Law on Foreign Investments

LAW OF TURKMENISTAN ON FOREIGN INVESTMENTS*

 (Statement of the Mejlis of Turkmenistan, 2018 y., No.1, p. 17)


This Law determines legal basics of the activity of foreign investors, enterprises with foreign investments on the territory of Turkmenistan and aims at the attraction and effective use of foreign investments in Turkmenistan.

Part I. General Provisions

Article 1. Main Concepts Used in this Law

The following main concepts are used in this Law:

1) foreign investments mean an investment of foreign capital in an object of business activity on the territory of Turkmenistan in a form of objects of civil laws owned by a foreign investor including monetary funds, securities any other property, property rights having pecuniary valuation, exclusive rights to the results of an intellectual activity (intellectual property) as well as services and information;

2) foreign investors:

- a foreign legal entity including its branch and representative office in Turkmenistan;

- an international organization;

- a foreign State;

- a foreign natural person as well as a stateless person permanently residing on the territory of a foreign State on the day of making investments;

- a citizen of Turkmenistan having his/her permanent residence outside the territory of Turkmenistan;

3) an enterprise with foreign investments means en enterprise established on the territory of Turkmenistan in order established by the legislation of Turkmenistan owned by a foreign investor in full or on the basis of a share participation with legal entities and natural persons of Turkmenistan;

4) direct foreign investments mean possession, acquisition by a foreign investor not less than 10 percent of shares (portion, contribution) in the authorized fund of an enterprise established or being newly established on the territory of Turkmenistan; contribution of  capital  into capital assets of a branch of a foreign legal entity being established on the territory of Turkmenistan;

5) an investment project means a feasibility study, scopes and terms of implementation of capital investments including design estimates developed in accordance with the state standards (norms) as well as description of practical actions on the implementation of investments (business plan). A priority investment project means a project that is implemented on the basis of a resolution of the Cabinet of Ministers of Turkmenistan;

 6) a payback period of an investment project means a period from the day of commencement of financing of an investment project with the use of a direct investment to the day when a difference between an accumulated amount of net profit including amortization deductions and an amount of investment costs of an enterprise with foreign investments, a branch of a foreign legal entity obtain a positive value;

7) a reinvestment means the execution of capital investments in the objects of business activity on the territory of Turkmenistan out of profit (income) of a foreign investor, an enterprise with foreign investments that is received by them from foreign investments on the territory of Turkmenistan;

8) a free economic zone means an economic zone of a free business activity, national tourist zone as well as any other types of free economic zones, which procedure of establishment, functioning and liquidation is established by the legislation of Turkmenistan.

Article 2. Legislation of Turkmenistan on Foreign Investments

1. The legislation of Turkmenistan on foreign investments shall be based on the Constitution of Turkmenistan and comprises this Law and any other standard legal act of Turkmenistan.

2.  If the rules other than those containing in this Law and any other standard legal acts of Turkmenistan are established by an international agreement then the rules of an international agreement shall apply.

 Article 3. Forms of Execution of Foreign Investments

Foreign investments shall be executed in a form of:

1) share participation in enterprises jointly with legal entities and natural persons of Turkmenistan;

2) establishment of enterprises owned in full by foreign investors, branches of foreign legal entities or acquisition for property of existing enterprises;

3) purchase of immovable and movable property except those in civil circulation restricted by the legislation of Turkmenistan;

4) granting of foreign loans and lends;

5) acquisition of property and non-property rights established by the legislation of Turkmenistan.

Part II. State Policy in the Field of Foreign Investments and Mechanism of its Implementation

Article 4. State Policy in the Field of Foreign Investments

The development and realization of a state policy on the attraction of foreign investments, coordination of an investment activity, rendering assistance to foreign investors in their activity on the territory of Turkmenistan shall be carried out by the Cabinet of Ministers of Turkmenistan and a state body authorized by it (hereinafter – the authorized body).

