Comprehensive_Property_Tax_Uzbekistan.pptx

Ubaydullo Xoshimjonov

1. Property Tax for Legal Entities in Uzbekistan Calculation, Reporting, and Payment Ubaydullo Xoshimjonov MO-29

2. 1. Overview Property tax in Uzbekistan is levied on immovable property Legal entities (companies, institutions) are subject to property tax. Separate from land tax; applies to buildings, structures, and assets. Tax Code provisions govern rates, exemptions, and compliance. 1. Legislation (laws and bylaws) ; Taxation system ; Authorized bodies ; Types of taxes ; Approval procedures ; Rates ; Tax base ; Peculiarities of payment ; Tax reporting ; Avoidance of double taxation (countries, peculiarities of regulation) ; Permanent establishments ; Formation of a PE ; Registration of a PE with tax authorities .

3. Source link https://gov.uz/oz/soliq/news/view/33142 https://www.ey.com/content/dam/ey-unified-site/ey-com/en-uz/documents/doing-business-uzbekistan-2023.pdf https://soliq.uz/page/yuridik-shaxslarga-soliq-solish https://lex.uz/ru/docs/-312 https://my3.gov.uz/uz/service/1185715?ONDATE2=05.04.2022&action=compare

4. Property tax Legal entities owning taxable property in the territory of the Republic of Uzbekistan. Taxation objects 1) buildings and structures that must be registered with the state registration bodies of real estate rights; 2) unfinished objects; 3) railways, main pipelines, communication and power transmission lines, as well as facilities that are an integral technological part of these objects; 4) residential real estate objects indicated for later sale in the balance sheets of construction organizations or builders of buildings, six months after the real estate object is put into use. (Article 411 of the Tax Code)

5. Tax base 1) Buildings and structures; 2) real estate objects indicated in the balance sheet for later sale by construction organizations or building builders, six months after being put into use; 3) The reassessed (market) value of the fully depreciated building; 4) The average annual value of the construction object not completed within the regulatory period; 5) average annual residual value of railways, main pipelines, communication and power transmission lines, as well as structures that are an integral technological part of these objects; 6) The average annual residual value of real estate and unfinished construction objects, the decision of the Cabinet of Ministers of the Republic of Uzbekistan on conservation was adopted.

6. Tax rate Base rate 1.5%; 2) the tax rate for objects whose construction is not completed within the regulatory period is 3 percent; 3) Railways, main pipelines, communication and power transmission lines, as well as structures that are an integral technological part of these objects, as well as conserved real estate and unfinished construction objects, are set at the amount of 0.6 percent. (Article 415 of the Tax Code) Tax period: Calendar year tax period. (Article 416 of the Tax Code) https://soliq.uz/page/yuridik-shaxslarga-soliq-solish

7. Procedure for submitting tax reports Current Fee Reference To calculate the amount of current payments, until January 20 of the current tax period, and for newly established ones, no later than 30 days from the date of registration. (Article 417 of the Tax Code) Calculations At the end of the year, the annual financial report is submitted once, no later than March 1 of the following year. Calculations At the end of the year, the annual financial report is submitted once, no later than March 1 of the following year. ( Article 417 of the Tax Code)

8. Payment term - from turnover tax payers - in the amount of 1/4 of the annual tax amount no later than the 20th day of the third month of each quarter of the year; - by taxpayers who are not considered turnover tax payers - in the amount of one-twelfth of the annual tax amount no later than the 10th day of each month. In this case, for the month of January, no later than January 20. (Article 417 of the Tax Code)

9. Special Conditions for Unfinished Properties Delayed construction projects (beyond 24 months) taxed at 3%. Projects officially ‘mothballed’ qualify for 0.65% rate. Encourages timely completion of construction. Government approval required for conservation exceptions.

