In order to further improve the investment climate in Uzbekistan, ensure the implementation of fair competition principles, as well as regulate the practice of granting tax and customs incentives, the Presidential Decree of the Republic of Uzbekistan 'On measures to further streamline of tax and customs incentives provision' No. УП- 5755 was adopted on 27 June 2019.
The document establishes that starting from 1 August 2019, agricultural producers who are payers of the unified land tax have the right to switch to the payment of value-added tax on a voluntary basis.
Also, the document introduces the following changes that will be in force from 1 October 2019:
- legal entities, engaged in sales of petrol, diesel fuel and gas through filling stations to the final consumers regardless of the amount of revenue from the sale of these goods are recognized as payers of value added tax;
- business entities that are importers of goods are recognized as payers of value added tax, regardless of the amount of revenue from the sale of goods (works, services). At the same time, those business entities importing goods for the first time must register as payers of value added tax from the 1st day of the following month after the conclusion of the import contract;
- value added tax incentives including those for import are revoked in relation to asbestos, coal, timber, wood and wood products, hydrocarbons, soybeans, sunflower seeds and sesame, oil raw materials and raw sugar, agricultural machinery, motor vehicles, components, materials and tooling used in the manufacture of motor vehicles;
- the incentives on exemption from corporate income tax at the source of payment, received as a percentage from funds placed in commercial banks are revoked;
- value added tax exemptions for agricultural products of own production and food products produced in the Republic of Uzbekistan are revoked.
Single land tax payers who have a turnover (revenue) more than 1 billion soums for the period from January to September 2019 or irrigated agricultural land covering more than 50 hectares, are recognized as value added tax payers and are required to register as a payer of value added tax in due course. At the same time, from 1 October 2019, the payers of the single land tax, reaching the established turnover (revenue) threshold, will switch to the payment of value added tax from the 1st day of the following month after the established threshold is reached.
Producers of raw cotton will switch to the payment of value-added tax starting from the harvest of 2019. At the same time, they are entitled to offset the amounts of value added tax paid on goods (work, services) actually received not earlier than 1 October 2018 and used by them to grow raw cotton of 2019.
Legal entities using value-added tax incentives in terms of food products produced in Uzbekistan are entitled to pay value-added tax on the basis of a notification of refusal for application of incentives from the 1st day of the following month after the notification is submitted.
Local government bodies are authorized to provide a postponement on property tax of legal entities, land tax for legal entities and a single land tax for up to 24 months with simultaneous cancellation of their right to receive incentives on these taxes. The postponement is granted with the condition of charging interest in the amount of the fine established for the tax debt. The procedure for granting a postponement shall be approved by the Cabinet of Ministers of Uzbekistan.
Overdue receivables under import contracts for the supply of equipment and (or) components do not result in the imposition of financial sanctions on business entities in case if the terms of such contracts establish the delivery time of more than 180 days for equipment of the above mentioned products in connection with their technical characteristics and features.
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.