Article 5. Competence of the Cabinet of Ministers of Turkmenistan

The Cabinet of Ministers of Turkmenistan shall:

1)     develop and implement a state policy in the field of an international investment cooperation;

2)     develop and ensure the implementation of state programs on the attraction of foreign investments;

3)     determine priority objects, branches and territories where it is reasonable to attract foreign investments as well as take a decision on the implementation of priority investment projects;

4)     exercise control of preparation and entering into investment agreements with foreign investors, enterprises with foreign investments relating to the implementation of priority investment projects by them;

5)     carry out any other functions on the attraction of foreign investments to economy of Turkmenistan.

Article 6. Competence of the Authorized Body

The authorized body shall:

1) develop and implement actions for the implementation of a state policy, promotion of the attraction of direct foreign investments to economy of Turkmenistan;

2) coordinate the activity in the field of foreign investments, establish effective mechanisms of a state and business partnership, provide for a cooperation between the bodies of public authority and management, local executive power and local government and foreign investors, enterprises with foreign investments;

3) carry out the establishment  and keeping of data base on a progress of preparation and implementation of investments projects with foreign investments including those implemented with a State share participation and on the basis of the use of foreign credits and grants;

4) arrange the conduction of expertise of investment projects with foreign investments as well as their registration;

5) provide potential foreign investors with marketing and information and consulting services as well as render a practical assistance requited by them;

6) exercise control of the fulfillment of obligations assumed by a foreign investor, enterprise with foreign investments for the implementation of investment projects;

7) monitor the attraction of funds of international financial institutions and countries-donors; study international markets of capitals and develop proposals for further attraction of foreign investments;

8) make proposals to the Cabinet of Ministers of Turkmenistan for the improvement of an investment climate and promotion of investment process and reduction of investment risks and administrative barriers;

9) implement measures aimed at the fulfillment the obligations of Turkmenistan arising from the international agreements, conduct actions on the international cooperation, study and use an advanced foreign experience;

10) exercise control of the execution by the bodies of public authority and management, local executive power and local government of the legislation of Turkmenistan in the field of foreign investments;

11) carry out any other functions aimed at the attraction of foreign investments, support and protection of foreign investors in Turkmenistan.

Article 7. Expertise and Registration of Investment Projects

1. Any investment project with foreign investments shall subject to a compulsory state expertise including meeting the standards of seismic stability and fire, explosion safety, ecological and sanitary and hygiene requirements.

2. Any expertise and registration of investment projects with foreign investments as well as a registration of any other forms of implementation of foreign investments shall be carried out in order established by the legislation of Turkmenistan.

Part III. Legal Regime of Activity of Foreign Investors, Enterprises with Foreign Investments

Article 8. Legal Regime of Activity of Foreign Investors, Enterprises with Foreign Investments

1. A national legal regime shall be provided to foreign investors, enterprises with foreign investments. A national legal regime means that a legal regime of the activity of foreign investors, enterprises with foreign investors and use of profit received from investments cannot be less favourable than a legal regime of the activity and use of profit received from investments provided to national investors.

2. A favourable legal regime shall be provided to foreign investors, enterprises with foreign investments carrying out their activity on the territory of a free economic zone. A favourable legal regime means that a legal regime of the activity of foreign investors, enterprises with foreign investments and use of profit received from investments shall not be less favourable than a legal regime of the activity and use of profit received from investments provided for investments of any third State.

3. Foreign investors shall have an option in size, composition and structure of a capital of an enterprise being established unless the legislation of Turkmenistan stipulates otherwise.

4. Types of activity and / or territories in respect of which the investment activity is restricted or prohibited as well as any other restrictions for foreign investors may be established by the law of Turkmenistan to that extend only required for the purpose of protection of the basis of a constitutional structure, defense and security of Turkmenistan.

