Unofficial translation Tax code of the Republic of Uzbekistan



Unofficial translation
Tax code of the Republic of Uzbekistan
(new edition)
GENERAL PART
SECTION I. GENERAL PROVISIONS
Chapter 1. Basic Provisions
Article 1. Relations which are Regulated by Tax Code of The Republic of Uzbekistan
This Code shall regulate relations with respect to the establishment, introduction and cancellation, calculation and payment of taxes and levies, and relations concerning the fulfillment of tax obligations.
Article 2. Tax Legislation
Tax legislation shall consist of this Code and other normative legal acts, the adoption of which is expressly provided for by this Code.
Where an international treaty of the Republic of Uzbekistan establishes rules other than those provided by the tax legislation of the Republic of Uzbekistan, the rules of the international treaty shall apply.
Article 3. Recognition of Normative Legal Acts or their Parts as Inconsistent with the Provisions of this Code
A normative legal act or its part shall be recognized as inconsistent with the provisions of this Code where one or more of the following conditions are satisfied with respect to this act:
1) has been adopted by a body which does not have the right to adopt such acts in accordance with this Code, or has been adopted in violation of the established procedure for adopting normative legal acts;
2) abolishes or limits the rights of subjects of tax relations provided for by this Code;
3) alerts the grounds, conditions, sequence or procedure for actions of subjects of tax relations which are established by this Code;
4) authorizes or allows actions which are prohibited by this Code;
5) otherwise contradicts the norms or the meaning of the provisions of this Code.
The body, which has adopted a normative legal act which is inconsistent with this Code, or its higher authorities shall have the right to abolish it or make the necessary amendments to it. Where those bodies refuse to abolish or make the necessary amendments to a normative legal act, which is inconsistent with this Code, the court may declare it invalid.
A normative legal act or part of it shall be recognized as inconsistent with this Code from the date of their adoption.
Article 4. The Force of Tax Legislation in Time
Taxation shall be carried out in accordance with the legislation in force at the time of the emergence of tax obligations, unless otherwise provided by this Article.
Acts of tax legislation shall not have retroactive force and shall apply to relations that arose after their entry into force, unless otherwise provided by this Article.
Acts of tax legislation which abolish or reduce liability for the violation of tax legislation shall have retroactive force.
Acts of tax legislation which provide for the abolition of taxes and levies, a reduction in the rates of taxes and levies, the cancellation of obligations or otherwise improve the position of taxpayers, with the exception of cases provided for in part three of this Article, may have retroactive force where this is expressly provided for in acts of tax legislation.
Acts of tax legislation which provide for the establishment of new taxes and levies shall enter into force not earlier than three months from the date of their official publication. Acts of tax legislation, which provide for the abolition of tax benefits, the introduction of new obligations, stricter measures of liability for violation of tax legislation or otherwise worsen the position of subjects of tax relations shall be enacted in a similar manner.
Acts of tax legislation which provide for an amendment in the rates of taxes and levies shall be effected from the first day of the month following the month of their official publication, unless a later date is indicated in them.
Acts of tax legislation not specified in parts five and six of this Article shall enter into force on the day of their official publication, unless a later date is indicated in the acts themselves.
Article 5. The Procedure for the Calculation of Time Limits Established by Tax Legislation
Time limits established by tax legislation shall be set in terms of a calendar date, by reference to an event which must inevitably occur, or to an action which must be performed, or the expiry of a period of time which is calculated in years, quarters, months or days.
The commencement of the calculation of the time limit established by tax legislation shall be the day following the calendar date or an event which must occur.
A time limit which is calculated in years shall expire in the corresponding month and date of the last year of the time limit. In this respect, a year may be any period of time which consists of twelve consecutive months, with the exception of a calendar year.
A time limit which is calculated in quarters shall expire on the corresponding day of the last month of the time limit. In this respect, a quarter shall be considered equal to three calendar months, and quarters shall be counted from the beginning of a calendar year.
A time limit which is calculated in months shall expire on the corresponding date of the last month of the time limit.
Where the end of a time limit falls in a month which does not have the corresponding date, the time limit shall expire on the last day of that month.
A time limit which is calculated in days, shall be calculated in terms of working days, unless it is established in calendar days. In this respect, a working day shall be considered a day which is not deemed to be a day of rest and (or) a non-working public holiday in accordance with the legislation.
Where the last day of a time limit falls on a day which is deemed to be a day of rest and (or) a non-working day in accordance with the legislation, the day of the end of the time limit shall be deemed the working day following a day of rest and (or) non-working day.
An action for the performance of which a time limit has been established may be performed before 24:00 on the last day of the time limit.
Where the documents or monetary resources are deposited at a communications organization before 24:00 of the last day of the time limit, the time limit shall not be considered to have been exceeded.
Article 6. Application of International Treaties of the Republic of Uzbekistan with Respect to Taxation
The application of international treaties of the Republic of Uzbekistan on taxation and general norms of international tax law shall be carried out in the manner prescribed by this Article.
The provisions of an international treaty which regulate the avoidance of double taxation and prevention of tax evasion, to which the Republic of Uzbekistan is one of the parties, shall apply to tax residents of one or both states that have entered into such an agreement.
The provisions of part two of this Article shall not apply to a tax resident of the state with which an international treaty of the Republic of Uzbekistan has been concluded, if the tax resident uses the provisions of this international treaty in the interests of another person who is not a tax resident of the state with which this international treaty is concluded.
The provisions of parts five through twelve of this Article shall apply for the determination of the person who has an actual right to receive income from the source of payment in accordance with the international treaty of the Republic of Uzbekistan.
A person who has an actual right to income payable by a legal entity shall be a person who has the right to independently use and (or) dispose of these incomes, or a person in whose interests another person is entitled to dispose of such income. In this respect, the right may arise by virtue of direct and (or) indirect participation in this legal entity or control over it, or by virtue of other circumstances.
A person who has an actual right to the income of the structure without the formation of a legal entity shall be determined in a similar manner.
In determining the person who has the actual right to income, account shall be taken of the functions performed by the persons specified in part five of this Article, as well as the risks which are assumed by them.
A foreign person shall not deemed to have an actual right to income from sources in the Republic of Uzbekistan if he possesses limited powers in relation to the disposal of that income, carries out intermediary functions in relation to that income in the interests of another person without performing any other functions and without assuming any risks, directly or indirectly paying the income in question (in whole or in part) to that other person.
Where income is paid from sources in the Republic of Uzbekistan to a foreign person who does not have an actual right to that income, and if the source of payment knows the person who has the actual right to that income (part of it), the income paid shall be taxed as follows:
1) where the person who has the actual right to paid income (or a part thereof) is deemed to be a tax resident of the Republic of Uzbekistan, paid income (part thereof) shall be taxed in accordance with the provisions of this Code in relation to tax residents of the Republic of Uzbekistan. In this respect, the source of payment shall not withhold tax on the income which is paid (or a part thereof), provided that notice is given to the tax authority with which the source of payment is registered. The procedure for such noticing shall be determined by the State Tax Committee of the Republic of Uzbekistan;
2) where the person who has the actual right to paid income (part thereof) is deemed to be a tax resident of the state (territory) with which there is a valid international treaty of the Republic of Uzbekistan on taxation, the provisions of that international treaty shall apply to taxation of paid income (part thereof).
These rules shall apply provided that the place of permanent residence of the person to whom the income is paid and who does not have an actual right to these income is the state (territory) with which there is a valid international treaty of the Republic of Uzbekistan on taxation issues.
Where the place of permanent residence of the person to whom income is paid and who does not have an actual right to them is a state (territory) with which there is no valid international treaty of the Republic of Uzbekistan on taxation issues, the tax shall be withheld at the source of payment at the tax rates established by this Code. The tax shall be withheld at the source of payment at the same tax rates, if that income is paid to a person who does not have an actual right to it and who does not know a tax resident of which state (territory) is the person who has the actual right to that income (its part).
The competent authority, which is defined in an international treaty on the part of the Republic of Uzbekistan, shall have the right to request the competent authority of a foreign state for assistance in ensuring the fulfillment by a taxpayer of a foreign state of a non-fulfilled tax obligation in the Republic of Uzbekistan, in accordance with the provisions of an international treaty of the Republic of Uzbekistan.
Article 7. Principles of Taxation
Taxation shall be based on the principles of obligation, certainty and cooperation of tax authorities with taxpayers, fairness, unity of the tax system, transparency and the presumption of the correctness of the taxpayer.
Article 8. Principle of Obligation
Every person shall be obliged to pay taxes established by this Code and levies provided for by it.
No one may be charged with an obligation to pay taxes and levies which have the attributes of taxes and levies other than those which are provided for by this Code or which have been established in violation of its norms.
Article 9. Principle of Certainty of Taxation and Cooperation of Tax Authorities with Taxpayers
Acts of tax legislation which establish taxes and levies must define taxpayers and all other elements of these taxes and levies, including the time limits and procedure for their payment, unless otherwise provided by this Code.
Within the framework of tax relations, tax authorities shall be obliged to cooperate with taxpayers in order to ensure the correct implementation of tax legislation. In this respect, the tax authorities shall have no right to create unreasonable obstacles to the legal activities of taxpayers, and taxpayers must create conditions for the tax authorities to exercise their mandates.
Article 10. Principle of Justice
Taxes and levies shall not be of a discriminatory nature and be applied differently on the basis of social, racial, national, religious and other similar criteria.
It shall not be permissible to establish differentiated rates of taxes, tax benefits or other tax exemptions depending on the form of ownership, the citizenship of physical persons or the country of origin of capital.
The establishment of taxes which hinder citizens from exercising their constitutional rights shall not be permissible.
Article 11. The Principle of Unity of the Tax System
The tax system shall be unified throughout the territory of the Republic of Uzbekistan.
It shall not be permissible to establish taxes which violate the single economic space of the Republic of Uzbekistan and, in particular, which directly or indirectly restrict the free movement of goods (services) or financial resources within the territory of the Republic of Uzbekistan.
Article 12. Principle of Publicity
Acts of tax legislation shall be subject to mandatory official publication.
Acts of tax legislation which have not been officially published shall not entail legal consequences as if they have not entered into force.
Article 13. Principle of the Presumption of the Taxpayer's Correctness
All unresolvable contradictions and ambiguities in acts of tax legislation shall be interpreted in favor of the taxpayer.
Article 14. Economic Content of Transactions and Their Legal Formalization
For tax purposes, all transactions and other economic relations, which the taxpayer enters into, must be accounted for on the basis of their actual economic content, irrespective of the way they are legally arranged or the name of the contract.
Where the legal formalization of the transaction or economic relations does not correspond to their actual economic content, the tax authorities shall have the right to change the legal qualification of the transaction, the status of the taxpayer and (or) the nature of its economic activity for tax purposes.
Fictitious (mock) transactions shall not be counted for tax purposes. Where such transactions cover up other transactions, then the economic content and results of actual transactions shall be taken into account for calculating taxes.
Where all participants of transactions or other economic relations fulfill all the conditions and requirements of the agreements concluded by them, individual violations of the rules provided for by normative legal acts, which govern non-tax relations, cannot serve as a basis for refusing to recognize income received by a taxpayer or expenses (losses) incurred by the taxpayer, for tax purposes.
Where a taxpayer performs operations or sequences of operations, the sole or primary purpose of which is to obtain an unjustified tax benefit in the form of non-payment or reduction of the amount of taxes payable, such actions shall be recognized as an abuse of right, for the purposes of this Code.
A tax reduction scheme, where such a reduction is a direct or indirect goal or consequence, or one of the goals or consequences, and this goal or consequence is not secondary, shall be also recognized as an abuse of right by taxpayer. Tax amounts reduction shall include direct or indirect changes in the scope of taxation, the use of tax benefits or other reductions for taxes payable.
In the event of abuse of the right by taxpayer, the tax authorities, upon determination of the amounts of taxes payable by the taxpayer, shall have the right not to take into account individual transactions or a sequence of operations which have signs of abuse of the right. The tax authorities shall have the right to adjust the amount of taxes payable in such a way as to exclude the impact of such abuse as well.
The cases of abuse of the right, fictitious (mock) transaction specified in this Article, as well as the application of their consequences, shall be established by the tax authorities, and in case the taxpayer does not agree, by the court on the suit of the tax authorities.
Article 15. Due Diligence
The taxpayers shall be required to exercise due diligence in tax relations, when choosing counterparties, by checking whether they are registered with the tax authorities as taxpayers, their business reputation, availability of production facilities and personnel, financial condition, ability to fulfill obligations under the transaction.
Expenses (losses) incurred by a taxpayer in transactions with persons who have not fulfilled their obligations to him shall not be recognized for tax purposes, where this taxpayer did not demonstrate due diligence when concluding the transaction.
Tax authorities shall provide taxpayers with access to information on the registration of counterparties with tax authorities as taxpayers, as well as to other information in the manner determined by the State Tax Committee of the Republic of Uzbekistan.
Chapter 2. The System of Taxes and Levies in the Republic of Uzbekistan
Article 16. Taxes and Levies
A tax shall be understood to be a compulsory non-refundable payment established by this Code and payable to the State Budget of the Republic of Uzbekistan or to a state trust fund (hereinafter referred to as “budget system”).
A levy shall be understood to be a compulsory payment to the budget system established by this Code or other acts of legislation, the payment of which is one of the conditions of the performance of legally significant actions in relation to the levy payer by the authorized body or its official, including the provision of particular rights or the issuance of permits.
Fines and other payments which are imposed on a person in court, as well as confiscations and other seizures of assets in cases established by law shall not attribute to taxes or levies.
Article 17. Types of Taxes and Levies
The following taxes shall be established on the territory of the Republic of Uzbekistan:
1) value added tax;
2) excise tax;
3) tax on the profit;
4) tax on income of physical persons;
5) tax for the use of subsoil;
6) tax for the use of water resources;
7) tax on the assets;
8) land tax;
9) social tax.
Levies may be established on the territory of the Republic of Uzbekistan. The procedure for the introduction, calculation and payment of levies shall be determined by this Code and other acts of legislation.
This Code shall regulate the procedure for calculating and paying the motor vehicle levy.
The procedure for calculation and recovering of the state duty shall be established by the legislation on the state duty.
Article 18. Special Tax Regimes
The following special tax regimes shall be established for certain categories of taxpayers in the territory of the Republic of Uzbekistan:
1) turnover tax;
2) a special procedure for taxation of participants of production sharing agreements;
3) a special procedure for taxation of participants of special economic zones and certain categories of taxpayers.
A special procedure for taxation of participants of special economic zones and certain categories of taxpayers shall be established for a certain period, which depends on the investments made and the fulfillment of other conditions stipulated by legislation or investment agreements.
Special tax regimes may provide for exemption from payment of certain taxes, application of reduced tax rates and other tax benefits.
Chapter 3. Subjects of Tax Relations, Their Rights and Obligations
Article 19. Subjects of Tax Relations and Procedure for Exchange of Documents
Taxpayers, tax agents and authorized bodies shall be the subjects of tax relations.
In the cases provided for by this Code, the tax authorities shall send to taxpayer documents in the form of an electronic document to the taxpayer's personal account. Those documents shall be deemed received after they have been read by the taxpayer, but no later than three days from the date of sending.
Where the taxpayer does not have a taxpayer's personal account, the documents shall be sent by registered mail and shall be considered received five days after they have been sent.
The documents can be handed over to the taxpayer or his representative in person against signature, indicating the date of receipt of these documents.
In the cases provided for by this Code, taxpayers shall send documents to the tax authorities in a manner similar to that specified in parts two to four of this Article. In this case, such documents shall be considered received by the tax authorities on the day they were sent when the documents have been sent through the taxpayer's personal account, and after five days — when the documents have been sent by mail.
The State Tax Committee of the Republic of Uzbekistan shall approve the forms of documents provided for by this Code, documents necessary to ensure electronic document flow, the procedure for filling out the forms of these documents, the procedure for sending and receiving these documents on paper or in electronic form via telecommunication channels or through the taxpayer’s personal account.
Article 20. Taxpayers
Taxpayers shall be understood to mean legal entities and physical persons who or which bear an obligation to pay the established taxes and levies in accordance with this Code.
In the cases and in the manner provided for by this Code, autonomous subdivisions of legal entities shall fulfill the obligations of these entities with respect to the payment of taxes and levies for the location of these autonomous subdivisions.
Taxpayers who are classified as major taxpayers shall submit tax reporting and pay taxes (levies) centrally, with account taken of autonomous divisions.
In the cases provided for by this Code, foreign structures without the formation of a legal entity shall be deemed taxpayers.
Article 21. Rights of Taxpayers
Taxpayers shall have the right:
to receive from tax authorities and other authorized bodies (within their powers) without charging the information on effective taxes, amendments in tax legislation, the procedure for the calculation and payment of taxes, forms of tax reporting and applications, as well as explanations with respect to completing them;
to receive data on the fulfillment of their tax obligations, available from the tax authorities and other authorized bodies;
to use tax benefits wherever justified and in the manner prescribed by this Code, or refuse to use them;
to the timely crediting or refund of amounts of overpaid or overly recovered taxes, penalties and fines;
to receive a deferral or installment plan for the payment of taxes in the manner and under the conditions established by this Code;
to correct independently errors made by them upon accounting for objects of taxation, calculation and payment of taxes;
to be present when the on-site tax inspection and tax audit are performed on their sites in accordance with this Code;
to get acquainted with the materials of the on-site tax inspection and tax audit, as well as receive acts of these audits;
to present to tax authorities, which carry out tax audits, the explanations on issues related to the implementation of tax legislation;
not to comply with the requirements of tax authorities and other authorized bodies and their officials which are at variance with this Code and (or) other acts of tax legislation;
to appeal in accordance with the established procedure against non-normative acts and decisions of tax authorities and other authorized bodies, actions (inaction) of their officials;
to demand, in the prescribed manner, full compensation for losses caused by unlawful decisions of tax authorities and other authorized bodies or unlawful actions (inaction) of their officials;
to participate in the process of examination of tax audit materials or other acts of tax authorities in the cases provided for by this Code;
to represent their interests on tax relations issues in person or through the organization of tax consultants or other their representatives;
to the observance and preservation of tax secrets.
Taxpayers may also have other rights established by this Code and other acts of tax legislation.
The personal participation of a taxpayer in tax relations shall not deprive him of the right to have a representative, just as the participation of a representative shall not deprive the taxpayer of the right to participation in person in these relations.
The rights of taxpayers shall be ensured by the corresponding duties of officials of tax authorities and other authorized bodies.
Non-fulfillment or improper fulfillment of obligations to ensure the rights of taxpayers shall entail responsibility provided for by the legislation of the Republic of Uzbekistan.
Article 22. Obligations of Taxpayers
Taxpayers shall be obliged to:
calculate and pay the established taxes and levies timely and in full;
appear at the tax authority upon receipt of a summons on the need to examine documents or provide explanations;
provide the purchaser with invoices, checks or other documents equivalent to them upon sale of goods (services);
to provide access to officials of tax authorities, who conduct a tax audit, to the documents which serve as the ground for calculation and payment of taxes for exploring them, as well as to relevant information stored on electronic media;
comply with the legal requirements of tax authorities and other authorized bodies, not interfere with the legal activities of these bodies and their officials;
to ensure the retention of tax reporting and other documents which are required for the calculation and payment of taxes for five years following the calendar year established for the payment of the corresponding taxes, unless otherwise provided by this Code;
present notice to the tax authorities for the place of their tax registration about participation in other legal entities of the Republic of Uzbekistan and foreign legal entities, where the participating interest exceeds 10 percent of the charter fund (authorized capital).
Taxpaying legal entities, in addition to the obligations provided for in part one of this Article, shall be obliged to notify the tax authorities for the place of their registration of all their autonomous subdivisions and changes in the previously reported information about the autonomous subdivisions within one month from the date of the establishment of the autonomous subdivision or changes in the specified information.
Persons who are obliged by this Code to submit tax reporting in electronic form must ensure that they receive from the tax authority via telecommunication channels the documents in electronic form which are used by tax authorities in the exercise of their powers in relations regulated by tax legislation.
Foreign legal entities which own immovable property recognized as an object of taxation in accordance with this Code, in addition to the obligations provided for by this Article, shall be obliged to report to the tax authority for the location of the immovable property information about the participants of this foreign legal entity, in the cases and procedure provided for by this Code. Foreign structures without the formation of a legal entity must provide information about their founders, beneficiaries and managers in the specified circumstances. Where a foreign legal entity (foreign structure without the formation of a legal entity) has several objects of property specified in this part, the notice shall be submitted to the tax authority for the location of one of the objects of property at the choice of this structure.
Taxpayers who pay taxes in connection with the movement of goods across the customs border of the Republic of Uzbekistan shall also bear the obligations provided for by the customs legislation of the Republic of Uzbekistan.
Taxpayers may also bear other obligations in accordance with the legislation.
Article 23. Tax Agents
Tax agents shall be persons who are charged, in accordance with this Code, with obligations associated with the calculation, withholding from a taxpayer and transfer of taxes to the budget system.
Tax agents shall have the same rights as taxpayers, unless otherwise provided by this Code.
Tax agents shall be obliged to:
to calculate, withhold and transfer taxes to the budget system correctly and timely;
to notice the tax authorities in writ or in electronic form about the impossibility of withholding tax and of the amount of taxpayer’s indebtedness within one month from the day the tax agent became aware of those circumstances;
to maintain personal records for each taxpayer with respect to income accrued for and paid, taxes calculated, withheld and transferred to the budgetary system;
to submit to the tax authorities the documents necessary to check whether taxes have been correctly calculated, withheld and transferred;
to ensure the retention of tax reporting and other documents required for the calculation, withholding and transfer of taxes during the limitation period provided for in Article 88 of this Code.
Tax agents may also bear other obligations in accordance with the legislation.
Article 24. Representatives of a Taxpayer
A taxpayer shall have the right to participate in tax relations through a legal or authorized representative, unless otherwise provided by this Code.
The powers of the representative must be documented in accordance with this Code and other acts of legislation.
The legal representatives of a taxpaying legal entity shall be persons authorized to represent this legal entity on the basis of the law or its foundation documents.
The legal representatives of a taxpaying physical person shall be persons acting as his representatives in accordance with civil legislation.
The actions (inaction) of the legal representatives of a legal entity committed in connection with the participation of this legal entity in tax relations shall be deemed to be actions (inaction) of this legal entity itself.
The authorized representatives of a taxpayer may be organizations of tax consultants or other persons duly authorized by the taxpayer to represent his interests in relations with tax authorities, customs authorities and other participants in tax relations.
The authorized representative of a taxpaying legal entity shall exercise his powers on the basis of a concluded agreement or a power of attorney issued in the manner prescribed by civil legislation, unless otherwise provided by this Code.
The authorized representative of a taxpaying physical person shall exercise his powers on the basis of a notarized power of attorney in accordance with civil legislation.
Officials of tax, financial, customs authorities and other state bodies cannot be authorized representatives of the taxpayer.
The responsible member of the consolidated group of taxpayers shall be the authorized representative of all members of the consolidated group of taxpayers on the basis of the law.
Irrespective of the provisions of the agreement on the creation of a consolidated group of taxpayers, the responsible member of this group shall have the right to represent the interests of the members of that consolidated group in the following legal relations associated with the:
registration with the tax authorities of the agreement on the creation of a consolidated group of taxpayers, as well as amendments to that agreement, the decision to extend the validity period or termination of the agreement;
enforced recovery from a member of a consolidated group of taxpayers of tax arrears with respect to tax on profit for the consolidated group of taxpayers;
the nature of actions (inaction) committed by an official of a tax authority, when they directly affect the rights of a legal entity which is a member of a consolidated group of taxpayers.
Upon the expiration of the validity period, in the event of early rescission or termination of the agreement on the creation of a consolidated group of taxpayers, the person who was the responsible member of this group shall retain the powers provided for in parts ten and eleven of this Article.
Persons who are a responsible member of a consolidated group of taxpayers shall have the right to delegate the powers conferred on them by this Code with respect to the presentation of the interests of members of this group to third parties on the basis of a concluded agreement or a power of attorney issued in the manner prescribed by legislation.
Article 25. The Authorized Bodies
The authorized bodies shall be:
tax authorities which include the State Tax Committee of the Republic of Uzbekistan, the Interregional State Tax Inspectorate for Major Taxpayers, state tax departments of the Republic of Karakalpakstan, regions and the city of Tashkent, as well as state tax inspectorates of districts (cities);
customs authorities which include the State Customs Committee of the Republic of Uzbekistan, departments of the State Customs Committee for the Republic of Karakalpakstan, regions, the city of Tashkent, specialized customs complex "Tashkent-AERO" and customs posts;
state bodies and organizations performing functions of collecting levies.
Article 26. Rights of Tax Authorities
Tax authorities shall have the right to:
require taxpayers and third parties to produce documents and data (information), including in electronic form, necessary for the calculation and payment of taxes and levies;
perform tax audits and other tax control measures in the manner prescribed by this Code;
examine the territory, production, storage, trading and other premises, including places used by the taxpayer for the derivation of income or are connected with the maintenance of objects of taxation;
make an inventory of assets and control measurements of work performed, services rendered;
seal cash desks, and inventory items and documents storage places for a period not exceeding two days, and for a period exceeding two days — by a court decision, in cases stipulated by legislation;
seize documents and electronic media related to the calculation of taxes and levies;
take photos and videos, receive explanations and other information;
engage a translator, an expert and appoint an examination;
independently determine the amount of taxes payable using a calculation on the basis of the information which is available to them concerning the taxpayer, as well as data relating to other similar taxpayers, in the event that the taxpayer lost or destructed accounting documents;
perform tax monitoring of compliance with tax legislation, the correctness of calculation, completeness and timeliness of payment of taxes by a taxpayer participating in tax monitoring on the basis of a mutual agreement;
take measures to enforce the recovery of tax arrears;
examine cases concerning tax violations and apply financial sanctions;
convert commodity-material assets to the state income according to the revealed facts of tax violations in accordance with the established procedure. The conversion of commodity and material assets of taxpaying legal entities and individual entrepreneurs into the state income shall be carried out in a judicial proceeding;
file actions with courts against taxpayers for the recovery into state revenue of funds illegally received by them;
require translation of documents into the state language;
summon taxpayers and tax agents to the tax authorities on the basis of a written notice to give explanations in relation to the payment (withholding and transfer) of taxes by them or in connection with a tax audit, as well as in other cases related to their compliance with tax legislation;
suspend operations on the bank accounts of a taxpayer or tax agent and attach their assets in the manner prescribed by this Code;
order taxpayers and their representatives, tax agents to rectify violations of tax legislation which have been discovered and monitor compliance with such orders;
check the fulfillment by banks of the obligations established by this Code.
The tax authorities may exercise other rights in accordance with the legislation.
Article 27. Obligations of Tax Authorities
Tax authorities shall be obliged to:
comply with tax legislation;
monitor compliance with tax legislation, the correctness of the calculation, the completeness and timeliness of payment of taxes and levies;
ensure complete and timely registration of taxpayers, objects of taxation and objects related to taxation, calculated and paid taxes;
inform taxpayers about their rights and obligations in course of tax audits, as well as inform about the results of the audits completed;
timely publish acts of tax legislation on the official website of the State Tax Committee of the Republic of Uzbekistan;
assist taxpayers in the implementation of tax legislation, clarify the norms of tax legislation and the procedure for application of tax benefits;
analyze and assess the facts of violation of tax legislation, to submit proposals to the relevant state bodies on eliminating the causes and conditions conducive to tax offences;
develop and implement jointly with law enforcement bodies long-term and ongoing programs to combat tax offences;
study appeals, messages and other information concerning violations of tax legislation;
monitor the completeness and timeliness of the receipt of funds from the sale of assets converted into state income;
transfer materials on the facts of violation of tax legislation to law enforcement agencies in cases where the resolution of the issue goes beyond the tax authorities powers;
exercise control over the observance of the established procedure for performing foreign exchange and export-import transactions within the limits of their authority;
observe tax secrets and ensure the preservation thereof;
draw up an act of reconciliation of the fulfillment of the tax obligation to pay taxes at the request of the taxpayer;
recover uncontested amounts of tax arrears in accordance with this Code;
register legal entities and physical persons, including non-residents of the Republic of Uzbekistan, assign to them taxpayer identification numbers and officially report them to statistical and registration authorities;
issue a certificate which confirms the registration with the tax authorities at the request of the taxpayer;
be guided by written explanations of the Ministry of Finance of the Republic of Uzbekistan on the application of tax legislation.
Tax authorities may also bear other obligations in accordance with the legislation.
Article 28. Rights and Obligations of Customs Authorities, State Bodies and Organizations Which Perform the Functions of Recovery of Levies
Customs authorities shall enjoy the rights and bear obligations with respect to the recovery of taxes and levies upon the movement of goods and vehicles across the customs border of the Republic of Uzbekistan in accordance with customs legislation, this Code and other acts of legislation.
The rights and obligations of state bodies and organizations which perform the functions of recovery of levies shall be regulated by this Code and other acts of legislation.
Article 29. Tax Secrets
Tax secrets shall constitute information which is received by the authorized bodies about the taxpayer, excluding the information which:
1) is publicly available, including those that have become so with the consent of their owner;
2) concerns the taxpayer’s identification number;
3) concerns violations of tax legislation and sanctions for those violations;
4) concerns tax regimes applied by taxpayers and registration as taxpayers of value added tax;
5) concerns the amounts of taxes paid and tax arrears;
6) about the participants of the legal entity;
7) on the average number of employees;
8) on the amounts of income and expenses according to the financial statements.
Tax secrets shall not be divulged by state bodies, their officials or by hired specialists and experts, except the cases provided for by legislation.
The divulgence of tax secrets shall be understood to include, in particular, the use or impartation to another person of information which constitutes a commercial secret (secret of production) of the taxpayer, and which has become available to an official of a state body, a specialist or expert in the course of the fulfillment of their duties.
The divulgence of tax secrets shall not include the provision of information about the taxpayer to the tax or other relevant authorities of other states at their request in accordance with the international treaties of the Republic of Uzbekistan.
The information which is received by the state authorities, and constitutes a tax secret, shall be applied a special regime of storage and access.
Access to information which constitutes a tax secret shall be available to officials determined by the State Tax Committee of the Republic of Uzbekistan.
The loss of documents which contain information which constitute a tax secret, or the divulgence of such information shall entail the liability provided by legislation.
The provisions of this Article shall apply to information which have been received by organizations under the jurisdiction of the State Tax Committee of the Republic of Uzbekistan which carry out the input and processing of data concerning taxpayers, as well as to employees of those organizations.
Chapter 4. Basic Concepts Used in this Code
Article 30. Physical Persons
Physical persons shall mean citizens of the Republic of Uzbekistan, citizens of foreign states, as well as stateless persons.
Tax residents of the Republic of Uzbekistan shall be recognized physical persons who actually stay in the Republic of Uzbekistan for more than one hundred and eighty three calendar days cumulatively during any consecutive twelve month period, beginning or ending in the tax period in relation to which the corresponding status is being determined.
The provisions of part two of this Article shall be applied with account taken of the special considerations established by this Article and the provisions of international treaties of the Republic of Uzbekistan on taxation issues.
A physical person shall be equally recognized as a tax resident of the Republic of Uzbekistan where he stayed in the Republic of Uzbekistan for a total of less than one hundred and eighty-three days in the corresponding tax period, however more than he stayed in any other state.
A physical person may be recognized as a tax resident of the Republic of Uzbekistan upon his application to the tax authorities before the expiry of the twelve-month period specified in part two of this Article, if this person submits a long-term employment contract or other document which confirms the fulfillment of the conditions provided for in parts two to four of this Article.
The period of the actual stay of a physical person in the Republic of Uzbekistan shall not be interrupted by periods in which he departs from the territory of the Republic of Uzbekistan for short-term (less than six months) treatment or education.
For the purposes of this Article, the time of actual stay in the Republic of Uzbekistan shall not include the time during which a citizen of a foreign state or a stateless person have stayed:
1) as a person with diplomatic or consular status;
2) as an employee of an international organization created under an international treaty, to which the Republic of Uzbekistan is a party;
3) as a family member of the persons specified in paragraphs 1 and 2 of this subsection, provided that such a person did not carry out entrepreneurial activity.
Military servicemen of the Republic of Uzbekistan who serve abroad, as well as employees of state authorities who have been seconded to work outside the Republic of Uzbekistan shall be deemed to be tax residents of the Republic of Uzbekistan irrespective of the actual time during which they stay in the Republic of Uzbekistan.
The day of entry (exit) into the Republic of Uzbekistan (from the Republic of Uzbekistan) shall be determined on the basis of a mark on crossing the state borders of foreign states, to confirm the actual stay on the territory of the Republic of Uzbekistan. Such a mark shall be made by the competent authority of the Republic of Uzbekistan and (or) a foreign state exercising border control in identity documents and (or) documents for entry (exit) into the Republic of Uzbekistan (from the Republic of Uzbekistan). The actual stay of a person on the territory of the Republic of Uzbekistan may be also determined on the basis of the information which is available in the tax authority, and has been provided by state bodies and organizations in the manner prescribed by legislation.
Where the provisions of part nine of this Article do not allow to unambiguously determine the time of the actual stay of a physical person on the territory of the Republic of Uzbekistan, the physical person shall submit to the tax authority documents (or their copies) confirming the place of his actual stay during the calendar year (s), as well as any other documents (or their copies) that may serve as a basis for determination of the place of his actual stay:
1) an identity document;
2) a permit for temporary residence in the Republic of Uzbekistan, issued in the prescribed manner;
3) documents which confirm the place of actual stay.
Where there are grounds for recognition of a physical person both a tax resident of the Republic of Uzbekistan and a tax resident of a foreign state simultaneously in accordance with the provisions of this Article or international treaties of the Republic of Uzbekistan on taxation, tax residency shall be determined in accordance with the provisions of that international treaty on the basis of the center of vital interests of a physical person. In this respect, the center of vital interests of a physical person shall be recognized as situated in the Republic of Uzbekistan where one or more of the following conditions are satisfied:
1) the spouse and (or) close relatives of the physical person live in the Republic of Uzbekistan;
2) the possession of immovable assets in the Republic of Uzbekistan belonging on the right of ownership or on other grounds to a physical person and (or) spouse and (or) his close relatives, available at any time for his residence and (or) for the residence of his spouse ( i) and (or) his close relatives.
If a physical person does not have a place of residence on the territory of the Republic of Uzbekistan, for the purposes of this Code, the place of residence may be determined at the request of this physical person at the place of his stay. In this case, the place of stay of a physical person shall be the place (address) where the physical person temporarily resides and is registered in the manner prescribed by the legislation of the Republic of Uzbekistan.
Physical persons who are not tax residents of the Republic of Uzbekistan shall be recognized as non-residents of the Republic of Uzbekistan.
Article 31. Individual Entrepreneurs
An individual entrepreneur shall be understood a physical person registered in the prescribed manner and performing entrepreneurial activity without forming a legal entity.
Physical persons carrying out entrepreneurial activities without forming a legal entity, but not registered as individual entrepreneurs, shall be considered as individual entrepreneurs for taxation purposes and the application of liability measures.
Article 32. Legal Entities and Their Separate (Autonomous) Divisions
Legal entities shall be:
1) legal entities created in accordance with the legislation of the Republic of Uzbekistan (legal entities of the Republic of Uzbekistan);
2) foreign legal entities (including companies and other corporate formations) with civil legal capacity, created in accordance with the legislation of foreign states;
3) international organizations.
A separate (autonomous) subdivision of a legal entity of the Republic of Uzbekistan shall be any subdivision geographically separate from it, at the location of which stationary workplaces are equipped.
Recognition of a separate subdivision of a legal entity as such shall be carried out irrespective of what powers it is endowed with and whether its creation is reflected or not reflected in the foundational or other organizational and administrative documents of the legal entity.
A workplace shall be considered stationary if it is created for a period of more than one month.
The location of a separate subdivision of a legal entity of the Republic of Uzbekistan shall be the place where this legal entity carries out activities through this separate subdivision.
