New Double Taxation Convention between Turkmenistan and Japan - Details
Turkmenistan and Japan have taken an important step toward strengthening economic cooperation and attracting investment. Recently, diplomatic notes were exchanged in Ashgabat regarding the entry into force of the Convention for the Avoidance of Double Taxation with Respect to Taxes on Income and the Prevention of Fiscal Evasion and Avoidance. The agreement, initially signed on December 16, 2024, will enter into force on November 27, 2025, and will apply to taxes levied from January 1, 2026. It will replace the outdated 1986 tax treaty Japan concluded with the former Soviet Union.
This modern treaty, consistent with the OECD Model Tax Convention, reflects global standards for combating abuse and ensuring transparency. Its primary goal is to strengthen economic cooperation by creating a predictable and fair tax environment for companies operating in both countries. It not only prevents double taxation of income but also includes updated provisions for the exchange of information between tax authorities.
Industry experts note that the new agreement is particularly important for regulating cross-border labor. The convention clearly defines when employees of Japanese companies located in Turkmenistan are subject to taxation. A key mechanism is the famous "183-day rule," according to which employment income is exempt from local taxation if the employee is present at work for no more than 183 days within 12 months and their remuneration is paid by a non-resident employer. The agreement's provisions also cover directors' fees, pensions, and the income of artists, athletes, and students.
The signing and entry into force of the convention demonstrates the strategic foresight of Turkmenistan and Japan, which, following the example of other countries, are adapting their tax systems to the rapid expansion of a distributed workforce and global mobility. This move is part of a broader trend to coordinate income tax and social security systems, significantly reducing duplication and uncertainty for international employers managing international travel and confirming Turkmenistan's readiness for deep integration into the global investment space.
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