Because freelancers are not our employees and we don't pay taxes on their payouts, they must declare any income received via Mellow by themselves.
To carry on tax accounting in Turkmenistan for your Mellow income, you need to:
Be a tax resident
Have a tax ID number
Tax residence
Turkmenistan taxes its residents on their worldwide income, while non-residents are taxed on their Turkmen-source earnings only.
Individuals who have stayed for 183 days and more in the country during a full tax year are recognized as tax residents of Turkmenistan (Article 14 of the Tax Code of Turkmenistan).
Turkmenistan has double taxation agreements with a number of countries (full list), the provisions of which may override the applicable tax residence rules and other provisions of national legislation.
Taxpayer ID number
The taxpayer identification number (TIN) (hususy salgyt belgisi, HSB) is a mandatory number for individuals, legal entities, and individual entrepreneurs used for filing tax returns, performing financial transactions, and other purposes. It consists of 12 digits and is assigned by a tax authority at the place of the taxpayer's residence or business in Turkmenistan within three days after application.
Individuals must register as taxpayers within 10 days after the occurrence of circumstances resulting in a tax obligation
Individual entrepreneurs get TIN assigned from the date of state registration as an individual entrepreneur
To obtain a TIN (HSB), a freelancer must contact the tax authority of Turkmenistan and submit the following documents:
An application (filled in directly at the tax office using the form provided by Appendix 3 to the Guidelines for Tax Registration of Individuals and Legal Entities)
Identity card (a copy of passport or a document replacing it)
A document confirming the freelancer's registration (place of residence) in Turkmenistan
Individual entrepreneurs additionally submit a certificate of state registration as an individual entrepreneur
The insurance number (Ätiýaçlandyrýanyň hasaba alyş belgisi, ÄHB) is a mandatory nine-digit number for paying pension contributions and filing relevant returns, which is assigned to the taxpayer at the place of insurance registration. To receive it, freelancers need to submit an application using the form from Appendix 2 to the Guidelines for Insurance Registration/Deregistration of Individuals and Legal Entities. Within two days from the application, they get a Certificate of Insurance Registration of an individual / individual entrepreneur issued in line with Appendix 6.
Taxes and contributions payable by freelancers
Tax liabilities depend on the chosen tax status and/or eligibility for certain criteria. Turkmenistan has two tax statuses for Mellow users to choose from:
Individual (fiziki şahs/şahsy)
Individual entrepreneur (hususy telekeçi)
IMPORTANT! Mellow does not have the option to choose a tax status for freelancers based in Turkmenistan, but you can fill in your taxpayer ID in your account.
Taxpayers can also register on the E-tax portal (Elektron salgyt, E-Salgyt) to interact with tax authorities and submit tax returns online (learn more).
Read on for more details.
Individual
An individual (fiziki şahs/şahsy) is a default tax status of each person, which requires no special registration and applies to employed individuals and freelancers alike.
Individuals are liable to pay the following taxes and contributions:
Income tax (sahsy adamlardan alynýan girdeji salgydy) is calculated and paid at a single fixed rate of 10% (in accordance with Article 192 of the Tax Code of Turkmenistan). The tax base is the freelancer's gross income minus deductions. When calculating income tax, taxpayers may claim the following deductions (Article 188 of the Tax Code of Turkmenistan) for each month of the tax period:
A one-off base value deduction equal to the minimum salary in Turkmenistan (set at TMT 1,280 for 2024)
Deductions in line with Subclauses b–d of Clause 1 of Article 188 of the Tax Code of Turkmenistan
A deduction in the amount of voluntary pension and/or health insurance contributions
Income in foreign currency is converted into Turkmenistan's national currency at the official exchange rate of the Turkmenistan manat (TMT) as at the day of the transaction.
Reporting. You need to submit an Income Tax Return (şahsy adamlardan alynýan girdeji salgydy boýunça beýannama) on paper or online in accordance with Appendix 26 to the Tax Reporting Guidelines:
Citizens of Turkmenistan are to file it no later than January 25 of the year following the reporting year
Foreign citizens submit it annually no later than April 1 of the year following the reporting year
The tax authority may extend the deadline for submitting a tax return for up to 30 days upon a relevant taxpayer request (salgyt beýannamasyny bermegiň möhletini uzaltmak üçin arza) filed in line with Appendix 14 to the Guidelines for Completing Other Types of Documents (provided you paid the estimated tax equal to the amount of tax for the previous reporting period).
The tax is paid online:
By citizens of Turkmenistan – no later than February 10 of the year following the reporting year
By foreign citizens – no later than April 15 of the year following the reporting year
Useful links: instructions for filling out tax returns; other types of documents submitted to the tax authority and guidelines for filling them out; FAQ.
