Approved by the order of the Director of the State agency on management and use of hydrocarbonic resources in case of the President of Turkmenistan of December 2, 2008 No. 23/P the order of the Chief of the Main State Tax Service of Turkmenistan of December 2, 2008 No. 59-O

Procedure for confirmation of the status of person as the subcontractor performing activities according to the Law of Turkmenistan "About hydrocarbonic resources"

I. General provisions

1. This Procedure for confirmation of the status of person as the subcontractor performing activities according to the Law of Turkmenistan "About hydrocarbonic resources" (further - the Procedure) is developed according to requirements of part 17 of article 48 of the Law of Turkmenistan "About hydrocarbonic resources", and for the purpose of application of provisions of the Tax code of Turkmenistan on establishment of category of persons which are subcontractors in the value determined by the Law of Turkmenistan "About hydrocarbonic resources".

2. The confirmation of the status of the Subcontractor performed according to this Procedure is applied both for the purposes of the taxation, and in other cases when the legislation of Turkmenistan establishes the special rules or requirements provided for this category of persons.

3. The terms applied in this Procedure from capital letter are this in the value given in the article 1 "Basic concepts" of the Law of Turkmenistan "About hydrocarbonic resources".

II. Persons which are Subcontractors

4. Subcontractors are:

a) person performing delivery of goods, performance of works and rendering the services to the Contractor stated in the contract with the Contractor on accomplishment of separate types of Oil works (including joint activities) within the Agreement of such Contractor; and

b) person which is carrying out separate types of Oil works for the Subcontractor within accomplishment of other agreement by it.

5. Stated above in item 4 of this Procedure treats physical persons (including to the individual entrepreneurs and persons rendering professional services) and to legal entities - as being tax residents of Turkmenistan, and residents of foreign states.

6. Concerning foreign legal entities specified concerns as to persons performing the activities in the territory of Turkmenistan through permanent mission and persons whose activities do not lead to formation of permanent mission, and gaining income from sources in Turkmenistan.

7. In the course of implementation of Oil works the Contractor has the right to use services of Subcontractors in case of accomplishment of separate types of Oil works. Therefore the delivery of goods performed by Subcontractors, performance of works and rendering services to the Contractor shall belong to accomplishment of Oil works, anek other their activities.

Oil works - all works on Exploration and production which are carried out according to the Agreement signed according to the Law of Turkmenistan "About hydrocarbonic resources". At the same time the terms "Investigation" and "Production" are used in their following value:

Investigation - the geological, geophysical and other works including also the drilling of shots, selection of cores, stratigrafichesky testing, well-drilling, space shootings, acquisition and lease of tangible and intangible assets which are carried out for the purpose of discovery of the fields of Hydrocarbonic resources and performed according to the Agreement;

Production - all work types on extraction from subsoil of Hydrocarbonic resources by primary methods or with artificial maintenance of energy of layer, to storage, preparation, loading, warehousing, transportation, measurements, delivery and marketing of Hydrocarbonic resources and other types of activity, including acquisition and lease of tangible and intangible assets according to the Agreement.

8. Subcontractors are not persons performing delivery of goods, performance of works and rendering services to the Contractor (Subcontractor), not belonging to Oil works.

Specified, in particular, treats persons rendering insurance, bank and utilities and providing other similar services.

In each case the Contractor makes the decision on reference of persons to category of Subcontractors proceeding from provisions of the Law of Turkmenistan "On hydrocarbonic resources" and type of the performed works or the rendered services.

In case the Contractor independently performs delivery of goods, performs works or renders services for the Subcontractor, behind it the status of the Contractor remains and provisions of this Procedure are not applied to it. It does not belong to cases when the Contractor performs delivery of goods, performs works or renders services for other Contractor or the Subcontractor of other Contractor (within accomplishment of Oil works on other Agreement) to which relevant provisions of this Procedure shall be applied.

III. Confirmation of the status of the Subcontractor

9. In case of the conclusion of contracts with persons performing delivery of goods, performance of works and rendering services, the Contractor proceeding from requirements of the Law of Turkmenistan established in Article 1 "About hydrocarbonic resources" establishes the status of such persons as Subcontractors.

10. After the conclusion of the contract with the Subcontractor the Contractor constitutes Confirmation of the status of the Subcontractor in form according to appendix No. 1 (on physical persons) and to appendix No. 2 (on legal entities) to this Procedure.

Confirmation of the status of the Subcontractor is constituted by the Contractor in duplicate from which:

 the first goes to the Subcontractor (specified in the subitem "an" of item 4 of this Procedure) no later than three days after the conclusion of the agreement in time;

 the second remains at the Contractor and is stored according to the terms established for such documents.

11. The contractor constitutes Confirmation of the status of the Subcontractor in the form stated above and concerning persons which are carrying out separate types of Oil works for the Subcontractor which are also determined as Subcontractors (person specified in the subitem "b" of item 4 of this Procedure).

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