Article 33. Legal Entities as Tax Residents of the Republic of Uzbekistan. Legal Entities as Non-Residents of the Republic of Uzbekistan
The following legal entities shall be understood to be tax residents of the Republic of Uzbekistan:
1) legal entities of the Republic of Uzbekistan;
2) foreign legal entities recognized as tax residents of the Republic of Uzbekistan in accordance with international treaties of the Republic of Uzbekistan on taxation issues for the purpose of applying these international treaties;
3) foreign legal entities, the place of actual management of which is the Republic of Uzbekistan, unless otherwise provided by an international treaty of the Republic of Uzbekistan on taxation issues.
For the purposes of paragraph 3 of part one of this Article, the place of actual management of a foreign legal entity shall be determined in accordance with the provisions of Article 34 of this Code.
Recognition of a management company of an investment fund (unit fund or other form of collective investment) as a tax resident of the Republic of Uzbekistan shall not be a basis for recognizing this investment fund (unit fund or other form of collective investment) as a tax resident of the Republic of Uzbekistan. The same rules shall apply in the case when managing partners or other persons manage these funds (other forms of collective investment).
Legal entities that are not tax residents of the Republic of Uzbekistan shall be recognized as non-residents of the Republic of Uzbekistan.
Article 34. Place of Actual Management of Foreign Legal Entity
The Republic of Uzbekistan shall be recognized as the place of actual management of a foreign legal entity subject to one or more of the following conditions:
1) its executive body (executive bodies) regularly carries out its activities with respect to this legal entity from the Republic of Uzbekistan. At the same time, the implementation of activities in the Republic of Uzbekistan in an amount significantly less than in another state (states) shall not be recognized as regular implementation of activities;
2) its main (leading) officials (persons authorized to plan and control activities, manage the activities of the enterprise and bear responsibility for this) mainly carry out the directing management of this legal entity in the Republic of Uzbekistan. At the same time, the directing management, in particular, shall include the decision-making and implementation of other actions on the current activities of this foreign legal entity falling within the competence of the executive management bodies.
The implementation of the following activities in the Republic of Uzbekistan shall not entail the recognition of the Republic of Uzbekistan as the place of actual management of a foreign legal entity:
1) preparation and (or) adoption of decisions on issues related to the competence of the general meeting of shareholders (participants);
2) preparation for the meeting of the board of directors;
3) implementation of certain functions within the framework of planning and monitoring the activities of a foreign legal entity.
The implementation of certain functions, in particular, shall include strategic planning, budgeting, preparation and drafting consolidated financial and management reports, analysis of the activities of this foreign legal entity, internal audit and internal control, as well as the adoption (approval) of standards, methodologies and (or) policies.
The Republic of Uzbekistan shall not be recognized as the place of actual management of a foreign legal entity with the simultaneous observance of the following conditions with respect to the activities of that foreign legal entity:
1) the activity is carried out in the state (on the territory) of its permanent location using its own qualified personnel and assets;
2) the Republic of Uzbekistan has a valid international treaty on taxation issues with a foreign state on the territory of which the activity is carried out.
The fulfillment of the conditions specified in part one of this Article must be documented.
Where it is documented that the conditions established by clauses 1 and (or) 2 of part one of this Article are fulfilled simultaneously in relation to both the Republic of Uzbekistan and any foreign state, the Republic of Uzbekistan shall be recognized as the place of management of a foreign legal entity, if one or more of the following conditions are met:
1) accounting or management accounting (with the exception of actions for the preparation of and drafting consolidated financial and management reports, as well as analysis of its activities) is carried out in the Republic of Uzbekistan;
2) record keeping is carried out in the Republic of Uzbekistan;
3) operational personnel management is carried out in the Republic of Uzbekistan.
Article 35. Foreign Structures without the Formation of Legal Entity
A foreign structure without the formation of a legal entity shall be an organizational structure established in accordance with the legislation of a foreign state without forming a legal entity, which has the right to carry out activities aimed at derivation of income (profit) in the interests of its participants (shareholders, principals or other persons) or other beneficiaries.
Foreign structures without the formation of a legal entity, in particular, shall include foundations, partnerships, a partnership association, trusts, other forms of collective investment and (or) fiduciary arrangement.
Article 36. Permanent Establishment
The permanent establishment of a foreign legal entity in the Republic of Uzbekistan for the purposes of this Code shall be understood to be a permanent place of activity through which this foreign legal entity fully or partially carries out entrepreneurial activity in the Republic of Uzbekistan.
A permanent establishment shall mean, in particular:
1) any place of management, branch, department, bureau, office, premises, room, agency, factory, workshop, production area, laboratory;
2) the place of production, processing, assembly, packing and packaging of goods;
3) any place, including a warehouse, used as a sale point;
4) mine, oil or gas well, quarry or any other place of extraction of natural resources;
5) an installation or structure (including its installation) used for the study (exploration), development, extraction and (or) exploitation of natural resources, but only on the condition that the installation or structure has been used or is ready for use for more than one hundred and eighty three days ;
6) any place of implementation of activities (including control or supervisory) related to the pipeline, gas pipeline;
7) any place of implementation of activities related to the installation, adjustment and operation of gaming machines (including consoles), computer networks and communication channels, attractions.
A permanent establishment shall also be recognized:
1) a construction site, construction, installation or assembly facility or related to them supervisory (control) activities, provided that such a site, facility or activity exists or continues for more than one hundred and eighty three days in any consecutive twelve month period ;
2) the provision of services, including consulting services, performed by this foreign legal entity through its employees or other personnel hired by it for these purposes, provided that such activities continue (for the same or related project of a person or a related party of a foreign legal entity) not less than one hundred and eighty-three days in any consecutive twelve month period.
If one or more interconnected foreign legal entities provide services at a construction site or other facility specified in paragraph 1 of part three of this Article, in different periods of time, each of which individually does not exceed the period or terms specified in paragraphs 1 and 2 of part three of this Article, the periods of activity for such services shall be added to the cumulative period of time during which activities were carried out on this construction site or other facility.
The following activities, which are exclusively preparatory or auxiliary in nature and are not part of the main types of business activities of this foreign legal entity, shall not lead to the formation of a permanent establishment:
1) the use of objects solely for the purpose of storing or displaying goods or products belonging to it;
2) the maintenance of stocks of goods or products belonging to him solely for the purpose of storage or display;
3) the maintenance of stocks of goods or products belonging to him solely for the purpose of processing by another person;
4) the maintenance of a permanent place of business solely for the purpose of purchasing goods, products or collecting information for this foreign legal entity;
5) the maintenance of a permanent place of business only for the purpose of carrying out any other activity of a preparatory or auxiliary character;
6) the maintenance of a permanent place of business exclusively for any combination of activities referred to in clauses 1 to 5 of this part, provided that the total activity of this fixed place of business arising from such combination shall be of a preparatory or auxiliary character. At the same time, activities of a preparatory and auxiliary nature should be carried out for the non-resident of the Republic of Uzbekistan himself, and not for third parties.
The provisions of part five of this Article shall not apply to a permanent place of entrepreneurial activity that is used or maintained by a foreign legal entity, if this foreign legal entity or a person interconnected to it carries out entrepreneurial activity through this or another place in the Republic of Uzbekistan, and if one or more of the following conditions are met:
1) this or another place constitutes a permanent establishment for a foreign legal entity or a person interconnected to it in accordance with the provisions of this Article;
2) the aggregate activity obtained as a result of a combination of types of activity carried out by two persons, including legal entities, which are non-residents of the Republic of Uzbekistan, through a permanent place or by the same non-resident or a person interconnected to him through both places, does not have a preparatory or auxiliary character.
The provisions of the sixth part of this Article shall apply if the entrepreneurial activity carried out by two persons, including foreign legal entities, through a permanent place or by the same person or a person interconnected to him through both places, represents complementary functions within the framework of general entrepreneurial activity.
A foreign legal entity performing insurance activities, except for cases of reinsurance, shall be recognized as having a permanent establishment in the Republic of Uzbekistan if it collects insurance premiums on the territory of the Republic of Uzbekistan or insures against risks through a dependent agent.
Where a person acts in the Republic of Uzbekistan on behalf of a foreign legal entity and usually enters into contracts or plays a major role in concluding contracts for the transfer of ownership (provision of services) or granting the right to use property on behalf of this foreign legal entity, then the activity of such a person shall lead to the formation of a permanent establishment of this foreign legal entity.
The provisions of part nine of this Article shall not apply where a foreign legal entity operates in the Republic of Uzbekistan through an independent agent which is acting on the basis of a commission agreement (assignment) or other similar agreement and is not authorized to sign contracts on behalf of this foreign legal entity. Moreover, if such an agent acts primarily on behalf of one or several foreign legal entities interconnected with it, this person shall be considered a dependent agent.
The provision of foreign personnel for work on the territory of the Republic of Uzbekistan by a foreign legal entity to another legal entity shall not lead to the formation of a permanent establishment in the Republic of Uzbekistan, provided that the following conditions are met simultaneously:
1) such personnel act on behalf and in the interests of the legal entity to which it is provided;
2) the legal entity that provided the personnel is not responsible for the results of the work of this personnel;
3) the income of a legal entity from the provision of personnel does not exceed 10 percent of the total amount of its costs for the provision of this personnel for the tax period.
Where a foreign legal entity carries out activities on the territory of the Republic of Uzbekistan on the basis of an agreement on joint activities:
1) the activity of each participant in such an agreement shall form a permanent establishment in accordance with the provisions established by this Article;
2) the fulfillment of the tax obligation shall be carried out by each party to such an agreement independently in the manner prescribed by this Code.
The activities of a foreign legal entity shall form a permanent establishment in accordance with the provisions of this Article from the date of commencement of such activities 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 purpose of applying this Code shall be the date of:
1) conclusion of any following contract (agreement) for:
a) provision of services in the Republic of Uzbekistan, including under a joint activity agreement;
b) granting powers to perform actions on his behalf in the Republic of Uzbekistan;
c) purchase of goods in the Republic of Uzbekistan for use or sale on the territory of the Republic of Uzbekistan;
d) purchase of services for the provision of services in the Republic of Uzbekistan;
2) the conclusion of the first labor contract (agreement) in order to carry out activities in the Republic of Uzbekistan;
3) arrival in the Republic of Uzbekistan of a non-resident physical person, hiring an employee or other personnel by a foreign legal entity to fulfill the terms of the contract (agreement) specified in paragraphs 1 or 2 of this part.
Where several conditions specified in part fourteen of this Article are met, the earliest of these dates shall be recognized as the date of commencement of the activities of a non-resident in the Republic of Uzbekistan, but not earlier than the first of the dates specified in paragraphs 2 and 3 of part fourteen of this Article.
A foreign legal entity carrying out entrepreneurial activity in the Republic of Uzbekistan, leading to the formation of a permanent establishment, shall be obliged to register as a taxpayer with a tax authority in the manner prescribed by Article 130 of this Code.
Where a foreign legal entity carries out entrepreneurial activities leading to the formation of two or more permanent establishments subject to registration with one tax authority, one permanent establishment shall be subject to registration in aggregate for a group of such permanent establishments. This rule shall not apply to activities that form a construction site or construction, installation or other facility specified in paragraph 1 of part three of this Article.
Where a foreign legal entity has a registered permanent establishment that carries out the activities specified in parts two, three or eighth of this Article, and carries out the same or similar activities in a place other than the place of registration of this permanent establishment, the implementation of such activities shall also lead to the formation of a permanent establishment, subject to registration from the date of commencement of this activity.
Where activities of a foreign legal entity are of a mobile nature (road construction, mineral exploration and other types of activities of a mobile nature), then the entire project shall be considered as a permanent establishment, regardless of its mobile nature.
Where a foreign legal entity resumes the activities specified in parts two or three of this Article within a twelve-month period after excluding a permanent establishment from the Unified Register of Taxpayers of the Republic of Uzbekistan, it shall be recognized as having formed a permanent establishment and shall be subject to registration as a taxpayer from the date of resumption of such activity.
Article 37. Interconnected Persons
Where the special considerations of relations between persons can affect the conditions and (or) the results of transactions made by them and (or) the economic results of the activities of these persons or the activities of the persons they represent, the persons indicated in this part shall be recognized as interconnected for tax purposes.
The influence that can be exerted due to the participation of one person in the capital of other persons in accordance with the agreement concluded between them shall be taken into account to recognize the interconnectedness of persons, or if there is another opportunity for one person to determine the decisions made by other persons. Such influence shall be taken into account irrespective of whether it can be exerted by one person directly and independently or jointly with its interconnected persons, having been recognized as such in accordance with this Article.
With account taken of the first and second parts of this Article, for the purposes of this Code, as interconnected persons shall be recognized:
1) legal entities in case one legal entity directly and (or) indirectly participates in another legal entity and the participating interest is more than 20 percent;
2) a physical person and a legal entity in the event that a physical person directly and (or) indirectly participates in this legal entity and such participating interest is more than 20 percent;
3) legal entities in the event that the same person directly and (or) indirectly participates in these legal entities and such participating interest in each legal entity is more than 20 percent;
4) a legal entity and a person (including a physical one) which have the authority to appoint (elect) the sole executive body of this legal entity or appoint (elect) at least 50 percent of the composition of the collegial executive body or the board of directors (supervisory board) of this legal entity. In the case of a physical person, when determining his powers, the joint powers with his interconnected persons specified in clause 11 of this part shall also be taken into account;
5) legal entities in which at least 50 percent of the composition of the collegial executive body or the board of directors (supervisory board) are appointed or elected by the decision of the same person (including a physical). In the case of a physical person, when determining his decisions, decisions taken jointly with his interconnected persons specified in paragraph 11 of this part shall be also taken into account;
6) legal entities in which more than 50 percent of the composition of the collegial executive body or the board of directors (supervisory board) are the same physical persons. In this case, the participation of persons directly interconnected to physical person, specified in paragraph 11 of this part, shall equal to participation of a physical person himself;
7) a legal entity and a person exercising the powers of its sole executive body;
8) legal entities in which the powers of the sole executive body are exercised by the same person;
9) legal entities and (or) physical persons, if in the sequence reflecting the direct participating interest of these persons in one another, the direct participating interest of each previous person in each subsequent legal entity is more than 50 percent;
10) physical persons, if one physical person is subordinate to another physical person by official position;
11) a physical person, his spouse (wife), parents (including adoptive parents), parents of a spouse (wife), children (including adopted children), brothers and sisters with full and incomplete kinship, as well as a guardian (curator) and ward.
For the purposes of this Article, the participating interest of a physical person in a legal entity shall be deemed to be the aggregate participating interest of this physical person and his interconnected persons, specified in paragraph 11 of part three of this Article, in the specified legal entity.
Where the conditions and (or) the results of transactions made by persons, and (or) the economic results of their activities are influenced by one or more other persons due to their advantageous position in the market or due to other similar circumstances, such influence shall not be a basis for recognition persons as interconnected.
Direct and (or) indirect participation of the Republic of Uzbekistan in legal entities of Uzbekistan shall not be a basis for recognizing such legal entities as interconnected. These legal entities may be recognized as interconnected on other grounds provided for by this Article.
The recognition of persons as interconnected on other grounds not provided for in part three of this Article, where the relationship between these persons has the characteristics specified in parts one and two of this Article, shall be performed by a court.
Article 38. Participating Interest in a Legal Entity
For tax purposes, the participating interest of one physical person or legal entity (hereinafter referred to as a person) in another legal entity selected for determining this interest (hereinafter referred to as a selected legal entity) shall be determined as the sum of direct and indirect interest held by this person in the selected legal entity.
The direct participating interest of a person in a selected legal entity shall be the proportion of voting shares directly held by this person or the interest directly held by the person concerned in the authorized capital (charter fund) of the selected legal entity.
Where it is impossible to determine the proportion of direct interest of a person in the selected legal entity in the specified way, such shall be the share determined in proportion to the number of participants in the selected legal entity.
The indirect participating interest of a person in a selected legal entity shall be recognized as an interest determined as follows:
1) all the chains of participation of the person in the selected legal entity through the direct participation of each preceding legal entity in each successive legal entity within a particular chain are determined;
2) the direct participating interests of each preceding legal entity in each successive legal entity within a particular chain are determined;
3) for each such chain, there are products of direct participating interest for all legal entities of this chain;
4) all products of direct participating interests found for each such chain are summed up.
When determining the participating interest in an organization, the participation of a physical person or a legal entity in a foreign structure without the formation of a legal entity shall be also taken into account, which, in accordance with the legislation of a foreign state (territory) in which it is established, has the right to participate in the capital of other organizations or in other foreign structures without formation of a legal entity.
When determining the participating interest in a legal entity, account shall not be taken of participation which is exercised by means of the possession of securities acquired through a REPO contract concluded in accordance with the legislation of the Republic of Uzbekistan, or as a result of an operation recognized as a REPO operation in accordance with the legislation of a foreign state, for a period not exceeding one year.
In such cases, for the purposes of determining the participating interest in a legal entity, these securities shall be taken into account for the person who is the seller of the securities in the first leg of the REPO, except in cases where securities sold by the seller in the first leg of the REPO were received by this seller through another REPO operation or lending operations with securities.
In case that the second leg of a REPO is not performed or performed not in full, as well as in the case of concluding a REPO contract for a period of more than one year, the participating interest of one legal entity in another legal entity shall be determined without taking into account the special considerations established by part five of this Article.
When determining the participating interest in a legal entity, account shall not be taken of participation which is exercised by means of the possession of securities acquired for a period not exceeding one year through a securities lending contract concluded in accordance with the legislation of the Republic of Uzbekistan or a foreign state.
In such cases, for the purposes of determining the participating interest in a legal entity, these securities shall be taken into account for by the person who is the creditor (lends securities), unless the securities transferred under a securities lending contract were received by the creditor through another securities lending operation or REPO operation.
In case of non-fulfillment or incomplete fulfillment of obligations to return securities in the context of securities lending operations, as well as in the case of concluding a securities lending contract for a period of more than one year, the participating interest of one legal entity in another legal entity shall be determined without taking into account the special considerations which are established by part seven of this Article.
Additional circumstances when determining the participating interest of one legal entity in another legal entity or a physical person in a legal entity shall be determined by the court.
Article 39. Controlled Foreign Companies
For tax purposes, a controlled foreign company shall be understood to be a foreign legal entity that simultaneously satisfies all of the following conditions:
1) the foreign legal entity is not deemed to be a tax resident of the Republic of Uzbekistan;
2) the foreign legal entity has as a controlling persons a legal entity and (or) a physical person, deemed to be tax residents of the Republic of Uzbekistan.
A foreign structure without the formation of a legal entity which has a legal entity and (or) a physical person, which are recognized as tax residents of the Republic of Uzbekistan, as controlling persons, shall also be recognized as a controlled foreign company.
The fact that a management company of an investment fund (mutual fund or other form of collective investment) is deemed to be a tax resident of the Republic of Uzbekistan shall not constitute a grounds for the recognition of this investment fund (mutual fund or other form of collective investment) as a controlled foreign company, for which the controlling person is a person specified in this part. The same rules shall apply in the case when these funds (other forms of collective investment) are managed by managing partners or other persons.
Article 40. Control over Foreign Companies and Controlling Persons
Unless otherwise provided for by this Article, the following shall be recognized as controlling persons of a foreign company, for tax purposes:
1) a legal entity or physical person which is recognized as a tax resident of the Republic of Uzbekistan, and whose participating interest in a foreign company amounts to more than 25 percent;
2) a legal entity or physical person whose participating interest in this company amounts to more than 10 percent, if the participating interest of all persons who are deemed to be tax residents of the Republic of Uzbekistan in this company amounts to more than 50 percent.
For the purposes of the first part of this Article, the participating interest in a foreign company shall be determined in the manner prescribed by Article 38 of this Code.
For physical persons specified in part one of this Article, the participating interest are accounted for together with the persons specified in paragraph 11 of part three of Article 37 of this Code.
A person shall not be recognized as a controlling person of a foreign company where his participation in it is exercised exclusively through direct and (or) indirect participation in one or more legal entities of the Republic of Uzbekistan that are issuers of securities that (or depositary receipts for which) have passed the listing procedure and (or) were admitted to trading on exchanges that have the appropriate license or are included in the list of foreign financial intermediaries, and if this person is not recognized as a controlling person in accordance with parts five to twelve of this Article. In this respect, foreign financial intermediaries shall be understood to mean foreign stock exchanges and foreign depository and clearing organizations which are included in the list approved by the authorized body for the development of the securities market of the Republic of Uzbekistan.
A controlling person of a foreign company shall be also recognized a person whose participating interest in the company does not comply with the conditions established by part one of this Article, but at the same time he is exercising control over this company in his own interests or in the interests of the persons specified in paragraph 11 of part three of Article 37 of this Code.
For the purposes of this Code, the exercise of control over a company shall be understood to mean the exertion of, or the ability to exert, a decisive influence on the decisions adopted by this company in relation to the distribution of profit (income). In this respect, the influence or the possibility of influence of a person on such decisions shall be taken into account, both due to direct or indirect participation in this company, and due to participation in an agreement (accord), concerning management of this company, or due to other arrangements of the relationship between this person and company and (or) other persons.
For the purposes of this Code, the exercise of control over a foreign structure without the formation of a legal entity shall be understood to mean the exertion of, or the ability to exert a decisive influence on the decisions made by the person who manages the assets of such a structure with respect to the distribution of the profit (income) received by it in accordance with the legislation of a foreign state (territory), of which this physical person is the citizen, or in which this legal entity is created, and (or) in accordance with the foundation documents of that legal entity or by other circumstances.
Unless otherwise provided by this Article, for the purposes of this Code, the founder of a foreign structure without the formation a legal entity shall be recognized as the controlling person of that structure.
Unless otherwise provided by part eleven of this Article, the founder of a foreign structure without the formation a legal entity shall not be recognized as a controlling person of this structure, if all of the following conditions are simultaneously observed in relation to him:
1) such a person does not have the right to receive (demand to receipt) directly or indirectly profit (income) of this structure in whole or in part;
2) such a person is not entitled to dispose of the profit (income) of this structure or part of it;
3) such a person did not retain the right in the assets transferred to this structure (the property was transferred on terms of irrevocability);
4) such a person does not exercise control over this structure in accordance with part seven of this Article.
The condition provided for in paragraph 3 of part nine of this Article shall be deemed fulfilled if the founder of a foreign structure without the formation a legal entity does not have the right to receive ownership of the assets of this structure. In this respect, the restriction on obtaining, in whole or in part, the ownership of the assets of this structure throughout the entire period of its existence, as well as in the event of its termination (liquidation, termination of the contract) must be confirmed by the legislation of the foreign state (territory) in which this structure was created, and (or) its foundation documents.
A person specified in part nine of this Article shall be recognized as a controlling person of a foreign structure without the formation a legal entity, if that person retains the right to receive any of the rights specified in paragraphs 1 — 3 of part nine of this Article.
For the purposes of this Code, another person who is not a founder of a foreign structure without the formation a legal entity shall be also recognized a controlling person if that person exercises control over the structure concerned and, at the same time, at least one of the following conditions is met in relation to him:
1) the person has the actual right to the income (part of it) received by this structure;
2) the person has the right to dispose of assets of this structure;
3) the person has the right to receive the assets of this structure in the event of its termination (liquidation, termination of the contract).
A tax resident of the Republic of Uzbekistan shall have the right to independently declare himself as a controlling person of a foreign company on the grounds provided for in parts one or five of this Article, or of a foreign structure without the formation a legal entity on the grounds provided for in parts nine or twelve of this Article. In this case, a person who has declared himself to be a controlling person shall send a notification to the tax authority for the place of his registration in the manner prescribed by this Code.
The rules for the recognition of controlling persons of foreign structures without the formation a legal entity established by this Article shall also apply to the recognition of controlling persons of foreign legal entities for which, in accordance with the legislation of a foreign state (territory) in which they are established or whose citizens they are, participation in capital is not provided for.
Article 41. Dividends and Interest
Dividends shall be recognized as:
1) any income received by a shareholder (participant) upon the distribution of the profit of a legal entity (including in the form of interest on preferred shares) on shares (holdings) of this legal entity owned by a shareholder (participant);
2) payments made upon the liquidation to a shareholder (participant) of a legal entity in monetary form or in kind in the part exceeding the size of the share of this shareholder (participant) in the authorized capital (charter fund) of this legal entity;
3) payment of the actual value of a part of a share to an excluded or withdrawn participant, determined according to the company's financial statements for the last reporting period preceding the date of exclusion and withdrawal of the participant in the part exceeding the size of the share of this shareholder (participant) in the authorized capital (charter fund) of this legal entity;
4) income of a shareholder (participant) of a legal entity received in the form of the value of additional shares (increase in the par value of a share) in the event of an increase in the authorized fund (charter capital) at the expense of the equity capital (assets) of this legal entity.
The incomes specified in the first part of this Article shall be recognized as dividends, provided that they are paid in proportion to the shares of shareholders (participants) in the authorized capital (charter capital) of the legal entity paying that incomes.
Dividends shall also include any income which is received from sources outside the Republic of Uzbekistan, and is classified as dividends in accordance with the legislation of foreign states.
For the purposes of this Code, incomes paid to the owner of a private enterprise, to a participant in a family enterprise or the head of a farm from the amount of profit remaining at the disposal of such legal entities shall be equated to dividends.
Interest shall be recognized as any income declared (established) in advance, including in the form of a discount, which is received in respect of a debt obligation of any kind (irrespective of the means it is drawn up), including monetary deposits.
Article 42. Income
Income shall be understood to be an economic gain in monetary form or in kind, which is taken into account where and to the extent it is possible to evaluate such gain.
Article 43. Income from Sources within the Republic of Uzbekistan
Income of a taxpayer may be classified as income from sources in the Republic of Uzbekistan or income from sources outside the Republic of Uzbekistan.
Income from sources within the Republic of Uzbekistan shall include income from economic activity in the Republic of Uzbekistan and other income directly related to its jurisdiction, legal capacity and (or) economic relations with its state bodies and other subjects of economic relations.
Where the provisions of this Code do not make it possible to classify income received by taxpayers unequivocally as income from sources within the Republic of Uzbekistan or as income from sources outside the Republic of Uzbekistan, the classification of income in terms of its source shall be performed by the State Tax Committee of the Republic of Uzbekistan. The proportion of such income, which may be classified as income from sources in the Republic of Uzbekistan, and the proportion that may be classified as income from sources outside the Republic of Uzbekistan shall be determined in a similar manner.
Article 44. Royalties
Royalties shall be understood to be payments for the use or the right to use any intangible asset, including for:
copyright for works of art, literature and science, including copyright for software and databases, drawing, design or model, plan, a secret formula, technology or process, audiovisual works and objects of related rights, including performances and phonograms;
patents, trademarks or other similar types of rights;
information regarding industrial, commercial or scientific experience (know-how). Know-how shall be understood as information of an industrial, commercial or scientific nature about the results of intellectual activity in the scientific and technical sphere and / or methods of carrying out professional activities, arising from previous experience, and having practical application in economic activity, as well as actual or potential commercial value (due to it is unknown to third parties, if third parties do not have free access to such information on a legal basis) and as a result of the disclosure of which economic benefits can be obtained.
There shall not be considered as royalties payments paid for:
1) use of a computer program (including its adaptation by customizing built-in internal capabilities), if the terms of use are limited by the functional purpose of such a program for final consumption and its reproduction is limited to the number of copies required for such use ;
2) the acquisition for the use, possession and (or) disposal of a person of goods (including storage medium), in which the objects of intellectual property rights, specified in paragraph 1 of this part, are embodied or on which they are located;
3) provision of services for the development of computer programs and databases (software and information products of computer technology), as well as for the installation, revision and configuration of programs, their adaptation and modification;
4) newly received information of an industrial, commercial or scientific nature, which is the result of the provision of services on the basis of an agreement with the customer;
5) transfer of the right to distribute copies of software products without the right to reproduce them, or if their reproduction is limited to use by the end consumer.
Article 45. Goods and Services. Market for Goods (Services)
A good shall be understood to mean any object of nature or human activity (including intellectual) that has an estimated value and is intended for sale.
Goods, in particular, shall be an electricity, database, information, results of intellectual activity, including exclusive rights to them.
For tax purposes, property rights shall be also recognized as goods.
For tax purposes, the property right shall be an object of civil law of an intangible nature, aimed at property, and that has a monetary value and is capable of an independent of this property circulation (it can be an object of sale or other alienation from its owner, who has the right to own, use and dispose of this property right specified in the contract or other supporting document).
Property rights shall include, in particular: the right of the creditor's claim against the debtor, the participating interest in the authorized fund (charter capital) of the business company, securities, the right of the author (or other rightholder) to the intellectual property object, as well as other types of rights associated with the property they are based on, that can be sold or otherwise alienated from its owner.
Item rights, the independent circulation of which is impossible without the transfer of the item itself, shall not be considered as property rights.
For purposes of regulating relations with respect to the collection of customs payments, goods may include other property determined in accordance with customs legislation.
For taxation purposes a services shall be any types of business activities for the production of products (tangible or intangible) aimed at satisfying the needs of other persons, as well as work performed for other persons.
The activity of physical persons under an employment contract with an employer shall not apply to services.
For the purposes of taxation, identical goods (services) shall be goods (services) which have the same basic characteristic attributes.
When determining whether goods are identical minor differences in the external appearance of such goods may be disregarded.
When determining whether or not goods are identical account shall be taken of their physical characteristics, quality, designated function and country of origin and of the manufacturer, its business reputation on the market and any trademark used.
When determining whether or not services are identical account shall be taken of the characteristics of the service provider (contractor), his business reputation on the market and any trademark used.
For the purposes of this Code, homogeneous (similar) goods shall be goods which, although not identical, have similar characteristics and consist of similar components, which enables them to perform the same functions and (or) to be commercially interchangeable.
When determining whether goods are homogeneous, account shall be taken of their quality, reputation on the market, trademark, and country of origin.
Homogeneous services shall be those services which, although not identical, have similar characteristics, enabling them to be commercially and (or) functionally interchangeable.
When determining whether services are homogeneous, account shall be taken of their quality, trademark, reputation on the market, as well as the type of services, their volume, uniqueness and commercial interchangeability.
The market for goods shall be the sphere of circulation of these goods, determined based on the ability of the buyer (seller) to purchase (sell) these goods on the territory of the Republic of Uzbekistan or abroad without significant additional costs. The service market shall be determined in a similar manner.
Article 46. Sale of Goods and Services
The sale of goods or services shall be recognized as the transfer of ownership right of goods or the provision of services in return for a consideration, including the exchange and transfer of pledged goods if the debtor fails to fulfill the obligation secured by pledge.
In the cases provided for by this Code, the transfer of ownership of goods or the provision of services without consideration shall be also recognized as sale.
Article 47. Invoice
When selling goods (services), legal entities and individual entrepreneurs shall be obliged to issue invoices to buyers of these goods (services), unless otherwise provided by this Article,
The invoice, as a rule, shall be issued in electronic form in the information system of electronic invoices.
When selling goods (services), the rules provided for in parts one and two of this Article shall not apply if the seller has issued a cashier's receipt or other document of the established form to the buyer.
When the cost of goods (services) sold is changed, including the cases of price change or clarification of the quantity (volume) of goods or services provided, the seller shall be obliged to issue an additional or corrected invoice to the buyer in the manner prescribed by this Code.
Foreign legal entities subject to registration in accordance with Article 279 of this Code shall not issue invoices, and shall not keep registers of purchases, registers of sales, logs of received and issued invoices in terms of the provision of services specified in Article 282 of this Code.
The invoice form and the procedure for filling it out shall be approved by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
Article 48. Earmarked Funds
For taxation purposes, earmarked funds shall include property received by a taxpayer for use by him for a purpose determined by a person who is a source of earmarked funds or by legislation.
Earmarked funds shall include, in particular:
1) budgetary allocations and budgetary subsidies;
2) grants and humanitarian aid;
3) targeted receipts.
For tax purposes, grants shall be recognized as a property provided without a consideration in the manner determined by the Cabinet of Ministers of the Republic of Uzbekistan to the Republic of Uzbekistan, by:
1) states, governments of states, international or foreign governmental or non-governmental organizations;
2) foreign citizens and stateless persons.
For taxation purposes, humanitarian aid shall be recognized as targeted gratuitous assistance to the Republic of Uzbekistan for the provision of medical and (or) social assistance to socially vulnerable groups of the population, support of social industry institutions, prevention and elimination of the consequences of natural disasters, accidents and catastrophes, epidemics, epizootics and other emergencies, that shall be distributed by the Cabinet of Ministers of the Republic of Uzbekistan through the organizations authorized by it.
Targeted receipts shall include receipts (with the exception of receipts in the form of excisable goods) for the maintenance of non-commercial organizations and their statutory activities, received without consideration on the basis of decisions of state authorities, as well as receipts from other legal entities and (or) physical persons used by the specified recipients on targets specified.
Targeted receipts for the maintenance of non-commercial organizations and their conduct of statutory activities shall include:
1) contributions made in accordance with the legislation on non-governmental non-commercial organizations, contributions of founders (participants, members), as well as donations recognized as such in accordance with civil legislation.
2) income in the form of services received free of charge by non-commercial organizations, provided on the basis of relevant agreements;
3) deductions for the formation of a reserve for repairs, overhaul of common property, which are made to the partnership of homeowners, housing, horticultural, gardening, garage-building, housing-building or other specialized consumer cooperatives by their members in accordance with the procedure established by this Code;
4) assets transferred to non-commercial organizations by will through inheritance procedure;
5) budgetary funds provided for the implementation of the statutory activities of non-commercial organizations;
6) funds and other property received for charitable activities;
7) funds received by trade union organizations in accordance with collective agreements (accords) for socio-cultural and other events of trade union organizations provided for by their statutory activities;
8) funds received without consideration by non-commercial organizations from their structural divisions that are taxpayers, for the conduct of statutory activities not related to entrepreneurial activity in accordance with the legislation;
9) assets received by religious organizations for the implementation of statutory activities;
10) property rights in the form of the right to free use of state property, provided by decisions of state authorities to non-commercial organizations to conduct their statutory activities.
Article 49. Securities
Securities shall be to understood to be documents certifying property rights or loan relations between the legal entity which are issued these documents and their owner, providing for the payment of income in the form of dividends or interest and the possibility of transferring rights arising from these documents to other persons.
Securities shall include stocks, bonds, bills of exchange, certificates of deposit, depositary receipts, options, futures and forward contracts, as well as other securities recognized as such in accordance with the legislation or applicable legislation of a foreign country.
The procedure for classifying securities as equity securities shall be established by legislation of the Republic of Uzbekistan or the applicable legislation of foreign states.
If a transaction in securities meets the criteria for a transaction in financial instruments of forward transactions, the taxpayer shall have the right to independently classify it for tax purposes as transactions in securities or transactions in financial instruments of forward transactions.
For tax purposes, securities shall be recognized as circulating on the organized securities market (circulating securities), provided that the following conditions are met:
they are admitted to circulation by at least one organizer of trading in securities;
information on their prices (quotes) is published in the mass media or may be provided by the organizer of the auction or another authorized person to any interested person within three years after the date of transactions with securities;
within three consecutive months preceding the date of the taxpayer's transaction with these securities, the market quotation was calculated on them at least once (except for the calculation of the market quotation during the initial placement of securities by the issuer).
Article 50. Financial Instruments of Forward Transactions
For the purposes of this Code, a financial instrument of forward transactions shall be an agreement with the distribution of the rights and obligations of the parties to the agreement in relation to the underlying asset, and indication of the date on which the obligations of the parties to be fulfilled.
For the purposes of this Code, an agreement in respect of which claims of are not subject to judicial protection in accordance with the civil legislation of the Republic of Uzbekistan and (or) the applicable legislation of foreign states shall not be recognized as a financial instrument of forward transactions. Losses made on such an agreement shall not be taken into account in taxation.
The underlying asset of the financial instruments of forward transactions shall be understood to mean the subject of the forward transaction.
The underlying asset may be, in particular, foreign currency, securities and other assets, interest rates, credit resources, price or interest rate indices, and other financial instruments for forward transactions.
For the purposes of this Code, the participants in forward transactions shall be understood to be legal entities and physical persons performing operations with financial instruments of forward transactions.
The fulfillment of the rights and obligations on transactions with financial instruments of forward transactions shall be the execution of a financial instrument of forward transactions by delivery of the underlying asset, by making a final settlement on the financial instrument of forward transactions, or by performing an operation by a participant in a forward transaction that is the opposite of a previous transaction with a financial instrument of forward transactions.