5. In case if any changes in the legislation of Turkmenistan leads to prohibitions and restrictions worsening a legal regime of the activity of foreign investors, enterprises with foreign investments then the legislation of Turkmenistan applicable on the day of registration of foreign investments shall apply to them within ten years and to enterprises of foreign legal persons, branches of foreign legal entities implementing the investment projects on the basis of a resolution of the Cabinet of Ministers of Turkmenistan within a payback period of the investment project declared in order established by the standard legal acts of Turkmenistan upon its registration. The provisions of this part shall also apply to the tax legislation of Turkmenistan. The provisions of this part shall not apply in case of any change in the legislation of Turkmenistan for the purpose of protection of the basis of a constitutional structure, defense and safety of the State.

6. In relation to foreign investments of the State that restricts a legal regime of investment on its territory for economic entities of Turkmenistan similar restrictions may be established by the legislation of Turkmenistan.

Article 9. Customs Facilities

1. The property shall be exempted from customs duties imported to Turkmenistan:

1) as a contribution of a foreign investor into the authorized fund of an enterprise with foreign investments, in capital assets of a branch of a foreign legal entity in accordance with a list declared;

2) by foreign investors, enterprises with foreign investments as investments on the basis of the international agreements and contracts concluded in accordance with the resolutions of the Cabinet of Ministers of Turkmenistan. The property specified in paragraph 2 of this part shall be exempted from customs duties for a payback period of an investment project established by a relevant agreement.

2. In case of alienation of property specified in part one of this Article for three years after its importation to Turkmenistan a collection of amounts of customs duties including fines charged for a delay in their payment shall be carried out in order established by the legislation of Turkmenistan.

3. The customs duties shall not be levied for customs formalities of a property specified in part one of this Article.

Article 10. Tax Regulations of Foreign Investments

Any taxation of foreign investments, enterprises with foreign investments including granting tax facilities to them shall be established by the Tax Code of Turkmenistan.

Article 11. Any Other Measures of Promotion of Foreign Investments

1. Enterprises with foreign investments, branches of foreign legal entities shall have the right to export products (works, services) of their own production and import the products (works, services) for their own needs without a license.

2. Foreign investors, enterprises with foreign investments carrying out their activity on the territory of a free economic zone shall have the right to lease lands depending on a payback period of investment projects in order established by the legislation of Turkmenistan.

3. The registration of investment projects as well as enterprises with foreign investments, branches and representative offices of foreign legal entities carrying out the construction and operation of objects in a free economic zone shall be carried out without levying registration fees.

4. Foreign investors, enterprises with foreign investments carrying out their activity on the territory of a free economic zone shall be exempted from:

1) payment of consular and registration fees;

2) payment of exchange fees for the registration of contracts;

3) payment of a state due for issue of a license and its re-registration;

4) lease payment for lands in order and on the conditions stipulated by the legislation of Turkmenistan;

5) deductions from profit to off-budget funds established by the legislation of Turkmenistan.

5. Certification of equipment and materials imported to Turkmenistan by foreign investors, enterprises with foreign investments as well as their contractors and subcontractors carrying out their activity on the construction and operation of objects on a territory of a free economic zone shall be carried out without levying any payment for certification services.

6. Enterprises with foreign investments, branches of foreign legal entities shall determine the conditions of selling of their products (works, services) independently except products (works, services) which prices are controlled by the State.

7. In the interests of social and economic development of Turkmenistan on priority investment projects, concession agreements ensuring a stable economic growth, progressive structure changes in economy of the country, strengthening and increase of export potential as well as increase in a level of employment of population any other privileges may be established for foreign investors and enterprises with foreign investments by the legislation of Turkmenistan.

Article 12. Commencement and Termination of Business Activity

The establishment,  state registration as well as liquidation of an enterprise with foreign investments, branch and representative office of a foreign legal entity, state registration and termination of the activity of a foreign natural person and a stateless person as an individual entrepreneur shall be carried out in order established by the legislation of Turkmenistan.

Article 13. Regulation of Labour Legal Relationship

1. The labour legal relationship between an enterprise with foreign investments, branch of a foreign legal entity and their employees including those not being citizens of Turkmenistan shall be regulated by the labour legislation of Turkmenistan.

