Tests of doing business and penalties for unregistered entities considered as doing business in Turkmenistan

1) What is considered doing business without registration?

Under article 9 of the Law “On Entrepreneurial Activities” entrepreneurial activity is subject to compulsory State registration:

• if it is carried out with the formation of a legal entity, it is registered in accordance with the procedure established by the Enterprise Act;
• if the activity is carried out by an individual without forming a legal entity (private entrepreneur) - registration is carried out by tax authorities at the place of tax registration.

Consequently, running a business without such registration is carrying out entrepreneurial activity without going through the state registration procedure established by law (as a legal entity or a private entrepreneur).

Such activity is considered illegal because it contradicts the requirements of Article 9 of the said Law and is carried out outside the legal framework, i.e. without tax registration and without establishing the status of a business entity.

2) What are the key indicators of doing business?

The main characteristics (indicators) of entrepreneurial activity are:

1. Profit or income orientation – the activity aims to earn profit or financial gain.
2. Independence and initiative – it is carried out independently, on one’s own initiative.
3. Conducted in one’s own name or on behalf of an enterprise – either as a physical person (own name) or as a legal entity (enterprise).
4. Assumption of risk – the entrepreneur operates at their own risk.
5. Property liability – the entrepreneur or enterprise bears financial responsibility for their obligations.

3) What are the legal consequences of doing business without registration?

Conducting business without registration is regarded as illegal entrepreneurial activity and entails both administrative and criminal liability.

Administrative Liability

“Engaging in entrepreneurial activity without registration or without a special permit (license) in cases where such a permit (license) is required, or in violation of the conditions of licensing,” entails the imposition of a fine on:

• individuals — from 3 to 8 base units;
• officials — from 5 to 15 base units;
• legal entities — from 10 to 30 base units;
• with confiscation.

If such actions result in substantial damage or the derivation of income in a large amount, they entail:

• a fine on individuals — from 10 to 20 base units;
• a fine on officials — from 15 to 60 base units;
• with or without confiscation, or administrative arrest for up to fifteen days;
• a fine on legal entities — from 25 to 100 base units, with or without confiscation.

Note: Damage or income in a large amount shall be understood as damage caused or income obtained within one year in an amount not exceeding 500 base units.

Criminal Liability

“Engaging in entrepreneurial activity without registration or a special permit (license) in cases where such a permit (license) is required, or in violation of the conditions of licensing, if this act is accompanied by the derivation of income in an especially large amount,” is punishable by a fine ranging from 50 to 100 base units or by corrective labor for a term of up to two years.

Note: Income in an especially large amount shall be understood as income obtained within one year in an amount exceeding 500 base units.

4) What is the penalty amount in 2025?

In accordance with the legislation of Turkmenistan, the base unit (BU) for calculating an administrative fine is set at 100 manat (29 USD):

• for physical persons: from 3 to 20 BU;
• for public officials: from 5 to 60 BU;
• for legal entities: from 10 to 100 BU. 

The amount of the base value for calculating fines as a criminal penalty is set at 300 manat (86 USD): 

• for all persons/entities: from 50 to 100 BU.

5) Is criminal liability possible?

Yes. Carrying out entrepreneurial activity without registration and a special permit (licence) in cases where such permit (licence) is mandatory, or in violation of the licensing conditions may also lead to criminal liability. 

For more information, see the answer to question 3.

6) Who identifies unregistered business activity?

The tax authorities of Turkmenistan investigate cases of administrative offences, in particular those related to the conduct of business activities without registration and without a special permit (licence) in cases where such a permit (licence) is mandatory, or in violation of licensing conditions (Article 475, Code of Turkmenistan on Administrative Offences). 

In the case of illegal entrepreneurial activity without registration, if this act is associated with the extraction of income on a particularly large scale and entails criminal liability, such a case is investigated by the relevant internal affairs authorities (Article 76 of the Criminal Procedure Code of Turkmenistan; Article 260 of the Criminal Code of Turkmenistan).

7) What should be done if the activity is already ongoing without registration?

Persons engaged in entrepreneurial activity without state registration should complete the registration procedure as soon as possible, since any delay may result in an increase in the amount of fines as well as the imposition of more severe administrative or criminal liability.

8) What obligations arise after registering a business?

After registration, the enterprise is subject to certain obligations, including the following:

• obtain all required licences and certificates to carry out activities for which special permission is required;
• register for tax purposes;
• maintain accounting records and reports in accordance with legislation and accounting standards (taking into account accounting standards for specific types of activities);
• register the necessary contracts;
• comply with all applicable legal and regulatory requirements (corporate, labour, etc.).

9) From what income level must an individual register as an entrepreneur?

The legislation of Turkmenistan does not establish a minimum income threshold requiring registration as an entrepreneur. State registration is a mandatory prerequisite for engaging in entrepreneurial activity.

Accordingly, any person intending to carry out entrepreneurial activity is legally obliged to undergo state registration regardless of the anticipated volume or amount of income.

Authors: Lachin Amandurdiyeva, Annamenli Rozymyradova, Gulenar Akmyradova