Overview of changes in the tax and customs law of Uzbekistan

On 26 July 2022 the Law of the Republic of Uzbekistan (the "RUz") No. 785 "On Amendments and Additions to Certain Legislative Acts of the RUz in connection with the improvement of tax and customs legislation" was adopted and entered into force on 27 July 2022. Some individual provisions of the Law have different terms of entry into force.

Some of the novelties provided by this Law were already announced earlier in 2022 by the relevant Presidential Decrees and after the adoption of the Law the changes were duly incorporated in the Uzbek legislation. 

In this review, we have summarized what are, in our opinion, the most significant changes. However, for the full information on changes, we recommend also consulting the text of the relevant legislative acts, as well as the current Uzbek Tax Code (the "TC RUz") and the Uzbek Customs Code (the "CC RUz"). 

Changes in the tax legislation

Personal income tax (PIT) and corporate income tax (CIT) benefits for holders of securities and bonds

Starting from 1 April 2022 to 31 December 2024 a number of tax benefits are being implemented for securities holders:

• For individuals - both residents and non-residents of the RUz - dividend income on shares is exempt from personal income tax (PIT) (previously, for resident individuals the dividend income on shares was subject to a 5% tax, while for non-resident individuals the dividend income on shares was subject to a 10% tax). 
  
• For legal entities that are non-residents of the RUz - dividend income on shares is subject to a 5% corporate income tax (CIT) similarly to legal entities that are residents of the RUz (previously, for legal entities that are non-residents of the RUz the dividend income on shares was subject to a 10% tax). 
• For individuals and legal entities – both residents and non-residents of the RUz – accrued interest income on bonds of enterprises is exempt from PIT and CIT (previously, for resident individuals the income was subject to a 5% tax, and for non-resident individuals it was subject to a 10% tax, while for resident legal entities it was subject to a 15% tax, and for non-resident legal entities without a permanent establishment in the RUz it was subject to a 10% tax). 

PIT

Starting from 1 May 2022 the PIT rate on income received by non-resident individuals under employment and civil contracts is set at 12% (previously 20%). 

Value added tax (VAT)

For the period starting from 1 April 2022 to 1 January 2025, the import of spare parts of medical equipment and products, as well as consumables for medical purposes, in the territory of the RUz is exempt from VAT.

Excise tax

Starting from 1 January 2022 the excise tax for mobile communication services provided by mobile operators is set at 10% (previously 15%).

Property tax for legal entities

Starting from 1 January 2022 while determining the tax base for property tax for legal entities in relation to real estate objects, which cost is lower than the minimum cost set by the TC RUz for 1 sq. m. of an object situated in a certain location, the taxpayer has the right to consider the results of an independent valuation conducted within previous two years. Real estate objects that are not covered by the minimum cost are determined by the legislation.

Starting from 1 April 2022 antenna-mast metal structures located in rural areas (excluding cities and regional centers)), including structures installed on them and being an integral part are exempt from property tax. 

Land tax for legal entities

• Starting from 1 April 2022 land plots, occupied by antenna-mast metal structures (including structures installed on them and being an integral part), located in rural areas (excluding cities and regional centers, are exempt from land tax.
• Starting from 1 January 2023 to 1 January 2026, taxpayers who have modern automated complexes for slaughtering livestock, as well as taxpayers who process and produce finished leather products, are exempt from land tax.

Social tax

Starting from 1 April 2022 to 1 January 2025, social tax is levied at the rate of 1% for those manufacturers whose total income for a relevant reporting period amounted to:

• At least 60% of sales proceeds from children’s, women’s and sports shoes, artificial (eco) leather, accessories, shoe forms and soles;
• At least 80% from export of footwear, leather goods and fur products.

Changes in the customs legislation

Tariff benefits in the form of exemption from customs duty are not applied to goods purchased at the expense of funds (loans, credits) of international financial institutions and foreign government financial organizations, refinanced or re-credited through the Uzbek commercial banks.

The applied privileges related to the customs duties adopted before 1 July 2022 by the acts of the President and the Cabinet of Ministers of the RUZ are valid until their expiration date.

How can EY help?

We will be glad to provide our assistance in the following areas:

• An assessment of the impact of these legislative changes on existing business structures, including taxation of both existing and planned operations.
• Revision and update of the company’s tax accounting policy, taking into account legislative changes.
• Preparation of relevant queries to the regulatory authorities on the application of new legislative rules that may require clarifications.

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

Authors:

• Doniyorbek Zulunov
• Dilovar Mavlonov
• Maryna Tarnavska