THE LAW OF TURKMENISTAN ON FOREIGN INVESTMENT IN
TURKMENISTAN
This Law determines legal, economic and organizational bases of
realization of foreign investments on the territory of Turkmenistan and is
aimed to attract in national economy of foreign advanced technologies,
managerial experience, material and financial resources and the
development of market economy.
SECTION I. GENERAL PROVISIONS
Article 1. Foreign investment
By foreign investment there are meant all kinds of property and intellectual
values, which are invested by foreign investors into the object of
entrepreneurial and other activities on the territory of Turkmenistan in the
form of:
• foreign currency, other currency values, currency valid on the � territory of Turkmenistan; �
• personal and real property (buildings, constructions, equipment and
other material values) and property rights related to them;
• shares, bonds, other securities or forms of participation in enterprises;
• money requirements or rights of requirements of contract obligations
execution, which are of value;
• any rights of intellectual property having value, including copyrights,
rights on inventions, trade marks, firm names, industrial samples,
“knowhow” and others;
• right on economic activities, including exploration, extraction, output
of mine or exploitation of natural resources, received by Law or
agreement;
• paid services;
• other kinds of investments not prohibited by the legislation of � Turkmenistan. �
Foreign investors have the right to make investments in the forms of partial
participation in enterprises of Turkmenistan, creation of enterprises which
completely belong to foreign investors, or acquisition of functioning
enterprises, acquisition of movable and immovable property including
houses, apartments, premises, equipment, transport facilities and other
objects of property not prohibited by the legislation of Turkmenistan by
means of direct acquisition of property or in the form of shares, bonds,
other securities, acquisition of independence or the right to use lands and
concessions with the participation of legal entities or physical persons of
Turkmenistan for the use of natural resources on the territory of
Turkmenistan, acquisition of other property rights.
Article 2. Foreign Investors
The following persons can be the foreign investors in Turkmenistan:
foreign legal entities including international organizations and
associations and also the states;
foreign physical persons (foreign citizens or persons without citizenship).
Article 3. Enterprises with foreign investment
Enterprise with foreign investment is acknowledged and effect of the
present and effect of the present Law covers any form of enterprise
founded in accordance with the legislation of Turkmenistan in case when
the foreign investor possesses within the period of calendar year not less
than 20 per cent of declared Charter capital on an average or a part the
absolute value of which is established by the Cabinet of Ministers of
Turkmenistan.
Article 4. Legal regulation of foreign investment
Relations connected with foreign investment in Turkmenistan are regulated
by the Law “On investment activities in Turkmenistan”, by this Law
ans also by other legislative acts of Turkmenistan functioning on the
territory of Turkmenistan and international agreements.
In case if an international contract or agreement signed by Turkmenistan
determines different rules then those of the legislative acts of
Turkmenistan, the rules of international contract or agreement are used.
Article 5. Government policy in the sphere of foreign investment
Elaboration and implementation of the policy of Turkmenistan aimed at
attraction and use of foreign investment, coordination of investment
activities, the assistance to foreign investors in their activities on the
territory of Turkmenistan are performed by the Cabinet of Ministers of
Turkmenistan or by the authorized body.
SECTION II. CREATION OF LEGAL ENTITIES WITH FOREIGN
PARTICIPATION AND THEIR ACTIVITIES
Article 6. The creation of legal entities with foreign participation
By a legal entity with foreign participation any legal entity in
Turkmenistan is meant, entrepreneurial activities of which are invested by
subjects noted in Article 2 of the present Law, and foreign enterprises,
which are under jurisdiction of Turkmenistan. Legal entities with foreign
participation are created on conditions and in the order determined by the
Laws on enterprises, entrepreneurial activities, stock associations, by this
Law and other normative acts of Turkmenistan.
Article 7. Activities of legal entities with foreign participation
Legal entities with foreign participation may perform any kinds of
activities not prohibited by the legislation of Turkmenistan.
