2.Facilities

№

               The content of guarantees, benefits and rights

Act legislation 

                                                                Income tax 

23

Taxable corporate income reduced by the amount:

•   Fees, funds in the form of sponsorship and charitable assistance to environmental, health and charities, cultural institutions, health, labor and social security, physical culture and sports, educational institutions, public authorities in the field, self-governing bodies of citizens, but no more than two percent of taxable income;

•  Funds to build colleges, academic colleges, schools and preschool educational institutions to address the Cabinet of Ministers, but not more than 30 percent of taxable income;
•  monetary means allocated at modernization, technical and technological re-equipment of the production processes, purchases of the new technological equipment, expansion of production on forms of new construction, reconstruction of buildings and facilities used for production needs, as well as debt recovery of loans obtained for those purposes, repayment of costs of the leased objects with deduction of depreciation accumulated during the according taxation period, but not more than 30 percent of taxable income. Reduction of taxable profit is applied within the five years period starting from taxation period during which the abovementioned expenses were made, as for technological equipment since the moment of its operational start-up. In cases of sale or gratuitous assignment of the new technological equipment within the period of three years since its purchase (imports) the said privilege is considered void with restoration of  the obligation on paying the profit tax by legal entities for the whole period when that privilege has been applied. This privilege is enjoyed by taxpayers performing production of goods (works, services);

•  monetary means gratuitously allocated at payments to be made for mortgage credits and (or) purchases of dwelling into proprietorship of the personnel relevant to category of young families but not more than 10 percent of taxable income.

Paragraphs two, three, four and six of Article 159 of the Tax Code of the Republic of Uzbekistan

24

For exporter enterprises the following order of payment of profit tax and property tax depended to share of exports of goods (works, services) (regardless of place of works’ performed, services rendered) of own production for the freely convertible currency – depended to exports’ share in overall volume of sales:

•  in case of exports’ share constituting from 15 to 30 percent  - rates established for profit tax and property tax shall be reduced by 30 percent;
•  in case of exports’ share constituting from 30 and more percent  - rates established for profit tax and property tax shall be reduced by two folds.

Those privileges apply to micro-firms and small enterprises at calculation of the single tax payment.

Decree by President of the Republic of Uzbekistan dated June 5, 2000 No UP-2613

25

Joint ventures, controlled by "Uzbeklegprom" (association of companies in light industry) and "Mahalliy-sanoat" (local industries), in charter funds of which the share of a foreign partner constitutes not less than 50%, shall be exempted from income (profit) tax provided that the whole amount of the tax is reinvested into development and expansion of the consumer goods production, first place, infant goods.

Clause 7 of the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan as of 29.04.1996. №166 " On measures on the state support of development of the light and local industry"».

26

Release the newly established manufacturing enterprises with foreign investments, generating export oriented and import-substituting products:

from paying income tax for 5 years since the start of production, if the production volume of more than 25 per cent of goods for children. In subsequent years the tax on profits of these companies charge at a rate reduced by 2 times against the current;

from paying income tax for a period of 2 years from the start of production, if the share of foreign capital in the enterprise is 50 percent or more.

Due to that reason paragraph 4.3 of Decree by President of the Republic of Uzbekistan dated November 30, 1996 No UP-1652 “On the Additional Stimuli and Privileges granted to Enterprises with Foreign Investments” has been excluded.

27

Release  from taxation profits of industrial enterprises with foreign investment with the share of foreign capital in more than 50% allocated to development and expansion of production.

Due to that reason paragraph 4.4 of Decree by President of the Republic of Uzbekistan dated November 30, 1996 No UP-1652 “On the Additional Stimuli and Privileges granted to Enterprises with Foreign Investments” has been excluded.

28

Sales of   the state enterprises and objects for the zero purchase price are carried out only on a competitive basis to the investors having  suggested the best investment projects and obligations, including also the full repayment of   creditor debts of   the enterprise; at that money resources, material values and other asset brought in by an investor on account of   performing its investment obligations, are not levied by the income (profit) tax.

Paragraph-2 of the Clause 3 of the Resolution of the Cabinet of Ministers as of 26.08.2003 №368 «On additional measures to accelerate of privatization state low-rofitable, non-profitable, economically insolvent enterprises and objects».

28

The proprietor - a legal entity or an individual, in respect of a low-profitable, unprofitable, economically insolvent enterprise (its property) or low-liquidity object acquired for the zero purchase price is not levied accordingly by the tax on income (profit) as well as the tax on an individual’s income.  

Paragraphs-5 of the Clause 3 of the Resolution of the Cabinet of Ministers as of 26.08.2003 №368 «On additional measures to accelerate of privatization state low-rofitable, non-profitable, economically insolvent enterprises and objects».

Related to the Value Added Tax

29

The tax rate on income (profit) for manufacturing enterprises with foreign investment with the share of foreign capital in 50 percent or more at a value equivalent to the authorized capital

1.0 million U.S. dollars - 18%;

for manufacturing enterprises with foreign investment with the share of foreign capital in 50 percent or more at a value equivalent to the  authorized capital of 1.0 million USD and above - 16%.

