Controlled foreign companies in Uzbekistan

A controlled foreign company (CFC) is a foreign company or a non-corporate structure controlled by an Uzbekistan tax resident. A controlling person notifies the tax authority, calculates its share of undistributed profit and, if no exemption applies, includes it in the corporate income tax or personal income tax base.

In brief:

• Control arises with an interest of more than 25% (Article 40 of the Tax Code), or more than 10% when Uzbekistan residents collectively hold more than 50%.
• A participation notice is filed within one month (Article 209 of the Tax Code); the CFC notice is due by 20 March of the following year.
• The attributable share of CFC profit is included in the tax base if it exceeds UZS 300 million (Article 208 of the Tax Code), unless an exemption applies.
• Failure to include the profit carries a penalty of 20% of unpaid tax (Article 227 of the Tax Code), subject to a UZS 10 million minimum.
• For an owner, the result is determined separately for each CFC: attributable profit, exemptions, foreign tax and supporting documents are not pooled between companies.

Updated: 05 September 2026

What is a controlled foreign company

A CFC is a foreign legal entity (Article 39 of the Tax Code) that is not an Uzbekistan tax resident and is controlled by a legal entity or individual who is an Uzbekistan tax resident. The same regime applies to a foreign non-corporate structure if it is controlled by Uzbekistan residents.

The tax residence of an investment fund’s management company does not by itself make the fund that management company’s CFC. The same rule applies when a managing partner or another person manages the fund. The status of the fund and its manager must therefore be assessed separately.

The tax residence of the foreign company itself must be checked first. A foreign legal entity effectively managed from Uzbekistan (Article 33 of the Tax Code) may be treated as an Uzbekistan tax resident unless a tax treaty provides otherwise. In that case, the first CFC condition—foreign non-residence—is not met.

Who is a controlling person

A legal entity or individual that is an Uzbekistan tax resident is a controlling person if its interest in the foreign company is:

• more than 25%;
• more than 10% where the combined interest of all Uzbekistan tax residents in the company exceeds 50%.

These ownership thresholds (Article 40 of the Tax Code) do not exhaust the concept of control. A person with a smaller interest is also a controlling person if it exercises, or can exercise, decisive influence over decisions on the distribution of net profit in its own interests or those of related family members. That influence may arise from ownership, a management agreement or other relationships.

For an individual, the interest is aggregated with the interests of related family members (Article 37 of the Tax Code): a spouse, parents and adoptive parents, a spouse’s parents, children, full and half siblings, a guardian or custodian, and a ward.

The founder of a foreign non-corporate structure is generally treated as its controlling person. The founder falls outside that status only if all four conditions are met: no right to receive the structure’s income, no right to dispose of that income, no retained right to the contributed property, and no control. The irrevocable transfer of assets must be supported by the law of the jurisdiction or the structure’s constitutional documents.

How to calculate direct and indirect ownership

An ownership interest is the sum of direct and indirect interests (Article 38 of the Tax Code). A direct interest consists of voting shares or an interest in charter capital held directly by the person. If it cannot be determined that way, it is calculated in proportion to the number of participants.

The indirect interest is calculated for every ownership chain:

1. identify every chain from the controlling person to the foreign company;
2. determine the direct interest at each link;
3. multiply the interests within each chain;
4. add the results for all chains.

Example. An Uzbekistan resident owns 60% of company A, and company A owns 50% of foreign company B. The resident’s indirect interest in B is 60% × 50% = 30%. This exceeds the 25% threshold, so the resident is a controlling person of B if the other conditions are met.

Short-term repos and securities loans of no more than one year are subject to special rules: the securities generally remain attributable to the original seller or lender. A court may determine additional circumstances relevant to ownership.

Which notices must be filed and when

A tax resident reports participation in a foreign legal entity, the establishment of a foreign non-corporate structure, and any CFC it controls. These are separate notices with different triggers and deadlines.

Notices are filed with the tax authority at the taxpayer’s place of registration in electronic form. An individual may file them on paper. The Cabinet of Ministers approves the forms, completion rules and filing procedure.

What information goes into each notice

The participation notice contains five groups of information (Article 209 of the Tax Code):

1. the date on which the filing obligation arose;
2. the name of the foreign legal entity or structure;
3. its foreign registration number and tax code, if any;
4. the taxpayer’s interest and, for indirect ownership, every entity in the chain and the interest in it;
5. the date participation ended, where applicable.

The CFC notice contains:

1. the period covered by the notice;
2. the name of the company or structure;
3. its registration number and foreign tax code, if any;
4. the last day of the CFC’s financial year;
5. the date of its financial statements and the end date of its foreign tax period;
6. the date of the auditor’s report where an audit is mandatory;
7. the direct or indirect interest and ownership chain;
8. the grounds for treating the taxpayer as a controlling person;
9. the grounds for exempting the CFC’s profit from tax.

