Uzbekistan, Republic of
Value-added tax (VAT)
Legal entities are subject to VAT, which is applied to the turnover of goods and services. The taxable base is determined as the sale price of supplied goods/services.
Foreign legal entities carrying out activities in Uzbekistan via PE become VAT payers. Moreover, certain categories of taxpayers, including agricultural producers and law firms, may also be subject to VAT.
Foreign legal entities that supply e-services to individuals whereby the place of supply is considered Uzbekistan are subject to VAT in Uzbekistan. In such a case, the foreign service provider is liable for registering for VAT purposes in Uzbekistan. The taxable base shall comprise actual sales price of such services inclusive of VAT.
The rate for taxable turnover is 15%. 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 is generally zero-rated. Insurance and most types of financial services are exempt from VAT.
All entities with turnover exceeding UZS 1 billion, as well as PEs of foreign legal entities, are considered as VAT payers. Legal entities selling gas, diesel fuel, and gas through gas stations to end consumers and all business entities that are importers of goods and products are considered as VAT payers regardless of the amount of their annual turnover.
Reporting and tax payments are made on a monthly basis.
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. Fixed rates are also set for certain goods as a minimum (e.g. the rate for coconuts is 20% but cannot be less than 0.2 United States dollars [USD] per kg).
From the 1 January 2021, customs clearance fees were revised and should be calculated at the rates nominated in Base Calculation Units (BCUs), depending on range of the customs value of the goods. For example, the customs clearance fee for goods valued USD 100,000 to USD 200,000 should comprise 15 BCU (approximately USD 360).
Due to the expiration of the Protocol on the Application of the Agreement on the Free Trade Area of the CIS Member States with Uzbekistan (dated 31 May 2013), Uzbekistan has cancelled excise tax for 73 product lines from 1 January 2021.
Legal entities producing or importing excise-able goods (e.g. cigarettes, petrol, alcohol drinks) are subject to excise tax. Rates vary from 15% 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 is charged 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 excise tax rate on mobile communication services is reduced to 10% from 1 January 2022, and mobile communication services are not subject to excise tax starting from 1 January 2023.
The excise tax rate on export of natural gas is reduced to 0% from 1 October 2021.
It is planned to introduce single excise tax rate on both locally manufactured and imported petrol. Imported gasoline is subject to an excise tax rate of 5%.
In addition, it is planned to abolish the excise tax on liquefied gas, which is now 30% and reduce the excise tax on polyethylene granules from 20% to 10%, as well as the introduction of excise tax on the import of polyethylene granules.
Excise tax rates are planned to be indexed (increased) by an average of 10% from 1 June 2022.
The headline property tax rate is 1,5% for legal entities (3% for overdue construction in progress). 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. Along with reduction of property tax rate, the minimum taxable base for each square meter of the immovable property was introduced. The amount of such taxable base depends on location of the immovable property and varies from UZS 1mln. (around, USD 93) to UZS 2,5 mln. (around USD 232).
Property tax on fully depreciated buildings is charged based on their revalued (market) value, determined at least once every three years. Alternative energy producers are exempt from property tax on renewable energy installations for a period of ten years from the date of registration.
Property tax is reported annually by 15 February following the reporting year.
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, land plots, and highways.
The ‘reduced tax rate’ established for particular objects is to be increased from 0.4% to 0.5% in relation to:
- public railways, main pipelines, communication lines and power transmission lines, as well as structures that are an integral technological part of these facilities;
- real estate and construction in progress, for which a decision was made by the Cabinet of Ministers of the Republic of Uzbekistan on their conservation.
New oil and gas wells are exempt from property tax in the first two years starting from the month of their commissioning, and 50% rate reduction for the consequent three 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 fees that are set in absolute values with precise amounts determined by the Law on State Budget of the Republic of Uzbekistan 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.
Producers of energy from renewable sources are exempt from payment of tax on land plots occupied by renewable energy installations for a period of ten years from the date of their commissioning.
The tax rate for agricultural land is set at 0.95% of the standard value of agricultural land.
A coefficient of 0.1 to tax rates of land plots is introduced to replace previously granted benefits for certain legal entities.
Beginning from 1 January 2020, the Tax Code introduces a norm, which provides that in case of improving the quality of agricultural land (increasing the yield class), the tax is paid by legal entities on the normative value of agricultural land based on a new yield class from the beginning of the year following the year of soil bonitation, without recounting it in periods when the agricultural activities were completed.
Starting from 1 January 2022, land plots allotted for exploration works are not subject to land tax.
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 the BCU, 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 BCU; for business claims, the duty is 2% of the claim amount, but not less than 1 BCU. Duty for notarisation of copies of documents for legal entities is 2% of the BCU per each page of the document. Duty for registration of legal entities with foreign investment comprises 10 times the BCU if submitted in person and 50% of this if submitted through the automated online registration system.
Social Tax (ST)
Employers are subject to ST assessed on total payroll cost related to local and expatriate staff. This tax is collected by the tax authorities. The rate of ST 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, etc. Budget organisations pay ST at the rate of 25%.
Income of foreign personnel paid to non-resident legal entities as part of secondment fees under personnel provision agreements is subject to ST. The taxable base for calculation of ST 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. ST is reported monthly.
In addition to ST, 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 Tax Code 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.
Some examples of the tax rates are:
|Business activity||Tax rate examples|
|Extraction of natural resources (tax rates effective from 1 January 2022)||natural gas 10%, precious stones 24%, oil and gas 10%, gold and copper 7%, silver 7%|
|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 monthly by legal entities and annually by individuals.
Starting from 1 January 2022, legal entities extracting precious, non-ferrous and radioactive metals, rare and rare-earth elements, as well as hydrocarbons (natural gas, gas condensate and oil) will be subject to a new rent tax. Taxable base comprises the amount of rent income, which is defined as the difference between the revenue from sales of respective products (net of VAT and excise tax) and expenses directly related to their extraction. If there is a rent loss, the taxable base shall be nil. Taxable base is calculated separately for each licensed subsoil plot (group of licensed plots).
Enterprises with foreign investments engaged in extraction of metals and hydrocarbons may determine taxable base in US dollars based on accrual method. In such a case, the taxable base indicated in foreign currency is converted into national currency at the exchange rate of the Central Bank of Uzbekistan established as at the date of tax filing. Expenses of the first tax period may include historical costs, including those incurred after 1 January 2021.
The minimum tax rate comprises 25 percent of the taxable base. During a competitive bidding (tender) for the right to use a subsoil plot for geological exploration or extraction, the organizer or participants have a right to propose a higher Rent Tax rate to be paid.
Tax period for Rent Tax is a calendar year. Reporting period is a quarter. Rent tax is paid quarterly not later than the 20th day of the next month, and for annual payments not later than 1 March of the year following the reporting one.
Excess profits tax
Excess profits tax is abolished from 1 January 2020.
Subscription and commercial discovery bonuses
Subscription and commercial discovery bonuses are one-off payments to the state budget. The subscription bonus is payable for the right to engage in exploration and extraction of natural resources and range from 50 to 5,000 times the BCU, 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.
Starting from 1 January 2022, a special procedure is introduced for tendering of subsoil rights for geological exploration and/or production in respect of previously explored fields having significant commercial potential (i.e. hydrocarbons, precious metals, non-ferrous, rare and radioactive metals and other types of minerals. At this, the cost of subsoil rights acquired replaces commercial discovery and subscription bonuses, which are abolished.
Starting from 1 January 2022, an annual license fee is introduced for the use of subsoil for geological exploration. It is calculated based on the allotted area and types of minerals, in the amounts established by legislation.