VAT is typically exempt for components being shipped in from overseas, however only if an FEZ also has a customs bonded area – which can include the entire FEZ. That does mean ring-fencing the FEZ off from the surrounding area so goods cannot leave without customs permission. The benefit to investors in providing this service is that it allows investors to work on imported components and integrate them into a finished product without being liable for VAT until the finished product is ready. At the finished product stage, the product can either be imported onto the Turkmenistan mainland (when VAT on the imported component parts then become due) or can be re-exported to other overseas markets (when VAT rebates can be claimed back by the investor on any Turkmenistan components used in the final product). VAT rebates vary but are typically reckoned at 50-70% of the total VAT reclaimable amount. Applying this tax structure requires a well-managed customs service in control of imports into the FEZ from both Turkmenistan and overseas, and the accurate record keeping and financial services to track and both impose VAT and refund it as appropriate.
Source: silkroadbriefing.com