10. Tax Incentives & Exemptions 50% reduction for cultural, educational, and agricultural facilities. Full exemptions for renewable energy installations (≥0.1MW) for 10 years. Special Economic Zones (SEZ) may offer property tax holidays. State privatization programs may grant temporary tax relief. https://soliq.uz/page/yuridik-shaxslarga-soliq-solish

11. Special Conditions for Unfinished Properties Delayed construction projects (beyond 24 months) taxed at 3%. Projects officially ‘mothballed’ qualify for 0.65% rate. Encourages timely completion of construction. Government approval required for conservation exceptions. https://soliq.uz/page/yuridik-shaxslarga-soliq-solish

12. Payment Deadlines & Methods Legal entities pay monthly (Corporate Tax regime) or quarterly. Individuals pay in two installments: April 15 & October 15. Online payment via government portal, bank transfer, or authorized cash deposits. Non-residents must pay property tax by February 15. https://soliq.uz/page/yuridik-shaxslarga-soliq-solish

13. Differences Between Legal Entities & Individuals Legal entities taxed at 1.5% on book value; individuals taxed on cadastral value. Higher compliance for companies: monthly/quarterly payments required. Individuals pay bi-annually with lower tax rates. Companies must self-file returns, individuals receive pre-calculated bills. https://soliq.uz/page/yuridik-shaxslarga-soliq-solish

14. 1. Legislation (laws and bylaws) The main regulatory legal acts in the field of taxation are: Constitution of the Republic of Uzbekistan; Certain changes have been introduced to the tax legislation of Uzbekistan effective from 1 January 2023. Any tax considerations and summaries in this document are outlined considering the newest changes in the tax legislation of Uzbekistan. Tax Code of the Republic of Uzbekistan of December 30, 2019, No. ZRU-599; Resolution of the Legislative Chamber of the Oliy Majlis of the Republic of Uzbekistan “On the State Budget of the Republic of Uzbekistan, budgets of state trust funds and the main directions of tax and budget policy for 2019” dated 17.11.2018, N 2119-III; Decree of the President of the Republic of Uzbekistan “On the concept of improvement of tax policy of the Republic of Uzbekistan” June 29, 2018, No. UP-5468; Decree of the President of the Republic of Uzbekistan “On the forecast of the main macroeconomic indicators and parameters of the state budget of the Republic of Uzbekistan for 2019 and budget guidelines for 2020-2021” dated December 26, 2018, No. PP-4086; Decree of the President of the Republic of Uzbekistan “On measures to further improve the tax policy of the Republic of Uzbekistan” dated September 26, 2019, No. UP-5837; Decree of the President of the Republic of Uzbekistan “On measures to further streamline the provision of tax and customs benefits” dated June 27, 2019, No. UP-5755.

15. 2. Taxation system Regulations “On deadlines of submission of financial reports, as well as their structure and content” (adopted by Order of the Minister of Economy and Finance of the Republic of Uzbekistan, registered on 04.11.2024 , reg. number 3567 ); First of all, it should be noted that the Tax Code of the Republic of Uzbekistan was revised and adopted in a new wording in the following years: from  January 1, 1998  to  January 1, 2008  (  during ten years)  the Tax Code of the Republic of Uzbekistan approved by the Law of the Republic of Uzbekistan dated April 24, 1997 No. 396-I was in force; from  January 1, 2008  to  January 1, 2020  (  within twelve years)  the Tax Code of the Republic of Uzbekistan approved by the Law of the Republic of Uzbekistan dated December 25, 2007 №ZRU-136 was in force; from  January 1, 2020  the Tax Code was enacted in a  new version  by the Law of the Republic of Uzbekistan dated December 30, 2019 №ZRU-599. In accordance with Article 17 of the new edition of the Tax Code of the RUz , the taxation system consists of taxes and fees. General information on the relevant taxes and fees is provided below. Certain changes have been introduced to the tax legislation of Uzbekistan effective from 1 January 2023 . Any tax considerations and summaries in this document are outlined considering the newest changes in the tax legislation of Uzbekistan. .

16. 3. Authorized bodies In accordance with Art.25 of the Tax Code of the RUz the authorized bodies in the sphere of taxation are: 1) tax authorities – the State Tax Committee of the Republic of Uzbekistan, Interregional State Tax Inspectorate on large taxpayers, state tax departments of the Republic of Karakalpakstan , regions, and the city of Tashkent, as well as state tax inspections of districts (cities); 2) customs authorities  – the State Customs Committee of the Republic of Uzbekistan, departments of the State Customs Committee in the Republic of Karakalpakstan , regions, Tashkent city, specialized customs complex “Tashkent-AERO” and customs posts; 3) state bodies and organizations  performing the functions of levying fees.

