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TAX CODE OF THE REPUBLIC OF TAJIKISTAN SECTION VI. GENERAL PROVISIONS CONCERNING THE PROFIT TAX
AND INCOME TAX CHAPTER 23. TAX ACCOUNTING RULES Article 181. Tax Period (Year) The tax period (year) shall be a calendar year. Article 182. Procedure for the Accounting of Income and Expenditures 1. A taxpayer shall be required to maintain accurate and timely accounting records of income and expenditures on the basis of documented data and to apply income and expenditures to the appropriate reporting period in which the income was earned or the expenditures were made, depending on the accounting method used in accordance with this chapter for the proper recording of taxable income (profit). The accounting method used by a taxpayer shall be understood to mean all aspects of the timing and procedure for the recording of receipts and expenses, such as cash basis or accrual accounting, and the method used to record production expenses and other capital expenses. 2. A taxpayer shall be required to maintain accounting records of all transactions related to its operations, which allow one to determine their beginning, progression, and end. 3. Except as otherwise established in this article, taxable income (profit) must be calculated according to the same accounting method that the taxpayer uses for its regular accounting records, with the necessary adjustments to comply with the requirements of this Code. 4. Except as otherwise established in this article, a taxpayer may maintain accounting records for tax purposes on a cash basis or an accrual basis, provided that the taxpayer applies the same method throughout the tax year. 5. A taxpayer must maintain accounting records on an accrual basis in the tax year if: 1) its turnover in the previous year exceeded 5 times the volume of operations established for registration for value-added tax purposes; or 2) it is required to maintain double-entry accounting records in accordance with the regulatory legal acts in force. A taxpayer that is required to maintain accounting records on an accrual basis for the first time in accordance with the provisions of this item must maintain accounting records on an accrual basis in all subsequent years as well. 6. Banks, credit unions, and micro-credit deposit institutions shall be required to maintain accounting records on an accrual basis from the time that they begin operation. Micro-loan institutions and micro-loan funds shall maintain accounting records for taxation purposes on a cash basis from the time that they begin operation, regardless of the provisions of this article. 7. For an individual, the requirement regarding accrual accounting shall apply only to income and deductions related to commercial activity. 8. In the event of a change in the accounting method used by a taxpayer, adjustments in the accounting of income, expenditures, and other elements that affect the tax amount must be made in the year that the accounting method is changed, so that none of these elements are omitted or counted twice. 9. In the case of payers of the value-added tax, income and expenditures shall be recorded without the value-added tax, except in cases of expenditures for which a value-added tax credit is not allowed. Article 183. Principles of Cash Basis Accounting of Income and Expenditures A taxpayer who performs cash basis accounting must record income as of the date it is received and deduct expenses as of the date they are effected in accordance with Articles 184 and 185 of this Code. Article 184. The Moment Income Is Received in Certain Cases When Cash Basis Accounting Is Used 1. If a taxpayer receives money, the moment income is received shall be the moment that cash funds are received, and in the case of a noncash payment, the moment money is posted to the taxpayer's bank account or to another account which the taxpayer controls or from which the taxpayer has the right to receive said funds. 2. In the event of the cancellation or discharge of a taxpayer's financial obligation, and specifically in the event of a mutual netting of obligations, the moment income is received shall be the moment the obligation is canceled or discharged. Article 185. The Moment Expenses Are Effected in Certain Cases When Cash Basis Accounting Is Used 1. The moment that expenses are effected shall be the moment a taxpayer actually effects the expense, except as otherwise provided in this article. 2. If a taxpayer makes a monetary payment, the moment expenses are effected shall be the moment cash is paid, and in the event of a noncash payment, it shall be the moment a bank receives an instruction from the taxpayer to transfer funds (assuming that funds are available on accounts at the bank). 3. In the event of the cancellation or discharge of a financial obligation to a taxpayer, and specifically in the event of a mutual netting of obligations, the moment expenses are effected shall be the moment the obligation is canceled or discharged. 