Uzbekistan: On the Way to Cut Tax Burden

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January 17, 2018

Uzbekistan: On the Way to Cut Tax Burden

At the Uzexpocenter, the State Tax Committee of the Republic of Uzbekistan has organized a demonstration seminar for the population and business entities to explain the essence and significance of amendments and addenda introduced to the tax legislation, taking into account the main aspects of the tax and budget policy for 2018.

It was attended by members of the Senate and Legislative Chamber of Oliy Majlis, officials of several ministries and other government agencies, representatives of the body corporate operating in Tashkent city and Tashkent region.

Chairman of the State Tax Committee Botir Parpiev and others noted that the Address of President Shavkat Mirziyoyev to the Oliy Majlis was aimed at securing modern living conditions for the people through the implementation of fundamental transformations in all spheres. In particular, it was stressed that in the Year of Support for Active Entrepreneurship, Innovative Ideas and Technologies, it is necessary to abandon tough measures in tax policy, simplify the taxation of business entities of all categories, reduce the tax burden and, building on this, expand production.

The demands expressed by the President on reducing the tax burden and improving the efficiency of tax administration are reflected in the budget-tax policy for 2018. In particular, the resolution of the head of our state on the forecast of the main macroeconomic indicators and parameters of the State Budget of the Republic of Uzbekistan for 2018 dated December 29, 2017, and the Law on introducing amendments and addenda to certain legislative acts of the Republic of Uzbekistan in connection with the adoption of the main aspects of the tax and budget policy for 2018.

Starting from January 1, 2018, the profit tax and the tax on improvement and development of social infrastructure are combined, and instead of 15.5% the tax rate is set at 14%. Last year, the income tax rate was 7.5%, for infrastructure improvement and development it was 8%, but in general it reached 15.5%. Due to the merger, the number of types of taxes will decrease by one unit, and in the year on average 70 billion soums will remain at the disposal of taxpayers (currency rates of CB RU from 16.01.2018, 1$= 8146.38 soums).

Mandatory contributions to the Pension Fund, the Republican Road Fund and the Fund for the Development of the Material and Technical Base of Educational and Medical Institutions are combined into a single payment – mandatory contributions to state trust funds with a fixed rate of 3.2%, lowered compared to the previous rate of 3.5%. As a result of consolidation of mandatory payments into trust funds, the number of types of taxes will decrease by two units, and 411 billion soums will remain at the disposal of enterprises.

On the basis of unified tax payments, the tax rates for the year 2017 have been preserved, the activities of procuring entities are equal to wholesale trade, and for them a tax rate of 4% of the volume of turnover has been determined.

Rates on the third and fourth scale of personal income tax are reduced by 0.5% and are determined in the amount of 16.5% and 22.5%, as well as the amount of the contribution transferred to individual accumulative pension accounts of citizens, increased from 1% to 2%.

The procedure for calculating the tax on property of individuals was introduced, taking into account the cadastral value of it, the basic tax rate was reduced from 1.7% to 0.2%, while it was determined that when calculating the tax, the cadastral value should be at least 42 million soums.

As it was noted at the seminar, from 1 April 2018, tax privileges under the Localization Program are canceled.

The tax rates for the use of gasoline, diesel fuel and gas were determined for 2018: for 1 liter of gasoline – 232.5 sums or for 1 tonne – 308 thousand 850 soums, for one liter of diesel fuel – 232.5 sums or for 1 ton – 282 thousands of 500 soums, for 1 cubic meter of compressed gas – 305 soums. Tax rates for liquefied gas are maintained at the level of 2017.

On July 18, 2017, the law of the Republic of Uzbekistan on December 30, 2017 was adopted to consolidate the legal basis for the norms defined by the Presidential Decree “On Measures to Improve the Tax Administration Essentially, To Raise Tax Collection and Other Mandatory Payments”. This law amended and supplemented the five laws, 16 articles of the Tax Code. The code itself was supplemented by seven new articles.

“In order to support entrepreneurship, the Tax Code introduces a new chapter on unified tax monitoring, according to which it is determined to introduce tax monitoring, which provides for an extended information exchange between taxpayers and tax authorities to solve tax issues and provide comprehensive assistance to taxpayers,” says the senior taxation inspector in the State Tax Committee Komil Saidov. “This, in turn, will help to eliminate mistakes and shortcomings that can be tolerated by taxpayers in the performance of tax obligations, promptly solve tax administration issues, and eliminate situations that worsen the financial situation as a result of the accrual of penalties and fines.”

At the same time, amendments to Articles 54, 55 and 354 of the Tax Code have been introduced, which determine the granting of a tax holiday to temporarily exposed financial difficulties to honest taxpayers – business entities.

This category includes taxpayers who have timely and fully fulfilled tax obligations during the last two years, but faced financial difficulties, they are provided with a change in the deadlines for fulfilling tax obligations in the form of extending the time for payment of taxes and other mandatory payments to twenty-four months and (or) their phased payment.

At the event, a group of individuals and legal entities that fulfill tax obligations in a timely manner, as well as representatives of the mass media, widely covering innovations in tax legislation, were presented with certificates of honor and memorable gifts.

(Source: «Uzbekistan Today» newspaper)