Parts Two and Three, paragraph 3, letter "Changes in the Taxation of legal entities and individuals from January 1, 2004, the Ministry of Finance of Republic of  Uzbekistan from 27.12.2003 № TD/04-01-02/1143 city,

Gos. Tax Committee of Uzbekistan № 2003-81 on 12/27/2003

                                                           On value added tax

30

•  services rendered by state bodies, citizens’ self-governance bodies and authorized institutions at granting to natural persons and legal entities of the certain rights for which state dues, patent dues, collection and other payments are to be derived;
•  services on kids’ keeping at pre-school educational institutions (kindergartens);
•  services on nursing care and aged persons’ care;
•  ritual services rendered by funeral bureaus and cemeteries;
•  sales of items of religious accessories, services on carrying out ceremonies by religious institutions and unions;
•  prosthetic and orthopaedic items, stocks for disabled persons including those to be sold by manufacturers of those items and stocks as well as services rendered to disabled persons on orthopaedic prosthetics, repairment and service of prosthetic and orthopaedic items and stocks for disabled persons;
•   products made by medical production workshops attached to medical institutions and being sold by those institutions;
•  postal stamps (except collection ones), postcards and envelopes containing the postal stamp;
•  telecommunication institutions’ services related to pension and welfare payments;
•  science research and innovation works performed at the state budget expense. Obtaining of such a privilege   shall be based on a conclusion about allocation made from the state budget issued by an according financial body;
•  city passengers’ transport services (except taxi cars including fixed-run taxi minibuses), as well as passengers’ transportation services in suburban areas by railway (commuter trains) and automobile transport of general usage (except taxi cars including fixed-run taxi minibuses). City transport services include passengers’ transportation services rendered by automobile and electric transport means within a city on determined routs in accordance with traffic timetable. Provisions of this closure apply also to services on personnel transportation to and (or) from the workplace, services on transportation in cases of holding events rendered by city passengers’ transport means including transportation outside city upon applications received from legal entities and natural persons;
•  teaching / training services, in part concerning studies at high, middle and medium professional educational institutions, as well as organizations performing rise of professional qualification levels and personnel training;
•  precious metals – to a state body responsible for storage and to exports;
•  medical (veterinary) services (excluding cosmetology ones), pharmaceutical means and items of medical (veterinary) design including those being sold by manufacturers of these means and items;
•  services rendered directly at the airports of the Republic of Uzbekistan and within the airspace of the Republic of Uzbekistan on rendering services to foreign air vessels including aeronavigation services;
•  treatment at a health resorts’, health-improving, tourism- excursion services, as well as services rendered by sports and physical culture institutions;
•  property being sold in order established for privatization of state-owned assets;
•  hydro-meteorological and aerological works;
•  geological and topographic works;
•  printed products as well as editorial, printing and publishing works (services) connected with production and sales of printed products;
•  goods (works, services), excluding turnover on sales performed in ways of trade, blanking, supply and sales activity by legal entities belonging to Disabled Persons’ Social Unions “Nuriniy” and “Chernobiltsy Uzbekistana” Associations with not less than 50 percent of disabled persons within the general number of their personnel;
•  goods (works, services) purchased by legal entities at the expense of loans (credits) extended by international and foreign governmental financial institutions based on the international agreements signed by the Republic of Uzbekistan as well as those received at the expense of grants;
•  maintenance and repairs’ services on housing facilities  rendered to population;
•  ecology examination services performed by specialized experts’ divisions of an authorized state body;
•  services on teaching the state language and book-keeping (paperwork) in the state language;
•  agricultural products of domestic manufacture;
•  main assets, intangibles and facilities of unfinished construction handed over in way of a share contribution into a charter fund (charter capital);
•  land cadastre, land surveying, soil and geobotanical works, performed at the state budget expenses;
•  inventory holdings of government reserve at their renewal;
•  technical means related to system of  investigation and search operations at telecommunication networks as well as services on their exploitation and servicing;
•  property handed over in way of fulfillment of  investment obligations in accordance with an agreement signed between an investor and a state body authorized for managing the state-owned property.

•   interests’ charge and collection on loans and credits, extension of loans and credits, issue of sureties (warranties), including the bank warranties;
•   acceptation of deposits, opening and managing of bank accounts belonging to legal entities and natural persons, including the correspondent banks’ accounts;
•   payments, transfer, liabilities, cheques and payment means, encashment operations;
•   operations with national and foreign currencies, excluding those used for numismatic purposes;
•   opening and management of the securities’ deposit accounts  belonging to legal entities and natural persons, including correspondent depositaries;
•   operations with securities (stocks, bonds and other kinds of securities);
•   sales of securities (shares) in charter funds (charter capital) of legal entities;
•   clearing operations;
•   opening and management of letters of credit;
•   monetary means’ conversion;
•   arrangement of exchange operations with foreign currencies;
•   cash operations (acceptation, giving out, recalculation, changing of money, exchange, sorting and maintenance of bank notes and coins);
•   render of services in accordance with an agreement on financial rent (leasing) in a part concerning the interest income of a renter (less or);
•   forfeiting and factoring operations;
•   pawn shop (extending short-term loans against collateral) operations;
•   funds’ turnover related to pension storage system;

Article 208 of the Tax Code of the Republic of Uzbekistan

Article 209 of the Tax Code of the Republic of Uzbekistan

31

Imports of the following is exempted from the Value added Tax (VAT):

