New tax incentives for business modernization endorsed by the President

April 02, 2007

The Decree by the President of the Republic of Uzbekistan on additional measures to stimulate the modernization, technical and technological upgrading of production process proposes to create an effective system of stimuli for economic entities to conduct the constant modernization, technical and technological upgrading of their production and equip it with modern production facilities that ensure an increase in the output of high quality, competitive and export-oriented commodities:

• to grant economic entities the right to reduce for three years the taxable basis of the profit tax by the sum channelled into the modernization, technical and technological upgrading of production, the settlement of credits allocated for the aforesaid purposes, and into the repayment of the leasing cost of an object provided that the amortization funds accrued during the reporting period are used. Second: to exempt newly-commissioned technological equipment from property tax for a period of five years.
• to introduce tax incentives for manufacturing micro-firms and small enterprises applying a simplified taxation system, by reducing for five years the taxable basis of the single tax payment for the cost of newly-purchased technological equipment, but by no more than 25 per cent of the taxable basis. Fourth: to prescribe that the tax incentives envisaged by this decree be applied from the moment equipment is put into operation during the next taxation period; in the event of the sale or donation of technological equipment within three years of its acquisition (import), the validity of these tax incentives shall be annulled and the obligation to pay relevant taxes and customs fees in line with the legally prescribed procedure shall be reinstated.

Editor's note: the Republic of Uzbekistan has come a long way following its pursuit of development and achievement of international standards in its production processes. The country has witnessed a range of national projects and programs based on a number of President Islam Karimov's initiatives realized efficiently and international experts believe this legal document is another legislative ground laid by the Head of Uzbekistan on the way to further modernise the existing business environment in the country.