For transactions with financial instruments of forward transactions aimed at purchasing the underlying asset, the opposite direction shall be a transaction aimed at selling the underlying asset, and for transactions aimed at selling the underlying asset, the opposite direction shall be a transaction aimed at purchasing the underlying asset.
Subject to the requirements of this Article, a taxpayer shall have the right to independently qualify a transaction with the terms of providing the delivery of the underlying asset by recognizing it as an operation with a financial instrument of forward transactions or as a transaction for the delivery of the subject of a transaction with a deferred execution.
The criteria for classifying transactions that provide for the delivery of the subject of the transaction (except for hedging transactions) to the category of transactions with financial instruments of forward transactions shall be determined by the taxpayer in the accounting policy for taxation purposes.
The end date of an operation with a financial instrument of forward transactions shall be the date on which the rights and obligations under the transaction with a financial instrument of forward transactions are fulfilled.
Obligations on a financial instrument of a forward transaction may be terminated without re-qualification:
1) by offset (mutual offset) of homogeneous claims and obligations;
2) in the manner determined by the general agreement, which corresponds to the approximate terms of contracts, if such termination provides for the determination of the amount of the net obligation;
3) offsetting counterclaims arising from contracts concluded under the terms of the rules of organized trading or clearing rules, if such offset was made in order to determine the amount of the net obligation.
For the purposes of this Code, requirements for the delivery of securities of the same volume of rights of one issuer, one type, one category (type) or one mutual investment fund (for investment shares of mutual investment funds), as well as requirements for payment of funds in the same currency shall be deemed a homogeneous.
Taxation of transactions qualified as transactions for the delivery of the subject of a transaction with a deferred execution shall be carried out in the manner prescribed by this Code for the corresponding underlying assets of such transactions.
For the purposes of this Code, the financial instruments of forward transactions shall be divided into financial instruments of forward transactions circulated in the organized market (circulating financial instruments of forward transactions) and financial instruments of forward transactions not circulated in the organized market (non-circulating financial instruments of forward transactions).
Financial instruments of forward transactions shall be recognized as circulating on the organized market, provided that the following conditions are met simultaneously:
1) the procedure for their conclusion, circulation and execution is established by the organizer of trades, who has the right to do so in accordance with the legislation of the Republic of Uzbekistan or the legislation of foreign states;
2) information on the prices of financial instruments of forward transactions is published in the mass media or may be provided by the trade organizer or other authorized person to any interested person within three years after the date of the transaction with the financial instrument of the forward transaction.
If a transaction is not concluded on an organized market and its terms provide for the delivery of the underlying asset, it can be qualified as a financial instrument of forward transactions only provided that the delivery of the underlying asset must be made no earlier than the third day after the day of its conclusion, in accordance with the terms of such a transaction.
A transaction that is not concluded on an organized market and the terms of which do not provide for the delivery of the underlying asset may be qualified as a financial instrument of forward transactions only.
Financial instruments of forward transactions, the terms of which provide for the delivery of the underlying asset or the conclusion of another financial instrument for forward transactions with terms of the delivery of the underlying asset, shall be recognized as deliverable forward transactions.
Financial instruments of forward transactions, the terms of which do not provide for the delivery of the underlying asset or the conclusion of another financial instrument for forward transactions with the condition of delivery of the underlying asset, shall be recognized as cash settlement forward transactions.
For the purposes of this Code, transactions that are qualified as deliverable forward transactions, as well as transactions for the delivery of the subject of a transaction with a deferred execution shall not be subject to re-qualification into cash settlement forward transactions in the event that obligations are terminated in ways other than proper execution.
Variation margin means the amount of monetary funds calculated by the organizer of trades or a clearing organization and is payable (receivable) by parties of forward transactions in accordance with the rules established by the organizers of trades and (or) clearing organizations.
Article 51. Hedging
For the purposes of this Code, hedging operations shall be understood to mean transactions (a set of transactions) involving financial instruments of forward transactions (including different types), performed for mitigating (offsetting) unfavorable consequences for the taxpayer (in whole or in part).
Such unfavorable consequences may include, in particular, a loss, a decrease in revenue or profit, a reduction in the market value of assets, an increase in the taxpayer's liabilities due to a change in the price, interest rate, foreign exchange rate to the national currency or other indicator (set of indicators) of the object (objects) of hedging.
Hedged objects shall be understood to mean assets, property rights of a taxpayer and obligations of a taxpayer, which have not fallen due as at the date of the hedging transaction.
Hedged objects may be rights of claim and obligations, the implementation (execution) of which is conditional upon the presentation of a claim by a party to the contract and in respect of which the taxpayer has made a decision to hedge.
The underlying assets of the financial instruments of forward transactions used for the hedging transaction may differ from the hedged object.
For hedging purposes, it is permissible to conclude more than one financial instrument of a forward transaction of various types, including multiple financial instruments of forward transactions within the framework of one hedging transaction during the hedging period.
For confirmation of the legitimacy of the classification of a transaction involving financial instruments of forward transactions as a hedging transaction, the taxpayer shall prepare a statement as at the date of conclusion of a such transactions, which confirms that, according to the taxpayer's forecasts, the conclusion of that transaction will help to mitigate unfavorable consequences associated with a change in prices, market quotations, exchange rates or another indicator of the hedged object.
Where for the purpose of one hedging transaction, a multiple transactions with financial instruments of forward transactions are to be concluded, such a statement shall be prepared as of the date of the first of the transactions.
Article 52. REPO transactions with Securities
In accordance with a REPO agreement, one party to the transaction shall sell securities to the other party to the transaction with an obligation to sell (buy) them back after a certain period at a price predetermined in this agreement. At the same time, the sale (purchase) price of these securities specified in the agreement may differ from their market prices.
A REPO transaction shall be understood to be an agreement that meets the requirements which are established for REPO agreements by the legislation of the Republic of Uzbekistan and (or) the applicable legislation of foreign states. In this respect, the first and second legs of a REPO shall be understood to mean the first and second legs of a REPO agreement respectively.
The purchaser in the first leg of a REPO and the seller in the first leg of a REPO shall be the purchaser under a REPO agreement and the seller under a REPO agreement respectively. In this case, obligations in respect of the second leg of a REPO should arise on condition that the first leg of the REPO has been executed.
The terms of the REPO transaction may provide for at least one of the following rights of the parties to the transaction:
1) the right of the seller in the first leg of the REPO before the date of execution of the second leg of the REPO to transfer other securities to the purchaser under the first leg of the REPO in exchange for the securities transferred in the first leg of the REPO, or for securities into which they have been converted;
2) the purchaser's right for the first leg of the REPO to demand from the seller for the first leg of the REPO the transfer specified in clause 1 of this part.
For the purposes of this Article, the dates of execution of the first or second leg of a REPO shall be considered to be the due dates for the fulfilment by the REPO participants of their obligations in the respective leg of the REPO.
In the event that obligations to deliver securities and obligations to pay for them in the first or second leg of a REPO are fulfilled on different dates, the date of the first and second leg of the REPO respectively shall be the later of the dates of fulfilment of obligations to pay for or obligations to deliver securities.
The date of fulfilment of obligations in respect of the second leg of a REPO may be altered so as to reduce or increase the REPO period. Transactions in which the date of execution of the second leg of the REPO is specified as “on demand” shall be recognized as REPO transactions if the REPO agreement sets out the procedure for determining the price of the second leg of the REPO and the second leg of the REPO is executed within one year from the date on which the parties fulfilled their obligations in respect of the first leg of the REPO.
In the case of REPO transactions which are concluded through an organizer of trade on the securities market (through an exchange) or for which execution takes place through a clearing organization, any change in the date of execution of the second leg of a REPO which is made in accordance with the rules of the organizer of trade on the securities market (on an exchange) or the clearing organization) shall be regarded as a change in the REPO period for the purposes of this Article.
For the purposes of this Code, the REPO rate shall be determined when a REPO transaction is concluded and may be a fixed rate or a reference rate.
The REPO rate must enable the amount of interest to be determined at the end of an accounting (tax) period and may be varied by agreement between the parties to the REPO agreement.
If, at the date of execution of the second leg of a REPO, the obligation to sell (purchase) securities in the second leg of the REPO remains wholly or partially unperformed and the procedure for settling mutual claims has not been carried out, the second leg of the REPO shall be deemed to have been improperly executed, unless otherwise provided by part six of this Article.
For the purposes of this Code, the following shall not be considered as non-full execution of the second leg of the REPO:
1) the performance of obligations in the second leg of a REPO within ten days of the date agreed upon by the parties for the execution of the second leg of the REPO;
2) fulfillment (termination) of obligations by offsetting counterclaims in the following cases:
a) where such claims arise from contracts concluded on the basis of a general agreement (unified contract) which conforms to the model conditions of contracts approved in accordance with the legislation of the Republic of Uzbekistan or applicable legislation of foreign states. In this case, the offset of counterclaims has been made in order to determine the amount of the net obligation;
b) where such claims arise from contracts concluded on the basis of organized trading rules and (or) clearing rules. In this case, the offset of counterclaims has been made in order to determine the amount of the net obligation.
In cases of improper execution of the second leg of the REPO, the REPO transaction shall be subject to re-qualification for tax purposes.
A REPO transaction shall be independently requalified by a taxpayer for the purpose of taxation in the following cases:
1) where the requirements established for REPO contracts by legislation and (or) the requirements established by this Article for a REPO transaction are not met;
2) upon termination of the REPO agreement;
3) in case of improper execution of the second leg of the REPO.
The re-qualification of a REPO transaction for tax purposes shall take place as at the earliest of the dates of occurrence of one of the conditions that are the basis for such re-qualification.
The obligations of the participants in the REPO transaction upon its re-qualification for tax purposes are established by the Special Part of this Code.
Article 53. Securities Lending Operations
The lending of securities shall take place on the basis of a loan agreement concluded in accordance with the legislation of the Republic of Uzbekistan or the legislation of foreign states, which satisfies the conditions specified in parts three to six of this Article (hereinafter referred to as the loan agreement).
The rules of this Code shall also apply to transactions involving the lending of a taxpayer’s securities which are concluded at the taxpayer’s expense by commission agents, delegates, agents and fiduciaries on the basis of corresponding civil-law agreements.
For the purposes of this Code, an agreement on a loan issued (received) in the form of securities must provide for interest to be paid in monetary form.
The interest rate or the procedure for determining the interest rate shall be established by the conditions of the loan agreement.
For the purpose of determining interest under a loan agreement, unless otherwise provided by parts three and four of this Article, the value of securities transferred under the loan agreement shall be taken to be equal to the market price of the securities in question as at the date of conclusion of the loan agreement or, if no market price exists, the reference price. In this respect, the market price and reference price of securities shall be determined in accordance with the Special Part of this Code.
The commencement date of a loan shall be date on which ownership of securities is transferred when they are transferred by the lender to the borrower, and the completion date of a loan shall be the date on which ownership of securities is transferred when they are transferred by the borrower to the lender.
For the purposes of this Code, the time limit of a loan agreement issued (received) by securities shall not exceed one year.
Where a loan agreement does not specify a due date for the return of securities or states that they are returnable “on demand” (open-dated loan agreement) and the securities are not returned by the borrower to the lender within a year from the commencement date of the loan, for tax purposes the securities are recognized as sold at the start date of the loan.
In this case, the income and expenses of the lender and the borrower from the sale (purchase) of securities transferred under the loan agreement shall be calculated based on the market price (settlement price) of the securities as of the start date of the loan and the interest received (paid).
The indicated market (settlement) price of these securities shall be determined in accordance with the rules established by the Special Part of this Code.
The provisions of part eight of this Article shall also apply in cases where:
1) where a loan agreement specified the due date for the return of the loan, but one year after the commencement date of the loan the securities have not been returned by the borrower to the lender;
2) where an obligation to return securities has been terminated by the payment of monetary resources to the lender or the transfer of assets other than securities.
In the event of the non-fulfilment or incomplete fulfilment of obligations to return securities in securities lending transactions, the taxation procedure established by this Code shall be applied for a REPO transaction in relation to which improper execution has occurred and a mutual claim netting procedure has not been carried out.
Article 54. Financial Lease and Leasing
For the purposes of this Code, financial lease shall be understood to mean a lease relationship arising from the transfer of assets (object of financial lease) under a contract into possession and use for a period exceeding twelve months. A finance lease agreement must meet one or more of the following requirements:
1) upon expiration of the financial lease agreement, the finance lease object becomes the property of the lessee;
2) the term of the financial lease agreement exceeds 80 percent of the service life of the financial lease object, or the residual value of the financial lease object at the end of the financial lease agreement is less than 20 percent of its initial cost;
3) at the end of the term of the finance lease agreement, the lessee has the right to redeem the object of finance lease at a fixed price established in the finance lease agreement;
4) the current discounted value of the lease payments for the period of the financial lease agreement exceeds 90 percent of the current value of the object at the time of its transfer to the financial lease. The current discounted value shall be determined in accordance with the accounting legislation.
Leasing for the purposes of this Code shall be understood as a special type of financial lease, in which one party (the lessor), on behalf of the other party (the lessee), purchases from a third party (the seller) the property stipulated by the leasing agreement (the object of leasing) and provides it to the lessee for possession and use for a fee under a contract that meets the requirements established by part one of this Article.
For the purposes of this Code, the financial lease lessee (leasing lessee) who is a party to the financial lease (leasing) agreement shall be considered as the buyer of the subject of financial lease (leasing).
Article 55. Tax Arrears
The tax arrears for the purposes of this Code shall be understood to mean the amount of taxes calculated (accrued) and which has not been paid within the established time limit, including advance and current payments on them, as well as financial sanctions and penalties that have not been paid within the time limit established by this Code.
The tax arrears of a taxpayer or tax agent may be determined both for all taxes, and for each of them separately.
The repayment of tax arrears, including when it is recovered by the tax authorities, shall be carried out sequentially in the following order:
1) the amount of taxes;
2) accrued penalties;
3) fines.
Article 56. Taxpayer’s Personal Account
Taxpayer’s Personal account shall be an information resource posted on the official website of the State Tax Committee of the Republic of Uzbekistan.
In the cases provided for by this Code, a taxpayer's personal account may be used by taxpayers and tax authorities to exercise electronically their rights and obligations. Also, in cases stipulated by law, other interested parties can exchange electronic documents through this information resource.
The list of electronic documents sent by tax authorities to taxpayers and by taxpayers to tax authorities shall be posted on the official website of the State Tax Committee of the Republic of Uzbekistan. The personal account of each taxpayer shall be formed after his registration with the tax authorities.
The use of a taxpayer's personal account shall be carried out by the taxpayer on a voluntary basis. In this respect, the exchange of information between tax authorities and taxpaying legal entities and individual entrepreneurs, shall be performed exclusively through the taxpayer's personal account.
One taxpayer’s personal account shall be formed for a physical person regardless whether this person is an individual entrepreneur or not.
A physical person, which is registered as an individual entrepreneur, may use his personal taxpayer’s account to electronically exercise his rights and obligations as an individual entrepreneur.
The entrance to the personal account of the taxpayer shall be carried out through a unified identification system using an electronic digital signature.
An electronic digital signature shall be provided to a taxpayer by the Center for Public Services on consideration based on his application in the manner established by the State Tax Committee of the Republic of Uzbekistan.
After activation of the personal account of the taxpayer and until the suspension of its operation, the tax authorities shall send to the taxpayer all documents exclusively through his personal account. The taxpayer shall send documents to the tax authorities in a similar manner.
When the tax authorities send a document to the taxpayer through the taxpayer's personal account, the corresponding SMS message shall be sent to the mobile phone number indicated by taxpayer.
If the tax authority receives notice that the taxpayer's personal account is suspended or his electronic digital signature key certificate is terminated after sending an electronic document to the taxpayer's personal account, that document shall be sent to the taxpayer in hard copy within three days from the date of receipt of this notice.
A taxpayer's personal account shall be used by a foreign legal entity registered with the tax authority in accordance with parts seven and thirteen of Article 129 of this Code to receive documents from the tax authority and to submit to tax authority documents (information) and data in electronic form regarding the provision of services, specified in Article 282 of this Code.
Access to the taxpayer’s personal account shall be provided to foreign legal entities from the date of their registration with the tax authorities in the manner prescribed by part seven of Article 129 of this Code. When such a foreign legal entity is deregistered with a tax authority, access to the taxpayer's personal account shall be retained to obtain documents used by the tax authorities for exercising their powers in relations regulated by tax legislation.
Article 57. Agricultural Goods Producers
For the purposes of this Code, agricultural goods producers shall be understood to mean legal entities that simultaneously meet the following conditions:
which produce agricultural products and carry out their primary processing, provided that the share of income from the sale of agricultural products produced by them, including products of the primary processing thereof which have been produced by them from own-produced agricultural raw materials, accounts for not less than 80 percent of the total income of such a legal entity for the tax period;
which possess land plots when such land plots are necessary for the production of agricultural goods.
For the purposes of this Code, agricultural products shall include products obtained from biological resources (animals and plants):
1) agricultural and forest crop husbandry;
2) animal husbandry, poultry farming, beekeeping;
3) sericulture;
4) fish farming and aquaculture.
Agricultural products that have undergone industrial processing shall not be considered agricultural products for the purposes of this Code.
Article 58. Non-Commercial Organizations
For the purposes of this Code, a non-commercial organization shall be considered a legal entity which has been registered in the form established by legislation for a non-commercial organization, and which meets the following conditions:
has no purpose of deriving income;
does not distribute income or assets between participants (members).
Article 59. Legal Entities Operating in the Social Sphere
For the purposes of this Code, legal entities which operate in the social sphere shall include legal entities operating in the following areas:
1) medical services (except for cosmetology services) provided by medical organizations on the basis of the corresponding license. For the purpose of applying this paragraph, medical services shall include, in particular, medical care and sanitary services for:
a) diagnosis, prevention and treatment;
b) dental services, including dental prosthetics services;
2) educational services, including the organization of testing and exams;
3) science (including scientific research, use, including sale of scientific intellectual property by the author), carried out by subjects of scientific and (or) scientific and technical activities, which have been accredited by the authorized body in the field of science;
4) services in the field of physical culture and sports. Such services, in particular, shall include:
a) services for carrying out physical culture and sports training with training groups and teams on types of sports in different sports facilities, schools, health-improving clubs, as well as carrying out general physical training services;
b) services for holding sports competitions or holidays, sports and entertainment events, as well as the lease of sports facilities for the preparation and conduct of such events;
c) services for the provision of sports and technical equipment, exercise equipment, sports inventory, sports uniform;
5) services in the field of social protection and social security of children, the elderly and persons with disabilities.
The persons specified in part one of this Article shall be recognized as operating in the social sphere, provided that income from the relevant activities accounts for not less than 90 percent of their total annual income with taking into account the income in the form of assets received without consideration.
Legal entities operating in the social sphere shall not include those that derives income from the production and sale of excisable goods, as well as those engaged in the extraction of minerals.
Article 60. Other Concepts Used in this Code
For the purposes of this Code, the following concepts shall also be used:
close relatives of a physical person means his parents, blood and half brothers and sisters, spouse, children, including adopted children, grandfathers, grandmothers, grandchildren, as well as parents of the spouse;
rental (leasing) payment means the amount paid to the lessor (landlord) by the lessee (tenant) on the basis of the concluded lease (renting) agreement;
interest income of the lessor (landlord) means the difference between the amount of the rental (leasing) payment and the value of the object of financial lease (leasing);
cash registers mean cash registers which are equipped with fiscal memory, other devices and software and hardware systems that ensure the recording and storage of fiscal data in fiscal drives, generating fiscal documents and ensuring their transfer to tax authorities through the fiscal data operator, as well as printing fiscal documents on paper in accordance with the requirements established by tax legislation on the use of cash registers;
overpaid amount of tax (penalty, fine) means a positive difference between the amount of tax (penalty, fine) which has been paid and the amount actually payable. The overpaid amount of tax (penalty, fine) shall be determined as of the date of its calculation, taking into account the amounts previously credited and (or) returned to the taxpayer, as well as the amounts credited to the upcoming tax payments;
excessively recovered tax amount means an excessively paid amount of tax as a result of illegal actions of tax authorities;
admitted tax arrears means arrears for which the taxpayer has not filed a claim within ten calendar days from the date of receipt of the demand to pay off the tax arrears, or an arrear confirmed by a court decision;
erroneously paid amount of tax (penalty, fine) means the amount of tax (penalty, fine), during the payment of which an error was made that does not allow to unambiguously establish the person who paid this amount, and (or) the purpose of this payment. An erroneously paid amount shall be also recognized the amount received for the payment of a tax (penalty, fine), in respect of which the person who paid is not a taxpayer, or received into the budget different from the one to which it was payable;
bad debt means an arrears that cannot be repaid due to the termination of the obligation by a court decision or due to bankruptcy, liquidation, death of the debtor or the expiration of the limitation period.
Chapter 5. Consolidated Group of Taxpayers
Article 61. Consolidated Group of Taxpayers
A consolidated group of taxpayers shall be a voluntary association of taxpayers formed on the basis of an appropriate agreement according to the procedure and subject to the conditions which are laid down in this Code with a view to tax on profit being calculated and paid with reference to the aggregate financial result of the economic activities of those taxpayers (hereinafter referred to as “tax on profit for the consolidated group of taxpayers”).
A member of a consolidated group of taxpayers shall be a legal entity which is a party to a current agreement on the creation of a consolidated group of taxpayers and meets all the conditions provided for by this Code for members of such a group.
The responsible member of a consolidated group of taxpayers shall be recognized the member which is responsible in accordance with the agreement on the creation of a consolidated group of taxpayers, for the calculation and payment of tax on profit for the consolidated group of taxpayers.
In legal relations associated with the calculation and payment of the specified tax, the responsible member of the consolidated group of taxpayers shall exercise the same rights and bear the same obligations as the payers of tax on profit.
The document confirming the powers of the responsible member of the consolidated group of taxpayers shall be an agreement on the creation of a consolidated group of taxpayers, which has been concluded in accordance with this Code and the civil legislation of the Republic of Uzbekistan.
Article 62. Conditions for the Creation a Consolidated Group of Taxpayers
Legal entities of the Republic of Uzbekistan which meet all the conditions laid down in this Article have the right to create a consolidated group of taxpayers.
The conditions which must be satisfied by members of a consolidated group of taxpayers such as are provided for in this Article shall apply for the entire duration of the agreement on the creation of that group, except as otherwise provided by this Code.
A consolidated group of taxpayers may be created by legal entities on condition that one legal entity has a direct and (or) indirect participating interest in the charter (pooled) capital of the other legal entities and the size of such participating interest in each such legal entity is not less than 90 per cent. This condition must be met during the entire term of the agreement on the creation of the consolidated group of taxpayers.
The size of the participating interest of one legal entity in another legal entity shall be determined in the manner established by Article 38 of this Code.
A legal entity, which is a party to an agreement on the creation of a consolidated group of taxpayers, must satisfy all of the following conditions:
it is not in the process of reorganization or liquidation, unless otherwise provided by this Code;
bankruptcy (economic insolvency) proceedings should not be initiated against him in accordance with the legislation of the Republic of Uzbekistan;
the size of a person's net assets as calculated on the basis of financial statements as of the last accounting date before the date of submission of documents to the tax authority for the purpose of the registration of the agreement on the creation (alteration) of a consolidated group of taxpayers, exceeds the size of its authorized capital (pooled capital).
A new legal entity may be admitted to an existing consolidated group of taxpayers on condition that the legal entity being admitted satisfies the conditions laid down in part five of this Article.
All legal entities, which are members of a consolidated group of taxpayers, must, taken in the aggregate, satisfy the following conditions:
1) the aggregate amount of value added tax, excise tax, tax on profit and subsoil use tax paid during a calendar year is not less than one hundred billion soums;
2) the aggregate amount of receipts from the sale of goods and services, as well as other income shown in financial statements for the calendar year is not less than five hundred billion soums;
3) the aggregate amount of assets shown in financial statements as of the end of the calendar year is not less than one trillion soums;
4) apply the same tax rate for tax on profit.
All indicators provided for in part seven of this Article shall be calculated based on the results of the year preceding the year in which the documents are submitted to the tax authorities for the purpose of the registration of the agreement on the creation of a consolidated group of taxpayers.
The following legal entities may not be members of a consolidated group of taxpayers:
1) legal entities which are participants of special economic zones;
2) legal entities which apply special tax regimes;
3) banks, except where all other legal entities in the consolidated group are banks;
4) insurance organizations, except where all other legal entities in the consolidated group are insurance organizations;
5) professional participants in the securities market which are not banks, except where all other legal entities in the consolidated group are professional participants in the securities market which are not banks;
6) legal entities which are not recognized as taxpayers of tax on profit;
7) clearing organizations;
8) microcredit organizations.
A consolidated group of taxpayers may be created only on the condition that all legal entities that satisfy the requirements provided for in this Article become members of this consolidated group.
The composition of the members of a consolidated group of taxpayers may change only by admitting only members, which satisfy such requirements, or as a result of the mandatory exclusion from it of members who have ceased to meet such requirements. A consolidated group of taxpayers, which has been created in violation of this requirement or ceased to comply with it, shall be deemed to have been created unlawfully or terminated from the date of violation of this requirement.
A consolidated group of taxpayers shall be created for a period of not less than two calendar years.
Article 63. Agreement on the Creation of a Consolidated Group of Taxpayers
In accordance with the agreement on the creation of a consolidated group of taxpayers, legal entities which satisfy the conditions established by Article 62 of this Code shall unite on a voluntary basis with a view to tax on profit being calculated and paid for the consolidated group of taxpayers in accordance with the procedure and subject to the conditions established by this Code.
The creation of a consolidated group of taxpayers shall be carried out without creating a legal entity.
The agreement on the creation of a consolidated group of taxpayers must contain the following:
1) the subject of the agreement on the creation of a consolidated group of taxpayers;
2) the list and details of legal entities that are members of the consolidated group of taxpayers;
3) the name of the legal entity which is to act as the responsible member of the consolidated group of taxpayers;
4) a list of powers that the members of the consolidated group of taxpayers transfer to the responsible member of this group in accordance with this Chapter;
5) the procedure and time limits for the fulfillment of obligations and the exercise of rights by the responsible member and other members of the consolidated group of taxpayers which are not provided for by this Code, and liability for failure to fulfill those obligations;
6) the period measured in calendar years for which a consolidated group of taxpayers is created, if it is created for a definite time period, or a reference to the absence of a definite time period for which the group is created;
7) indicators required for the determination of the tax base and the payment of tax on profit for each member of the consolidated group of taxpayers, with account taken of the special considerations laid down in the Special Part of this Code. In this respect, the chosen indicators are not subject to change during the entire term of the agreement on the creation of a consolidated group of taxpayers.
Legal relations arising from an agreement on the creation of a consolidated group of taxpayers shall be governed by tax legislation, and in the part not covered by tax legislation, shall be governed by civil legislation.
An agreement on the creation of a consolidated group of taxpayers and its provisions, if they are at variance with the legislation, may be invalidated by the court.
An agreement on the creation of a consolidated group of taxpayers is valid until the earliest of the following dates:
1) the date of termination of the agreement;
2) the date of rescission of the contract.
An agreement on the creation of a consolidated group of taxpayers must be registered with the tax authority at the location of the legal entity acting as a responsible member of the consolidated group of taxpayers.
Where the responsible member of the consolidated group of taxpayers is classified as a major taxpayer, the agreement on the creation of the consolidated group of taxpayers must be registered with the tax authority at the place of registration of that responsible member of the consolidated group that is registered as a major taxpayer.
Article 64. Registration of a Consolidated Group of Taxpayers
The responsible member of this group shall submit the following documents to the tax authority at the place of registration for registering the agreement on the creation of a consolidated group of taxpayers:
1) an application for registration of the agreement on the creation of a consolidated group of taxpayers, signed by the authorized officers of all members of the consolidated group which is to be created;
2) two copies of the agreement on the creation of a consolidated group of taxpayers;
3) documents confirming compliance with the conditions provided for in parts three, fifth, seventh and ninth of Article 62 of this Code, certified by the responsible member of the consolidated group of taxpayers. Such documents shall include, in particular, copies of payment orders for the payment of taxes specified in paragraph 1 of part seven of Article 62 of this Code (copies of tax authority decisions allowing credits to be made for these taxes), balance sheets, statements of financial results for the preceding calendar year for each of the group members;
4) documents confirming the powers of the persons who signed the agreement on the creation of a consolidated group of taxpayers.
The documents referred to in part one of this Article shall be submitted to the tax authority no later than October 30 of the year preceding the tax period, commencing from which tax on profit is to be calculated and paid for the consolidated group of taxpayers.
The director (deputy director) of the tax authority shall, within fifteen days from the date of submission to the tax authority of the documents specified in part one of this Article, register the agreement on the creation of a consolidated group of taxpayers or adopt a reasoned decision to refuse to register that agreement. In the event of the discovery of violations which could be remedied within the period established by this part, the tax authority shall be obliged to notify the responsible member of the consolidated group of taxpayers of those violations. The responsible member of the consolidated group of taxpayers shall have the right to remedy the violations identified before the expiry of the time period established by this part.
If the conditions laid down in Article 62, part three of Article 63 of this Code and parts one and two of this Article are satisfied, the tax authority shall be obliged to register an agreement on the creation of a consolidated group of taxpayers.
Within five days from the date of registration of the agreement, the tax authority shall be obliged to issue one copy of the agreement marked as registered to the responsible member of the consolidated group of taxpayers in person against receipt or by any other means which indicates the date of receipt.
Within the same time frame, information on the registration of an agreement on the creation of a consolidated group of taxpayers shall be sent by the tax authority to the tax authorities for the locations of legal entities that are members of the consolidated group of taxpayers.
A consolidated group of taxpayers shall be considered to have been created from the first day of the calendar year following the year in which the tax authority registered the agreement on the creation of this group.
A tax authority may refuse to register an agreement on the creation of a consolidated group of taxpayers only if at least one of the following circumstances exists:
1) the conditions for creating a consolidated group of taxpayers laid down in Article 62 of this Code are not satisfied;
2) the agreement on the creation of a consolidated group of taxpayers does not meet the requirements set forth in part three of Article 63 of this Code;
3) failure to submit or incomplete submission to the authorized tax authority of documents for registration of an agreement on the creation of a consolidated group of taxpayers, provided for in part one of this Article, or violation of the deadline for submission of these documents, provided for in part two of this Article;
4) if documents have been signed by persons not authorized to do so.
In the event a tax authority refuses to register an agreement on the creation of a consolidated group of taxpayers, the responsible member shall have the right to re-submit documents for the registration of that agreement after the deficiencies have been eliminated.
A copy of the decision to refuse to register an agreement on the creation of a consolidated group of taxpayers shall be transferred by the tax authority to the authorized representative of the person specified in the agreement as a responsible member of the consolidated group of taxpayers within five days from the date of acceptance, in person against receipt or by any other means which indicates the date of receipt.
A refusal to register an agreement on the creation of a consolidated group of taxpayers may be appealed by a person specified in such an agreement as a responsible member of the consolidated group of taxpayers in the manner and within the time limits which are established by this Code for appealing against acts, actions or inaction of tax authorities and their officials.
In the event that the petition (appeal) is satisfied, the tax authority shall be obliged to register this agreement, and the consolidated group of taxpayers shall be deemed to be created from the first day of the calendar year following the year in which the group should have been registered in accordance with part four of this Article. This provision shall apply if there are no other obstacles established by this Chapter for the registration of an agreement on the creation of a consolidated group of taxpayers.
Article 65. Amendment and Extension of an Agreement on the Creation of a Consolidated Group of Taxpayers
An agreement on the creation of a consolidated group of taxpayers may be amended in accordance with the procedure and subject to the conditions laid down in this Article.
The parties to the agreement on the creation of a consolidated group of taxpayers shall be obliged to amend that agreement where:
1) a decision is made to liquidate one or more legal entities that are members of the consolidated group of taxpayers;
2) a decision is made on reorganization (by means of a merger, acquisition, spin-off or demerger) of one or more legal entities that are members of a consolidated group of taxpayers;
3) one or several legal entities join a consolidated group of taxpayers;
4) a legal entity withdraws from the consolidated group of taxpayers in cases where this legal entity ceases to satisfy the conditions provided for in Article 62 of this Code;
5) a decision is made to extend the term of the agreement on the creation of a consolidated group of taxpayers.
In the event that a member of a consolidated group of taxpayers is re-organized, the reorganized legal entities shall be subject to mandatory inclusion in this consolidated group if they meet the conditions provided for in Article 62 of this Code.
An agreement to amend the agreement on the creation of a consolidated group of taxpayers shall be adopted by all members of such a group, including newly admitted members and excluding members which are withdrawing from the group.
An agreement on amending the agreement on the creation of a consolidated group of taxpayers shall be submitted for registration to the tax authority within the following time limits:
1) not later than one month before the expiry of the term of the agreement on the creation of a consolidated group of taxpayers when a decision is adopted to extend the term of that agreement;
2) within one month from the date on which circumstances arise which require the agreement on the creation of a consolidated group of taxpayers to be amended — in other cases.
In order for an agreement on the amendment of an agreement on the creation of a consolidated group of taxpayers to be registered, the responsible member shall submit the following documents to the tax authority:
1) a notification of amendments to the agreement;
2) two copies of the agreement on amendment of the agreement, including the extension of its term, signed by authorized persons of the members of the consolidated group of taxpayers;
3) documents confirming the powers of the persons who signed the agreement on amending the agreement;
4) documents confirming the compliance with the conditions laid down in Article 62 of this Code, with account taken of the amendments made to the agreement.
The tax authority shall be obliged to register an agreement on amendments to the agreement on the creation of a consolidated group of taxpayers within ten days from the date of submission of the documents referred to in part six of this Article, and to issue one copy of the amendments, marked as registered, to an authorized representative of the responsible member of that group.
The registration of an agreement to amend an agreement on the creation of a consolidated group of taxpayers shall be refused on the following grounds:
1) the conditions laid down in Article 62 of this Code are not satisfied with respect to at least one member of the consolidated group of taxpayers;
2) documents have been signed by persons not authorized to do so;
3) failure to meet the time limit for the submission of documents for the amendment of that agreement;
4) non-submission (incomplete submission) of documents provided for in part six of this Article.
The agreement on amendments to the agreement on the creation of a consolidated group of taxpayers shall enter into force in the following order:
1) amendments to the agreement on the creation of a consolidated group of taxpayers which are connected with the admission of new legal entities to the group (except where the group members are reorganized) shall enter into force not earlier than the first date of the calendar year following the year in which the relevant amendments to the agreement were registered by the tax authority;
2) amendments to the agreement on the creation of a consolidated group of taxpayers which are connected with the withdrawal of members from the group shall enter into force on the first day of the calendar year following the year in which the circumstances arose for making the appropriate amendments to the agreement (unless otherwise provided by paragraph 3 of this part);
3) in other cases, amendments to the agreement on the creation of a consolidated group of taxpayers shall enter into force from the date indicated by its parties, but not earlier than the date of registration of the relevant amendments by the tax authority.
Failure to make compulsory amendments to the agreement on the creation of a consolidated group of taxpayers shall result in the agreement being terminated from the first day of the calendar year in which the corresponding compulsory amendments to the agreement should have entered into force.
Article 66. Rights and Obligations of Members of a Consolidated Group of Taxpayers
Members of a consolidated group of taxpayers have the right to:
1) receive from the responsible member of the consolidated group copies of reports, decisions, demands, reconciliation statements and other documents provided to the responsible member by a tax authority in connection with the operation of the consolidated group;
2) file appeal with a higher tax authority or with court against acts of tax authorities, actions (inaction) of their officials, with account taken of the special considerations laid down in this Code;
3) perform voluntarily the obligation of the responsible member of the consolidated group of taxpayers to pay tax on profit for the consolidated group of taxpayers;
4) be present during tax audits which are conducted in connection with the calculation and payment of tax on profit for the consolidated group of taxpayers at the site of the member in question, as well as to participate in the process of examination of the materials relating to such tax audits.
A member of a consolidated group of taxpayers, which meets the conditions provided for in Article 62 of this Code for members of such a group, shall not be entitled to terminate voluntarily its membership in the group during the term of the agreement on the creation of a consolidated group of taxpayers.
