneurs and 61% of SMEs mentioned encountering
problems during the licensing process.
Licensing Costs
Licensing costs consist of both official payments (established by legislation/regulations for various types of
activities) and unofficial payments (which may be charged at any stage of the licensing process). The official
cost of a license depends on the type of business activity which it covers.
Chart 66Chart 66Perceived Difficulty of Obtaining Information on the Licensing Process, by Government AgencyPerceived Difficulty of Obtaining Information on the Licensing Process, by Government Agency
% of respondents obtaining information from the respective agencies
Ministry of CommunicationsMinistry of Communications
100%100% 75%75%
Ministry of JusticeMinistry of Justice
KhukumatsKhukumats
Ministry of Health Ministry of Health
Ministry of Economics and TradeMinistry of Economics and Trade
Committee of Architecture and ConstructionCommittee of Architecture and Construction
Government of TajikistanGovernment of Tajikistan
Committee for Food and ProcessingCommittee for Food and Processing
Transport AuthorityTransport Authority
75%75% 50%50% 25%25% 0%0% 25%25% 50%50%
Very difficultVery difficult Very easyVery easy
Chart 67Chart 67Obstacles Encountered During the Licensing ProcessObstacles Encountered During the Licensing Process
% of respondents obtaining licences
Large number of required documentsLarge number of required documents
Frequently changing licensing procedures
Frequently changing licensing procedures
Lengthy duration of the licensing process
Lengthy duration of the licensing process
Lack of informationLack of information
High costsHigh costs
0%0% 50%50%
Requirement to obtain more than one license
Requirement to obtain more than one license
25%25%
LargestdifficultyLargestdifficulty
2nd largestdifficulty2nd largestdifficulty
3rd largestdifficulty3rd largestdifficulty
C h a p t e r 8
[2003] 67B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Box 15. Selected License Fees, by Type of Business Activity
License fees issued to legal entities for production and broadcasting of television and radio programs
are based on both the volume of broadcasting and the area covered.74 Fees range from US $300 to
US $3,000 dollars, payable in local currency using the official exchange rate on the date the license
is issued.
Issuance or extension of a license to provide employment services to citizens of the Republic of
Tajikistan seeking work abroad or to attract foreign workers into the Republic of Tajikistan costs 30
times the minimum monthly wage amount for legal entities (approximately US $50) and 10 times the
minimum monthly wage amount for individual entrepreneurs (approximately US $10).75
Issuance of a license for production and wholesaling of ethanol and alcoholic beverages (retailing
not included) for legal entities costs US $300 for a one-year license and US $50 to process the
application. A license for retailing of alcoholic beverages (for both legal entities and individual
entrepreneurs) costs US $50 for a one-year license and US $10 for processing.76 All payments must
be made in local currency using the official exchange rate on the date the license is issued.
Issuance of a license for purchase, storage, and sale of medications and pharmaceutical products
costs US $102 for a one-year license.77 All payments must be made in local currency using the
official exchange rate on the date the license is issued.
The chart below shows that licensing costs are highest for entrepreneurs in the construction sector. Overall,
the average cost (including official and unofficial payments) of the entire licensing process for entrepreneurs
in Tajikistan was 547 somoni (US $197).
Obtaining licenses was most expensive for SMEs and least expensive for individual entrepreneurs.
74 The size of the fee charged is determined in accordance with the Instruction On the Procedure for Payment of Fees and Application
of Tariff Requirements for Issuance of Licenses for Production of Television and Radio Programs and Television and Radio
Broadcasting, approved by Executive Order No. 53 of the Committee for Television and Radio Broadcasting under the Government
of the Republic of Tajikistan, dated August 2, 2000.75 Paragraph 8 of the «Interim Regulation on Issuance of Permits (Licenses) for Providing Employment Services to Citizens of the
Republic of Tajikistan Seeking Work Abroad and for Attracting Foreign Workforce into the Republic of Tajikistan», approved by
Decree No. 608 of the President of the Republic of Tajikistan, dated July 25, 2001.76 The fees charged for processing applications for licenses for production and wholesaling of ethanol and alcoholic beverages were
established by Resolution No. 131 of the Government of Tajikistan, dated April 7, 1999.77 The license fee was determined by the Ministry of Health of the Republic of Tajikistan.
Chart 68Chart 68Average Cost of the Licensing Process, by SectorAverage Cost of the Licensing Process, by Sector
ConstructionConstruction
AgricultureAgriculture
ManufacturingManufacturing
Transportation and CommunicationsTransportation and Communications
00 550550
Trade and Public CateringTrade and Public Catering 345345
322322
194194
183183
110110
In somoni
547547
220220 330330 440440
L i c e n s i n g
[2003] 68 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
It is difficult to determine the breakdown of either official or unofficial payments made by entrepreneurs at
each stage of the registration process, due to a lack of transparency concerning fees established by individual
agencies. Nevertheless, 33% of respondents who obtained licenses indicated that they made unofficial
payments (cash, gifts or services) in the course of obtaining licenses. Individual entrepreneurs made unofficial
payments more often (36%) than SMEs or dekhan farmers.
According to focus group participants, unofficial payments are most often made to reduce the large number
of required documents or shorten the lengthy application process.
«When I obtained a license for the first time, I was required to submit a huge number of documents and got my license in 1.5 to 2 weeks. In applying the second time, I gave them 100 dollars and they issued the license in 2 days. They did not require as many documents as they did the first time…»
«It is easier and more efficient to pay unofficially than to go through the official issuing process. While waiting for the license, I would have lost more money than the amount I paid out unofficially…»
- Focus Group participants
As the chart below illustrates, unofficial payments were most often required of entrepreneurs in the
construction sector: 44% of them paid unofficially during the licensing process.
Chart 70Chart 70Did you Make Unofficial Payments in the Process of Obtaining Licenses?Did you Make Unofficial Payments in the Process of Obtaining Licenses?
Chart 71Chart 71Unofficial Payments During the Licensing Process, by SectorUnofficial Payments During the Licensing Process, by Sector
% of respondents making unofficial payments
ConstructionConstruction
AgricultureAgriculture
ManufacturingManufacturing
Transportation and CommunicationsTransportation and Communications
0%0% 45%45%
Trade and Public CateringTrade and Public Catering
36%36%
34%34%
30%30%
17%17%
15%15%
44%44%
30%30%
C h a p t e r 8
[2003] 69B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Licensing of Small and Medium Businesses
As mentioned earlier, 27% of entrepreneurs were required to obtain one or more licenses to carry out
their business activities in 2002. While 64% of SMEs were required to obtain licenses, only 6% of dehkan
farmers were required to do so. The rarity with which farmers obtained licenses is a function of the specific
nature of their activities and the size of their farmsteads. In cases where dehkan farmers were required to
secure licenses, these were generally for selling seed or producing, processing, storing, and selling livestock
products.78
«Only those farmers who have a lot of land and are involved in production and processing need licenses…»
- Focus Group participant
Most entrepreneurs interviewed needed to obtain only one license.
Depending on the type license required, an entrepreneur must submit from 4 to 17 documents to the relevant
licensing authority. To underscore the extensive scope of the process, a complete list of documents required
to obtain an initial license for the purchase, storage, and sale of medications and pharmaceutical products
not manufactured by the applicant is presented below.
78 Law of the Republic of Tajikistan, dated November 4, 1995, No. 118 «On Agricultural Crop Breeding»; Joint Regulation by the
Chief Directorate for Veterinary Services and the State Veterinary Inspection under the Ministry of Agriculture of the Republic of
Tajikistan, approved by Resolution No. 391 of the Government of the Republic of Tajikistan, dated October 1, 2002.
Chart 72Chart 72The Reach of the Licensing ProcessThe Reach of the Licensing Process
% of respondents
3%3%
27%27%
70%70%
6%6%
78%78%
12%12%
Don’t knowDon’t know
NoNo
YesYes
OneOne
TwoTwo
FourFour
ThreeThree
Are your activities subject to licensing?
Are your activities subject to licensing?
How many licenses do you need to obtain?
How many licenses do you need to obtain?
Chart 73Chart 73Share of Respondents Participating in the Licensing Process, by Sector Share of Respondents Participating in the Licensing Process, by Sector
% of respondents90%90%
0%0%
30%30%
84%84%
60%60%
ConstructionConstruction Transportation and Communications
Transportation and Communications
Trade and PublicCatering
Trade and PublicCatering
ManufacturingManufacturing AgricultureAgriculture
79%79%
23%23%18%18%
6%6%
L i c e n s i n g
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Box 16. Documents Required to Obtain a First-time License for the Purchase, Storage, and Sale of Medications and Pharmaceutical Products not Manufactured by the Applicant
1) Original and two copies of the license application prepared in accordance with the established form
and indicating the exact name, legal address, and bank account details of the applicant;
2) Notarized copies of Constituent Documents and of the State Registration Certificate;
3) Copies of documents confirming that the applicant is entitled to utilize the intended production
facilities;
4) Statement by the Local Sanitary and Epidemiological Authority;
5) Statement by the Local Fire Safety Authority;
6) List of the staff members, complied in accordance with the established form, attested to by the leader
of the legal entity, and stamped with the seal of the applicant, and
7) A recent copy of bank confirmation stating that the application fee has been paid in full.
According the results of the survey, entrepreneurs applied for licenses from Khukumats and the Transport
Authority most often. In addition to the other agencies listed, it should be noted that less than one percent
of entrepreneurs applied for licenses from the Ministry of Education, the State Insurance Authority, the
Ministry for Environmental Protection, and the National Bank.
The share of respondents who applied for licenses from Khukumats varies significantly from one region
to another. The highest percentage of those who obtained licenses from Khukumats was observed in the
Kulyab district of Khatlon province.
Tajikistan’s legislation establishes a variety of time limits for issuance of licenses, as well as for the timeframe
within which a licensing authority must notify an applicant whether his/her application has been accepted
or denied. For example, a decision on the issuance or denial of a license for construction activities must
Chart 74Chart 74Licenses Obtained, by Government AgencyLicenses Obtained, by Government Agency
% of respondents obtaining licenses
Committee for Architecture and ConstructionCommittee for Architecture and Construction
00 28%28%
KhukumatsKhukumats
Ministry of Agriculture Ministry of Agriculture
25%25%
10%10%
9%9%
8%8%
4%4%
2%2%
2%2%
2%2%
14%14%
16%16%
1%1%
Transport AuthorityTransport Authority
Committee for Food and ProcessingCommittee for Food and Processing
Ministry of Economy and TradeMinistry of Economy and Trade
Ministry of HealthMinistry of Health
Ministry of CommunicationsMinistry of Communications
Ministry of JusticeMinistry of Justice
Government of TajikistanGovernment of Tajikistan
Chart 75Chart 75Licenses Obtained from Khukumats, by RegionLicenses Obtained from Khukumats, by Region
% of respondents obtaining licenses
0%0% 25%25% 50%50%
49%49%
28%28%
26%26%
12%12%
11%11%
7%7%
Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous ProvinceGorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican SubordinationRegions under Republican Subordination
Kurgan-Tube District (Khatlon Province)Kurgan-Tube District (Khatlon Province)
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be taken within 30 days of the date of application. In other cases, such as in the sphere of pharmaceutical
practice, timeframes are not specified at all. Nevertheless, according to the survey, the time within which
licenses are usually issued are suitable to entrepreneurs. The Ministry of Health, which takes an average of
11 days to issue a license or deny an application, processes applications the most slowly.
Licensing Terms
Tajik legislation establishes validity periods for licenses through reference to the type of business activity
being carried out and the category of small and medium business acquiring the license. For example,
construction licenses are issued for a term of not more than one year,79 while pharmaceutical licenses are
issued for a term of up to 5 years.80 Licenses for transportation services are issued to individual entrepreneurs
for a term not exceeding one year and to legal entities for a term of no less than one year.81
License fees are often established as flat fees for each year during which the license is valid. In such cases,
most entrepreneurs prefer to obtain licenses with limited validity periods (one year or less) due to financial
constraints as well as uncertainty about the type of activities they will be engaged in the following year.
In cases when license fees are not dependent on the validity period of the license, entrepreneurs prefer to
obtain licenses for the maximum term possible. As the procedure for determining license validity is often
not clearly articulated in relevant legislation, however, terms are determined at the discretion of the issuing
agency. In general, licenses are issued for short periods of validity, even when longer terms are requested
by the applicants. For instance, the term of the license for providing legal consulting services may range
from one to five years.82 As the exact period of validity of the licenses is established by the Board of Experts
of the Ministry of Justice, licenses are usually issued for a term of two or three years. Therefore, the rights
of entrepreneurs to choose the validity period and the price of licenses issued to them are limited, and
sometimes violated due to the ambiguity of applicable legislation.
79 Paragraph 3.5 of the Regulation «On State Licensing of Construction Activities in the Republic of Tajikistan» approved by
Resolution No. 211 of the Government of the Republic of Tajikistan, dated May 6, 1997.80 Paragraph 6 of the Regulation «On the Procedure for Licensing of Pharmaceutical Activities in the Republic of Tajikistan», approved
by Resolution No. 245 of the Government of the Republic of Tajikistan, dated July 5, 2002. 81 Regulation «On Licensing of Transport Activities in the Republic of Tajikistan», approved by Resolution No. 252 of the Government
of the Republic of Tajikistan, dated June 11, 2001.82 Paragraph 12 of the Regulation «On the Procedure for Licensing of Attorney and Legal Consulting Services», approved by Resolution
No. 42 of the Government of the Republic of Tajikistan, dated February 18, 1998.
Chart 76Chart 76Duration of the Licensing Process, by Government AgencyDuration of the Licensing Process, by Government Agency
Average number of working days
00 1212
1111
99
88
77
77
77
66
44
88
1010
44
44
Committee for Architecture and ConstructionCommittee for Architecture and Construction
KhukumatsKhukumats
Ministry of Agriculture Ministry of Agriculture
Transport AuthorityTransport Authority
Committee for Food and ProcessingCommittee for Food and Processing
Ministry of Economy and TradeMinistry of Economy and Trade
Ministry of HealthMinistry of Health
Ministry of CommunicationsMinistry of Communications
Ministry of JusticeMinistry of Justice
Government of TajikistanGovernment of Tajikistan
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«I want to obtain a five-year license. However, as clear license terms are not stipulated in legislation, there is no guarantee that I will be issued a five-year license, especially since the cost of the license does not depend on its period of validity. The officials are certainly better off issuing licences repeatedly year after year to contribute to the Government budget and, incidentally, to line their own pockets…»
- Focus Group participant
The sentiment quoted above reflects the data obtained in the course of the survey. As can be seen in Chart
77, government agencies tend to issue licenses with validity periods of up to one year.
The Government of Tajikistan has already guaranteed its support for entrepreneurship by establishing and
introducing simplified licensing procedures for entrepreneurial activities.83 This process should be further
simplified after enactment of the Law «On Licensing». The law is expected to provide a detailed list of the
types of business activities that are subject to licensing as well as the general principles guiding the licensing
process.
Recommendations
1. Consider reducing the number of business activities that are subject to licensing, as well as the
number of required documents and the cost of the licensing process. Enact a Law listing activities for
which licenses are compulsory as well as procedures for obtaining such licenses.
2. Enforce current legislation allowing entrepreneurs to choose preferred validity periods for licenses.
3. Consider extending the terms of licenses for selected activities to reduce investment risk. If this step
were taken, investors (both local and foreign) would then feel more confident about investing in
Tajikistan.
4. Develop and disseminate information outlining licensing procedures as well as a standardized kit of
documents required for licensing, to be used as a model for entrepreneurs. Distribute these materials
through local Khukumats, non-government organizations, and business associations.
5. Consider the introduction of the «consent through silence» rule in issuance of select licenses.
The rule switches the burden of action from the entrepreneur to the state – if state officials do not
meet the deadline to issue a final decision, the license is issued by default (this concept has been
introduced in Spain and Italy and has resulted in a dramatic reduction in time for business start-up).
83 Article 23 of the Law of the Republic of Tajikistan, dated May 10, 2002 No. 46, «On Government Protection and Support of
Entrepreneurship in the Republic of Tajikistan».
Chart 77Chart 77Terms of the Licenses, by Government AgenciesTerms of the Licenses, by Government Agencies
% of respondents who obtained licenses from these agencies
0%0% 100%100%25%25% 50%50% 75%75%
From 2 to3 yearsFrom 2 to3 years
From 1 yearto 2 yearsFrom 1 yearto 2 years
Up to 1 yearUp to 1 year
From 3 to5 yearsFrom 3 to5 years
Over 5 yearsOver 5 years
Committee for Architectureand Construction
Committee for Architectureand Construction
Ministry of Agriculture Ministry of Agriculture
Ministry of Economy and TradeMinistry of Economy and Trade
Ministry of CommunicationsMinistry of Communications
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STANDARDIZATION AND CERTIFICATION
Standardization and certification are two processes within a system aimed at ensuring both product quality
and consumer safety. Standardization refers to the establishment of a range of norms and requirements for
products, services and methods of production which are likely to be replicated or reproduced on a large-
scale, long-term basis. Certification is a process of verification that products, works or services comply to the
norms, rules and characteristics established (e.g. to standards).
Standardization in Tajikistan
The goal of standardization is to ensure that products and services do not endanger the health and safety
of consumers, and are not harmful to the environment. Standardization is also aimed at: (i) guaranteeing
that products and services comply with their intended functional uses and employ appropriate scientific and
technological processes in their development, (ii) promoting competitiveness in international markets, and
(iii) protecting consumer interests and rights.84 Products and services that comply with the requirements of
relevant standards earn marks of conformity.
Standardization in Tajikistan is governed by the Constitution, the Law «On Standardization», local
regulatory acts, and international regulations on standardization that are acknowledged by the Republic of
Tajikis tan.85 The list of normative acts on standardization include classifications for technical and economic
information as well as rules, norms, and recommendations.
The business activities of 20% of entrepreneurs were subject to standardization in 2002 and the products and services of 42% of entrepreneurs were subject to certification.
Three-fourths of respondents were issued certificates valid for less than one year.
On average, an entrepreneur paid 127 somoni (including official and unofficial payments) to obtain all necessary standards and 192 somoni for all obligatory certificates; this amounts to 24% and 37% of the per capita GDP in 2002, respectively.
For more than half of the respondents who obtained standards/certificates, finding comprehensive and reliable information on the relevant procedures was a key difficulty.
The existing standardization system has been inherited from the USSR. The system has not been updated in recent years and many of the existing standards are in need of revision.
84 Article 1 of the Law of the Republic of Tajikistan dated December 14, 1996, No. 333 «On Standardization».85 Article 3, of the Law.
S t a n d a r d i z a t i o n a n d C e r t i f i c a t i o n
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Standardization Agencies
Government regulation of standardization processes is carried out by Tajikistan’s Agency for
Standardization, Metrology, Certification, and Trade Inspections under the Ministry of Economy and Trade
(hereafter, «TajikStandart»).86 TajikStandart coordinates public administration agencies’ activities with
social organizations and business entities, formulates and implements government standardization policy,
and establishes standardization rules.
The government standardization system also includes other government agencies as mandated by law.
Box 17. Government Agencies Involved in Standardization Activities87
1. State Committee for Construction and Architecture – for the construction industry.
2. Ministry of Environmental Protection – for the use of natural resources and environmental protection.
3. Ministry of Public Health – for the medical supplies industry, pharmaceuticals industry, etc.
4. Ministry of Education – for curriculum guidelines.88
5. Ministry of Finance – for accounting standards.89
Standards are the normative documents of the standardization process. Based on scientific and technological
achievements, as well as on the results of practical experience, standards are meant to assure optimal benefit
to consumers, producers and the public at large.
There are several categories of standards, which are applied selectively depending on the sphere or activity
concerned:
1) International (regional) standards;
2) Intergovernmental standards;90
3) Governmental standards of the Republic of Tajikistan;91
4) Industry standards;
5) Enterprise standards;92
6) Technical standards.
Products and services that comply with the requirements of relevant standards are given marks of
conformity.
The law does not specify the products or services that are subject to standardization. As per Article 2 of
the Law «On Standardization», however, products, services and methods of production that are likely to be
replicated or reproduced on a large-scale basis must be standardized.93
86 Article 6 of the Law of the Republic of Tajikistan dated December 14, 1996, No. 333 «On Standardization».87 Ibid.88 Article 7 of the Law of the Republic of Tajikistan, dated December 27, 2003, No. 899 «On Education». 89 Resolution of the Government of the Republic of Tajikistan, dated November 4, 2002, No. 428 «On International Accounting
Standards».90 Intergovernmental standards are applicable in Tajikistan and do not need to be legalized as national government standards.91 Governmental standards are developed and approved by a standardization agency authored to do so.92 Enterprise standards are developed and approved independently by business entities, provided there is a need for applying such
standards.93 Neither the Law «On Standardization», nor other regulatory acts provide a clear definition of «products, services, and methods of
production that are likely to be replicated, or reproduced on a large scale basis».
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The Process of Standardization in Tajikistan
In the event a product is not subject to any of the standards applicable in the Republic of Tajikistan, the
manufacturer must develop its own technical terms to meet the existing requirements for:
environmental, public heath, property, and occupational safety;
industrial sanitation;
technical, technological, and information compatibility and interchangeability, and
basic product characteristics, etc.
According to the survey results, every fifth entrepreneur was required to have their products/services
certified. Notably, 36% of the SMEs surveyed took part in the standardization process.
Diagram 2Diagram 2Products, Works and Services Subject to StandardizationProducts, Works and Services Subject to Standardization
Products, works and services subject to
standardization
Products, works and services subject to
standardization
* Products - raw materials, goods or any other movable property (including all types of energy),
including hard currency and valuables, as well as immovable property.
** Services - entrepreneurial activities as related to provision of services to the population,
enterprises, and organizations.
* Products - raw materials, goods or any other movable property (including all types of energy),
including hard currency and valuables, as well as immovable property.
** Services - entrepreneurial activities as related to provision of services to the population,
Diagram 3Diagram 3An Example of Product Standardization ProcessAn Example of Product Standardization Process
EntrepreneurEntrepreneur
Three copies of Application and Technical Terms in Russian and Tajik are filed withThree copies of Application and Technical Terms in Russian and Tajik are filed with
A Certificate, on the basis of which the entrepreneur is entitled to manufacture the product, is issued to
A Certificate, on the basis of which the entrepreneur is entitled to manufacture the product, is issued to
TajikStandart
(Experts review compliance with the requirements)
TajikStandart
(Experts review compliance with the requirements)
S t a n d a r d i z a t i o n a n d C e r t i f i c a t i o n
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The standardization requirement also varies according to type of economic activity. In the industrial sector,
for example, approximately 32% of respondents indicated that their products/services must be standardized,
while only 12% of respondents in the agricultural sector were subject to standardization.
Obtaining the obligatory number of standards depends upon the type of product to be manufactured or
service to be provided. The results of the survey revealed that during one year of operation, 78% of individual
entrepreneurs had to obtain one standard; 10% mentioned two standards, and 12% received more than two
standards.
Chart 78Chart 78Share of Respondents Requiring StandardizationShare of Respondents Requiring Standardization
[2003] 77B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The requirement to obtain standards also differs by type of economic activity. In agriculture, for example,
35% of entrepreneurs had to secure more than two standards in one year of operation, whereas only 12% of
respondents engaged in trade and public catering were required to do so.
Approximately 90% of the entrepreneurs whose products, processes, or services were standardized received
standards from TajikStandart. Special attention in this survey has, therefore, been devoted to the activities
of this regulating agency.
Validity Periods of Standards
Tajik legislation, including the Law «On Standardization», does not specify validity periods for standards.
Consequently, standards tend to be issued for short durations. The results of the survey reveal that most
small and medium businesses applying for standardization (89%) obtained standards valid for only up to one
year. In most cases, the validity of standards obtained in the farming sector did not exceed 6 months.
Difficulties of the Standardization Process
Forty-four percent of respondents reported that the high cost of the standardization process was the key
difficulty. The large number of documents was cited as the second most important challenge (42%) and the
lengthy processing period was cited as the third most pressing problem (32%).
