Issue 3
PwC Uzbekistan
Tax newsletter keeps you better informed with the the most notable developments in tax and related matters in Uzbekistan
The President held an open dialog with entrepreneurs
On 22 August 2022 President of Uzbekistan, Shavkat Mirziyoyev held an annual ‘open-dialogue’ session with entrepreneurs. During the session, Shavkat Mirziyoyev announced initiatives in 5 business areas for entrepreneurial support.
1. Introduction of segregated approaches for supporting entities by classifying them based on their annual turnover and providing the following tax incentives effective as of 1 January 2023:
- Entities with turnover less than UZS 1 bln. will be qualified as ‘micro-business’ and enjoy single reduced tax rate of 4% from turnover (previously, this rate varied from 4% to 25%)
- Entities with turnover from UZS 1 bln. to UZS 10 bln. will be qualified as ‘small business’. Small business entities that switched to the standard tax regime will pay 50% of the corporate income tax during their first year after the switch.
- Entities with turnover from UZS 10 bln. to UZS 100 bln. will be qualified as ‘medium business’. Entities switched to this category will pay 50% of the corporate income tax for the first two years after the switch. Moreover, the following incentives will be envisaged for this category of entities:
- 50% of the expenses on property insurance will be compensated by the government;
- simplified tax, financial and statistical reporting will be introduced for them;
- quota of 20% will be introduced for government procurement. The amount of advance payment to be paid to this category of entities within the framework of government procurement will be increased to 50% (currently, 15%).
During the dialogue, President also announced the following tax incentives for all categories of businesses:
- Reduction of VAT rate from 15% to 12% starting from 1 January 2023 (previous reduction of VAT rate from 20% to 15% was introduced as of 1 October 2019);
- Abolishment of an increased property and land tax rates for vacant (unused) buildings and land plots starting from 1 July 2022.
2. Creation of a convenient financing system for expansion of activities of entrepreneurs and implementation of new projects. It is expected that UZS 20 trillion (wholly or partially attracted from international financial organizations) will be allocated towards the projects of small business.
3. Differentiation of approaches depending on location of businesses - cities and districts will be divided into 5 categories based on their facilities/ conditions. Different taxation regime, funding, interest compensation etc. will be determined depending on the assigned category.
4. Protection of property rights was announced as another area of support. Thus, decision on arresting property as well as abolishment of decisions on allocation of land and property to entrepreneurs may be taken by courts only. In addition, the statute of limitation for appeals against the decisions of tax authorities in courts will be extended to three years (currently, 1 month).
5. The fifth area discussed was control over business activities and holding them accountable. Specifically, the following was announced with respect to this initiative:
- Moratorium for introduction of new types of liabilities and penalties for entrepreneurs will be enforced for the period of 3 years.
- Entrepreneurs will not be punished for violation of newly introduced legislative acts that impose new obligations within 6 months after their introduction.
- The amount of fines payable should not exceed the amount of taxes paid by the entrepreneur.
- Violation of trading rules will not be subject to criminal liability.
Contacts:
Abdulkhamid Muminov
Managing Partner, Tax and Legal Services
Jamshid Juraev
Partner, Tax and Legal Services
Alisher Zufarov
Director, Tax and Legal Services
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