If incomplete information, an inaccuracy or an error is discovered after filing, the taxpayer may submit a corrected notice.

What happens after a tax authority demand

If the tax authority has information indicating control but no notice was filed, it demands an explanation or a notice. The demand must be complied with within 20 calendar days (Article 209 of the Tax Code) after receipt. The information may come from an exchange with a foreign competent authority.

The taxpayer may attach documents showing that there are no grounds to treat it as a controlling person, and the tax authority must consider the explanation and documents. If the grounds remain, an official sends a notice treating the person as controlling.

That notice may be challenged in court within three months after receipt. The tax authority must be informed within three days after the court application is filed. Until the judgment takes effect, the person cannot be treated as controlling. If the notice is not challenged, after three months the person is deemed to have acknowledged its controlling-person status and the CFC rules apply.

How CFC profit is calculated

CFC profit or loss is determined using one of two methods (Article 331 of the Tax Code):

• under the unconsolidated annual financial statements prepared under the law of the country of registration; profit before tax is used;
• under the rules in Section XI of the Tax Code for legal entities.

The financial-statements method is available if the CFC is in a jurisdiction that has a tax treaty and exchanges tax information with Uzbekistan, or if the statements carry an auditor’s report that contains neither an adverse opinion nor a disclaimer of opinion. If local law does not regulate financial reporting, IFRS or other internationally recognised standards are used. A voluntary election to use the Tax Code method applies for at least five tax periods and must be recorded in the controlling person’s tax accounting policy.

Foreign-currency profit is converted at the Central Bank’s average exchange rate for the annual reporting period. The average rate for the relevant calendar year applies when profit is calculated under the Tax Code rules.

Under the financial-statements method, the calculation excludes:

• revaluation of interests, units, securities and derivatives;
• profit or loss of subsidiaries and associates, except dividends;
• expenses for creating provisions and income from reversing them, subject to the adjustments in the Tax Code.

A loss shown in the annual statements may be carried forward without a time limit. It cannot be carried forward, however, if the CFC notice for the loss-making period was not filed. The tax base is determined separately for each controlled company.

CFC profit is reduced by dividends (Article 208 of the Tax Code) paid in the following calendar year, including interim dividends for the financial year. For a non-corporate structure, profit distributed to controlling persons and other beneficiaries is deducted.

How profit is taxed and documented

The CFC’s undistributed profit is treated as income of the controlling person. A legal entity (Article 203 of the Tax Code) includes it in its corporate income tax base; an individual includes it in the personal income tax base. Profit is attributed by reference to the interest on the distribution-decision date or, if no decision has been made by 31 December, the interest at the end of the financial period.

The amount attributable to the controlling person for a particular CFC is included only if it exceeds UZS 300 million. The general rate is 15% (Article 337 of the Tax Code) for a legal entity and 12% (Article 381 of the Tax Code) for an individual.

Example. A CFC has UZS 1 billion of profit before tax, pays UZS 200 million in dividends, and is 40% owned by an Uzbekistan legal entity. Undistributed profit is UZS 800 million, and the controlling person’s share is UZS 320 million. It exceeds the UZS 300 million threshold; tax at 15% is UZS 48 million before credit for supported foreign tax.

The tax return must be accompanied by:

• the CFC’s financial statements for the relevant period, or other documents if no statements exist;
• the auditor’s report if an audit is required by foreign law or corporate documents, or was performed voluntarily.

Foreign-language documents must be translated into the state language. If the auditor’s report cannot be filed with the return, it is submitted no later than one month after the date of the report stated in the CFC notice.

A legal entity files its annual corporate income tax return by 1 March (Article 339 of the Tax Code) of the following year. An individual declares foreign-source income by 1 April (Article 397 of the Tax Code) and pays the tax shown in the return by 1 June (Article 398 of the Tax Code).

When CFC profit is exempt

An exemption applies if at least one condition (Article 204 of the Tax Code) is met:

1. the CFC is a non-profit organisation that does not distribute profit under the law of its jurisdiction;
2. it is an active foreign company or active foreign holding company;
3. its effective profit tax rate is not lower than Uzbekistan’s general corporate income tax rate;
4. it is a bank or insurance organisation operating under a licence or special permit.

For an active company or active holding company, the jurisdiction of permanent establishment must not be on the offshore-jurisdiction list. For the effective-rate exemption and the bank or insurer exemption, Uzbekistan must have a tax treaty with the relevant jurisdiction. Every exemption ground must be supported by documents, and the necessary parts of foreign documents must be translated into the state language.

An active foreign company derives no more than 20% (Article 205 of the Tax Code) of its income from passive activities. For an active holding company, the Uzbekistan controlling legal entity must directly hold at least 75% for at least 365 consecutive days. Passive income of the holding company, excluding dividends from active companies, must not exceed 5%; the holding company must directly own at least 50% of each such active company for at least 365 days.