Members of a consolidated group of taxpayers shall be obliged to:
1) carry out all actions and submit all documents as are needed for the registration of the agreement on the creation of a consolidated group of taxpayers and of amendments thereto;
2) submit (including in electronic form) to the responsible member of the consolidated group of taxpayers the data necessary for him to perform his obligations and exercise the rights of a taxpayer of tax on profit for the consolidated group of taxpayers. Such data shall include calculations of the tax base for tax on profit in relation to income received and expenses incurred, data from accounting registers and other documents;
3) submit to the tax authorities, in accordance with the procedure established by this Code, the documents and other information requested when the tax authority carries out tax control measures in connection with the operation of the consolidated group of taxpayers;
4) fulfill the obligation to pay tax on profit (advance and current payments) for the consolidated group of taxpayers, corresponding penalties and fines, in the manner prescribed by Section III of this Code, in the event that those obligations are not fulfilled or fulfilled improperly by the responsible member of this group;
5) in the event that conditions provided for in Article 62 of this Code are not satisfied, immediately notify the responsible member of the consolidated group of taxpayers and the tax authority in which the agreement on the creation of the specified group is registered;
6) maintain tax records for taxation purposes in the manner prescribed by Section II of this Code.
In the event that the responsible member fails to fulfill or improperly fulfills the tax obligation in respect to tax on profit for the consolidated group of taxpayers, the member of this group which fulfilled those tax obligation shall acquire a right of recourse to the extent of the amounts and according to the procedure which are provided for by civil legislation and the agreement on the creation of the specified group. This provision also applies to cases where, instead of a responsible member of a consolidated group of taxpayers, several members of this consolidated group fulfill its tax liability (including the payment of advance and current payments).
When a legal entity withdraws from a consolidated group of taxpayers, it shall be obliged to:
1) make amendments to tax records from the beginning of the tax period for tax on profit in which it has withdrawn from the consolidated group, with a view to complying with the requirements of Section II of this Code relating to the tax records of the taxpayer which is not a member of a consolidated taxpayer group;
2) calculate and pay tax on profit on the basis of profit actually earned from the beginning of the tax period in which this legal entity has withdrawn from the consolidated group of taxpayers. Taking into account the amounts of tax on income actually paid by the responsible member of the consolidated group of taxpayers for this group, the specified requirement shall apply to the relevant reporting and tax periods and shall include the obligation to pay advance and current payments of tax on profit within the time limit established by Section XII of this Code;
3) submit to the tax authority at the place of its registration tax reporting on tax on profit within the time limits provided for by Section XII of this Code.
The withdrawal of a legal entity from the consolidated group of taxpayers shall not release it from the fulfillment of the tax obligation in respect of tax on profit for the consolidated group of taxpayers that arose during the period when this legal entity was a member of this group.
This provision shall apply irrespective of whether this legal entity was aware of the failure to fulfill tax obligations or violation of tax legislation prior to its withdrawal from the consolidated group of taxpayers.
Article 67. Rights and Obligations of the Responsible Member of the Consolidated Group of Taxpayers
In addition to the rights and obligations provided for in Article 66 of this Code, the responsible member of the consolidated group of taxpayers shall exercise the rights and bear the obligations established by this Article.
The responsible member of the consolidated group of taxpayers, unless otherwise provided by this Code, shall have the rights and bear the obligations laid down in this Code for payers of tax on profit in relations, which arise in connection with the operation of the consolidated group of taxpayers.
The responsible member of the consolidated group of taxpayers shall have the right to:
1) present to tax authorities and their officials any explanations relating to the calculation and payment of tax on profit (advance and current payments) for the consolidated group of taxpayers;
2) be present during on-site tax inspections and tax audits which are conducted in connection with the payment of tax on profit for a consolidated group of taxpayers, at the location of any member of such a group and its autonomous subdivisions thereof;
3) receive copies of tax audits reports and decisions of the tax authority which are issued on the basis of the tax audits results conducted in connection with the payment of tax on profit for a consolidated group of taxpayers. And receive demands for the payment of tax on profit (advance payments) and other documents relevant to the operation of the consolidated group of taxpayers;
4) participate in the process of the examination by the director (deputy director) of a tax authority of materials relating to tax audits and additional tax control measures conducted in connection with the payment of tax on profit for the consolidated group of taxpayers, in the cases and according to the procedure which are laid down in this Code;
5) receive from the tax authorities information concerning members of the consolidated group of taxpayers, which constitutes tax secrets;
6) lodge appeals, in the prescribed manner, against acts of tax authorities and other authorized bodies, actions (inaction) of their officials, including in the interests of individual members of a consolidated group of taxpayers, in connection with the fulfillment of their obligations (exercise of rights) with respect to the calculation of tax on profit for a consolidated group of taxpayers;
7) submit an application to a tax authority for the crediting (refund) of overpaid tax on profit for the consolidated group of taxpayers.
The responsible member of the consolidated group of taxpayers shall be obliged:
1) to submit an agreement on the creation of a consolidated group of taxpayers, an agreement to amend that agreement, a decision or notification concerning the cessation of operation of the consolidated group of taxpayers to the tax authority in the manner and within the time limits which are provided for by this Code for the purpose of their registration;
2) to maintain tax records, calculate and pay tax on profit (advance and current payments) for the consolidated group of taxpayers in the manner prescribed by Section XII of this Code;
3) to present to the tax authority a tax report on tax on profit for a consolidated group of taxpayers, as well as documents received from other members of the group, in the manner and within the time limit which are established by this Code;
4) in the event of the cessation of operation of the consolidated group of taxpayers, to present to its members such information as is needed for the calculation and payment of tax on profit (advance and current payments) and the preparation of tax reports for the relevant reporting and tax periods, in the manner and time limits provided for by the agreement on the creation of a consolidated group of taxpayers. When one or several legal entities withdraw from the consolidated group of taxpayers, such information shall be submitted to other members of this consolidated group and legal entities that have withdrawn in a similar manner;
5) to pay arrears arising in connection with the fulfillment of obligations of a taxpayer of tax on profit for a consolidated group of taxpayers;
6) to notify the members of the consolidated group of taxpayers of the receipt of a demand for the payment of taxes within five days from the date of receiving that demand;
7) to request from the members of the consolidated group of taxpayers documents, explanations and other information as may be necessary for the tax authorities for the conduct of tax control measures and the fulfillment of the obligations of the payer of tax on profit for the consolidated group of taxpayers;
8) to present primary documents, tax ledgers and other information related to the consolidated group of taxpayers, which is requested in the course of tax control measures by the tax authority, which registered the agreement on the creation of this consolidated group.
When one or more legal entities withdraw from the consolidated group of taxpayers, the responsible member of this consolidated group shall be obliged to:
1) make the appropriate amendments in tax reports from the beginning of the tax period for tax on profit for the consolidated group of taxpayers in which the legal entities have withdrawn from the consolidated group ;
2) recalculate the advance and current payments for tax on profit for the past reporting periods and submit to the tax authority at the place of registration the revised tax reporting on tax on profit for the consolidated group of taxpayers.
The responsible member of the consolidated group of taxpayers shall, within the powers conferred on it, have other rights and bear other obligations of a taxpayer which are provided for in this Code.
Article 68. Cessation of Operation of a Consolidated Group of Taxpayers
A consolidated group of taxpayers shall cease to operate if one or more of the following circumstances exists:
1) the expiry of the agreement on the creation of a consolidated group of taxpayers;
2) the rescission of the agreement on the creation of a consolidated group of taxpayers by agreement of the parties;
3) the entry into legal force of a court decision invalidating the agreement on the creation of a consolidated group of taxpayers;
4) the failure to submit to the tax authority within the prescribed time limits an agreement on the amendment of the agreement on the creation of a consolidated group of taxpayers in connection with a change in the composition of its members;
5) the reorganization (other than re-organization in the form of conversion of form) or liquidation of the responsible member of the consolidated group of taxpayers;
6) the initiation of insolvency (bankruptcy) proceedings against the responsible member of the consolidated group of taxpayers in accordance with the legislation;
7) non-compliance by the responsible member of the consolidated group of taxpayers with the conditions provided for in Article 62 of this Code;
8) failure to make compulsory amendments to the agreement on the creation of a consolidated group of taxpayers.
The acquisition or sale of shares (participating interests) in the authorized capital (charter) of a legal entity that is a member of a consolidated group of taxpayers, where this does not result in non-compliance with the conditions laid down in part three of Article 62 of this Code, shall not bring about the cessation of operation of the consolidated group of taxpayers.
Should circumstances such as are referred to in clause 2 of part one of this Article arise, the responsible member of the consolidated group of taxpayers shall be obliged to send the decision concerning the recession of operation of the consolidated group, signed by authorized representatives of all legal entities — members of the group, to the tax authority which registered the agreement on its creation. Such a decision shall be sent to the specified tax authority no later than five days from the date of its adoption.
Should circumstances such as are referred to in paragraphs 1, 3 — 7 of the first part of this Article arise, the responsible member of the consolidated group of taxpayers shall be obliged to send to the tax authority which registered the agreement on its creation, a notification indicating the date on which those circumstances arose. Such a notice shall be prepared in arbitrary form and sent to the specified tax authority no later than five days from the date of occurrence of the relevant circumstance.
Within five days from the date of receipt of the documents specified in parts three or four of this Article, information on the cessation of operation of the consolidated group of taxpayers shall be sent by the tax authority to the tax authorities for the locations of legal entities that are members of the consolidated group of taxpayers.
A consolidated group of taxpayers shall cease to operate from the first day of the calendar year following the year in which the circumstances referred to in part one of this Article arose, unless otherwise provided by this Code.
Where the ground provided for in paragraph 3 of part one of this Article arises, a consolidated group of taxpayers shall cease to operate from the first day of the reporting period for tax on profit, in which the court decision entered into force.
Where the ground provided for in paragraph 4 of part one of this Article arises, a consolidated group of taxpayers shall cease to operate from the first day of the reporting period for tax on profit, in which the condition was violated which was established by Article 65 of this Code.
Where the ground provided for in clauses 5, 6 or 7 of part one of this Article arises, the consolidated group of taxpayers shall cease to operate from the first day of the calendar year in which the relevant circumstance arose.
Chapter 6. Elements of Taxes
Article 69. Elements of Taxes
A tax shall be considered to have been established only when all elements of this tax have been defined in tax legislation.
These elements of tax shall include:
1) object of taxation;
2) tax base;
3) rate;
4) tax period;
5) procedure for the calculation of tax;
6) procedure for the submission of tax reporting;
7) procedure for the payment of tax.
When establishing a tax, tax exemptions and the grounds on which they may be applied may be stipulated.
Article 70. Object of Taxation
An object of taxation shall be assets, action, result of action or other circumstance possessing value, quantitative or physical characteristics, the existence of which is specified by tax legislation as giving a rise to a tax obligation of a taxpayer.
Each tax shall have its own object of taxation, which shall be determined in accordance with the Special Part of this Code.
Article 71. Tax Base
A tax base shall be the value, physical or other characteristics of the object of taxation.
For each tax, the tax base and the procedure for its determination shall be established by this Code.
Article 72. Tax Rate
The tax rate shall represent the size of tax charges per unit of measurement of the tax base in percentage or absolute amount.
Tax rates shall be established by this Code, unless otherwise provided by part three of this Article.
The rates of excise tax, land tax, tax for the use of water resources and tax on personal income in a fixed amount shall be established by the Law on the State Budget of the Republic of Uzbekistan. Excise tax rates may be revised by decisions of the President of the Republic of Uzbekistan throughout the year, based on the dynamics of prices and sales of goods.
Article 73. Tax Period
A tax period shall be understood as the calendar year or another period of time, upon the expiration of which the tax base is determined and the amount of tax payable is calculated.
The tax period may consist of several reporting periods.
With regard to taxes for which the tax period is a calendar year, the provisions of this Article shall apply subject to the special considerations provided for in parts four to ten of this Article.
Where a legal entity was established after the beginning of the calendar year, but before December 1 of this year, the first tax period for it shall be the period from the date on which a legal entity was established to the end of this year.
Where a legal entity was established in the period from December 1 to December 31, the first tax period for it shall be the time period from the date on which it was established to the end of the calendar year following the year of establishment. In this event, the day of its state registration shall be recognized as the day of establishment of a legal entity.
The rules laid down in parts four and five of this Article shall not apply to the determination of the first tax period for tax on profit for foreign legal entities which have independently declared themselves as tax residents of the Republic of Uzbekistan in accordance with the procedure established by this Code, and whose activities on the date of that declaration did not give rise to a permanent establishment in the Republic of Uzbekistan. Where a legal entity has been liquidated (reorganized) before the end of the calendar year, the last tax period for it shall be the time period from the beginning of this year to the date of completion of the liquidation (reorganization).
Where a legal entity that was established after the beginning of a calendar year is liquidated (reorganized) before the end of this year, the tax period for it shall be the period from the date of its establishment to the day of liquidation (reorganization).
Where a legal entity was established in the period from December 1 to December 31 of the current calendar year, and liquidated (reorganized) before the end of the calendar year following the year of establishment, the tax period for it shall be the period from the date of its establishment to the day of liquidation (reorganization).
The rules stipulated by part nine of this Article shall not apply to legal entities from which one or more legal entities are separated or to which joined.
In the case a foreign legal entity, whose activities did not give rise to a permanent establishment in the Republic of Uzbekistan, and which independently declared itself as a tax resident of the Republic of Uzbekistan, the first tax period for tax on profit of it shall be determined in the following order:
1) if the foreign legal entity declared itself as tax resident of the Republic of Uzbekistan from January 1 of the calendar year in which it submitted the notice of self-declaration as a tax resident of the Republic of Uzbekistan, the first tax period for it shall be the calendar year in which the specified notice was submitted;
2) if the foreign legal entity declared itself as a tax resident of the Republic of Uzbekistan from the date of submission of the relevant notice, the first tax period for it shall be the period from the date of submission of the specified notice to the tax authority until the end of the calendar year in which it was submitted. At the same time, if the notice of a foreign legal entity for declaring itself as a tax resident of the Republic of Uzbekistan was submitted in the period from December 1 to December 31, the first tax period for it shall be the period from the date of submission of this notice to the tax authority until the end of the calendar year following the year, in which that notice was submitted to the tax authority.
Article 74. Procedure for the Calculation and Payment of Taxes and Levies
The procedure for the calculation of taxes shall determine the rules for calculating the amount of tax payable for a tax period on the basis of the tax base, the tax rate, as well as tax exemptions, if any should be applied.
The tax shall be calculated by the taxpayer independently.
In the cases provided for by this Code, this obligation may be placed upon a tax authority or a tax agent.
Taxpayers and tax agents shall pay taxes and levies on their own, unless otherwise provided for in this Code.
The payment of tax shall me made by the entire amount of the tax or in any other order provided by this Code.
If the tax period for tax consists of several reporting periods, current payments shall be paid based on the results of each of them. The obligation to pay current payments shall equal to the obligation to pay tax.
Advance payments may be provided for certain types of taxes. The obligation to pay advance payments shall equal to the obligation to pay tax.
Legal entities and individual entrepreneurs shall pay taxes through banks in non-cash form.
The Special Part of this Code shall determine the procedure for the calculation and time limits of payments by type of taxes and levies.
Article 75. Tax Exemptions
Tax exemptions shall be understood to mean the advantages provided to certain categories of taxpayers as compared to other taxpayers, including the possibility of not paying tax or paying them in a smaller amount.
Provision of a deferral (installment plan) for paying taxes to a taxpayer shall not be deemed as tax exemption.
Tax exemption shall be provided by this Code, unless otherwise provided by part five of this Article.
Tax exemptions cannot be individualized.
Tax exemptions for certain taxes, with the exception of value added tax, excise tax in the production and (or) sale of excisable products and tax for the use of subsoil, may be provided by decisions of the President of the Republic of Uzbekistan only in the form of a reduction in the established tax rate with taking into account the provisions of part six of this Article, but not more than 50 percent and for a period not exceeding three years.
Unless otherwise provided by this Code, taxpayers shall have the right to use tax exemptions from the moment the relevant legal grounds arise during the entire period of their validity, or refuse to use a tax exemption or suspend its use for one or more tax periods, except for the sale of goods (services) that are exempt from value added tax.
Tax exemptions may be provided on the condition that the funds released from taxation should be directed for specific purposes. In case of use of such funds for other purposes, the amount of misuse shall be subject to recovery to the budget with the accrual of a penalty in accordance with the established procedure. The amount of funds released in connection with the provision of tax exemptions and not used during the period of their validity may be used for the purposes that were determined when the exemptions had been granted, within a year after the expiration of the granted exemptions. In this respect, the funds which are not used within the specified period shall be subject to transfer to the budget.
Exemptions for value added tax, including when transporting (importing) goods into the territory of the Republic of Uzbekistan, cannot be provided with the condition that the funds released from taxation to be directed for specific purposes.
The Central Bank of the Republic of Uzbekistan, its Main Departments in the Republic of Karakalpakstan, regions and the city of Tashkent, as well as institutions of the Central Bank of the Republic of Uzbekistan shall be exempt from the payment of taxes provided for by this Code, with the exception of social tax and value added tax paid when transporting (importing) goods to the territory of the Republic of Uzbekistan.
SECTION II. TAX ACCOUNTING AND TAX REPORTING
Chapter 7. Tax Accounting
Article 76. Accounting for Tax Purposes and Accounting Documentation
Accounting for tax purposes shall be understood to mean the maintenance by a taxpayer or tax agent of accounting documentation in accordance with the requirements of this Code in order to summarize and systematize information about object of taxation and (or ) objects associated with taxation, as well as for the calculation of taxes, levies and development of tax reporting.
Accounting documentation shall be the primary documents, accounting registers and other documents that serve as the basis for the determination of objects of taxation and objects associated with taxation, as well as for the calculation of taxes and levies.
Unless otherwise established by part four of this Article, accounting for tax purposes shall be based on accounting data. The procedure for maintaining accounting records and accounting documentation shall be established by the legislation on Accounting.
Persons, which are not obliged to maintain accounting records in accordance with the legislation on accounting, shall organize and maintain accounting for tax purposes in accordance with this Chapter.
Article 77. Accounting Policy for Taxation Purposes
The taxpayer shall determine accounting policy for taxation purposes independently. At the same time, the accounting policy shall be approved in an arbitrary form and it must reflect:
1) the forms and procedure for compiling tax registers developed by the taxpayer or tax agent independently, unless otherwise provided by tax legislation;
2) officials responsible for its compliance;
3) the procedure for maintaining separate accounting for tax purposes in cases where the obligation to maintain such accounting is provided for by this Code;
4) the methods chosen by the taxpayer for attributing costs to expenses for the purpose of calculating tax on profit, as well as attributing to the offset of value added tax;
5) the policy for determining hedged risks, hedged items and the hedging instruments used in relation to them, the methodology for assessing the degree of hedging effectiveness in the event of hedging transactions, as well as other financial risks;
6) norms (methods of accrual) of depreciation for each group and subgroup of assets.
Amending and (or) making additions to accounting policies for tax purposes shall be carried out by the taxpayer in one of the following ways:
1) by approval of a new accounting policy or its new Section, developed in accordance with the legislation on accounting;
2) making amendments and (or) additions to the current accounting policy or to a Section of the current accounting policy, developed in accordance with the legislation on accounting.
The methods for accounting for tax purposes, which have been chosen by the taxpayer when forming the accounting policy, shall be applied from January 1 of the year following the year when this accounting policy was approved.
A newly established legal entity or a permanent establishment of a foreign legal entity shall decide on ways to maintain accounting for tax purposes during its first reporting period after establishment.
An accounting policy for tax purposes shall not change during the calendar year. Alterations in the taxpayer’s accounting policy shall be allowed in the event of amendments in tax legislation or in taxation conditions and only to the extent that is due to these amendments.
Article 78. Maintaining Records for Tax purposes
Unless otherwise provided by this Code, a taxpayer or tax agent shall maintain records for tax purposes in national currency on an accrual basis.
Article 79. Requirements for the Preparation and Storage of Accounting Documentation
Accounting documentation shall be drawn up in paper and (or) electronic forms and shall be stored until the expiration of the statute of limitations for the tax obligation established by Article 88 of this Code.
In the event of reorganization of a taxpayer, the obligation to maintain the accounting records of the reorganized entity shall be assigned to his successor (s).
Upon liquidation of a legal entity, the accounting documentation shall be transferred to the appropriate state archive in the manner prescribed by legislation.
Article 80. Separate Accounting and Rules for its Maintenance
Taxpayers, which simultaneously carry out activities for which this Code provides for a different taxation procedure, shall be obliged to maintain separate accounting of objects of taxation and objects that are related to taxation.
Separate accounting of objects of taxation and objects that are related to taxation shall be maintained by taxpayers on the basis of accounting data.
All income and expenses attributed to a certain type of activity must be confirmed by appropriate accounting documentation.
Separate accounting of objects of taxation and objects that are related to taxation can be carried out by the proportional method or by the direct accounting method.
When applying the proportional accounting method, income, expenses and other objects of taxation and objects that are related to taxation shall be attributed to certain types of activities in proportion to the share of proceeds from sales for these types of activities in the total amount of sales proceeds, excluding value added tax and excise tax.
When applying the direct accounting method, income, expenses and other objects of taxation and objects that are related to taxation shall be attributed to the type of activity with which they are associated. At the same time, income, expenses and other objects of taxation or objects related to taxation, which cannot be attributed to only one specific type of activity, shall relate to all types of activities carried out with using the proportional accounting method.
Taxpayers which are receiving earmarked funds shall be obliged to maintain separate records of income (expenses) received (incurred) in the framework of the use of these earmarked funds.
At the end of the tax period, the taxpayers shall submit to the tax authorities at the place of their registration a report on the use of the earmarked funds, excluding the budgetary organizations. The forms and procedure for submitting reports on the use of earmarked funds shall be approved by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
Chapter 8. Tax Reporting
Article 81. Preparation of Tax Reporting
Tax reporting shall be understood to be documents of a taxpayer, which include calculations and tax declarations for each type of tax and income paid, as well as annexes to calculations and tax declarations that serve as the basis for determining tax obligations of taxpayers and tax agents.
Tax reporting shall be prepared according to the forms approved by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
Tax reporting shall be submitted to the tax authorities only for those taxes in respect of which a person is recognized as a taxpayer.
The responsibility for the accuracy of the data indicated in the tax reporting shall rest with the taxpayer or tax agent.
Article 82. Procedure for Submitting Tax Reporting
Tax reporting shall be submitted to the tax authority for the place of registration of the taxpayer in the prescribed form on paper or in electronic form together with documents that must be attached to tax reporting in accordance with this Code.
A taxpayer shall have the right to submit documents that must be attached to tax reporting in accordance with this Code, in electronic form.
Taxpaying legal entities and individual entrepreneurs shall submit tax reporting to the tax authority for the place of their registration according to the established forms as an electronic document.
Major taxpayers shall submit tax reporting to the Interregional State Tax Inspectorate for Major Taxpayers irrespective of location.
The provisions of parts three and four of this Article shall not apply to the submission of information classified as state secrets.
Tax reporting forms shall be provided free of charge by the tax authorities.
In the cases provided for by this Code, the taxpayer may submit tax reporting to the tax authority in person or through a representative, or send by mail with a list of attachments.
The organization of tax consultants shall have the right to submit tax reporting in the form of an electronic document on behalf of the taxpayer through the taxpayer's personal account.
The tax authority shall not have the right to refuse to accept tax reporting which the taxpayer submits in the established form.
At the request of the taxpayer, upon receipt of tax reporting on paper, the tax authority shall be obliged to put on the copy of tax reporting a mark that it is accepted and the date of receipt.
Tax reporting shall be submitted with an indication of the taxpayer’s identification number, unless otherwise provided by this Code.
The taxpayer and his authorized representative shall sign the tax reporting and thereby confirm the accuracy and completeness of the information specified therein.
Where an authorized representative of the taxpayer confirms the accuracy and completeness of the information specified in the tax reporting, a corresponding note on this shall be made in the tax reporting. In this case, a copy of the document, which confirms the authority of this representative to sign the tax reporting, shall be attached to the tax reporting.
When submitting tax reporting in electronic form, a copy of the document, which confirms the authority of the representative to sign tax reporting, can be submitted in electronic form via telecommunication channels.
Tax reporting shall be submitted within the time limits established by tax legislation.
The rules provided for by this Article shall also apply to tax agents and other persons which are charged with the obligation to submit tax reporting in accordance with the Special Part of this Code.
Article 83. Amendments to Tax Reporting
A taxpayer which discovered in the previously submitted tax reporting inaccurate or incomplete information and (or) errors that led to an understatement (change) of the calculated amount of tax shall be obliged to make the necessary corrections to these tax reporting and submit to the tax authority updated tax reporting.
Where the circumstances specified in the first part of this Article did not lead to an underestimation of the calculated tax amount, the taxpayer shall have the right to make the necessary corrections to the previously submitted tax reporting and submit the updated tax reporting to the tax authority. At the same time, a corrected tax reporting which has been submitted after the expiry of the established time limit for their submission shall not be considered as submitted out of time.
If the updated tax reporting is submitted to the tax authority before the expiry of the time limit for the submission of tax reporting, then the tax reporting shall be considered as submitted on the day the updated one is submitted.
If the updated tax reporting is submitted to the tax authority after the expiration of the time limit for tax payment, the taxpayer shall be released from liability provided that the following conditions are satisfied:
1) the updated tax reporting is submitted before the moment when he learned that the tax authority discovered the circumstances that led to the understatement (change) of the calculated tax amount, or before a tax audit was appointed;
2) prior to the submission of the updated tax reporting, the taxpayer has paid the missing amount of tax and the corresponding penalty.
The updated tax reporting shall be submitted to the tax authority in the manner established for the submission of tax reporting, with taking into account the special considerations provided for in this Article.
The rules provided for in this Article shall also apply to updated tax reporting which tax agents submit.
Article 84. Retention Period for Tax Reporting
Taxpayers and tax agents shall be obliged to keep tax reporting and documents attached thereto for not less than five years following the year of submission of these reporting to tax authorities, unless otherwise provided by this Code.
If tax legislation binds the application of the tax rate, the amount of the tax payable, the application of a tax exemptions or tax deduction and (or) a change in the time limit for the payment of a tax with observance by the taxpayer of certain conditions, then this taxpayer must keep all supporting documents for not less than five years following the year, in which the specified conditions expire. Such supporting documents shall include, in particular, the tax reporting on this tax, documents attached to it, as well as documents confirming compliance with the specified conditions or obligations. The rules of this part shall apply if the specified conditions or obligations are temporary in nature and require documentary evidence of their compliance.
SECTION III. FULFILLMENT OF TAX OBLIGATION
Chapter 9. General Rules for the Fulfillment of the Tax Obligation
Article 85. Tax Obligation
A tax obligation of taxpayers shall be understood to mean the obligation placed upon them by tax legislation to correctly calculate and timely pay taxes and levies.
The obligation placed upon tax agents by tax legislation to correctly calculate, withhold and timely transfer taxes with respect to which these persons are recognized as tax agents shall be equated to a tax obligation.
A tax obligation shall arise, change and terminate on the grounds, which are established by this Code or another act of tax legislation.
The tax obligation in respect of each tax shall be placed upon a taxpayer from the time when the circumstances which are established by the tax legislation arise which require that tax to be paid.
Article 86. Procedure and Terms of Fulfillment of a Tax Obligation
A taxpayer shall fulfill his tax payment obligation independently, unless otherwise provided by this Code.
The tax obligation of a taxpaying physical person which is not an individual entrepreneur may be fulfilled by another person. At the same time, the material benefit received by a taxpayer as a result of the fulfillment of his tax obligation by another person shall not be recognized as income of this taxpayer for tax purposes. Another person shall not have the right to claim the amount of tax paid by him on behalf of the taxpayer.
The tax obligation must be fulfilled within the time limit which is established by tax legislation.
The time limit for the fulfillment of the tax obligation shall be determined by the calendar date or the expiration of the time period (year, quarter, month, decade and day).
The course of the time limit begins on the next day after the calendar date or the occurrence of the event that determines its beginning. The tax obligation must be fulfilled by twenty four o'clock on the last day of the due date for the tax obligation.
When the last day of the time limit for the fulfillment of the tax obligation falls on a day off (non-working day), the first working day following it shall be considered the day of the end of the time limit.
The taxpayer shall have the right to fulfill the tax obligation before the scheduled deadline.
The time limit for the fulfillment of the tax obligation may be changed in the manner prescribed by Articles 97 — 102 of this Code.
The non-fulfillment or improper fulfillment of the tax obligation by the taxpayer shall constitute grounds for a tax authority to send a demand to pay off tax arrears to the taxpayer.
Where a tax obligation is not fulfilled or fulfilled improperly by a taxpayer, the tax authorities shall be obliged to take measures to fulfill this obligation in a compulsory manner, provided for by Chapter 15 of this Code, and (or) to apply measures to ensure its fulfillment, provided for by Chapter 13 of this Code.
Article 87. Termination of a Tax Obligation
A tax obligation shall end, unless otherwise provided by parts two to four of this Article:
with the payment of the tax by the taxpayer or its transfer by a tax agent;
with the occurrence of other circumstances which are specified by the tax legislation as causing the termination of the tax obligation.
The tax obligation of a physical person shall end:
with the death of that person;
with the entry into force of a court decision declaring him dead.
The tax arrears of a deceased physical person or a person who has been declared deceased shall be paid off by the heirs within the limits of the value of the inherited assets in the manner prescribed by Article 94 of this Code.
The tax obligation of a legal entity shall be terminated:
with its liquidation after all settlements with the budgetary system have been effected in accordance with Article 91 of this Code;
with its reorganization after all settlements with the budgetary system have been effected in accordance with Article 92 of this Code.
Article 88. Period of Limitation for Tax Obligation
The limitation period for a tax obligation shall be the period during which a tax authority or other authorized body has the right to conduct a tax audit, following the results of which it may send a taxpayer a demand to pay off tax arrears or revise the amount of taxes payable in compliance with tax legislation.
Unless otherwise established by this Code, the limitation period for a tax obligation shall be five years after the end of the tax period, based on the results of which the tax obligation is determined. When the occurrence of a tax obligation is associated with a specific event or action and, unless otherwise established by this Code, the limitation period for a tax obligation shall be five years from the time of this event or action occurred.
In the cases provided for in the second part of Article 84 of this Code, the limitation period shall be increased by the period of validity of the conditions with which the tax legislation connects the application of the tax rate, the amount of tax payable, tax exemptions, tax deductions and (or) the change in the time limits for payment of tax by the taxpayer.
The course of the limitation period for a tax obligation shall be suspended, interrupted and restored in accordance with civil legislation.
Chapter 10. Fulfillment of Tax Obligation
Article 89. Payment of Taxes and Levies
Tax shall be paid in national currency, unless otherwise provided by this Code.
The recalculation of the tax amount calculated in foreign currency shall be translated into the national currency at the official exchange rate set by the Central Bank of the Republic of Uzbekistan as at the date of tax payment.
The taxpayer's obligation to pay the tax shall be deemed to have been fulfilled, unless otherwise provided by part four of this Article:
1) from the moment of the presentation to a bank of an instruction for the transfer of monetary resources from the taxpayer’s account to the budget system by payment to the appropriate Treasury account, provided there is sufficient balance of money in the taxpayer's account as at the day of payment;
2) from the moment the cash is deposited at the bank's cash desk for transfer to the budget system to the appropriate Treasury account without opening a bank account. Such a rule shall apply only when the tax is paid by physical persons, subject to the sufficiency of funds for the payment of tax;
3) from the date of depositing cash into the bank or postal organization for transfer to the budget system. Such a rule shall apply only when the tax is paid by physical persons, subject to the sufficiency of funds for the payment of tax;
4) from the moment of the reflection in the ledger account of a legal entity for which a ledger account has been opened with the treasury, of operations involving the remittance of appropriate monetary resources to the budget system;
5) from the date of the issuance by the tax authority of a decision to credit the amounts of overpaid or overly recovered taxes, penalties, fines toward the fulfillment of the obligation to pay the tax in question;
6) from the date on which tax amounts are withheld by a tax agent, where a tax agent is charged with the obligation to calculate and withhold tax from the taxpayer's monetary resources in accordance with this Code.
The taxpayer's obligation to pay tax shall not be deemed to have been fulfilled in the following cases:
1) the taxpayer recalls or the bank returns to him an unfulfilled instruction to transfer the corresponding funds to the budget system;
2) a legal entity that has a ledger account opened with the Treasury, recalls, or the Treasury returns an unfulfilled instruction to transfer the corresponding funds to the budget system;
3) incorrect indication of bank details in the instruction for the transfer of funds, which resulted in the non-remittance of these funds to the budget system to the appropriate Treasury account;
4) if the taxpayer has other outstanding claims against its account, which, in accordance with civil legislation, must be executed on a priority basis, and there is not a sufficient balance to satisfy all claims.
The rules provided for in this Article shall also apply to penalties and fines and shall apply to tax agents.
The tax authorities maintain records of revenues to the budgetary system by reflecting the accrued and paid amounts of taxes and levies, as well as penalties and fines in the taxpayer's ledger card. The procedure for maintaining a taxpayer's ledger card shall be determined by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
The customs authorities maintain records of revenues to the budgetary system of taxes and levies, as well as penalties and fines payable with respect to the movement of goods across the customs border of the Republic of Uzbekistan. The procedure for maintaining records shall be determined by the State Customs Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
The procedure for maintaining records of revenues to the budgetary system of the state duty and other fees, the collection of which is carried out by other state bodies and organizations, shall be determined by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
Article 90. Execution of Payment Instructions by Banks for the Transfer of Taxes
Banks shall be obliged to execute a payment instruction of a taxpayer to transfer tax to the budget system (hereinafter in this Article referred to as “an instruction of a taxpayer”), as well as a tax authority’s collection instruction for a transfer of tax to the budget system (hereinafter in this Article referred to as “collection instruction of the tax authority”) at the expense of the taxpayer's monetary resources.
Instructions of a taxpayer and collection instructions of a tax authority shall be subject to execution in the order established by civil legislation.
Instructions of a taxpayer and collection instructions of a tax authority shall be executed by the bank within one business day following the day of receipt of such instruction.
When there are funds on the taxpayer's account and the details of the payment document indicated correctly, the bank shall not be entitled to delay the execution of the instructions of a taxpayer and collection instructions of a tax authority.
If it is impossible to execute the collection instruction of the tax authority within the prescribed period due to the lack (insufficiency) of funds in the taxpayer's account, the bank shall be obliged to report the non-execution (partial execution) of the collection instruction to the tax authority that sent it, within the day following the expiration of the established period.
The form of the bank's report on non-execution (partial execution) of the taxpayer's instruction or the collection instruction of the tax authority and the procedure for its transmission in electronic form shall be established by the State Tax Committee of the Republic of Uzbekistan in agreement with the Central Bank of the Republic of Uzbekistan.
Banks shall bear responsibility established by this Code for failure to fulfill or improper fulfillment of the obligations provided for by this Article.
The application of liability measures shall not relieve the bank of the obligation to fulfill the instructions of a taxpayer and collection instructions of a tax authority.
Banks shall execute instructions of a taxpayer and collection instructions of a tax authority without charging a service fee for these operations. When banks execute instructions to return to taxpayers or tax agents the amounts of overpaid (over recovered) taxes, penalties and fines, the service fee for these operations shall also not be charged.
Article 91. Fulfillment of the Tax Obligation in the Event of Liquidation of a Legal Entity
The tax obligation of a legal entity, which is undergoing liquidation, shall be fulfilled by the liquidator at the expense of the monetary resources of this legal entity, including proceeds from the sale of its assets.
Where the monetary resources of the legal entity, which is undergoing liquidation, are insufficient to pay off its tax arrears in full, including proceeds from the sale of its assets, the remaining outstanding arrears may be repaid off by the founding participants of the that legal entity, within the limits and in the manner established by legislation.
The order of priority of the fulfillment of the tax obligation upon liquidation of a legal entity among settlements with other creditors of this legal entity shall be determined by the civil legislation.