1) goods imported by natural persons within the limits of duty free importation, approves by customs’’ legislation;

  2) goods intended for official usage by foreign diplomatic and equated to them representation offices as well as those designed for personal usage by diplomatic and administration and technical personnel of those offices including their families’ members living together with them;

  3) goods brought in as humanitarian aid in order determined by the Cabinet of Ministers of the Republic of Uzbekistan;

4) goods brought in as charitable aid including technical assistance rendered by states, governments and international institutions;

  5) goods brought in by legal entities at the expense of loans (credits) extended by international and foreign governmental financial institutions in accordance with international treaties and agreements signed by the Republic of Uzbekistan, as well as those brought in at the expense of grants;

  6) pharmaceutical means and items for medical (veterinary) purposes as well as raw material being imported in accordance with the list determined by legislation for manufacture of pharmaceutical means and items for medical (veterinary) purposes;

  7) technological equipment brought into the territory of the Republic of Uzbekistan as per the list approved in accordance with legislation as well as component items and spare parts provided their supply has been foreseen by terms of a contract on supplies of technological equipment. In cases of sale or gratuitous assignment of the imported technological equipment for exports within the three years’ period since the moment of its importation, force of this privilege is considered abrogated with restoration of the obligation to pay  the VAT;

  8) property being brought in as investment obligations in accordance with an agreement signed between an investor and a state body authorized for management of the state-owned property;

  9) technical means related to system of  investigation and search operations purchased by telecommunication operators and special body for certification of technical means related to system of  investigation and search operations at presence of written approval issued by an authorized state body;

  10) raw materials, materials and half-finished products for usage at the own manufacturing process imported by enterprises with foreign investment specializing at kids’ footwear production;

  11)   timber and wood  according to the list determined by legislation

Article 211 of the Tax Code of the Republic of Uzbekistan

32

It shall be established that the enterprises and organizations being residents of the Republic of Uzbekistan carrying out supplies of materials, performing works and rendering services to the foreign companies executing the oil and gas exploration works, are exempted from value added tax.

Clause 5 of the Decree of the President of the Republic of Uzbekistan as of 28.04.2000 №UP-2598 "On measures to attract direct foreign investments into oil and gas exploration".

33

It shall be established that the enterprises and organizations being residents of the Republic of Uzbekistan carrying out supplies of materials, performing works and rendering services to the foreign companies executing the oil and gas exploration works, are exempted from value added tax.

Paragraph 5 of the Decree by President of Uzbekistan dated April 28, 2000 No UP-2598 “On measures aimed at attraction of foreign direct investments into exploration and  production of oil and natural gas exploration“

On tax payments

34

The followings are released from levying by customs duties:

• vehicles carrying out international transportations of cargoes’, luggage and passengers, and also items of material-technical supplies (logistics) and equipment, fuel, foodstuffs and other property needed for their normal operation during the period of their being en route, at points of their intermediate stop or acquired abroad connected with necessity to liquidate failure  (trouble-shooting) of   the said vehicles;
•   currency of   the Republic of   Uzbekistan, foreign currency (except for the ones used for  numismatic purposes), and also securities according to the legislation;- items of material-technical supplies (logistics) and equipment, fuel, the foodstuffs and other property to be transported out of the limits of   customs territory for maintenance of   activity of   the ships of   the Republic of   Uzbekistan and ships, rented freighted) by legal entities and individuals of   the Republic of   Uzbekistan conducting a sea craft as well as production of   their craft imported into the customs territory of   the Republic of Uzbekistan; 
•   goods subject to become the property of   the state, in cases stipulated by the legislation; 
•   subjects which are imported into customs territory or taken out of that territory for official or personal use by representatives of foreign states, individuals having the right for duty-free imports of such items on basis of legislations or international contracts signed by the Republic of Uzbekistan; 
•   goods imported into the customs territory of  the Republic of Uzbekistan for rendering aid as a result of the natural disasters, military conflicts, accidents or casualties, in way of humanitarian aid and gratuitous technical assistance, and also the goods imported on the charitable purposes by the states, governments, international organizations; 
•   manuals for free-of-charge educational, preschool and medical establishments;
•   goods moved under customs control in a mode of   transit through customs territory and destined for the third countries; 
•   goods moved through customs border by individuals and not intended for industrial or other commercial activity according to customs legislation;- goods originated and imported from states with which the mode of   free trade is established; 
•   goods delivered on intergovernmental and credit agreements, made on behalf of the Government of the Republic of Uzbekistan or under its guarantees; 
•   property imported by foreign investors into the Republic of Uzbekistan for their own industrial needs; 
•   property imported for personal needs of   foreign investors and citizens of foreign states residing in the Republic of Uzbekistan according to labor contracts concluded with foreign investors; 
•   goods imported by foreign legal entities having made direct investments into economy of   the Republic of Uzbekistan in a total sum of more than fifty million US dollars, provided that the imported goods are production of their own manufacture; 
•   goods, works and services intended for works under the production-share agreement and imported into the Republic of Uzbekistan in conformity with project documentation by a foreign investor or other persons participating in performance of   works under the production-share agreement, and also production belonging the investor and being taken out in conformity with the production-share agreement; 
•   goods imported for advertising and presentations; goods imported into the Republic of  Uzbekistan by the budget-financed organizations (or upon their orders) on the account of budgetary allocations for their own needs; 
•   technological equipment imported into customs territory of   the Republic of Uzbekistan:
• for implementation of investment projects financed on the account foreign credits under a guarantee of   the government;
•  for newly built and being reconstructed enterprises, specializing on manufacture of   the consumer goods;
• brought in by foreign investors as their contribution in the charter fund of   the enterprises with foreign investments;
• according to authorized in the established order projects on creation of new, and also modernization and technical re-equipment of   operating production facilities, with presentation of the corresponding confirmation of   the authorized bank;
• for transfer into leasing, with presentation of the corresponding confirmation of   the authorized bank;
• by enterprises of   small and medium business for organizing their own production.

