The President signed a Law introducing certain changes into the Tax Code

On 26 July 2022, President of Uzbekistan signed a Law No. ZRU-785 "On introduction of amendments to some legislative acts of the Republic of Uzbekistan aimed on improvement of tax and customs legislation"

Below we summarise the most noteworthy amendments:

• Personal deduction in the amount of 3 mln. Uzbek soums per month per child was introduced for parents incurring expenses on education of their children in non-state schools and (or) preschool educational organizations (effective retrospectively from 1 April 2022).
• Reduction of personal income tax rate for non-resident individuals from 20% to 12% declared earlier this year by Resolution 101 (please refer to our previous Tax News Report for details) was introduced into the Tax Code (effective retrospectively from 1 May 2022).  
• The list of non-deductible expenses was amended to exclude certain types of benefit-in-kind paid to employee. Thus, while benefits-in-kind are generally remain non-deductible, expenses related to purchase of tickets by employer for employees and their close relatives for attendance of cultural events and concerts are now considered deductible (limited up to 0.5% of revenue).
• Rate of Excise Tax on mobile communication services was reduced from 15% to 10% (effective retrospectively from 1 January 2022).
• Antenna-mast metal structures located in rural areas (excluding cities and district centers), including hardware installed considered as an integral part of structures are exempt from Property Tax. Similarly, land plots occupied by such structures are exempt from Land tax (effective retrospectively from 1 April 2022).
• In the period between 1 April 2022 to 1 January 2025 entities carrying out the following activities pay Social Tax at a rate of 1% (standard rate is 12%):

1. retail trade
2. catering
3. hotel services
4. passenger and freight transportation by vehicles
5. repair and maintenance of vehicles
6. computer services
7. repair of household appliances
8. agro- and veterinary services, services provided in entertainment centers. 

The above reduced rate is available for business entities if, in the current reporting (tax) period, revenue from provision of services for specified types of activities comprises at least 60% of total revenue. This incentive may be withdrawn if headcount concealment cases are revealed. 

• The list of temporary tax incentives provided in the Tax Code was supplemented with the following incentives (initially declared by Presidential Decree 90):

In the period from 1 April 2022 to 31 December 2024: 

1. income of individuals (both residents and non-residents) in the form of dividends from shares in joint stock companies is exempt from Personal Income Tax (PIT);
2. income of legal entities - non-residents of Uzbekistan in form of dividends from shares in joint stock companies shall be subject to a reduced 5% tax rate (same as tax rate applicable to residents);
3. income of legal entities and individuals (both residents and non-residents) in the form of interest on corporate bonds is exempt from PIT and CIT.

• The list of temporary tax incentives was also supplemented by exemption in the period from 1 April 2022 to 1 January 2025 from Value Added Tax at importation of spare parts for medical equipment and products, as well as consumables used for medical purposes – as per the approved lists. 

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