The amounts of taxes (penalties, fines) overpaid by a legal entity, which is undergoing liquidation, or excessively recovered from it taxes (penalties, fines) shall be subject to credit by the tax authority toward the settlement of tax arrears in respect of other taxes in the manner prescribed by this Code.
The amount of overpaid or overly recovered taxes (penalties, fines), which are subject to be credited, shall be distributed in proportion to other taxes arrears or by the decision of the liquidator.
When the legal entity undergoing liquidation, does not have tax arrears, the amount of overpaid or overly recovered taxes (penalties, fines) shall be refunded to this legal entity in the manner prescribed by this Code, no later than fifteen days from the day it submits an application.
The provisions provided for by this Article shall also apply when paying taxes with respect to the movement of goods across the customs border of the Republic of Uzbekistan.
Article 92. Fulfillment of the Tax Obligation in the Event of Reorganization of a Legal Entity
The tax obligation of a reorganized legal entity shall be fulfilled by its legal successor (legal successors) in the manner prescribed by this Article.
Responsibility for fulfilling the tax obligation of a reorganized legal entity shall rest with its legal successor (successors), irrespective of whether the legal successor (successors) knew before the reorganization was completed of the facts and (or) circumstances of non-fulfillment or improper fulfillment of those obligations by the reorganized legal entity.
The legal successor (successors) must pay off all tax arrears on the obligations which have passed to it, including the amount of fines for tax offenses imposed on the reorganized legal entity prior to the completion of the reorganization.
The legal successor (successors) of the reorganized legal entity shall enjoy the rights and bear obligations in the manner prescribed by this Code for taxpayers, in the fulfillment of the obligations assigned to it by this Article.
The re-organization of a legal entity shall not alter the time limits for the fulfilment of its tax obligations by the legal successor (legal successors) of that legal entity.
Where two or more legal entities merge, their legal successor insofar as the fulfilment of tax obligations is concerned shall be deemed to be the legal entity which arises as a result of such merger.
Where one legal entity is acquired by another legal entity the legal successor of the acquired legal entity insofar as the fulfilment of tax obligations is concerned shall be deemed to be the legal entity which acquired it.
In the event of a demerger, the legal entities which arise as a result of such demerger shall be deemed to be the legal successors of the re-organized legal entity insofar as the fulfilment of tax obligations is concerned.
Where there are two or more legal successors the share of each of them in the fulfilment of the tax obligations of the re-organized legal entity shall be determined by the distribution balance developed with the procedure prescribed by civil legislation. If the distribution balance sheet does not make it possible to determine the share of each legal successor of the re-organized legal entity, then by decision of a court the newly formed legal entities may jointly fulfil the tax obligations of the re-organized entity.
The rule specified in part nine of this Article shall also apply in a situation where the separation balance sheet excludes the possibility for the tax obligations to be fulfilled in their entirety by any legal successor, and such re-organization was aimed at avoiding the fulfilment of tax obligations.
Where one or more new legal entities are spun off from an existing legal entity, no legal succession shall arise in relation to the re-organized legal entity insofar as the fulfilment of its tax obligations is concerned, unless otherwise established by part twelve of this Article.
If, as a result of the spin-off of one or more new legal entities from an existing legal entity, a taxpayer is unable to fulfil its tax obligations in their entirety, and such re-organization was aimed at avoiding the fulfilment of obligations with respect to the payment of taxes, then by decision of a court the spun-off legal entities may jointly fulfil the tax obligations of the re-organized entity.
Where one legal entity is re-organized as another legal entity, the legal successor of the re-organized legal entity insofar as the fulfilment of tax obligations is concerned shall be deemed to be the newly formed legal entity.
An amount of tax (penalties, fines) which was paid in excess by a legal entity or recovered in excess prior to its re-organization shall be credited by the tax authority towards the fulfilment by the legal successor (legal successors) of the tax obligations of the re-organized legal entity. Such crediting shall take place not later than one month from the day of the completion of the re-organization, with account taken of the particular considerations which are laid down in this Article.
An amount of tax (penalty, fine) overpaid by a legal entity or excessively recovered from it prior to its reorganization and is subject to be credited shall be distributed in proportion to arrears of other taxes, with respect to which the tax authorities are responsible for checking calculation and payment.
Where a legal entity undergoing re-organization does not have outstanding obligations with respect to the payment of tax or with respect to the payment of penalties and fines, any amount of tax (penalties and fines) which has been paid in excess by or recovered in excess from that legal entity shall be refundable to its legal successor (legal successors) no later than one month from the day on which an application is submitted by the legal successor (legal successors).
The rules laid down in this Article shall also apply to the fulfillment of the obligation to pay a levy in the event of reorganization of a legal entity.
The rules provided for by this Article shall be also applied when determining the legal successor (successors) of a foreign organization which has been reorganized in accordance with the legislation of a foreign state.
The provisions provided for by this Article shall also apply when paying taxes in connection with the movement of goods across the customs border of the Republic of Uzbekistan.
Article 93. Fulfillment of the Tax Obligation When Transferring Assets to Fiduciary Management
A fiduciary manager shall fulfill tax obligations under a fiduciary agreement from the date of the conclusion of the fiduciary agreement.
The principal of the fiduciary (beneficiary) shall independently fulfill the tax obligations arising from the transfer of assets to fiduciary, if the fulfillment of the tax obligation (except for the obligation for value added tax) is not entrusted to the fiduciary manager or when the assets are transferred to fiduciary management by the fiduciary manager which is a non-resident of the Republic of Uzbekistan.
The fiduciary manager shall be obliged to maintain separate records of objects of taxation and (or) tax-related objections for the activities of fiduciary management carried out in the interests of the principal of the fiduciary management (beneficiary), and other activities.
Where the fiduciary manager is entrusted with the fulfillment of the tax obligation, as well as with the obligation to prepare and submit tax reporting and financial statements for the principal of the fiduciary management (beneficiary), then the fulfillment of such tax obligation shall be carried out on behalf of the person who is the fiduciary manager, in the manner prescribed by the Special Part of this Code.
If the fiduciary manager has not fulfilled the obligations stipulated by this Article for the calculation and payment of taxes, or has fulfilled them in an incomplete amount, the obligations to fulfill them shall be placed upon the principal of the fiduciary management (beneficiary).
Article 94. Fulfillment of the Tax Obligation in the Event of the Death of a Physical Person or the Declaration Him as Deceased
In the event of the death of a physical person who has tax arrears, the amount of penalties and fines charged to him for improper compliance with tax legislation shall be considered as non-recoverable. The remaining unpaid tax arrears of this physical person shall be paid off by his heir (s), who accepted the inherited assets of the deceased by way of inheritance, within the value of the inherited assets and in proportion to his (their) share in the inheritance, taking into account the provisions of this Article.
Where the tax arrears of a deceased physical person exceeds the value of the inherited assets, the excess amount of the tax arrears over the value of the inherited assets shall be considered as non-recoverable. The specified norm shall be applied in case the value of the inherited assets of is confirmed by documentary by the heir (heirs).
Where an heir is absent or the heir (heirs) refuses to accept the right of inheritance, the tax arrears of a deceased physical person shall be deemed non-recoverable. The tax authorities must write off non-recoverable tax arrears.
In the event of the death of a physical person who has tax arrears, the tax authority at the place of his registration and (or) the location of his assets shall be obliged to inform the heir (heirs) of the deceased about the existence of tax arrears within one month from the date of being informed about heir (heirs).
The heir (heirs) of a deceased physical person shall be obliged to pay off the remaining tax arrears of this physical person no later than one year from the date of acceptance of the inheritance.
The repayment period may be extended by the decision of the tax authority if the heir (s) received the notification of the existence of tax arrears less than six months before its expiration.
The indebtedness of a deceased physical person for the payment of personal income tax and social tax shall be recognized as non-recoverable.
The rules provided for by this Article shall also apply to the tax arrears of a physical person who is declared deceased in the manner prescribed by civil legislation.
Article 95. Fulfillment of the Tax Obligation of a Physical Person Who Is Recognized As Absent In Place Unknown or Legally Incapable
Tax obligations with respect to the payment of taxes of a physical person who has been pronounced by a court to be absent in place unknown shall be fulfilled by the person authorized, in accordance with legislation, to manage the property of the person who is absent in place unknown at the expense of this property (hereinafter referred to as “authorized person”).
The authorized person shall be obliged to pay the entire amount of the taxpayer’s unpaid taxes due as at the day on which the person in question is pronounced by the court absent in place unknown, at the expense of money resources or other assets of this person.
The tax obligations of a physical person who has been pronounced legally incapable by a court shall be fulfilled by his guardian out of the assets of that legally incapable person.
The guardian of a physical person who has been pronounced legally incapable must pay off the entire amount of tax arrears due as at the day on which the person concerned was pronounced legally incapable at the expense of the monetary resources or other assets of this incapacitated person
The fulfilment of the obligations with respect to the payment of taxes of physical persons who have been pronounced absent in place unknown or legally incapable and the obligation to pay penalties and fines due shall be suspended by decision of the appropriate tax authority in the event that the monetary resources of those physical persons are insufficient to fulfil those obligations.
Where a decision is adopted in accordance with the established procedure to rescind the pronouncement of the absence in place unknown or legal incapability of a physical person, the suspended fulfilment of that person’s obligations shall be resumed from the day on which that decision is adopted
Persons who, in accordance with this Article, are charged with the obligations with respect to the payment of taxes of physical persons who have been pronounced missing or legally incapable shall enjoy all rights and fulfil all obligations in accordance with the procedure which is stipulated by this Code for taxpayers, with account taken of the particular considerations which are laid down by this Article.
Where such persons, while carrying out the duties imposed upon them by this Article, are held to account for the commission of tax offences for which they are at fault, they shall not have the right to pay the fines prescribed by this Code out of the assets of a person who has been pronounced missing or legally incapable.
Article 96. Qualification as Non-Recoverable of Tax Arrears
Amounts of tax arrears which are owed by particular taxpayers and tax agents shall be qualified as non-recoverable after it has proved impossible to secure the payment and (or) recovery of the amounts concerned in cases where:
1) a legal entity has been liquidated — to the extent of arrears which has not been paid off in the manner prescribed by Article 91 of this Code owing to the fact that the legal entity did not have sufficient assets and (or) they could not be settled by the founding parties (participants) of the legal entity within the limits and according to the procedure which are established by the legislation;
2) a private entrepreneur has been declared bankrupt — to the extent of the tax arrears that has not been repaid due to the debtor did not have sufficient assets;
3) a physical person has died or has been declared deceased — to the extent of tax arrears that has not been paid off in the manner prescribed by Article 94 of this Code, due to the insufficiency of his assets, including in the case that the inheritance passes into the state ownership;
4) a court has adopted an act in accordance with which the tax authority is no longer able to pursue the recovery of the arrears owing to the expiry of the established time limit, including the issuance by the court of a determination not to restore a missed time limit for filing an application for the recovery of the arrears;
5) a foreign legal entity is deregistered with a tax authority in accordance with part seven of Article 129 of this Code — to the extent of tax arrears that has not been repaid due to insufficient assets of a permanent establishment and the impossibility of its repayment by a legal entity that is non-resident of the Republic of Uzbekistan within limits and by the order established by law. The specified tax arrears, qualified as non-recoverable, shall be subject to restoration upon re-registration of this foreign legal entity with the tax authority on the grounds provided for by part seven of Article 129 of this Code.
The bodies competent to adopt a decision on qualifying tax arrears as non-recoverable and writing it off are:
1) the tax authorities at the location of the legal entity or the place of residence of a physical person (except in the cases provided for in paragraphs 2 and 3 of this part) — in the circumstances provided for in paragraphs 1 — 3 of part one of this Article;
2) the tax authorities where the taxpayer or tax agent is registered (except in the case provided for in paragraph 3 of this part) — in the circumstances provided for in paragraphs 4 and 5 of part one of this Article;
3) customs authorities to be designated by the State Customs Committee of the Republic of Uzbekistan — with respect to taxes, penalties and fines which are payable in connection with the movement of goods across the customs border of the Republic of Uzbekistan.
The procedure for the write off of tax arrears which have been qualified as non-recoverable and a list of documents confirming the circumstances provided for in part one of this Article shall be approved by the State Tax Committee of the Republic of Uzbekistan.
With respect to taxes payable in connection with the movement of goods across the customs border of the Republic of Uzbekistan, the procedure and list of documents shall be approved by the State Customs Committee of the Republic of Uzbekistan.
Chapter 11. Alteration of the Time Limits for the Payment of Taxes
Article 97. General Conditions Relating to the Alteration of the Time Limits for the Payment of Taxes
The alteration of the time limit for the payment of a tax shall mean the postponement of it to a later date.
The time limit for the payment of a tax may be altered in accordance with the procedure established by this Chapter.
The time limit for the payment of a tax may be altered with respect to all or part of the amount of the tax which is due (hereafter in this Chapter referred to as “amount of the indebtedness”), with interest being charged on the amount of the indebtedness, unless otherwise provided by this Chapter.
The alteration of the time limit for the payment of a tax shall be in the form of a deferral or an instalment plan.
A deferral or an installment plan for the payment of a tax shall represent an alteration of the time limit for the payment of this tax, with amount of the indebtedness to be paid as a lump sum or on installment bases respectively.
A deferral or an installment plan for the payment of tax may be granted in relation to the amount owed that arose before the decision was made to grant a deferral or installment plan, or in relation to the amount owed that will arise in the future.
A deferral or installment plan shall be granted for a period not exceeding one year, unless otherwise provided by Article 99 of this Code.
A person who is seeking the alteration of the time limit for the payment of a tax (hereinafter in this Chapter — an interested person) shall have the right to submit an application for the grant of a deferral or an installment plan. Such an application can be submitted with respect to one or more taxes.
Upon considering an application from an interested person for the granting of a deferral or instalment plan, a body authorized to adopt decisions on the alteration of the time limits for the payment of taxes shall have the right to offer that person other conditions provided for in this Chapter, which shall be adopted subject to agreement with the interested person.
The alteration of the time limit for the payment of a tax shall neither cancel the existing nor create a new tax obligation.
The alteration of the time limit for the payment of tax may, by decision of the bodies referred to in Article 99 of this Code, be secured by a pledge of assets, a surety bond or a bank guarantee in accordance with Articles 107 — 109 of this Code, unless otherwise provided by this Chapter.
The provisions of this Chapter shall also apply when granting a deferral or installment plan for the payment of a penalty and a levy.
The provisions of this Chapter shall not apply to tax agents.
Article 98. Circumstances Which Preclude the Alteration of the Time Limit for the Tax Payment
The time limit for the payment of a tax, may not be altered if, in relation to the interested person:
1) a criminal proceedings have been instituted with respect to evidence of a crime involving a violation of tax legislation, unless otherwise provided by part the second of this Article;
2) there are sufficient grounds to believe that the person in question will use the alteration of the time limit to conceal his monetary resources or other taxable assets or that he intends to depart from the Republic of Uzbekistan for permanent residence abroad;
3) at any time during the three years preceding the day on which that person submitted the application for the alteration of the time limit for the payment of the tax, the body referred to in Article 99 of this Code issued a decision terminating the effect of a previously granted deferral, or instalment plan by reason of the violation of the conditions of the corresponding alteration of the time limit for the payment of a tax;
4) a bankruptcy case has been initiated.
The conditions specified in the first part of this Article shall not apply to the cases provided for in the second part of Article 99 of this Code.
Where the circumstances referred to in in the first part of this Article exist, a decision to alter the time limit for the payment of a tax may not be adopted, and any such decision which has been adopted must be rescinded.
The interested person and the tax authority where that person is registered shall be notified of the rescission of the adopted decision within a period of three days. The interested person shall have the right to appeal against such a decision in accordance with the procedure which is established by this Code.
The time limit for the payment of tax shall not be altered in relation to tax on profit which is payable for a consolidated group of taxpayers.
Article 99. Bodies Authorized to Adopt Decisions on the Alteration of the Time Limits for the Payment of Taxes
The bodies which have the authority to adopt decisions on the alteration of the time limits for the payment of taxes, levies and insurance contributions (hereinafter referred to as “authorized bodies”) shall be:
1) the State Tax Committee of the Republic of Uzbekistan for taxes specified in paragraphs 1 to 5 of part one of Article 17 of this Code (except for the cases provided for in paragraph 3 of this part and part two of this Article);
2) local governance bodies in the manner prescribed by the Cabinet of Ministers of the Republic of Uzbekistan for taxes specified in clauses 6 — 8 of part one of Article 17 of this Code, and for turnover tax. A deferral or installment plan may be granted for up to two years with respect to such taxes;
3) the customs authorities for taxes payable in connection with the movement of goods across the customs border of the Republic of Uzbekistan (except for the cases provided for by part two of this Article) in the manner prescribed by customs legislation.
The Cabinet of Ministers of the Republic of Uzbekistan shall have the right to grant a deferral or installment plan to the taxpayer for up to three years for any tax specified in Article 17 of this Code. When granting a deferral or installment plan, the Cabinet of Ministers of the Republic of Uzbekistan shall have the right to deviate from the restrictions established by part one of Article 98 of this Code.
Article 100. Conditions for Granting a Deferral or an Installment Plan for the Payment of Taxes
A deferral or instalment plan for the payment of tax may be granted to an interested person whose financial position does not enable that tax to be paid within the established time limit but there are sufficient grounds to believe that the person concerned will be able to pay that tax within the period for which the deferral or instalment plan is granted.
A deferral or installment plan for the payment of tax may be granted to an interested person if at least one of the following grounds exist:
1) the person has sustained damage as a result of a natural calamity, an industrial disaster or other circumstances of insurmountable force;
2) delays of financing from the budget to this person (state trust fund) or of payment for the state order executed by this person, for work performed and (or) services rendered for state needs or the needs of local government bodies;
3) there is a risk that indications of insolvency (bankruptcy) would arise for the interested person if that person were to pay tax as a lump sum;
4) the financial position of a physical person (disregarding assets on which execution cannot be levied in accordance with the legislation) makes it impossible for tax to be paid as a lump sum;
5) the production and (or) sale of goods, work or services by the interested person is seasonal in nature;
6) there are grounds such as are established by the customs legislation for the granting of a deferral or instalment plan for the payment of taxes which are payable in connection with the movement of goods across the customs border of the Republic of Uzbekistan.
Where there are grounds specified in clauses 1, 3 — 6 of part two of this Article, a deferral or installment plan for payment of tax may be granted:
1) to a legal entity — in an amount not exceeding the value of its net assets;
2) to a physical person — in an amount not exceeding the value of his assets, with the exception of assets, which cannot be foreclosed, in accordance with the legislation of the Republic of Uzbekistan.
Legal entities and individual entrepreneurs shall have the right to pay taxes which have been additionally charged on the basis of the results of a tax audit, as well as financial sanctions, in equal shares within six months from the date of entry into the force of the decision of the tax authority adopted as a result of consideration of the audit materials, by having sent a written notification to the tax authority at the place of registration, including through the personal account of the taxpayer.
Where a deferral or installment plan for the payment of taxes is granted on the grounds specified in clauses 1 or 2 of part two of this Article, interest shall not be charged on the amount of the indebtedness.
Where a deferral or an installment plan for payment of tax is granted on the grounds specified in clauses 3 — 6 of part two and (or) part four of this Article, interest shall be charged on the amount of the indebtedness on the basis of a rate equal to the refinancing rate of the Central Bank of the Republic of Uzbekistan which is in effect during the period of the deferral or installments.
Article 101. Procedure for Granting a Deferral or Installment Plan for Payment of Tax
Application for a deferral or installment plan for the payment of tax shall be submitted by an interested person to the appropriate authorized body.
The application for the granting of a deferral or an instalment plan for the payment of tax shall be accompanied by the following documents:
1) a statement of the tax authority at the place of registration of this person concerning the status of his payments of taxes, penalties and fines;
2) a statement of the tax authority at the place of registration of this person, containing a list of all bank accounts opened for that person;
3) statements of banks on the monthly turnover of monetary resources for each month from the six months preceding the filing of the specified application on the accounts of this person in banks, as well as on the presence of his settlement documents, placed in the corresponding card index of unpaid settlement documents, or on their absence in this card index;
4) statements of banks concerning balances of monetary resources in all the person’s bank accounts;
5) an undertaking by the person to comply during the period of the adjustment of the time limit for the payment of tax with the conditions subject to which the decision to grant a deferral or instalment plan is adopted, and that person’s proposed schedule for the settlement of indebtedness;
6) documents confirming the existence of grounds for changing the deadline for payment of the tax, specified in parts three to eight of this Article.
An application for the granting of a deferral or instalment plan for the payment of tax on the ground specified in subsection in paragraph 1 of part two of Article 100 of this Code shall be accompanied by:
1) a report on the occurrence in relation to the interested person of the circumstances of insurmountable force which are the basis for filing that application;
2) a statement of appraisal of damage caused to that person as a result of those circumstances.
The documents specified in part three of this Article shall be prepared by an local government body or organization responsible for civil defence and the protection of the public and territories against emergencies, citizens' self-governance bodies.
The application of the interested person for a deferral or installment plan for the payment of tax on the basis specified in paragraph 2 of part two of Article 100 of this Code shall be accompanied by a document of the financial authority which confirms the existence of such a basis and specifies the amounts that were not received by this person on his account that was due to be financed from the budget (state target fund), or non-payment for the state order fulfilled by this person and (or) services rendered by him for state needs or the needs of local government bodies.
The existence of the grounds specified in paragraph 3 of part two of Article 100 of this Code shall be established by the State Tax Committee of the Republic of Uzbekistan or its authorized tax body on the basis of the results of an analysis of the financial position of the interested person. This analysis shall be carried out in accordance with the methodology to be approved by the Ministry of Economy and Industry of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
An application of the interested person for the granting of a deferral or installment plan for the payment of tax on the ground specified in paragraph 4 of part two of Article 100 of this Code shall be accompanied by information on movable and immovable property of a physical person (excluding property on which execution can not be levies in accordance with the legislation).
An application for a deferral or installment plan on the basis specified in paragraph 5 of part two of Article 100 of this Code shall be accompanied by a document prepared by the interested person confirming that the share of his income from seasonal in nature activities accounts for not less than 50 percent of this person’s total income,.
The list of sectors and types of activities that are a seasonal in nature shall be approved by the Cabinet of Ministers of the Republic of Uzbekistan.
In an application for the granting of a deferral or instalment plan for the payment of tax the interested person shall undertake to pay interest charged on the amount of indebtedness in accordance with this Chapter.
Upon the request of the authorized body an interested person shall present documents concerning assets which may be pledged as security, a surety bond or a bank guarantee.
Upon a petition of the interested person the authorized body shall have the right to adopt a decision concerning a temporary (for the period while the deferral or instalment plan application is considered) suspension of the payment of the amount of indebtedness by the interested person. The interested person shall present a copy of that decision to the tax authority where he is registered within five days from the day on which the decision is adopted.
The decision to grant or refuse to grant a deferral or instalment plan for the payment of tax shall be adopted by the authorized body within 30 days from the day on which the interested person’s application is received.
The decision to grant a deferral or installment plan for the payment of tax must contain:
1) an indication of the amount of indebtedness;
2) the tax for the payment of which a deferral or installment plan is granted;
3) the time limits and procedure for the payment of the indebtedness and interest charges.
In appropriate cases, the decision to grant a deferral or installment plan for the payment of tax must contain documents relating to assets which are provided as a security, a surety bond or a bank guarantee.
The decision to grant a deferral or instalment plan for the payment of tax shall enter into force from the day specified in that decision. In this respect, penalties charged for the entire period of time from the day established for the payment of tax up to the day on which the decision enters into force shall be included in the amount of indebtedness if that payment deadline precedes the day on which the decision enters into force.
Where a deferral or instalment plan is granted on security of assets, the decision to grant it shall enter into force only after the conclusion of an agreement on the pledging of assets in accordance with the procedure which is stipulated by Article 107 of this Code.
A decision to refuse to grant a deferral or instalment plan for the payment of tax must be substantiated.
The interested person may appeal against the decision to refuse to grant a deferral or instalment plan for the payment of tax in accordance with the procedure which is established by legislation.
The authorized body shall send a copy of the decision to grant or refuse to grant a deferral or instalment plan for the payment of tax to the interested person and to the tax authority where that person is registered within a period of three days from the day on which that decision is adopted.
Article 102. Termination of a Deferral or Installment plan for the Payment of Tax
A deferral or instalment plan shall terminate upon the expiry of the period of validity of the relevant decision or agreement or may be terminated before that time in the instances provided for by this Article.
A deferral or instalment plan shall terminate early in the event that the entire amount of the tax, which is due and appropriate interest are paid before the expiry of the established period.
In the event that the interested person violates the conditions of the granting of a deferral or instalment plan, the deferral or instalment plan may be terminated early by decision of the authorized body which adopted the decision concerning the relevant alteration of the time limit for the fulfilment of the obligation to pay a tax.
Where a deferral or instalment plan is terminated early in the case provided for part three of this Article the interested person must, within one month after receiving the relevant decision, pay the unpaid amount of the indebtedness and penalties for each calendar day, beginning with the day following the day on which the decision is adopted until the day on which the amount is paid inclusively. In this respect, the amount of indebtedness which remains unpaid shall be determined as the difference between the amount of indebtedness specified in the decision to grant a deferral (instalment plan), increased by the amount of interest calculated in accordance with the deferral (instalment plan) decision for the period while the deferral (instalment plan) was in effect, and actually paid amounts and interest.
A notice of the rescission of the deferral or instalment plan decision shall be sent by the authorized body which adopted that decision to the interested person in the manner prescribed by this Code within five days from the day of its adoption. A copy of that decision shall be sent to the tax authority where the interested person is registered within the same time limits.
The interested person may appeal against the decision of an authorized body concerning the early termination of a deferral or instalment plan in the manner prescribed by legislation.
In the event that interest provided for in this Chapter which is payable by an interested person is not paid on time and after the expiry of the time limit for the fulfilment of a demand for the payment thereof, it shall be recovered in accordance with the procedure and within the time periods which are prescribed by Chapter 15 of this Code.
Chapter 12. Crediting and Refund of Taxes Which Have Been Paid or Recovered in Excess
Article 103. General Provisions on Crediting and Refund of Paid or Recovered in Excess Taxes
An amount of overpaid or overly recovered tax shall be refunded to the taxpayer or credited towards a taxpayer’s future payments in respect of the same tax with condition of the absence of tax arrears.
Where the taxpayer has a tax arrears, the amount of overpaid or overly recovered tax shall be credited towards the repayment of these arrears in the following sequence:
1) in respect of the debt on penalty interest on this tax;
2) in respect of debts for other taxes and penalties for these taxes;
3) for the payment of fines for tax offenses.
The amount of overpaid tax can be fully or partially refunded to the taxpayer at the request of the taxpayer.
Refunds to the taxpayer of the amount to be refunded in accordance with parts one or two and taking into account part three of this Article shall be made in the manner prescribed by Articles 104 and 105 of this Code.
In the event of the discovery of indications of a possible overpayment of tax, at the proposal of the tax authority or the taxpayer a joint reconciliation of settlements in respect of taxes, penalties and fines may be carried out
The crediting or refund of the amount of overpaid tax and assessed interest shall be effected in the national currency.
The rules established by this Chapter shall also apply to the crediting or refund of amounts of overpaid or overly recovered advance and current payments, levies, penalties and fines and shall apply to tax agents and payers of levies.
The rules established by this Chapter shall also apply to the crediting or refund of amounts of overpaid or overly recovered levies, penalties and fines by other authorized bodies.
The rules established by this Chapter shall also apply to the crediting or refund of the amount of value added tax that is subject to reimbursement according to the decision of the tax authority.
The rules established by this Chapter shall also apply to the crediting or refund of the erroneously paid amount of tax, as well as penalties and fines.
Article 104. Procedure for Crediting or Refunding Overpaid Tax
The crediting of an amount of overpaid tax towards the settlement of arrears provided for by part two of Article 103 of this Code, shall be effected by tax authorities independently.
The decision on the crediting of an amount of overpaid tax toward paying off tax arrears shall be adopted by the tax authority within 10 days from the day on which it discovers the occurrence of the tax overpayment or from the day on which the tax authority and the taxpayer sign a report on the joint reconciliation of taxes paid by the taxpayer, if such a joint reconciliation has been carried out, or from the day of the entry into force of a court decision.
The provision provided for in parts one and two of this Article shall not prevent a taxpayer from submitting to the tax authority a written application for an amount of overpaid tax to be credited towards the settlement of tax arrears. In this case the tax authority’s decision on the crediting of the amount of overpaid tax towards the settlement of arrears shall be adopted within 10 days from the day of the receipt of the above-mentioned application from the taxpayer or from the day on which the tax authority and the taxpayer sign a report on the joint reconciliation of taxes paid by the taxpayer, if such a joint reconciliation has been carried out.
An amount of overpaid tax shall be refundable on the basis of a written application from the taxpayer within fifteen days from the day on which that application is received by the tax authority, with account taken of the provisions of Article 103 of this Code.
An application for the crediting or refund of an amount of overpaid tax may be submitted within five years from the day on which the amount in question was paid, except as otherwise provided by the tax legislation.
A decision on the refund of an amount of overpaid tax shall be adopted by a tax authority within 10 days from the day of the receipt of a taxpayer’s relevant application or from the day on which the tax authority and the taxpayer in question sign a report on a joint reconciliation of taxes paid by the taxpayer, if such a joint reconciliation has been carried out.
Before the expiry of the time limit which is established in part eight of this Article, an instruction for the refund of the amount of overpaid tax, drawn up on the basis of the tax authority’s decision on the refund of that amount of tax, must be sent by the tax authority to the treasury in order for the refund to the taxpayer to be effected in accordance with the budget legislation.
A tax authority shall be obliged to give a taxpayer notice of a decision to allow the crediting (refund) of amounts of overpaid tax or of a decision not to allow such crediting (refund) within three days from the day on which the decision in question is adopted. In the event that an amount of overpaid tax is refunded outside the time limit which is established by part four of this Article, the tax authority shall assess on the amount of overpaid tax which has not been refunded within the established time limit interest payable to the taxpayer for each calendar day by which the time limit for the refund is exceeded. Accrued interest shall be paid from the funds of the corresponding budget. The interest rate shall be taken to be equal to the refinancing rate of the Central Bank of the Republic of Uzbekistan which was effective on the days on which the refund time limit was exceeded.
Amounts of tax paid by error, as well as penalties and (or) fines, shall be returned to the taxpayer on the basis of a written request from the taxpayer or the bank or the Treasury of the Republic of Uzbekistan, where a mistake was made on their part.
Amounts of overpaid tax on profit for a consolidated group of taxpayers shall be credited for (refunded) to the responsible member of that group in accordance with the procedure established by this Article.
In the event that the agreement on the creation of a consolidated group of taxpayers has been terminated, amounts of overpaid tax on profit for the consolidated group of taxpayers which cannot be (have not been) reckoned towards arrears for that group shall be credited for or refunded to the legal entity which was the responsible member of the consolidated group of taxpayers upon its written application.
Article 105. Procedure for Crediting or Refund of Tax Recovered in Excess
A claim for the refund of an amount of previously recovered tax may be submitted by a taxpayer to a tax authority within five years from the day on which the taxpayer became aware of the excess recovery of tax, or from the date of entry into the legal force of the court decision.
An amount of tax recovered in excess shall be refundable together with interest assessed thereon within fifteen days from the day of the receipt of the taxpayer’s written application, with taking into account the provisions of Article 103 of this Code.
Interest on the amount of excessively recovered tax shall be accrued with condition that the taxpayer applies within thirty days from the day when he became aware of the fact of excessive recovery of tax, or from the date of entry into force of the court decision. Interest shall be assessed on an amount of tax recovered in excess from the day following the day of recovery up to and including the day on which the refund actually takes place. Accrued interest shall be paid from the funds of the corresponding budget. The interest rate shall be taken to be equal to the refinancing rate of the Central Bank of the Republic of Uzbekistan which was effective on those days.
Where the fact of excessive recovery of tax is established, the tax authority shall adopt a decision on crediting and (or) refunding the amount of excessively recovered tax, as well as interest on the excessively recovered amount, accrued in the manner prescribed by part three of this Article.
Crediting of the amount of excessively recovered tax towards the repayment of the tax arrears of the taxpayer or towards his forthcoming payments for the same or other taxes, provided for in part two of Article 103 of this Code, shall be carried out by tax authorities in a manner similar to the procedure established by parts one to five of Article 104 of this Code to credit the amounts of overpaid tax.
The procedure for the refund of excessively recovered tax shall be similar to the procedure provided for in Article 104 of this Code for the refund of the amounts of overpaid tax.
Amounts of excessively recovered tax on profit for a consolidated group of taxpayers shall be credited for (refunded) to the responsible member of that group in accordance with the procedure established by this Article.
In the event that the agreement on the creation of a consolidated group of taxpayers has been terminated, amounts of excessively recovered tax on profit for the consolidated group of taxpayers which cannot be (have not been) reckoned towards arrears for that group shall be credited for or refunded to the legal entity which was the responsible member of the consolidated group of taxpayers upon its written application.
Chapter 13. Ensuring the Fulfillment of the Tax Obligation
Article 106. Means of Ensuring the Fulfillment of the Tax Obligation
The fulfilment of obligations to pay taxes may be ensured by a pledge of assets, a surety bond, a bank guarantee, penalties, the suspension of operations on bank accounts and attachment of the taxpayer’s property.
The attachment of property as an interim measure for the fulfillment of the taxpayer's tax obligation, upon his application, may be replaced by:
1) a pledge of securities circulating on the organized securities market, or a pledge of other assets, drawn up in the manner prescribed by Article 107 of this Code;
2) surety bond of a third party, drawn up in the manner prescribed by Article 108 of this Code;
3) a bank guarantee, drawn up in the manner prescribed by Article 109 of this Code.с
Where an effective bank guarantee is issued in the manner prescribed by Article 109 of this Code, the tax authority shall not be entitled to refuse the taxpayer to replace the interim measures provided for in this paragraph.
The means of ensuring the fulfillment of the tax obligation, the procedure and conditions for their application shall be established by this Chapter.
With respect to taxes payable in connection with the movement of goods across the customs border of the Republic of Uzbekistan, other means to ensure the fulfillment of the tax obligation in the manner and under the conditions established by customs legislation may be applied.
Article 107. Pledge of Assets
In the cases provided for by this Code, the obligation to pay taxes may be secured by a pledge of assets.
A pledge of assets shall be documented by an agreement between the tax authority and the pledger. The pledger may be the taxpayer itself or a third party.
Where a taxpayer fails to fulfil the obligation to pay the amounts of a tax which are due and appropriate penalties, the tax authority shall fulfil that obligation out of the value of the pledged property in accordance with the procedure which is established by the civil legislation.
The object of a pledge may be assets which may be put in pledge in accordance with the civil legislation, unless otherwise established by this Article.
The object of a pledge in an agreement between a tax authority and a pledgor may not be the object of a pledge in another agreement.
Assets which are pledged may remain with the pledger or be transferred at the pledger’s expense to the tax authority (pledgee), in which case the latter shall assume responsibility for the safekeeping of the assets.
Any transactions involving the pledged property, including transactions which are carried out for the purpose of settling amounts of indebtedness, may be undertaken only subject to prior agreement with the pledgee.
The provisions of civil legislation shall apply to legal relations which arise when a pledge is established as a means of ensuring the fulfilment of obligations with respect to the payment of taxes, unless otherwise stipulated by tax legislation.
Article 108. Surety Bond
Where the time limits for the fulfilment of tax obligations are changed and in other cases provided for in this Code, tax obligations may be secured by a surety bond.
Under a surety bond, the surety assumes an obligation before the tax authorities to fulfil a taxpayer’s tax obligation in full should the latter fail to pay the amounts of tax due and appropriate penalties within the established time limit.
A surety bond shall be documented in accordance with the civil legislation by an agreement between the tax authority and the surety.
In the event that a taxpayer fails to fulfil a tax payment obligation which is secured by a surety bond, the surety and the taxpayer shall bear joint and several liability.
In the event that tax for which the payment obligation is secured by a surety bond is not paid or is not paid in full within the established time limit, the tax authority shall, within five days after the expiry of the time limit for compliance with a tax payment demand, send the surety a demand for the payment of a sum of money under the surety agreement.