 Privileges foreseen by paragraphs-4,15,18 of  this article, are not spread upon the consumer goods imported into the Republic of Uzbekistan by legal entities.

Privilege foreseen by the paragraph of   the thirteenth part first present article, it is not spread upon consumer goods, imported into the Republic of  Uzbekistan by legal entities, except  consumer goods imported for rendering hotel services.

 Specifying the goods as the consumer ones is carried out in accordance with the legislation.

Article 33 of the Law of   the Republic of   Uzbekistan «On custom duties ».

35

At realization of foreign-trade policy of the Republic of   Uzbekistan within the limits of   its customs territory, granting tariff privileges in ways of returning of previously paid duty, lowering the rate of   the duty and exemption, in exclusive cases, from the duty is allowed concerning the goods: 

•   imported into customs territory of the Republic of   Uzbekistan as the contribution into the charter fund of an enterprise with foreign investments or a foreign enterprise as well as being exported by such enterprises as the goods of  their own manufacture;
•     in cases stipulated by share-production agreements on section of   production, in accordance with the legislation.

Paragraph-1,5 of the Article 35 of   the Law of   The Republic of   Uzbekistan « On  custom duties ».

36

Spare parts and accessories to the technological equipment, imported to the Republic of Uzbekistan on account of investment obligations of a foreign investor for technical re-equipment and modernization of production facilities, are exempted from customs duties (except for charges for customs procedures) for the investment period since the moment of acceptance by the investor of investment obligations.  

The paragraph 4of the Clause 4 of the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan as of 17.04.2003 №185 "On program of denationalization and privatization of the enterprises for 2003-2004".

37

To improve the quality and competitiveness, as well as expanding the range of light industry products free for a period up to January 1, 2009, from payment of import customs duties and imported by the enterprises HOOK Uzbekengilsanoat chemicals, dyes, accessories and supplies, and other auxiliary materials not produced in Republic.

The first paragraph of paragraph 6 of the Cabinet of Ministers of 25.03.2004g. № 141 "On measures to improve the management structure of Public Joint Stock Company  «Uzbekengilsanoat» and stimulate further development of light industry of the republic"

paragraph 5 of the Cabinet of Ministers of 27.01.2005g. № 38 "On measures to attract investment in the textile industry of the republic."

38

To exempt:till January, 1, 2008 from payment of   customs payments (except the ones paid for customs procedures) the raw material, dyes, chemicals and the auxiliary materials not made in the Republic and imported by the enterprises of   silk-manufacture branch HOOK "Uzbekyengilsanoat" for their own production needs.

Paragraphs-1,3 of the Claus 6 of the Decisions of   the President of   The Republic of   Uzbekistan from 15.11.2006г. №-512 «On measures on further reforming silk branch of   the Republic»

Related to several types of   Taxes and other Obligatory Payments

For several types of taxes and other obligatory payments

39

The followings are assessed by zero rate:

•   turnover of goods’ (excluding precious metals) export sales for foreign currency;
•  goods, (works, services) rendered to foreign diplomatic and equated to them representation offices for their official usage as well as personal usage by diplomatic and administration and technical personnel by diplomatic and administration and technical personnel of those offices including their families’ members living together with them if they are not being citizens of the Republic of Uzbekistan and do not live in the Republic of Uzbekistan constantly under terms of application of  mutuality principle by a foreign party;
•  goods (works, services) acquired by Diplomatic Services Office of the Foreign Affairs Ministry of the Republic of Uzbekistan for their further sale to foreign diplomatic and equated to them representation offices;
•   works (services) on processing of goods placed under customs’ regime of “processing within the customss’ territory” in accordance with the customss’ legislation;
•  works (services) on processing of goods placed under customs’ regime of “processing within the customss’ territory” with further placement of products subject to processing into the regime of “release for free circulation”  in accordance with the customss’ legislation;
•  transit cargo transportation on the territory of the Republic of Uzbekistan. To transit cargo transportation across the territory of the Republic of Uzbekistan apply services on transportation and servicing related to foreign transit cargo at presence of direct agreements with foreign persons or international (inter-institutional) transport agreements on performance of cargo’s transit and record made by a customss’ body about actual bringing in and moving-out of the shown transit cargo;
•   international transportation of passengers, luggage, cargo and mail;
•  services rendered to population on water-supply, sewerage, sanitary purification, heat and natural gas supplies acquired by associations private dwelling owners on behalf of population.

