Tax and Accounting Committee Seminar on VAT

January 18 and January 23, 2019 AmCham Tax and Accounting Committee Seminars (edited)
Dozens of changes and additions to the Tax Legislation of the Republic of Uzbekistan were introduced in January, 2019. AmCham had received number of requests to provide clarification on new taxation, especially surrounding legislation and procedures related to the Value Added Tax (VAT), which came into force since January, 2019. To provide clarification and to advise members, the Tax and Accounting Committee of AmCham in Uzbekistan organized two seminars in January. Special thanks go to Uzbekistan British-American Tobacco, an AmCham Platinum member, who graciously hosted both seminars.
The first 4-hour seminar was held on January 18. This seminar covered general changes in the Tax Legislation of Uzbekistan. All the changes were stipulated by a number of legislative acts including: PP-4086, dated 26.12.2018 on “Forecast of the main macroeconomic indicators and parameters of the state budget of the Republic of Uzbekistan for 2019 and budget indicators for 2020-2021. In particular, “The Law of the Republic of Uzbekistan” #3PY-508 dated 24.12.2018 which reflects main changes in tax legislation in line with the Tax Reform concept approved in June, 2018. The new Tax Code is expected to be introduced on July 1, 2019.
The changes that have been enacted as of January, 2019:
• Flat rate on personal income tax
• Abolishment of obligatory contribution to the Pension Fund and Social Security Tax. Along with this, various state funds have been eliminated e.g. the funds for educational and medical institutions, road funds, funds for stabilization of the prices at internal market and others
• Corporate Income Tax Changes
• Property Tax rate decrease withholding tax rates on dividend and interest of residents
• New Simplified Tax Regime criteria
Other tax changes covered Individual (Sole) Entrepreneurs licensing and changes in the excise tax rates, custom duties and royalty tax.
The 4-hour seminar on January 23rd was dedicated exclusively to the Value Added Tax (VAT), which was the major recent introduction to the tax legislation of Uzbekistan. It is stipulated by “The PP-4086 dated 26.12.2018 on “Forecast of the main macroeconomic indicators and parameters of the state budget of the Republic of Uzbekistan for the year 2019 and budget indicators for 2020-2021”.
In summary, as of January 1, 2019, all entities with turnover over of 1 Billion UZS are subject to VAT payment. The VAT rate is 20 % and should be reported monthly by all taxpayers with no exception. Legal entities subject to VAT might offset the input VAT related to leftover inventory, long –term assets and finished goods.
According to Article 197, there are three types of VAT in Uzbekistan:
1. VAT on services and goods produced in Uzbekistan
2. VAT of export of goods
3. VAT on import of works with non-residents
All legal entities registered and operating in Uzbekistan are subject to VAT with the exemptions that are listed in Article 208, 209 and 210.
A 0 VAT rate is applied to the following exemptions:
• Export of goods
• International freight
• Services for diplomatic representations listed by the Ministry of Foreign Affairs
• Processing in the “Tolling “ regime
• Provision of natural gas, water and heating to the population.
The AmCham Tax and Accounting Committee is planning to write “White Papers”, which will include recommendations to the government of Uzbekistan in the sphere of Tax Legislation improvement. If you would like to join this group, and/ or the Tax and Accounting Committee please contact the AmCham office.