2. Salaries, wages, remunerations and any other sums of money legally received by employees of an enterprise with foreign investments, branch of a foreign legal entity not being citizens of Turkmenistan may be transferred outside Turkmenistan in order established by the legislation of Turkmenistan.

Article 14. Social Insurance and Social Security

Enterprises with foreign investments, branches of foreign legal entities shall:

1) make deductions for the state social insurance for their employees being citizens of Turkmenistan in order established by the legislation of Turkmenistan;

2) have the right to transfer payments for social insurance and social security for an employee being a foreign natural person or a stateless person to the relevant funds of the State of  his/her nationality or a permanent residence.

Article 15. Insurance of Foreign Investments

The insurance of property and risks of foreign investors, enterprises with foreign investments shall be carried out at their discretion unless the legislation of Turkmenistan stipulates otherwise.

Article 16. Observance of Bona Fide Competition by Foreign Investors, Enterprises with Foreign Investments

Foreign investors, enterprises with foreign investments shall be liable not to allow an unfair competition including the establishment on the territory of Turkmenistan an enterprise for the production of any goods being in higher demand and then the termination of its activity for the purpose of market promotion of similar goods of foreign origin as well as entering into an agreement for prices or distribution of market of goods limiting the rights of any other economic entities in Turkmenistan.

Article 17. Accounting and Reporting

Accounting, statistical accounting and reporting of enterprises with foreign investments, branches and representative offices of foreign legal entities on the territory of Turkmenistan shall be maintained in order established by the legislation of Turkmenistan.

Article 18. Estimation of Foreign Investments

An estimation of investments in the authorized fund of an enterprise with foreign investments and capital assets of a branch of a foreign legal entity shall be made in national currency of Turkmenistan in order established by the legislation of Turkmenistan.

Part IV. State Guarantees of Foreign Investments Protection

Article 19. Guarantees of Legal Assistance of Activity of Foreign Investors, Enterprises with Foreign Investments

1. The protection of rights and interests of foreign investors, enterprises with foreign investments on the territory of Turkmenistan shall be guaranteed in accordance with this Law and any other standard legal acts of Turkmenistan.

2. Foreign investors, enterprises with foreign investments that have initially imported the property and information in a documentary form or in an electronic form as a foreign investment to the territory of Turkmenistan and registered them shall have the right to free (without quotation, licensing and application of any other measures of non-tariff regulation of a foreign trade activity to them) exportation of the said property and information outside Turkmenistan.

3. Foreign investors, enterprises with foreign investments shall acquire a legal assistance, guarantees and privileges established by this Law from the day of registration of an investment project with foreign investments, enterprise with foreign investments on the territory of Turkmenistan.

4. Foreign investors, enterprises with foreign investments upon reinvestment of profit received from foreign investments shall enjoy a legal assistance, guarantees and privileges in a full scope established by this Law.

5. The bodies of public authority and management, local executive power and local government shall not have the right to interfere in an economical activity of foreign investors, enterprises with foreign investments carried out in accordance with the legislation of Turkmenistan.

The bodies of public authority and management, local executive power and local government upon detection of any facts of infringement of the legislation of Turkmenistan by foreign investors, enterprises with foreign investments shall have the right, within a scope of their competence, to take measures directly related to elimination of a particular infringement and shall not have the right to use any facts of infringement available as a basis for interference, suspension or restriction of any other legal activity of foreign investors, enterprises with foreign investments.

6. The acts of bodies of public authority and management, local executive power and local government conflicting this Law, infringing the rights of foreign investors, enterprises with foreign investments shall be recognized invalid, and actions based on them illegal in order established by the legislation of Turkmenistan.

