Issue 7
PwC Uzbekistan
Tax newsletter keeps you better informed with the the most notable developments in tax and related matters in Uzbekistan
Changes in tax legislation
❑ Law of the Republic of Uzbekistan № ZRU-812 as of 30 December 2022 (Law) provides the changes in the Tax Code as of 1 January 2023.
Value Added Tax (VAT)
• VAT rate is reduced from 15 to 12 percent
• desktop tax audits for validation of VAT refund claims are reduced from 60 to 30 day
• new procedure is introduced allowing taxpayers to recover input VAT related to goods/ services purchased in the period when VAT certificate was suspended (previously, such VAT was non-recoverable).
• ‘large taxpayers’ are eligible to utilise their recoverable VAT amount towards import VAT payable at importation of goods.
As of 1 April 2023 the following VAT incentives are abolished:
• geological services provided within the framework of annual state programs for development and reproduction of mineral resource base at the expense of the state budget;
• turnover on implementation of research and innovation works carried out at the expense of the state budget.
Personal Income Tax (PIT)
• Deadline for filing of annual PIT and Social Tax returns is amended to 15 February (previously, 25 March).
• Starting from 1 April 2023 PIT incentive related to payment of long-term life insurance premiums is abolished.
Excise tax
New mechanism of Excise Tax calculation envisaging calculation of tax depending on the proportion of ethyl alcohol contained in excisable drinks.
Excise Tax rates at importation of alcohol and tobacco products are reduced by 5%.
Excise Tax rates on petrochemicals, as well as produced alcohol and tobacco products are to be increased by 10% as of 1 February 2023.
Corporate Income Tax (CIT)
• As of 1 November 2022 income from export of goods (services) is subject to 0% CIT rate irrespective of the share of export revenue in the total revenue (previously, minimum share of export was 15%). At that, it should be noted that as of 1 January 2023 the above CIT incentive is not applicable to income from services provided to non-residents carrying out activities in Uzbekistan via permanent establishment (PE).
• As of 1 January 2022 the net profit of nonresidents operating in Uzbekistan via PE is
equated to dividends and is subject to taxation at 10% (similar to dividends).
The Law clarifies that a reduced dividend tax rate(s) envisaged by relevant tax treaty may be applied for taxation of the net profit of PE. Moreover, if a tax treaty provides for several reduced dividend tax rates, the lowest rate to be applied.
• Following taxpayers are eligible to apply 50% reduced CIT rate:
✔ payers of Turnover Tax who switched to payment of CIT for the first time after 1 September 2022 are eligible for the reduced CIT rate during the following tax year provided that their turnover does not exceed UZS 10 bln. (around, USD 893k) during that tax year.
✔ CIT payers whose turnover after 1 September 2022 exceeded UZS 10 bln. for the current tax year for the first time – are eligible for reduced CIT rate during the current tax year and following year, provided that during these tax periods their turnover does not exceed UZS 100 bln. (approx., USD 8.93 mln).
• Deadline for submission of a notification on advance payment is set as 15th day (previously 10th day) of the first month following the previous quarter. The amount is based on the expected amount of income to be generated in the current quarter.
Property Tax
New deadlines for tax reporting and payments are introduced as follows:
• Filing of tax reports – not later than 1 March of the year following the reporting year (previously, 15 February).
• Filing of certificate on tax due for the current period (advance payments) – not later than 20 January of the current reporting year (previously, 10 January).
• Advance payments (only for payers of Turnover Tax) – not later than 20th day (previously, 10th day) of the third month of each quarter.
Subsurface Use Tax
Tax rate for mining of iron is reduced from 5% to 2%.
Turnover Tax
• A unified tax rate of 4% is introduced for all categories of Turnover Tax payers.
• Payers of Turnover Tax may choose to pay fixed tax in lieu of Turnover Tax as follows:
✔ For taxpayers with annual turnover of up to UZS 500 mln (approx. USD 45k) – fixed tax amounts to UZS 20 mln annually (USD 1,800);
✔ For taxpayers with annual turnover more than UZS 500 mln – fixed tax of UZS 30 mln annually (USD 2,700).
• Dividends paid by Turnover Tax payers that choose to utilise fixed tax alternative are exempt from taxation.
Land Tax
New deadlines for tax reporting and payment in relation to non-agricultural land plots were introduced as follows:
• Filing tax reports and certificate on available land plots – not later than 20 January of the current reporting year (previously 10th January).
• Tax payment (only for Turnover Tax payers) – not later than 20th day (previously, 10th day) of the third month of each quarter.
Other amendments
• Starting 1 April 2023, customs duty incentives on property imported by entities with foreign investments for use in their own production were abolished, unless otherwise provided by investment agreements signed before 1 January 2023.
• VAT and CIT payers with annual turnover of up to UZS 10 bln. (approx. USD 893k) are now eligible to settle their tax liability in installments during six months via notification mechanism (previously installments option was available only upon clearance of respective application by the tax authorities).
PwC would also like to remind on the following important reporting deadlines approaching quickly in 2023:
• 15 February 2023 Annual PIT and Social Tax report for 2022 ( new
• 1 March 2023 Annual CIT report for 2022.
Individual PIT declarations for 2022 are due before 1 April 2023. In accordance with the Tax Code, Uzbek PIT is paid by tax residents on their worldwide income. An individual is deemed to be a tax resident if he/ she spends 183 days and more during any 12 month period ending in the reporting year.
Please feel free to contact us with queries on the annual tax filing requirements or if you need support on other tax issues.
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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