Compulsory pension insurance contributions (döwlet pensiýa ätiýaçlandyrmasy) are paid in the amount of 10% of the minimum salary (set at TMT 1,280 for 2024).
Reporting. You need to submit an online Return on Contributions for State Pension Insurance (Döwlet pensiýa ätiýaçlandyrmasyna pensiýa gatançlarynyň tölenendigi hakynda Beýannama) in accordance with Appendix 2 of the Guidelines for Completing. The return is due to be filed before the 15th day of the second month following the reporting half-year. Contributions must be paid online by the same deadline.
Useful links: pension insurance legislation; FAQ.
Special-purpose duty for the improvement of urban and rural territories (şäherleriň, şäherçeleriň we oba ýerleriniň çäklerini abadanlaşdyrmak üçin belli bir maksada gönükdirilen ýygym) is payable in the amount of TMT 5 per month. Individuals are not required to do any reporting. The payment deadline is the same as for income tax.
Voluntary contributions:
Pension insurance (pensiýa ätiýaçlandyrmasy) under a voluntary pension insurance contract (meýletin pensiýa ätiýaçlandyrmasy hakynda şertnama) signed with the local body of the Pension Fund of Turkmenistan. It amounts to at least 2% of the individual's income and is paid online.
Health insurance (meýletin saglygy goraýyş ätiýaçlandyrmasy) under a voluntary health insurance contract (meýletin saglygy goraýyş ätiýaçlandyrmasy hakyndaky şertnama) signed with a medical institution at the place of residence (“Health House”). The rate is 3% of income, or (in case of no systematic income) of the base amount used for calculating state voluntary health insurance contributions (set at TMT 750).
Useful links: more on voluntary health insurance; FAQ; health insurance legislation.
Individual entrepreneur
An individual entrepreneur (hususy telekeçi) is an individual who engages in entrepreneurial activities without registering as a legal entity.
Restrictions: only individuals aged 18+ or married before the specified age (unless other age restrictions apply to your type of activity). Foreign citizens must have a residence permit/permanent residence in Turkmenistan.
Freelancers can apply for the individual entrepreneur status upon a personal visit to the tax authority at the place of their registration / tax accounting.
To learn more about registration and key requirements, see the Guidelines for State Registration of Individual Entrepreneurs.
While not part of the individual entrepreneur registration process, some things may be required for you to carry on your business:
Licensing: Individual entrepreneurs engaged in certain types of activities need a license
Registration with the Pension Fund of Turkmenistan as a payer of pension contributions (made at the place of tax registration)
Opening a bank account: It is up to you, but a bank account is required for any cashless payments
Turkmenistan has the following tax regimes for individual entrepreneurs:
General tax regime
The default tax regime for individual entrepreneurs with no restrictions in terms of types of activities.
It includes the following taxes and contributions:
Income tax (sahsy adamlardan alynýan girdeji salgydy) is similar to income tax paid by individuals in terms of rates and requirements, with certain exceptions:
Deductions are based on documented business expenses and losses (can be carried forward for three years).
Note that the first tax period for individual entrepreneurs registered between January 1 and September 30 is counted from the date of registration to the end of the corresponding year, while those registered from October 1 to December 31 have it from the date of registration to the end of the next calendar year.
Value-added tax / VAT (goşulan baha üçin salgyt) is paid at the rate of 15%. The tax base includes all income from the performance of works, sales of goods, and rendering of services in Turkmenistan.
A VAT return (hususy telekeçiler üçin goşulan baha üçin salgyt boýunça beýannama) is submitted using the form specified in Appendix 2 of the Tax Reporting Guidelines no later than the 20th day of the month following the reporting half-year (January 1 to June 30 and July 1 to December 31).
The tax is paid based on a tax notice (goşulan baha üçin salgydyň hasaplanylan we tölenmäge degişli pul möçberi hakynda habarnama) sent by the tax authority in accordance with Appendix 9 to the Tax Reporting Guidelines no later than August 1 of the current year and no later than February 1 of the following year respectively.
Tax payment deadline is before September 1 of the current year and March 1 of the following year respectively.
Accounting and reporting. The VAT payer must issue an invoice (salgyt hasap-faktura) in two counterparts for the recipient of goods, works, or services using the form set out in Appendix 5 to the Tax Reporting Guidelines no later than five days from the date of performance of works / provision of services.
Individual entrepreneurs who do not have employees pay compulsory pension insurance contributions (döwlet pensiýa ätiýaçlandyrmasy) every month in the amount of at least 10% of the minimum salary in Turkmenistan. The payment deadline and reporting rules are the same as those for individuals.
