Transfer pricing

A transfer price is the price that is formed in transactions between related (affiliated) parties and is lower (or higher) than the objectively determined market price that would be used in similar transactions between independent parties.

As per the transfer pricing rules, tax authority in Uzbekistan is entitled to reassess a controlled transaction and re-calculate tax liability. Transfer pricing rules apply to corporate income tax, personal income tax, value added tax, excise tax and subsoil use tax.

Controlled local transactions

A transaction between related (affiliated) resident entities that meets one of the following criteria shall be subject to transfer pricing rules in Uzbekistan:

• yearly income earned from the transaction exceeds 5 billion Uzbek soums
• yearly income earned from the transaction exceeds 500 million Uzbek soums and one party to the transaction enjoys special tax benefits or incentives under Uzbek laws unlike the other party
• yearly income earned from the transaction exceeds 500 million Uzbek soums and the object of the transaction is extracted mineral resources taxed with an ad valorem tax rate

Controlled foreign trade transactions

A foreign trade (cross-border) transaction that meets one of the following criteria shall be subject to transfer pricing rules in Uzbekistan:

• the transaction is between related (affiliated) entities
• the object of the transaction is an exchange trade commodity such as precious and non-ferrous metals, mineral fertilizers, hydrocarbons, oil products and cotton fiber
• a party to the transaction is registered in, or a tax resident of, a territory recognized by Uzbekistan as an offshore zone

Disclosing controlled transactions

Taxpayers are under the obligation to disclose controlled transactions to tax authority on an annual basis by way of filing a notice in a state-regulated form. The deadline to file the notice is the final date of submitting annual financial statements for the previous calendar year (usually, February 15).

A notice on controlled transactions is filed through the account of a taxpayer at my3.soliq.uz.

A taxpayer, at the request of the tax authority, within 30 calendar days shall provide documentation regarding a specific transaction (group of similar transactions). Documentation is a set of documents or a single document containing information about the requested transaction, the parties to the transaction and the pricing in the transaction.

Liability

Failure to pay or incomplete payment of a tax by a taxpayer as a result of non-compliance with the transfer pricing rules shall be fined in the amount of 40% of the unpaid tax amount.

For each calendar day of delay in settling the tax in due amount a penalty may be charged.