17. 4. Types of taxes According to Article 17 of the Tax Code, there are the following types of taxes: value-added tax; excise tax; profit tax; personal income tax; tax for the use of subsurface resources; special rent tax on the extraction of mineral resources; tax for the use of water resources; property tax; land tax; social tax.

18. 5. Approval procedure In accordance with Article 93 of the Constitution of RUz , the establishment of taxes and other compulsory payments belongs to the joint jurisdiction of the Legislative Chamber and the Senate of the Oliy Majlis of the Republic. It should be borne in mind that the concept of “other compulsory payments” in the new edition of the Tax Code of RUz is absent and instead the concept of “fees” is used. 6. Rates According to Article 72 of the Tax Code RUz , the tax rate is the amount of tax charges per unit of measurement of the tax base in percent or absolute amount. As a general rule, tax rates are established by this Code. However, the rates of excise tax, land tax, tax for the use of water resources, and personal income tax in a fixed amount are established by the Law on the State Budget. Excise tax rates may be revised by decisions of the President of the Republic of Uzbekistan during the year based on the dynamics of prices and the volume of sales of products. 6.1 Taxes and fees [1] In the system of taxes and fees, there is also a system of simplified procedures for calculating the tax base.

19. 7. Tax base The tax base is one of the obligatory elements of taxation, which should be determined by the legislation (Article 69 of the Tax Code of the Republic of Uzbekistan). In accordance with the Tax Code of the RUz , the tax base is a cost, physical, or other characteristic of the object of taxation (Art. 71 of the Tax Code of the RUz ). The concepts of the object of taxation and tax base are interrelated. The object of taxation is property, action, result of action, or other circumstance having cost, quantitative, or physical characteristics, the presence of which the tax legislation binds the taxpayer to incur a tax liability (Article 70 of the Tax Code of the RUz ). There are no questions about the value characteristic if the object is, say, profit or the amount of income. How to determine the tax base, for example, for land tax from legal entities?  In the tax legislation of the Republic of Uzbekistan, the object of taxation of land tax from legal entities is land plots owned, owned, used, or leased by legal entities (Article 426 of the Tax Code of the Republic of Uzbekistan). When determining the taxable base for a land plot, the total area of the land plot less the areas of land plots not subject to taxation in accordance with part two of Article 427 of the Tax Code RUz is taken into account. It follows that each tax has its own procedure for determining the tax base.

20. 8. Peculiarities of payment In addition to the obligation to calculate the tax, the taxpayer is obliged to pay this tax correctly and within the established time limit. If we talk about the terms of tax payment, these terms are established for each tax. For example, according to Article 293 of the Tax Code of the Republic of Uzbekistan, excise tax is paid monthly not later than the tenth day of the month following the tax period. 9. Tax reporting Tax reporting is a document of the taxpayer, which includes calculations and tax declarations for each type of tax or income paid, as well as annexes to the calculations and tax declarations, prepared according to the form approved by the State Tax Committee of the Republic of Uzbekistan in coordination with the Ministry of Finance of the Republic of Uzbekistan ( Article 81 of the Tax Code of the RUz ).

21. 10. Avoidance of double taxation (countries, peculiarities of regulation) Double taxation is a simultaneous imposition of the same taxes on income in different countries. Double taxation is caused by the fact that a non-resident taxpayer (an individual or a legal entity that does not reside permanently in the territory of the country of which it is a citizen or subject) must pay taxes on global profits simultaneously at the place of its actual location and at the place of its citizenship. To avoid such conflicts, countries conclude agreements on the avoidance of double taxation. Currently, Uzbekistan has concluded more than 50 double taxation treaties. Peculiarities of regulation.  If an existing treaty establishes rules that differ from those provided for by the tax legislation of Uzbekistan, the rules of the treaty should be applied. However, it should be remembered that Uzbekistan has a mechanism for applying the rules of treaties, which is based on the thesis that a foreign legal entity wishing to receive a benefit (in terms of lowering the rate of taxation down to zero) must prove that it has a permanent residence in the country to which the agreement with which it refers.