Chart 81Chart 81Validity of Standards Obtained from TajikStandart, by SectorValidity of Standards Obtained from TajikStandart, by Sector
% of respondents requiring standardization
up to 6monthsup to 6months
up to 1 yearup to 1 year
up to 2 yearsup to 2 years
up to 3 yearsup to 3 years
over 3 yearsover 3 years
ManufacturingManufacturing
ConstructionConstruction
Transportation and communications
Transportation and communications
Trade and publiccatering
Trade and publiccatering
AgricultureAgriculture
0%0% 60%60% 100%100%20%20% 40%40% 80%80%
31%31% 4%4% 10%10%52%52%
63%63%28%28% 8%8%
73%73%27%27%
63%63%26%26% 11%11%
71%71%18%18% 11%11%
Chart 82Chart 82Problems in the Standardization ProcessProblems in the Standardization Process
% of respondents requiring standardization
Most SeriousProblemMost SeriousProblem
2nd Serious Problem2nd Serious Problem
3rd Serious Problem3rd Serious Problem
Large number of documents required
Large number of documents required
Frequent changes in procedureFrequent changes in procedure
Lengthy processing periodLengthy processing period
Lack of access to information on procedures
Lack of access to information on procedures
High costsHigh costs
0%0% 50%50%25%25%
Requirements to obtain more than one standardRequirements to obtain more than one standard
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In addition, focus group participants noted difficulties caused by the absence of a uniform approach to
standardization in cases when laboratory testing equipment is unavailable.
«Standardization agencies do not accept certificates from countries of origin, even for goods that cannot be tested in Tajikistan. For example, there is not a single laboratory in Tajikistan in which to test computers, but when I import computers I am forced to have them standardized and to pay for the whole process in full…»
- Focus Group participant
Official standardization costs are established by TajikStandart in coordination with the Ministry of Finance and
the Agency for Anti-Monopoly Policy and Support of Entrepreneurship under the Government of the Republic
of Tajikistan. These costs vary according to labor inputs for each type of product, process or service to be
standardized. Since a majority of entrepreneurs find it difficult to distinguish between the official and unofficial
portions of the standardization fees, the costs referred to herein include both official and unofficial expenses.
According to respondents, the average cost of securing a standard is 127 somoni, or US $46. Notably,
about half the respondents obtaining standards spent less than 100 somoni (US $36) per standard. The
standardization process appeared to be most expensive for SMEs, which pay an average of 296 somoni (US
$107) for necessary standards.
Timeframes for processing standardization applications are related to the man-hours each standardizing
agency has determined as necessary to evaluate an application for each type of product/service. Survey
results indicate that obtaining a standard from the Ministry of Education took the longest – an average of 13
working days per standard.
Chart 83Chart 83Average Cost of Obtaining All Necessary StandardsAverage Cost of Obtaining All Necessary Standards
Chart 84Chart 84Time Required to Obtain One Standard, by Standardization AgencyTime Required to Obtain One Standard, by Standardization Agency
Average number of working days
Ministry of EducationMinistry of Education
Ministry of Natural ResourcesMinistry of Natural Resources
TajikStandartTajikStandart
Committee for Architecture and Construction
Committee for Architecture and Construction
Ministry of HealthMinistry of Health
1313
00 1010 1515
88
77
66
55
66 66
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More than half of the entrepreneurs surveyed had difficulty obtaining reliable information on the
standardization procedure from TajikStandart. Specifically, individual entrepreneurs encountered this
problem most often (68%).
Certification in Tajikistan
Certification procedures in Tajikistan are regulated by the Law «On Certification of Products and Services»
and other regulatory acts.94 Similar to licensing, certification is carried out with the goal of protecting the
rights and health of consumers by barring low-quality or defective products from entering local markets.
Imported and local products, processes, and services are subject to certification;95 the certification procedure
is the same for all types of products.
A foreign certificate indicating the country of origin and compliance with established requirements is
acknowledged in Tajikistan if the foreign certificate is issued under a certification system to which Tajikistan
is a party. In that case, the foreign certificate is legalized upon issuance of a Tajik certificate for the product
in question.
94 Atricle 2 of the Law of the Republic of Tajikistan dated December 13, 1996, No. 313 «On Certification of Products and Services».95 Preamble, of the Law.
Chart 85Chart 85Perceived Difficulty of Obtaining Information on the Standardization Process from TajikStandartPerceived Difficulty of Obtaining Information on the Standardization Process from TajikStandart
% of respondents requiring standardization
75%75% 25%25% 25%25%50%50% 0%0% 50%50%
Individual entrepreneursIndividual entrepreneurs
SMEsSMEs
Dehkan farmersDehkan farmers
Very difficultVery difficult Very easyVery easy
Diagram 4Diagram 4
* At the request of the applicant, the certifying agency may, after selection and identification of product samples, provide an assessment of the newly certified product(s) or certify the production process
* At the request of the applicant, the certifying agency may, after selection and identification of product samples, provide an assessment of the newly certified product(s) or certify the production process
EntrepreneurEntrepreneur
Testinglaboratory
Testinglaboratory
Testing of product samplesTesting of product samples
Copy of product test statementCopy of product test statement
Product test statement
Product test statement
ProductsamplesProductsamples
Certifying AgencyCertifying Agency
The Certification Procedure*The Certification Procedure*
Certification application and product sample are submitted to
Certification application and product sample are submitted to
Certificate or Letter of Denial is forwarded to
Certificate or Letter of Denial is forwarded to
Certified products are entered in the State Register
Certified products are entered in the State Register
Selection and identification
of samples
Selection and identification
of samples
Analysis of the results obtained and
decision-making
Analysis of the results obtained and
decision-making
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Box 18. The Foreign Certificate Acknowledgement Process
The process of legalizing foreign certificates for imported goods:
1. Submission of Application for Acknowledgement of a Foreign Certificate and accompanying
documents;
2. Analysis of the documents received;
3. Acknowledgement or denial of the foreign certificate and, if denied, justification for denial and
description of proposed certification procedures, and
4. Legalization of the foreign certificate in the form of re-certification as a Tajik certificate and
subsequent registration.
There are two types of certification in Tajikistan – mandatory and voluntary.96 Voluntary certification occurs
when third parties or foreign partners of local enterprises require additional certification of goods produced
or services rendered. Mandatory certification is carried out in cases as stipulated by law.97 The list of goods,
products, and services produced in or imported to Tajikistan that are subject to mandatory certification is
established by the Government of the Republic of Tajikistan.98
According to survey results, 42% of entrepreneurs said that their products/services were subject to mandatory
certification. The requirement, however, differs according to business category. For instance, 88% of dehkan
farmers required mandatory certification. This high percentage can partially be explained by the need for
dehkan farmers to obtain a Land Tenure Certificate.99 Mostly engaged in trade, individual entrepreneurs are
infrequently subject to mandatory certification as the goods they sell have already been certified.
Certification Agencies
TajikStandart is the principal government agency that issues certificates of compliance for products,
processes, and services, as well as certificates authorizing the use of marks of conformity.100 Besides
TajikStandart, there are a number of other government agencies responsible for certification.
96 Articles 6 – 18, of the Law.97 For example, as per Article 19 of the Law of the Republic of Tajikistan dated November 29, 2000, No. 22 «On Transportation»,
the means of transportation must be certified.98 See List #7, Annex F.99 Article 3 of the Law of the Republic of Tajikistan dated May 10, 2002 , No 48 «On Dehkan Farming».100 Section 2 of the Resolution of the Cabinet of Ministers dated June 2, 1994, No. 249 «On the National System of Certification of
Products, Work, and Services in the Republic of Tajikistan».
Chart 86Chart 86Share of Respondents Requiring Certification, by SectorShare of Respondents Requiring Certification, by Sector
% of respondents
AgricultureAgriculture
ManufacturingManufacturing
Transportation and communications
Transportation and communications
ConstructionConstruction
Trade and public cateringTrade and public catering
88%88%
0%0% 60%60%
44%44%
43%43%
32%32%
30%30%
30%30%
90%90%
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Box 19. Government Agencies Involved in Standardization Activities
1) Ministry of Transportation – issues vehicle quality certificates;101
2) Ministry of Health – issues certificates of compliance and quality certificates for medications;
cosmetics, medical nutrition products, medical products and equipment, and food additives;102
3) State Committee for Land Use and Land Resources – issues land use certificates;103
4) Ministry of Communications – issues certificates for the right to use communication technologies;104
5) Chamber of Commerce and Industry – issues certificates of origin in the Republic of Tajikistan, and105
6) Ministry of Agriculture – issues phyto-sanitary certificates and pedigree livestock breeding
certificates;106
Ninety-six percent of dehkan farmers obtained certificates from the State Committee for Land Use and Land
Resources. By contrast, 59% of SMEs and individual entrepreneurs obtained certificates from TajikStandart.
Number of Certificates Required
The number of certificates required depends upon the type of business activity in which entrepreneurs are
engaged. Entrepreneurs involved in foreign trade operations, for example, must secure a minimum of two
certificates:107
Certificate of compliance, issued by TajikStandart or by another authorized agency
Certificate of origin, obtained from the Chamber of Commerce and Industry.
The survey revealed that an overwhelming majority of dehkan farmers (98%) obtained only one certificate
during one year of operation. Approximately two thirds of individual entrepreneurs (65%) and SMEs
(62%) received only one certificate during one year of operation, with this indicator being the highest for
101 Resolution, dated March 4, 2002, No. 93 «On the Procedure for Issuing Vehicle Quality Certificates».102 Resolution, dated June 10, 1996, No. 258 «On Establishment of a Government Research Center for Expert Analysis and Certification
of Pharmaceutical Products, Medical Equipment, Medical and Sanitary and Hygienic Products, Medical Nutrition Products, and
Cosmetics». 103 Land Code of the Republic of Tajikistan, dated December 13, 1996.104 Law of the Republic of Tajikistan, dated December 27, 1993, No. 893, «On Communications».105 Resolution dated January 28, 1994, No 13 «On the Agency Authorized to Issue Certificates of Origin in the Republic of
Tajikistan».106 Law of the Republic of Tajikistan, dated July 20, 1994, No. 985 «On Pedigree Livestock Breeding».107 Section 6 of the Resolution dated March 16, 1999, No 97 «The Procedure for Certification of Food Products and Other Goods
Imported into or Exported from the Republic of Tajikistan».
Chart 87Chart 87Certificates Obtained by SMEs and Individual Entrepreneurs, by Certifying AgencyCertificates Obtained by SMEs and Individual Entrepreneurs, by Certifying Agency
% respondents obtaining certificates
78%78%
TajikStandartTajikStandart
Ministry of HealthMinistry of Health
Chamber of Commerce and Industry
Chamber of Commerce and Industry
Ministry of Transportation Ministry of Transportation
OtherOther
59%59%
0%0% 45%45%
8%8%
8%8%
6%6%
30%30%
20%20%
60%60%15%15%
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the construction sector (71%) and lowest for the transportation and communications industry (55%).
In agriculture, most entrepreneurs were required to obtain only one certificate.
Validity of Certificates
Depending on the type and purpose of the certificate, certificates may be valid for a fixed period of time or
for life. For example, the Land Tenure Certificate is a lifetime certificate which would only be re-certified
if there were changes in land use legislation or procedures.108 Certificates of origin and vehicle compliance
certificates are valid for 12 months.109, 110
The terms of most certificates are less than one year. According to the survey, 32% of entrepreneurs obtained
certificates for a term of up to six months, and 43% of respondents obtained certificates with periods of
validity ranging from six months to one year. In the farming sector, however, 50% of certificates are valid for
more than one year.
108 Section 8 of the Resolution dated September 4, 1999, No 389 «Provision on the Procedure for Processing and Issuance of Land
Tenure Certificates and Land Share Certificates».109 Section 1.2. of the «Instruction on the Implementation of the Procedure for Product Identification, Processing, and Issuance of
Certificates of Origin for Goods and of Other Documents Related to Carrying out Foreign Economic Activities», approved by the
Chairperson of the Chamber of Commerce and Industry of the Republic of Tajikistan on August 22, 2001. 110 Resolution dated March 4, 2003, No 93 «On the Procedure for Issuance of Vehicle Quality Certificates».
Chart 88Chart 88Number of Certificates Obtained during One Year of OperationNumber of Certificates Obtained during One Year of Operation
Chart 89Chart 89Number of Certificates Required during One Year of Operation, by SectorNumber of Certificates Required during One Year of Operation, by Sector
% of respondents obtaining certificates
OneOne
TwoTwo
More than twoMore than two
ManufacturingManufacturing
ConstructionConstruction
Transportation andcommunications
Transportation andcommunications
Trade and publiccatering
Trade and publiccatering
AgricultureAgriculture
0%0% 75%75% 100%100%25%25% 50%50%
98%98%
26%26%
55%55%
71%71% 23%23%6%6%
64%64%
69%69% 14%14% 17%17%
10%10%
10%10% 36%36%
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With the exception of the State Committee for Land Use and Land Resources, government certification
agencies usually issue short-term certificates with validities of up to one year.
Difficulties Encountered in the Certification Process
Respondents cited the most pressing difficulty with the certification process as high costs (47%), followed by
the large number of documents required (38%). Respondents also mentioned the length of the application
processing period as a key difficulty (35%). Notably, the list of problems encountered by respondents in the
certification process mirrors those identified for the standardization process.
Chart 90Chart 90Validity of Certificates Obtained from TajikStandart, by SectorValidity of Certificates Obtained from TajikStandart, by Sector
% of respondents obtaining certificates
Up to6 monthsUp to6 months
Up to1 yearUp to1 year
Over1 yearOver1 year
Trade and public catering
Trade and public catering
AgricultureAgriculture
0%0% 80%80% 100%100%40%40% 60%60%
Transportation and communications
Transportation and communications
20%20%
ConstructionConstruction
ManufacturingManufacturing
44%44% 11%11%45%45%
14%14%28%28% 58%58%
50%50% 45%45% 5%5%
50%50% 50%50%
39%39% 50%50% 11%11%
Chart 91Chart 91Validity of Certificates, by Certifying AgencyValidity of Certificates, by Certifying Agency
% of respondents obtaining certificates
Ministry of AgricultureMinistry of Agriculture
State Committee for Land Use and Land Resources
State Committee for Land Use and Land Resources
Ministry of HealthMinistry of Health
Chamber of Commerce and Industry
Chamber of Commerce and Industry
Ministry of TransportationMinistry of Transportation
0%0% 100%100%50%50%
TajikstandartTajikstandart
Ministry of CommunicationsMinistry of Communications
25%25% 75%75%
Up to 6 monthsUp to 6 months
Up to 1 yearUp to 1 year
Up to 2 yearsUp to 2 years
Up to 3 yearsUp to 3 years
Over 3 yearsOver 3 years
Chart 92Chart 92Problems with CertificationProblems with Certification
% of respondents obtaining certificates
Problem # OneProblem # OneProblem# TwoProblem# TwoProblem# ThreeProblem# Three
Large number of required documents
Large number of required documents
Frequent changes in proceduresFrequent changes in procedures
Lengthy processing periodLengthy processing period
Lack of InformationLack of Information
High costsHigh costs
0%0% 50%50%
The need to obtain several certificates
The need to obtain several certificates
10%10% 20%20% 30%30% 40%40%
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The price of a certificate varies. Some methods of determining price include calculations based on man-
hours111 needed to certify product or a percentage of the product’s value.112 In other cases, fixed fees are
applied according to the type of product to be certified.
The process of obtaining all certificates appeared to be most expensive to SMEs – an average of 423 somoni
(US $153). These fees include the official price of the certificate, additional services provided by the certifying
agency, and informal payments.
The official fee for processing a Land Tenure Certificate is 63.85 somoni (US $23). For dehkan farmers
whose farms were established as restructured agricultural enterprises, the official fee is as little as 38.76
somoni (US $14).113 Nevertheless, respondents paid an average of 312 somoni (US $113) to obtain all
compulsory certificates. Since an overwhelming majority of dehkan farmers obtained only one certificate
per farm, it appears that unofficial payments constituted most of the certification costs. According to some
dehkan farmers, unofficial payments were made to obtain a favorable decision from a local Khukumat on
setting aside a land parcel from a collective (kolkhoz) or state-owned (sovkhoz) farm, or to obtain a Land
Tenure Certificate.
Forty-six percent of entrepreneurs who received certificates paid up to 100 somoni (US $36), with another
30% of respondents paying anywhere from 101 to 300 somoni (US $36 to US $108).
The number of documents required by certifying agencies depends on the type of product or service, as well
as on the type of certificate to be issued. To secure a certificate of origin, for example, an entrepreneur must
submit the following documents to the Chamber of Commerce and Industry: an application, a contract, and
up to 12 additional documents depending on the category of small or medium business.114
111 Guideline Document RT 50-002-2002.112 Resolution of the Presidium of the Chamber of Commerce and Industry, dated December 27, 2002 «On Approval of the Rates for
Services Provided to Determine the Origin of Goods and for Issuance of Form A and Form ST-1 Certificates».113 Annex #1 and Annex #3, of the Resolution dated September 4, 1999, No. No. 389 «On Approval of the Provision on the Procedure
for Processing and Issuance of Land Tenure Certificates and Land Share Certificates, and On the Pricing of Said Certificate».114 «Instruction on the Implementation of the Procedure for Product Identification, Processing, and Issuance of Certificates of Origin
for Goods and of Other Documents Related to Carrying out Foreign Economic Activities», approved by the Chairperson of the
Chamber of Commerce and Industry of the Republic of Tajikistan on August 22, 2001.
Chart 93Chart 93Average Cost of Obtaining All Necessary CertificatesAverage Cost of Obtaining All Necessary Certificates
[2003] 85B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Box 20. Additional Documents Required to Obtain Certificates of Origin
1. Certificate of Registration;
2. Assessed value statement made by a relevant exchange;
3. Passport copies (for individuals);
4. Expert statement on the origin of the product;
5. Bills or invoices for product shipment;
6. Power of Attorney to receive the certificate;
7. A document confirming that the product has been acquired;
8. Invoice for lint cotton issued and certified by the manufacturing plant;
9. Registration certificate issued by the Ministry of Economy and Trade;
10. Confirmation by the servicing bank of the value of the product to be exported;
11. Product delivery route, legal address of the importer, and name of the destination terminal;
12. A document confirming that certification services have been paid.
According to Focus Group participants, information detailing required documents is often not available; the
example above is more an exception than a rule.
Some legislation outlines timeframes for processing certificate applications. For example, applications for
certificates of origin are usually processed within three days. If all required documents have been submitted,
the certificate is often processed immediately. Applications for vehicle quality certificates are processed
within 10 days of the date of filing and presenting the vehicle(s) for examination.115
According to the survey results, entrepreneurs waited longest to obtain certification from the State
Committee for Land Use and Land Resources – an average of 12 working days. This can be explained by the
nature of the certificate applied for since, unlike certificates for products/services issued by other agencies, the
State Committee for Land Use and Land Resources mainly issues Land Tenure Certificates. Furthermore,
the legislation regulating the procedure for obtaining Land Tenure Certificates does not specify timeframes
for processing applications. Therefore, the State Committee for Land Use and Land Resources applies the
timeframes stipulated in the Law on Citizens’ Appeals.
115 Section 10, of the Resolution dated March 4, 2002, No 93 «On the Procedure for Issuance of Vehicle Quality Certificates».
Chart 94Chart 94Time Required to Obtain One Certificate, by Certifying AgencyTime Required to Obtain One Certificate, by Certifying Agency
Number of working days
Ministry of AgricultureMinistry of Agriculture
State Committee for Land Use and Land Resources
State Committee for Land Use and Land Resources
Ministry of HealthMinistry of Health
Chamber of Commerce and IndustryChamber of Commerce and Industry
Ministry of TransportationMinistry of Transportation
00 141477
TajikStandartTajikStandart
Ministry of CommunicationsMinistry of Communications
1212
1010
88
66
55
88
66
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The results of the survey indicate that more than half of the respondents who have received certificates
cited difficulty acquiring relevant information from all government certification agencies, despite declared
transparency. For example, according to Section 12 of the «Procedure for Certification of Food Products
and Other Goods Imported into or Exported from the Republic of Tajikistan», No. 97, dated March 16,
1999, information on certification regulation, certifying agencies and accredited laboratories is available
from TajikStandart. As focus group participants commented, however, an entrepreneur must apply to
TajikStandart in writing to receive detailed information on the certification procedure. Even if a written
request is submitted, there is no guarantee that the information would actually be received. It is most difficult
to obtain comprehensive and reliable information from the Ministry of Agriculture – a fact noted by nearly
98% of entrepreneurs.
The results of the survey indicate that of all small and medium businesses, Tajikistan’s agricultural
enterprises required certificates most frequently, most entrepreneurs had to undergo the certification process
more then once during one year of operation, and the standardization/certification costs paid by business
entities are high. Policy recommendations are provided below to help the government improve Tajikistan’s
standardization/certification system.
Recommendations
1. Conduct a review of all existing mandatory state certification and technical standards with the goal of
eliminating all but those necessary for the protection of public health, safety, and the environment.
2. Study recent experiences of other CIS countries in reforming standardization and certification
procedures.
3. Consider extending the validity of certificates issued for selected products. Doing so would reduce
the time entrepreneurs spend renewing certificates, thereby allowing them to focus on their
businesses.
4. Ensure that standards refer to only to final products and services rather than processes.
5. Consider government-sponsored studies of product quality to assist customers in product selection.
Chart 95Chart 95Perceived Difficulty of Obtaining Information on the Certification Process by Certifying AgenciesPerceived Difficulty of Obtaining Information on the Certification Process by Certifying Agencies
% of respondents who obtained certificates
Ministry of AgricultureMinistry of Agriculture
State Committee for Land Use and Land Resources
State Committee for Land Use and Land Resources
Ministry of HealthMinistry of Health
Chamber of Commerce and Trade Chamber of Commerce and Trade
Ministry of TransportationMinistry of Transportation
100%100% 50%50%25%25%
TajikStandartTajikStandart
Ministry of CommunicationsMinistry of Communications
50%50% 25%25%75%75% 0%0%
Very difficultVery difficult Very easyVery easy
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REGISTRATION
Legal Framework for Registration
The registration procedure for each category of small and medium business in Tajikistan is regulated by
separate regulatory acts. Registration procedures are, therefore, different for SMEs, dehkan farmers, and
individual entrepreneurs.
In 2002 and 2003, the Tajik Parliament passed new legislation revising the procedures for registration of legal
entities (small and medium-sized enterprises are included in this category) and dehkan farmers. The impact
of these laws can be analyzed in future surveys.
There is no unified registration system for small and medium businesses in Tajikistan. Consequently, 76% of dekhan farmers, 54% of SMEs, and 51% of individual entrepreneurs encountered difficulties obtaining comprehensive and reliable information about the registration process.
The average duration of the registration process in Tajikistan is 36 working days for dehkan farmers, 25 working days for SMEs, and 13 working days for individual entrepreneurs.
According to the results of the survey, average registration costs (including both official and unofficial payments) are high: - 487 somoni (US $176), or 93% of per capita GDP for SMEs;- 419 somoni (US $151), or 80% of per capita GDP for dehkan farmers, and - 178 somoni (US $64), or 34% of per capita GDP for individual entrepreneurs.
Average registration costs incurred by entrepreneurs vary according to region.
After completion of the registration process, all entrepreneurs must obtain additional permits and/or approvals before commencing business operations. This substantially increases the time and costs involved in entering the market.
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Diagram 5Diagram 5Registration Procedures for Small and Medium BusinessesRegistration Procedures for Small and Medium Businesses
I. Registration procedure for dehkan farmers...
...in effect until May 10, 2002 ...current
I. Pre-registration 1. Regional (oblast)/ district (rayon) Khukumat (Decision on Land Parcel Allocation)*2. Land Use Authority (Land Tenure Certificate)*3. Ministry of Justice/Regional Justice Department (Legal Review Statement) – within 10 days.4. Statistical Authority (statistical code)*
I. Pre-registration 1. Regional (oblast)/ district (rayon) Khukumat (Decision on Land Parcel Allocation)2. Land Use Authority (Land Tenure Certificate)3. Ministry of Justice/Regional Justice Department (Legal Review Statement) – within 10 days.4. Statistical Authority (statistical code)
**
*
II. State registration 5. Public Notary Office – within 5 days
II. State registration 5. Public Notary Office – within 5 days
III. Registration with:6. Tax Authority – within 5 days 7. Social Protection Fund – within 10 days8. Local branch of Department of Internal Affairs*9. Bank*10. Local government (Khukumat)*11. Local self-governance body (Jamoate)*
III. Registration with:6. Tax Authority – within 5 days 7. Social Protection Fund – within 10 days8. Local branch of Department of Internal Affairs9. Bank10. Local government (Khukumat)11. Local self-governance body (Jamoate)
**
**
II. Registration system for SMEs...
...in effect until April 24, 2003
I. Pre-registration period1. Ministry of Justice/Regional Justice Depart-ment (Legal Review Statement) – within 10 days.2. Statistical Authority (statistical code)*
I. Pre-registration period1. Ministry of Justice/Regional Justice Depart-ment (Legal Review Statement) – within 10 days.2. Statistical Authority (statistical code)*
II. Registration3. Public Notary Office within 5 days
II. Registration3. Public Notary Office within 5 days
III. Registration with:4. Tax Authority within 5 days 5. Social Protection Fund within10 days6. Local branch of Dept. of Internal Affairs*7. Bank *8. Local government (Khukumat)*9. Local self-governance body (Jamoate) *
III. Registration with:4. Tax Authority within 5 days 5. Social Protection Fund within10 days6. Local branch of Dept. of Internal Affairs7. Bank 8. Local government (Khukumat)9. Local self-governance body (Jamoate)
**
* *
III. Registration system for individual entrepreneurs (has not changed in recent years)
I. Registration 1. Tax Authority – within 3 days
I. Registration 1. Tax Authority – within 3 days
II. Registration with2. Social Protection Fund – within 10 days
II. Registration with2. Social Protection Fund – within 10 days
* no indication of a particular timeframe. The time limits applied are those stipulated in Article 12 of the Law of the Republic of Tajikistan «On Citizens' Appeals», No. 343, dated December 14, 1996 (e.g. 5 days provided additional verification of documents is not required or a maximum of 30 days if additional documentation is required.)