Individual entrepreneurs who have employees pay contributions in the amount of 20% of each employee's salary.
Reporting. You need to submit a Return on Contributions for State Pension Insurance (Döwlet pensiýa ätiýaçlandyrmasyna pensiýa gatançlarynyň tölenendigi hakynda Beýannama) in line with Appendix 1 of the Guidelines for Completing no later than the 20th day of the month following the reporting month.
Contributions are paid online monthly, no later than the day when you withdraw cash from the bank to pay salaries or the day you make cashless transfers to employees' bank accounts.
Useful links: pension insurance legislation; FAQ.
Special-purpose duty for the improvement of urban and rural territories (şäherleriň, şäherçeleriň we oba ýerleriniň çäklerini abadanlaşdyrmak üçin belli bir maksada gönükdirilen ýygym) is 0.3% of the gross income minus VAT, but not less than TMT 5 per month.
Individual entrepreneurs file a return using the form set out in Appendix 39 to the Tax Reporting Guidelines before February 15 of the year following the reporting one.
The duty is paid no later than February 25 of the year following the reporting year.
Simplified tax regime
The simplified tax regime (hususy telekeçileriň girdejilerine salgyt salmagyň ýeňillikli ulgamy) is a special tax regime that exempts an entrepreneur from paying income tax and VAT. It applies only to individual entrepreneurs carrying out certain types of activities (see the list).
Freeleances can register by submitting an application (girdeji salgydynyň bellenen ululygynyň tölenendigine şaýatlyk edýän tassyknamanyň berilmegi (onuň uzaldylmagy) üçin arza) in line with Appendix 30 of the Recommendations on the Use of Forms of Tax Returns and Other Documents at the place of their tax registration, and paying a fixed patent fee at least 10 days before starting the intended entrepreneurial activity.
Upon registration, an individual entrepreneur obtains a patent (hususy telekeçiler tarapyndan girdeji salgydynyň bellenen ululygynyň tölenendigine şaýatlyk edýän tassyknama) in line with Appendix 29.
When applying this regime, the following taxes and contributions are payable:
A fixed patent fee (girdeji salgydynyň bellenen ululygy/ bellenen patent tölegi) in accordance with the type of activity (we recommend that you inquire about the applicable activities and rates directly with the tax authority). The fee provides for no deductions or benefits.
It is to be paid at least 10 days before you start the intended entrepreneurial activity (the activity period must be at least three months). The amount payable can be changed if:
The freelancer's activity provides for a higher fee
The individual entrepreneur terminates activities. The fee is then recalculated based on a relevant application
Additional patent fee (goşmaça patent tölegi) at the rate of 2% of gross income from the sale of goods, as well as income and expenses (losses) from non-operating transactions (see the list in Clauses 5 and 6 of Article 200 of the Tax Code of Turkmenistan).
Reporting. You need to submit an Income Tax Return for Individual Entrepreneurs Applying the Simplified Taxation System (salgyt salmagyň ýönekeýleşdirilen ulgamy degişli edilen şahsy adamlardan-hususy telekeçilerden alynýan girdeji salgydy boýunça beýannama (umumy girdejiden tölenilýän girdeji salgydy)) using the form set out in Appendix 28 to the Recommendations on the Use of Forms of Tax Returns and Other Documents. The return is due to be filed before the 15th day of the second month following the reporting period (year/half-year).
The fee is paid before the 25th day of the second month following the reporting period in the form of an advance payment from the funds on the individual entrepreneur's bank account.
The rules for compulsory pension insurance contributions are the same as those under the general tax regime for individual entrepreneurs.
Additional info
The Ministry of Finance and Economy of Turkmenistan (Türkmenistanyň maliýe we ykdysadyýet ministrligi)
Mejlis (Parliament) of Turkmenistan (Türkmenistanyň Mejlisi (Parlamenti))
Digital Services Platform of the Ministry of Finance and Economy of Turkmenistan (Türkmenistanyň maliýe we ykdysadyýet ministrliginiň sanly hyzmatlar gurşawy)
The Tax Department of the Ministry of Finance and Economy of Turkmenistan (Türkmenistanyň maliýe we ykdysadyýet ministrliginiň Salgyt Müdiriýeti)
The Ministry of Labor and Social Protection of the Population of Turkmenistan (Türkmenistanyň Zähmet we ilaty durmuş taýdan goramak ministrligi)
The Ministry of Health and Medical Industry of Turkmenistan (Türkmenistanyň Saglygy goraýyş we derman senagaty ministrligi)
Income received through Mellow is declared using certificates and invoices, and in accordance with the offer agreement.
If you have any questions, get in touch via the chat in your Mellow account or email us at [email protected].