Articles 212, 214, 215, 216 and 217 of the Tax Code of the Republic of Uzbekistan

40

The followings are not subject to rating by excise tax:

1 export) sales of goods subject to rating by excise tax by their manufacturers with the exclusion of certain kinds  of goods subject to rating by excise tax, determined by the Cabinet of Ministers of the Republic of Uzbekistan;

2) transfer of goods subject to rating by excise tax – processed products manufactured from goods placed under customss regime “processing on the customss’ territory” provided they further are moved out from  customss’ territory of the Republic of Uzbekistan;

3) imports into customss’ territory of the Republic of Uzbekistan of goods subject to rating by excise tax brought into in ways of:

•   humanitarian aid, determined by the Cabinet of Ministers of the Republic of Uzbekistan; 
•   with purposes of charity aid including render of technical assistance rendered by states, governments, international institutions; 
•   by legal entities on the account of loans (credits) extended by international, and foreign governmental financial institutions in accordance with international agreements signed by the Republic of Uzbekistan as well as those received on the account of grants extended;

4) imports of goods subject to rating by excise tax into customss’ territory of the Republic of Uzbekistan by natural persons within the limits of norms for imports of goods not subjected to rating by the excise tax. Quota for imports by natural persons into the territory of the Republic of Uzbekistan of goods not subjected to rating by the excise tax shall be established by legislation; 

5) imports of technical means related to system of  investigation and search operations purchased by telecommunication operators and special body for certification of technical means related to system of  investigation and search operations at presence of written approval issued by an authorized state body/

Part two of Article 230 of the Tax Code of the Republic of Uzbekistan

Part two of Article 230 of the Tax Code of the Republic of Uzbekistan

41

At calculation of the profit tax related to legal entities tax base shall be reduced by the cost of:

1) facilities of housing and communal services.

To facilities of housing and communal services shall apply: housing facilities, water supply (with water intake facilities), sewerage (sewage disposal plants), natural gas and heat distribution networks, boiler rooms / houses (including the equipment) used for the public utility needs;

  2) facilities of social and cultural sphere belonging to spheres of culture and art, education, public health, physical culture and sports, social welfare;

  3) property of legal entities used for needs of the cultural institutions, preschool, comprehensive school educational institutions;

4) property being on balance sheets of agricultural enterprises and being used for manufacture and maintenance of agricultural products (crop sector,  livestock, fish breeding);

  5) facilities of irrigation, water collector and drainage system networks;

6) telecommunication satellites;

7) equipment purchased of at the expense of a credit, for the period of five years since the moment of its operational start-up but not longer than a period established for credit repayment;

8) facilities designed for nature conservation and sanitary purification purposes, fire safety. Labelling facilities as those used for  nature conservation and sanitary purification purposes, fire safety is carried out based on a certificate issued by an appropriate institution dealing with protection of nature or state fire inspection

9)  railways and highways of public usage, main pipelines, communication lines and power transmission lines as well as installations being integral technological part of facilities mentioned above;

10) main production assets in respect of which resolution of the Cabinet of Ministers on their conservation has been adopted;

11) property received in way of leasing for the period a leasing agreement remains in force;

12) civil defense and mobilization facilities being on a taxpayer’s balance and not used for entrepreneurial purposes;

13) transportation means belonging to city passengers’ transportation bodies performing passengers’ transportation in the city and suburban areas (buses, trams, trolley buses, subway trains);

14) equipment transferred for usage without compensation to outworkers’ for carrying out of works upon a legal entity’s order in accordance with contracts signed (for the period of usage);

15) technical means of system of  investigation and search operations at telecommunication networks;

16) new technological equipment launched for operation anew – for the five-years’ period. In cases of sale or gratuitous transfer of new technological equipment within the three-years’ period since the date of its purchase (imports), force of this privilege becomes void with restoration of the obligations on payment of the property tax for the whole period of that privilege has been enjoyed;

The followings are exempted from property tax imposed to legal entities:

1) healthcare, physical culture and social welfare, popular schooling, culture and arts institutions;

2) enterprises of housing and communal services and other urban services of the common civil purpose.  To enterprises of housing and communal services and other urban services of the common civil purpose belong organizations directly performing management, maintenance and exploitation of housing facilities, arrangement of sanitary purification and cleaning, improvement and landscape gardening, street lighting, exploitation of water intake points belonging to water-supply (including treatment facilities) and water-distribution systems, exploitation of sewerage networks (including treatment facilities), exploitation of natural gas distribution networks and natural gas distribution, exploitation of boiler rooms / houses, heat distribution for public utility needs and to population, service buildings’ management departments, fire brigades, management departments of housing and communal services, other enterprises of housing and communal and other urban services of the common civil purpose;

3) legal  entities belonging to Disabled Persons’ Social Unions “Nuriniy” and “Chernobiltsy Uzbekistana” Associations with not less than 50 percent of disabled persons, war and labor front veterans of 1941-1945, among the general number of their personnel, excluding  those dealing with trade, blanking, supply and sales activity. At determining the right of obtaining the said privilege, workmen present at the staff list are to be included into the general number of personnel;

4) newly created enterprises – during the two-years’ period since the moment of of their state registration. The said privilege does not apply to enterprises created on basis of reorganized legal entities as well as legal entities performing their activity on territories of other enterprises with usage of the equipment rented from those enterprises;

5) voluntarily  liquidated subjects of entrepreneurship – since the date of announcement on voluntary liquidation made by a body performing state registration of legal entities. In case of non-completion of voluntary liquidation within the periods  established by legislation or stopping of liquidation procedure the present privilege does nor apply and tax amount shall be levied in full amount for the whole period of the said privilege’s application.