* no indication of a particular timeframe. The time limits applied are those stipulated in Article 12 of the Law of the Republic of Tajikistan «On Citizens' Appeals», No. 343, dated December 14, 1996 (e.g. 5 days provided additional verification of documents is not required or a maximum of 30 days if additional documentation is required.)
I. Pre-registration 1. Regional (oblast)/ district (rayon) Khukumat (Decision on Land Parcel Allocation)*2. Land Use Authority (Land Tenure Certificate)*3. Statistics Authority (statistical code)*
I. Pre-registration 1. Regional (oblast)/ district (rayon) Khukumat (Decision on Land Parcel Allocation)2. Land Use Authority (Land Tenure Certificate)3. Statistics Authority (statistical code)
*
**
II. State registration4. Tax Authority – within 5 days
II. State registration4. Tax Authority – within 5 days
III. Registration with:5. Social Protection Fund – within 10 days6. Local self-governance body (Jamoate)*
III. Registration with:5. Social Protection Fund – within 10 days6. Local self-governance body (Jamoate)*
...current
I. Registration1. With Ministry of Justice/Regional Justice Department – within 10 days
I. Registration1. With Ministry of Justice/Regional Justice Department – within 10 days
II. Registration with:12. Statistics Authority *
13. Tax Authority – within 5 days4. Social Protection Fund – within 10 days5. Local branch of Dept. of Internal Affairs*6. Bank*
II. Registration with:12. Statistics Authority *
13. Tax Authority – within 5 days4. Social Protection Fund – within 10 days5. Local branch of Dept. of Internal Affairs*6. Bank*
1 – handled by the registering authority.1 – handled by the registering authority.
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The registration procedure that applies to individual entrepreneurs is streamlined in comparison to the
procedures affecting dehkan farmers and SMEs. An individual entrepreneur is registered with the tax authorities
once the application is filed and the individual’s name is entered into the tax register.116 The individual
entrepreneur must then register with the Social Protection Fund of the Republic of Tajikistan within 10 days.117
The Law of the Republic of Tajikistan «On Dehkan Farmers», No. 48, dated May 10, 2002, simplifies
registration for dehkan farmers by reducing the number of participating agencies, thereby shortening the
duration of the process. In addition, the law eliminates all registration fees. The key aspect of the new
regulations, however, is the new status options for dehkan farmers. Prior to May 10, 2002, all dehkan
farmers were classified as legal entities; the new legislation allows both new and existing dehkan farmers
to choose between remaining dehkan farmers or establishing a business partnership/production cooperative.
In the former si tuation, farmers now follow the registration procedure for individual entrepreneurs. In the
latter scenario, farmers must register as legal entities. In both cases, farmers acquire the status associated
with the procedure under which they registered.
The Law of the Republic of Tajikistan «On State Registration of Legal Entities»118, No. 5, dated April 22,
2003, abolishes the pre-registration phase and reduces the number of government agencies involved in the
registration process. This will help to shorten the duration of the registration period. Moreover, the new
registration process will have certain elements of the «One-Window» registration system.119 Under the new
law, the registering authority is responsible for entering the legal entity in the registers of the statistical and
tax authorities.120
Duration of the Registration Process
As in previous legislation, the new laws do not establish clear timeframes for consideration of applications
and document processing by many of the agencies involved in the registration process. In cases when
timeframes are not clearly delineated, the time limits stipulated in the Law of the Republic of Tajikistan
«On Citizens’ Appeals», No. 343121, dated December 14, 1996, must be applied. The Law holds that decisions
must be made within 15 days, provided additional examination and verification of accompanying documents
116 State registration is not required for individual entrepreneurs who: 1) work on a dehkan farm; 2) fulfill a discrete job on a contractual
basis or on the basis of other civil law agreements; 3) outside a wholesale or retail chain, are engaged in selling their own property
or other property such as manufactured, processed, or purchased products, including imported industrial and food products, in
places specifically designated for such purposes or through secondhand stores, or 4) have annual revenues less than twenty times the
established minimum monthly wage amount. Tax legislation outlines procedures for taxing such persons (Article 24, Civil Code of
the Republic of Tajikistan).117 «Instruction on the Implementation of the Procedures for Making Contributing, Accounting for and Disbursing Funds of the Social
Protection Fund of the Republic of Tajikistan», signed by the Chairman of the Fund and approved by the Minister of Finance of the
Republic of Tajikistan and the Chairman of the National Bank of Tajikistan, dated June 24, 1997. 118 As of the effective date of this law, the Law of the Republic of Tajikistan «On State Registration of Enterprises», No. 498, dated
December 12, 1997, is invalid.119 Under the «One-Window» registration system, the entire process of registration, including pre-registration and subsequent
registration with other agencies, is managed by one registering authority without the direct participation of the entrepreneur. 120 Within ten days of state registration as a legal entity, the registering authority shall notify the local statistical and tax authorities of
said registration. Based on the information provided by the registering authority, the local statistical authority must include the newly
registered legal entity in the State Register of Enterprises and Organizations of the Republic of Tajikistan, assign it an identification
code under the General Classification of Enterprises and Organizations as well as relevant classification codes, and issue the legal
entity a letter containing the code(s) assigned to it under the General Classification of Enterprises and Organizations.121 The timeframe set forth in the Law «On Citizens’ Appeals» is also applied with regard to other processes (issuance of permits,
licensing, or certification) unless otherwise noted by the laws that govern these processes.
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is not required. If additional documentation is required, a decision must be made within 30 days. The
absence of distinct timeframes, combined with the substantial number of registration agencies involved in
the process and the number of required documents, negatively affects the entire registration procedure by
extending its duration, while contributing to a strong disparity in registration times among the regions of
Tajikistan.
According to survey results, the average duration of the registration process for dehkan farmers was 36
working days, as opposed to 25 working days for SMEs and 13 working days for individual entrepreneurs.
The lengthy duration of the registration process for dehkan farmers results from the complexity of the
previous registration system and the low level of legal literacy among new farmers (seen in the process of
preparing application documents). Dehkan farmers mentioned difficulties obtaining a Decision on Land
Parcel Allocation and a Land Tenure Certificate as the most troubling issues in the registration process.
«Allocation of land depends upon the relationship between the farmer and the local authorities, and the people in the Khukumat do not issue [land allocation] decision documents for just anybody…»
«There are cases when the Chairman of a Khukumat issues a decision authorizing the setting aside of a parcel of land from a collective farm, but the chairman of that collective farm does not set the land aside for several months…»
- Focus Group participants
As current legislation does not establish definite timeframes with respect to registration procedures, there
are considerable regional differences in the duration of the registration process. To some extent, these
differences reflect the business environment in a region, and in particular, the relationships that exist between
entrepreneurs and the local officials involved in the registration process.
For example, the registration process for farmers was the longest in the Kulyab district of Khatlon province
(an average of 42 working days) and in Sughd province (an average of 40 working days).
The registration process for SMEs was the longest in the Gorno-Badakhshan Autonomous Province, (an
average of 36 working days) and in Sughd province (an average of 30 working days). By contrast, the
registration process for SMEs in the Kulyab district of Khatlon province averaged 17 days.
Chart 96Chart 96Duration of the Registration Process for Dehkan Farmers, by RegionDuration of the Registration Process for Dehkan Farmers, by Region
Average number of working days
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordination
Regions under Republican Subordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
00 99
Gorno-Badakhshan Autonomous Province
Gorno-Badakhshan Autonomous Province
1818 2727 3636 4545
4242
4040
3232
3232
99
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For individual entrepreneurs, the duration of the registration process was longest in the Gorno-Badakhshan
Autonomous Province (an average of 31 working days), and shortest in the Kurgan-Tube district of Khatlon
province (an average of eight working days).
Registration Costs
The law does not contain provisions regulating the costs of the entire registration process for entrepreneurs;
there are only references to the size of the fee charged for state registration. In this survey, however,
registration costs include all fees, both official and unofficial, paid throughout the process:
1. During the pre-registration period;
2. For state registration (state fee);
3. For registration with other agencies as required, and
4. For additional services provided by agencies involved in the registration process.
It is difficult to determine the breakdown of either official or unofficial payments made by entrepreneurs at
each stage of the registration process due to a lack of transparency concerning fees established by individual
agencies. Thus, the registration costs referred to consist of both official payments (those established by
legislation) and unofficial payments (those that may be charged at any stage of the registration process).
The survey revealed that average registration costs for SMEs are higher than for other categories of small
and medium businesses, which corresponds to the high state registration fee set for SMEs.
Chart 97Chart 97Duration of the Registration Process for SMEs, by RegionDuration of the Registration Process for SMEs, by Region
Average number of working days
10%10%
Dushanbe CityDushanbe City
00 88 1616 2424 3232 4040
3636
3030
3030
2222
2121
1717
Gorno-Badakhshan Autonomous Province
Gorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordination
Regions under Republican Subordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
Chart 98Chart 98Duration of the Registration Process for Individual Entrepreneurs, by RegionDuration of the Registration Process for Individual Entrepreneurs, by Region
Average number of working days
00 77 1414 2121 2828 3535
3131
1717
1616
1313
1212
88
Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous Province
Gorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordination
Regions under Republican Subordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
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The following fees122 have been established for state registration of SMEs123: five hundred times the
established minimum monthly wage amount (2000 somoni, or US $722) for enterprises with foreign
investment and one hundred times the established minimum monthly wage amount (400 somoni, or US
$144) for all other enterprises.124
Registering a firm was most costly for entrepreneurs from the Kurgan-Tube district of Khatlon province and
the city of Dushanbe.
As shown in the Chart 99, the average registration cost for dehkan farmers was 419 somoni. Yet, the official
registration expenses established for dehkan farmers for 2002 were 63.85 somoni to process a Land Tenure
Certificate and 80 somoni for state registration, for a total of 143.85 somoni.
In cases where legislation does not establish fee structures, farmers in particular have to pay much more
than the government fees to register their businesses. Payments for «quasi-voluntary» services «offered» by
agencies involved in the registration process account for this difference.125
122 Article 1 of the Law of the Republic of Tajikistan dated January 6, 1992, No. 496 «On Government Fees». 123 Section 3 of the Resolution of the Government of the Republic of Tajikistan dated November 29, 1993, No. 587 «The Government
Fee Rates». 124 As per Decree No. 717, dated November 25, 2001, of the President of the Republic of Tajikistan, «On Increasing the Minimum
Monthly Wage and Current Base Salaries for Employees of Budget-Financed Organizations» and «On Measures Aimed at Increased
Social Protection for the Most Vulnerable Strata of the Population», the minimum monthly wage was established in the amount of
4 somoni for all sectors of the economy as of January 1, 2002.125 At the stage of preparation and processing of application documents, for example.
Chart 99Chart 99Average Registration Costs, by Small and Medium BusinessAverage Registration Costs, by Small and Medium Business
93%93% 80%80% 34%34%Registration costs as a percentage of per capita GDPRegistration costs as a percentage of per capita GDP
Chart 100Chart 100Average SME Registration Costs, by Region*Average SME Registration Costs, by Region*
Amount in somoni
00 620620155155 465465
601601
558558
489489
402402
300300
310310
* The number of respondents in the Gorno-Badakhshan Autonomous Province was insufficient to compare the data obtained in that region with the data obtained in other regions
Dushanbe CityDushanbe City
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under RepublicanSubordination
Regions under RepublicanSubordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
C h a p t e r 1 0
[2003] 93B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
«We have no information about how much we should pay during the course of the registration process… For example, we go to the State Committee for Land Use and Land Resources and they tell us how much we should pay. But they never produce a document confirming their right to charge the fees quoted. And they never give us any receipts in return…»
- Focus Group participant
According to the results of the survey, the registration process for farmers appeared to be most expensive in
Sughd province and in the Kurgan-Tube district of Khatlon province.
A certificate issued by the Tax Authorities is the only official document certifying that a person has been
registered as an individual entrepreneur.126 This certificate also serves as a document confirming that the
bearer has paid all applicable income tax. The cost of registering as an individual entrepreneur is based upon:
(i) the price of the certificate issued by the Tax Authorities (equal to the amount of income tax paid) as well
as the type and duration of the activity, and (ii) the state fee127 in the amount of six percent of the established
minimum monthly wage,128 which was equal to 0.24 somoni or US $0.09 in 2002.
For example, an entrepreneur who has decided to sell newspapers and magazines for a period of one month
will have to pay 3.24 somoni for registration as an individual entrepreneur – three somoni for the monthly
license129 and 0.24 for state registration.
According to survey results, the average registration cost for an individual entrepreneur was 195 somoni in
Dushanbe city and 77 somoni in the Kurgan-Tube district of Khatlon region. Factors which contribute to
variations in cost include differences in types of activity, validity periods of registration, and in some cases
– unofficial payments.
126 Article 24 of the Civil Code of the Republic of Tajikistan127 Article 121 of the Civil Code of the Republic of Tajikistan and Article 1, Law of the Republic of Tajikistan «On Government
Fees». 128 Section 14 of the Resolution of the Government of the Republic of Tajikistan dated November 29, 1993, No. 587 «The Government
Fee Rates».129 Resolution No. 216 of the Government of the Republic of Tajikistan «On Approving the List of Activities for Which Income Tax
May be Charged in the Form of a Certificate Fee» and «On the Procedure for Individual Entrepreneurs Who Do Not Form Legal
Entities to Acquire Such Certificates», dated May 10, 2000.
Chart 101Chart 101Average Registration Costs Incurred by Dehkan Farmers, by Region*Average Registration Costs Incurred by Dehkan Farmers, by Region*
Amounts in somoni
00 800800200200 600600
793793
457457
341341
229229
400400
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordination
Regions under Republican Subordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
* The number of respondents in the Gorno-Badakhshan Autonomous Region was insufficient to compare the data obtained in that region with that obtained in other regions
R e g i s t r a t i o n
[2003] 94 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Key reasons for unofficial payments are shortcomings in legislation regulating the registration process. On
average, 38% of entrepreneurs surveyed had to pay unofficially during registration. Among the main reasons
cited as explanations for unofficial payments included the ambiguity of current legislation, a complicated
registration system, the number of agencies involved in the registration process, and artificial bureaucratic
barriers.
«Some officials deliberately create bureaucratic barriers so that they can receive unofficial payments…»«There is no way to obtain a certificate or statement from any agency free of charge…»
- Focus Group participants
Among types of small and medium businesses, dehkan farmers made unofficial payments most frequently:
57% paid unofficially during the registration process.
The survey also revealed that the number of entrepreneurs who made unofficial payments varies by region.
For example, 51% of entrepreneurs working in Regions of Republican Subordination made unofficial
payments, whereas in the Kurgan-Tube district of Khatlon province, only 26% of entrepreneurs made such
payments. These regional differences are due to the complexity of the registration process and the vagueness
of its governing legislation, which have allowed regional and local authorities to establish additional
administrative barriers to business registration.
Chart 102Chart 102Average Registration Costs Incurred by Individual Entrepreneurs, by Region*Average Registration Costs Incurred by Individual Entrepreneurs, by Region*
Amounts in somoni
00 200 200
195195
189189
185185
164164
7777
100100
Dushanbe CityDushanbe City
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordinationy
Regions under Republican Subordinationy
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
* The number of respondents in the Gorno-Badakhshan Autonomous Region was insufficient to compare the data obtained in that region with that obtained in other regions
Chart 103Chart 103Unofficial Costs Incurred during the Registration Process, by Small and Medium BusinessUnofficial Costs Incurred during the Registration Process, by Small and Medium Business
[2003] 95B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Access to Information
The survey revealed that entrepreneurs encounter difficulties at the outset of the registration process. Among
the main difficulties are limited access to information, the large number of documents required, and the
lengthy duration of the registration process.
Seventy-six percent of dehkan farmers reported difficulties obtaining comprehensive and reliable information
on the registration process – the highest percentage among all categories of small and medium businesses.
The difficulty in accessing information may be a consequence of the complexity of the former registration
process, in which dehkan farmers and SMEs were required to register with 11 different government agencies.
Difficulties inherent in the process may have also been exacerbated by the low level of legal literacy among
entrepreneurs. Future surveys will be able to track the impact of recent legislative changes to the process of
state registration.
Chart 104Chart 104Unofficial Payments Incurred during the Registration Process, by RegionUnofficial Payments Incurred during the Registration Process, by Region
Large number of required documentsLarge number of required documents
0%0% 40%40%
Unofficial paymentsUnofficial payments
20%20%
LargestdifficultyLargestdifficulty
2nd largestdifficulty2nd largestdifficulty
10%10% 30%30%
3rd largestdifficulty3rd largestdifficulty
Chart 106Chart 106
% of respondents
Dehkan farmersDehkan farmers
Individual EntrepreneursIndividual Entrepreneurs
SMEsSMEs
80%80% 60%60%20%20% 20%20%40%40%
Difficulty of Obtaining Information on the Registration ProcessDifficulty of Obtaining Information on the Registration Process
60%60% 0%0% 40%40%
Very difficultVery difficult Very easyVery easy
R e g i s t r a t i o n
[2003] 96 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The survey also revealed significant regional differences in access to information. For example, nearly three
quarters (71%) of entrepreneurs in Gorno-Badakhshan Autonomous Province indicated difficulties in
obtaining information on the registration process.
According to the Civil Code, small and medium businesses can commence business activities as of the date of
their state registration,130 except when required by law to obtain additional licenses.131 In practice, however,
entrepreneurs are obliged to obtain additional permits/approvals before they can launch business activities.
The results of the survey reflect this discrepancy between expectations and reality. Prior to initiating business
activities, SMEs and dehkan farmers had to obtain permits/approvals from five additional agencies, and
every individual entrepreneur had to do so from three agencies.
As a result, starting a business is both time-consuming and expensive for Tajikistan’s entrepreneurs.
To obtain the permits necessary to launch their business activities:
SMEs waited 58 working days and paid 938 somoni (US $339) – 179% of the per capita GDP in 2002;
Dehkan farmers waited 69 working days to receive all necessary permits and paid 671 somoni (US
$242), or 128% of the per capita GDP in 2002;
Individual entrepreneurs waited 33 working days and paid 341 somoni (US $123) – 65% of the per
capita GDP in 2002.
The process of starting business activities is described in more detail in the «Permits and Approvals» chapter
of this report.
Recommendations
1. Extend the unified «One-Window» registration procedure to include not only legal entities, but all
categories of businesses. Establish a clear and unified registration mechanism and implement it in all
regions of the country.
2. Consider allowing applications for permits and approvals to be included under the «One-Window»
registration process.
3. Develop and disseminate a standardized kit of documents required for registration, to be used as
a model for entrepreneurs.
4. Disseminate information materials outlining the fee structure of registration payments and the process
for making such payments.
130 Articles 24 and 51 of the Civil Code of the Republic of Tajikistan.131 Article 49 of the Civil Code of the Republic of Tajikistan; and Article 19 of the Law of the Republic of Tajikistan «On Government
Protection and Support of Small Business in the Republic of Tajikistan».
Chart 107Chart 107Difficulty of Obtaining Information on the Registration Process, by RegionDifficulty of Obtaining Information on the Registration Process, by Region
[2003] 97B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
PERMITS AND APPROVALS
The Permit System
There is no unified legislation in Tajikistan that provides standard definitions of «permit» or «approval»,132
establishes the procedure for obtaining permits, outlines guidelines for processing times, application costs, or
validity periods, or sets rules for either extending or revoking existing permits. The current legislative base
governing the permit process consists of a variety of laws, government resolutions, and numerous internal
agen cy instructions and provisions. As a result, entrepreneurs often do not understand why certain permits
are required, and neither do they fully comprehend the procedures and conditions of their issuance.
Process of Obtaining Permits
Given the absence of unified legislation and clearly established principles for the issuance of permits, a
number of other difficulties are inherent in the current process: no clear indications as to which government
agencies are entitled to issue permits, and no comprehensive list of permits that entrepreneurs may need to
obtain in order to legally conduct business activities in Tajikistan. While an analysis of current legislation
reveals that more than 31 government agencies are authorized to issue approximately 100 types of permits,
such estimates are far from conclusive.133
After registering their business, entrepreneurs are required to obtain permits from an average of four government agencies in order to start operations. Moreover, entrepreneurs often need to obtain additional permits after commencing business activities.
More than 31 government agencies are authorized to issue permits in Tajikistan. The majori ty of permits are issued by Khukumats, the Fire Safety Authority, and the Sanitary-Epidemiological Service.
It takes an average of 6.5 working days for an entrepreneur to obtain one permit.
Legislation regulating the permit process is neither unified nor systematic. As a result, government agencies issuing permits often independently establish the procedures, timeframes, and fees for obtaining these permits.
47% of entrepreneurs surveyed cited difficulties acquiring comprehensive and reliable information on the permit application process.
39% of respondents reported making unofficial payments in the course the permit process. In 2002, the average entrepreneur paid 197 somoni (including official and unofficial payments) – 38% of the per capita GDP – to obtain all necessary permits.
132 Due to a lack of clear differentiation between permits and approvals in Tajik legislation, the term «permit» will be used to indicate
both permits and approvals throughout this section of the report.133 See Annex C.
P e r m i t s a n d A p p r o v a l s
[2003] 98 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The permit system may be described as consisting of 2 stages: 1) obtaining mandatory permits and 2) obtaining
optional permits. The process of obtaining permits in both of these cases is illustrated in the example below.
Entrepreneurs surveyed were required to obtain permits from an average of four different agencies after
completion of the registration process.
Chart 108Chart 108Average Number of Agencies from which Permits areNecessary to Start Business Activities Average Number of Agencies from which Permits areNecessary to Start Business Activities
Diagram 6Diagram 6The Process of Obtaining Permits: Opening a Fueling Station*The Process of Obtaining Permits: Opening a Fueling Station*
APPLICANT(Business entity)
APPLICANT(Business entity)
KHUKUMATObtaining of a Decision on Allocation
of a Land Parcel
KHUKUMATObtaining of a Decision on Allocation
of a Land Parcel
LAND USE AUTHORITYObtaining of a Land Tenure Certificate
LAND USE AUTHORITYObtaining of a Land Tenure Certificate
ARCHITECTURE AND TOWN PLANNING AUTHORITY
Approval of the project and design documents
ARCHITECTURE AND TOWN PLANNING AUTHORITY
Approval of the project and design documents
WATER SUPPLY AUTHORITYAgreement for the use
of sewer networks
WATER SUPPLY AUTHORITYAgreement for the use
of sewer networks
FIRE SAFETY AUTHORITYApproval of the fire safety TTDs
FIRE SAFETY AUTHORITYApproval of the fire safety TTDs
ENERGY SAFETY AUTHORITYPermit for power grid connections
ENERGY SAFETY AUTHORITYPermit for power grid connections
SANITARY-EPIDEMIOLOGICAL SERVICEApproval of the sanitary-epidemiological TTDs
SANITARY-EPIDEMIOLOGICAL SERVICEApproval of the sanitary-epidemiological TTDs
ENVIRONMENTAL SAFETY AUTHORITYApproval of the environmental
safety TTDs
ENVIRONMENTAL SAFETY AUTHORITYApproval of the environmental
safety TTDs
Mandatory approval of Technical Terms Documents (TTDs)
Mandatory approval of Technical Terms Documents (TTDs)
Discretionary permits and approvals
Discretionary permits and approvals
CITY/DISTRICT GAS AUTHORITYConnections to gas
supply systems
CITY/DISTRICT GAS AUTHORITYConnections to gas
supply systems
CITY/DISTRICT COMMUNI-CATIONS AUTHORITY
Connections to communications lines
CITY/DISTRICT COMMUNI-CATIONS AUTHORITY
Connections to communications lines
CITY/DISTRICTS HEATING NETWORKS
Connections to heating networks
CITY/DISTRICTS HEATING NETWORKS
Connections to heating networks
Mandatory permitsMandatory permits
* An entrepreneur must obtain a fuel and lubricant sale license before initiating the process described below* An entrepreneur must obtain a fuel and lubricant sale license before initiating the process described below
C h a p t e r 1 1
[2003] 99B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Entrepreneurs most often needed to obtain permits from Khukumats, the Fire Safety Authority, and the
Sanitary-Epidemiological Service. One reason for the large number of applications filed with Khukumats
is Article 35 of the Constitutional Law «On Local Government», No. 1092, dated December 1, 1994, which
outlines certain permits which must be obtained from Khukumats. In addition, Land Tenure Certificates are
issued by Khukumats.