22. 11. Permanent establishments A permanent establishment of a foreign legal entity in the Republic of Uzbekistan (hereinafter – PE) is a permanent place of business through which this foreign legal entity fully or partially carries out entrepreneurial activity in the Republic of Uzbekistan (part 1, article 36 of the Tax Code of the RUz ). A permanent establishment means, in particular:                  any place of management, branch, department, bureau, office, office, cabinet, agency, factory, workshop, shop, laboratory; any place where production, processing, kitting, packing, and packaging of goods is carried out; any place, including a warehouse, used as a retail outlet; mine (mine), oil or gas well, quarry, or any other place where natural resources are extracted; an installation or structure (including its installation) used for the study (exploration), development, extraction, and/or exploitation of natural resources, but only if the installation or structure is used or ready for use for more than one hundred eighty-three days; any place of performance of activities (including control or observation) related to a pipeline, or gas pipeline; any place of performance of activities related to the installation, adjustment, and operation of gaming machines (including consoles), computer networks and communication channels, and amusement rides.

23. A permanent establishment is also recognized as A construction site, construction, installation or assembly facility or related supervisory (control) activity, provided that such site, facility or activity exists or continues for more than one hundred eighty-three days during any consecutive twelve-month period; Provision of services, including consulting services, performed by that foreign legal entity through its employees or other personnel employed by it for such purposes, provided that such activity continues (for the same or a related project of the foreign legal entity or a related party of the foreign legal entity) for at least one hundred eighty-three days during any consecutive twelve-month period (Article 36 of the RUz Tax Code). 

24. 12. Formation of a PE The activity of a foreign legal entity forms a permanent establishment in accordance with the provisions of Article 36 of the Tax Code from the date of commencement of such activity in the Republic of Uzbekistan. The date on which a foreign legal entity begins to carry out activities in the Republic of Uzbekistan for the purposes of application of the Tax Code shall be recognized as the date of: The conclusion of any following contract (contract, agreement) for: rendering services in the Republic of Uzbekistan, including under a joint activity agreement; authorization to perform actions on its behalf in the Republic of Uzbekistan; purchase of goods in the Republic of Uzbekistan for use or sale in the territory of the Republic of Uzbekistan; Acquisition of services for the provision of services in the Republic of Uzbekistan; Conclusion of the first labor contract (agreement, contract) for the purpose of carrying out activities in the Republic of Uzbekistan; Arrival in the Republic of Uzbekistan of a non-resident individual, hiring of an employee or other personnel by a foreign legal entity to fulfill the terms of the contract (agreement, contract) specified in the above paragraphs 1 or 2 (paragraphs 13-14 of Article 36 of the Tax Code of the Republic of Uzbekistan).

25. 13. Registration of a PE with tax authorities A legal entity – non-resident of the Republic of Uzbekistan, carrying out activities in the Republic of Uzbekistan through a permanent establishment,  no later than one hundred eighty-three calendar days  from the date of commencement of such activities is obliged to submit to the tax authority an application for registration as a taxpayer. This application shall be accompanied by original or notarized copies translated into the state language: Document confirming state registration in the country where this legal entity – non-resident of the Republic of Uzbekistan – is established; Special permits or licenses (if any); Power of attorney or other document (if any), certifying the right to act on behalf of a legal entity – non-resident of the Republic of Uzbekistan in the Republic of Uzbekistan; Contract (if any), the execution of which leads to the formation of a permanent establishment.

26. [1]  The information provided is not exhaustive. [2]  Tax agents are persons who, in accordance with the present Code, are responsible for calculating, withholding from the taxpayer and remitting taxes to the budget system (Article 23 of the Tax Code of the Republic of Uzbekistan). [3]  In the Republic of Uzbekistan, the basic calculation value is set at 340,000 sums, which is equivalent to 28 US dollars [4]  This tax is introduced instead of the Single Tax Payment (STP). However, the fact of registration of a permanent establishment in the state tax service body is not the moment of formation of this permanent establishment. A permanent establishment of a non-resident will be considered to be formed regardless of the will of the non-resident.

27. Conclusion & Key Takeaways Property tax in Uzbekistan applies to all immovable property. Legal entities face a 1.5% standard rate, with special conditions. Deadlines for reporting and payment must be strictly followed. Tax exemptions and incentives exist but require proper documentation.