4. When interest is paid on a debt obligation or when payments are made for the leasing of property, if the term of the debt obligation or the leasing agreement covers several tax periods, the amount of interest paid (leasing payments made) actually deductible for the tax period shall be the amount of interest (leasing payments) due for the given period. Article 186. Principles of Accrual Accounting of Income and Expenditures A taxpayer who performs accrual accounting must record income and expenses, respectively, at the moment the right to receive income is acquired or an obligation to effect a payment is incurred, regardless of the time the income is actually received or a payment is actually made in accordance with Articles 187 and 187 of this Code. Article 187. The Moment Income Is Received When Accrual Accounting Is Used 1. The right to receive income shall be considered to be acquired if the amount in question is payable unconditionally to the taxpayer or the taxpayer has performed all of its obligations under a transaction or agreement. 2. If a taxpayer performs work or provides services, the right to receive income shall be considered to be acquired at the moment of the final completion of work or services specified in a transaction or agreement. If a transaction or agreement calls for the performance of work or services in stages, the right to receive income shall be considered to be acquired with respect to each stage at the time of the final completion of a particular stage of work or services, except as provided under Article 190 of this Code. 3. If a taxpayer receives income or has the right to receive income in the form of interest or income from the leasing of property, the right to receive income shall be considered to be acquired at the moment the term of the debt obligation or leasing agreement expires. If the term of a debt obligation or leasing agreement covers several tax periods, income shall be distributed among these tax periods in the order in which it is accrued. Article 188. The Moment Expenses Are Effected When Accrual Accounting Is Used 1. The moment expenses which relate to a transaction (agreement) are effected shall be considered the moment at which all of the following conditions are met, except as otherwise provided in this article: 1) a taxpayer unequivocally recognizes a financial obligation; 2) there is a sufficiently precise assessment of the size of the financial obligation; 3) all of the parties to the transaction or agreement have actually fulfilled all of their obligations under the transaction or agreement and the amounts in question are subject to unconditional payment. 2. In connection with the provisions outlined in item 1 of this article, a financial obligation shall mean an obligation assumed by a taxpayer in accordance with a transaction (agreement) for the purposes of the fulfillment of which another party to the transaction (agreement) will have to provide the taxpayer with the income in question (security in question) in cash or in another form. 3. In the case of the payment of interest on a debt obligation or making payments for leased property, the moment expenses are effected shall be considered the moment at which the term of the debt obligation or leasing agreement expires. If the term of a debt obligation or leasing agreement covers several tax periods, the expense shall be distributed among these tax periods in the order in which it is accrued. Article 189. Joint Ownership In the event of an agreement (both written and oral) regarding the joint ownership of property or joint commercial activity, or another type of agreement that calls for at least two owners, but without the establishment of a legal entity, income and deductions under the agreement shall apply to each owner and they shall be subject to taxation in accordance with their stake in the operation. Article 190. Income and Deductions on Long-Term Contracts 1. In the event that a taxpayer applies accrual accounting, income and deductions in connection with long-term contracts shall be reflected for each tax year in accordance with the extent to which the contracts have actually been carried out. 2. The extent to which a contract has been carried out shall be determined by comparing expenses incurred during the tax year against the total estimated expenses provided for under the given contract. 3. "Long-term contract" shall be understood to mean a contract for manufacturing, installation, or construction, or for the performance of auxiliary services, which is not completed within the tax year during which the work specified under the contract was begun, with the exception of contracts which, according to estimates, should be completed within six months of the date the work specified under the contract was started. Article 191. Procedure for Inventory Accounting 1. Inventory accounting for tax purposes shall be performed exclusively in accordance with the accounting regulations in force, which have been prepared on the basis of the Republic of Tajikistan legislation on accounting. 2. In inventory accounting a taxpayer shall be required to reflect in the tax records the value of goods that the taxpayer has produced or purchased, which is determined, respectively, on the basis of production expenses (production costs) or purchase price. Specifically, a taxpayer shall be required to include in the cost of these goods expenses associated with their storage and transport. 