Box 21. Excerpt from Article 35 of the Law «On Local Government Power»
«The Chairman of a Khukumat shall also decide upon other issues within the scope of his/her authority
as per standing legislation, including in the fields of planning, budgeting, finance, accounting, and
management of the property of the Gorno-Badakhshan Autonomous Province (GBAO) or of the
respective province, city, or district, and upon issues that are related to interaction with enterprises,
establishments, and organizations of various types of ownership, in sectors including agriculture, land
use and utilization of natural resources, environmental protection, construction, transportation, highway
construction and maintenance, communications, residential building maintenance and utility services,
trade, social and cultural services and social protection of the population, as well as employment, law
and order, public safety, and protection of individual rights and freedoms…»
Local Khukumats can, however, invoke Article 35 when requiring entrepreneurs to obtain permits for
activities not specified by either Article 35 or any other legislation (e.g. distribution and retailing of soft
drinks, consumer goods, and agricultural products). This illustrates the power Khukumats can exert on
businesses.
Chart 109Chart 109Share of Respondents Applying for Permits, by Government AgencyShare of Respondents Applying for Permits, by Government Agency
% of respondents
Committee for Architecture and ConstructionCommittee for Architecture and Construction
State Industrial Safety Enforcement AgencyState Industrial Safety Enforcement Agency
Ministry of InteriorMinistry of Interior
Geological AuthorityGeological Authority
Antimonopoly AgencyAntimonopoly Agency
Ministry of EnergyMinistry of Energy
Ministry of FinanceMinistry of Finance
City/District Gas AuthorityCity/District Gas Authority
Labor, Employment, and Social Protection Authority
Labor, Employment, and Social Protection Authority
43%43%
37%37%
27%27%
23%23%
19%19%
15%15%
8%8%
8%8%
7%7%
7%7%
5%5%
2%2%
2%2%
1%1%
1%1%
P e r m i t s a n d A p p r o v a l s
[2003] 100 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Re-applying for Permits
As a result of frequent changes in the regulations for obtaining permits (e.g. requirements on application forms,
costs, and processing times) as well as structural changes in government agencies, entrepreneurs are often
required to re-apply for permits that have not yet expired. This produces an adverse impact on entrepreneurial
activities, while providing an additional opportunity for corruption among government officials.
«There are situations when during one year entrepreneurs have had to repeatedly obtain the same permits and/or approvals due to such factors as changes in Khukumat leadership or revisions in the permit form…»
- Focus Group participant
Twenty one percent of the entrepreneurs interviewed said they had to re-apply for required permits in 2002
due to revised rules and/or procedures.
Obstacles in the Process of Obtaining Permits
As shown in Chart 111, the main obstacles confronted by entrepreneurs in the process of obtaining permits
are the large number of required documents and limited access to comprehensive and reliable information.
Chart 110Chart 110Re-application for Permits in 2002Re-application for Permits in 2002
% of respondents
6%6%
80%80%
14%14%
No answerNo answer
NoNo
YesYes
OneOne
TwoTwo
More than 2More than 2
Did you need to re-apply for a permit or approval?Did you need to re-apply for a permit or approval?
21%21%
74%74%
5%5%
If «Yes», how many permits and approvals
did you have to obtain?
If «Yes», how many permits and approvals
did you have to obtain?
Chart 111Chart 111Obstacles in the Process of Obtaining PermitsObstacles in the Process of Obtaining Permits
% of respondents citing each issue
Translation of documents into TajikTranslation of documents into Tajik
Long duration of proceduresLong duration of procedures
[2003] 101B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Accessibility of Information
Securing information regarding the permit application process is a key difficulty cited by entrepreneurs.
According to entrepreneurs, obtaining information from the Ministry of Economy and Trade is the most
difficult, as noted by 66% of the respondents who needed to obtain information from the Ministry.
Documents Required to Obtain Permits
According to the survey results, the number of documents required to obtain permits is a key obstacle for
entrepreneurs. The number of documents that must accompany an application depends upon the type of
permit to be obtained. For example, to obtain a permit to purchase and install electronic communications
equipment, an entrepreneur must submit four134 documents, as well as another six to obtain a permit to
engage in foreign economic activities.
Box 22. Documents Required to Obtain a Permit to Engage in Foreign Economic Activities135
1) Application for registration as a participant of foreign economic activities;
2) Completion of registration card and three copies;
3) Statements from relevant state statistical agencies, with agency seal, containing the statistical codes:
Classifier codes for enterprises and organizations (OKPO);
Location codes (SOATO);
Type of activity codes (OKONKh);
Subordination codes (SOOGU);
4) If a legal entity, an original or a notarized copy of the company charter. If an individual entrepreneur,
a notarized copy of a patent authorizing the relevant sphere of business activity. The fact that the
entrepreneurs plans to conduct foreign economic activities within this sphere of business must be
noted in the original patent;
5) Passport details of individual entrepreneurs, and
6) Statement by a Ministry of Economy and Trade representative in the respective province, city or district.
134 «Instruction on the Procedure for Acquisition and Operation of Electronic Communications Equipment and High-Frequency
Devices in the Republic of Tajikistan», approved by Executive Order No. 84 of the Ministry of Communications, dated September 8,
1997.135 «Regulation on the Procedure for Registration as Participants of Foreign Economic Activities of the Republic of Tajikistan»
approved by Resolution No. 316 of the Government of the Republic of Tajikistan, dated July 11, 1994.
Chart 112Chart 112Assessed Complexity of Obtaining Information on Permits, by Government AgencyAssessed Complexity of Obtaining Information on Permits, by Government Agency
[2003] 104 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Recommendations
1. Conduct a thorough analysis of the government agencies authorized to issue permits with the goal of
clearly determining which agencies should be entitled to issue permits and for what purpose.
2. Carry out regular comprehensive reviews of the permit system with the goal of verifying the necessity
of particular permits, and eliminating those that are no longer needed.
3. Consider the expediency of adopting unifying legislation which would proscribe:
a complete list of required permits and the agencies authorized to issue them;
the costs of obtaining all permits, and
simple and transparent permit procedures, to be enforced in all regions of the country.
4. Consider introducing a unified procedure for issuing permits as a part of the «One Window»
registration procedure. Also consider introducing the «consent by silence» principle for obtaining
permits: if officials do not take a decision on an application within an established time period, the
permit is issued by default.
5. Develop comprehensive information on the procedures required for obtaining key permits and
disseminate this information to entrepreneurs in an accessible format.
C h a p t e r 1 2
[2003] 105B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
RELATIONSHIPS BETWEEN ENTREPRENEURS AND AUTHORITIES
Legal Awareness
Between 2002 and 2003, the Government of the Republic of Tajikistan initiated a number of projects to
improve the business environment in the country, including the following:
Development of additional financing instruments for small and medium businesses:
Drafting and ratifying the Law «On Leasing». The Government of Tajikistan is also evaluating the
possibility of instituting a tax system that would encourage leasing operations;
Developing and reviewing legislation regulating lending mechanisms (e.g. microfinance) which are
specifically designed for small and medium businesses;
Establishing a Fund for Financial Support of Entrepreneurship under the Agency for Anti-Monopoly
Policy and Support of Entrepreneurship.
Development of enterprise support mechanisms and encouragement of a constructive dialog between authorities and small and medium businesses: Conducting an entrepreneurs’ forum as well as a series of meetings between entrepreneurs and top Tajik
government officials;
Facilitating the creation of local centers to support entrepreneurship;
Encouraging the mass media to provide broad coverage of entrepreneurs and business activities.
The key problem for entrepreneurs is their low level of legal awareness. Only 14% of surveyed entrepreneurs have good knowledge of legislation regulating their activities.
Tajikistan’s entrepreneurs rate the work of local authorities as unsatisfactory:- only 17% of respondents believe that the public servants in their area are honest and do
not solicit bribes;- only 29% of respondents believe they can resolve business-related problems with
government officials in their area;- 63% of respondents stated that bureaucratic barriers impede their relationship with local
authorities.
Most entrepreneurs surveyed were not aware of the Agency for Anti-Monopoly Policy and Support of Entrepreneurship, and its role in defending entrepreneur’s rights. Of those who were aware of the Agency’s existence, only 8% turned to it for assistance.
Just over half of surveyed entrepreneurs believe that the business environment in Tajikistan will improve over the next 12 months.
R e l a t i o n s h i p s B e t w e e n E n t r e p r e n e u r s a n d A u t h o r i t i e s
[2003] 106 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Improvement of legislation regulating specific administrative procedures: Drafting a regulatory act that would introduce the «One-Window» registration principle throughout
Tajikistan;
Drafting a Law «On Licensing of Selected Activities» that would harmonize the rules governing the
licensing process.
Box 23. Legislation Which Has Improved the Business Environment in Tajikistan
1. Introduction of a simplified tax system for small and medium businesses (Tax Code, No. 664, dated
November 12, 1998).
2. Conduction of free re-registration of the constituent documents of legal entities, to ensure
entrepreneurs comply with new procedures (Resolution No. 92 of the Government of the Republic of
Tajikistan, dated March 11, 2000).
3. Introduction of the possibility of sovereign backing for foreign investment (Resolution No. 385 of the
Government of the Republic of Tajikistan, dated September 21, 2000).
4. Introduction of the Inspections Registration Book (Decree No. 542 of the President of the Republic of
Tajikistan, dated March 28, 2001).
5. Introduction of a Unified Tax for dehkan farmers, on a two-year provisional basis in pilot regions
(Resolution No. 570 of Majlisi Namoyandagon of Majlisi Oli – the Lower Chamber of Parliament
– of the Republic of Tajikistan, dated March 19, 2002).
6. Government agencies were prohibited from giving instructions to entrepreneurs regarding shipment of
goods or establishing prices for goods to be sold by entrepreneurs (Law «On Government Protection
and Support of Entrepreneurship in the Republic of Tajikistan», No. 46, dated May 10, 2002).
7. Simplification of the procedure for registration of dehkan farmers (Law «On Dehkan Farmers»,
No. 48, dated May 10, 2002).
8. A State Program for Support of Entrepreneurship (including a state finance and lending program) was
adopted (Resolution No. 384 of the Government of the Republic of Tajikistan, dated October 1, 2002).
Entrepreneurs report that, of all recent reforms, the introduction of the Inspections Registration Book,137
the introduction of Simplified Tax for small businesses and dehkan farmers,138 and the Law «On Dehkan
Farmers»139 have had the greatest positive impact on business development in Tajikistan.
137 Decree No. 542 of the President of the Republic of Tajikistan «On Introduction of the Inspections Registration Book for Business
Entities in the Republic of Tajikistan», dated March 28, 2001 (For more information, see the chapter «Inspections»).138 Section XV and Section XVI-A, Tax Code of the Republic of Tajikistan, No. 664, dated November 12, 1998 (For more information,
see the chapter «Taxation»).139 Law No. 48, dated May 10, 2002 (For more information, see the chapter «Registration»).
Chart 116Chart 116Policy Reforms Contributing to an Improved Environment for Business DevelopmentPolicy Reforms Contributing to an Improved Environment for Business Development
% of respondents
Most importantchangeMost importantchange
2nd most importantchange2nd most importantchange
3rd most important change3rd most important change
Introduction on the Simplified Tax System
Introduction on the Simplified Tax System
Introduction of the unified tax for dehkan farmers
Introduction of the unified tax for dehkan farmers
Enactment of the Law «On Dehkan Farmers»Enactment of the Law
«On Dehkan Farmers»
Introduction of Land Tenure Certificates
Introduction of Land Tenure Certificates
Introduction of the Inspections Registration Book
Introduction of the Inspections Registration Book
0%0% 12%12%
Government support of small and medium businesses
Government support of small and medium businesses
4%4% 8%8%
C h a p t e r 1 2
[2003] 107B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Although the reform efforts of the Government of Tajikistan have yielded positive legislative changes, their
impact has been limited by a low level of legal awareness among entrepreneurs. Indeed, more than half the
entrepreneurs surveyed indicated that they are not aware of the legislative reforms enacted over the past
three years concerning their operations.
Focus group participants also found that the low level of legal awareness among entrepreneurs is one of the
key difficulties for small and medium business in Tajikistan.
«The major problem for entrepreneurs is their low level of legal awareness – many of them do not know the basic laws and rules…»
- Focus Group participant
The survey revealed that, of all types of businesses, individual entrepreneurs are least aware of legislation
regulating their business activities – 88% of respondents claimed that they have no, poor, or cursory
knowledge of relevant legislation. This may be explained by the lack of government funding for campaigns
aimed at disseminating information on new laws to entrepreneurs.
According to survey results, mass media (40%) and friends/colleagues (39%) are the main sources of
information on regulatory change for small and medium businesses. Just over 10% of respondents obtain
such information from government agencies. While full texts of new laws are printed in both Russian and
Tajik in official publications, only 2% of entrepreneurs surveyed actually read the publications. It can be
inferred, therefore, that entrepreneurs only receive very general information about regulatory changes from
television and radio broadcasts.
Chart 117Chart 117Entrepreneurs’ Awareness and Assessment of Selected Legal and Regulatory Acts Enacted in 2002Entrepreneurs’ Awareness and Assessment of Selected Legal and Regulatory Acts Enacted in 2002
% of respondents
The possibility of providing sovereign guarantees to foreign investors
The possibility of providing sovereign guarantees to foreign investors
Introduction of the Inspections Registration BookIntroduction of the Inspections Registration Book
Adoption of the State Program for Support of EntrepreneurshipAdoption of the State Program
for Support of Entrepreneurship
Prohibitions on government employees giving instructions to entrepreneurs regarding
the shipment of goods and prices for goods
Prohibitions on government employees giving instructions to entrepreneurs regarding
the shipment of goods and prices for goods
Adoption of the Financial Support Program for Business Entities
Adoption of the Financial Support Program for Business Entities
80%80% 60%60%
Introduction of the Simplified Tax Systemfor small and medium businesses
Introduction of the Simplified Tax Systemfor small and medium businesses
60%60% 40%40% 20%20% 0%0% 20%20% 40%40%
Don’t knowDon’t know Had a negative impactHad a negative impact Had no impactHad no impact Had a positive impactHad a positive impact
Chart 118Chart 118
% of respondents
Dehkan farmersDehkan farmers
Individual entrepreneursIndividual entrepreneurs
SMEsSMEs
0%0% 100%100%50%50% 75%75%25%25%
Have fairly good knowledgeHave fairly good knowledge Have cursory, poor, or no knowledgeHave cursory, poor, or no knowledge
Awareness of Legislation Regulating Business ActivitiesAwareness of Legislation Regulating Business Activities
R e l a t i o n s h i p s B e t w e e n E n t r e p r e n e u r s a n d A u t h o r i t i e s
[2003] 108 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Business Environment
In general, Tajikistan’s entrepreneurs believe that the actions of national-level government agencies do not
hinder business development. At the same time, neither do entrepreneurs believe that any of these agencies
offer support to business.
More importantly however, the survey did reveal a strong regional disparity in assessment of the local
business environment. This disparity in business climate is likely the result of differences in the attitude
of local authorities towards entrepreneurs and private enterprise in their region. The survey revealed that
Chart 119Chart 119Main Sources of Information on Changes in LegislationMain Sources of Information on Changes in Legislation
% of respondents
Friends/colleaguesFriends/colleagues
OtherOther
Government agenciesGovernment agencies
Lawyers/law firmsLawyers/law firms
Mass mediaMass media
0%0% 40%40%
Business/professional associations
Business/professional associations
10%10% 30%30%20%20%
2%2%
4%4%
4%4%
11%11%
39%39%
40%40%
Table 4Table 4Assessment of the Local Business Environment, by RegionAssessment of the Local Business Environment, by Region
% of respondents who agreed with these statements
RRSRRSGBAOGBAO Kulyab RegionKulyab Region
DushanbeCity
DushanbeCity
Kurgan-Tube Region
Kurgan-Tube Region
Sughd provinceSughd
province
Local authorities implement all the laws and regulations of centralauthorities in a precise mannerLocal authorities implement all the laws and regulations of centralauthorities in a precise manner
Local authorities do not impede business developmentLocal authorities do not impede business development
The rent on building space used for business purposes is quite reasonableThe rent on building space used for business purposes is quite reasonable
Local authorities make efforts to help entrepreneurs start their businessesLocal authorities make efforts to help entrepreneurs start their businesses
I can easily lease/rent building space for business purposesI can easily lease/rent building space for business purposes
I can easily obtain a Land Tenure CertificateI can easily obtain a Land Tenure Certificate
I can easily lease/rent a parcel of landI can easily lease/rent a parcel of land
The rent on land used for business purposes is quite reasonableThe rent on land used for business purposes is quite reasonable
Local authorities promote business development by creating equal opportunities for entrepreneursLocal authorities promote business development by creating equal opportunities for entrepreneurs
Local authorities promote business development by developing a business infrastructureLocal authorities promote business development by developing a business infrastructure
The centers for support of entrepreneurship in my city/district serve the interests of entrepreneursThe centers for support of entrepreneurship in my city/district serve the interests of entrepreneurs
The local authorities have the necessary knowledge and expertise to carry out their responsibilitiesThe local authorities have the necessary knowledge and expertise to carry out their responsibilities
I can freely discuss my business-related problems with local authoritiesI can freely discuss my business-related problems with local authorities
I can always resolve my business-related problems with local authoritiesI can always resolve my business-related problems with local authorities
There are no bureaucratic barriers in relationships with local authoritiesThere are no bureaucratic barriers in relationships with local authorities
The business environment in my city/ district promotes investment and business developmentThe business environment in my city/ district promotes investment and business development
The business environment in my city/district is better than in other regions of the countryThe business environment in my city/district is better than in other regions of the country
Government officials in my city/ district are honest people who do not solicit bribesGovernment officials in my city/ district are honest people who do not solicit bribes
Note: No more than 55% of entrepreneurs gave a positive response to any of the questions above. Note: No more than 55% of entrepreneurs gave a positive response to any of the questions above.
[2003] 109B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
entrepreneurs from the Kurgan-Tube District of Khatlon Province are most critical of the local business
climate, while those from the city of Dushanbe are least critical in this assessment.
Overall, Table 4 shows that most entrepreneurs give negative assessments to the attitude of local authorities
towards entrepreneurship, as well as to existing conditions for doing business. It is interesting to note that
only 17% of respondents agreed that government officials are honest and do not solicit unofficial payments
and that 63% of entrepreneurs cited the presence of bureaucratic barriers as impeding the development of
relationships with local authorities.
The Agency for Anti-Monopoly Policy and Support of Entrepreneurship
In accordance with the Law «On Competition and Limitation of Monopoly Activities on the Markets»,
No. 11, dated November 29, 2000, the Government of Tajikistan instituted the Agency for Anti-Monopoly
Policy and Support of Entrepreneurship140 to advocate in favor of entrepreneurial interests.141
There are 77 professional employees working for the Agency — 45 are based at the head office in Dushanbe
and 32 work in its territorial branches located in regional centers.142 The Agency has been granted broad
powers in questions concerning regulation of private enterprise in Tajikistan.
The Agency’s work in implementing the State Program for Support of Entrepreneurship for 2002-2005
(adopted by Resolution No. 384 of the Government of the Republic of Tajikistan, dated October 1, 2002)
deserves special attention. The principal goal of the program is to create favorable legal, socio-economic,
financial, and organizational conditions for private sector development as well as to identify the main
government instruments which can be utilized to promote public support for entrepreneurship.143
The objectives of the program are:144
To improve legislation related to SME development;
To create a well-developed SME financing, lending, and insurance system; and
To develop business support infrastructure.
140 Resolution No. 11 of the Government of the Republic of Tajikistan «On the State Agency for Anti-Monopoly Policy and Support
of Entrepreneurship under the Government of the Republic of Tajikistan», dated January 11, 2001.141 Paragraph 6 of Regulation on the State Agency for Anti-Monopoly Policy and Support of Entrepreneurship under the Government
of the Republic of Tajikistan, approved by Resolution No. 75 of the Government of the Republic of Tajikistan, dated February 14,
2001.142 Resolution No. 75 of the Government of the Republic of Tajikistan «On Issues Related to the State Agency for Anti-Monopoly
Policy and Support of Entrepreneurship under the Government of the Republic of Tajikistan», dated February 14, 2001.143 Paragraph 1 of the State Program for Support of Entrepreneurship in the Republic of Tajikistan for 2002-2005, approved by
Resolution No. 384 of the Government of the Republic of Tajikistan, dated October 1, 2002. 144 Ibid, Paragraph 2.
R e l a t i o n s h i p s B e t w e e n E n t r e p r e n e u r s a n d A u t h o r i t i e s
[2003] 110 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Box 24. Basic Powers of the Agency for Anti-Monopoly Policy and Support of Entrepreneurship145
1. To submit proposals and comments on issues related to improvement of legislation on state support
of entrepreneurship to the Government of Tajikistan;
2. To develop and undertake measures aimed at de-monopolizing the production and distribution of
goods and services;
3. To form and maintain a register of business entities which have a market share exceeding 35 percent,
and which are under state control as potential monopolies;
4. To exercise control over the observance of legislation during the establishment, reorganization, or
liquidation of business entities;
5. To prepare proposals aimed at strengthening government support for business development, with a
focus on promoting small businesses;
6. To arrange for the development and implementation of a program for government support of
entrepreneurship;
7. To develop an enabling environment to support the development of small business, and to build the
capacity of new and existing businesses by providing consulting, information, and financial support
services;
8. To develop proposals aimed at improving the taxation systems for the small business sector;
9. To protect entrepreneurs’ legitimate interests;
10. To provide technical guidance to regional programs aimed at supporting and developing
entrepreneurship;
11. To develop proposals aimed at promoting investment and innovation within the small business sector
and using extra-budgetary funds, borrowed resources, or other sources of financing;
12. To develop and implement measures to provide small and medium businesses with the equipment
and technology necessary to foster the development of technological parks, leasing firms, centers for
support of entrepreneurship, centers of excellence, and other business infrastructure;
13. To participate in presentations about and exhibitions of investment projects and programs, as well as
workshops and conferences on small business investment issues
14. To review the state of the small business sector and the efficiency of the small business support
measures undertaken by the government;
15. To encourage local authorities to support small businesses, especially within the framework of
regional and inter-regional programs;
16. To supervise local government observance of legislation on government support of entrepreneurship;
17. To keep the population regularly informed on progress in development of entrepreneurship by
disseminating information to through the mass media;
18. To develop technical guidelines and recommendations on the above-referenced issues.
The Agency for Anti-Monopoly Policy and Support of Entrepreneurship has developed a workplan
which details 27 activities aimed at accomplishing the objectives of the State Program for Support of
Entrepreneurship.
145 Paragraph 6 of «Regulation on the State Agency for Anti-Monopoly Policy and Support of Entrepreneurship under the Government
of the Republic of Tajikistan», approved by Resolution No. 75 of the Government of the Republic of Tajikistan, dated February 14,
2001.
C h a p t e r 1 2
[2003] 111B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Box 25. Selected Activities of the State Program for Support of Entrepreneurship
Activity StatusDevelop and submit a draft Law «On Leasing» for consideration by the Government of Tajikistan.
The Law «On Leasing» was ratified on April 22, 2003.
Establish a Fund for Financial Support of Entrepreneurship.
This activity is in progress.
Assist in establishing local centers for support of entrepreneurship.
This is being done on a periodic basis.
