Tax incentives for renewable electricity producers

On 12 August 2024, the President of Uzbekistan, Shavkat Mirziyoyev, instructed the State Tax Committee to remove restrictions on the use of land tax and property tax benefits for the installation of solar panels¹. This instruction was announced as part of the overall effort to expand opportunities for the population and entrepreneurs to acquire energy-saving equipment and solar panels.

To assess the potential consequences of this instruction, we have summarized the existing tax incentives currently available to renewable electricity producers:

Incentives established by the Tax Code:

• Renewable electricity producers are exempt from property tax imposed on legal entities for renewable energy installations (with a nominal capacity of 0.1 MW and above) for ten years from the date of their commissioning;
• Renewable electricity producers are exempt from land tax imposed on legal entities for land plots occupied by renewable energy installations (with a nominal capacity of 0.1 MW and above) for ten years from the date of their commissioning;
• Revenues from the sale of “green energy” certificates of generation facilities based on the use of renewable energy are exempt from corporate income tax (hereinafter, “CIT”);
• Property owned by individuals using renewable energy sources in residential premises with complete disconnection from existing energy resource networks is exempt from personal property tax for three years starting from the month in which the renewable energy sources were installed;
• Individuals using renewable energy sources in residential premises with complete disconnection from existing energy resource networks are exempt from land tax for individuals for three years.

Also, some incentives are indicated in Presidential Decree No. PP-57 of 16 February 2023, but are not reflected in the Tax Code. Those individuals who have installed and use renewable energy installations with a total capacity of up to 0.1 MW are exempt for three years from the day such installations are commissioned:

• From property tax for legal entities for these installations;
• From land tax for legal entities for land plots occupied by standalone installations;
• From CIT on profits derived from the sale of electricity to the power grid;
• From property tax and land tax for individuals for real estate objects of the housing properties owned by them.

Currently, there is no clarity regarding which specific restrictions the instruction addressed. Potential options for removing restrictions could be:

• Extending the incentives to the entire area of the land plot and a broader list of property related to energy production;
• Incorporating the incentives established by Presidential Decree No. PP-57 of 16 February 2023 into the text of the Tax Code; or
• Removing other restrictions that taxpayers encounter in practice when applying these incentives.

In any case, the deadline for the instruction to remove restrictions is set for the end of August, and we will soon learn what specific tax changes await renewable electricity producers.

Authors:

• Doniyorbek Zulunov
• Sergey Bachmanov
• Maryna Tarnavska