If the surety fails to fulfil within the established time limit the demand for the payment of a sum of money under the surety agreement, the tax authority, in the manner and within the time limits provided for in Chapter 15 of this Code, shall take measures for the recovery from a surety of the amounts, for which the payment obligation is secured by a surety bond.
Upon the fulfilment by a surety of its assumed obligations in accordance with the agreement, it shall acquire the right to demand from the taxpayer the amounts which it has paid, interest on those amounts and compensation for losses incurred as a result of the fulfilment of the taxpayer’s obligations.
The surety may be a legal entity or a physical person.
It shall be permissible to use more than one surety simultaneously for one tax obligation.
The provisions of the civil legislation shall apply to legal relations which arise when a surety bond is established as a means of securing the fulfilment of a tax obligation, unless otherwise stipulated by tax legislation.
The rules of this Article shall apply equally to a surety bond for the payment of levies.
Article 109. Bank Guarantee
Where the time periods for the fulfilment of tax payment obligations are altered and in other cases provided for in this Code, the obligation to pay tax may be secured by a bank guarantee.
Under a bank guarantee the bank (the guarantor) makes an undertaking to the tax authorities to fulfil in full the taxpayer’s obligation to pay tax, should the latter fail to pay the amount of tax due within the established time limit, and corresponding penalties.
A bank guarantee must meet the following requirements:
1) must be irrevocable and non-transferable;
2) cannot contain a reference to the presentation by the tax authority to the guarantor of documents which are not provided for in this Article;
3) must expire not earlier than six months from the date of expiry of the established time limit for the fulfilment by the taxpayer of the tax payment obligation which is secured by the guarantee, except as otherwise provided by this Code;
4) the amount for which the bank guarantee is issued must be such as to ensure that the guarantor will cover the full amount of the taxpayer’s obligation to pay tax and corresponding penalties, except as otherwise provided by this Code;
5) must provide for the application by the tax authority of measures enabling amounts whose payment is secured by the bank guarantee to be recovered from the guarantor in the event that it fails to fulfil within the established time limit a demand for the payment of a sum of money covered by the bank guarantee.
Recovery from the guarantor shall be carried out in the manner and conditions provided for in Articles 121 and 123 of this Code, if the specified request of the tax authority was sent to the guarantor before the expiration of the bank guarantee.
In the event that tax is not paid or is not paid in full within the established time period by the taxpayer whose obligation to pay tax is secured by the bank guarantee, the tax authority shall send a demand for the payment of a sum of money covered by the bank guarantee to the guarantor within five days from the date of expiry of the time limit for the fulfilment of the tax demand.
An obligation arising from a bank guarantee must be fulfilled by the guarantor within five days from the day on which it receives a demand for the payment of a sum of money covered by the bank guarantee.
A guarantor shall not have the right to refuse to satisfy a tax authority’s demand for the payment of a sum of money covered by the bank guarantee (unless the demand has been presented to the guarantor after the expiry of the time period for which the bank guarantee was issued).
The rules laid down in this Article shall also apply in relation to bank guarantees which secure the fulfilment of obligations to pay penalties and fines.
The obligation to pay tax by a legal entity of the Republic of Uzbekistan or a foreign legal entity may be secured by a bank guarantee of a foreign bank that has high ratings from international rating agencies, in the manner and on the conditions determined by the Ministry of Finance of the Republic of Uzbekistan. Such a guarantee of a foreign bank must meet the requirements provided for in paragraphs 1 to 4 of part three of this Article.
Article 110. Penalty
A penalty shall be a monetary amount which a taxpayer must pay in case of violation of the tax payment time limits established by tax legislation.
The amount of applicable penalties shall be paid in addition to the amounts of a tax which are due irrespective of the use of other measures to ensure the fulfilment of the tax obligation and sanctions for the violation of tax legislation.
A penalty shall be charged for each calendar day of the delay in the fulfilment of an obligation to pay tax, commencing from the day following the day established by tax legislation for the payment of the tax, unless otherwise provided by this Code.
The submission of an application for a deferral or instalment plan shall not stop the charging of penalties on the amount of tax due to be paid.
Penalties shall not be charged on an amount of arrears which a taxpayer was unable to settle by reason of the fact that the taxpayer’s assets were attached by decision of a tax authority or injunctive measures were taken in the form of the suspension of operations on bank accounts of the taxpayer or the attachment of monetary resources or assets of the taxpayer. In this case, no penalties shall be charged for the entire period for which those circumstances existed.
Penalties shall not be charged on an amount of arrears which arose for a taxpayer as a result of observing written explanations concerning the procedure for the calculation and payment of a tax or on other issues relating to the application of tax legislation which were given to that taxpayer or to an indefinite circle of persons by a financial or tax authority (an authorized official of such an authority) within the limits of its competence.
Penalties shall not be charged on the amount of arrears which arose as a result of the implementation by a taxpayer of a reasoned opinion of a tax authority which was sent to it in the course of the conduct of tax monitoring.
The circumstances specified in parts six and seven of this Article shall be established with the presence of an appropriate document of this body, within the meaning and content of the tax (reporting) periods for which the tax arrears arose, regardless of the date of adoption of such a document.
The provisions of parts six and seven of this Article shall not apply if the said written explanations or a reasoned opinion of the tax authority are based on incomplete or inaccurate information provided by the taxpayer.
The penalty for each calendar day of delay in the fulfilment of a tax payment obligation shall be determined as a percentage of the unpaid amount of tax.
The percentage rate of a penalty shall be taken to be equal to one three hundredth of the refinancing rate of the Central Bank of the Republic of Uzbekistan in effect at the time.
Penalty interest shall be paid to the budget (state trust fund) to which the corresponding tax is paid.
Penalties may be recovered on an enforced basis out of a taxpayer’s monetary resources in bank accounts and out of a taxpayer’s other assets in accordance with the procedure which is stipulated by Chapter 15 of this Code.
The enforced recovery of penalties from legal entities and individual entrepreneurs shall be effected according to the procedure laid down by Articles 121 — 124 of this Code, and the enforced recovery of penalties from physical persons shall be effected according to the procedure laid down in Article 125 of this Code.
The enforced recovery of penalties from legal entities and individual entrepreneurs in the instances provided for by parts seven and eight of Article 120 of this Code shall be effected by judicial process.
The rules provided for in this Article shall apply to tax agents.
Article 111. Suspension of Operations on Bank Accounts
A decision to suspend the operations of a taxpayer (tax agent) on its bank accounts may be adopted by the director (deputy director) of the tax authority for a period not exceeding ten days. A decision to suspend the operations of a taxpayer (tax agent) for a period of more than ten days may be adopted by a court on the basis of a petition from a tax authority.
In this case, the operations of the taxpayer (tax agent) on its bank accounts shall be suspended pending a decision by the court.
A decision to suspend the operations of a taxpayer (tax agent) on its bank accounts shall be sent by the tax authority to the bank in electronic form. At the same time, the tax authority shall send a notification to the taxpayer's personal account about the suspension of the operations on its bank accounts, indicating the reasons.
The suspension of the operations on the bank accounts of legal entities and individual entrepreneurs can be applied by the tax authority to ensure the fulfillment of the tax obligations of the specified taxpayers (tax agents) in the following cases:
1) in the event that the taxpayer (tax agent) does not submit financial and (or) tax reports to the tax authority within ten days after the expiry of the established time limit for the submission of such reports;
2) in the event the taxpayer (tax agent) does not submit clarifications and (or) corrections in response to the tax authority's request on the basis of the results of a desk tax audit, as well as failure to submit documents requested by the tax authority;
3) in the event that the taxpayer (tax agent) obstructs the access of tax authorities officials which has been conducting a tax audit to the specified territories or premises (excluding residential premises). Obstruction of access of a tax authority official shall be confirmed by an act signed by him and the person undergoing audit. The tax authority shall suspend the operations on bank accounts on the basis of that act;
4) in the event that the taxpayer (tax agent) is absent at the place of its declared address.
The suspension of operations on the accounts of a taxpayer (tax agent) shall signify the cessation by the bank of all debit operations on those accounts.
Where the responsible member of the consolidated group of taxpayers fails to submit tax reports within ten days after the expiry of the established time limit for submitting it, a decision to suspend the operations on bank accounts may be adopted with respect to the operations of the responsible member or all members of this consolidated group by the director (deputy director) of the tax authority.
The suspension of the operations on the bank accounts of a taxpayer (tax agent) shall not be applied to payments specified in the first priority in accordance with civil legislation, as well as to bank accounts for which recovery is not permitted, in accordance with the legislation.
Article 112. The Procedure for Cancellation of the Decision to Suspend Operations of a Taxpayer (Tax Agent) on its Bank Accounts
The decision to suspend the operations of a taxpayer (tax agent) on its bank accounts shall be rescinded by a decision which is adopted on the basis of:
1) paragraph 1 of part three of Article 111 of this Code — not later than one day following the day the taxpayer (tax agent) submits financial and (or) tax reports;
2) paragraph 2 of part three of Article 111 of this Code — on the day of submission of documents, explanations and (or) corrections in response to the request of the tax authority;
3) paragraph 3 of part three of Article 111 of this Code — not later than one day following the day of granting access to tax authorities officials who are conducting a tax audit;
4) paragraph 4 of part three of Article 111 of this Code — no later than one day from the date of acceptance by the tax authority of the validity of the absence of a taxpayer (tax agent) at the declared address. A taxpayer's representative must in person submit the necessary explanations to the tax authority at the place of registration, for such acceptance to happen.
The absence of a taxpayer (tax agent) at the place of registration may be accepted justified in case of its registration with another tax authority, or if the information about the change of place of its registration was not known to the tax authority at the previous place of registration, as well as in case of technical errors or other similar circumstances.
The absence of a taxpayer (tax agent) at the place of registration of his branch or separate subdivision, or at the location of the asset that is the object of taxation, may be accepted as justified, in particular, if a branch or separate subdivision is undergoing liquidation, or upon the sale of that asset.
A decision to rescind the suspension of the operations on the accounts of the taxpayer (tax agent) shall be sent to the bank in electronic form no later than the day following the day when such a decision was adopted.
The procedure for the sending to a bank in electronic form of a tax authority’s decision on the suspension and the cancellation of the suspension of operations on bank accounts of a taxpayer (tax agent) shall be established by the Central Bank of the Republic of Uzbekistan in agreement with the State Tax Committee of the Republic of Uzbekistan.
Where a tax authority fails to comply with the time limit for the cancellation of a decision on the suspension of operations on a taxpayer’s (tax agent) bank accounts or the time limit for the sending to a bank of a such decision, interest payable to the taxpayer shall accrue on the amount of monetary resources covered by the suspension for each calendar day by which the time limit is exceeded.
If the tax authority made an unlawful decision to suspend transactions on the accounts of the amount of money in respect of which the suspension regime was in effect accrues interest payable to this taxpayer for each calendar day from the day the bank receives a decision on suspension of operations until the day the bank receives a decision on its cancellation, inclusive.
In the event that a tax authority unlawfully issues a decision ordering the suspension of operations on a taxpayer’s (tax agent) bank account, interest payable to that taxpayer (tax agent) shall accrue on the amount of monetary resources covered by that decision of the tax authority for each calendar day commencing from the day on which the bank received the decision ordering the suspension of operations on the taxpayer’s accounts up to the day on which the bank receives a decision cancelling that decision.
In the cases specified in parts six and seven of this Article, the interest rate shall be taken to be equal to the refinancing rate of the Central Bank of the Republic of Uzbekistan which was in effect on days on which operations on a taxpayer’s (tax agent) accounts were unlawfully suspended or the tax authority was not in compliance with the time limit for the cancellation of a decision on the suspension of operations on a taxpayer’s (tax agent) bank accounts or the time limit for the sending to a bank of a decision on the cancellation of the suspension of operations on a taxpayer’s (tax agent) bank account.
Article 113. Procedure for Execution by Banks of Decisions to Suspend Transactions on Accounts with Banks
A decision of a tax authority to suspend the operations on bank accounts of a taxpayer (tax agent) shall be subject to unconditional execution by the bank.
A bank shall not be liable for losses incurred by a taxpayer (tax agent) as a result of the suspension of its operations on bank accounts by a decision of a tax authority.
The suspension of operations of a taxpayer (tax agent) on its bank accounts shall have effective from the time when the bank receives a the tax authority’s decision on the suspension of such operations until the bank receives a the tax authority’s decision on the cancellation of that suspension, unless otherwise provided by part one of Article 111 of this Code.
Where a decision to suspend the operations on the bank accounts of a taxpayer (tax agent) is sent in electronic form to the bank, the date and time of the receipt thereof a the bank shall be determined in the manner to be established by the State Tax Committee of the Republic of Uzbekistan in agreement with the Central Bank of the Republic of Uzbekistan.
Where, since the adoption of a decision on the suspension of operations on the bank accounts of a taxpayer (tax agent), changes have occurred in the name of the taxpayer (tax agent) and (or) in the details of its bank account on which operations are suspended according to the tax authority’s decision, the bank must continue to enforce that decision in relation to the taxpayer (tax agent) whose name has changed and in relation to operations on the account whose details have changed.
After receiving the decision of the tax authority or the court decision on the suspension of the operations on the bank accounts of the taxpayer (tax agent), banks shall not have the right to open new accounts or deposits for that taxpayer (tax agent), with exception of accounts on which, in accordance with the legislation, recovery is not permitted.
Article 114. Attachment of Property (Assets)
The attachment of property (assets) as a means of securing the enforcement of a decision on the recovery of tax shall be understood to be action taken by a tax authority to limit a taxpayer — legal entity’s right of ownership in respect of his assets.
Assets of taxpayers for tax arrears shall be attached by a court decision. If a taxpayer admits tax arrears, the tax authority may attach assets for the taxpayer's tax arrears on the basis of a tax authority’s decision.
Assets of taxpayers for tax arrears shall be attached in the event where it fails to fulfill the demand to repay the tax arrears within fifteen calendar days from the date of the demand was sent.
The attachment of property may be full or partial.
A full attachment of property shall be understood to be such restriction of a taxpayer’s rights in relation to his assets whereby the taxpayer does not have the right to dispose of the attached assets and the assets are possessed and used subject to the authorization of and under the control of the tax authority.
A partial attachment shall be understood to be such restriction of a taxpayer’s rights in relation to his assets whereby the assets are possessed, used and disposed of subject to the authorization of and under the control of the tax authority.
Attachment may only be applied only for the purpose of securing the fulfilment of an obligation to pay tax, penalties and a fine from the assets of a taxpayer, where a taxpayer has insufficient or no monetary resources in its bank accounts.
The attachment of property may be applied not earlier than a demand for the repayment of tax arrears was sent to the taxpayer by the tax authority in accordance with Article 117 of this Code.
An attachment order may be levied on the entire assets of a taxpayer.
Only those assets which are necessary and sufficient to meet the obligation to pay off tax arrears shall be attached.
Where the value of an item of immovable property of a foreign organization which does not carry on activities in the Republic of Uzbekistan through a permanent establishment exceeds amounts of tax arrears which are being recovered in respect of that item of immovable property, an attachment may be imposed on that item of immovable property in the event that the foreign organization does not have other assets in the territory of the Republic of Uzbekistan on which execution may be levied.
A decision to attach a taxpayer’s assets shall be adopted by the director (deputy director) of a tax authority in the form of an appropriate order (resolution).
The attachment of the assets of a taxpayer shall take place with the participation of attesting witnesses.
The authority carrying out the attachment of assets shall not have the right to refuse to allow the taxpayer (or a legal and (or) authorized representative of the taxpayer) to be present when the assets are attached.
Persons participating in the attachment of assets as attesting witnesses and specialists and the taxpayer (the taxpayer’s representative) shall have their rights and obligations explained to them.
Before assets are attached, the officials carrying out the attachment must present to the taxpayer (the taxpayer’s representative) the attachment order and documents which certify their powers.
A protocol on the attachment of assets shall be drawn up when an attachment is carried out.
The assets which are to be attached shall be listed and described in that protocol and the attached list with an exact indication of the name, quantity and individual characteristics of the items and, if possible, their value.
All items which are to be attached shall be shown to the attesting witnesses and the taxpayer (the taxpayer’s representative).
The director (deputy director) of the tax or customs authority who adopts the order on the attachment of assets shall specify the place where the attached assets are situated.
The alienation (except where carried out under the control of or with the permission of the tax authority making the attachment), embezzlement or concealment of attached property shall not be permitted.
At the request of a taxpayer in relation to which a decision has been taken to attach assets, a tax authority shall have the right to replace the attachment of assets with a pledge of assets in accordance with Article 107 of this Code.
A decision to attach assets shall be rescinded by an authorized official of a tax authority when the obligation to pay tax, penalties and fines is terminated or an agreement on the pledge of assets is concluded with Article 107 of this Code.
A tax authority shall notify a taxpayer of the cancellation of a decision on the attachment of assets within five days after the day of the adoption of that decision.
A decision to attach assets shall have effect from the time of the levying of an attachment order until that decision is rescinded by the authorized official of a tax authority who adopted the decision, or until that decision is rescinded by a higher tax authority, or by a court
The rules established by this Article shall apply equally to the attachment of assets of a legal entity which is a tax agent.
The rules established by this Article shall apply in relation to security for the payment of tax on profit for a consolidated group of taxpayers with account taken of the following special considerations:
the assets of the responsible member of this consolidated group of taxpayers shall be subject to attach first of all;
if the assets of the responsible member of the consolidated group of taxpayers is insufficient to fulfill that tax obligation, the tax authority shall have the right to attach the assets of other members of this consolidated group in part of the missing amount. In this respect, the director (deputy director) of the tax authority, on the basis of the information he has about taxpayers, shall independently determine the sequence in which the attachment of assets of other members of the consolidated group of taxpayers is applied.
Chapter 14. Demand for Paying Off Tax Arrears
Article 115. Ensuring the Fulfillment of Obligations to Pay Taxes
A taxpayer, which has the obligation to pay tax, shall be obliged to submit a payment order for its payment to the bank, which serves the taxpayer, no later than the date of payment established by this Code, irrespective of the availability of monetary resources in its bank account.
Where the taxpayer has outstanding tax arrears, the tax authority shall be obliged to send him a demand to pay off the tax arrears no later than three days after the time limit for payment expired.
Article 116. Demand to Pay Off Tax Arrears
A tax arrears payment demand shall be understood to be a notice to a taxpayer informing him of the amount of tax arrears outstanding and of the obligation to pay the outstanding amount of tax arrears within the specified time limit.
A tax arrears payment demand shall be sent to a taxpaying legal entity or an individual entrepreneur in part of its entrepreneurial activity where he has tax arrears or interest on it, provided for in Article 100 of this Code.
A tax arrears payment demand on tax on profit for a consolidated group of taxpayers shall be sent to the responsible member of this consolidated group of taxpayers.
A tax arrears payment demand shall be sent to a taxpayer irrespective of whether or not the taxpayer has been called to account for the violation of tax legislation.
The tax arrears payment demand must contain information concerning the amount of tax indebtedness, the amount of penalties charged at the time of sending the demand, the amount of fines and the measures for the recovery and for ensuring the fulfilment of the tax arrears payment obligation which would be used should the taxpayer fail to fulfil the demand.
The form of a tax arrears payment demand shall be approved by the State Tax Committee of the Republic of Uzbekistan.
The rules provided by this Chapter shall apply to demands sent to tax agents.
In the cases provided for by parts eight to ten of Article 120 and Article 122 of this Code, the taxpayer's tax arrears payment demand may be sent to other persons. In such cases, all the rules provided for in this Chapter shall also apply to tax arrears payment demands sent to these persons.
Article 117. Procedure and Time Limits for Sending a Tax Arrears Payment Demand
A tax arrears payment demand shall be sent to a taxpayer by the tax authority where the taxpayer is registered.
A tax arrears payment demand must be sent to the taxpayer no later than three working days from the date of identification of this arrears, or from the date of entry into force of the decision to pay off tax arrears identified as a result of a tax audit.
Demands for the repayment of tax arrears in the cases provided for in parts seven and eight of Article 116 of this Code shall be sent to other persons in the manner prescribed by parts one and two of this Article. From the date of receipt of the tax arrears payment demand, the specified persons shall be equated to taxpayers which has tax arrears in part of the fulfillment of this demand.
Article 118. Amendment to the Tax Arrears Payment Demand
Where the tax authority discovered circumstances leading to a change in the amount of tax arrears, penalties or fines for violating tax legislation after sending to the taxpayer a demand to pay off tax arrears, it shall be obliged to send this taxpayer an updated demand to pay off tax arrears or withdraw a previously sent demand. This rule shall not apply to cases of partial repayment by the taxpayer of the amounts of tax, penalties or fines arrears specified in the tax arrears payment demand.
An updated tax arrears payment demand or revocation of a previously sent demand shall be sent to the taxpayer within three days from the date of discovery of the circumstances that led to the changes specified in part one of this Article.
Article 119. Fulfillment of a Tax Arrears Payment Demand
In the event a legal entity, as well as an individual entrepreneur in part of its entrepreneurial activity, did not pay off tax arrears within thirty calendar days from the day they receive a tax arrears payment demand, and if the tax arrears remain unpaid even as a result of applying the measures provided for in Articles 120 — 122 of this Code, then the tax authorities shall levy execution on the taxpayer’s assets in the manner prescribed by Articles 123 — 124 of this Code.
Chapter 15. Recovery of Tax Arrears
Article 120. General Provisions on the Recovery of Tax Arrears
Where tax arrears are not paid or paid incompletely within the established time limit, this tax arrears shall be recovered in the manner prescribed by this Chapter.
The tax arrears shall be recovered from the taxpayer who has these tax arrears, and from other persons in the cases provided for by this Article.
Where the taxpayer's obligation to pay taxes has been secured by a bank guarantee, a surety bond of a third party or a pledge of assets, then in case of non-fulfillment or incomplete fulfillment of the demand to pay off the tax arrears by this taxpayer, the tax authority shall be obliged to recover the outstanding amount from the bank that provided the bank guarantee, the surety, or from the pledged assets respectively.
Recovery of tax arrears from a legal entity or individual entrepreneur shall be carried out in the manner prescribed by Articles 121 — 124 of this Code.
Recovery of tax arrears from a physical person who is not an individual entrepreneur shall be carried out in the manner prescribed by Article 125 of this Code.
Recovery of tax arrears from a legal entity or an individual entrepreneur shall be carried out first from monetary resources on its bank accounts, and, in case they are insufficient, from other assets of this person.
In the cases provided for by this Article, the tax arrears of a taxpayer or another person may be recovered from other persons, in the part that cannot be recovered from monetary resources on its bank accounts.
Where the proceeds of the taxpayer from the sale of goods (services) or other income were placed to the bank accounts of other persons, the tax arrears may be recovered from these persons.
Where the taxpayer transferred his money or other assets to other persons from the moment the taxpayer learned about the tax audit, then the recovery of the tax arrears of the taxpayer may be carried out from these persons.
The provisions of parts eight and nine of this Article shall also apply in cases where it is established that the transfer of proceeds from the sale of goods (services) or other income, or the transfer of monetary funds or other assets to other persons was made through a set of transactions.
In the cases specified in parts eight — ten of this Article, the recovery of tax arrears from the specified persons shall be carried out within the limits of the proceeds received by them for the goods (services) sold, limits of taxpayers’ other income, the funds, the value of other assets transferred to them by taxpayer. The tax authority, on the basis of the information available to it about these persons and depending on the amount of the tax arrears of the taxpayer, shall have the right to independently determine with respect to which of these persons and in what proportion to recover these arrears.
Recovery of tax arrears in the cases provided for in parts eight to ten of this Article shall be carried out as a result of judicial process.
Tax recovery in court shall also be carried out in cases where the obligation to pay it:
1) is based on a change by the tax authority of the qualification of the transaction, the status or nature of the taxpayer's activities;
2) arose as a result of tax control during transfer pricing with respect to transactions between interconnected parties.
The provisions of this Chapter shall also apply to the recovery of tax arrears on taxes paid in connection with the movement of goods across the customs border of the Republic of Uzbekistan, as well as to the recovery of tax arrears of tax agents.
Article 121. Recovering Tax Arrears from Monetary Resources on Bank Accounts
Where tax arrears are not paid or are not paid in full within the established time limit, the fulfilment of the tax arrears payment obligation shall be enforced by means of effecting recovery against monetary resources held in bank accounts (including funds on corporate cards).
The provisions of this Article shall apply exclusively to the recovery of tax arrears from legal entities and individual entrepreneurs.
The enforced recovery of tax arrears may be carried out from a taxpayer or tax agent who has outstanding tax arrears, and from other persons in the cases provided for by Articles 120 and 122 of this Code.
The recovery of tax shall take place by means of sending in electronic form to a bank with which accounts are held by a taxpayer (tax agent) a tax authority’s instruction for the debiting and transfer to the budget system of necessary monetary resources.
The standard form and the procedure for the sending to a bank of a tax authority’s instruction for the debiting and transfer of monetary resources from accounts of a taxpayer to the budget system shall be established by the State Tax Committee of the Republic of Uzbekistan in agreement with the Central Bank of the Republic of Uzbekistan.
The tax authority’s instruction shall be issued to the taxpayer's account no later than three working days after the expiration of the period established for the payment of tax, if the taxpayer has not independently sent a payment order for the payment of tax.
The tax authority’s instruction for the debiting and transfer of monetary resources from accounts of a obliged person to the budget system shall be subject to unconditional execution by the bank in the order of priority established by civil legislation.
The tax authorities shall decide to revoke unfulfilled (fully or partially) instruction for the debiting and transfer of monetary resources from accounts of a obliged person to the budget system in the following cases:
1) granting a deferral or installment plan with respect to tax arrears in accordance with Chapter 11 of this Code;
2) repayment of tax arrears, including by crediting overpaid or overly recovered amounts in accordance with Chapter 12 of this Code;
3) write-off of tax arrears recognized as non-recoverable in accordance with Article 96 of this Code;
4) reduction of the amounts of tax and penalties according to the updated tax reporting submitted in accordance with Article 83 of this Code.
Recovery of tax arrears can be carried out from deposit accounts on demand in national currency, and in case of insufficient funds in such accounts — from deposit accounts on demand in foreign currency of the obligated person. Recovery of tax arrears from foreign currency accounts of the obliged person shall be carried out in an amount which is equivalent to the recovery amount in national currency on the exchange rate set by the Central Bank of the Republic of Uzbekistan as at the date on which currency is sold.
The recovery of tax arrears shall not be carried out from funds which are placed on time limit deposit accounts before their expiry.
When recovering from foreign currency accounts, the director (deputy director) of the tax authority, in addition to the tax authorities’ debiting instruction, shall send instruction to the bank for the currency of the obliged person to be sold. This instruction shall be executed by the bank no later than the next business day after receiving it. Expenses associated with the sale of foreign currency shall be charged to this obligated person.
The tax authority’s instruction for the debiting and transfer of monetary resources from accounts of a obliged person to the budget system shall be executed by the bank no later than one business day following the day it received the specified instruction, and when recovering from foreign currency accounts — no later than two business days.
Where there are insufficient or no monetary resources in the accounts of a obliged person on the day on which a bank receives a tax authority’s instruction, that instruction shall be executed as and when monetary resources are received in those accounts, not later than one or two business days after the day of each such receipt, depending on the currency of the account.
The specified recovery order shall be executed provided that this does not violate the order of priority of payments which is established by the civil legislation.
The special considerations of recovering tax arrears from monetary funds in bank accounts of members of a consolidated group of taxpayers shall be established by Article 122 of this Code.
Article 122. Recovery of Tax Arrears from Monetary Resources on Bank Accounts from Members of a Consolidated Group of Taxpayers
When recovering tax arrears on tax on profit for a consolidated group of taxpayers from monetary resources on bank accounts of members of this consolidated group, the provisions of Article 124 of this Code shall apply with taking into account the considerations provided for in this Article.
The demand for the payment of the tax arrears on tax on profit for a consolidated group of taxpayers shall be adopted in the manner prescribed by Article 116 of this Code. Such a demand shall be is adopted after the expiry of the time limit established for the payment of tax on profit for the consolidated group of taxpayers.
Recovery of tax arrears from monetary resources on bank accounts shall be first effected from the monetary resources of the responsible member of the consolidated group of taxpayers.
Where there is no sufficient or no funds on bank accounts held by the responsible member of the consolidated group of taxpayers to cover the entire amount of tax arrears, the remaining amount that is unrecovered shall be recovered from the funds in the banks of the other members of this consolidated group.
The tax authority, on the basis of the information it has about taxpayers, shall independently determine the composition of those members of the consolidated group of taxpayers, whose funds on bank accounts will be used for recovery, as well as the sequence of such recovery from these members in case if funds in the bank accounts of the previous members is insufficient.
When tax arrears is repaid, including in part, by one of the members of the consolidated group of taxpayers, recovery proceedings shall be terminated with respect to the part which has been paid.
The rights and guarantees provided for by this Code for taxpayers shall extend to the members of the consolidated group of taxpayers, in relation to whom the decision on recovery has been issued.
Article 123. Recovery of Tax Arrears Out of Other Assets
Where the tax arrears of an obliged person may not be recovered in the manner prescribed by Articles 121 and 122 of this Code, the tax authority shall have the right to recover it from other assets of this obliged person, including from cash monetary resources.
Recovery of tax arrears shall be carried out within the limits of the amounts indicated in the demand for the payment o tax arrears, and with account taken of the amounts which have been recovered in accordance with Articles 121 and 122 of this Code.
The provisions of this Article shall apply exclusively to the recovery of tax arrears from legal entities and individual entrepreneurs.
The recovery of tax arrears out of the assets of the obliged person shall be carried out in consecutive order against:
1) monetary resources in cash that was not levied in accordance with Articles 121 and 122 of this Code;
2) assets that are not directly involved in the manufacture of products (goods), in particular, securities, currency assets, non-production facilities, light motor vehicles, office design items;
3) finished products (goods) and other tangible assets which are not used and (or) are not intended for direct use in production;
4) raw materials and other materials intended for direct use in production, as well as machine tools, equipment, buildings, installations and other fixed assets;
5) assets which have been transferred under an agreement to other persons for possession, use or disposal without ownership of those assets passing to those persons, where such agreements have been cancelled or invalidated in accordance with the established procedure for the purpose of securing the fulfilment of tax payment obligations;
6) other assets, with the exception of those intended for everyday personal use by a private entrepreneur or members of his family as defined in accordance with the legislation.
The violation of the sequence of recovery of tax arrears out of the assets of an obliged person, who has tax arrears established by part four of this Article, shall not be allowed.
The recovery of tax arrears out of the assets of an obliged person who has tax arrears shall be effected by a court decision. Where the taxpayer accepts the amount of the tax arrears, the recovery of the tax arrears out of the assets of the obliged person who has tax arrears may be carried out by a decision of the director (deputy director) of the tax authority.
The tax authority must send the corresponding decision in paper or in electronic form to the state body which is responsible for its compulsory execution within three working days from the date the decision on recovery of tax arrears out of the assets of the obligated person is adopted, for execution in the manner prescribed by legislation, with account taken of the special considerations provided for in this Article.
The form and procedure for sending to the state body for compulsory execution of the decision of the tax authority specified in part seven of this Article, as well as its content, shall be established by the State Tax Committee of the Republic of Uzbekistan.
The state executor shall perform enforcement actions and execute demands contained in the decision to recover tax arrears out of the assets of the obliged person within two months from the date of receipt of this decision.
The special considerations of the recovery of tax arrears out of other assets of the members of the consolidated group of taxpayers shall be established by Article 124 of this Code.
The provisions stipulated by this Article shall apply equally when recovering tax arrears by customs authorities, with account taken of the provisions established by customs legislation.
Article 124. Recovery of Tax Arrears Out Of Other Assets of the Members of a Consolidated Group of Taxpayers
When recovering tax arrears with respect to tax on profit from a consolidated group of taxpayers out of other assets of its members, the provisions of Article 123 of this Code shall be applied with account taken of the special considerations provided for by this Article.
The recovery of tax arrears from the assets of members of the consolidated group of taxpayers shall take place first and foremost out of cash resources and monetary resources held with banks of the responsible of this consolidated group, which were not levied in accordance with Article 122 of this Code.
In the event that the responsible member of the consolidated group of taxpayers has insufficient (no) cash resources and monetary resources held with banks which have not been seized in accordance with Article 122 of this Code, the recovery of tax arrears shall take place out of cash and bank resources of other members of the consolidated group of taxpayers.
In the event that members of the consolidated group of taxpayers have insufficient (no) cash resources and monetary resources held with banks which have not been seized in accordance with Article 122 of this Code, the recovery of tax shall take place out of other assets of the responsible member of the group.
Such recovery shall be effected in the sequence established by paragraphs 2 — 6 of the fourth part of Article 123 of this Code.
In the event that the responsible member of the group does not have sufficient assets, the recovery of tax shall take place out of other assets of other members of the group according to the order of priority established by paragraphs 2 — 6 of the fourth part of Article 123 of this Code.
The tax authority, on the basis of the information it has about taxpayers, shall independently determine the composition of those members in the consolidated group of taxpayers, out of whose other assets the recovery of tax arrears shall be carried out, and the sequence of such recovery from these members in case if assets of the previous members are insufficient.
Members of a consolidated group of taxpayers, with respect to whom a decision to recover tax arrears out of other assets has been adopted, shall enjoy the rights and guarantees provided for by this Code for taxpayers.
Article 125. Recovery of Tax Arrears of a Physical Person Who is Not an Individual Entrepreneur
Where a taxpayer who is a physical person and is not an individual entrepreneur (hereinafter in this Article referred to as a physical person) fails to fulfill within the established time limit an obligation to pay tax, the tax authority shall have the right to file a petition with a court for the recovery of tax arrears from property of this physical person (hereinafter in this Article referred to as a recovery petition).
A recovery petition may be accompanied by an application of the tax authority for the respondent’s assets to be attached by way of securing the claim.
Not later than the day on which the recovery petition is filed with a court, a copy of that petition shall be sent by the tax authority to the physical person from whom taxes are to be recovered.
The recovery petition shall be filed by a tax authority with a court where the total amount of tax which is recoverable from the physical person exceeds one million soums.
Cases concerning the recovery of a tax, a arrears from assets of a physical person shall be examined in accordance with legislation.
The recovery of tax arrears from assets of a physical person on the basis of a judicial act which has entered into legal force shall take place in accordance with the legislation, with account taken of the special considerations laid down in this Article.
The recovery of tax arrears from property of a physical person shall be effected in consecutive order against:
1) monetary resources held in bank accounts;
2) monetary resources in cash;
3) property which has been transferred under an agreement to other persons for possession, use or disposal without ownership of that property passing to those persons, where such agreements have been rescinded or invalidated for the purpose of securing the obligation to pay a tax;
4) other property, with the exception of property intended for everyday personal use by the physical person or members of his family as defined in accordance with the legislation.
Violation of the sequence of recovery of tax arrears from the property of a physical person, established by part seven of this Article, shall not be allowed.
Where tax arrears are recovered from property other than monetary resources of a physical person, the obligation to pay the tax shall be deemed to have been fulfilled from the moment when the property in question is sold and the indebtedness is settled put of the proceeds.
No penalties for the late remittance of taxes shall be charged from the date when the property in question is attached up to the day on which the proceeds are remitted to the budget system.
SECTION IV. REGISTRATION OF TAXPAYERS AND OBJECTS OF TAXATION
Chapter 16. Procedure for Registration of Taxpayers
Article 126. General Provisions on Registration of Taxpayers
For the purposes of tax control, legal entities and physical persons must be registered with the tax authorities.
The registration of tax residents of the Republic of Uzbekistan with a tax authority shall take place irrespective of the circumstances to which this Code links the origination of an obligation to pay a certain tax.
Registration and deregistration with tax authorities shall be free of charge.
The document which confirms the registration of a taxpayer shall be a certificate of assignment of a taxpayer identification number issued by a tax authority, or in the case of state registration of a taxpayer with simultaneous registration with tax authorities and state statistics authorities — a certificate of state registration.
On the basis of data concerning registration of taxpayers, the State Tax Committee of the Republic of Uzbekistan maintains the Unified Register of Taxpayers of the Republic of Uzbekistan.