Organize and conduct an Entrepreneurs’ Forum. A meeting with the President of the Republic of Tajikistan was held on July 8, 2003, at which the establishment of a Coordination Council for the Development of Entrepreneurship was proposed.
Promote mass media coverage of entrepreneurs’ activities.
This is being done on a periodic basis.
Develop and implement lending and microfinance mechanisms for business entities.
The Microfinance Legislation Development Project is being carried out by the IFC with the support of USAID.
Develop proposals to amend Tajik tax, currency, and customs regulations so that they foster entrepreneurial development.
A new version of the Tax Code is being developed.
Despite the fact that the Agency for Anti-Monopoly Policy and Support of Entrepreneurship has operated
for over three years, more than half of the 2,000 respondents to this survey had never heard of the Agency.
Among the country’s small and medium businesses, 25% of farmers are aware of the existence of the Agency,
as are 33% of individual entrepreneurs and 62% of SMEs. Entrepreneurs in the city of Dushanbe were most
aware of the Agency, due to the greater availability of information and the energetic public awareness efforts
of the Agency’s head office.
Only 8% of entrepreneurs who were aware of the Agency sought assistance from it, while less than half of the
requests for assistance were successful.
Chart 120Chart 120Entrepreneurs’ Attitude towards the Agency for Anti-Monopoly Policy and Support of EntrepreneurshipEntrepreneurs’ Attitude towards the Agency for Anti-Monopoly Policy and Support of Entrepreneurship
% of respondents
NoNo
YesYes
66%66%
34%34%
86%86%
92%92%
8%8%
Have you ever applied for assistance to the Agency?
Have you ever applied for assistance to the Agency?
Was your application for assistance successful?
Was your application for assistance successful?
7%7%
31%31%
55%55%
8%8%
YesYes
NoNo
No answerNo answer
NoNo
UnderconsiderationUnderconsideration
YesYes
Do you know about the Agency for Anti-Monopoly Policy and Support of Entrepreneurship, whose mission is to
protect your legitimate interests?
Do you know about the Agency for Anti-Monopoly Policy and Support of Entrepreneurship, whose mission is to
protect your legitimate interests?
R e l a t i o n s h i p s B e t w e e n E n t r e p r e n e u r s a n d A u t h o r i t i e s
[2003] 112 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Expectations of Entrepreneurs
Tajikistan’s entrepreneurs were generally optimistic about the development of the business environment in
their region and in the country as a whole in the coming 12 months. More than half of small and medium
businesses (56%) think that the business environment in the country will improve over the coming year.
Entrepreneurs in the Kurgan-Tube district of Khatlon province were the most optimistic in their
expectations, with 59% responding that the business environment in their region will improve over the next
12 months. One possible reason for this optimistic assessment is that the current business environment is
assessed as unsupportive of small and medium businesses.
According to the results of the survey, most entrepreneurs stated that they would start their business again,
given what they know now.
Chart 121Chart 121
% of respondents who have not sought support from the Agency
Length and bureaucratic nature of process
Length and bureaucratic nature of process
Unaware of the Agency`s locationUnaware of the Agency`s location
No reason to seek assistanceNo reason to seek assistance
0%0% 75%75%25%25% 50%50%
Reasons Entrepreneurs Did Not Seek Support from the Agency for Anti-MonopolyPolicy and Support of EntrepreneurshipReasons Entrepreneurs Did Not Seek Support from the Agency for Anti-MonopolyPolicy and Support of Entrepreneurship
65%65%
10%10%
10%10%
Chart 122Chart 122Expectations for Change in the Business Environment over the Next 12 MonthsExpectations for Change in the Business Environment over the Next 12 Months
% of respondents
75%75%
50%50%
100%100%
0%0%
25%25%
In the regionIn the regionIn the countryIn the country
88%88% 86%86%
Will improveWill improve
Will remain the sameWill remain the same
Will become worseWill become worse
56%56%
34%34%
10%10%
52%52%
37%37%
11%11%
Chart 123Chart 123Expectations for Change in the Business Environment over the 12 Months, by RegionExpectations for Change in the Business Environment over the 12 Months, by Region
% of respondents
Will improveWill improve
Will remainthe sameWill remainthe same
Will becomeworseWill becomeworse
0%0% 100%100%25%25% 75%75%50%50%
59%59%
58%58%
54%54%
52%52%
46%46%
34%34%
Dushanbe CityDushanbe City
Gorno-Badakhshan Autonomous Province
Gorno-Badakhshan Autonomous Province
Kulyab District (Khatlon Province)
Kulyab District (Khatlon Province)
Sughd ProvinceSughd Province
Regions under Republican Subordination
Regions under Republican Subordination
Kurgan-Tube District (Khatlon Province)
Kurgan-Tube District (Khatlon Province)
C h a p t e r 1 2
[2003] 113B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
The Government of Tajikistan has recently begun to pay increased attention to the development of
entrepreneurship in the country. The fact that recent legislative initiatives aimed at improving conditions for
small business development have generally been positively received by entrepreneurs is a testament to these
efforts. At the same time, most entrepreneurs have given a negative assessment of both the attitude of local
authorities toward small and medium businesses as well as the overall business environment in their regions.
The low level of legal awareness among entrepreneurs, in combination with a lack of aggressiveness from the
Agency for Anti-Monopoly Policy and Support of Entrepreneurship to actively protect their rights, create
difficulties for business operations and hinder private sector development.
Recommendations
1. In order to enact changes to legislation having considerable influence on private sector activities,
organize open discussions of legislative drafts with entrepreneurs prior to the introduction of changes.
Encourage the participation of business associations and other members of the business community
in these discussions and, when possible, incorporate their comments and recommendations into
legislative drafts.
2. Increase entrepreneur’s awareness of the role of the Agency for Anti-Monopoly Policy and Support of
Entrepreneurship in protecting their rights.
3. Organize more frequent meetings with entrepreneurs to familiarize them with recent changes in
the country’s legal environment. Consider organizing public hearings and discussions on drafts of
regulatory documents with the Government of Tajikistan and NGOs representing the small and
medium business sector in order to obtain an open and critical assessment of draft legislation.
4. Analyze appropriate channels for distributing informational materials to small and medium
businesses, including direct mail, seminars, mass media, and business associations, with the goal of
providing maximum accessibility. Regularly update and disseminate these informational materials.
Chart 124Chart 124Based on Your Experience, Would You Start Your Business Again?Based on Your Experience, Would You Start Your Business Again?
R e l a t i o n s h i p s B e t w e e n E n t r e p r e n e u r s a n d A u t h o r i t i e s
[2003] 114 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
C h a p t e r 1 3
[2003] 115B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
SMALL AND MEDIUM BUSINESS MANAGEMENT
Information Technology
The majority of small and medium businesses in Tajikistan have limited access to information technology.
According to survey results, only 8% of enterprises employ computers in their daily activities and even fewer
(3%) use the Internet.
Small and medium businesses have limited access to information technology. On average, 8% of respondents used computers in their business activities. While this indicator varies significantly by type of small and medium businesses, it exceeds 30% for SMEs.
Entrepreneurs do not actively use the Internet in their business activities. Internet penetration is only 3% and a majority of respondents do not plan to obtain Internet access in the future.
On average, an SME employs 17 full-time employees and 10 part-time employees, whereas there are 15 full-time and 17 part-time workers employed on the average dehkan farm. Individual entrepreneurs employ 4 full-time employees on average.
According to survey results, 88% of entrepreneurs and their employees have never taken specialized training courses. Moreover, 80% of respondents mentioned they do not see the practical benefits of enrolling in specialized training courses.
An overwhelming majority of SMEs (81%) and individual entrepreneurs (94%) are not members of professional associations, as they do not see membership bringing practical benefits to their business, or simply don’t know about the existence of such associations.
Many entrepreneurs are willing to pay for services provided by professional associations such as legal consultations and assistance in protecting their rights.
Chart 125Chart 125Computer Usage by Small and Medium BusinessesComputer Usage by Small and Medium Businesses
% of respondents35%35%
0%0%
7%7%
21%21%
SMEsSMEs Dekhan farmersDekhan farmers
2%2%
28%28%
14%14%
16%16%
17%17%
5%5%
2%2%
Individual entrepreneurs
Individual entrepreneurs
Use onecomputerUse onecomputer
Use more than one computer
Use more than one computer
S m a l l a n d M e d i u m B u s i n e s s M a n a g e m e n t
[2003] 116 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Entrepreneurs mainly use computers for accounting purposes: 54% claimed to use computers for financial
accounting and 38% to provide services to customers.
At the time of the survey, 97% of respondents were not using the Internet in their business activities,
although 23% planned to obtain Internet access within the next three years. The remaining entrepreneurs did
not plan to use the Internet mainly because the practical benefits of using the Internet are unclear (48%) and
the costs of Internet services remain high (12%).
The Internet is primarily used for business correspondence (e-mail) (28%), searching for information on
goods and commodities available in foreign markets (15%), and receiving the latest news (13%).
Chart 126Chart 126Computer Usage, by Purpose and IntensityComputer Usage, by Purpose and Intensity
Chart 133Chart 133Reasons for not Joining Business AssociationsReasons for not Joining Business Associations
% of respondents currently not members of associations
Do not know about their existence
Do not know about their existence
Do not see any practical benefit
Do not see any practical benefit
Not enough timeNot enough time
Difficult to replyDifficult to reply
0%0% 15%15% 30%30% 45%45%
High membership feesHigh membership fees
Chart 134Chart 134Business Association Services, by Quantity and QualityBusiness Association Services, by Quantity and Quality
% of respondents belonging to associations
Financial servicesFinancial services
Legal counselingLegal counseling
Information servicesInformation services
Protection of the rights of entrepreneursProtection of the rights of entrepreneurs
LobbyingLobbying
0%0%
ConsultingConsulting
80%80% 100%100%20%20% 20%20% 40%40% 60%60%
15%15%
25%25%
71%71%
33%33%
57%57%
24%24%
% of respondents whose associations provide
them with services
% of respondents whose associations provide
them with servicesLowLow MediumMedium HighHigh
S m a l l a n d M e d i u m B u s i n e s s M a n a g e m e n t
[2003] 120 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
More than one-third of entrepreneurs identified a need for legal counseling and consulting services on
business planning issues.
Given the level of demand for business services, membership in business/professional associations could
increase if the quality of services they provide improves.
Recommendations
1. Promote the use of computers and other information technology among small and medium
businesses by granting broader access to official information and government services through
electronic systems of information exchange.
2. Associations and consulting companies may enlarge the scope of fee-based services, identify target
segments of entrepreneurs, and more actively promote the value of membership to entrepreneurs in
need of training and consulting support.
Chart 135Chart 135Demand for Business Services from Small and Medium BusinessesDemand for Business Services from Small and Medium Businesses
% of respondents willing to pay for business services
Protection of entrepreneurs’ servicesProtection of entrepreneurs’ services
Lobbying Lobbying
Information servicesInformation services
ConsultingConsulting
Legal counselingLegal counseling
0%0%
Financial servicesFinancial services
20%20%
37%37%
36%36%
30%30%
27%27%
19%19%
13%13%
40%40%10%10% 30%30%
Chart 136Chart 136Potential Demand for Consulting Services from Small and Medium BusinessesPotential Demand for Consulting Services from Small and Medium Businesses
% of respondents in need of consulting services
Business planningBusiness planning
Information technologyInformation technology
Audits/accountingAudits/accounting
Business administrationBusiness administration
Legal counselingLegal counseling
0%0% 45%45%
Marketing/advertisingMarketing/advertising
15%15% 30%30%
Staff recruitmentStaff recruitment
42%42%
34%34%
29%29%
28%28%
27%27%
24%24%
12%12%
A n n e x A
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1. Constitution of the Republic of Tajikistan, adopted November 6, 1994 by national referendum.
Constitutional Laws of the Republic of Tajikistan:
2. «On Local Authorities», No. 1092, dated December 1, 1994
3. «On Prosecution Authorities of the Republic of Tajikistan», No. 289, dated March 11, 1996
Codes of the Republic of Tajikistan:
4. Customs Code, dated April 11, 1995
5. Land Code, dated December 13, 1996
6. Tax Code, No. 664, November 12, 1998 (effective January 1, 1999)
7. Civil Code (Part I), June 30, 1999 (effective January 1, 2000)
8. Civil Code (Part II), December 11, 1999 (effective July 1, 2000)
Laws of the Republic of Tajikistan:
9. «On Protection of Labor in the Republic of Tajikistan», No. 460, dated December 24, 1991
10. «On Government Fees», No. 496, dated January 6, 1992
11. «On Communications», No. 893, dated December 27, 1993
12. «On Education», No. 899, dated December 27, 1993
13. «On the Foreign Economic Activity of the Republic of Tajikistan», No. 869, dated December 27, 1993
37. «On the State Budget of the Republic of Tajikistan for 2004», No. 75, dated December 16, 2003
38. «On Government Fees» No. 19, dated February 28, 2004
39. Resolution of Majlisi Namoyandagon (Assembly of Representatives) of Majlisi Oli (Supreme Assembly) of the
LIST OF LEGAL AND REGULATORY ACTS REFERENCED
(As of January 1, 2004)
L i s t o f L e g a l a n d R e g u l a t o r y A c t s R e f e r e n c e d
[2003] 122 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Republic of Tajikistan «On Adoption of the Law of the Republic of Tajikistan, ‘On Introduction of Changes and Additions to the Tax Code of the Republic of Tajikistan,’ and ‘On Enacting This Law’», No. 570, dated March 19, 2002
Decrees of the President of the Republic of Tajikistan:
40. «On Liberalization of Foreign Exchange and Export Operations and On Measures to Ensure Complete Repatriation of Hard Currency Earnings to the Republic of Tajikistan», No. 424. dated February 24, 1996
41. «On State Support Of Small Businesses in the Republic of Tajikistan», No. 459, dated April 18, 1996
42. «On Increasing the Minimum Monthly Wage and Wages and Salaries for Employees of Budget-Financed Organizations, Pensions, and Stipends», No. 896, dated December 27, 1997
43. «On Introduction of the Inspections Registration Book for Business Entities in the Republic of Tajikistan», No. 542, dated March 28, 2001.
44. «On Increasing the Minimum Monthly Wage Amounts and Current Base Salaries for Employees of Budget-Financed Organizations, and On Measures Aimed at Increased Social Protection for the Most Vulnerable Strata of the Population», No. 717, dated November 25, 2001
45. «On the Procedure for Issuance of Permits (Licenses) for Employment Services Provided by Citizens of the Republic of Tajikistan Seeking Work Abroad and for Attracting Foreign Workforce into the Republic of Tajikistan», No. 608, dated July 25, 2001
46. «On Measures Aimed at Increased Social Protection of the Population and On Increasing the Minimum Monthly Wage Amount, Current Base Salaries for Employees of Budget-Financed Organizations, Pensions, and Stipends», No. 1173, dated November 4, 2003
Resolutions of the Government of the Republic of Tajikistan:
47. «On Government Fee Rates», No. 587, dated November 29, 1993
48. «On the Agency Authorized to Issue Certificates of Origin in the Republic of Tajikistan», No. 35, dated January 28, 1994
49. Regulation «On the Procedure for Allocation of Quotas and Issuance of Export/Import Licenses for Products and Services in the Republic of Tajikistan», No. 133, dated March 20, 1994
50. «On the National System for Certification of Products, Work, and Services in the Republic of Tajikistan», No. 249, dated June 2, 1994.
51. «On Approving the Procedure for Registration as Participants of Foreign Economic Activities in the Republic of Tajikistan», No. 316, dated July 11, 1994.
52. «On the Procedure for Conducting Expert Reviews of Contracts, Agreements, and other Legal Documents that Affect the Economic Interests of the Republic of Tajikistan, and On the Procedure for Registration of, Accounting for, and Exercising Control over the Implementation of Contracts, Agreements, and Documents», No. 437, dated June 27, 1995
53. Regulation «On State Fire Safety Supervision in the Republic of Tajikistan», No. 726, dated December 7, 1995
54. «On Establishment of the Government Research Center for Expert Analysis and Certification of Pharmaceutical Products, Medical Equipment, Medical and Sanitary and Hygienic Products, Medical Nutrition Products, and Cosmetics», No. 258, dated June 10, 1996.
55. Instruction «On the Procedure for Conducting Audits and Inspections of Tax Authorities with Regard to Collection of Taxes and Other Obligatory Payments», approved by Resolution No. 31 of the Tax Committee under the Government of the Republic of Tajikistan, dated November 28, 1997
56. Regulation «On State Licensing of Construction Activities in the Republic of Tajikistan», No. 211, dated May 6, 1997
57. Regulation On the Procedure for Licensing Legal Counseling and Attorney Services, approved by Resolution No. 42 of the Government of the Republic of Tajikistan, dated February 18, 1998
58. Procedure On Processing and Issuing Loans to Small Businesses in the Republic of Tajikistan, approved by Resolution No. 59 of the Government of the Republic of Tajikistan, dated February 20, 1998
59. «On Approving the Regulation On Licensing of Transportation and Transportation Support Services in the Republic of Tajikistan», No. 497, dated December 8, 1998
60. «Procedure for Certification of Food Products and Other Goods Imported into or Exported from the Republic of Tajikistan», No. 97, dated March 16, 1999
61. «On Approving the Provisions for Government Regulation of the Production and Distribution of Ethanol and Alcoholic Beverages», No. 131, dated April 7, 1999
A n n e x A
[2003] 123B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
62. Regulation «On the Procedure for Processing and Issuing Land Tenure Certificates and Land Share Certificates», No. 389, dated September 4, 1999.
63. «On the Procedure for Bringing the Constituent Documents of [Tajik] Enterprises in Conformity with the Requirements Set Forth in Part I of the Civil Code of the Republic of Tajikistan, Irrespective of the Types of Ownership of Such Enterprises», No. 92, dated March 11, 2000
64. «On Approving the List of Activities for Which Income Tax May be Charged in the Form of a Patent Fee and On the Procedure for Individual Entrepreneurs Who Do Not Form Legal Entities to Acquire Patents», No. 216, dated May 10, 2000
65. «On Approving the Procedure for Selection of Investment Projects for which Sovereign Guarantees will be Provided, the Use, Repayment, Accounting, and Registration of Foreign Credit, and Loans Guaranteed by the Government that Constitute the External Debt of the Republic of Tajikistan», No. 385, dated September 21, 2000
66. «On the State Agency for Anti-Monopoly Policy and Support of Entrepreneurship under the Government of the Republic of Tajikistan», No. 11, dated January 11, 2001
67. Regulation On the State Agency for Anti-Monopoly Policy and Support of Entrepreneurship under the Government of the Republic of Tajikistan, No. 75, dated February 14, 2001
68. «On Measures to Improve the Promotion of Domestic Goods in Foreign Markets», No. 237, dated June 8, 2001
69. Regulation On Licensing Transportation Activities in the Republic of Tajikistan, No. 252, dated June 11, 2001
70. «On the Procedure for Issuing Vehicle Quality Certificates», No. 93, dated March 4, 2002
71. Regulation On the Procedure for Licensing Pharmaceutical Activities in the Republic of Tajikistan, No. 245, dated July 5, 2002
72. «On Determining the Administrative Divisions of the Republic of Tajikistan in which the Single Tax for Dehkan Farmers Shall be Temporarily Introduced», No. 319, dated August 3, 2002
73. «On Strengthening Government Measures for Small Business Support in the Republic of Tajikistan», No. 384, dated October 1, 2002
74. Regulation No. 391 by the Chief Directorate for Veterinary Services, dated October 1, 2002
75. «On International Accounting Standards», No. 428, dated November 4, 2002
76. List of Goods That are Subject to Excise Stamps, No. 153, dated March 31, 2003
77. «On Measures for Improving the Procedure for Making Social Contributions and for Increasing the Level of Social Protection for Individual Entrepreneurs without Establishment of Legal a Entity in the Republic of Tajikistan», No. 250, dated June 6, 2003
Decisions of Ministries and Agencies of the Republic of Tajikistan:
78. Instruction «On the Procedure for Issuing Licenses for Professional Securities and Exchange Activities», approved by the Ministry of Finance of the Republic of Tajikistan, No. 9/1-2, dated April 20, 1993
79. Instruction On the Implementation of the Procedures for Making Contributions to, Accounting for and Disbursing Funds of the Social Protection Fund of the Republic of Tajikistan, signed by the Chairman of the Fund and approved by the Minister of Finance of the Republic of Tajikistan and the Chairman of the National Bank of Tajikistan, dated June 24, 1997
80. Classification of the Types of Construction Works Subject to Licensing, approved by the Chairman of the Committee for Architecture and Construction under the Government of the Republic of Tajikistan, dated July 5, 1997
81. Procedure On Issuing Permits for (Tajik) Residents to Open Foreign Currency Accounts with Banks Outside the Republic of Tajikistan, approved by the Management Committee of the National Bank of Tajikistan, Directive No. 51, dated September 16, 1997
82. Instruction On Procedure of Conducting Tax Inspections On the Issues of Tax Liabilities And Other Compulsory Payments No. 31, dated November 28, 1997
83. Instruction «On Procedure of Acquiring And Exploiting Radio-Electronic Devices and High-Frequency Equipment In the Republic of Tajikistan», approved by the executive order of Minister of Communications of the Republic of Tajikistan, No. 84, dated September 8, 1997
84. Annex No. 1 to the Joint Executive Order of the National Bank of Tajikistan (No. 28, dated October 10, 1998) and the Customs Committee under the Government of the Republic of Tajikistan (Resolution No. 304, dated November 20, 1998), and the Regulation «On the Procedure for Exercising Currency Control over Repatriation of Hard Currency Export Earnings to the Republic of Tajikistan», approved jointly by the National Bank of
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Tajikistan (Resolution No. 38, dated August 14, 1996) and the Customs Committee under the Government of the Republic of Tajikistan (Resolution No. 132, dated August 14, 1996)
85. Instruction «On the Procedure for Payment of Fees and Application of Tariff Requirements With Regard to Issuance of Licenses for Production and Broadcasting of Television and Radio Programs», approved by Executive Order No. 52 of the State Committee for Television and Radio Broadcasting under the Government of the Republic of Tajikistan, dated August 2, 2000
86. Instruction On the Implementation of the Procedure for Product Identification, Processing, and Issuance of Certificates of Origin for Goods and of Other Documents Related to Carrying out Foreign Economic Activities, approved by the Chairman of the Chamber of Commerce and Industry of the Republic of Tajikistan on August 22, 2001
87. Executive Order No. 151 by the Chairman of the Customs Committee under the Government of the Republic of Tajikistan «On Customs Clearance Procedures for Selected Exported Goods», dated December 6, 2001
88. Resolution of the Presidium of the Chamber of Commerce and Industry of the Republic of Tajikistan «On Approval of the Rates for Services Provided to Determine the Origin of Goods and for Issuance of Form A and Form ST-1 Certificates», dated December 27, 2002
89. Procedure On the Collection of Fees for State Registration, Accreditation, and Other Services Furnished, (Including Visa Support), Provided by the Ministry of Economy and Trade of the Republic of Tajikistan, to Participants in Foreign Economic Activities, approved by the Ministry of Economy and Trade, Resolution No. 12, dated April 4, 2003
90. Concurrent Executive Order of the National Bank of Tajikistan (No. 85/OP, dated September 15, 2003) and the Ministry for Government Revenues and Levies of the Republic of Tajikistan (No. 219, dated September 15, 2003) «On the Procedure for Exercising Currency Control over Justification of Payments in Foreign Currency for Imported Goods in the Republic of Tajikistan»
91. Instruction No. 6 of the State Bank of the USSR «On Organization of Work on Currency Circulation by Institutions of the State Bank of the USSR», dated December 3, 1986
SELECTED LAWS AND REGULATIONS ADOPTED IN 2003
Laws of the Republic of Tajikistan:
92. «On Production and Safe Handling of Pesticides and Agricultural Chemicals», No. 1, dated April 22, 2003
93. «On Charitable Activities», No. 18, dated April 22, 2003
95. «On Librarian Activities», No. 32, dated August 1, 2003
96. «On Advertising», No. 34, dated August 1, 2003
97. «On Postal Communication» No. 39, dated January 8, 2003
98. «On Folk Art and Crafts», No. 43, dated August 1, 2003
99. «On Insolvency», No. 46, dated December 8, 2003
100. «On Beekeeping», No. 51, dated December 8, 2003
101. «On Government Forecasts, Concepts, and Programs for Social and Economic Development of the Republic of Tajikistan», No. 53, dated December 8, 2003
102. «On Veterinary Services», No. 73, dated December 8, 2003
Decrees of the President of the Republic of Tajikistan:
103. «On the Mechanism for Adjustment of the Debt of Reorganized Agricultural Enterprises/Organizations or Those Under Reorganization», No. 1054, dated April 15, 2003
104. «On Monitoring and Evaluation of the Implementation of the Poverty Reduction Strategy Paper», No. 1080, dated May 21, 2003
105. «On the Committee for Governmental Financial Oversight of the Republic of Tajikistan», No. 1162, dated October 10, 2003
Resolutions of the Government of the Republic of Tajikistan:
106. «On the Results of Social and Economic Development in the Republic of Tajikistan in 2002 and On the Development Objectives for 2003», No. 21, dated January 27, 2003
107. «On the Procedure for Conducting Attestation, Accreditation, and Licensing of Educational Establishments», No. 54, dated February 5, 2003
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108. «On Approving the Regulation on Mergers and Acquisitions for Bus/Trucking Companies», No. 88, dated March 3, 2003
109. «On Establishing the State Broadcasting Inspection of the Committee for Television and Radio Broadcasting under the Government of the Republic of Tajikistan», No. 126, dated March 31, 2003
110. «On Licensing of Selected Activities in the Manufacturing Sector of the Republic of Tajikistan», No. 139, dated March 31, 2003
111. «On Approving the Procedures for Testing and Branding Articles Made from Precious Metals, Licensing Selected Activities Related to Production, Use, and Circulation of Precious Metals and Precious Stones by Legal Entities and Individuals and the Interim List of the Types of Work for Which Test Charges Shall be Levied», No. 145, dated March 31, 2003
112. «On the State Seed Inspection of the Ministry of Agriculture of the Republic of Tajikistan», No. 147, dated March 31, 2003
113. «On Establishing Excise Tax Rates for Selected Goods, Manufactured in or Imported into the Republic of Tajikistan», No. 153, dated March 31, 2003
114. «On Additional Measures for Implementation of the Law on Amnestying the Citizens of the Republic of Tajikistan Who Have Legalized Their Money», No. 165, dated April 18, 2003
115. «On Establishing the Share of Foreign Capital in the Banking System of the Republic of Tajikistan», No. 206, dated May 10, 2003
116. «On Organizational Measures for Producing Documents and Forms/Letterheads for which Strict Registration and Accounting Procedures are Applied», No. 222, dated May 13, 2003
117. «On Improving the Mechanism for Production and Marketing of Cotton», No. 223, dated May 15, 2003
118. «On Approving the Procedure for Licensing Activities Related to Handling Hazardous Waste», No. 252, dated June 6, 2003
119. «On Approving the Procedure for Licensing Activities Related to Environmental Expert Reviews», No. 300, dated July 3, 2003
120. «On Approving the Procedure for Issuance of Permits for Catching Migrating, Rare, and Endangered Animal Species», No. 301, dated July 3, 2003
121. «On Approving the Charter of the Government Center for Expert Review and Certification of Pharmaceutical Products and Medical Equipment», No. 382, dated August 29, 2003
122. «On Approving the Regulation on the State Broadcasting Inspection of the Committee for Television and Radio Broadcasting under the Government of the Republic of Tajikistan», No. 391, September 1, 2003
123. «On Measures Aimed at Furthering the Economic Development of the Republic of Tajikistan and Implementing the Structural Reforms in the Banking System», No. 438, dated October 22, 2003
124. «On the Program for Government Investments, Grants, and Technical Assistance for 2004–2006», No. 449, dated October 25, 2003
125. «On Customs Tariffs of the Republic of Tajikistan», No. 450, dated October 25, 2003
126. «On Approving the Plan for Implementing Strategic Priorities in the Development of the Tax and Customs Service of the Republic of Tajikistan during 2003–2008», No. 465, dated October 25, 2003
127. «On the Strategic Plan for Privatizing Medium and Large Enterprises and Restructuring of Natural Monopolies and Very Large Enterprises during 2003–2007», No. 486, dated November 7, 2003
128. «On Introduction of Changes and Additions to Resolution No. 450, dated October 25, 2003, of the Government of the Republic of Tajikistan ‘On Customs Tariffs of the Republic of Tajikistan’», No. 497, dated November 14, 2003
129. «On Introduction of Changes and Additions to the Resolution of the Government of the Republic of Tajikistan, dated May 6, 1997, ‘On State Licensing of Construction Activities in the Republic of Tajikistan’», No. 521, dated December 2, 2003
130. «On the Concept for Developing Tajikistan’s Industry», No. 523, dated December 4, 2003
131. «On Measures for Implementing Decree No. 1173», dated November 4, 2003, «On Measures Aimed at Increased Social Protection of the Population and On Increasing the Minimum Monthly Wage Rate, Current Base Salaries for Employees of Budget-Financed Organizations, Pensions, and Stipends», No. 525, dated December 2, 2003
132. «On Projecting the Basic Areas for Monetary Policy and Currency Regulations of the Republic of Tajikistan for 2004», No. 529, dated December 4, 2003
133. «On Additional Measures for Development of the Statistics of the Republic of Tajikistan», No. 530, dated December 4, 2003
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134. «On Approving the Procedure for Delivery of a Free Copy of Open Electronic Publications, Computer Software, and Databases», No. 532, dated December 5, 2003
135. «On Adjustment of the Debt of Reorganized Agricultural Enterprises/Organizations or those under Reorganization», No. 542, dated December 25, 2003
136. «On Measures for Implementing the Law on the State Budget of the Republic of Tajikistan for 2004», No. 550, dated December 29, 2003
137. «On Approving the Regulation On the State Sanitary and Epidemiological Service of the Republic of Tajikistan», No. 575, dated December 29, 2003
138. «On Approving the Government Program for Developing Tourism in the Republic of Tajikistan during 2004–2009», No. 582, dated December 29, 2003
Decisions of Ministries and Agencies of the Republic of Tajikistan:
139. Instruction «On the Procedure for Calculation and Payment of the Unified Tax for Dehkan Farmers», approved by the Ministry for Government Revenues and Levies, No. 216, dated January 9, 2003
140. Regulation «On Accounting and Bookkeeping Procedures in the Republic of Tajikistan», approved by the Ministry of Finance, No. 9, dated February 8, 2003
141. Procedure «On the Issuance of Certificates for Organization of Lottery Activities», approved by the Ministry of Finance of the Republic of Tajikistan, No. 36, dated May 16, 2003
142. Executive Order by the Minister for Government Revenues and Levies «On the Procedure for Applying Indirect Taxes in Trade Transactions with Turkmenistan», No. 139, dated June 18, 2003
143. Changes to Instruction No. 120 «On the Procedure for Opening Hard Currency Accounts of Legal Entities and Individuals (Residents and Non-Residents) of the Republic of Tajikistan», approved by the Management Committee of the National Bank of Tajikistan, No. 176, dated September 15, 2003
144. Executive Order by the Minister of Communications «On Licensing of Activities in the Field of Electrical and Postal Communications», No. 107, dated December 14, 2003
Note:
1) Provisions of other laws and regulations in effect at the time of the survey were also incorporated in this report.