Article 269 of the Tax Code of the Republic of Uzbekistan

42

Land owners and the land users who are carrying out, in the established order, extraction of   generally used minerals (treasures of the soil) within the limits of the land pieces given to them for economic and household needs, are exempted from payment of   the tax for using bowels of the earth. 

Article 108 of   the Tax Code of   The Republic of   Uzbekistan.

43

The followings shall be exempted from the water use tax:

1) enterprises belonging to Disabled Persons’ Social Unions “Nuroniy” and “Chernobiltsy Uzbekistana” Associations with not less than 50 percent of disabled persons, war and labor front veterans of 1941-1945, among the general number of their personnel, excluding  those dealing with trade, blanking, supply and sales activity. At determining the right of obtaining the said privilege, workmen present at the staff list are to be included into the general number of personnel;

2) water consumers having received water from entities who already paid tax for it to the sate budget;

3) water consumers using recycled water, previously paid for in way of primary usage;

4) voluntarily  liquidated subjects of entrepreneurship – since the date of announcement on voluntary liquidation made by a body performing state registration of legal entities. In case of non-completion of voluntary liquidation within the periods  established by legislation or stopping of liquidation procedure the present privilege does nor apply and tax amount shall be levied in full amount for the whole period of the said privilege’s application.

At calculation of the water use tax the tax base shall be reduced by the volume of the followings:

1) mineral underground water, used by healthcare institutions for medical purposes excluding the volume of water used for sale through trade network;

2) water used for manufacture of medicaments;

3) underground waters extracted with purposes to prevent their hazardous affect to environment with the exclusion of water used to fulfill production and technical needs;

4) underground waters used for mine drainage along with mining operations and pumped back into the bowels of the earth to maintain seam pressure  with the exclusion of water used to fulfill production and technical needs;

5) water used for performance of hydraulic turbines of hydroelectric power plants;

6) water used for washing saline soil of agricultural use.

Article 261 of the Tax Code of the Republic of Uzbekistan

44

Starting from June 01, 1996 the following additional privileges shall be applied to the enterprises with the foreign investments, manufacturing export-oriented and import-substituting products:

-  have a right to receive tax credit for development of manufacture, namely they will granted a postponement for two years of payments to the budget of profit tax, value added tax and land tax.

Clause 4 of the Decree of the President of Republic Uzbekistan as of 31.05.1996 №UP-1467 "On additional measures to stimulate the creation and activity of the enterprises with foreign investments".

45

Foreign companies performing the research and exploratory works on oil and gas, as well as foreign contractor and subcontractor organizations involved by them, are exempted from:

•   all kinds of taxes, deductions and the payments in force within the territory of the Republic of Uzbekistan, for the period of carrying out of geological survey;
•   customs duties (except for fees for customs procedures) at imports of the equipment, material-technical resources and the services necessary for carrying out of research, exploratory and other accompanying works.           

Clause 4 of the Decree of the President of Republic Uzbekistan as of 28.04.2000 №UP-2598 "On measures to attract direct foreign investments into investigation and extraction of oil and gas".

46

Joint ventures on an oil and gas extraction, formed with participation of the foreign companies which are carrying out research and exploration on oil and gas, shall be exempted from:

•   income tax for the period of seven years since the start-up of the oil and gas extraction. After expiration of the above mentioned period, rate of the income tax for the said joint ventures shall be established at a rate of 50 percent from the rate in force;
•   property tax and on incomes of foreign participants in those joint ventures.

Paragraphs of 1 - 3 of the Clause 7 of the Decree of the President of the Republic of Uzbekistan as of 28.04.2000 №UP-2598 "On measures to attract the direct foreign investments into investigation and extraction of oil and gas".

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To establish, that from July, 1, till January, 1, 2009 the industrial enterprises with foreign investments State Joint Stock Company "Uzbekyengilsanoat" specializing on manufacture of   ready-made garments (sewing, knitted and leather items), hosieries and footwear, are released from payments into the state budget of   all kinds of   taxes and tax collections, except for the value added tax.   

Claus1 of the Decree of   the President of   The Republic of   Uzbekistan from 20.06.2003г. №DP-3267 «On additional measures to stimulate  increase manufactures of   ready consumer goods by the enterprises with foreign investments »,Claus 5  of the  Decision of   the Cabinet of   The Republic of   Uzbekistan from 27.01.2005г. №38 «On measures to attract  investments into textile branch of   the Republic».

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To release since July, 1, 2005 of   the enterprises of   branches of economy, according to the appendix, involving direct private foreign investments, from payment on their main activity of   the incomes (profit) tax, the property tax, the tax for accomplishment and development of   a social infrastructure, uniform tax payment or the uniform tax for micro firms and small enterprises, and also obligatory deductions into the Republican Roads Fund.

