Value-added tax (VAT)
Legal entities are subject to VAT, which is applied to taxable turnover and taxable imports. The rate for taxable turnover is 20%. This rate also applies to taxable imports, for which the tax base is determined as the customs value plus import duties and excise tax (on excise-liable goods). Export of goods for hard currency is generally zero-rated. Insurance and most types of financial services are exempt from VAT.
VAT is reported quarterly by micro-firms and small enterprises and monthly by other categories of taxpayers.
Import of certain goods to Uzbekistan is subject to customs duties. The taxable base is determined as the customs value of imported goods. Rates of customs duties vary from 5% to 70%, depending on the type of imported goods. There is also a customs clearance fee of 0.2% from the customs value of imported goods, but not less than USD 25 and not exceeding USD 3,000.
Legal entities producing or importing excise-able goods (e.g. cigarettes, jewellery, petrol, alcohol drinks) are subject to excise tax. Rates vary from 5% to 70%, depending on the type of goods produced/imported. The taxable base is determined as the value of produced/imported goods, excluding VAT. Excise tax is reported monthly.
The property tax rate is 5% for legal entities. The tax is computed annually, based on the net book value of the fixed assets, adjusted for the effect of revaluation, which should be performed annually on 1 January, and the value of overdue construction-in-progress. The rate is doubled for equipment not installed in due time.
A charge of 0.25% of the historic value of outdated equipment is collected from legal entities (except for micro-firms and small enterprises) for exploitation of fully depreciated equipment.
Newly opened enterprises are exempt from property tax for a period of two years from their date of registration, unless such enterprises have been created on the basis of production facilities or assets of existing enterprises. There is also a rate reduction benefit available to companies engaged in production and export of goods (work, services).
Property tax is reported annually.
Obligatory revaluation of fixed assets is to be performed by micro-firms and small enterprises once every three years (other categories of enterprises that are subject to this requirement should perform revaluation every year).
The Tax Code provides for the list of certain non-taxable property, mostly including public service facilities (e.g. waterwork facilities), gas and heat distribution lines, railways and highways, and machinery and equipment in use for more than ten years.
Enterprises, including foreign legal entities operating in Uzbekistan via a PE, owning land plots or rights of their use are subject to land tax or land lease payment annually. Land tax is charged at fixed fees that vary depending on the quality, location, and level of water supply of each land plot. Land lease payment is charged at negotiable rates; however, the minimum amount cannot be less than the land tax rate for the respective land plot. Land tax and land lease payment are computed based on the area of the land in use.
There are no transfer taxes in Uzbekistan.
According to Uzbek legislation, stamp duty (state due) is an obligatory payment charged for performance of legal actions and/or issuance of legal documents. The following actions, among others, are subject to stamp duties: filing claims, performing notary actions, civil registration, state registration of a legal entity, obtaining licences/permits to carry out certain activities, etc.
The rates of stamp duties generally vary from 0.5 to 20 times MMW, depending on the type of action executed. For instance, duty for filing a claim depends on the amount and nature of claim. If the amount of civil claim is less than 20 MMW, the duty comprises 5% of this amount; for business claims, the duty is 1% of the claim amount. Duty for notarisation of copies of documents for legal entities is 2% of the MMW per each page of the document. Duty for registration of legal entities with foreign investment comprises 32 times the MMW (approximately USD 680 at the effective rate of UZS 8085.11) if submitted in person and 50% of this (i.e. 16 MMW or approximately USD 340) if submitted through the automated online registration system.
There are three mandatory contributions that are charged on the enterprise’s gross annual turnover (less VAT and excise tax):
- Road fund to be imposed at a rate of 1.4%.
- Pension fund at a rate of 1.6%.
- Educational and medical institutions fund (for reconstruction, capital repair, and equipment) at a rate of 0.5%.
The taxable base (and tax rate in exceptional cases) for these mandatory contributions may differ depending on the type of activity of a company. Turnover taxes are reported quarterly.
Micro-firms and small enterprises paying taxes under the standard tax regime (except enterprises producing excisable goods and extracting mineral products subject to subsurface use tax) are no longer subject to obligatory contributions to the above-designated funds.
Unified social payment (USP)
Employers are subject to USP assessed on total payroll cost related to local and expatriate staff. This payment is collected by the tax authorities. The rate of USP is 25% (15% for micro-firms, small enterprises, and farms).
Income of foreign personnel paid to non-resident legal entities as part of secondment fees under personnel provision agreements is subject to USP. The taxable base for calculation of USP on such income shall be the income of foreign personnel provided, but not less than 90% of the secondment fee payable under the personnel provision agreement. USP is reported monthly.
In addition to USP, employers are responsible for withholding personal income tax (PIT) and pension fund contributions from salaries and remitting them to the state budget.
Enterprises (including PEs) using water in their production are subject to water-use tax. The tax rate is set by the Cabinet of Ministers and depends on the source of water consumption (i.e. surface or underground). Water-use tax is calculated based on the volume of the water consumed. Water-use tax is reported annually.
Taxes of subsurface users
In addition to standard taxes, subsurface users (i.e. legal entities and individuals exploring and extracting natural resource) are subject to subsurface users’ specific taxes, as listed below:
Subsurface use tax (royalty)
Subsurface use tax is charged on volume of produced (extracted) natural resources that are ready for sale or transfer (including free of charge) and consumption for internal purposes. The taxable base is determined as the average weighted sales price.
||Tax rate examples
|Extraction of natural resources
||natural gas 30%, precious stones 24%, oil 20%, gold 5%, silver 8%
|Utilisation of by-products received during the extraction of natural resources
||30% of tax rate applicable to main natural resources extracted
Subsurface use tax is reported quarterly.
Excess profits tax
Excess profits tax is assessed on the difference between the selling price of the extracted natural resources (as per the list) and the statutory price set by the legislation. Excess profits tax is not payable by entities operating under production sharing agreements.
The list of natural resources and goods subject to excess profits tax includes copper, cement, natural gas, polyethylene granules, and clinker. Excess profits tax is paid at 50% of the taxable base.
Signing and commercial discovery bonuses
Signing and commercial discover bonuses are one-off payments to the state budget. The signing bonus is payable for the right to engage in exploration and extraction of natural resources and range from 100 to 10,000 times the MMW, depending on the type of minerals. The commercial discovery bonus is paid for each field where a subsurface user discovers the natural resources and comprises 0.1% from the cost of the proved reserve volume.