Article 20. Guaranties of Provision of Visa Regime and Stay on the Territory of Turkmenistan

1. Foreign natural persons and stateless persons as well as their representatives, representatives of foreign legal entities, international organizations and foreign States being foreign investors, citizens of foreign states working at enterprises with foreign investments, in branches and representative offices of a foreign legal entity and members of their families staying in Turkmenistan to carry out the investment activity shall have the right:

1) to obtain a multiple visa for a period not less than one year;

2) to free movement on the whole territory of Turkmenistan except territories where the conditions and procedure of stay is established by the legislation of Turkmenistan. Entry visas and permits shall be issued in a speeded up order approved by the Cabinet of Ministers of Turkmenistan to  foreign natural persons  and stateless persons as well as their representatives, representatives of foreign legal entities, international organizations and foreign States being foreign investors, citizens of foreign States working at enterprises with foreign investments, in branches and representative offices of a foreign legal person arriving in Turkmenistan for the work for a period of the construction and operation of objects on the territory of a free economic zone.

2. Foreign natural persons and stateless persons being foreign investors who own enterprises with foreign investments in full shall have the right to a permanent residence in Turkmenistan in order established by the legislation of Turkmenistan.

Article 21. Guarantees of Use on the Territory of Turkmenistan and Transfer Outside Turkmenistan Incomes and Profits

1. Foreign investors, enterprises with foreign investments shall have the right to open bank accounts in national and foreign currency in banks on the territory of Turkmenistan in accordance with the legislation of Turkmenistan.

2. Foreign investors, enterprises with foreign investments after payment of taxes and any other obligatory payments stipulated by the legislation of Turkmenistan shall have the right to free use of incomes and profits on the territory of Turkmenistan including reinvestment for purposes not contradicting the legislation of Turkmenistan as well as for free transfer outside Turkmenistan incomes, profits and any other legally received sums of money in foreign currency in connection with investments executed by them earlier including:

1) incomes from foreign investments received in a form of profit, dividends, interests and any other incomes;

2) sums of money in pursuance of obligations of an enterprise with foreign investments or a branch of a foreign enterprise under contracts or any other transactions;

3) sums of money received by a foreign investor due to liquidation of an enterprise with foreign investments or alienation of invested property, property rights and exclusive rights on the results of an intellectual activity;

4) compensations stipulated by Article 26 of this Law.

3. A conversion of monetary funds as well as money transfers to and from Turkmenistan  in foreign currency relating to foreign investments shall be carried out by foreign investors, enterprises with foreign investments in order established by the legislation of Turkmenistan.

Article 22. Guarantees of Assignment of Rights and Obligations of Foreign Investors, Enterprises with Foreign Investments to any Other Person

1. Foreign investors, enterprises with foreign investments shall have the right to assign their rights and obligations under a contract including a cession and transfer of a debt to any other person in accordance with the civil legislation of Turkmenistan.

2. In case if a foreign State or a state body authorized by it makes payment in favour of foreign investors, enterprises with foreign investments under guarantee (insurance contract) provided to them in relation of investments executed on the territory of Turkmenistan and the rights (cession) of foreign investors, enterprises with foreign investments on the said investments are transferred to this foreign State or state body authorized by it then Turkmenistan shall recognize a lawfulness of such transfer of the rights (cession) in accordance with an international agreement which participants are the said foreign State and Turkmenistan.

Article 23. Guarantees of Protection of Intellectual Property Rights

Exercising of intellectual property rights of foreign investors, enterprises with foreign investments and their protection shall be secured in accordance with the legislation of Turkmenistan.

Article 24 Guarantees of Access of Foreign Investors, Enterprises with foreign Investments to Information

1. Foreign investors, enterprise with foreign investments shall have the right to access to the information in order established by the legislation of Turkmenistan.

2. The standard legal acts of Turkmenistan infringing on the interests of foreign investors, enterprises with foreign investments in any way shall be accessible to them and in cases directly stipulated by the legislation of Turkmenistan they shall be published.