3. In inventory accounting a taxpayer shall have the right to estimate the cost of goods or products that are defective, obsolete, or no longer in fashion, which for these or other similar reasons cannot be sold at a price that is greater than the costs associated with their production (purchase price), based on the price at which they could be sold. 4. In the case of goods for which a taxpayer does not maintain separate accounting records, the taxpayer shall have the right to use one of the three following methods for inventory accounting: 1) the FIFO method, according to which in a reporting period goods that are part of the inventory at the beginning of the reporting period are assumed to be sold (used) first, followed by goods produced (purchased) during the reporting period in the order of their production (purchase); 2) the LIFO method, according to which goods that were produced (purchased) last are assumed to be sold (used) first in the reporting period; 3) a valuation method based on the average production cost. Article 192. Accounting of Financial Leasing 1. In cases in which a lessor is the owner of depreciable tangible property before the beginning of a financial leasing arrangement, the transaction shall be treated as the sale of the property by the lessor and its purchase by the lessee. 2. Depreciable tangible property that is leased out under a financial leasing agreement shall be recorded on the lessee's balance sheet during the period that the financial leasing agreement is in force, which shall give the lessee the right to take deductions related to the leased object (specifically, depreciation and repair expenses). Article 193. Compensated Deductions and Reduction in Reserves 1. If compensation is provided for expenses, losses, and problem debts previously taken as deductions, the amount received shall be treated as income for the tax period in which the compensation was provided. 2. If there is a reduction in reserves for which a deduction was previously taken in accordance with item 3 of Article 150 and Article 151 of this Code, the amount of the reduction shall be treated as income. Article 194. Profit and Loss from the Sale or Transfer of Assets 1. Profit from the sale or transfer of assets shall be the positive difference between receipts from the sale or transfer and the value of the assets defined in accordance with Article 195 of this Code. When assets are transferred on an unrequited basis or at a discounted price, the profit of the person providing the assets shall be defined as the positive difference between the market price of the property being transferred in this manner and its value as determined in accordance with Article 195 of this Code. 2. Losses from the sale or transfer of assets shall be the negative difference between receipts from the sale or transfer and the value of the assets defined in accordance with Article 195 of this Code. 3. Items 1 and 2 of this article shall not apply to assets that are depreciable by groups, nor shall they apply to inventory. Article 195. Value of Assets 1. The value of assets shall include expenses related to their purchase, production, construction, assembly and installation, as well as other expenses that increase their value, with the exception of expenses which a taxpayer has the right to take as deductions. 2. If only part of an asset is sold or transferred, the value of the asset at the time of its sale or transfer shall be distributed between the remaining and sold or transferred parts. Article 196. Nonrecognition of Profit or Loss 1. No profit or loss shall be taken into account when determining taxable income (profit) in the event of: 1) the transfer of assets between spouses; 2) the transfer of assets between former spouses in the process of a divorce; or 3) the unintentional destruction of an asset or its alienation accompanied by the reinvestment of the proceeds (for example, insurance compensation received for the unintentional destruction of an asset) in an analogous asset or an asset of the same type before the end of the second year following the year in which the asset was destroyed or alienated. 2. The value of a replacement asset referred to under subitem 3) of item 1 of this article shall be determined taking into account (at the level of) the value of the replaced asset at the time of its destruction or alienation, with an increase in the value of the replacement asset by the positive difference between the taxpayer's expenditures on reinvestment and the amount of the proceeds in accordance with subitem 3) of item 1 of this article. 3. The value of an asset acquired as a result of a transaction in which profit is not taken into account for tax purposes in accordance with subitems 1) and 2) of item 1 of this article shall be the value of the asset for the party transferring it as of the transaction date. 4. This article shall not apply to assets that
are depreciable by groups, with the exception of subitems
1) and 2) of item 1 of this article, which shall apply in
cases in which all assets in the group are transferred at
the same time.
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