Worldwide Tax Summaries--UZBEKISTAN（1999-2000）(part1)
Worldwide Tax Summaries--UZBEKISTAN（1999-2000）(part1)
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Legislation in the Republic of Uzbekistan is constantly evolving during the period of economic transition from the preindependence soCIAlist economy. On April 14,1997 Uzbekistan introduced a consolidated tax code, which in certain cases represents a significant change from the previous laws, regulations and decrees. The code became effective on January 1,1998. Since that time the tax authorities have issued a
number of regulations and procedures on how to apply the provisions of the tax code. The information presented below is based on laws, regulations and practices as of July 1,1999.
Noteworthy changes in the tax and regulatory legislation subsequent to the adoption of the tax code, which are effective from January1,1999, include the following.
1. Reduction in the corporate profits tax rate from 35% to 33%.
2. Increase in the rate of mandatory conversion of foreign-currency export receipts from 30% to 50%.
3. Introduction of a 5% tax on the purchase of hard currency.
TAXES ON CORPORATE INCOME
Profits tax / All type of enterprises (i.e., legal persons)are subject to profits tax at a maximum rate of 33%. Significant tax concessions may be available to certain types of enterprise (see below).
Local taxes / there are two local taxes based on accounting profit (less profits tax ): the soCIAl infrastructure development tax and a maintenance levy. Maximum rates for these taxes, 6% and 2% ,respectively, are established by the tax code. Actual rates vary from region to region on the basis of decisions of the local authorities.
For Uzbek tax purposes, corporations are classified as resident or nonresident. A resident corporation is one established in accordance with Uzbek legislation .
Sales (value-added) tax/ Legal entities are subject to VAT, which is applied to taxable turnover and taxable imports. The rate for taxable turnover is 20%. This rate also applies to taxable imports for which the tax base is determined as the customs value plus any customs duties, tariffs and excise tax payable upon import. VAT is assessed at 15% on certain important foodstuffs. Exports are generally zero-rated. Insurance and most types of finanCIAl services exempt.
VAT is generally paid three times each month.
Natural resource tax/ All legal enterprises and individuals engaged in the extraction or other ue of natural resources are subject to natural resource tax, which usually is based on the volume of the resource extracted.
Other taxes/ The most important of the other taxes imposed in Uzbekistan are as follows.
1. Property tax-generally imposed at a rate of 4% of an enterprise's tangible and intangible fixed assets.
2. Road fund tax Generally imposed at a rate of 1.4% of an enterprise's turnover.
3. Ecology tax Generally imposed at a rate of 1% of an enterprise's production costs.
Other taxes include water tax, land tax, excise tax, tax on the purchase of foreign currency, and various other local taxes. Export taxes have been abolished.
Branches of foreign corporations are taxed on their profits from Uzbek activities. Foreign legal entities carrying on activities or deriving income from sources in Uzbekistan are subject to profits tax ,which may be modified under the terms of a relevant tax treaty. Branches and foreign legal entities carrying on business in the country may also be subject to an additional 10% branch profits tax.
Capital gains/ No speCIAl treatment of capital gains has been legislated.
They are taxed under the standard profits tax rules.
Foreign income /Relief is provided for foreign taxes paid to countries with which Uzbekistan has a double taxation treaty.
In certain cases the tax base for profits tax purposes varies
significantly from the computation of taxable profits as in most Western jurisdictions. Expenditures such as advertising, entertaining ,international and long -distance telephone calls, labor ,and debt servicing are dither nondeductible or restricted to very low levels.
Depreciation and depletion /Fixed assets are pooled into five classes and subject to straight-line depreCIAtion at rates ranging from 5% to 20%.
Certain geological exploration expenes are subject to a separate 15% depreCIAtion rate.
Net operating losses /Tax losses cannot be carried forward or back.
Payments to foreign affiliates/ The new tax code introduces transfer pricing for international transactions between a parent company and its Uzbek branch and /or subsidiary. The mechanism for determining independent transfer prices has yet to be announced..
There is no provision for consolidation of income or losses by related companies for tax purposes.
There are significant tax incentives for investing in strategically important sectors of the Uzbek economy. These concessions are constantly changing ,but the most important are granted a seven-year tax holiday for production-oriented companies included in the government's investment program. At present, significant tax concessions may be available to
enterprises with foreign with foreign equity, agricultural enterprises, export-oriented enterprises, and enterprises producing children's goods.For major projects the scope and duration of a range of tax and currency incentives are likely to be subject to a specific project agreement with the government, written into legislation by decree and settled only after protracted and detailed negotiations.
Resident recipients/ The domestic withholding tax rates are as follows.
Dividends and interest 15
Insurance and reinsurance payments 10
Royalties, services (including management, consulting services), rents,
other income except wages 20
Nonresident recipients/ Foreign legal entities that do not carry on activities in Uzbekistan through a permanent establishment are subject to withholding tax on income from sources in Uzbekistan, subject to the terms of a relevant double taxation treaty. Uzbekistan generally does not
recognize the tax treaties of the former Soviet Union. Double taxation treaties in force establish withholding rates as follows.
Dividends Interest Royalties
% % %
Azerbaijan 10 10 10
Belarus 15 10 15
Chin ,P.R. 10 10 10
Finland 5(1/15) 5 5/19(2)
Georgia 5(3)/15 10 10
Germany 15 5(4) 0
India 15 15 15
Indonesia 10 10 10
Japan 20 10 10/20(5)
Kazakhstan 10 10 10
Korea, Rep. of 5(3)/15 5 2(6)/5
Latvia 10 10 10
Moldova 5(3)/15 10 15
Pakistan 10 10 15
Poland 5/15(1) 10 10
Romania 10 10 10
Russian federation 10 10 0
Turkey 10 10 10
Turkmenistan 5/10(1) 10 10
Ukraine 15 10 10
United Kingdom 5/10(1) 5 5
Vietnam 15 10 15
The numbers in parentheses refer to the notes below.
1. 5% if the benefiCIAl shareholder owns not less than 10% of the voting shares.
2. 5% if royalties paid are for patents, trademarks, know-how, etc. 10% if for copyrights on literature, cinema, musical works, etc.
3. Where the benefiCIAl shareholder owns not less than 25% of the capital of the paying entity.
4. Where one state has identified specific types of interest income that may be subject to a 0% withholding tax, the same treatment is applied by the other state.
5. 10% if royalties paid are for patents, trademarks, know-how, etc. ,20% if paid for copyrights literature, cinema musical works, etc.
6. Where royalties are paid in respect of use of the fight to use industrial, commerCIAl or scientific equipment.
7. 5% if the benefiCIAl shareholder owns not less than 20% of the voting shares.
Current tax payments are generally paid twice a month, on the 10th and 25th days, and based on the estimated quarterly tax liability. Interest is charged on late payments at the rate of 0.15% per day.
There is a strictly enforced system of currency controls and regulations.
In addition ,there is a mandatory requirement to convert 50% of all hard-currency earnings into the national currency of Uzbekistan, the soum.
Currency conversion is one of the major issues faced by all businesses and foreign nationals operating in Uzbekistan.
Exchange rate of the soum at December 31,1998:US$=UZS110.00 来源：CFTInet, Beijing