Russian Federation: Uzbek Tax News Reporter - 7 February 1997

Last Updated: 10 June 1997
Within December 1996 all correspondent accounts opened by Uzbek banks with commercial banks of the former USSR Republics must be closed with the following transfer of cash balances to the accounts of authorised banks in the RU. Only the National Bank of Foreign Affairs and Asakabank are authorised to continue operating correspondent accounts with two Russian banks and one Ukrainian bank.

Letter 16/27-226 of the CB RU "On the closure of correspondent accounts of foreign banks" of 8 November 1996

Debts to the budget as well as fines and penalties are subject to collection by the tax authorities without recourse to the court by means of issuing a collection order on the basis of which the bank will transfer cash from the enterprise's account to the budget account within 3 days. If there is no cash on the enterprise's account or the balance is not sufficient, the tax authorities are entitled to refer their claim onto the enterprise's property by way of applying to the Supreme Economic Court of the RU.

Resolution 387 of the Cabinet of Ministers of the RU "On the approval of the Resolution on the charge of arrears related to taxes and obligatory payments to the budget on the property of enterprises and organisations" of 8 November 1996

Beginning from 1 November 1996 trading entities and agencies which sell imported consumer goods should translate Sums into hard currency at the commercial rate including authorised banks' margin in the amount of 12% - thus, the price of goods sold by these entities and services provided by them is determined on the basis of the commercial exchange rate.

Letter 318/3348 of the CB RU "On the introduction of the 12% margin rate from 1 November 1996 for translation of Sums into hard currency by trading entities and agencies selling imported consumer goods" of 13 November 1996

The minimum monthly wage on the territory of the Republic of Uzbekistan is established at 600 Sums a month beginning from 1 December 1996.

Decree of the President of the RU "On the increase of a minimum wage" of 26 November 1996

Beginning from 1 January 1997 only those newly established entities are considered as entities with foreign equity which have the Charter capital no less than the equivalent of USD300 000, with the participation of no less than one foreign legal entity and with the foreign investors' share no less than 30% of the total Charter capital.

It is determined that " manufacturing companies with foreign equity include foreign entities, their subsidiaries and joint ventures meeting the above requirements if the share of own production and/or servicing of their products in their Charter activities is over 60% of the total proceeds."

Beginning from 1 January 1997 the period of exemption from tax on profit for production entities with foreign equity is increased from 5 to 7 years for entities included in the investment programme of the RU.

Additional incentives are granted to these entities, including reduction of the profits tax rate depending on the total amount of the Charter capital (if the foreign equity share in the Charter capital is no less than 50%): from the equivalent of USD300 000 to USD1 mln - applicable rate is 20%; from the equivalent of USD1 mln and - above this rate is 16%.

The above tax incentives also apply to entities with foreign equity registered prior to 1 January 1997, provided they bring their foundation documents into compliance with the provisions of the Decree and become reregistered by the Ministry of Justice.

Decree of the President of the RU UP - 1652 "On additional incentives and exemptions for entities with foreign equity" of 30 November 1996

With the purpose of retaining highly qualified staff and specialists the existing procedure of state regulation of funds allocated for remuneration of labour is cancelled for manufacturing entities with foreign equity beginning from 1 January 1997.

Decree of the President of the RU UP-1659 "On additional measures aimed at the stimulation of development and investment activities of entities with foreign investments" of 13 December 1996

Beginning from 1 January 1997 all accounts opened by entities of the RU with commercial banks of the former USSR Republics must be closed.

Posting of currency proceeds to accounts opened in foreign banks without permission of the Central Bank of the RU will be treated as concealment thereof.

Letter of the CB RU "On the closure of the accounts of entities of the RU opened in commercial banks of the CIS" 16/09-639 of 12 December 1996

The following changes and amendments in the taxation system for 1997 are established for enterprises of the RU:

  • For enterprises-monopolists the super-profits tax is established, with the confiscation of the total profit received in excess of the declared price or in excess of the established profitability level;
  • VAT rate is increased from 17 to 18%; VAT on goods (works, services) shipped (provided) calculated prior to 1 January 1997 is at the rate of 17% upon receipt of cash;
  • property tax and tax on owners of transport vehicles are combined into one property tax with the rate of 3%;
  • ecological tax is introduced in the amount of 1% of the production cost of goods (works, services);
  • land tax rates are increased by 1,5 times;
  • penalty for late payments of taxes are reduced from 0.2 % to 0.15% of the arrears for each day of delay.

Letter of the Ministry of Finance of the RU, State Taxation Committee RU 96-105 "On certain changes in taxation applicable to enterprises and organisations in 1997" 04-01-06/514 of 30 December 1996

The rate of payments to the Road Fund for enterprises including those with foreign equity is increased to 1.2% of total sales including export; (for trading companies and intermediaries - 0,4% of trade turnover).

Resolution of the Cabinet of Ministers of the RU 466 "On changes and amendments to Resolution  334 of the Cabinet of Ministers of the RU of 5 July 1993 "On the establishment of the Republican Road Fund" of 30 December 1996

The Pension Fund has been established at the Ministry of Social Security of the RU. Contributions, as previously, should be made by enterprises, institutions and organisations at the rate of 36% of the payroll fund.

In addition, another obligatory payment is introduced for enterprises in the amount of 0.5% of the gross sales.

The rate of individuals' obligatory contributions is increased from 1 to 1.2% of the wages.

Resolution of the Cabinet of Ministers of the RU 459 "On the establishment of the Pension Fund at the Ministry of Social Security of the RU" of 27 December 1996

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Alla Shaulina on tel: +7 503 232 5511 fax: +7 503 232 5522 or e-mail directly: Alla_Shaulina@ru.coopers.com or enter a text search 'Coopers & Lybrand' and 'Business Monitor'.

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