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.
All entities with turnover exceeding UZS 1 billion are considered as VAT payers. VAT is reported on a monthly basis.
Entities with turnover of up to UZS 3 billion have an option to apply a ‘simplified VAT’ mechanism. The simplified VAT regime envisages application of differentiated VAT rates from 4% to 15% depending on type of activity as shown in the table below:
||VAT rate (%)
|General rate for legal entities, except those shown below
|Entities engaged in retail and wholesale activities
|Entities engaged in catering and hotel services
|Legal entities that provide professional services (e.g. audit, tax consulting, brokers, consulting)
|Legal entities engaged in sales of agricultural products, except for sales of goods of their own production
Please note that the simplified VAT regime does not envisage offset of input VAT.
Taxpayers engaged in several activities subject to different simplified VAT rates should keep separate accounting for each activity. If the annual turnover of the simplified VAT payer exceeds UZS 3 billion, it becomes subject to the standard VAT regime (i.e. 20% VAT rate and offset of input VAT).
Simplified VAT payers should issue VAT invoices to their customers indicating VAT rate charged. If the customer is under the standard VAT regime, it can offset the input VAT based on the VAT invoice issued by the simplified VAT payer.
Similarly to standard VAT regime, reporting and tax payments under the simplified VAT regime should be made monthly.
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 25 United States dollars (USD) 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.
Excise tax was introduced for provision of mobile communication services and sale of petrol, diesel, liquefied gas, and compressed gas to final consumers. Also, combined excise tax for production of cigarettes was implemented (i.e. the excise tax rate would include a fixed rate element and an ad valorem rate element).
The property tax rate is 2% for legal entities. The tax is computed annually based on the net book value of the immovable property, adjusted for the effect of revaluation, which should be performed annually on 1 January, and the value of overdue construction and idle equipment/construction. The rate is doubled for overdue construction and idle equipment/construction.
Additional charge for use of fully depreciated equipment is abolished.
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.
Property tax is reported annually.
Obligatory revaluation of immovable property as part 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.
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 the claim. Under the civil claim, the duty comprises 4% of claim amount, but not less than 1 MMW; for business claims, the duty is 2% of the claim amount, but not less than 1 MMW. 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 10 times the MMW if submitted in person and 50% of this if submitted through the automated online registration system.
From 2019, the mandatory contribution to the state funds on turnover at a rate of 3.2% is abolished.
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 stated as 12% for all kind of entities with extension to certain new categories of taxpayers, including individual entrepreneurs and their employees, members of family enterprises, farming enterprises, and artisans. However, 25% USP will remain payable by state organisations, legal entities with state participation of at least 50%, as well as legal entities where at least 50% belongs to the latter.
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 Presidential Resolution 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 32%, silver 32%
|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 (natural gas) and the statutory price set by the legislation. Excess profits tax is not payable by entities operating under production sharing agreements.
Excess profit tax for natural gas is assessed on excess profits calculated in respect of each contract for the reporting period.
Signing and commercial discovery bonuses
Signing and commercial discovery 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.