The following income is passive (Article 206 of the Tax Code):

1. dividends;
2. distributions of profit or property, including on liquidation;
3. interest on debt obligations;
4. royalties;
5. disposal of shares or interests and assignment of rights in foreign structures;
6. transactions in derivatives;
7. disposal of real estate;
8. rent, subletting and leasing, except the transport used for international carriage specified in the Tax Code;
9. disposal or redemption of investment fund units;
10. consulting, legal, accounting, audit, engineering, advertising, marketing, information-processing and research and development services;
11. provision of personnel;
12. income analogous to the listed categories;
13. other income, which is treated as active for this classification.

The effective rate is the ratio of foreign taxes (Article 207 of the Tax Code) assessed on the profit of the CFC and its subdivisions, including tax withheld at source, to the company’s total profit together with its subdivisions. If there is no income or total profit is zero or negative, no rate is calculated and the exemption condition is treated as met.

Profit that cannot be distributed under the law of the CFC’s jurisdiction and must be added to charter capital is also excluded from the controlling person’s tax base.

How foreign tax is credited

Uzbekistan tax calculated on CFC profit is reduced in proportion to ownership (Article 331 of the Tax Code) by foreign tax assessed on that profit, including tax withheld at source. Corporate income tax assessed on the CFC’s permanent establishment in Uzbekistan is also taken into account.

The foreign tax must be supported by documents. If Uzbekistan has no tax treaty with the CFC’s jurisdiction, the evidence must be certified by the foreign authority responsible for tax control. This is a specific reduction of tax on CFC profit; it does not replace the calculation of the profit or the controlling person’s interest.

What penalties apply

If a controlling person fails to include its share of CFC profit in the tax base and consequently underpays tax, the penalty is 20% of the unpaid amount, but not less than UZS 10 million (Article 227 of the Tax Code). The penalty applies to both legal entities and individuals.

The specific penalty provision links liability to omitted profit and a tax underpayment. A missing notice triggers the separate process of a demand, explanations and possible recognition of the person as controlling. These consequences should not be conflated.

What a foreign-company owner should check

The review follows this sequence:

1. establish whether the owner is an Uzbekistan tax resident;
2. check whether the foreign company itself has become an Uzbekistan resident because of its place of management;
3. map every direct and indirect ownership chain, including aggregated family interests for an individual;
4. assess actual influence over profit distribution even where the ownership interest is below a threshold;
5. determine profit and any exemption separately for each CFC;
6. collect financial statements, the auditor’s report, translations and foreign-tax evidence;
7. verify the notice and tax-return dates.

Effective management is in Uzbekistan if the executive body regularly operates from Uzbekistan or senior officers predominantly manage from here (Article 34 of the Tax Code). Preparing shareholder decisions or board meetings, strategic planning, consolidated reporting, internal audit and individual control functions do not by themselves establish the place of effective management.

This article does not address whether prices in foreign or intragroup transactions are at arm’s length. The CFC regime governs control status and the attribution of undistributed profit, while controlled transactions (Article 181 of the Tax Code) are regulated separately. Read the transfer pricing article when the foreign company transacts with related persons or counterparties in offshore jurisdictions.

Frequently asked questions

What is a controlled foreign company in simple terms?

It is a foreign company that is not an Uzbekistan tax resident but is controlled by an Uzbekistan tax resident. Control is usually determined by ownership, but it may also arise from the practical ability to determine how profit is distributed. The regime also covers trusts, funds and other foreign non-corporate structures where a controlling person exists.

Must a CFC notice be filed if the company made no profit?

The CFC notice is tied to a period in which a share of profit must be attributed to the controlling person. The separate participation notice is filed when an interest arises or changes and when participation ends. If the grounds for the participation notice remain unchanged, it does not have to be repeated annually. No profit does not remove the need to determine which notice, if any, is required for the period.

Does an interest of exactly 25% create control?

The first ownership test says “more than 25%,” so exactly 25% does not meet it. The person may still meet the second test if its interest is above 10% and Uzbekistan residents together hold more than 50%. Control may also exist below an ownership threshold where the person exercises decisive influence over the distribution of net profit.

Is profit already distributed by the CFC taxed again?

The controlling person includes undistributed profit. The calculation reduces profit by dividends paid in the prescribed period, including interim dividends. For a foreign non-corporate structure, profit distributed to controlling persons and other beneficiaries is taken into account. The distribution must be supported by financial and corporate documents.

Can foreign tax paid by the CFC be credited?

Yes. Uzbekistan tax calculated on CFC profit is reduced, in proportion to the controlling person’s interest, by foreign tax on that profit and tax withheld at source. The amount must be supported by documents. If there is no tax treaty with the CFC’s jurisdiction, the evidence must be certified by that jurisdiction’s competent tax authority.