2) While preparing the report, provisions of the following draft normative acts were also examined:
a) Draft Law of the Republic of Tajikistan «On Licensing of Selected Activities»;
b) Draft Law of the Republic of Tajikistan «On Microfinance Institutions», and
d) Draft Regulation «On the Procedure for Interaction between Government Agencies Involved in the Process of State Registration of Legal Entities and also On the Procedure for Interaction between the Single State Register of Legal Entities and the State Register of Enterprises, Establishments, and Organizations of the Republic of Tajikistan».
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Agencies authorized to issue licenses and types of activities subject to licensing
Governing laws and regulations
1. Government of Tajikistan:1) Use of subsoil 2) Geological surveying, extraction and processing of minerals3) Geological examinations
Laws:«On Subsoil», No. 983, dated July 20, 1994«On Precious Metals and Precious Stones», No. 21, dated May
12, 2001Regulation «On the Procedure for Licensing Subsoil Users in the
Republic of Tajikistan», No. 92, dated March 4, 2002
2. Khukumats (region, city, district):1) Extraction of minerals2) Construction and operation of underground structures and
facilities, formation and protection of geological objects and natural monuments
Law «On Subsoil», No. 983, dated July 20, 1994Law «On Subsoil», No. 983, dated July 20, 1994LawRegulation «On the Procedure for Licensing Subsoil Users in the
Republic of Tajikistan», No. 92, dated March 4, 2002
3. Ministry of Economy and Trade:1) Import and export of raw materials, goods, and works and
services2) Tourism activities
Laws:«On the Foreign Economic Activity of the Republic of Tajikistan»,
dated December 27, 1993 «On Tourism», No. 824, dated September 3, 1999Regulations:«On the Procedure for Allocation of Quotas and Issuance of
Exports/Imports Licenses for Goods, Work and Services in the Republic of Tajikistan», No. 133, dated March 20, 1994
«On the Procedure for Licensing Tourism Activities», No. 421, dated September 13, 1996
4. Ministry of Health:1) Production of medications, diagnostic agents, preventive
medical drugs, cosmetics, medical equipment, and nutritional products, provided that necessary production facilities and equipment are available, sanitary and technical requirements are met, and that necessary personnel is available to ensure an adequate quality of manufactured products
2) Import and export of medicinal components (animal, vegetable, and mineral), medications, cosmetic products, medical equipment, and diagnostic devices, food additives, and nutritional products
3) State registration of domestic and foreign medications, medicinal components (animal, vegetable, and mineral), medications, cosmetic products, medical equipment, food additives, nutritional products, sanitary products, and reagents
4) Wholesale purchase, transportation, and storage of medications, medical equipment and, nutritional products and cosmetics
5) Provision of medical and healthcare services to the population
Laws: «On Medications and Pharmaceutical Activities», No. 39, dated
August 6, 2001«On Private Medical Activities», No. 60, dated December 2,
2002«On Introduction of Changes and Additions to the Law on Public
Health Care», No. 19, dated April 22, 2003Regulation «On the Procedure for Licensing of Pharmaceutical
Activities in the Republic of Tajikistan», No. 245, dated June 5, 2002
Charter of the State Center for Expert Reviewing and Certification Charter of the State Center for Expert Reviewing and Certification Charterof Pharmaceutical Products, Medical Equipment and Products, Sanitary and Hygienic Products, Health and Preventive Nutrition Products, Food Additives, and Cosmetic Products, approved by Resolution No. 382 of the Government of the Republic of Tajikistan, dated August 29, 2003
5. State Insurance Supervision Authority under the Ministry of Finance:
1) Provision of insurance services
Law «On Insurance», No. 981, dated July 20, 1994Law «On Insurance», No. 981, dated July 20, 1994LawRegulation «On the State Insurance Supervision Authority of the
Ministry of Finance of the Republic of Tajikistan», No. 29, dated July 7, 1995
LICENSING
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Agencies authorized to issue licenses and types of activities subject to licensing
Governing laws and regulations
6. Chief Directorate for Geology under the Government of the Republic of Tajikistan (Gelogiyai Tochik):
1) Use of subsoil2) Production and sale of precious metals and precious stones3) Procurement and processing of precious metal scraps and
waste.4) Purchase of jewelry and household items made from precious
and metals and stones as well as scrap thereof5) Recovery of precious stones6) Cutting and processing of precious stones7) Manufacture of dentures from precious metals8) Certification of precious metals and stones and of products
made from these9) Provision by legal entities of services for protection, storage,
and transportation of precious metals and stones10) Wholesale and retail trade in jewelry made from precious
metals and stones11) Utilization and distribution of precious metals and stones12) Bank operations with precious metals and stones13) Activities of trading companies with regard to purchase and
sale of precious metals and stones14) Manufacture and repair of jewelry
Laws:«On Subsoil», No. 983, dated July 20, 1994«On Precious Metals and Precious Stones», No. 21, dated May
12, 2001Regulation «On the Chief Directorate for Geology under the
Government of the Republic of Tajikistan (Gelogiyai Tochik)», No. 520, dated December 31, 2002
7. Ministry of Energy:1) Activities and services in the energy industry2) Providing activities in the fuel-and-energy complex
Law «On Energy», No. 33, dated November 29, 2000 Law «On Energy», No. 33, dated November 29, 2000 LawRegulation «On the Procedure for Licensing Activities and
Services in the Energy Sector of the Republic of Tajikistan», No. 591, dated December 30, 2001
8. Ministry of Communications:1) Activities in the fields of communication and information
technology2) Activities in the field of electrical communication,3) Activities in the field of postal services4) Organization of public radio networks
Laws:«On Communications», No. 893, dated December 27, 1993«On Electrical Communications», No. 56, dated May 10, 2002«On Postal Services», No. 39, dated August 1, 2003Regulations:«On the Ministry of Communications of the Republic of
Tajikistan», No. 337, dated July 5, 2001«On Licensing of Activities in the Field of Communications»,
No. 369, dated August 1, 1994
9. The Food Products and Food Processing Industry Corporation of the Republic of Tajikistan (TajikPishcheProm):
1) Activities related to storage, production, sale, import, export, and distribution of ethanol and alcoholic beverages
2) Import, export, and wholesaling of tobacco products
Law «On Government Regulation of Production and Distribution Law «On Government Regulation of Production and Distribution Lawof Ethanol and Alcoholic Beverages», No. 451, dated May 15, 1997.
Regulation «On the Procedure for Processing and Issuance of Licenses for Production and Distribution of Ethanol and Alcoholic Beverages», No. 131, dated April 7, 1999
Instruction «On the Procedure for Issuance of Import, Export, and Wholesaling Licenses for Tobacco and Tobacco Products», No. 453, dated October 27, 1999
10. Ministry of Internal Affairs:1) Production and trade of weapons2) Development, production, sale, import, export, and purchase
for resale purposes of equipment designed to obtain information by secret means, by individuals and legal entities unauthorized to engage in detective and investigation activities.
Laws:«On Weapons», No. 232, dated February 1, 1996«On Detective and Investigation Activities», No. 651, dated May
23, 1998
11. Ministry of Justice:1) Legal counseling services
Law «On Attorney Services», No. 110, dated November 4, 1995Law «On Attorney Services», No. 110, dated November 4, 1995LawRegulation «On the Procedure for Licensing of Legal Counseling
and Attorney Services», No. 42, dated February 18, 1998
12. Ministry of Education:1) Activities related to education and educational
establishments
Law «On Education», No. 899, dated December 27, 1993Law «On Education», No. 899, dated December 27, 1993LawProcedure «On Attestation, Accreditation, and Licensing of
Educational Establishments in the Republic of Tajikistan», No. 50, dated January 17, 1997
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Agencies authorized to issue licenses and types of activities subject to licensing
Governing laws and regulations
13. State Committee for Architecture and Construction:
1) Project design works2) Construction works3) Town planning4) Production of construction materials, building products, and
structures5) Construction and installation work, start-up and adjustment
work, and repairs6) Testing of construction sections, materials, and products7) Examination of construction sections and structures8) Quality control for project designs, construction materials,
sections and structures, and installation work.
Law «On Architecture and Town Planning», No. 440, dated Law «On Architecture and Town Planning», No. 440, dated LawMay 15, 1997Regulation «On State Licensing of Construction Activities in the Republic of Tajikistan», No. 211, dated May 6, 1997
Classifier of the Types of Construction and Design Works Subject Classifier of the Types of Construction and Design Works Subject Classifierto Licensing, dated July 5, 1997
Regulation «On Licensing of Design and Surveying Activities in the Republic of Tajikistan», No. 319, dated October 18, 1991
14. Customs Department of the Ministry for Government Revenues and Levies:
1) Establishment of Customs Bonded Warehouses2) Establishment of Duty-Free Shops3) Customs brokerage activities4) Customs carrier operations5) Processing of goods outside and inside the Customs Territory
Customs Code of the Republic of Tajikistan, dated November 4, 1995
Regulations:«On Customs Brokers», No. 254, dated June 2, 1997«On Customs Bonded Warehouses», No. 53, dated April 10,
1996«On Customs Procedures for Processing of Goods Outside the
Customs Territory of the Republic of Tajikistan», No. 53, dated April 10, 1996
15. The National Bank:1) Banking operations 2) Operations in foreign currencies 3) Registration, acceptance of collateral, storage, and sale of
precious metals 4) Sale of goods, work and services in foreign currency to
individuals in the Republic of Tajikistan
Laws:«On the National Bank of Tajikistan», No. 383, dated December
14, 1996«On Banks and Banking Activities in the Republic of Tajikistan»,
No. 648, dated May 23, 1998«On Currency Regulation and Currency Control», No. 112, dated
November 4, 1995«On Precious Metals and Precious Stones», No. 21, dated May
12, 2001Instructions:«On the Procedure for Registration of Banks and Their Units, and
for Licensing of Banking Activities», No. 100, dated March 29, 2000
«On the Procedure for Sale of Goods, Work and Services in Foreign Currency to Individuals in the Republic of Tajikistan», No. 51, dated September 16, 1997
Regulation «On Credit Unions», No. 1, dated January 26, 1999
16. Ministry for Environmental Protection:1) Collection, storage, transportation, utilization,
decontamination, and disposal of hazardous waste2) Collection of wild medical herbs3) Studies aimed at revealing degraded and polluted land4) Environmental monitoring5) Establishment of maximum allowable rates for pollutant
discharge into the environment and location of dump sites6) Environmental certification of equipment, production
processes, enterprises, industrial and natural objects and areas
7) Environmental auditing8) Assessment of the environmental safety of materials,
substances, technologies, equipment, industrial processes and facilities
9) Environmental consulting10) Environmental impact assessments and strategic
environmental assessments, preparation of environmental statements for planned and operational enterprises, including preparation of Environmental Protection sections of pre-design and design documents
11) Environmental control measurements and analyses12) Flora- and fauna- related activities (gathering and procurement
of raw vegetables materials, tree felling and grass mowing operations in natural habitats of rare or endangered species, and extraction operations in animal ecosystems)
13) Export of hunting trophies
Laws: «On Industrial and Consumption Waste», No. 44, dated May 10,
2002«On Environmental Expert Reviews», No. 20, dated April 22,
2003Procedures for: «Licensing of Activities Related to Handling of Hazardous Waste»
No. 252, dated June 6, 2003«Licensing of Activities Related to Environmental Expert Reviews»
No. 300, dated July 3, 2003 Regulations:«On Streamlining the Gathering of Wild Medical Herbs in the
Republic of Tajikistan», No. 408, dated August 23, 1993«On the Procedure for Obtaining of Approvals and Permits for
Use of Flora and Fauna», dated September 24, 2001
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Agencies authorized to issue licenses and types of activities subject to licensing
Governing laws and regulations
17. Ministry of Labor and Employment:1) Employment of Tajik citizens in foreign countries2) Attraction of foreign workers into the Republic of Tajikistan
Law «On Migration», No. 881, dated December 11, 1999Law «On Migration», No. 881, dated December 11, 1999LawInterim Regulation «On the Procedure for Issuance of Permits
for Employment Services Provided to Citizens of the Republic of Tajikistan Seeking Work Abroad and for Attracting Foreign Workers into the Republic of Tajikistan», No. 608, dated July 25, 2001
18. Ministry of Culture: 1) Distribution of printed publications
Law «On Publishing», No. 897, dated December 27, 1993Law «On Publishing», No. 897, dated December 27, 1993Law
19. State Committee for Television and Radio Broadcasting under the Government of the Republic of Tajikistan:
1) Activities of television and radio companies
Law »On Television and Radio Broadcasting», No. 382, dated Law »On Television and Radio Broadcasting», No. 382, dated LawDecember 14, 1996
Regulation «On Television and Radio Broadcasting Licensing Procedures», No. 52, dated August 2, 2000
20. Ministry of Agriculture:1) Sale of seeds Production and reproduction of seeds Pre-sowing conditioning of seeds for reproduction
purposes Sale offerings Sale of seeds Storage of seeds Export and import of seeds
2) Selected veterinary services
Laws:«On Veterinary Services», No. 73, dated December 8, 2003«On Agricultural Crop Breeding», No. 118, dated November 4,
1995Regulation by the Chief Directorate for Veterinary Services,
No. 391, dated October 1, 2002
21. State Pedigree Breeding Service:1) Pedigree breeding (planning of genetic improvement of
livestock, productivity and origin assessments, matching and selection of animals and other pedigree materials)
2) Import of pedigree material, as well as of specific goods, work, and services for breeding purposes
Law «On Pedigree Livestock Breeding», No. 985, dated July 20, Law «On Pedigree Livestock Breeding», No. 985, dated July 20, Law1994
22. Ministry of Industry: 1) Purchase and processing of industrial scrap and waste of non-
ferrous and ferrous metals2) Repair of hunting and sporting weapons3) Repair and manufacture of semi-precious gem items4) Purchase and sale of items and articles made from gems
(except from precious stones and metals)5) Manufacturing and repair of measuring equipment6) Manufacturing of industrial goods and provision of services as
related to household chemical products, rubber, and rubber products
7) Production of special clothes from natural and synthetic fabrics for military servicemen
8) Leather and leatherette work, production of items from leather and leatherette, and provision of services in this area
9) Production, repair, and maintenance of electronic and electrical equipment
Law «On Precious Metals and Precious Stones», No. 21, dated Law «On Precious Metals and Precious Stones», No. 21, dated LawMay 12, 2001
Regulation «On Licensing of Selected Activities in the Manufacturing Sector of the Republic of Tajikistan», No. 139, dated March 31, 2003
Procedure «On Licensing of Selected Activities Related to Production, Utilization, and Distribution of Precious Metals and Precious Stones by Legal Entities and Individuals», No. 145, dated March 31, 2003
23. State Industrial and Mining Safety Supervision Committee under the Government of the Republic of Tajikistan:
1) Design, construction, and operation of industrial blasting and mining equipment and processes, main gas and oil pipelines, gas utility facilities and load-lifting facilities, as well as high pressure boilers, vessels, and pipelines
2) Expert safety review of industrial production processes, facilities, equipment, and work
3) Development, testing, production, distribution, storage, and use of explosives
4) Explosion of fireworks
Government Resolution «On the State Industrial and Mining Safety Supervision Committee under the Government of the Republic of Tajikistan», No. 350, dated July 18, 1994
24. Ministry of Finance:1) Auditing activities2) Professional activities related to securities trading and
operations on exchanges3) Selected activities related to production, use, and circulation
of precious metals and precious stones
Laws:«On Auditing Activities», No. 601, dated May 21, 1998«On Securities and Stock Exchanges», No. 552, dated March 10,
1992Instruction «On the Procedure for Issuing Licenses for Professional
Securities and Exchange Activities», No. 9/1-2, dated April 20, 1993
Procedure «On Licensing of Selected Activities Related to Production, Utilization, and Distribution of Precious Metals and Precious Stones by Legal Entities and Individuals», No. 145, dated March 31, 2003
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Agencies authorized to issue licenses and types of activities subject to licensing
Governing laws and regulations
25. Ministry of Transportation:1) Passenger and freight transportation by car/bus/truck as well
as by rail, water, and air (except for international bus and trucking operations)
2) Forwarding activities3) Air traffic services, aircraft maintenance and servicing,
passenger services, and luggage, cargo, and mail delivery services at airfields and airport terminals
4) Aerial work activities aimed at meeting the demands of individuals and legal entities, including activities carried out in foreign countries’ airspace
5) Professional training of specialists, as per the list of aviation personnel staff positions
6) Activity of public organizations and unions in aviation that exercise technical control and safety supervision of general purpose aircraft and aircraft used for sports flying, training, advertisement, and other similar purposes;
7) Transport operation activities on local or access railways8) Preparation of railroad cars and containers for freight
shipments and installation of additional rolling stock equipment
9) Loading, unloading and storage at warehouse facilities10) Processing of transportation documents and cargo
commissioning, acceptance, and storage services11) Provision of information support in the transportation
process12) Repair and maintenance of railway tracks that belong to
industrial enterprises13) Repair and maintenance of railway crossings (including
industrial crossings)14) Design and survey work related to construction,
reconstruction, repair, and maintenance of motorways and railways
15) Rehabilitation and maintenance of automobiles, locomotives, railroad cars, aircraft, as well as their parts and components
16) Reconstruction and organization of construction process for motorways and railways
17) Training and retraining of drivers and driving instructors for educational establishments (driver categories A, B, C, D, and E, as well as trolley bus drivers and motorcycle drivers)
18) Other types of business activities related to the transportation process (e.g. fuelling stations, parking lots, automobile repair shops, bus and railway terminals and airports)
19) Design, construction, reconstruction, rehabilitation, and maintenance of motorways and other support for traffic management, implementing a single traffic management and control policy, and training traffic management and control specialists
Laws: «On Transportation», No. 22, dated November 29, 2000 «On Motorways and Motorway-Related Activities», No. 47,
dated May 10, 2002The Automobile Transport Charter of the Republic of Tajikistan, The Automobile Transport Charter of the Republic of Tajikistan, The Automobile Transport Charter
No. 396, dated September 14, 1999Regulation «On Licensing of Transportation Activities in the
Republic of Tajikistan», No. 252, dated June 11, 2001
26. State Agency for Standardization, Certification, Metrology, and Trade Inspections (TajikStandart):
1) Manufacture, repair, testing, renting, and sale of measuring equipment
2) Activities related to applications for certificates of compliance
Laws:«On Ensuring Unified Measurements», No. 435, dated May 15,
1997«On Certification of Products and Services», No. 313, dated
December 13, 1997
27. Narcotic Drug Control Agency under the President of the Republic of Tajikistan:
1) Activities related to the legal distribution of narcotic drugs, psychotropic substances, and drug precursors
Law «On Narcotic Drugs, Psychotropic Substances, and Drug Law «On Narcotic Drugs, Psychotropic Substances, and Drug LawPrecursors», No. 873, dated December 10, 1999
Regulation «On the Procedure for Issuing Licenses in the Field of Legal Distribution of Narcotic Drugs, Psychotropic Substances, and Drug Precursors», No. 465, dated November 9, 2000
28. Athletics and Sports Committee under the Government of the Republic of Tajikistan:
1) Activities in the fields of athletics, sports, and hiking2) Manufacturing of athletic gear and sportswear
Regulation «On the Athletics and Sports Committee under the Government of the Republic of Tajikistan», No. 358, dated May 24, 1995
29. Committee for Land Use and Land Resources under the Government of the Republic of Tajikistan:
1) Activities related to land planning and valuation
Law «On Land Valuation», No. 18, dated May 12, 2001Law «On Land Valuation», No. 18, dated May 12, 2001Law
L i c e n s i n g
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Agencies authorized to issue licenses and types of activities subject to licensing
Governing laws and regulations
30. Ministry of Land Improvement and Water Economy:
1) Special water use activities
Water Code of the Republic of Tajikistan, No. 34, dated November 29, 2000
31. Chief Directorate of Fire and Emergency Services, Ministry of Internal Affairs:
1. Development of fire safety measures and fire protection consulting services
2. Expert reviews of organizational and technical solutions aimed at ensuring fire safety, as well as expert review statements on fires, technological accidents, and explosions
3. Organization and employment of emergency fire teams in municipalities, ministries, agencies, enterprises, establishments, and organizations of all types of ownership
4. Observance of fire safety rules and requirements5. Manufacturing, testing, and supply of fire equipment and fire
extinguishers6. Installation, startup and adjustment, repair, and maintenance
of fire protection equipment and systems (except for those in the construction sector)
7. Testing of substances, materials, mechanisms, equipment, and structures for compliance with fire safety requirements
8. Personnel training in fire safety measures
Law «On Fire Safety», No. 995, dated July 21, 1994Law «On Fire Safety», No. 995, dated July 21, 1994LawRegulation «On the State Fire Safety Authority in the Republic of
Tajikistan», No. 726, dated December 7, 1995
32. Agencies Authorized by the Government of Tajikistan (not determined yet)
1) Circulation of electronic documents2) Provision of services for distribution of open signature
verification keys3) Selected activities related to production and distribution of
food products, wholesale trade in food products, and public catering services
4) Activities in the field of information sharing and dissemination
5) Activities related to protection of information: certified testing of secure data processing equipment
(SDPE), information protection equipment, equipment for controlling data protection efficiency, and protected software for compliance with the requirements for security of information
attestation of information systems; automated control systems; data transfer and communications systems; equipment for receiving, transmitting, and processing of information subject to protection, as well as of equipment and systems located in rooms where such information is processed and in rooms designed for holding negotiations
development, manufacturing, sale, installation, repair, maintenance, and servicing of secure data processing equipment, information protection equipment, equipment for controlling data protection efficiency, protected data processing software, and data protection monitoring software;
special studies on incidental electromagnetic radiation and induced magnetic fields from SPDEs
design of secured facilities personnel training and retraining in information protection
6) Activities related to production and safe handling of pesticides and agricultural chemicals
7) Selected types of advertisement activities, in accordance with current legislation
Laws:«On Electronic Documents», No. 51, dated May 10, 2002«On Quality and Safety of Food Products», No. 54, dated May
10, 2002«On Information Sharing and Dissemination», No. 40, dated
August 6, 2001«On Protection of Information», No. 334, dated November 12,
2002«On Production and Safe Handling of Pesticides and Agricultural
Chemicals», No. 1, dated April 22, 2003«On Advertising», No. 34, dated August 1, 2003
Notes:
1. There is no official list of agencies authorized to issue licenses, nor is there a single list of all types of business activities that are subject to licensing.