Article 25. Guarantees of Return of Foreign Investments due to Termination of Investment Activity

1. Foreign investors, enterprises with foreign investments shall have the right to terminate the investment activity in Turkmenistan. After termination of the investment activity foreign investors, enterprises with foreign investments shall have the right to a free return of their assets either in a form of money or in kind received as a result of execution foreign investments without prejudice to the fulfillment of obligations of foreign investors, enterprises with foreign investments in relation to Turkmenistan or other creditors.

2. Any return of funds of foreign investors, enterprises with foreign investments may be suspended on the basis of kazyyat’s award in cases established by the laws of Turkmenistan.

Article 26. Guarantees of Compensation upon Property Compulsory Recoverable Seizure

1. Any compulsory recoverable seizure of property of foreign investors, enterprises with foreign investments for property or for temporary use by the State in a form of requisition shall be allowed only in cases stipulated by the law for the purpose of overcoming circumstances of an emergency nature including natural disasters, accidents, epidemics, epizootic and their consequences.

2. Upon cessation of an action of circumstances due to which a requisition has been performed foreign investors, enterprises with foreign investments shall have the right to request a return of the remained property with a condition of return of an amount of compensation received by them for requisition property less losses due to depreciation of the retained property.

3. Upon requisition of the property of foreign investors, enterprises with foreign investments a compensation shall:

1) be made immediately in foreign currency and transfer abroad at the investor’s will;

2) correspond to a commercial value of investments on the day of taken a decision on requisition.

4. An estimation of requisition property and losses due to its depreciation shall be made by an authorized body or an independent assessor in order determined by the legislation of Turkmenistan.

5. Settlements of disputes on lawfulness of requisition of property, payment of damages upon requisition of property shall be carried out in order stipulated by Article 29 of this Law.

Article V. Responsibility for Infringement of Legislation of Turkmenistan on Foreign Investments. Settlement of Disputes

Article 27. Responsibility for Infringement of Legislation of Turkmenistan on Foreign Investments

1. The authorized persons of bodies of public authority and management, local executive power and local government that infringe the legislation of Turkmenistan on foreign investments shall bear responsibility in accordance with the legislation of Turkmenistan.

2. Foreign investors, enterprises with foreign investments upon carrying out of their investment activity on the territory of Turkmenistan shall comply with the legislation of Turkmenistan as well as the obligations assumed for the implementation of investment projects. In case of infringement of the legislation of Turkmenistan and contractual obligations foreign investors, enterprises with foreign investments shall bear responsibility in accordance with the legislation of Turkmenistan and conditions of a contract concluded.

3. The property of foreign investors, enterprises with foreign investments, branches of foreign legal entities including the funds attracted as well as the property rights may be used by them as funds for securing their obligations in order established by the legislation of Turkmenistan.

4. A foreign legal entity shall bear responsibility for the activity of a branch or representative office established by it on the territory of Turkmenistan in order stipulated by the legislation of Turkmenistan.

Article 28. Responsibility of Turkmenistan for Foreign Investments

Turkmenistan shall not be responsible for the obligations of foreign investors, enterprises with foreign investments except cases when these obligations are guaranteed by the State.

Article 29. Settlement of Disputes

Any disputes in connection with the execution of foreign investments on the territory of Turkmenistan shall be settled by means of negotiations or their consideration in Arachy Kazyyat of Turkmenistan or upon an agreement between the Parties in the arbitration.

Part VI. Final Provision

Article 30. Coming of this Law into Effect

1. This Law shall come into effect from the day of its official publication.

2. To recognize to become invalid the Law of Turkmenistan “On Foreign Investments in Turkmenistan” adopted by Medjlis of Turkmenistan on 19 Makhtumkuli 1992 and all subsequent laws or their relevant parts where any changes or additions have been made from the day of coming this Law into effect.

3. The standard legal acts of Turkmenistan contradicting this Law shall subject to be brought to conformity with this Law within one month form the day of coming this Law into effect.

 

President of Turkmenistan

Gurbanguly BERDYMUKHAMEDOV.



Ashgabat city

March 3, 2008

№ 184-III.