Value added tax (VAT)

The rate of value added tax (VAT) in Uzbekistan is set at 12%. VAT is levied on the sale of goods and services in the territory of Uzbekistan.

The following entities pay VAT:

• commercial companies (residents) and individual entrepreneurs whose annual revenue from the sale of goods and services exceeds 1 billion Uzbek soums, or who has voluntarily switched to paying VAT
• foreign companies operating in Uzbekistan through permanent establishment
• foreign companies selling goods and services, when Uzbekistan is recognized as the place of sale
• companies importing goods to Uzbekistan

Companies on turnover tax regime do not pay VAT (except in cases of importation of goods). See our article on turnover tax.

Tax base for value added tax is the sales price of supplied goods and services (excise tax included, if applicable), and the customs price of goods imported into Uzbekistan (customs duty and excise tax included, if applicable).

Switch to value added tax

Resident companies and individual entrepreneurs whose revenue from the sale of goods or services for a calendar year has exceeded 1 billion Uzbek soums are required to switch to paying corporate income tax and VAT.

Companies subject to VAT are required to undergo separate registration as a VAT taxpayer. Failing to comply with this requirement entails a fine of 5% of the income received, but not less than 5 million Uzbek soums.

Exemption from value added tax

The following types of activities are exempt from VAT:

• financial services and insurance services
• services for the daycare of children in pre-school institutions
• care services for the sick and elderly
• sale of prosthetic and orthopedic products, equipment for persons with disabilities
• services provided to persons with disabilities on orthopedic prosthetics, repair and maintenance of prosthetic and orthopedic products
• educational services in the field of primary, secondary, secondary specialized, vocational, higher and postgraduate education
• services for organizing education testing and examinations
• services for additional education provided by educational institutions, retraining and advanced training of personnel
• services for conducting classes with minors in clubs and studios (including sports)
• health resort and health-improving services provided by sanatoriums, hospitals, health resorts, boarding houses, recreation centers and areas, children's summer camps
• passenger transportation services with regulated rates
• services and works provided and performed by management organizations or managers of apartment buildings for the management, maintenance and repair of common property, as well as the improvement of adjacent land plots
• sale of goods at duty-free shops

The following goods are exempt from VAT:

• import of technological equipment, analogues of which are not produced in the Republic of Uzbekistan, according to the approved list
• import of goods by individuals within the limits of duty-free import norms

Export of goods from the territory of Uzbekistan is subject to VAT at zero rate (0%). Export of services is also taxed with VAT at zero rate (0%) on the condition that Uzbekistan is not recognized as the place of service.

Offsetting value added tax

Taxpayers are allowed to offset the value added tax they are charged (input VAT) with the value added tax that they charge or remit to state budget (output VAT), thus reducing the amount of output VAT.

Offsetting value added tax on purchased goods and services is permitted if all of the following conditions are met:

• purchased goods and services are used for the production or sale of goods (services) that are subject to VAT
• an invoice or other replaceable document has been received for the goods (services) purchased, in which the amount of VAT is separately indicated
• the supplier of the goods (services) is registered as a VAT taxpayer
• VAT on purchased goods (services) has been paid to state budget
• in case of the export of goods, a foreign purchaser has paid for the exported goods

Offsetting or refunding VAT is not allowed if the supplier of goods (services) has had its VAT certificate suspended or cancelled. Offsetting or refunding VAT is not allowed for purchased passenger vehicles (motorcycles, helicopters, motorboats, airplanes), if they are not used for commercial and business needs.

Tax authorities have the right to cancel or adjust the offsetted amount of VAT if there is evidence that such offset resulted from fictitious or sham transactions.

Refunding value added tax

The negative (excess) value added tax that remains after deducting input VAT from output VAT can be refunded to the taxpayer by the state. The refund requires a desk audit by tax authority to be performed within 50 calendar days from the date of a refund request.

The following categories of taxpayers are eligible for an accelerated VAT refund procedure within 7 days:

• large taxpayers
• entities engaged in export operations
• taxpayers who procured a valid bank guarantee
• entities participating in tax monitoring programs

Tax reporting and tax payments

The reporting period for value added tax is a month. The reporting due date is the 20th day of a month following the end of the reporting month.

The payment due date of value added tax is the same as the reporting due dates. The payment due date of value added tax when importing goods into Uzbekistan shall be determined by customs legislation.

A local company receiving services from a foreign supplier that is not registered as a VAT taxpayer in Uzbekistan must withhold value added tax from the payments made to foreign supplier. If a contract between a local entity and a foreign supplier is exclusive of value added tax, the local entity shall pay the value added tax at its own expense.

VAT-liable digital services by foreign companies

Foreign entities providing digital services to individuals in Uzbekistan and receiving payments from them must register as a VAT taxpayer at tax.uz. Such services include, inter alia, supply of software, supply of digital content via internet, domain, hosting and cloud services, streaming services, online advertising services and e-commerce marketplaces.

The registration requirement equally applies to foreign entities acting as a payment clearance intermediary between digital service providers and Uzbek individuals (purchasers of such services).

The registration requirement does not apply to foreign entities doing the same business through permanent establishment in Uzbekistan.

Tax period of value added tax for the above taxpayers is a quarter. The reporting and tax payment due date is the 20th day of a month following the end of a reporting quarter.