2. This list has been complied based on an analysis of existing legislation; additional agencies may also have the authority to issue licenses.
3. The agencies to be authorized to issue licenses per Section 32 of this list are pending approval by the Government of Tajikistan.
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Agencies authorized to issue permits/approvals and types of activities subject to permits/approvals
Governing laws and regulations
1. Government of the Republic of Tajikistan: 1) Import and export of goods, works, and services that are subject to export
control regulations, as per the established list of such goods, work, and services
2) Allocation of land parcels
Land Code, dated December 13, 1996Resolution No. 237 of the Government of the
Republic of Tajikistan «On Measures to Improve the Promotion of Domestic Goods in Foreign Markets», dated June 8, 2001
2. Ministry of Economy and Trade: 1) Foreign economic activities
Law «On the Foreign Economic Activity of the Republic of Tajikistan», dated December 27, 1993
Regulation «On the Procedure for Registration as Participants in Foreign Economic Activities of the Republic of Tajikistan», No. 316, dated July 11, 1994
3. Ministry of Health:1) Private medical institutions 2) Clinical drug trials3) Clinical and medical/biological experiments and use of new diagnostic
and treatment methods
Laws:«On Private Medical Activities», No. 60, dated
December 2, 2002«On Medications and Pharmaceutical Activities»,
No. 39, dated August 6, 2001«On Public Health Care», No. 419, dated May 15,
1997
4. Ministry of Finance:1) Organization and conduct of lotteries2) Printing and sale of financial accounting forms
Law «On Accounting», No. 750, dated May 14, 1999
Procedure «On the Conduct of Lotteries in the Republic of Tajikistan», No. 274, dated July 3, 2002
5. Ministry of Energy:1) Fuelling stations and automobile repair shops
Law «On Energy», No. 33, dated November 29, 2000
6. Ministry of Internal Affairs:1) Manufacture of seals and stamp2) Firearms stores, shooting ranges and galleries3) Private detective and security guard services4) Stamp manufacturing and engraving activities
Laws:«On Militia (Police)», No. 650, dated May 2, 1992«On Detective and Investigation Activities», No. 651,
dated May 23, 1998Instruction «On the Procedure for Opening Stamp
Manufacturing and Engraving Shops and On Manufacturing of Seals and Stamps», approved by Executive Order No. 578 of the Ministry of Internal Affairs, dated October 21, 1993
7. Ministry of Labor and Employment:1) Compliance with occupational and workplace safety rules
Law «On Protection of Labor in the Republic of Tajikistan», No. 460, dated December 24, 1991
8. Ministry of Land Improvement and Water Economy:1) Special water use activities2) Wastewater irrigation
Water Code of the Republic of Tajikistan, No. 34, dated November 29, 2000
9. Ministry of Communications:1) Development, modernization, and production of radio-electronic
equipment (REE) and high-frequency devices (HFD) as well as importation of said equipment and devices
2) Research and development conducted with the use of REE and HFDs3) Technical approvals for production and broadcasting of television and
radio programs
Laws:«On Communications», No. 893, dated December
27, 1993«On Television and Radio Broadcasting», dated
December 14, 1996Regulation «On the Procedure for Development,
Production, Designing, Construction (Installation), Acquisition, and Operation of Radio-Electronic Equipment and High-Frequency Devices in the Republic of Tajikistan, and On Importation of Such Equipment and Devices from Abroad», No. 371, dated August 1, 1994
Instruction «On the Procedure for Acquisition and Operation of Radio-Electronic Equipment and High-Frequency Devices in the Republic of Tajikistan, No. 84, dated September 8, 1997
PERMITS AND APPROVALS
Activities requiring permits/approvals
P e r m i t s a n d A p p r o v a l s
[2003] 134 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Agencies authorized to issue permits/approvals and types of activities subject to permits/approvals
Governing laws and regulations
10. Ministry for Environmental Protection:1) Commercial catch of fish and other animals in their natural habitats2) Discharges of pollutants into the environment3) Consumption of atmospheric air as a raw material for production 4) Utilization of raw materials5) Extraction of general mineral resources6) Allocation of industrial, household, and other wastes7) Special water use activities8) Well-drilling for water9) Subsoil utilization for geological survey purposes10) Catch of migrating, rare, and endangered animal species
Law «On Preservation and Utilization of Fauna», No. 989, dated July 20, 1994
Regulation «On the Ministry for Environmental Protection of the Republic of Tajikistan», No. 362, dated September 25, 1992
Procedure «On the Issuance of Permits for Catching Migrating, Rare, and Endangered Animal Species», No. 301, dated July 3, 2003
11. Ministry of Culture:1) Exchange, elimination, relocation, reproduction, and restoration of cultural
items entered in the State Register of the National Cultural Heritage
Law «On Culture», No. 516, December 13, 1997
12. Ministry for Government Revenues and Levies of the Republic of Tajikistan:
1) Import and export of products subject to mandatory certification
Customs Code, dated April 11, 1995Law «On Customs Tariffs», No. 200, dated November
4, 1995
13. Ministry of Agriculture:1) Import of products subject to quarantine (veterinary certificates) 2) Imports of agricultural, decorative, and herbaceous plants and silkworms
Law «On Quarantining of Plants», No. 25, dated May 12, 2001
Resolution No. 62 of the Government of the Republic of Tajikistan, dated February 20, 1998
14. State Committee for Construction and Architecture of the Republic of Tajikistan:
1) Design and construction works of legal entities as well as manufacturing of construction materials, building units and structures
2) Architectural and town planning activities
Law «On Architecture and Town Planning», No. 440, dated May 15, 1997
15. State Committee for Land Use of the Republic of Tajikistan:1) Approvals for use of land parcels for agricultural production purposes
prior to receiving authorization to use said parcels
Land Code, dated December 13, 1996
16. State Industrial and Mining Safety Supervision Committee under the Government of the Republic of Tajikistan:
1) Allocation of underground structures and facilities on mineral deposit areas, development of mineral deposit areas
2) Design of enterprises for extraction and processing of mineral resources and design of underground structures and facilities unrelated to subsoil exploration or extraction of mineral resources
3) Approvals for: Annual plans for water withdrawal from deposits of medicinal, mineral,
and thermal water Permits for special use of mineral, thermal, and medicinal water Draft licensing conditions (for using subsoil) for use of underground
water (mineral, medicinal, or thermal), as well as for registration of said licenses
Designs for construction of tailing dumps, storage ponds, sludge pits, and other waste dumping facilities
Law «On Production and Consumption Wastes», No. 44, dated May 10, 2002
Resolution «On the State Industrial and Mining Safety Supervision Committee under the Government of the Republic of Tajikistan», No. 350, dated July 18, 1994
17. Committee for Sport and Athletics of the Government of the Republic of Tajikistan:
1) Labor activities related to athletics and sports
Law «On Athletics and Sports», No. 413, dated May 15, 1997
18. State Agency for Standardization, Certification, Metrology, and Trade Inspections (TajikStandart):
1) Operation of measuring equipment2) Import and export of goods subject to mandatory certification
Laws:«On Ensuring Unified Measurements», No. 435,
dated May 15, 1997 «On Standardization», No. 333, dated December 14,
1996«On Certification of Products and Services», No. 313,
dated December 13, 1996
19. State Agency for Anti-Monopoly Policy and Support for Entrepreneurship:
1) Establishment, reorganization, and liquidation of business entities (in cases stipulated by the anti-monopoly legislation)
2) Granting of market privileges to selected business entities
Law «On Competition and Limitation of Monopoly Activities on the Markets», No. 11, dated November 29, 2000
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Agencies authorized to issue permits/approvals and types of activities subject to permits/approvals
Governing laws and regulations
20. Chief Directorate for Geology under the Government of the Republic of Tajikistan (Gelogiyai Tochik):
1) Project approvals for: Well-drilling for water Exploration, surveying, and construction of new water intake facilities Construction of tailing dumps, storage ponds, sludge pits, filter beds,
and other waste dumping facilities Construction of facilities for underground disposal of industrial
wastewater and radioactive waste2) Permits for special use of underground water3) Operating conditions for underground water intake facilities
Water Code of the Republic of Tajikistan, No. 34, dated November 29, 2000
Law «On Production and Consumption Wastes», No. 44, dated May 10, 2002
21. Khukumats (Region, City, District):1) Sale of consumer goods (soft drinks, agricultural products, beer, et cetera),
provision of services (opening of barber/hairstyle shops, repair/mending shops, etc.), and performance of work
2) Creation of cable broadcasting networks; 3) Construction of religious/spiritual buildings 4) Land use rights5) Extraction of mineral resources by means of prospecting 6) Use of land parcels for agricultural production purposes before the rights
to the use of such parcels have been granted7) Use of land 8) Use in villages, townships, and cities of underground water that is not
utilized for centralized water supply purposes by means of mineshafts, wells, and tapping of groundwater sources without lowering the water level, such permits/approvals are issued by local authorities
9) Non-centralized water supply for selected agricultural enterprises and pasture irrigation purposes
10) Approvals for: allocation and operation of water facilities and works in riverside/
lakeside water protection zones compliance of alcoholic beverage retail outlets with established
requirements
Land Code, dated December 13, 1996Water Code, dated November 29, 2000Laws:«On Television and Radio Broadcasting», No. 381,
dated December 14, 1996 «On Religion and Religious Organizations», dated
December 1, 1994«On Subsoil», No. 983, dated July 20, 1994 «On Local Authorities»
22. State Road Inspection:1) Issuance of driver’s/operator’s licenses2) Permits for vehicle maintenance
Law «On Road Traffic», No. 196, dated November 4, 1995
Regulation «On the Procedure for Issuance of Permits for Operation of Vehicles and for Issuance of Driver’s Licenses to Citizens», No. 306, dated August 5, 1998
Procedure of the State Registration of Mechanical Vehicles and Trailers, No. 441, dated October 23, 1999
23. Veterinary Authorities:1) Approvals for irrigation of land with wastewater
Water Code of the Republic of Tajikistan, No. 34, dated November 29, 2000
24. State Sanitary and Epidemiological Service:1) Approvals for wastewater irrigation 2) Production, utilization, storage, transportation, and disposal of radioactive
substances and other sources of ionized radiation, as well as the use of sources of electromagnetic fields
3) Operation of new and reconstructed production facilities4) Development and installation of production lines for new types of food
products and additives and introduction of new technological processes and technological equipment, packaging and production of plates, dishes and packaging materials
Water Code of the Republic of Tajikistan, No. 34, dated November 29, 2000
Law «On State Sanitary Supervision», No. 987, dated July 20, 1994
25. Fire Safety Authorities:Approvals for: 1) Draft standards, norms, rules, and other relevant documents for fire
safety 2) Operation of vehicles in conjunction with fire safety3) Town planning and design documents for construction, reconstruction,
renovation, expansion, and modernization of enterprises, buildings, and facilities
Regulation «On State Fire Safety Supervision in the Republic of Tajikistan», No. 726, dated December 7, 1995
26. Water Supply Authority (Vodokanal): 1) Special water use by businesses2) Non-centralized water supply for selected agricultural enterprises and for
pasture irrigation purposes
Water Code of the Republic of Tajikistan, dated November 29, 2000
27. City/District Gas Authority: 1) Use of gas burning installations and equipment
P e r m i t s a n d A p p r o v a l s
[2003] 136 B u s i n e s s E n v i r o n m e n t i n T a j i k i s t a n
Agencies authorized to issue permits/approvals and types of activities subject to permits/approvals
Governing laws and regulations
28. Energy Safety Authority: 1) Installation of energy equipment and utilization of electric power
Regulation «On State Energy Oversight in the Republic of Tajikistan», No. 465, dated October 17, 1996
29. Environmental Safety Authorities:1) Approvals for wastewater irrigation2) Environmental safety approvals for buildings and other facilities
Water Code of the Republic of Tajikistan, No. 34, dated November 29, 2000
Regulation «On State Environmental Expert Reviews in the Republic of Tajikistan», No. 156, dated April 7, 1994
30. The National Bank of Tajikistan:1) Opening of foreign currency accounts by Tajik residents with banks
outside the Republic of Tajikistan 2) Sale of goods, work, services in foreign currency in the Republic of
Tajikistan3) Alienation (including by sale) by banks of non-resident stock
Law «On Banks and Banking Activities», No. 648, dated May 23, 1998
Procedure of Issuing Permits for (Tajik) Residents to Open Foreign Currency Accounts with Banks outside the Republic of Tajikistan, approved by the Management Committee of the National Bank of Tajikistan, Directive No. 51, dated September 16, 1997
Instruction «On the Procedure for the Sale of Goods, Works, and Services in Foreign Currency to Individuals in the Republic of Tajikistan», approved by the Management Board of the National Bank of Tajikistan, Directive No. 51, dated September 16, 1997
systems, gas supply, heating, electrical, contact, and communications systems) and other facilities.
Regulation of Technical Inventorying of Sites, Buildings, Structures, Facilities, Utility Networks, and Outdoor Landscape Elements in Cities, Regional Centers, Townships, and Villages of the Republic of Tajikistan, No. 513, dated December 30, 1998
Note:
There is no official list of the types of activities that require permits/approvals, nor is there a list of government agencies authorized to issue said permits/approvals. This list has been complied based on an analysis of existing legislation, and includes 31 Authorities granted to issue permits/approvals, as well as a list of relevant normative acts. Additional agencies may also have the authority to issue permits/approvals.
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The survey was conducted by an independent research firm in June 2003. The survey was carried out on the basis of personal interviews supported by a questionnaire consisting of 179 questions. The selection of respondents was random, based on established quotas for each region, sector of business activity, and small and medium business category. Interviews in the provinces (oblasts) were conducted in province centers and the surrounding rural areas.
Results of the survey were discussed in three different focus group sessions, with separate participation by dehkan farmers, individual entrepreneurs, and small and medium-sized enterprises. In this manner, an assessment of results through commentary on each section of the questionnaire was compiled. The survey also benefited from the input of experts in particular fields for a number of key issues.
Sample Selection
The survey sample includes 600 dehkan farmers, 700 individual entrepreneurs, and 700 representatives of SMEs located in Sughd province, Khatlon province, Gorno-Badakhshan Autonomous Province (GBAO), Regions under Republican Subordination, and in the capital city of Dushanbe. The respondents were owners or top managers of enterprises, firms, or farms, responsible for decision-making. In total, 2,000 small and medium businesses in Tajikistan were interviewed for the report.
In an effort to include all sectors of the economy and all regions of the country, sample selection was based on official data made available by the State Statistics Committee of the Republic of Tajikistan, as of January 1, 2003.
Thus, sampling was based on the following criteria:
1. sectors of business activity in which small and medium businesses operate;2. regions of Tajikistan where small and medium businesses operate; and 3. number of small and medium businesses, by category:
number of individual entrepreneurs, by region and by sector of business activity; number of dehkan farmers, by region, and number of SMEs, by region, sector of business activity, and number of employees.1
The total sample includes representatives of small and medium businesses engaged in the following lines of business and located in the following regions of the Republic of Tajikistan:
METHODOLOGY
Region Number of dehkan farmers
% of total number of dehkan farmers
Number of respondents
Sughd Province 3456 22 134
Kulyab District of Khatlon Province 2006 13 78
Kurgan-Tube District of Khatlon Province 3265 21 127
Regions under Republican Subordination 6602 43 256
Gorno-Badakhshan Autonomous Province (GBAO) 134 1 5
City of Dushanbe 0 0 0
Total for Tajikistan 15463 100 600
1. Dehkan farmers
1 Firms with 50 or fewer employees are classed as small enterprises, while firms with between 51-200 employees are classed as medium
enterprises. firms with 50 or fewer employees are classed as small enterprises, while firms with between 51-200 employees are classed
as medium enterprises.
