Dushanbe, Tajikistan, June 13, 2008—
IFC, a member of the World Bank Group, has helped Tajikistan's government launch a simplified taxation system that will ease the process of calculating and paying taxes for small business owners. Beginning in July 2008, the new lump-sum taxation system will combine income, social, and retail trade taxes into one fixed payment.
On average, small businesses in Tajikistan are visited by tax inspectors six times per year. The new system will shorten considerably the time required for entrepreneurs to comply with tax regulations. It is one of several policy recommendations by IFC that have been adopted by the government since 2006, when IFC published the survey entitled "Business Environment in Tajikistan as Seen by Small and Medium Enterprises." About 100,000 individual entrepreneurs will benefit from the efficiencies of the new system.
"This system will reduce the number of inspections significantly as well as promote the expansion of individual entrepreneurs into new spheres of economic activity," said Ahliddin Davlatov, Tax Committee representative.
In addition to reducing costs associated with compliance, the system will include broader categories of economic activity. "Under the old system, entrepreneurs had limited ability to expand their businesses. For example, a bread baker could not start selling sweets without paying additional taxes to obtain a separate permit for their sale. The new system consolidates the activities of small businesses from 49 categories to 28 broader ones. So, a bread baker will now be able to expand his food product line without incurring extra time and costs," said Alisher Isaev, Policy Advisor for the IFC-Tajikistan Business Enabling Environment Project.
To date, IFC has conducted two comprehensive surveys of small and medium enterprises in Tajikistan. IFC also helped draft the new Inspections Law and amendments to the Tax Code, which were adopted in 2006 and resulted in an estimated savings of $7.6 million in direct and indirect costs for Tajikistan's SMEs. In partnership with NGOs and other organizations, IFC conducted 71 trainings for entrepreneurs and more than 600 government officials on the Inspections Law and reformed inspection procedures. IFC has also created checklists for use by inspection agencies and brochures on the new inspection procedures.
IFC's work to improve Tajikistan's business environment is supported with funds from Switzerland's State Secretariat for Economic Affairs.
About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC's vision is that people should have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit
www.ifc.org
.
About SECO
The State Secretariat for Economic Affairs is the Swiss Confederation's competence center for all the core issues related to economic policy. Its aim is to create basic regulatory and economic policy conditions to enable business to flourish and benefit all. SECO also represents Switzerland in the large multilateral trade organizations and international negotiations, and is involved in efforts to reduce poverty and help developing countries with transition economies build sustainable democratic societies and viable market economies. Each year, Switzerland spends about 1.9 billion francs on development cooperation and transition assistance to countries.