Special kinds of activities, which are determined by the Cabinet of
Ministers of Turkmenistan, may be carried out by legal entities with
foreign participation only with special permission.
Article 8. State registration
State registration of legal entities with foreign participation is carried out in
the order established by the Cabinet of Ministers of Turkmenistan. In order
to be registered the legal entities should submit the following documents:
• application of the founders;
• permission to make investment into the economy of Turkmenistan;
• agreement on the terms of establishing a joint venture;
• Charter (regulations);
• the document certifying financial position of the foreign investor.
The agreement and the Charter are to be submitted in two copies confirmed
by notary in the state language as well as in the language of original
documents.
The authority responsible for state registration has no right to require any
other documents except those mentioned above in this Law and has no
right to refuse the founder in accepting his documents for registration. The
resolution on registration or on rejection of registration is taken within two
weeks after the foundation documents have been submitted.
An enterprise is rejected in state registration in writing and rejection is
possible in case of violation by a founder of the procedure of establishing
an enterprise set by the legislation of Turkmenistan and also in case of non
compliance of the founding documents with the requirements of this Law.
The authority that has registered an enterprise with foreign participation
within three days sends the confirmed copies of foundation documents for
enterprises to be included into the State Register of Enterprises and to the
Taxation Department of the location place of enterprise.
Enterprises with foreign participation obtain the right of legal entity after
being included into the State Register of Enterprises. The information on
including it in State Register of Enterprise is published by the legal entity.
Article 9. Foundation documents of legal entity with foreign
participation
Foundation documents of legal entity with foreign participation must
determine the subject and purposes of activities, the amount of the Charter
fund, share participation, the order of liquidation of a legal entity and also
the other regulations provided by the legislation of Turkmenistan.
All the additions and amendments to the foundation documents of already
registered enterprises with foreign investments and their branches are also
subject to the state registration.
Additions and amendments to the foundation documents come into force
only after their registration and with the written consent of the authority
that issued the permission to make investments in the economy of
Turkmenistan.
Article 10. Appraisal of investment objects
Investment protects and programs, technicaleconomic calculations on the
construction of objects are subject to the obligatory state expert
examination including the compliance with the standards of seismic
firmness, fireburn security, ecological and sanitary requirements.
An investor at his discretion can carry out expert examination of the
protects additionally, involving state and other expert organizations on a
contract basis.
Article 11. Limitation of foreign investing
Foreign investing is not allowed into the objects creation and use of which
does not meet the requirements of sanitary, ecological and other standards
set by the legislation of Turkmenistan.
Article 12. Responsibility of foreign investors
The foreign investors are responsible for their actions violating the
legislation of Turkmenistan up to the holding up of their activities on the
territory of Turkmenistan by the resolution of Cabinet of Ministers.
Article 13. Requirements to production of foreign investors
The quality of foreign investors' production and provided services must � correspond to the standards accepted in Turkmenistan. � The legal entity with foreign participation can independently determine the � terms of realization of production (work, services), including prices on it. �
Article 14. Associations of legal entities with foreign participation
Legal entities with foreign participation may voluntarily join into unions,
associations, concerns, industrial, regional and other associations in the
order and on terms provided by the legislative acts of Turkmenistan.
Article 15. Customs privileges
Property imported in Turkmenistan as the contribution of a foreign investor
into the Charter fund of legal entities with foreign participation, and also
property intended for their own material production are exempted from
customs duty and the tax on import.
Property brought to Turkmenistan by foreign employees of legal entities
with foreign participation for personal needs is exempted from customs
duty.
Article 16. Export and import of production
Legal entities with foreign participation which have more than 30% of
foreign investment in hard currency in the Charter fund have the right to
export goods (works and services) of their own production without license
and in the volume adequate to the foreign investor's share in the Charter
fund on the basis of the certificate issued by the authorized body.
Legal entities with foreign participation have the right to import goods
(works, services) for their own economic activities without license.
