Corporate income tax

Corporate income tax (CIT) is paid by companies on profits earned from commercial activities in Uzbekistan. Profit is the difference between total revenue and deductible expenses. Some categories of expenses may not be deductible.

A foreign company pays corporate income tax on income received from Uzbekistan without the right to deduct expenses.

Corporate income tax is also paid on the profits of controlled foreign companies of a taxpayer. See our article on controlled foreign companies.

Taxpayers of corporate income tax

All taxpayers, including foreign companies operating in Uzbekistan through permanent establishment and foreign companies receiving income from Uzbekistan, are subject to corporate income tax under Uzbek law, with the exception of:

• companies (residents of Uzbekistan) on turnover tax regime whose annual revenue does not exceed 1 billion Uzbek soums
• individual entrepreneurs whose annual revenue does not exceed 1 billion Uzbek soums

Companies on turnover tax regime do not pay corporate income tax and value added tax (VAT). See our articles on turnover tax.

Switch to corporate income tax

Taxpayers on turnover tax regime whose annual revenue from the sale of goods or services has exceeded 1 billion Uzbek soums are required to switch to paying corporate income tax and value added tax (VAT).

Companies whose income for a calendar year does not exceed 1 billion Uzbek soums may switch to corporate income tax and VAT voluntarily.

Tax rates

The standard rate of corporate income tax is 15%. Certain taxpayers and activities are taxed at differentiated rates, e.g. banks (20%), agricultural producers (0%), markets and shopping malls (20%), e-commerce (7.5%). Dividends are taxed at the rate of 5%.

Foreign companies pay corporate income tax on income from Uzbekistan at the rate of 20%. Dividends and interest paid to foreign companies are taxed at the rate of 10%. There are differentiated rates for certain taxpayers and activities.

There are many incentives on corporate income tax for certain types of business. See our article on tax incentives.

Taxable revenue

For taxation purposes, total revenue consists of income received from sources in Uzbekistan and outside of Uzbekistan.

Total revenue includes income receivable in any form (monetary, assets) and from any activity, in particular:

• income from the sale of goods and services
• dividends and interest received
• income from the sale of depreciable assets and property
• income from leasing property
• assets received free of charge
• benefit arising from a write-off
• compensation for previously deducted expenses or losses
• foreign currency exchange gains
• profits of controlled foreign companies

The following earnings shall not be considered as income for taxation purposes:

• funds received from shareholders as contribution to charter capital
• funds received as a pledge or deposit
• funds received as insurance compensation under insurance contracts
• credit and loan funds

Resident companies are subject to CIT on their worldwide income, meaning they are taxed on income earned both within Uzbekistan and from foreign sources. The undistributed profits of foreign companies controlled by the residents of Uzbekistan may also be subject to CIT.

Non-deductible expenses

Certain types of expenses do not reduce the amount of taxable revenue (non-deductible expenses). These expenses include:

• expenses not related to business activities generating income
• expenses for events not related to business activities (sports and cultural events, recreation and other similar events)
• taxes and fees charged as a result of tax audits
• taxes paid for other persons
• losses from theft and shortages, the perpetrators of which have not been identified
• dividends paid by a taxpayer to shareholders
• penalties and fines payable to state
• costs of acquisition, construction, assembly, installation, etc. included in the cost of depreciable assets

If a local company is financed through a relatively high level of debt compared to its equity (thin capitalization situation), when the lessor is a related or affiliated foreign entity (controlled debt), the borrower's right to deduct interest expenses under the controlled debt shall be limited. Limits on deductibility apply if the amount of controlled debt exceeds the amount of equity by 3 times (13 times for banks and leasing companies).

Depreciation allowance

Depreciation (amortization) expenses are deductible expenses and reduce tax liability. For depreciation purposes, assets must be used in the production of goods and services or used for administrative needs.

Land plots and objects of nature, livestock, mothballed fixed assets, objects of tangible cultural heritage, non-capitalized expenditures are not allowed for depreciation.

Uzbek law specifies the maximum annual rates of depreciation permitted to different types of fixed assets as provided in the following table:

Asset	Annual depreciation (max)
Buildings	5%
Pipelines, power and telecommunication lines	15%
Machinery and equipment	20%
Railroad, sea and air transport	10%
Vehicles, trailers and semi-trailers	20%
Computers and related hardware	40%

Intangible assets are subject to amortization over their useful life. Intangible assets with indefinite or unidentifiable useful life shall be amortized over a five-year period.

Tax reporting and tax payments

Tax reports for corporate income tax are filed quarterly and annually. Quarterly tax returns are reported no later than the 20th day of a month following the end of each quarter. Annual tax returns are reported no later than March 1 following the end of a calendar year.

The payment due dates of corporate income tax are the same as the reporting due dates provided above. A taxpayer whose annual revenue exceeds 10 billion Uzbek soums is required to pay advance tax payments on a monthly basis.