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2. Individual entrepreneurs
Sector Total number% of total number
individual entrepreneursNumber of respondents
Manufacturing 5808 8 57
Transportation and communications 7452 11 73
Trade and public catering 46701 65 458
Basic consumer services 10742 15 105
Other 606 2 7
Total for Tajikistan 71309 100 700
Distribution of individual entrepreneurs by region is as follows:
Total number
% of total
number
Number of respon-
dents
Manufacturing 1359 7 13
Transportation and communications 2823 13 28
Trade and public catering 14117 67 138
Basic consumer services 2498 12 25
Other 120 1 1
Total for the Region 20917 29 205
Total number
% of total
number
Number of respon-
dents
Manufacturing 1003 10 10
Transportation and communications 766 8 8
Trade and public catering 6168 62 60
Basic consumer services 1903 19 19
Other 32 0 0
Total for the District 9872 14 97
Sughd Province Kurgan-Tube District of Khatlon Province
Total number
% of total
number
Number of respon-
dents
Manufacturing 260 10 3
Transportation and communications 198 8 2
Trade and public catering 1610 63 15
Basic consumer services 497 19 5
Other 11 0 0
Total for the District 2576 4 25
Total number
% of total
number
Number of respon-
dents
Manufacturing 9 1 0
Transportation and communications 151 14 2
Trade and public catering 924 83 10
Basic consumer services 22 2 0
Other 2 0 0
Total for GBAO 1108 2 12
Kulyab District of Khatlon Province Gorno-Badakhshan Autonomous Province (GBAO)
Total number
% of total
number
Number of respon-
dents
Manufacturing 1155 9 11
Transportation and communications 1934 15 19
Trade and public catering 7045 56 69
Basic consumer services 2101 17 21
Other 322 3 3
Total for the Regions 12557 17 123
Total number
% of total
number
Number of respon-
dents
Manufacturing 2022 8 20
Transportation and communications 1580 7 15
Trade and public catering 16837 69 164
Basic consumer services 3721 15 37
Other 119 1 2
Total for the City 24279 34 238
Regions under Republican Subordination City of Dushanbe
Enterprises with 50 or fewer employees
Enterprises with 51-200 employees
Total for Tajikistan
Number of enterprises
% of total number of enterprises
Number of respondents
Number of enterprises
% of total number of enterprises
Number of respondents
Number of enterprises
% of total number of enterprises
Number of respondents
Manufacturing 666 11 75 41 29 5 707 11 80
Agriculture 509 9 59 39 28 4 548 9 62
Construction 861 14 97 26 18 3 887 14 100
Trade and public catering 959 16 108 6 4 1 965 16 109
General business activities 2504 41 283 0 0 0 2504 41 283
Other 551 9 62 30 21 3 581 9 66
Total 6050 98 684 142 2 16 6192 100 700
3. SMEs
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Kurgan-Tube District of Khatlon Province
Enterprises with 50 or fewer employees
Enterprises with 51-200 employees
Total for the District
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Manufacturing 31 7 4 4 40 0 35 8 4
Agriculture 91 20 10 4 40 0 95 20 10
Construction 87 19 10 1 10 0 88 19 10
Trade and public catering 68 15 8 0 0 0 68 15 8
General business activities 126 28 14 0 0 0 126 27 14
Other 49 11 6 1 10 0 50 11 6
Total 452 98 52 10 2 0 462 7 52
Sughd Province
Enterprises with 50 or fewer employees
Enterprises with 51-200 employees
Total for the Province
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Manufacturing 329 17 37 22 27 2 351 18 39
Agriculture 184 10 21 30 36 3 214 11 24
Construction 179 9 20 9 11 2 188 9 22
Trade and public catering 260 14 29 1 1 0 261 13 29
General business activities 778 41 88 0 0 0 778 39 88
Other 169 9 20 21 25 2 190 10 22
Total 1899 96 215 83 4 9 1982 32 224
Distribution of the SMEs by region is as follows:
Kulyab District of Khatlon Province
Enterprises with 50 or fewer employees
Enterprises with 51-200 employees
Total for the District
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Manufacturing 23 6 3 2 29 0 25 6 3
Agriculture 50 13 6 2 29 0 52 13 6
Construction 86 22 10 2 29 0 88 23 10
Trade and public catering 30 8 3 0 0 0 30 8 3
General business activities 168 44 19 0 0 0 168 43 19
Other 28 7 3 1 13 0 29 7 3
Total 385 98 44 7 2 0 392 6 44
Gorno-Badakhshan Autonomous Province (GBAO)
Enterprises with 50 or fewer employees
Enterprises with 51-200 employees
Total for GBAO
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Manufacturing 14 13 2 1 50 0 15 13 2
Agriculture 15 13 2 1 50 0 16 14 2
Construction 16 14 2 0 0 0 16 14 2
Trade and public catering 50 45 6 0 0 0 50 44 6
General business activities 0 0 0 0 0 0 0 0 0
Other 17 15 2 0 0 0 17 15 2
Total 112 98 14 2 2 0 114 2 14
M e t h o d o l o g y
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Regions under Republican Subordination
Enterprises with 50 or fewer employees
Enterprises with 51-200 employees
Total for Regions under Republican Subordination
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Manufacturing 141 13 16 9 39 2 150 13 18
Agriculture 147 13 17 2 9 0 149 13 17
Construction 258 23 29 8 35 1 266 23 30
Trade and public catering 163 14 18 2 9 0 165 14 18
General business activities 345 30 39 0 0 0 345 30 39
Other 83 7 9 2 8 0 85 7 9
Total 1137 98 128 23 2 3 1160 19 131
City of Dushanbe
Enterprises with 50 or fewer employees
Enterprises with 51-200 employees
Total for the City
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Number of enterprises
% of total number of enterprises
Number of question-
naries
Manufacturing 128 6 14 3 18 0 131 6 14
Agriculture 22 1 2 0 0 0 22 1 2
Construction 235 11 27 6 35 1 241 12 28
Trade and public catering 388 19 44 3 18 0 391 19 44
General business activities 1087 53 123 0 0 0 1087 52 123
Other 205 10 23 5 29 1 210 10 24
Total 2065 99 233 17 1 2 2082 34 235
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Table 1. Tax Rates in Tajikistan and Select CIS Countries
TAXATION
CountryProfit Tax Property Tax Sales (retail) Tax
Tajikistan 30% 0,5% 5%
Russia 24% 2,2% 4%
Kazakhstan 30% 1% –
Uzbekistan24% (2002)22% (2003)18% (2004)
2% (2002)3% (2003)
3,5% (2004)–
Kyrgyz Republic 20% 0,95% 4%
Table 2. Taxation System for Small and Medium BusinessesTable 2. Taxation System for Small and Medium BusinessesTable 2. Taxation System for Small and Medium BusinessesTable 2. Taxation System for Small and Medium Businesses
#
Legal entities, including dehkan
farmers
SMEs that pay taxes under the Simplified Tax
System
Dehkan farmers that are not legal
entities1
Individual entre-preneurs
Dehkan farmers in pilot regions2
Tax rate, %
REPUBLICAN
1 Personal income tax 10; 15; 20 10; 15; 20 10; 15; 20 (–) 10; 15; 20
2 Tax on profits of legal entities 30 (–) (–) (–) (–)
3 VAT 20 (–) 20 (–) (–)
4Excise taxes (depending on the type of product) in somoni or as a % of product value
(+) (+) (+) (+) (+)
5 Social contributions (payments) 25 25 25 20 25
6Tax on land (depending on the size of land parcel, cadastral zone and type of land), in somoni
(+) (+) (+) (+) (–)
7Subsoil User Taxes (as per subsoil use agreement in accordance with the Tax Code)
(+) (–) (+) (+) (+)
8 Tax on property owned by enterprises 0,5 (–) (–) (–) (–)
9Vehicle Owner Tax (depending on the horsepower of the engine)
from 1 to 5.5 from 1 to 5.5 from 1 to 5.5 from 1 to 5.5 (–)
10 Motorway User Tax 0,5; 2 (–) (–) (–) (–)
11Tax, payable by small and medium businesses under the Simplified Tax System
1 Sales tax (retail) not more than 5 (–) not more than 5 not more than 5 (–)
2 Tax on public passenger transport maintenance not more than 2 not more than 2 not more than 2 not more than 2 (–)
LICENSE FEE (imputed tax depending on the type of activity)
(–) (–) (–) (+) (–)
TOTAL NUMBER OF TAXES 14 11 11 10 7
Types of taxes
Small and medium businesses
( - ) this tax is not payable
( +) this tax is payable
1 As per the Law of the Republic of Tajikistan «On Dehkan Farmers» dated May 10, 2002, No. 48, dehkan farmers shall carry out
their business activities without legal establishment. 2 Pilot regions – territories where a unified tax system was introduced for Dehkan farms until December 31, 2004, as per Resolution
of Lower House of Parliament of Republic of Tajikistan, dated March 19, 2002, No. 570.
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Box 1. Tax Payable by Small and Medium Businesses under the Simplified Tax System3
Enterprises exempt from the VAT pay taxes under the Simplified Tax System unless they are engaged
in the manufacturing of excise tax products or are lending institutions, insurers, investment funds, or
professional members of the securities market.
The object of taxation is gross revenue received during the reporting period. The tax rate is 5 percent of
the size of the object of taxation.
Under the Simplified Tax System, the reporting (fiscal) period for enterprises is one quarter. Tax
declarations must be submitted by taxpayers to the Tax office in which they were registered before the
10th day of the month following the close of the quarter.
The tax is payable on the 10th day of the month following the close of the reporting period. If a taxpayer
chooses part or all of the tax liability in advance, payments be deducted from the final tax liability.
Box 2. The Unified Tax for Dehkan Farmers4
The Unified Tax applies to dekhan farmers engaged in the production and supply of unprocessed
agricultural products. If a dekhan farmer engages in other activities (such as processing agricultural
products) separate additional taxes are applicable.
Dehkan farms are liable for VAT if their non-agricultural sales during the preceding 12 months exceeded
12,000 times the minimum non-taxable income.
The area of a dehkan farmer’s land parcel is the object of taxation: the amount of the Unified Tax is
linked to neither revenue or profit. The tax amount is determined by multiplying the area of the land
parcel by the established tax rate.
Box 3. Tax Payable by Individual Entrepreneurs5
Individual entrepreneurs engaged in activities included in the official list of business activities as
established by the Government of Tajikistan,6 are assessed income tax as determined in their Registration
patent. Individual entrepreneurs involved in activities that are not included in the said list must pay
income tax as specified in their Registration Certificate.
The Patent, although issued at registration, is employed as a work permit allowing an individual
entrepreneur to legally conduct business activities (with a separate patent needed for each activity). This
Patent(s) is/are issued to the individual entrepreneur upon payment of all applicable fees and before the
commencement of business activities.
3 Articles 278 – 281 of the Tax Code of the Republic of Tajikistan. 4 Law of the Republic of Tajikistan dated May 10, 2002, No. 28 «On Introduction of Changes and Additions to the Tax Code of the
Republic of Tajikistan».5 Article 121 of the Tax Code of the Republic of Tajikistan. 6 Resolution of the Government of the Republic of Tajikistan dated May 10, 2000, No. 216 «On Approving the List of Activities for
Which Income Tax May be Charged in the Form of a Patent Fee And On the Procedure To Acquire the Patent By Citizens Involved
into Entrepreneurship Without Forming A Legal Entity».
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7 Ibid, Paragraph 3. The Ministry of Finance is entitled, jointly with the Tax Committee under the Government of the Republic of
Tajikistan, to consider proposals by the Chairpersons of the Gorno-Badakhshan Autonomous Province (GBAO), provinces cities,
and districts, while increasing patent fees, establish license fee adjustment coefficients depending on profitability, location, and other
factors, and establish patent fees for new types of business activities. 8 Resolution of the Government of the Republic of Tajikistan dated June 6, 2003, No. 250 «On Measures for Improvement of the
Procedure for Making Social Contributions and for Increasing the Level of Social Protection for Individual Entrepreneurs without
Forming Legal Entity in the Republic of Tajikistan».9 Article 3 of the Law of the Republic of Tajikistan «On State Fees», dated February 28, 2004, No. 19.
If an individual entrepreneur carries out business activities without establishing a legal entity, he/she may
not hire external labor or employ family members on the basis of the original patent issued. Separate
additional patents must be obtained for each family member or each worker hired.
Each patent is issued for a term of less than one year, and is valid only for the individuals and terms that
are indicated in it.
Depending on the types of business activities carried out by the individual entrepreneur, the total amount
of monthly income tax varies from 3 somoni to 80 somoni per activity.
Examples of Patent fees for selected activities (somoni/month):
Manufacturing and sale of carpets and carpet items ............................................ 10
Manufacturing and sale of tin items .................................................................... 15
Manufacturing and sale of furniture .................................................................... 25
Barber/ hairstyle services in cities ....................................................................... 15
Household equipment and appliance repair ....................................................... 6
Private marketplaces (over 100 sale places) ........................................................ 80
Sale of alcohol in shops or retail trade outlets ..................................................... 15
Street sale operations .......................................................................................... 5
Sale of newspapers and magazines ..................................................................... 3
Patent fees, however, may vary from one region of the country to another.7
Social contributions are made by individual entrepreneurs in accordance with a simplified procedure
and payments are transferred to the Social Protection Fund under the Government of the Republic of
Tajikistan. The size of such contributions constitutes 20 percent of declared income. The size of the
annual income declared for social insurance purposes may not be less than 18 times the minimum
monthly wage in effect on the date of payment.8
Box 4. State Fees9
State fees are charged for:
submission of court claims related to legal and administrative disputes, appeals or other special
proceedings, submitted to the courts of the Republic of Tajikistan;
legal services provided by the Ministry of Justice or its subdivisions;
notary services as required by the legislation of the Republic of Tajikistan;
registration of civil status as required by the legislation of the Republic of Tajikistan
consideration and issuing documents related to the attainment or renouncement of citizenship of the
Republic of Tajikistan
other legal proceedings as required by relevant legislation.
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FOREIGN TRADE OPERATIONS
Box 1. Registration of Business Entities Engaged in Foreign Economic Activity1
* Registration should be finalized within 15 days, based on a properly completed registration application for entities to engage in foreign economic activities as well as submission of the following documents: Registration Card, along with three copies, filled out in accordance with the established form; Statements from relevant state statistical agencies with affixed agency seals and containing the following statistical agency
codes: Classification Codes for Enterprises and Organizations (OKPO), Location Codes (SOATO), Type of Activity Codes (OKONKh), and Subordination Codes (SOOGU);
For legal entities – an original or notarized copy of the organizational charter. For individuals – a notarized copy of the certificate entitling them to carry out certain business activities including the list of specific types of foreign economic activities that the entity or individual will engage in;
For individuals – their passport details; and Statements authorized by a representative of a Ministry of Economy and Trade from respective area (province, city, district).
** Based on the filled out Registration Card, the registering authority assigns the applicant a Registration Number and processes and issues a Registration Certificate. On the basis of the issued Registration Certificate, an entry is included into the State Register
Applicant (Entrepreneur)
Issuance of Registration Certificate
Assignment of Registration
Number**
Entrance into the State Register
Ministry of Economy and Trade*
Box 2. Conditions for Obtaining Export/Import Licenses for Goods, Works, and Services2
Export/import quotas, established by the Government of Tajikistan, serve as the grounds for issuing relevant licenses.3 The list and volumes of export/import quotas for raw materials, products, goods, works, and services are renewed on an annual basis by the Ministry of Economy and Trade with the input of concerned ministries and agencies, Khukumats and other entities engaged in foreign economic relations. Final approval is issued by the Government of the Republic of Tajikistan. In order to export or import goods or services not on the list of quotas established by the Tajik Government,4 it is necessary to have not only a relevant license, but also a resolution of the Tajik Government authorizing the export/import
1 Regulation «On the Procedure for Registration of Participants of Foreign Economic Activities of the Republic of Tajikistan»,
approved by Resolution No. 316 of the Government of the Republic of Tajikistan, dated July 11, 1994.2 Regulation «On the Procedure for Allocation of Quotas and Issuance of Export/Import Licenses for Goods (Works, Services) in the
Republic of Tajikistan», approved by Resolution No. 133 of the Government of the Republic of Tajikistan, dated March 20, 1994.3 Quotas and licensing do not apply to raw materials used for the manufacture of, or to manufactured goods entitled for research,
education, or charitable purposes, nor to samples, specimens, or exhibits and equipment used at fairs and exhibitions. If the above-
mentioned raw materials, articles, products, or equipment are sold, the general quota allocation and licensing procedures shall apply
(Regulation «On the Procedure for Allocation of Quotas and Issuance of Export/Import Licenses for Goods (Works, Services) in
the Republic of Tajikistan», approved by Resolution No. 133 of the Government of the Republic of Tajikistan, dated March 20,
1994).4 See List 1 of this Annex.
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Box 4. Procedure for Processing and Issuance of the Export Transaction «Passport» (Certificate)6
To obtain an Export Transaction Passport (Certificate), the applicant must submit a completed and signed draft passport of transaction and an original or notarized copy of the contract to the servicing bank.
After the draft transaction passport is signed by the exporter, the exporter assumes responsibility for the complete compliance of the information contained in the draft transaction passport with the terms and conditions of the contract. The exporter is also responsible for transferring the total amount of export earnings, resulting from contract transactions, to the exporter’s hard currency bank account. The exporter must use the bank that has submitted its export passport to.
of the particular goods and services. Export/import licenses for such products are issued by the Ministry of Economy and Trade or its authorized local representatives. For other products, licenses are issued by corresponding ministries/agencies, as authorized by the Government.
Single general licenses are issued for the time period stipulated in the agreement or contract but for a term not exceeding 6 months. License recipients may request an annulment or an extension of their license. A fee of 0.01% of the value of exported goods is charged for processing and issuance of export licenses.
Possession of an export license allows entities to clear customs and export products.
Only companies with at least 30% of foreign capital in their equity are entitled to export their own products, works, and services without export licenses. Companies with foreign capital are also entitled to import products and services that are needed for their business activities without import licenses.
Box 3. Expert Review Process for Export/Import Contracts of Special Goods5 Expert review, accounting of and control over export/import contracts are provided by the Ministry of Economy and Trade. The purpose of expert contract reviews is to establish economic justification of intended imports or exports and proposed payment procedures. Expert contract reviews also ensure that contracts comply with international standards.
Contracts signed by individual entrepreneurs are subject to expert review by both the Ministry of Economy and Trade and its authorized local representatives. This is to ensure that actual volumes of exported products comply with those documented.
Expert contract reviews are to be completed within 10 days of submission of documents to the respective departments or agencies of the Ministry of Economy and Trade or to its authorized local representatives.
A fee is charged for expert contract reviews. The amount of the fee and the procedure for conducting the review are determined by the Ministry of Economy and Trade and the Ministry of Finance.
5 Resolution No. 437 of the Government of the Republic of Tajikistan «On the Procedure for Conducting Expert Reviews of Con-
tracts, Agreements, and Other Legal Documents that Affect the Economic Interests of the Republic of Tajikistan, And On the
Procedure for the Registration of, Accounting for, and Exercising Control over the Implementation of Said Contracts, Agreements,
and Documents», dated June 27, 1995. 6 Regulation «On the Procedure for Exercising Currency Control over Repatriation of Hard Currency Export Earnings to the Repub-
lic of Tajikistan», approved jointly by the National Bank of Tajikistan (Resolution No. 38, dated August 14, 1996) and the Customs
Committee under the Government of the Republic of Tajikistan (Resolution No. 132, dated August 14, 1996). It is also Annex No. 1
to the Joint Executive Order of the National Bank of Tajikistan (No. 28, dated October 10, 1998) and the Customs Committee under
the Government of the Republic of Tajikistan (Resolution No. 304, dated November 20, 1998).
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List 1. Goods That Can Only be Exported/Imported through Special Decision of the Government of the Republic of Tajikistan7
1. Uranium and other radioactive substances, as well as products, technology, instruments, equipment,
or installations that are manufactured from or employ such substances. This also includes sources of radioactivity, including radioactive waste;
2. Explosive powder, substances and waste; 3. Weapons and military equipment including parts for manufacturing weapons and equipment as well
as works and services for military and technological cooperation;4. Technical designs and operational documents for military products;5. Military and civilian weapons;6. Military uniforms and insignia;7. Chemical agent protection gear and appliances;8. Encryption devices (including cryptographic equipment and parts as well as encryption software
packages) and technical documents for encryption devices;9. Information on below ground resources including location of fuel, energy, and mineral deposits
in the Republic of Tajikistan (including schemes, maps, and plans). An exception is information obtained as a result of geological surveys and exploration activities carried out with the permission of the Government of the Republic of Tajikistan and with foreign investment in the Republic of Tajikistan;
10. Pieces of art and antique items that have significant artistic, historic, scientific or cultural value, and11. Wild animals and birds included in the Red Book.
The servicing bank is responsible for checking the compliance of the passport data with the terms and conditions of the contract. The bank must also check whether the signature on the passport matches the signature on the card for persons with authorized access to the exporter’s account. After checking for compliance, an authorized bank officer signs all copies of the original passport. The first original copy of the passport is returned to the exporter. The second original copy is kept on file by the bank and allows the bank to open a transaction file for the client.
Upon signing the transaction passport, the bank assumes the responsibility for account transactions under this contract and agrees to provide oversight for the repatriation of export hard currency earnings under this contract.
The issuance of the passport can be denied if:
the data contained in the contract do not correspond to the data contained in the transaction passport;
the hard currency operations stipulated in the contract do not conform with the requirements set forth in the national legislation and in regulations issued by currency control authorities; or
the processing or issuance of the passport was done in breach of the established requirements, etc.
7 Resolution of the Government of the Republic of Tajikistan No. 470, dated October 21, 1997, «On Approving the Procedure for
Preparation of Decisions by the Government of the Republic of Tajikistan And For Processing and Issuance of Documents for
Export or Import of Selected Types of Goods, Works and Services».
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List 3. Domestic Goods, Commodities, and Products that must be Sold on the Tajik Goods and Commodity Exchange9
1. Vegetable materials (lint and cotton fuzz)2. Tobacco and tobacco products 3. Ores, slag, and ash 4. Fluorine, chlorine, bromine and iodine 5. Rare-earth metals 6. Sodium hydroxide (sodium hydrate) 7. Pharmaceutical products 8. Ready-made explosives 9. Untanned hides and skins 10. Silk 11. Sheep wool and other fine and coarse animal wool 12. Cotton 13. Natural and cultivated pearls; precious and semi-precious stones; precious metals and metals inlaid
with precious stones and products made from them 14. Ferrous metals and items made out of them15. Copper scrap and waste
List 2. Goods Subject to Review and Supervision Prior to Issuance of Export/Import Contracts8
Exports:1. Cotton fiber2. Unwrought aluminum3. Treated tobacco4. Silkworm cocoons5. Hides and skins6. Scrap of non-ferrous and ferrous metals7. Geranium oil8. Mineral fertilizer9. Precious, semi-precious, and decorative stonesImports:
Imports:1. Grain2. Flour3. Cereals4. Sugar5. Tea6. Vegetable oil7. Fuels and lubricants8. Mineral fertilizer9. Chemicals10. Seeds11. Automobiles, trucks, machinery, spare parts, tractors, and agricultural machinery
8 Resolution No. 437 of the Government of the Republic of Tajikistan «On the Procedure for Conducting Expert Reviews of
Contracts, Agreements, and Other Legal Documents that Affect the Economic Interests of the Republic of Tajikistan, And On the
Procedure for the Registration of, Accounting for, and Exercising Control over the Implementation of Contracts, Agreements, and
Documents», dated June 27, 1995. 9 Resolution of the Government of the Republic of Tajikistan, No. 237, dated June 8, 2001 «On Measures to Improve the Promotion
of Domestic Goods On Foreign Markets».
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List 4. Documents Required for Permission to Open a Foreign Bank Account10 1. A request letter justifying the need to open an account with a foreign bank based on the specifics of
the applicant’s business and indicating the difficulties that would otherwise occur if the applicant’s transactions are made through an account with an authorized Tajik bank;
2. Notarized copies of the constituent and registration documents;3. Balance sheet reports and profit and loss statements of the resident applicant for the past year and as
of the latest reporting date - certified by the relevant tax authority; 4. A statement from the tax authority with which the resident applicant is registered, indicating that:
a) the tax authority is aware of the resident’s intention to open an account in a foreign country, and b) the resident applicant does not have tax indebtedness.
5. A statement from the authorized bank which holds the hard currency account of the applicant with the following information:a) the applicant’s major source оf hard currency earnings and a detailed description of that source, andb) past Currency Regulation compliance or transgressions of the applicant.
6. Copies of documents that specify the type of account to be opened and the anticipated patterns of cash flow through that account.
16. Nickel scrap and waste17. Aluminum items 18. Lead scrap and waste 19. Insulated wires, cables, and electrical conductors with or without connectors
List 5. Goods for Which Export Customs Clearance Procedures are Conducted Only After the Export Contract Has Been Registered with the Directorate for Customs Supervision, Customs Department of the Ministry for Government Revenues and Levies11
1. Ethanol and alcoholic beverages;2. Tobacco products;3. Precious and semi-precious metals, alloys of such metals and items manufactured from them. This
includes precious metal ores, concentrates, scrap and waste;4. Rare-earth metals, raw materials for production of alloys of such metals and compounds and items
made from them;5. Precious and semi-precious stones;6. Scrap and waste of non-ferrous metals;7. Scrap and waste of ferrous metals;8. Unwrought aluminum (except that exported by TajAZ Co.) and aluminum products, and9. Geranium oil.
10 «The Procedure for Issuing Permits for [Tajik] Residents to Open Foreign Currency Accounts with Banks outside the Republic of
Tajikistan», approved by the Management Committee of the National Bank of Tajikistan, Directive No. 51, dated September 16,
1997.11 Executive Order No. 151 of the Chairman of the Customs Committee under the Government of the Republic of Tajikistan
«On Customs Clearance Procedures for Selected Exported Goods», dated December 6, 2001.
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List 6. Documents to be Submitted for the Registration of Export Contracts 1. Certificate of Registration as an Entity Engaged in Foreign Economic Activities; 2. A signed contract (agreement), traded at the Tajik Goods and Commodity Exchange or any other
contract (agreement) endorsed by the Exchange;3. Freight customs declaration;4. License (for goods that are subject to licensing);5. Account statement report issued by the authorized bank;6. Transportation and shipping documents;7. Certificate of Origin (for goods subject to mandatory certification), and8. A document confirming that the contract has been registered with the Directorate for Customs
Supervision, Customs Department, Ministry for Government Revenues and Levies of the Republic of Tajikistan.12
In addition, the entrepreneur must submit the following documents:13
confirmation by the authorized Tajik bank that 100% advance payment on the export contract has been transferred to the bank (for export of goods for which 100% advance payment is required);
commitment on the part of the authorized bank, guaranteeing that account transactions through that bank will be made within the established timeframes, i.e. 90 days for fermented tobacco and 120 days for other products.
List 7. Goods Manufactured in and Imported into the Republic of Tajikistan that are Subject to Mandatory Certification14
1. Children’s goods;2. Food products, agricultural products and animal feed (except bread and baked goods, dairy and
meat products and perishable confectionery);3. Medications and medical herbs;4. Consumer goods that contact the skin, food products, or drinking water;5. Fuel;6. Household chemical products;7. Perfumes and cosmetics;8. Herbicides, pesticides, and mineral fertilizer;9. Equipment, instruments and household items and equipment;10. Agricultural machinery and equipment;11. Individual protection kits;12. Electrical, radio, and electronic testing equipment for electromagnetic compatibility and safety;13. Construction materials and structures;14. Means of communications;15. Fire and explosion-proof substances, materials and items manufactured from such substances and
materials;16. Aircraft, parts, and operation of aircraft;17. Railroad rolling stock, energy supply, signaling and communications systems;18. Automobiles, busses and trucks;19. Mining equipment including electrical devices, and20. Explosive materials and blasting equipment, pressure vessels and load-lifting machinery and
equipment.
12 Paragraph 5 of Executive Order No. 151.13 Paragraph 6 of Decree No. 424 of the President of the Republic of Tajikistan «On Liberalization of Foreign Exchange and Export
Operations and On Measures to Ensure Complete Repatriation of Hard Currency Earnings to the Republic of Tajikistan» dated
February 24, 1996.14 Resolution of the Government of the Republic of Tajikistan, No. 249, dated June 2, 1994 «On the National System of Certification
of Products, Works, and Services in the Republic of Tajikistan».