To determine that the specified tax privileges are given at volume of   direct private foreign investments:

•    from 300 thousand US dollars up to 3 million US dollars - for the period of   3 years;
•  from above 3 million US dollars up to 10 million US dollars - for the period of   5 years;
•   from above 10 million US dollars - for the period of   7 years.

 To establish, that the above mentioned tax privileges are applied under following conditions:

•   location of   the said enterprises in  manpower-abundant regions - the Republic Karakalpakstan, Dzhizak, Kashkadarinskai, Syr-Darya, Surkhan-Darya, Khorezm regions as well as in rural settlements of Navoiy, Andizhan, Namangan and Fergana regions;
•   bringing-in by foreign investors of   private direct foreign investments without granting a guarantee of  the Republic of   Uzbekistan;
•    the share of   foreign participants in the charter fund of   the enterprise should be not less than 50 percent;
•   contributing the  private direct foreign investments after the state registration of   the said enterprises;
•  contribution of   foreign investments in form of the hard currency or the new modern technological equipment;
•   direction of   the income received as a result of   granting of   the specified privileges during term of   their application, on reinvestment with the purpose of   the further development of   the enterprise.

To establish, that:

•   interests under the long-term credits involved by the enterprises with foreign investments without a guarantee of   the Republic of   Uzbekistan shall not be included in taxable base at calculation of   the income (profit) tax;
•   losses from the main activity, arising at newly created enterprises with foreign investments, are transferred for the term of   up to 5 years by equal potions for repayment on the account of  the taxable income during the years following after the accounting period within which the loss has been suffered;
•   at worsening of   investment conditions by the subsequent legislation, privileges granted by the item 1 of   the present Decree shall be in force during the whole period for which they had been granted. 

     The Appendix - the List of   Branches of   Economy over which the privileges granted for direct private foreign investments are spread:

1. Products of   the radio-electronic industry and manufacture of   accessories to computers and computer facilities.

2. Light Industry:- manufacture of   finished cotton and woolen fabrics; - manufacture of   ready ready-made, knitted, hosiery products and textile haberdashery goods; - leather processing; - manufacture of   the footwear, ready-made leather haberdashery products.

3. The Silk Industry:- manufacture of   silk fabrics and finished articles made of silk.

4. Construction Materials’ Industry: manufacture of   new kinds of   the construction materials specified in appendix N1а to the Decree of   the President of the Republic of   Uzbekistan dated March, 24, 2005 N DP-3586.

5. Industrial production of   Poultry Meat and Eggs.

6. The Food-Processing Industry:- manufacture of   ready-made industrially-processed food products from local raw material (except for alcoholic, soft drinks and tobacco items).

7. The Meat-and-Milk Industry:- manufacture of   ready kinds of   meat and dairy production, cheese and animal oil.

8. Chemical-Pharmaceutical:- manufacture of   medicaments; - manufacture of   synthetic detergents, household chemical goods.

Clauses 1, 2, 4 of the Decrees  and the Appendix to the Decree of   the President of   The Republic of   Uzbekistan from 11.04.2005. №DP-3594 «On additional measures to stimulate the  attraction of   direct private foreign investments».

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In the City of Navoi within the area of Navoi International Airport, Free Industrial Economic Zone “Navoi” (hereinafter referred to as the FIEZ) has been created.

Duration period of functioning of Free Industrial Economic Zone “Navoi” is 30 years with possibility of its further prolongation;

During the period of functioning of the FIEZ within its territory the special customss, currency and tax regimes, simplified procedures of entry and exit as well as obtaining permit for performance of labor activity by citizens being non-residents of Uzbekistan shall be applied;

Force of special legal regime including customss, currency and tax regimes shall be applied only to activity performed by economic entities registered by the FIEZ directorate, exclusively on the FIEZ’s territory.

 Economic entities registered in Free Industrial Economic Zone “Navoi” shall be exempted from payments of: land tax, property tax, income tax, tax for improvement and development of social infrastructure, single tax payment (for small enterprises), mandatory allocations to the Republican Highway Fund, Republican School Education Fund depended to volume of investments made:

•   from 3 to 10 million Euros – for 7 years;
•   from 10 to 30 million Euros – for 10 years. During the following 5 years tax rate for income tax and single tax payment shall be established at size of 50 percent lower than the rates in force;
•   over 30 million Euros – for 15 years. During the following 10 years tax rate for income tax and single tax payment shall be established at size of 50 percent lower than the rates in force;

Economic entities registered at the FIEZ shall be exempted from customss’ payments (excluding  customs procedure charges) for imported equipment as well as raw material, materials and component items for manufacture of products aimed for exports for the whole period of functioning of the FIEZ.

For the raw material, materials and component items for manufacture of products aimed for sale in domestic market of Uzbekistan, customs payments shall be levied at size of 50 percent of established rates (excluding  customs procedure charges) with the award of delay of their payment for the period of up to 180 days provided that legislation has not established a more privileged regime).

In cases of sale or gratuitous assignment of the equipment raw material, materials and component items brought into territory of the FIEZ with application of the said privileges, customs payments shall be collected to the state budget in full volume in order established by legislation.