The order of attribution of goods (works, services) to the goods of own
production of legal entities with foreign participation is established by the
Cabinet of Ministers of Turkmenistan.
After the payment of taxes and duties stipulated by the legislation of
Turkmenistan, the currency income of the legal entity with foreign
participation from he export of it's own production is left at it's disposal.
Article 17. Taxation
Legal entities with foreign participation pay taxes on profit in the amount
and in the order determined by the legislation of Turkmenistan.
For the period of the recovery of initial investments the foreign investor
who has invested the share of more than 30% of hard currency m the
Charter fund of an enterprise is exempted from the tax on dividens and the
enterprise is exempted from the tax on profit.
Enterprises with foreign participation directing their profit to reinvestment
are exempted from the taxation in the sphere directed to reinvestment after
the recovery of initial investment.
The other privileges for the legal entities with foreign participation may be
established by the Cabinet of Ministers of Turkmenistan.
Control of regularity of tax payments, financial and commercial activities
is implemented by the tax authorities and authorized organizations of
Turkmenistan.
Article 18. Bookkeeping report and accounts
Bookkeeping (statistical) report and accounts of legal entities with foreign
participation on the territory of Turkmenistan are recorded according to the
rules adopted in Turkmenistan.
Balance appraisal and property accounting of legal entities with foreign
participation are carried out in the way of recalculation of foreign
currency into the money unit of Turkmenistan according to the special rate
of the Central Bank of Turkmenistan.
Article 19. Obligations security
Property of the legal entity with foreign participation including attracted
borrowed funds, property rights including rights of buildings,
constructions, equipment, except rights of possession of land and other
natural resources can be used as security for all kinds of obligations.
Mortgaged property can be sold by the mortgage holder for the money unit
of Turkmenistan and for foreign currency including auctions, to other legal
entities and physical persons.
SECTION III. STATE GUARANTEES OF FOREIGN
INVESTMENT PROTECTION
Article 20. Legal regimen of foreign investment
Foreign investment on the territory of Turkmenistan have legal protection
provided by this Law, other legislative acts and international agreements
applicable on the territory of Turkmenistan.
Legal regimen of foreign investment and foreign investors activities
directed to the investment implementation cannot be less favorable than
regimen for property, property rights and investment activities of legal
entities and citizens of Turkmenistan.
In case the change of legislation concerning foreign investment, a foreign
investor can require that the Law that was in force at the moment of
investment registration must be used for the period of 10 years.
Article 21. Guarantees of property of foreign investors
Foreign investments in Turkmenistan are not subject to nationalization and
requisition. The property of foreign investor can be confiscated in case of
perpetration by the investor of illegal actions and only in the court order.
Article 22. Guarantees of the property transference right
Foreign investors and foreign employees are given the guaranteed right of
free property transference abroad. The order of transference through the
border of currency, payment documents, securities is determined by the
legislation of Turkmenistan on currency regulation.
Article 23. Guarantees of the use of foreign investor's profit
After paying taxes the profit of the foreign investor remains at his disposal
and can be reinvested on the territory of Turkmenistan.
Foreign investors have the right to open current and settlement accounts in
banks of Turkmenistan in the currency of Turkmenistan and currencies of
other states.
A foreign investor has the right to use the currency of Turkmenistan for
acquisition of foreign currency at the domestic currency market.
Article 24. Guarantees of the restitution of foreign investor's property
In case of termination of investment activities a foreign investor has the
right for the restitution of his investments not later than within 6 months
and also restitution of income in the form of money and goods on the real
market price.
Article 25. Protection of the rights on intellectual property of foreign
investors
The legislation of Turkmenistan provides implementation and protection of
the rights for intellectual property of foreign investors including copyright
for fiction, scientific works, programs for computers and data base, patents
and other rights for inventions and industrial samples, "knowhow,"
commercial secrets, service and trade marks, firm names and protection of
these rights from unfair competition.
