Changes in legislation on taxation issues

New reporting forms are adopted along with changes to the existing tax reporting forms

In accordance with the Resolution of the President of Uzbekistan No. PP-4611 "On additional measures for the transition to international financial reporting standards", the State Tax Committee adopted the Decree "On amendments to the  Decree "On approval of tax reporting forms”” No. 3221-1 dated 20 October 2020, which becomes effective from 1 January 2021. The following changes are introduced by the Decree:

• "Return on property tax of legal entities" is supplemented by a new Appendix No. 5 - "Information on the property of a taxpayer ";
• New reporting forms are introduced (Appendix No. 13) - “Main indicators for calculating taxes of legal entities that have switched to international financial reporting standards (IFRS)”. These new forms will be submitted by legal entities (that have switched to IFRS) once a year no later than 1 March.

Changes to the regulation on offshore zones

Amendments were made to the Regulation "On the procedure for monitoring justifiability of foreign exchange transactions by legal entities and individuals" No. 2467-3 on 12 October 2020.

• The list of offshore zones, currency transactions with which are subject to monitoring, has been amended. The following jurisdictions have been added to the existing list: American Samoa, Aruba, Guatemala, Dominica, Kiribati, Monaco, Alderney Channel Island, Pitcairn, San Marino, Saint Martin (Sint Maarten), Uruguay and the Philippines, while Dublin and Shannon have been excluded from the list. 
• A new monitoring mechanism has been introduced. For analysis of the received information, the tax authorities rely on information from electronic information databases and other information available to them. If violations of the procedure for conducting foreign exchange transactions are detected, the tax authorities will send to taxpayers a request for provision of documents and information related to processing transactions in foreign currency:
  • in digital form to the taxpayer's online personal tax account;
  • by a post letter, if the taxpayer does not have an online personal tax account.

During the process of monitoring, legal measures in the form of suspension of activities, bank account, etc. are not applied.

New measures to combat the shadow economy

The Decree "On organizational measures to reduce the shadow economy and enhance the efficiency of the tax authorities" was signed by the President of Uzbekistan on 30 October 2020. According to the Presidential Decree, effective from 1 January 2021:

• Until 1 January 2022, revenue of small businesses operating in the public catering sector received from individuals via bank (plastic) cards and methods of contactless payment is not included in the total revenue for the purposes of calculating the threshold amount of revenue for mandatory transition from simplified tax regime to payment of taxes under general tax regime;
• the established revenue tax rate on realtor activities is decreased from 25% to 13%;
• construction companies are granted with the right to hire workers on a fixed-term basis without concluding employment agreements with remuneration (salary) being paid in cash. The amount of such contracts should not exceed 10% of the total payroll for the reporting period (excluding the amount of social tax). At the same time, companies are required to ensure withholding and payment of personal income tax (PIT), social tax and monthly submission of a register of such employees to the tax authorities, indicating the amount of remuneration in cash. On the basis of these registers, tax authorities automatically identify taxpayers and ensure the record of paid PIT and social tax.

Amendments have been made to the tax code of Uzbekistan ("Tax Code")

Law ZRU No. 646 “On Amendments and Additions to Certain Legislative Acts of the Republic of Uzbekistan” was adopted on 9 November 2020, according to which:

• It has been clarified that the provisions stipulated by the Tax Code on the procedure of taxation of interest income at the source of payment (WHT on interest) paid by a legal entity - tax resident of Uzbekistan to non-profit and budgetary organizations, refers to interest from placement of funds on deposits. Consequently, other types of interest (i.e. not on deposits) paid to non-profit and budgetary organizations are included in the tax base (if applicable) of the recipients of such interest.
• The following forms of aid provided by self-governing bodies, trade unions, charitable, environmental and other funds created by decisions of the President of Uzbekistan is not considered as taxable income of an individual:
  • work performed and services rendered within the framework of the activities stipulated by the charter of such funds;
  • cost of treatment, medical services, purchase of technical equipment for rehabilitation of disabled people;
  • purchase of goods and services from a supplier for the interests of an individual;
  • other forms of support for charity purposes (except support in cash).
• Social allowances as well as other types of assistance in the form of monetary funds provided to individuals by self-governing bodies, trade unions, charitable and environmental funds are exempt from Personal Income Tax provided that the amount does not exceed UZS 15 million.
• Provisions of this Law which stipulate exemptions for individuals are also applied to transactions occurred starting from 1 April 2020.

Amendments to the law “On the use of renewable energy sources”

According to the Law ZRU No. 646 "On Amendments and Additions to Certain Legislative Acts of the Republic of Uzbekistan" dated 09.11.2020, exemption of manufacturers of installations (equipment) of renewable energy from all types of taxes has been abolished.

Announcement of new customs processing fee rates

Resolution No. 700 was adopted by the Cabinet of Ministers of Uzbekistan on 9 November 2020 "On Approving the Rates of Customs Processing Fees", according to which new customs processing fee rates are being introduced from 1 January 2021:

• customs processing fees will range from 1-fold to 75-fold amount of specified base value (SBV) (~ USD 21.5 - 1.612) depending on the customs value of the imported goods. In addition, customs processing fee of 2-fold SBV (~ US $ 43) is introduced for customs clearance processing outside the working hours of the customs authorities (i.e. from 18:00 to 9:00 and weekends, holidays).

We hope that you found this overview helpful. We will be glad to advise you on these changes in more detail and discuss should you have any questions.