Measures on improvement of tax, customs, and reporting rules

1) On October 12, 2022, President Shavkat Mirziyoyev signed Decree No. PP-392 “On measures to create additional comfort for Uninterrupted Supply of Raw Materials for Industrial Production” (hereinafter referred to as “Decree No. 392”), which aims to further simplify the processing regime in the customs territory and improve the quality of raw materials supplied to industrial enterprises in the Republic of Uzbekistan (hereinafter referred to as "RUz").

Decree No.392 provides for the following incentive measures:

• Until January 1, 2025, a zero-customs duty rate shall apply to the importation of raw materials and semi-finished products as listed in Appendix No. 1 to the Decree (in particular, this list includes raw materials and semi-finished products such as ethylene polymers in primary forms, fabrics made of synthetic and artificial yarns and fibers, greenhouse plants, molasses from the extraction or refining of sugar, dyes, and other inks).
• Customs payments are abolished for all participants in foreign economic activities under the customs regime "processing in the customs territory".
• Additional types of equipment included in the list of technological equipment (Appendix No. 2 of the Decree), analogues of which are not produced in the RUz, and which is exempt from customs duties and VAT when imported into the territory of the RUz (for example, pneumatic lifts and conveyors, tower cranes, other bucket and belt elevators and conveyors with continuous action for goods or materials, equipment for the production of tobacco sticks, alternators, other machines and apparatus for high-temperature soldering).
• From January 1, 2023, the proposals of the Ministry of Investment and Foreign Trade, the Ministry of Economic Development and Poverty Alleviation, and the Ministry of Finance of the RUz on the following tax measures have been approved:
  
  • Cancellation of the procedure for calculating the taxable income of a non-resident from the provision of services for the installation and (or)  commissioning of equipment, training of personnel etc. thereof which is determined by the current Article 351 of the Tax Code of the RUz (according to this Article, the taxable income of a non-resident is calculated at 20 percent of the contract value if no separate service value is specified in the contract for the supply of such equipment).
  • Instead, the taxable income of a non-resident will be calculated based on the market value of the specified services.
• The RUz Government Commission on Foreign Trade, Investment, Local Industry Development, and Technical Regulation issues is given several new powers, namely:
  • to approve a list of certain technological equipment that is exempt from customs duties and VAT when imported into the RUz territory, but for which more than 3 years have elapsed since the date of production, subject only to exemption from customs duties;
  • to identify countries that have a high quality and controls systems- - when importing certified and declared equipment, components, raw materials, measuring and transport vehicles, chemicals and lifting equipment from such countries, the requirement to obtain a national certificate (including on the basis of a certificate of origin) is canceled;
  • to approve the list of circumstances in which customs clearance of products imported for own production needs is allowed without providing a certificate of conformity on condition that such a certificate is received within two months from the date of customs clearance (based on the importer's letter of guarantee).

2) On November 10, 2022, President Shavkat Mirziyoyev signed Decree No. PP-419 “On Optimization Measures for Submitting Reports and Preservingn Archived Documents” (hereinafter referred to as “Decree No. 419”), which aims to reduce financial, tax and statistical reporting, and improve the practice of retention and transferring documents to state authorities based on today’s requirements.

Decree No. 419 provides for the following initiatives:

• Legal entities are no longer required to retain and transfer the following documents and reports to state or non-state archives:
  • documents in relation to salaries and other income of individuals accrued by such legal entities after January 1, 2022, including documents relating to taxes accrued in respect thereof;
  • financial, tax and statistical reports filed in electronic form starting from 1 January 2022 to the tax and statistical authorities in electronic form, including electronic documents generated through automated information systems of the tax authorities.
• Starting from 1 January 2023, persons liable for bookkeeping are no longer required to submit quarterly financial reports to tax and statistical authorities.
• Starting from 2023, persons engaged in entrepreneurial activity and paying revenue tax at a fixed rate are no longer required to submit annual financial reports to the tax authorities.
• Starting from 1 January 2023, the following types of statistical reports will be cancelled:
  • Form 1 – exchange – "Exchange Activity Report";
  • Form 1 ms – "Report on working conditions";
  • Form 1-nh – “Report on allocation of employees by accrued payroll";
  • Form 1 – railway (of public use) – “Report on Public Rail Transportation Services";
  • Form 1-tb – "Report on the activities of a commercial bank";
  • Form 1 – insurance – "Report on the activities of an insurance organization";
  • 1-kb (km) (appendix to Form 1-kb) – "Report on existing construction machines and mechanisms in small construction organizations and micro companies";
  • 4th pipeline road – "Report on pipeline transportation activities";
  • Form 4 – horticultural – "Report on the purchase of fruit and vegetable products".

In order to fully implement the measures specified in Decrees No. 392 and No. 419, the  state authorities of Uzbekistan (the Ministry of Investment and Foreign Trade, the Ministry of Finance, the State Tax Committee, the State Statistics Committee and interested ministries and departments) have been instructed to ensure the preparation and approval of several documents, in particular, proposals for amendments and additions to the legal acts resulting from these decrees must be submitted to the Cabinet of Ministers within two months.

We hope you found this information helpful. We will be pleased to advise you on these changes and address any questions or comments you may have.

Authors:

• Dilovar Mavlonov
• Maryna Tarnavska