Decree by President of the Republic of Uzbekistan dated December 2, 2008 No UP-4059 “On Creation of the Free Industrial Economic Zone in Navoi Region”

Decree by President of the Republic of Uzbekistan dated December 2, 2008 No UP-4059 “On Creation of the Free Industrial Economic Zone in Navoi Region”

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Enterprises specializing in output of nonfood consumer goods in accordance with Appendix No 2 shall be awarded for the period up to January 1, 2012  tax and customs preferences in form of:

•   exemption from payment of income tax and property tax, single tax payment for micro-firms and small enterprises, mandatory allocations to the Republican Highway Fund;
•   exemption from customs payments (excluding  customs procedure charges) for imported equipment, component items, raw material and materials not produced in the Republic of Uzbekistan and used for manufacture of nonfood consumer goods in accordance with lists approved by the Cabinet of Ministers of the Republic of Uzbekistan;
•   delay of payment of customs duties (excluding  customs procedure charges) for the period of up to 60 days since the date of acceptance of customs declaration at imports of raw material, materials and accessories needed for own production of nonfood consumer goods not included into a list approved by the Cabinet of Ministers of the Republic of Uzbekistan.

I shall be established that tax and customs privileges and preferences foreseen by the present paragraph apply to enterprises specializing in manufacture of nonfood consumer goods of the goods’ groups in accordance with Appendix No 2 whose production volumes contain not less than 60 percent of such goods.

Resolution by President of the Republic of Uzbekistan dated January 28, 2009 No PP-1050 “On the Additional measures aimed at stimulation of expansion of production of domestic nonfood consumer goods”  

On mandatory sale of foreign currency

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Joint ventures involved in extracting oil and gas, which were created with the participation of foreign companies and carrying out oil and gas search and exploration works, shall be exempted from obligatory sale of foreign currency gained from sale of production, received as the result of extracting and processing of oil and gas for the period of return on investments into the search and exploration works

The paragraph 4 of the Clause 7 of the Decree of the President of Republic Uzbekistan as of 28.04.2000 №UP-2598 "On measures to attract direct foreign investments into investigation and extraction of oil and gas".

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The followings shall be exempted from mandatory sales of revenue received in foreign currency:

a) for five years since the date of registration – enterprises with foreign investments specializing in manufacture of consumer goods whose share of foreign capital in the charter fund exceeds 50 percent. Those enterprises shall be considered specializing in manufacture of consumer goods in case the own production share constitutes over 60 percent of total volume of revenue received from their economic activity;

b) amounts in foreign currency obtained in for donation made for charity purposes, grants provided their purposeful use, contributions into charter capital as well as means received in way of payment for acquired stocks and other securities enterprises sold to foreign legal entities and natural persons located abroad  (with the exclusion of means in free foreign currency received from foreign investors as payment for cost of enterprise of stocks package being mandatory, in accordance with the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan dated November 18, 1998 No 477 “On measures aimed at stimulation of attraction of foreign capital at privatization of the state-owned property” for entering in the special foreign currency bank account of the State Property Committee with its consequent mandatory sale to the Central Bank in the whole volume);

c) credits received in foreign currency;

d) monetary means in foreign currency acquires at a currencies’ market;

e) return of advance payments on unexecuted imports’ contracts;

f) revenue in foreign currency received from exports of goods (works, services) of own production  by micro-firms, small enterprises with the exclusion of enterprises performing exports and transits of natural gas;

g) investments brought by investors in form of monetary means in foreign currency at sales of the state-owned assets with investment obligations and entered in a separate bank account of an enterprise.

Resolution by the Cabinet of Ministers of the Republic of Uzbekistan dated June 29, 2000 No 245 “On measures aimed at further development and strengthening of the over-the-counter currencies’ market”

Resolution by the Cabinet of Ministers of the Republic of Uzbekistan dated June 29, 2000 No 245 “On measures aimed at further development and strengthening of the over-the-counter currencies’ market”

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Revenue received in foreign currency subject to mandatory sale shall be reduced related to:

a) enterprises – by the amount of expenses for customs’ procedures outside of the Republic of Uzbekistan, transportation, insurance, freight forwarding, success fees, amounts paid for interest of credits received from foreign banks and authorized banks of the Republic of Uzbekistan, including guarantors’ interest (except the interest to be paid for delinquent and delayed  loans), performed in foreign currency in accordance with signed contracts;

b) banks:

•   for the amount of interest paid for demand balance in deposit accounts and deposits made by banks’ clients in foreign currency;
•   for the amount of interest payments for loans in foreign currency received from foreign banks as well as cost of services rendered by foreign banks and paid in foreign currency;
•   for a part of revenue received in foreign currency subject to payment for rent (lease) of equipment located abroad;

c) enterprises awarded, in way of exclusion, the permission to perform  raw material purchases for free convertible currency within the territory of the Republic of Uzbekistan – the volume of their mandatory sale of part of revenue received in foreign currency shall be reduced by foreign currency expenses used for purchases of raw material and materials within the Republic of Uzbekistan, with payment made in foreign currency, needed for manufacture of products for exports.

Resolution by the Cabinet of Ministers of the Republic of Uzbekistan dated June, 2000 No 245 “On measures aimed at further development and strengthening of the over-the-counter currencies’ market”

Resolution by the Cabinet of Ministers of the Republic of Uzbekistan dated June, 2000 No 245 “On measures aimed at further development and strengthening of the over-the-counter currencies’ market”