January 25, 2021

Changes in tax legislation for 2021

The New Year began with a number of changes in legislation, including tax legislation. From January 1, 2021, the following benefits for legal entities that were valid in 2020 will be canceled:

  1. exemption from payment of land tax and property tax of legal entities;
  2. payment of social tax at a reduced rate of 1%;
  3. if a legal entity or individual was forced to suspend its activities due to quarantine, the increased rates of property tax and land tax were not applied to it in relation to unused production areas, non-residential structures (clause 4 of Presidential Decree dated 03.04.2020 No. 5978);
  4. business entities could receive an interest-free deferral (installment plan) of taxes on turnover taxes, on property, land, for the use of water resources, and social tax. The privilege could be used by micro firms, small enterprises and individual entrepreneurs that had suspended their activities, or whose proceeds from the sale of goods (services) decreased by more than 50% compared to the monthly average for the first quarter of this year;
  5. The collection of tax arrears, fines and accrued fines for violation of tax legislation from micro firms and small enterprises was suspended.

In accordance with the regulation of the Ministry of Finance and the State Tax Committee “On Changes in the Taxation of Legal Entities and Individuals from January 1, 2021” dated December 30, 2020, the FOLLOWING CHANGES in taxation are provided:

  1. The VAT rate is still 15%. Goods (services) purchased by legal entities within the framework of projects implemented by Uzbekistan in whole or in part at the expense of funds (loans, credits) of international financial institutions and foreign government financial organizations are exempted from this tax (Art. 6 of Law of the Republic of Uzbekistan-599 dated December 30, 2019 )
  2. Excise tax has been canceled for 73 commodity items. When used for their own needs, imported excisable goods sold to the end consumer (gasoline, diesel fuel, liquefied and compressed gas), taxpayers are the persons who imported these goods for their own needs. Natural wines (with the exception of bottled wines) sold by producers in tasting zones (places) organized along tourist routes are not taxed
  3. Income tax is 15%, for certain categories 20%. From January 1, income received in accordance with paragraphs 8, 9, 14, 15 and 17 of Art. 304 Tax Code, as well as acquired at the expense of funds released as a result of tax and customs benefits provided, are not recognized as depreciable assets and are not subject to depreciation.
  4. The property tax of legal entities is 2%. The reduced rate established for the objects provided for in Part 4 of Art. 415 Tax Code, increases from 0.2% to 0.4%.These include: public railways, communication and power transmission lines, as well as structures that are an integral technological part of these facilities; immovable property and construction in progress, for which a decision was made by the Cabinet of Ministers of the Republic of Uzbekistan on their conservation.
  5. Social tax for legal entities is 12%. The 1% social tax benefit is canceled.
  6. The list of persons not subject to turnover tax is supplemented by retail stores selling alcoholic products (including beer), markets and shopping malls. The tax rate for turnover tax for realtors is reduced from 25% to 13%.
  7. According to Art. 429 of the Tax Code, the procedure for calculating and paying land tax from legal entities and individuals are preserved. Reducing coefficient to tax rates for legal entities in relation to land plots occupied by objects provided for in Art. 429 Tax Code, increases from 0.1 to 0.25. From January 1, 2021, lands on which not only drip, but also other types of water-saving irrigation have been introduced are also exempt from tax.