The Ministry of Finance and the State Tax Committee of the Republic of Uzbekistan shall determine the content of the information contained in the Unified Register of Taxpayers of the Republic of Uzbekistan and the procedure for maintaining it.
A taxpayer’s details shall constitute tax secrets from the time of his registration with a tax authority unless otherwise provided by Article 29 of this Code.
Article 127. Taxpayer Identification Number
Upon registration, every taxpayer shall be assigned a single taxpayer identification number which shall be the same throughout the territory of the Republic of Uzbekistan, and his credentials shall be entered into the Unified Register of Taxpayers of the Republic of Uzbekistan.
The procedure and conditions for the assignment, use and alteration of the taxpayer identification number shall be determined by the Cabinet of Ministers of the Republic of Uzbekistan.
The tax authority shall indicate the taxpayer identification number in all notifications sent to the taxpayer.
Every taxpayer shall indicate his identification number in tax reportings, applications and other documents submitted to the tax authority and in other instances provided for in legislation, unless otherwise provided by this Article.
The taxpayer identification number must be indicated in:
licenses to engage in certain types of activities;
economic, civil and labor contracts which are concluded by legal entities and (or) physical persons;
documents which define or confirm the performance of transactions by legal entities and (or) individual entrepreneurs, including invoices and shipping documents;
monetary, settlement and payment documents;
other documents in cases established by legislation.
Article 128. Registration of Taxpayers
Legal entities shall be subject to registration with the tax authorities for their location and the location of their economically autonomous subdivisions.
Legal entities, which have economically autonomous subdivisions located on the territory of the Republic of Uzbekistan, must register with tax authorities for the location of each economically autonomous subdivision.
Legal entities which are non-residents and which carry out operations on commodity exchanges and (or) buying (selling) shares of joint-stock companies at organized auctions in the Republic of Uzbekistan, shall be subject to registration with the tax authority at the place of exchange trading.
The State Tax Committee and the Ministry of Finance of the Republic of Uzbekistan shall have the right to lay down special considerations relating to the registration with the tax authorities of major taxpayers.
Foreign legal entities which operate in the Republic of Uzbekistan through a representative office or permanent establishment shall be subject to registration with the tax authorities at the place of business.
Physical persons must register with the tax authorities for place of residence.
Legal entities and physical persons, in addition, shall be subject to registration with the tax authorities at the location of their immovable property, as well as on other grounds provided for by this Code.
The procedure for registration with the tax authorities on the grounds provided for by this Article shall be established by Articles 129 and 130 of this Code.
Article 129. Procedure for Registration of Taxpayers
The registration of legal entities and physical persons with tax authorities on the basis of information received in the manner prescribed by Article 128 of this Code shall be carried out by tax authorities independently, unless otherwise provided by this Article.
The tax authorities shall be obliged to ensure that taxpayers are registered (deregistered) on the basis of the data and information available to them and maintain records of information about taxpayers.
The registration with the tax authorities on the basis of information contained in the Unified Register of Taxpayers of the Republic of Uzbekistan shall be carried out with respect to:
1) a legal entity for its location, location of its branch and (or) representative office;
2) a foreign non-commercial non-governmental organization at the place of its activities on the territory of the Republic of Uzbekistan through a branch;
3) an individual entrepreneur for his place of residence.
The registration with the tax authorities of a foreign legal entity at the place of its activity through an accredited branch and (or) representative office shall be carried out on the basis of information provided by the Ministry of Investment and Foreign Trade of the Republic of Uzbekistan.
When a foreign legal entity carries out its activities through other economically autonomous subdivisions, its registration shall be carried out on the basis of its application for registration, unless otherwise provided by part three of this Article. The deregistration of a foreign legal entity from the tax authorities shall be carried out in a same manner.
An application for registration shall be submitted by a foreign legal entity to the tax authority no later than thirty calendar days from the date of the beginning of its activities in the territory of the Republic of Uzbekistan. An application for deregistration shall be submitted by such a person no later than fifteen calendar days from the date of termination of activities in the territory of the Republic of Uzbekistan.
When submitting an application for registration (deregistration), a foreign legal entity simultaneously with the specified application shall submit the documents necessary for registration (deregistration) to the tax authority. The list of such documents shall be approved by the State Tax Committee of the Republic of Uzbekistan.
The registration (deregistration) of a foreign legal entity with the tax authority as a tax resident of the Republic of Uzbekistan shall be carried out by the tax authority on the basis of an notice from that foreign legal entity of self-declaration as a tax resident of the Republic of Uzbekistan (of renunciation of the status of a tax resident of the Republic of Uzbekistan).
The procedure for registering non-resident legal entities carrying out operations on commodity exchanges and (or) buying (selling) shares of companies at organized auctions in the Republic of Uzbekistan shall be determined by the State Tax Committee of the Republic of Uzbekistan.
The registration of a legal entity as a responsible member of a consolidated group of taxpayers shall be carried out by a tax authority which registered an agreement on the creation of a consolidated group of taxpayers in accordance with Article 64 of this Code, within five days from the date of registration of that agreement. This legal entity shall be issued (sent) a notice of registration with the tax authority as a responsible member of the consolidated group of taxpayers within the same time limit.
The deregistration of a legal entity as a responsible member of a consolidated group of taxpayers shall be carried out by the tax authority within five days from the date of termination of the consolidated group of taxpayers in accordance with Article 68 of this Code. This legal entity shall be issued (sent) a notice of deregistration with the tax authority as a responsible member of the consolidated group of taxpayers within the same time limit.
The registration (deregistration) with a tax authority of a foreign legal entity that provides to physical persons in electronic form services which are specified in Article 282 of this Code, for which the place of sale is deemed to be the territory of the Republic of Uzbekistan, and which makes settlements directly with these physical persons, shall be carried out by the tax authority on the basis of an application for registration (deregistration) and other documents according to the list approved by the State Tax Committee of the Republic of Uzbekistan. The registration (deregistration) of a foreign legal entity, which operates as an intermediary and is deemed to be as a tax agent, shall be carried out in a similar manner.
An application for registration (deregistration) shall be submitted to the tax authority by the foreign organizations, specified in part thirteen of this Article, no later than thirty calendar days from the date on which those services begin (cease) to be provided. The registration (deregistration) shall be carried out by the tax authority on the basis of the corresponding application of the taxpayer and other documents, the list of which shall be approved by the State Tax Committee of the Republic of Uzbekistan.
Where the foreign legal entity violates the requirements of the tax legislation of the Republic of Uzbekistan specified in part thirteen of this Article, the tax authority shall have the right to deregister that legal entity with the tax authorities without submitting a relevant application.
The registration with the tax authority of a foreign legal entity that was previously deregistered on the indicated grounds shall be carried out by the tax authority on the basis of the taxpayer's application for registration and the documents specified in part thirteen of this Article.
The provisions of parts thirteen — sixteenth of this Article shall not apply to foreign legal entities that provide mentioned services in electronic form or act as intermediaries in the provision of such services directly through their permanent establishments in the Republic of Uzbekistan.
The registration with the tax authorities of physical persons who are not individual entrepreneurs shall be carried out by tax authorities for the place of residence of these physical persons on the basis of information presented by the bodies specified in Article 133 of this Code, or on the basis of applications of physical persons.
Physical persons, whose place of residence for tax purposes is determined at the place of stay of a physical person, shall have the right to apply to the tax authority at their place of stay with an application for registration.
Where a taxpayer has difficulties with determining the place of registration, a decision on the basis of the data provided by him shall be adopted by the tax authority.
Article 130. Special Considerations With Respect to the Registration of Foreign Persons Who Are Non-Residents of the Republic of Uzbekistan
A legal entity which is a non-resident of the Republic of Uzbekistan and which operates in the Republic of Uzbekistan through a permanent establishment, must submit to the tax authority an application for registration as a taxpayer no later than one hundred and eighty three calendar days from the date of commencement of its activity,.
This application shall be accompanied by originals or notarized copies, translated into the state language, of:
1) a document confirming state registration of this legal entity which is a non-resident of the Republic of Uzbekistan, in the country in which it is established;
2) special permits or licenses (if any);
3) a power of attorney or other document (if any) which certifies the right to perform actions in the Republic of Uzbekistan on behalf of a legal entity which is non-resident of the Republic of Uzbekistan;
4) an agreement (if any), the execution of which leads to the formation of a permanent establishment.
If a legal entity which is non-resident of the Republic of Uzbekistan has entered into an agreement for a period of more than one hundred and eighty three calendar days, the application for registration as a taxpayer and the documents provided for in part one of this Article shall be submitted to the tax authority no later than thirty calendar days from the date of commencement of its activity.
If a legal entity which is non-resident of the Republic of Uzbekistan has concluded several agreements, according to which the total period of activity will be more than one hundred and eighty three calendar days, the application for registration as a taxpayer and the documents provided for in part one of this Article shall be submitted to the tax authority no later than thirty calendar days from the date of commencement of its activity or the conclusion of an agreement, according to which the total period of activity under several agreements exceeds one hundred and eighty three calendar days.
A non-resident of the Republic of Uzbekistan which is a participant in a simple partnership (agreement on joint activities) which is concluded with a tax resident of the Republic of Uzbekistan, and whose activities lead to the formation of a permanent establishment, must submit to the tax authorities at the place of location (residence, stay) of a tax resident of the Republic of Uzbekistan, which is a party to the agreement on joint activities, an application for registration as a taxpayer within thirty calendar days from the date of commencement of the activity, with the attachment of notarized copies of the following documents:
1) agreement on joint activities;
2) an identity document of a physical person who is non-resident of the Republic of Uzbekistan, or a document which confirms state registration of a legal entity which is non-resident of the Republic of Uzbekistan, in the country of its registration, and which indicates the state registration number (or its equivalent).
Foreign citizens and stateless persons who receive income from sources in the Republic of Uzbekistan, which are not subject to taxation at the source of payment in accordance with the provisions of this Code, shall be obliged to submit to the tax authority at the place of stay (residence) an application for registration as a taxpayer within thirty calendar days from the date of commencement of activities, with the attachment of copies of the following documents:
1) confirming the identity of a foreign citizen or stateless person;
2) confirming tax registration in the country of citizenship (residence), if such a document is available;
3) confirming the amount of income from sources in the Republic of Uzbekistan, if such a document is available.
Foreign citizens or stateless persons who acquire property in the Republic of Uzbekistan, which is subject to property tax or land tax, must submit to the tax authority at the location of such property or land plot an application for registration as a taxpayer with copies of the following documents:
1) confirming the identity of a foreign citizen or stateless person;
2) confirming tax registration in the country of citizenship (residence), if such a document is available.
Article 131. Registration of Taxpayers by the Object of Taxation
The registration of a taxpayer shall be carried out by the tax authorities at the location of the object of taxation.
The registration of a taxpayer at the location of the object of taxation shall be carried out after its registration in the manner established by Article 129 of this Code, when, in accordance with this Code, the taxpayer has obtained obligation to pay land tax, property tax, tax for the use of water resources and (or) tax for the use of subsoil for non-metallic minerals not at the place of registration as a taxpayer.
A taxpayer who has obtained an obligation to pay land tax, property tax or tax for the use of water resources not at the place of his registration, must apply to the tax authorities for registration of taxable objects at their location in the manner prescribed by legislation, within ten days from the date of state registration of the right to the relevant land plot or from the date on which property tax or tax for the use of water resources created the object of taxation.
The obligation specified in part three of this Article shall not apply to physical persons who pay a property tax and land tax at the location of objects of taxation, and registration of which shall be carried out by tax authorities independently.
The obligation specified in the first part of this Article shall equally apply to:
a taxpayer of the excise tax which is paid when it sells gasoline, diesel fuel and gas to the end consumer;
a tax agent who created stationary jobs at the location of a territorially separate subdivision with more than twenty-five employees.
The taxpayer referred to in the second paragraph of part five of this Article must, within ten days from the date of sale of excisable products, apply to the tax authority at the location of the gas station for registration as a taxpayer of excise tax.
The tax agent specified in paragraph three of part five of this Article must, within ten days after the expiration of one month from the date of the creation of a separate subdivision, apply to the tax authority at the location of the separate subdivision for registration as a tax agent paying personal income tax.
The tax authority shall register a taxpayer at the location of the object of taxation no later than three working days from the date of the taxpayer's appeal, in accordance with the previously issued taxpayer identification number.
Article 132. Registration Data on a Taxpayer
For the purposes of this Code, a registration data on a taxpayer shall to be understood to mean information submitted by him, as well as information, which is sent by bodies, institutions and organizations to tax authorities in the manner prescribed by Article 133 of this Code.
The composition of the registration data on a legal entity shall include, in particular:
1) taxpayer identification number;
2) full and abbreviated name;
3) location (postal address);
4) organizational and legal form;
5) date, place and number of state registration;
6) the size of the authorized fund (charter capital) with respect to commercial organizations;
7) data on autonomous subdivisions;
8) the full list of participants, with indicating the taxpayer identification number of participants who are residents of the Republic of Uzbekistan, the country of registration of the foreign participant and the share of each participant in the authorized fund (charter capital) with respect to commercial organizations.
The composition of the registration data on physical persons shall include their personal data:
1) taxpayer identification number;
2) surname, name, patronymic;
3) citizenship;
4) personal identification number of a physical person with respect to citizens of the Republic of Uzbekistan;
5) the series and number of the passport, the date and place of its issue;
6) place of residence (address).
For individual entrepreneurs, in addition to the information specified in the registration data specified in part three of this Article, shall also include:
1) the date, place and number of state registration;
2) type of activity;
3) place of business activity.
The procedure for maintaining registration data on taxpayers, providing these data to third parties, as well as the special considerations of forming the composition of data with respect to the certain categories of taxpayers, shall be established by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
Article 133. Obligations of Bodies, Institutions and Organizations to Provide Information to Tax Authorities
Bodies which carry out the state registration of legal entities and physical persons as business entities shall be obliged to submit to the tax authority at the place of registration of the person an extract from the State Register of relevant legal entities, information about the director (person performing functions of the director), personal identification number of a physical person and his passport data no later than ten days from the date of state registration of these persons. These bodies shall also be obliged to inform the tax authority about any alterations made to the state register and which concerns the relevant persons, no later than three days from the date of such alterations.
The internal affairs bodies shall be obliged to report on a monthly basis to the tax authorities at the place of their location about the facts of issuing passports, including replacing lost or expired ones, as well as about canceled passports, and also inform the tax authorities at the place of their location within three days when they discover the facts of the absence of a rental (lease) agreement, an agreement for the provision of residential premises for free use or non-compliance with the mandatory registration of a rental (lease) agreement with the tax authorities.
Bodies which carry out the state registration of rights in immovable property shall be obliged to provide information concerning the land plot and other immovable property located in the territory under their jurisdiction, and concerning the owners thereof to the tax authorities at the place of their location before February 1 of each year, current as at January 1 of the current year, as well as about the right to a land plot and other immovable property which arose within a year with presenting that information within ten days from the date of state registration of rights to this immovable property.
Bodies which carry out the recording and (or) registration of users of natural resources and the licensing of activities associated with the use of such resources must give notice of the granting of rights to such use which constitute an object of taxation to the tax authorities for their locality within ten days after the registration of (issuance of an appropriate licence or permit to) the user of natural resources.
Bodies which carry out the recording of water resources shall be obliged to report the amount of water used without measuring devices to the tax authorities at the place of water use or consumption based on the results of the previous year no later than January 15.
The bodies which issue licenses and (or) other permissive documents shall be obliged to inform the tax authority at the location of the persons to whom these documents were issued about the issuance of such documents, their cancellation, suspension or termination of their validity within ten days from the date of the relevant event.
Bodies and organizations which accredit representative offices of foreign legal entities shall be obliged to provide the tax authorities at the location of the representative office the information on accreditation (revocation of accreditation) of representative offices of foreign legal entities within ten days from the date of the relevant event.
The body authorized to maintain the register representations of international organizations and foreign non-commercial non-governmental organizations shall be obliged to report the insertion of information in the corresponding register (amendments made to the register) to its local tax authority within ten days from the date of accreditation (deprivation of accreditation) or of that information being inserted (of those amendments being made).
Guardianship and custodianship bodies shall be obliged to give notice of the establishment of a guardianship or custodianship and the administration of property in relation to physical persons who own (possess) property, including the placing of a child who owns (possesses) property in an adoptive family, and of subsequent changes associated with such guardianship, custodianship or administration of property, to the tax authorities for the locality of those bodies within ten days from the day on which the relevant decision is adopted.
Bodies (institutions) authorized to perform notarial acts shall be obliged to report the issuance of certificates of contracts for the sale of immovable property, property lease contracts and the amount of rent, certificates of inheritance rights and the notarial certification of gift agreements to the tax authorities at their location not later than five days from the day on which such notarial certification occurs. In this respect, information on the certification of gift agreements should contain information on the degree of kinship between the donor and the done
Bodies which issue work permits or patents to foreign citizens or stateless persons shall be obliged to report information on the migration registration at a place of stay of foreign citizens or stateless persons. Such information shall be provided in relation to foreign citizens and stateless persons who are not registered with the tax authorities and in relation to whom documents required for the drawing-up of a work permit or a licence have been accepted for consideration. The specified bodies shall report this information to the tax authorities at their location no later than the day following the day on which the above-mentioned documents are accepted.
The Central Securities Depository shall provide to the State Tax Committee of the Republic of Uzbekistan information on transactions with shares registered by it and by investment intermediaries on a monthly basis, no later than the tenth day of the month following the reporting month.
The customs authorities shall be obliged to provide the tax authorities information on a monthly basis:
on an export-import operations, as well as on the movement of goods across the customs border of the Republic of Uzbekistan, including those which carried out in the form of e-commerce;
on the facts of storage of goods by non-residents of the Republic of Uzbekistan in customs warehouses of the Republic of Uzbekistan.
The body which that determines the domain names system of the national segment of the worldwide information network Internet, shall provide the tax authorities access to information about domain names administrators by providing software for connecting to the corresponding database.
The forms of information which is to be provided on paper or in electronic form specified in this Article, as well as the procedure for filling out that forms, shall be approved by the State Tax Committee of the Republic of Uzbekistan.
The procedure for submitting information to tax authorities in electronic form shall be determined by agreement of the interacting parties.
The information, which is specified in this Article, shall be provided to the tax authorities without consideration.
The information, which is provided for in this Article, shall be also provided to the tax authorities according to their requests within five days from the date of receipt of the request, by the bodies, institutions, organizations or officials specified in this Article and which are authorized to perform notarial acts.
Article 134. Obligations of Banks in Connection with the Exercise of Tax Control
A bank shall be obliged to present to the tax authority for its location information on the opening (closing) an account or deposit (deposit account), on changes in the details of an account or deposit (deposit account) of a legal entity or physical person (hereinafter referred to in this Article as the client) in electronic form within three days from the date of the relevant event.
The procedure and forms of the presentation by the bank of the information provided for in part one of this Article shall be established by the Central Bank of the Republic of Uzbekistan in agreement with the State Tax Committee of the Republic of Uzbekistan.
Bank shall be obliged to issue to the tax authorities the following information in relation to the client of the bank at the request of the tax authority, within three days from the date of receipt of the written request:
1) a statement of accounts and deposits (deposit accounts) held with the bank;
2) a statement of the balances of monetary resources in accounts and deposits (deposit accounts) of the client;
3) statements on operations on accounts and on deposits (deposit accounts) of the client;
4) other information with respect to the fulfillment of tax obligations by the taxpayer.
The information provided for in part three of this Article may also be requested by the tax authority from the bank on the basis of a request from the competent authority of a foreign state in cases stipulated by international treaties of the Republic of Uzbekistan.
The form and procedure for sending a request by the tax authority to the bank and the procedure for submitting information by banks at the request of tax authorities shall be established by the State Tax Committee of the Republic of Uzbekistan and the Central Bank of the Republic of Uzbekistan.
SECTION V. TAX CONTROL
Chapter 17. General Provisions Concerning Tax Control. Tax Audits
Article 135. General Provisions Concerning Tax Control
Tax control shall be understood to mean activities carried out by authorized bodies involving the checking of compliance with tax legislation by taxpayers and tax agents.
For the purposes of tax control, state bodies, institutions, organizations and officials which are specified in Article 133 of this Code, shall be obliged to provide the tax authorities with information necessary for registration of taxpayers in the manner prescribed by this Code.
For the purposes of tax control, banks shall fulfill the obligations assigned to them by Article 134 of this Code.
Tax authorities, customs authorities and other authorized bodies, prosecutors and investigative bodies shall inform one another of materials in their possession concerning violations of tax legislation and concerning tax audits performed by them. These bodies shall exchange other necessary information for carrying out their assigned tasks. The procedure of informing shall be determined by agreement between the indicated bodies.
Documents or other information concerning a taxpayer (tax agent) which has been received in violation of the provisions of the legislation may not serve as a basis for bringing this person to responsibility for committing a tax offense.
Tax control materials must be registered with the tax authority at the place of registration of the taxpayer in the manner established by the State Tax Committee of the Republic of Uzbekistan no later than the next business day from the date of its completion.
Article 136. Forms of Tax Control
Tax authorities shall exercise tax control in the form of:
1) tax audits;
2) tax monitoring.
The customs authorities shall exercise tax control within their competence in relation to taxes payable in connection with the movement of goods across the customs border of the Republic of Uzbekistan, in accordance with this Code and customs legislation.
Article 137. Types of Tax Audits
Tax audits shall be conducted with the purpose of checking compliance by taxpayers, payers of levies and tax agents with tax legislation.
A tax audit shall be carried out on the basis of the study and analysis of data concerning the taxpayer which is available with the tax authorities.
Tax authorities shall perform the following types of tax audits:
1) a cameral (in-house) tax inspection;
2) an on-site tax inspection;
3) an audit of tax operations.
Article 138. Cameral Tax Inspection
A cameral tax inspection shall be performed by a tax authority on the basis of an analysis of tax reporting, financial statements submitted by a taxpayer (tax agent), as well as other documents concerning a taxpayer’s activities which are in the possession of the tax authority.
A cameral tax inspection shall be performed on the basis of the order of the director (deputy director) of the tax authority. The order shall indicate the name and identification number of the taxpayer, the surname, first name, patronymic and position of the inspectors, the timing of the inspection, the inspected period, the types of taxes and levied to be inspected.
A cameral tax inspection may be performed in respect of tax periods for which the limitation period, established by Article 88 of this Code, has not been expired.
In the course of a cameral tax inspection, the tax authority may request from the taxpayer (tax agent, third party) accounting documents, explanations with respect to the submitted tax reporting and accounting documents, as well as other information related to the calculation and payment of taxes and levies, in the manner prescribed by this Code.
The requested documents and explanations must be submitted to the tax authority within five days from the date of receipt of the relevant request. The time limit for the submission of the requested documents may be extended by the tax authority at the request of the taxpayer, which shall indicate the reasons and the required time limit for their submission.
Where a taxpayer submits an updated tax reporting in which the amount of the calculated tax has been changed in the manner prescribed by Article 83 of this Code, and it does it before the end of a cameral tax inspection, then a cameral tax inspection shall be conducted with account taken of the submitted updated tax reporting.
In the event that a cameral tax inspection reveals discrepancies and (or) errors in the submitted tax reporting, the tax authority shall send to the taxpayer, in the manner prescribed by this Code, a request to amend the tax reporting.
The date of the submission of the request for amendments to the tax reporting shall be considered as the date of completion of the cameral tax inspection. A cameral tax inspection shall be also considered completed if no discrepancies and (or) errors have been identified, based on the results of the study and analysis.
The taxpayer shall be obliged to submit the updated tax reporting on the corresponding taxes and levies or justification for the revealed discrepancies with the submission of supporting documents in the manner prescribed by this Code, within ten days from the date of receipt of the request for making amendments.
The taxpayer shall have the right to submit a conclusion of the organization of tax consultants, as a justification for the revealed discrepancies specified in the corresponding request of the tax authority. The organization of tax consultants may submit such a justification independently on behalf of the taxpayer, on the basis of an agreement with the taxpayer.
The justifications submitted by the taxpayer shall be reviewed by the director (deputy director) of the tax authority within fifteen days from the date of receipt of the corresponding documents (justifications).
In case of full or partial consent with the submitted justifications for the revealed discrepancies, the tax authority shall send the taxpayer a notification about the cancellation of a previously sent request or an updated request to amend tax reporting.
If the taxpayer has not submitted updated tax reporting (including after the updated request) or has not provided justification for the discrepancies revealed or the justifications provided by him have been deemed insufficient, then the tax authority shall have the right to assign an audit of tax operations of the taxpayer.
A cameral tax inspection shall not be performed for a tax (reporting) period for which tax monitoring is carried out. This rule does not apply in case of early termination of tax monitoring.
The rules provided for by this Article shall equally apply to cameral tax inspections concerning tax agents and other persons who are charged with the obligation to submit tax reporting, unless otherwise provided by this Code.
A cameral tax inspection with respect to the refund of the value added tax shall be performed in the manner established by the State Tax Committee of the Republic of Uzbekistan, within sixty days from the date the taxpayer submits an application for the refund of the amount of value added tax and without an order from the tax authority. The request to amend the tax reporting shall not be issued as a result of a cameral tax inspection in respect of the refund of the amount of value added tax.
The tax authorities shall adopt a decision to refund or a reasoned decision to refuse (in full or in part) to refund the amount of value added tax based on the results of a corresponding cameral tax inspection.
The regulation on performing a cameral tax inspection shall be approved by the State Tax Committee of the Republic of Uzbekistan.
Article 139. On-Site Tax Inspection
An on-site tax inspection shall be understood to be an audit of the fulfillment of certain obligations of taxpayers in the area of the calculation and payment of taxes and levies, as well as other obligations stipulated by tax legislation.
During an on-site tax inspection, there shall be carried out an analysis of accounting documents, the movement of inventories and monetary resources, as well as other information with respect to the taxpayer’s activities.
When performing on-site tax inspections, the tax authorities shall have the right to implement preventive measures and time-keeping surveys, to check the use of cash registers and payment terminals and other tax control measures.
An on-site tax inspection shall be carried out on the basis of the order of the director (deputy director) of the tax authority. The order shall indicate the name of the taxpayer, as well as the surname, first name, patronymic and position of the inspectors, the timing and purpose of the inspection.
An on-site tax inspection shall be carried out within ten days.
The date specified in the order on its assignment shall be considered to be the beginning of the time limit for conducting an on-site tax inspection.
The end of the time limit for the on-site tax inspection shall be the day the taxpayer receives the act with respect to the on-site tax inspection.
The tax authorities shall not charge taxes and levies based on the results of the on-site tax inspection.
The regulation on conducting an on-site tax inspection shall be approved by the State Tax Committee of the Republic of Uzbekistan.
Article 140. Audit of Tax Operations
An audit of tax operations shall be understood the verification of the correctness of the calculation and payment of taxes and levies for a certain period.
An audit of tax operations shall be carried out with respect to a taxpayer (tax agent) which belongs to the category of taxpayers (tax agents) with a high risk.
Tax authorities shall send a notice of an audit of tax operations to the taxpayer at least thirty calendar days before the start of the audit of tax operations.
The notice shall indicate the date of the start of the audit of tax operations, a list of issues to be verified, a preliminary list of requested documents, as well as other data required for conducting an audit of tax operations.
The tax authority shall have the right to start an audit of tax operations without prior notification of the taxpayer where there are signs of tax evasion, in agreement with the State Tax Committee of the Republic of Uzbekistan.
An audit of tax operations of persons classified as major taxpayers shall be carried out by the Interregional State Tax Inspectorate for Major Taxpayers on the basis of an order from the director of the inspectorate (deputy director of the inspectorate).
Officials of other tax authorities may be involved in an audit of tax operations.
The order of the director (deputy director) of the tax authority on conducting an audit of tax operations shall indicate the name and identification number of the taxpayer which is being audited, the surname, first name, patronymic and position of the auditors, the time limits and purpose of the audit of tax operations.
The order of the director (deputy director) of the tax authority on the conduct of an audit of tax operations shall approve the program for its conducting.
Unless otherwise provided by Article 143 of this Code, the audit of tax operations may cover only the period following the last audit, for which the limitation period established by Article 88 of this Code has not expired.
In case of voluntary liquidation of a taxpayer, an audit of tax operations may cover no more than three years of the taxpayer's activity immediately preceding the year of the audit.
The taxpayer shall not be allowed to amend and make additions to the tax reporting of the audited period during the period of the an audit of tax operations.
The regulation concerning performance of an audit of tax operations shall be approved by the State Tax Committee of the Republic of Uzbekistan.
Article 141. Time Limit of an Audit of Tax Operations
An audit of tax operations may not last more than thirty days, unless otherwise provided by Article 142 of this Code.
The time limit for performing an audit of tax operations shall begin on the day the taxpayer (tax agent) receive the order which assigns an audit of tax operations.
Article 142. Extension of the Time Limits for Conducting an Audit of Tax Operations
The time limit for conducting an audit of tax operations may be extended up to two months, and in exceptional cases — up to three months, unless otherwise provided by this Article.
The grounds and procedure for extending the period of an audit of tax operations shall be established by the State Tax Committee of the Republic of Uzbekistan.
The director (deputy director) of the tax authority shall also have the right to extend an audit of tax operations for:
1) requesting documents (information) in accordance with part one of Article 146 of this Code;
2) receiving information from foreign state bodies within the framework of international treaties of the Republic of Uzbekistan;
3) conducting expert examinations;
4) translation of documents submitted in a foreign language.
The extension of an audit of tax operations period on the basis specified in paragraph 1 of part three of this Article shall be allowed no more than once for each person from whom documents are requested.
The extension of an audit of tax operations period shall be formalized by an appropriate order of the director (deputy director) of the tax authority, which performs an audit of tax operations.
The total time limit of an audit of tax operations cannot exceed six months.
The time limit of an audit of tax operations shall end on the day of drawing up (signing) the act on the conducted audit of tax operations.
Article 143. Restrictions With Respect to Audit of Tax Operations
Tax authorities shall not entitled to conduct more than one audit of tax operations of a taxpayer for the same taxes for the same period, unless new circumstances are revealed that were not known to the tax authority during the an audit of tax operations. Where new circumstances are revealed, the tax authority shall have the right to appoint a repeated audit of tax operations.
Article 144. Access of Officials to the Taxpayer's Site
Officials of tax authorities who are directly involved in carrying out a tax audit shall be allowed access to the site and premises of the person being audited upon presentation by those officials of their official identity cards and the order (decision) of the director (deputy director) of a tax authority concerning the performance of a tax audit of that person.
Officials of tax authorities who are directly involved in carrying out a tax audit may inspect sites or premises of the audited person which are used for entrepreneurial activities or inspect objects of taxation in order to establish whether or not actual data relating to those objects correspond to the documentary data provided by the audited person.
In the event that officials of tax authorities who are performing a tax audit are denied access to the above-mentioned sites or premises (with the exception of residential premises), the official of the tax authority shall draw up an act to be signed by him and by the audited person. On the basis of that act the tax authority shall have the right independently to determine the amount of tax payable using data possessed by it concerning the audited person or by analogy. In the event that the audited person refuses to sign the above-mentioned act, a note to that effect shall be made in the report.
Officials of tax authorities carrying out a tax audit shall not be allowed access to residential premises (dwellings) without the consent or against the will of the physical persons residing therein other than in the instances established by law or on the basis of a court decision.
Article 145. Inspection of Sites and Premises
An official of a tax authority who is carrying out a tax audit, for the purpose of clarifying circumstances which are of significance in ensuring the completeness of the audit, shall have the right to carry out an inspection of the sites and premises of the person in relation to whom the tax audit is carried out as well as documents and items.
The inspection of documents and items in cases not provided for in the first part of this Article shall be permitted if the documents and items were received by an official of a tax authority as a result of earlier tax control actions or if the owner of the items consents to such inspection.
The inspection shall be made in the presence of attesting witnesses.
The person in relation to whom the tax audit is carried out or his representative and specialists shall have the right to participate when an inspection is made.
Where necessary, photography and video recording shall be used, documents shall be copied and other actions shall be undertaken when carrying out inspections.
A protocol shall be drawn up concerning the inspection.
Article 146. Request of Documents When Performing a Tax Audit
An official of a tax authority conducting a tax audit shall have the right to request from the audited person the documents necessary for the audit.
A request for documents shall be transmitted to the director (the legal or authorized representative) of the person who is being audited in person against signed receipt.
Where it is impossible for a request for documents to be transmitted in the manner stated above, it shall be sent in accordance with the procedure established by part two of Article 19 of this Code.
Requested documents may be presented to a tax authority by an audited person in person or through a representative, sent by registered mail or transmitted in electronic form via telecommunications channels or through a taxpayer’s personal account.
Documents in paper form shall be presented in the form of copies certified by the audited person. It shall not be permissible to require the notarial certification of copies of documents which are presented to a tax authority (an official), unless otherwise provided by the legislation.
Documents prepared in electronic form in the formats prescribed by the federal executive body in charge of control and supervision in the area of taxes and levies shall be presented via telecommunications channels or via a taxpayer’s personal account
Where ta[payer compiles accounting documents in electronic form, a taxpayer (tax agent) shall be obliged during a tax audit, at the request of tax officials, to submit copies of such documentation in hard (paper) copy, with the exception of invoices registered in the information system of electronic invoices.
Where necessary, an official of a tax authority shall have the right to inspect the originals of documents.
Documents which have been requested during a tax audit shall be produced within five days from the day on which the relevant request is received.
In the event that an audited person is unable to produce requested documents within the established time limit, that person shall notify the auditing officials about this in writing.
A notice of the impossibility of producing the documents within the established time limit, stating the reasons why the requested documents cannot be produced must be sent by the taxpayer within the day following the day of receipt of the request for submission of documents. The notice must indicate the time period within which the audited person is able to produce the requested documents.
Within two days after receiving such notification, the director (deputy director) of the tax authority may, on the basis of that notification, extend the time limit for the production of documents or refuse to extend that time limit, to which effect a separate decision shall be rendered.
The refusal of the audited person to produce the requested documents shall be noted in the protocol drawn up by an official of the tax authority. The protocol shall be signed by an official of the tax authority and the audited person. In case of refusal of the audited person to sign the protocol, a corresponding entry shall be made in it. A refusal by an audited person to produce documents requested in the course of a tax audit or failure to produce them within the established time limit shall be deemed to be a basis for their seizure in the manner provided for in Article 148 of this Code.
In the course of a tax audit and other tax control measures, tax authorities shall not be entitled to request from the audited entity documents which were previously submitted to tax authorities during cameral or on-site tax inspections of the audited entity, as well as documents submitted in the form of certified copies during tax monitoring.
The documents may be re-requested from the audited entity if they were previously submitted to the tax authority in the form of originals which were subsequently returned to the person being audited or to cases where documents submitted to a tax authority were subsequently lost by reason of force majeure.
Article 147. Request of Documents (Information) from Third Parties
A tax authority official who is performing a tax audit shall have the right to require a contract partner or other persons possessing documents (information) relating to the activities of an audited taxpayer to produce those documents (that information).
Requests for documents (information) relating to the activities of an audited taxpayer may also be made when examining tax audit materials on the basis of a decision of the director (deputy director) of a tax authority concerning the performance of additional tax control measures.
A tax authority which is carrying out tax audits or other tax control measures shall send an instruction to request documents (information) relating to the activities of the audited taxpayer to the tax authority at the place of registration of the person from whom that documents (information) are to be requested. In this respect, there shall be indicated in the instruction the tax control measure in the course of the performance of which the need for the production of documents (information) arose and, where information regarding a particular transaction is requested, details which enable that transaction to be identified.
Within three days after receiving an instruction, the tax authority where the person from whom the documents (information) are to be requested is registered shall send to that person a request for the production of documents (information).
That request shall be accompanied by a copy of the instruction to request and obtain documents (information).
A person which has received a request to submit documents (information) shall fulfil that request within five days of receiving it or shall give notice within the same time period that it does not possess the requested documents (information).
If the requested documents (information) cannot be submitted within the specified time period, the tax authority, at the request of the person from whom the documents are requested, shall have the right to extend the time limit for the submission of the documents (information).
Requested documents shall be submitted with account taken of the provisions laid down in parts three through five and eleven of Article 146 of this Code.
