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Uzbekistan, Republic of Corporate - Deductions

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The tax base for CIT purposes varies significantly from the computation of taxable profits in most Western jurisdictions. Expenditures such as benefits in-kind and business trip allowances exceeding the statutory norms (that are generally low) are non-deductible.

There are additional costs that cannot be deducted by PEs of foreign legal entities, such as interest on head office loans; commission fees charged by the head office; and royalty, administrative, and management expenses of the head office incurred outside Uzbekistan. However, PEs are eligible to deduct expenses incurred outside of Uzbekistan if they directly relate to their business in Uzbekistan.

Depreciation and amortisation

For tax purposes, depreciation/amortisation is calculated with application of rates defined by the Tax Code. If depreciation for accounting purposes is charged at higher rates (compared with the Tax Code rates), the difference is treated as a temporary difference for CIT purposes (i.e. deducted in future periods).

Depreciation is calculated from a month following the month when the asset was put into use until it is fully depreciated, disposed of, or written off. The maximum annual depreciation rates applicable to different types of fixed assets are outlined in the table below.

Depreciable item Rate (%)
Buildings and other structures 5
Cars, tractors, special equipment, computers and related hardware 20
Lorries, buses, special cars and trucks, industrial machinery and equipment, agricultural machinery and equipment, oil extraction and mining equipment, office furniture 15
Railway, river and air transport vehicles, thermo-technical equipment, turbines, electric and diesel drives, power supply and communication lines, pipelines 8
Depreciable assets not mentioned above 15

For statutory accounting purposes, fixed assets can be depreciated using one of the following methods:

  • Straight-line method.
  • Production method.
  • Double-declining-balance method.
  • Sum-of-the-years’ (cumulative) method.

Intangible assets, including leases and other property rights, are amortised over the shorter of an asset's useful life or the period of activity of the enterprise. Where an asset's useful life cannot be determined, the asset can be amortised over five years.

Expenses related to geological exploration and developmental works necessary for the extraction of natural resources are deductible for CIT purposes through depreciation at the rate of 15% per annum.


For tax purposes, expenses incurred for acquisition of goodwill should be deductible through monthly amortisation charges at norms calculated by the taxpayers based on historical cost of goodwill and its useful life.

Start-up expenses

Current legislation does not provide specific guidance on tax treatment of start-up expenses. However, as per Uzbek accounting legislation, certain types of start-up expenses (e.g. expenses for acquisition of right for production, right for rendering services and carrying out works, right to use economic or other privileges) can be considered as expenses for procurement of intangible assets and, respectively, can be deducted through monthly depreciation charges.

Interest on short-term loans

Interest is deductible, except for interest on overdue/delayed loans (i.e. ‘penalty interest’) and interest capitalised in the value of fixed assets (i.e. in cases where a loan was obtained to purchase fixed assets).

Bad debt

Bad debts are deductible for tax purposes in cases where they are recognised in accordance with Uzbek accounting legislation. Otherwise, such expenses should be considered as non-deductible. According to the current Uzbek legislation, arrears are recognised as bad debts upon expiration of three-years from their due date.

Charitable contributions

Charitable contributions are generally treated as non-deductible expenses and added-back to the taxable base.

However, taxable income can be reduced for the amount of charitable contributions to ecological and charitable foundations and cultural, medical, educational, and municipal institutions, not exceeding 2% of the taxable income.

Fines and penalties

Fines and penalties are considered as non-deductible expenses.


Generally, taxes are deductible for CIT purposes.

Other tax losses

In cases where goods or services are sold below cost (or given for free), the revenue should be adjusted for tax purposes to the cost or purchase price of the goods or services. However, in cases of export below cost, the CITable income shall be determined based on the actual export price upon approval by a special authorised body

Production wastes and defects within statutory norms, and losses resulting in force-majeure circumstances, are generally deductible.

Losses from the disposal of fixed assets also may be deducted if the fixed asset has been used for three or more years.

Net operating losses

Tax losses may be carried forward for a period of five years, allowing a reduction of taxable income of the respective year by up to 50%. Loss carrybacks are not permitted.

Payments to foreign affiliates

There are no special tax provisions regarding deductibility of payments to foreign affiliates for services provided. They may be deducted in full if the general deductibility criteria are met (see Transfer pricing in the Group taxation section).

Last Reviewed - 30 May 2018

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