Article 26. Money compensation of damages and indemnification for
losses of foreign investors
Foreign investors have the right to claim in the court order for money
compensation of damages and indemnification for losses resulting from
illegal actions of authorities or its officials. The amount of damages and
losses is determined according to the current market prices or on the basis
of appraisals of independent auditors.
The damages are compensated and losses are indemnified in the currency
used for the investment or in another currency acceptable for the investor.
From the moment of effect of the right for compensation and until the
compensation payment period the interests are added
SECTION IV. LABOUR AND SOCIAL RELATIONS OF LEGAL
ENTITIES
WITH FOREIGN PARTICIPATION GOVERNED BY LAW
Article 27. Regulation of legal labor relations in enterprises with
foreign participation
Legal labor relations of enterprises with foreign participation, including
clauses of social development and health protection of the staff are
regulated by collective and individual agreements (contracts) in accordance
with the legislation of Turkmenistan and international standards.
The staff of workers and employees of the legal entity with foreign
participation and it's administration may also include foreign citizens.
Article 28. Social insurance and security
Social insurance and security of employees of the legal entity with foreign
participation (with the exception of pensions security for foreign
employees) are regulated by the legislation of Turkmenistan.
The legal entity with foreign participation makes allocations for the state
social insurance and pension security of their workers at the rates
established for enterprises of Turkmenistan.
Allocations for the state social insurance of foreign employees of the legal
entity are made by an enterprise only in case if these workers want to use
the proper forms of social insurance on the territory of Turkmenistan.
Payments for pension security of foreign employees of enterprise are
transferred to the proper funds in countries of their permanent residence
place in the currency and on the terms of these countries.
Article 29. Regulation of the right for intellectual property at the
enterprise with foreign investments
The right for intellectual property between the legal entity with foreign
participation and an employee is regulated by the agreement between them.
The agreement points the obligation of the legal entity to provide for the
financial, industrial and social security of an employee in response to his
concession to the right of the patent possession.
If such an agreement was not signed the patent is issued to the author of the
invention and the legal entity may use this invention on the terms stipulated
in the agreement with the author the owner of the patent.
The patent on the invention, industrial sample and trade mark is issued to
the legal entity by proper authorities after the submission of the mentioned
agreement.
Article 30. Insurance of property and risks
Insurance of the property and risks of legal entity with foreign participation
is implemented at its discretion if it is not stipulated by the current
legislation on the territory of Turkmenistan.
SECTION V. LIQUIDATION OF THE LEGAL ENTITY WITH
FOREIGN PARTICIPATION AND SOLUTION OF ARGUMENTS
Article 31. Liquidation of legal entity with foreign participation
Liquidation of the legal entity with foreign participation, it's branches
(representations) is carried out in the order and in the cases pointed in the
foundation documents and according to the legislation of Turkmenistan.
In case if the founders have not contributed 50% of the initially declared
Charter capital within one year since the date of putting an enterprise in the
State Register of Enterprises, the banks of Turkmenistan terminate
performing operations on the accounts of such enterprises and inform on
this fact the authorities that registered this enterprise for adopting a
decision on it's liquidation.
Registration of liquidation of the legal entity with foreign participation is
implemented by the registration body on the basis of the statement of
liquidation commission and liquidation balance approved by the auditing
organization.
When liquidating the enterprise with foreign participation, its accumulated
assets are subject to taxation according to their real cost.
The legal entity with foreign participation is liquidated after the expiration
of 30 days period, after publishing it by the legal entity in press.
The enterprise with foreign participation is excluded from the State
Register after its liquidation.
Article 32. Solution of disputes of the foreign investor
Disputes of the foreign investor with legal entities and physical persons are
subject to the trials in courts of Turkmenistan or in arbitration by
agreement of the parties.
In case if the international agreement of Turkmenistan stipulates the other
rules of disputes' consideration, the rules of international agreement are
applied.
PRESIDENT OF TURKMENISTAN
SAPARMURAT TURKMENBASHY
With Changes and amendments
By Mejlis on October, 8, 1993