American multinational technology company that specializes in Internet-related services and products Google bended to tax demands in Tajikistan on March 3 following American online social media and social networking service Facebook Ireland Ltd, which filed its papers with the Tax Committee under the Government of Tajikistan on March 2.

A source within the Tax Committee says Google was registered as VAT payer through the Committee’s official website http://www.andoz.tj.

Facebook Ireland Ltd and Google now will have to report quarterly and pay an 18 percent value added tax (VAT).  

The source added that the Tax Committee is currently working on registering other foreign companies offering e-services in Tajikistan.    

Eurasianet says the 18 percent tax rate far exceeds what is levied by European countries that have implemented digital services taxes.

Recall, Tajikistan’s upper house (Majlisi Milli) of parliament seconded the law on amendments made to the country’s Tax Code on December 9, 2020 and the law was signed by the president on December 17, 2020.  The law took effect on January 16, 2021.  

The Tax Committee says the decision to tax online-giants was made following the rapid development of information technology and electronic commerce (e-commerce).

Tajik authorities reportedly studied the experience of Russia, Belarus, Uzbekistan and several European Union members while drawing up the changes to this law.

Tajikistan’s lower house (Majlisi Namoyandagon) of parliament adopted changes to the Tax Code that extend liability to international online transactions in November last year.

Ads, products and services posted on sites of companies that will refuse to operate in accordance with Tajikistan’s tax legislation will be blocked. 

Tajik authorities say the solution will not affect the price for Internet in the country.

The idea has been booted around for a few years now.  In 2018, it was the Tax Committee that came forward with the idea of somehow forcing companies like Google, Facebook, Microsoft, Booking.com, Chinese online retail service AliExpress and others to pay tax inside Tajikistan.  The Finance Ministry rejected the idea at the time.  But the head of the Tax Committee, Nusratullo Davlatzoda, revived the proposal in February.

“Foreign companies are making a profit by providing services to our citizens. We must create an appropriate legal framework, so that [foreign companies] are able to register and pay taxes,” Davlatzoda told reporters in Dushanbe.

Russian was the first country to introduce the so-called Google tax.  The Russian President signed a federal law making e-services VA Table at the location of the customer on July 3, 2016. 

Belarus, Moldova and Uzbekistan have also introduced the Google tax.

Belarus introduced this tax in 2018 and it reportedly received more than 60 million Belarusian rubles in Google tax.   

Uzbekistan introduced the Google tax in January this year.