The procedure for requesting documents (information) provided for by this Article shall also apply when requesting documents (information) concerning members of a consolidated group of taxpayers.
The procedure for requesting documents (information) provided for in this Article shall also apply when requesting documents and information concerning tax agents.
A person who has received a request to submit documents (information) shall have the right to refuse to submit documents (information) at a request that does not comply with the provisions of this Article.
Article 148. Seizure of Documents and Items
The seizure of documents and items shall take place on the basis of a substantiated order of the tax authority official carrying out an tax audit.
Documents and items may not be seized at night-time.
Documents and items shall be seized in the presence of attesting witnesses and the persons whose documents and items are being seized. Where necessary, a specialist shall be invited to participate in the seizure.
Before the seizure commences, the tax authority official shall present the order to carry out the seizure and shall explain to the persons present their rights and obligations.
The tax authority official shall propose the person whose documents and items are to be seized to hand them over voluntarily; in the event of a refusal, the seizure shall be carried out compulsorily.
In the event that the person from whom documents and items are to be seized refuses to open premises or other places where the documents and items which are to be seized may be kept, the tax authority official may do this himself, avoiding unnecessary damage to locks, doors and other objects.
Documents and items which are not related to the subject of the tax audit shall not be seized.
A protocol on the seizure of documents and items shall be drawn up in compliance with the requirements which are laid down in Article 154 of this Code and this Article.
Documents and items which have been seized shall be listed and described in the seizure protocol or in attached lists with an exact indication of the name, quantity and individual characteristics of the items and, where possible, the value of the items.
In cases where copies of documents of an audited person are not sufficient for the performance of tax control measures and tax authorities have sufficient grounds to believe that the originals of the documents may be destroyed, concealed, altered or replaced, a tax authority official shall have the right to confiscate the originals of the documents in accordance with the procedure prescribed by this Article
Where such documents are seized, copies of them shall be made which shall be certified by a tax authority official and provided to the person from whom they are seized.
Where copies cannot be made or provided at the same time as documents are seized, the tax authority shall provide them to the person from whom they were seized within five days after the seizure.
All documents and items which are seized shall be shown to the attesting witnesses and other persons participating in the seizure and, where necessary, shall be packed at the place of seizure.
The seized documents must be numbered, bound and sealed or signed by the person from whom they are seized. In the event that a person refuses to seal or sign seized documents, a special note to this effect shall be made in the seizure protocol.
A copy of the protocol on the seizure of documents and items shall be delivered against receipt or sent to the person from whom they were seized.
Article 149. Participation of a Witness
Any physical person of adult age who may be aware of any circumstances that are important for the implementation of tax control may be summoned as a witness to testify.
The testimony of the witness shall be recorded in the protocol.
The following persons cannot be involved as a witness who:
due to their physical or mental disabilities are not able to correctly perceive the circumstances that are important for the implementation of tax control;
has received the information necessary for tax control in connection with the performance of their professional duties, and where such information refers to the professional secrecy of these persons. In particular, such persons shall include a lawyer, auditor, tax consultant.
The testimony of a witness can be obtained at the place of his stay where, due to illness, old age or disability, he is unable to arrive to the tax authority.
An official of the tax authority shall warn the witness about liability for refusing or avoiding giving testimony or for knowingly giving false testimony before receiving his testimony, and a note on that shall be made in the protocol, certified by the signature of the witness.
For employees summoned to the tax authority as witnesses, the salary at the main place of work shall be retained during their absence from work in connection with the appearance at the tax authority.
Article 150. Expert Examinations
Where necessary, an expert may be engaged to participate in the conduct of specific tax audit procedures.
The involvement of a person as an expert shall be carried out on a contractual basis between the tax authority and the expert.
An expert examination shall be commissioned in the event that specialist knowledge in the field of science, art, technology or crafts is required in order to resolve matters which arise. The possession of such knowledge by an official of the tax authority who are exercising tax control shall not exempt from the need to appoint an expert examination.
The questions posed to the expert and his opinion cannot go beyond the bounds of the expert's specialist knowledge.
An expert examination shall be commissioned by an order of the director (deputy director) of the tax authority on the basis of the petition of the official who is conducting the tax audit.
The order must indicate the grounds on which the expert examination is commissioned, the name of the organization that must conduct the examination, or the surname, name, patronymic of the expert, the name of the organization at which the examination is to be carried out, the questions posed to the expert and the materials submitted to him.
An expert shall have the right to acquaint himself with audit materials relating to the subject of the examination and to make requests to be provided with additional materials.
The expert shall give an opinion in writing in his own name. The expert’s opinion must contain an exposition of the research carried out, the conclusions reached as a result of that research and substantiated answers to the questions submitted.
An expert may decline to give an opinion if the materials provided to him are insufficient or if he does not possess the knowledge required to carry out the expert examination.
The tax authority official who issued the order commissioning an expert examination must acquaint the person to be audited with that order and inform him of his rights as provided for in part ten of this Article, to which effect a protocol should be drawn up.
When an expert examination is commissioned, the audited person shall have the right:
1) to challenge the expert;
2) to request that an expert be appointed from among persons designated by him;
3) to submit additional questions in order to receive the expert’s opinion on them;
4) to be present when the expert examination is carried out subject to the permission of the tax authority official and to give explanations to the expert;
5) to acquaint himself with the expert’s opinion;
6) submit a reasoned opinion on the expert’s opinion.
Article 151. Engagement of a Specialist
Where necessary, a specialist who possesses specialized knowledge and skills and who has no personal interest in the outcome of the case may be engaged to participate in the conduct of particular tax control procedures.
A person shall be engaged as a specialist on a contractual basis between the tax authority and the specialist.
A person’s participation as a specialist shall not preclude him from being questioned as a witness with respect to the same circumstances.
Article 152. Participation of a Translator
Where necessary, a translator may be engaged to participate in the conduct of tax control procedures.
The translator must be a person who has no personal interest in the outcome of the case and who speaks the language of which a knowledge is required for translation, or who understands the signs of a mute or deaf physical person.
A person shall be be engaged as a translator on a contractual basis between the tax authority and the specialist.
The translator must appear when summoned by the tax authority official who appointed him and perform the translation work which is assigned to him with accuracy.
Article 153. Participation of Attesting Witnesses
In the instances which are provided for in this Code, attesting witnesses shall be called when tax control procedures are carried out.
No fewer than two attesting witnesses must be called.
Any physical persons who have no personal interest in the outcome of the case may be called as attesting witnesses.
Officials of tax authorities shall not be permitted to participate as attesting witnesses.
Attesting witnesses shall be required to certify in the protocol of proceedings the fact, nature and results of the procedures carried out in their presence. They shall have the right to make observations on the procedures carried out which must be entered in the protocol of proceedings. Where necessary, attesting witnesses may be questioned about the above-mentioned circumstances.
Article 154. General Requirements Relating to the Protocol Where Tax Control Procedures are Carried Out
A protocol shall be drawn up in the course of carrying out tax control procedures. The protocol shall indicate:
1) the grounds, type and period of the inspection;
2) the place and date of the carrying out the particular procedure;
3) the time of the commencement and termination of the procedure;
4) the position, surname, first name, patronymic of the person who drew up the protocol;
5) the surname, first name, patronymic of each person who participated in the procedure or was present when it was carried out, and, where necessary, the address of each person;
6) the nature of the procedure, the sequence in which it was carried out;
7) significant relevant facts and circumstances revealed upon carrying out the procedure.
The protocol of proceedings shall be read by all persons who participated in carrying out the procedure or who were present when it was carried out. Those persons shall have the right to make comments, and those comments shall be entered in the protocol of proceedings or included in the file.
The protocol of proceedings shall be signed by the tax authority official who drew it up and by the persons who participated in the procedure or were present when it was carried out.
Photographs, videotapes and other materials produced while the procedure was carried out shall be attached to the protocol of proceedings.
Article 155. Inadmissibility of Causing Harm by Unlawful Actions during a Tax Audit
Causing any harm by unlawful actions during a tax audit to audited persons or property in their possession, use or disposal shall not be permitted.
Losses caused to audited persons by unlawful decisions of tax authorities or actions of their officials during a tax audit shall be subject to compensation in full.
The officials of tax authorities shall bear responsibility as provided by law for causing losses to the audited persons as a result of unlawful decisions of tax authorities.
Losses caused to the audited persons or their representatives by lawful actions of officials of tax authorities shall not be subject to compensation, with the exception of cases provided for by legislation.
Chapter 18. Legal Consequences of Tax Audits and Other Tax Control Measures
Article 156. Documentation of the Results of a Tax Audit
On the basis of the results of a tax audit, the authorized tax officials who conducted this audit must prepare a tax audit act.
There shall be indicated in a tax audit act:
1) the date of the tax audit act, and that date shall be understood to be the date on which the act is signed by the persons who performed the audit;
2) the full and abbreviated name or surname, first name and patronymic of the audited person. Where an audit of a legal entity is performed at the location of an economically autonomous subdivision of the legal entity, in addition to the name of the legal entity there shall be entered the full and abbreviated name of the audited economically autonomous subdivision and the location of that subdivision;
3) the surnames, first names and patronymics of the persons who performed the audit and their titles, stating the name of the tax authority which they represent;
4) the date and number of the decision of the director (deputy director) of the tax authority on the performance of the on-site tax audit (in the case of an on-site tax audit);
5) a list of documents presented by the audited person in the course of the tax audit;
6) the period in respect of which the audit was performed;
7) the name of the tax in respect of which the tax audit was performed;
8) the dates of the commencement and completion of the tax audit;
9) the address of the location of the legal entity or of the place of residence of the physical person;
10) information concerning tax control measures conducted when carrying out the tax audit;
11) documented thoroughly violations of tax legislation (if were found) with reference to the corresponding Article of tax legislation;
12) conclusion and recommendations with respect to the results of tax audit.
Where no violations of tax legislation have been found based on the results of the tax audit, a note to the effect must be entered to the tax audit act.
A tax audit act shall be accompanied by documents confirming violations of tax legislation which were discovered in the course of the audit.
The form and requirements relating to the preparation of a tax audit act shall be established by the State Tax Committee of the Republic of Uzbekistan.
The tax audit act shall be drawn up in at least three copies.
The tax officials who conducted the tax audit shall sign all copies of the tax audit act. One copy of the tax audit act shall be delivered by hand to the taxpayer within three days after its completion. The taxpayer shall be obliged to sign for the receipt of the tax audit act on all copies of the act indicating the date of receipt. The copies of the tax audit act which remain with the tax authority shall be attached to the tax audit materials.
The signature of the taxpayer in the tax audit act shall not mean his agreement with the results of the tax audit.
In the event that a taxpayer (his representative) in relation to whom an audit has been performed evade receipt of the tax audit report, that fact shall be reflected in the tax audit act. In this case, one copy of the tax audit act shall be sent by registered mail to the location of a legal entity (economically autonomous subdivision) or to the place of residence of a physical person.
Where a tax audit report is sent by registered mail the date of delivery of that report shall be considered to be the fifth day counting from the date on which the registered letter was sent
A tax audit act shall be sent to a foreign legal entity (other than an international organization or a diplomatic mission) which does not carry on activities in the territory of the Republic of Uzbekistan through a permanent establishment by registered mail to the address contained in the Unified State Register of Taxpayers of the Republic of Uzbekistan. The date of delivery of the act shall be considered to be the twentieth day counting from the date on which the registered letter was sent.
Where a person in relation to whom a tax audit has been performed (or his representative) disagrees with statements made in the tax audit act and (or) with the conclusions and recommendations of the auditors, that person shall have the right, within ten days after receiving the tax audit act, present to the appropriate tax authority written objections relating to the act as a whole or to individual points therein.
In this respect, the taxpayer shall have the right to present together with the written objections or to provide to the tax authority within an agreed time limit documents (or certified copies thereof) which prove the validity of its objections.
Article 157. Procedure for Examination of Cases Concerning Tax Offenses
Cases concerning tax offences which were found in the course of a tax audit shall be examined in accordance with the procedure prescribed by Articles 158 and 159 of this Code. This specified procedure for examination shall be equally applied with respect to tax offenses provided for in Articles 223 or 224 of this Code.
Cases of tax offenses not provided for in the first part of this Article, which were found in the course of tax audits and (or) other tax control measures, shall be examined in the manner prescribed by Articles 165 and 166 of this Code.
Failure by officials of tax authorities to comply with requirements established by this Code may be a basis for a decision of a tax authority to be rescinded by a higher tax authority or a court.
A violation of significant conditions of procedures for the examination of tax audit materials shall constitute a basis for a tax authority’s decision on the imposition of sanctions for the commission of a tax offence or decision on accrual of additional amount of taxes to be rescinded by a higher tax authority or a court. Such significant conditions shall include ensuring that a person in relation to whom an audit has been performed has the opportunity to participate in the process of the examination of tax audit materials in person and (or) through his representative and ensuring that the taxpayer has an opportunity to present explanations.
Such essential conditions include ensuring the possibility of the person in respect of whom the audit was carried out to participate in the process of considering the materials of the tax audit personally and (or) through his representative and ensuring the taxpayer's ability to provide explanations.
Other violations of the procedures for the examination of tax audit materials may serve as grounds for the rescission of the above-mentioned decision of a tax authority if those violations have resulted or may result in the adoption of an unlawful decision by the director (deputy director) of the tax authority.
Article 158. Procedure for Examination of Materials of a Tax Audit and On-Site Tax Inspection
A tax audit act and (or) other materials of an on-site tax inspection, in the course of which violations of tax legislation were found must be examined by the director (deputy director) of the tax authority which performed the tax audit, upon expiration ten, but not later than fifteen days from the date of drawing up the act of this tax audit. The decision with respect to them must be adopted no later than five days after examination of the materials of the tax audit.
Where the audited person (his representative) has submitted, within the time period provided for in part twelve of Article 156 of this Code, written objections to the tax audit act and (or) on-site tax inspection, these objections shall also be considered.
The tax authority shall notify the taxpayer of the date, time and place of examination of the materials of the audit at least two working days before the examination.
Where the taxpayer has notified the tax authority that it is impossible for him to appear for examination of the tax audit materials for justified reasons, the director (deputy director) of the tax authority shall adopt a decision to postpone the examination of the tax audit materials for a period of not more than five days, and the taxpayer shall be notified of this.
The person in relation to whom a tax audit was performed shall have the right to participate in the process of the examination of the materials relating to that audit in person and (or) through his representative.
The non-appearance of the person in relation to whom an audit was performed (his representative), where that person has been duly notified of the time and place of the examination of the tax audit materials, shall not hinder the examination of the tax audit materials except where the participation of that person is deemed by the director (deputy director) of the tax authority to be essential for the examination of those materials.
Before the examination of tax audit materials on their merits commences, the director (deputy director) of a tax authority must:
1) announce who is to examine the case and to which tax audit the materials which are to be examined relate;
2) establish whether persons invited to participate in the examination are present.
In the event that such persons are not present the director (deputy director) of the tax authority shall ascertain whether or not the parties to the case proceedings were duly notified, and adopt a decision to examine the tax audit materials in the absence of those persons or to postpone that examination;
3) in the event of the participation of a representative of the person in relation to whom the audit was performed, verify the authority of that representative;
4) explain to the persons participating in the examination proceedings their rights and obligations;
5) issue a decision to postpone the examination of the tax audit materials in the event of the non-attendance of a person whose participation is essential for the examination.
In the context of the examination of an audit of tax operations and (or) an on-site tax inspection, the audit act, and where necessary, other materials relating to tax control measures and the written objections of the person in relation to whom the audit was performed may be read out. The absence of written objections shall not deprive that person (his representative) of the right to give his explanations at the stage of the examination of the tax audit materials.
The examination of tax audit and (or) an on-site tax inspection materials shall involve studying evidence presented before the examination of the tax audit materials which has been made available for inspection by the person in relation to which the audit was performed, including documents previously requested from the person in relation to whom the audit was performed, documents submitted to the tax authorities in the course of tax inspections of the persons concerned and other documents in the tax authority’s possession.
It shall not be permissible to use evidence obtained not in compliance with this Code.
Additional documents (information) on the activities of the taxpayer may be examined, even if they are submitted to the tax authority in violation of the time limits established by this Code.
In the course of examination of the materials of a tax operations audit and (or) an on-site tax inspection, a decision may be adopted, where necessary, to engage a witness, expert or specialist to take part in the examination.
A protocol shall be taken in the process of the examination of the tax audit materials.
In the course of the examination of tax audit and (or) an on-site tax inspection materials the director (deputy director) of a tax authority:
1) shall establish whether or not the person in relation to whom the tax audit act was drawn up has committed a violation of tax legislation;
2) shall establish whether or not violations found constitute a tax offence;
3) shall establish whether or not there are grounds for calling the person to account for the commission of a tax offence;
4) shall establish whether the taxpayer's objections are grounded.
Where a tax offence is present, the director (deputy director) of the tax authority shall identify circumstances which eliminate culpability for the commission of a tax offence or circumstances which mitigate or increase liability for the commission of a tax offence.
Where additional evidence needs to be obtained in order to confirm the commission or non-commission of violations of tax legislation, the director (deputy director) of a tax authority shall have the right to issue a decision on the performance of additional tax control measures within a period not exceeding one month.
There shall be stated in a decision ordering the performance of additional tax control measures the circumstances which gave rise to the need to perform those additional measures, the time limit within which the measures are to be performed and the specific form of the measures.
Additional tax control measures may involve the requesting of documents in accordance with Articles 146 and 147 of this Code, the questioning of a witness and the performance of an expert examination.
The commencement and completion of additional tax control measures, information on tax control measures performed in carrying out additional tax control measures, additional evidence obtained of the commission of violations of tax legislation or the absence thereof, the conclusions and recommendations of the inspectors regarding the remedying of violations found and references to Articles of this Code where this Code prescribes liability for those violations of tax legislation shall be recorded in an addendum to the tax operations audit or on-site tax inspection act.
The addendum to the act of tax audit and (or) on-site tax inspection must be prepared and signed by the tax authority officials carrying out the additional tax control measures within ten days from day on which those measures were completed.
The addendum to the act of tax audit and (or) on-site inspection, accompanied by materials received as a result of the performance of additional tax control measures, must, within three days from the date of that addendum, be delivered to the person in relation to which the tax audit was performed (or its representative) against receipt or transmitted by another means which provides confirmation of the date on which it was received.
In the event that a person in relation to which a tax audit was performed (or its representative) evades receipt of an addendum to the tax audit act and (or) on-site tax inspection, that fact shall be recorded in the addendum to the tax audit act. In this case the addendum to the tax audit act shall be sent by registered mail to the location of the organization (economically autonomous subdivision) or the place of residence of the physical person and shall be considered to have been received on the fifth day from the date on which the registered letter was sent.
A person in relation to which a tax audit and (or) an on-site tax inspection was performed (or its representative) may, within ten days of receiving an addendum to a tax audit act, submit written objections to the tax authority regarding that addendum to the tax audit act as a whole or regarding individual parts of it.
Article 159. Adoption of Decision Based On the Results of Examination of Materials of Tax Audit and On-Site Tax Inspection
On the basis of the results of the examination of a tax audit and an on-site tax inspection materials in the manner prescribed by Article 158 of this Code, the director (deputy director) of a tax authority shall adopt a decision (hereinafter referred to as the decision on the results of the tax audits), providing for:
1) additional assessment of taxes and penalties or refusal to do so based on the materials of a tax audit;
2) on the imposition of sanctions for the commission of a tax offence or refusing to do so.
The circumstances of the tax offence committed by the person who is called to account as they were established by the audit performed, with reference to documents and other evidence of those circumstances, the arguments given by the person in relation to whom the audit was performed in his defence and the results of the evaluation of those arguments shall be stated in a decision on the imposition of sanctions for the commission of a tax offence.
The decision on the imposition of tax sanctions on the taxpayer for specific tax offences shall specify the Articles of this Code which refer to those offences, and the sanctions which are to be imposed.
The amount of identified arrears, if such arrears were identified in the course of the audit, and of applicable penalties shall be stated in a decision on additional tax assessment.
The circumstances which occasioned the non- imposition of sanctions shall be stated in a decision on the non-imposition of sanctions for the commission of a tax offence.
The time period within which the person in relation to whom the decision has been issued may appeal against that decision, the procedure for appealing against the decision to a higher tax authority, shall be indicated in a decision, which bases on the results of a tax audit.
In the event of the discovery in the course of a tax audit of an amount of tax which was reimbursed in excess on the basis of a decision of a tax authority, in the decision concerning the assessment of additional amount of taxes, that amount shall be recognised as tax arrears for this tax. If this amount of tax was refunded to the taxpayer, it shall be recognized as a tax arrears from the day on which the taxpayer actually received funds, or from the date of adoption of the decision to credit the amount of tax claimed as reimbursable, if the amount of tax was credited.
Following the issuance of a decision which is based on the results of a tax audit and (or) an on-site tax inspection, the director (deputy director) of a tax authority shall have the right to take injunctive measures aimed at ensuring the enforceability of the decision in question.
Article 160. Entry into Force of a Decision Concerning the Results of Examination of Materials of a Tax Audit and an On-site Tax Inspection
A decision concerning the results of a tax audit and (or) an on-site tax inspection, adopted in the manner prescribed by Article 159 of this Code, shall enter into force upon the lapse of one month from the day on which it is delivered to the person in relation to whom the decision in question was issued (or a representative of that person).
A decision concerning the results of a tax audit and (or) an on-site tax inspection must, within two days of being issued, be delivered to the person in relation to whom it has been issued (or a representative of that person) against signed receipt or transmitted by another means which provides proof of the date on which the person (his representative) received the decision.
In the event that the above-mentioned decision cannot be delivered or transmitted by another means which provides proof of the date of receipt, it shall be sent by registered mail to the location of the legal entity (economically autonomous subdivision) or the place of residence of the physical person. Where a decision is sent by registered mail, the date of delivery shall be considered to be the fifth day from the day on which the registered letter was despatched.
Where an appeal is filed against a decision of a tax authority, that decision shall enter into force in the manner prescribed by Article 163 of this Code.
A person in relation to whom a particular decision has been issued shall have the right to execute the decision in whole or in part before it has entered into force. In this respect, the filing of an appeal shall not deprive that person of the right to execute a decision which has not entered into force in whole or in part.
Article 161. Injunctive Measures
Following the issuance of a decision which is based on the results of a tax audit, the director (deputy director) of a tax authority shall have the right to take measures aimed at ensuring the enforceability of the decision in question (injunctive measures).
Injunctive measures shall be taken where there are sufficient grounds to believe that failure to take such measures might make it difficult or impossible in the future to enforce that decision or to recover the arrears, which are stated in the decision to prosecute a tax offense.
In order to take injunctive measures the director (deputy director) of the tax authority shall issue an appropriate decision. The specified decision shall enter into force from the day on which it is issued and shall have force until the day of the execution of the decision on the imposition of sanctions for the commission of a tax offence and (or) the decision on additional tax assessment, or until the day on which the issued decision is rescinded by a higher tax authority or a court.
The director (deputy director) of a tax authority shall have the right to adopt a decision to cancel injunctive measures or a decision to replace injunctive measures in cases provided for by part eleven of this Article.
A decision to cancel (replace) injunctive measures shall enter into force from the day on which it is issued.
Injunctive measures may take the form of a prohibition on the alienation (pledging) of the taxpayer’s assets without the tax authority’s consent and the suspension of transactions on bank accounts in the manner prescribed by Article 111 of this Code. The prohibition which is provided for in this subsection on alienation (pledging) shall be applied consecutively to:
1) immovable property, including immovable property which is not used in the production of products (work and services);
2) means of transport, securities, office interior design items;
3) other assets, other than finished products, raw materials and other supplies;
4) finished products, raw materials and other supplies.
In this respect, a prohibition on the alienation (pledging) of assets of each successive group shall be imposed in the event that the aggregate value of the assets in the preceding groups is less than the total amount of arrears on the basis of the decision concerning the results of a tax audit and on-site inspection.
In this case, the value of the assets shall be determined according to the accounting data.
The suspension of operations on bank accounts by way of taking injunctive measures may be applied only after a prohibition has been imposed on the alienation (pledging) of assets and in the event that the aggregate value of such assets according to accounting data is less than the total amount of arrears.
The suspension of operations on bank accounts may be applied in relation to the difference between the total amount of arrears indicated in the decision based on the results of a tax audit and the value of assets, which cannot be alienated (pledged).
At the request of a person in relation to whom a decision on the taking of injunctive measures has been issued, a tax authority shall have the right to allow the injunctive measures which are provided for in part six of this Article to be replaced by:
1) a bank guarantee confirming that the bank undertakes to pay the amount of arrears specified in the decision on the imposition of sanctions for the commission of a tax offence and (or) the decision on additional accrual taxes in the event that those amounts are not paid by the principal within the time limit established by tax authority;
2) a pledge of securities which are circulated on the organized securities market or a pledge of other assets executed in accordance with the procedure prescribed by Article 107 of this Code;
3) a third-party surety bond executed in accordance with the procedure prescribed by Article 108 of this Code.
In the event that a taxpayer provides a valid bank guarantee issued for the amount to be paid to the budgetary system indicated in a decision concerning the results of a tax audit and (or) an on-site tax inspection, the tax authority shall not have the right to refuse the taxpayer’s request for the replacement of the injunctive measures which are provided for in part six of this Article.
Copies of a decision on the taking of injunctive measures and a decision on the cancellation of injunctive measures shall, within five days after its issuance, be delivered by hand to the person in relation to whom the decision has been issued or to his representative against receipt or shall be transmitted in another manner which provides evidence of the date on which the taxpayer received the decision in question.
Where a copy of a decision is sent by registered mail the decision shall be considered to have been received upon the lapse of five days from the date on which the registered letter was sent.
Article 162. Special Considerations With Relation to the Execution of Decisions of Tax Authorities
An authorized official of a tax authority who has performed an on-site tax inspection or tax operations audit shall draw up an administrative offence protocol within the limits of his competence in relation to violations found by the tax authority for which physical persons or officials of legal entities are liable to administrative sanctions.
The examination of cases concerning such offences and the application of administrative punishments in relation to physical persons and officials of legal entities who are guilty of committing them shall take place in accordance with the legislation on administrative responsibility.
Where a tax authority which has issued a decision on the imposition of sanctions for the commission of a tax offence on a taxpayer has sent materials to the prosecutor's office, the tax authority shall be obliged to issue a decision suspending execution of the decision on the imposition of sanctions for the commission of a tax offence.
Simultaneously with the submission of materials to the prosecutor's office, the execution of the decision to recover tax arrears from this physical person shall be suspended. Such suspension shall be effected by the decision of the director (deputy director) of the tax authority no later than the day following the day the materials are sent to the prosecutor's office. In this respect, the running of the time limits for recovery of tax arrears which are stipulated by this Code shall be suspended for the period of the suspension of the decision on the recovery of the relevant tax arrears.
Where, following the examination of materials, a resolution is issued not to institute a criminal case or a resolution is issued to terminate a criminal case, the suspended decisions of the tax authority shall be resumed.
The resumption of action shall be made by the decision of the director (deputy director) of the tax authority no later than the day following the day on which it received notification of those facts from the prosecutor's office. A similar rule shall apply where a judgment of acquittal is rendered in a relevant criminal case.
Where an action (omission) on the part of a physical person which was the basis for the imposition of sanctions for the commission of a tax offence has become the basis for the rendering of a guilty verdict in relation to that physical person, the tax authority shall rescind the decision issued insofar as it concerns the imposition on the physical person of sanctions for the commission of a tax offence.
Prosecution bodies which have received materials from tax authorities shall be obliged to send the tax authorities notifications of the results of the examination of those materials not later than the day following the day on which the relevant decision is adopted.
Copies of decisions of a tax authority such as are referred to in this Article shall be transmitted (sent) by the tax authority to the person in relation to whom the decision in question was adopted (his representative) within five days from the day on which the decision was issued.
The provisions established by this Article shall apply to physical persons who are taxpayers, payers of fees and (or) tax agents.
Article 163. Execution of Decisions of Tax Authorities Where an Appeal is Filed
Where a decision of a tax authority concerning the results of a tax audit is contested, the decision in question, to the extent that it is not rescinded by a higher tax authority and to the extent not contested, shall enter into force from the day on which the higher tax authority adopts a decision on the appeal.
In the event that a higher tax authority which considers an appeal rescinds the decision of the lower tax authority and adopts a new decision, that decision of the higher tax authority shall enter into force from the day on which it is adopted.
In the event that a higher tax authority dismisses an appeal, the decision of the lower tax authority shall enter into force from the day on which the higher tax authority adopts the decision to dismiss the appeal, but not earlier than the expiry of the time limit for the filing of an appeal.
Article 164. Execution of Decisions of Tax Authorities
A decision concerning the results of a tax audit shall be enforceable from the date on which it enters into force.
Responsibility for enforcing a particular decision shall rest with the tax authority which issued that decision. Where an appeal is considered by a higher tax authority, the relevant decision which has entered into force shall be sent to the tax authority which issued the initial decision within three days from the day on which the decision in question entered into force.
Article 165. Proceedings With Respect to Cases of Tax Offenses
Upon discovering evidence of violations of tax legislation for which sanctions are provided for by part two of Article 157 of this Code, a tax authority official must prepare an act, which shall be signed by that official and by the person who committed the violation.
An act in the prescribed form shall be drawn up within ten days from the day on which such violation is discovered,
The act must contain documented evidence of violations of tax legislation and the conclusions and recommendations of the official who discovered the evidence of violations of tax legislation with respect to the rectification of the violations revealed.
The form of the act and the requirements relating to the preparation thereof shall be established by the State Tax Committee of the Republic of Uzbekistan.
The act shall be delivered by hand to the person who committed the tax offence against receipt or shall be transmitted in another manner which provides evidence of the date of receipt of that act. In the event that the person concerned evades receipt of that act, an official of the tax authority shall make a note to this effect in the act. In this case, the act shall be sent to that person by registered mail. In the event that the act is sent by registered mail, the date of delivery of the report shall be deemed to be the fifth day commencing from the day on which it was despatched.
In the event that a person who has committed a tax offence disagrees with the statements made in the act or with the conclusions and recommendations of the official who discovered the occurrence of the tax offence, that person may, within a period of ten days from the date of receipt of the act, present to the appropriate tax authority written objections relating to the act as a whole or to individual points therein. In this respect, that person shall have the right to present together with the written objections or to transmit to the tax authority within an agreed time limit documents (their certified copies thereof) which prove the validity of the objections.
Upon the expiration of the time limit which is referred to in part six of this Article, the director (deputy director) of the tax authority shall examine the act which sets out evidence of violations of tax legislation and the documents and materials submitted by the person who committed the offence.
The act shall be examined in the presence of the person who is called to account or of his representative.
The tax authority shall notify the person who committed the violation of tax legislation in advance of the time and place of the examination of the act.
If the taxpayer has notified the tax authority that it is impossible to appear for examination of the act for justified reasons, the director (deputy director) of the tax authority shall adopt a decision to postpone the examination of the act for a period of no more than three days, and shall notify the taxpayer about this decision.
The non-appearance of a person called to account for the commission of a tax offence who has been duly notified, or of a representative of that person, shall not prevent the director (deputy director) of the tax authority from examining the act in the absence of that person.
Upon the examination of an act, the prepared act, other materials relating to tax control measures and the written objections of the person who is called to account for the commission of a tax offence may be read out. The absence of written objections shall not deprive that person of the right to give his explanations at the stage of the examination of the act.
Upon the examination of a report, the explanations of the person who is called to account shall be heard and other evidence shall be examined.
It shall not be permissible to use evidence obtained not in compliance with this Code.
Where a person being called to account presented documents (information) to the tax authority not in compliance with the time limits established by this Code, the documents (information) received shall not be considered to have been received not in compliance with this Code.
A protocol shall be taken in the process of the examination of tax audit materials.
In the course of the examination of a report and other materials relating to tax control measures, a decision may be adopted, where necessary, to engage a witness, expert or specialist to take part in the examination.
1) whether or not the person in relation to whom the act was prepared has committed a violation of tax legislation;
2) whether or not the violations found constitute tax offences which are contained in this Code;
3) whether or not there are grounds for calling the person in relation to whom the act was prepared to account for the commission of a tax offence.
Where a tax offense is established, the director (deputy director) of the tax authority shall identify circumstances which eliminate culpability for the commission of a tax offence or circumstances which mitigate or increase liability for the commission of a tax offence.
Article 166. Adoption of a Decision Concerning Materials on Tax Offenses
On the basis of the results of the examination of an act and accompanying documents and materials, the director (deputy director) of a tax authority shall issue, in the manner prescribed by Article 165 of this Code, a decision:
1) on assessment of additional tax and penalty interest or refusal on that;
2) on the imposition of sanctions on a person for the commission of a tax offence or refusing to do so.
The decision specified in the first part of this Article shall be adopted within five days after the examination of the act.
In a decision on the imposition of sanctions on a person for the commission of a tax offence an account shall be given of the circumstances of the offence committed and reference shall be made to documents and other data confirming those circumstances, the arguments given by the person who is called to account in his defence and the results of the evaluation of those arguments.
The decision on the imposition of sanctions on the person for specific tax offences, shall specify also the Articles of this Code which prescribe liability for those offences, and the sanctions which are to be imposed.
There shall be indicated in a decision on the imposition of sanctions for the commission of a tax offence the time period within which the person in relation to whom that decision has been issued may appeal against that decision, the procedure for appealing against the decision to a higher tax authority.
An authorized official of a tax authority shall draw up an administrative offence protocol in relation to violations of tax legislation found by the tax authority for which persons are liable to administrative sanctions. The examination of cases concerning such offences and the application of administrative sanctions in relation to persons who are guilty of committing them shall be carried out by tax authorities in accordance with the legislation on administrative responsibility.
Article 167. Petition for the Recovery of Financial Sanctions
After the issuance of a decision on the imposition of sanctions for the commission of a tax offence on a physical person who is not a private entrepreneur, the tax authority in question shall file a petition with a court for the recovery of the financial sanction which is established by this Code from the person who is called to account for the commission of a tax offence. In other cases where the extrajudicial recovery of financial sanctions is not permitted, the same procedure for applying financial sanctions shall be followed.
Before presenting a claim to a court the tax authority shall be obliged to request the person who is called to account for the commission of a tax offence to pay the due amount of the financial sanction voluntarily.
Where necessary, at the same time as it presents a petition for the recovery of a financial sanction from a person who is called to account for the commission of a tax offence, the tax authority may petition the court for the claim to be secured.
Article 168. Examination of Cases and Enforcement of Decisions on the Recovery of Financial Sanctions
The recovery of amounts of financial sanctions which are envisaged in the decisions of tax authorities and which impose financial sanctions to legal entities and individual entrepreneurs shall be carried out by tax authorities independently in the manner prescribed by Articles 120 — 124 of this Code.
Cases involving the recovery of financial sanctions at the request of the tax authorities to physical persons who are not individual entrepreneurs shall be examined by the court. Court decisions concerning the recovery of financial sanctions which have entered into legal force shall be enforced in accordance with the procedure which is established by the legislation.
Chapter 19. Tax Monitoring
Article 169. General Provisions Concerning Tax Monitoring
The objective of tax monitoring shall be to check the compliance with tax legislation, correct calculation and full and timely payment (remittance) of taxes and fees by a legal entity in respect of which tax monitoring is being carried out.
Tax monitoring shall covers all taxes and fees in relation to which responsibility for the payment thereof is placed in accordance with this Code on a legal entity as on a taxpayer or tax agent.
Tax monitoring for a taxpayer shall be voluntary.
Tax monitoring shall be conducted by a tax authority on the basis a decision to conduct tax monitoring.
A legal entity shall have the right to submit an application to a tax authority for tax monitoring if its income, according to the annual financial statements, received for the previous year amounted to not less than ten billion soums.
The period for which tax monitoring is conducted shall be the calendar year following the year in which the legal entity submitted an application for tax monitoring to the tax authority.
Tax monitoring shall commence from 1 January 1 of the year for which tax monitoring is conducted and shall end on July 1 of the year following the period for which tax monitoring was conducted.
Article 170. Regulations on Information Exchange
Information exchange between a legal entity which participates in tax monitoring and a tax authority shall be carried out on the basis of the regulations.
Regulations on information exchange shall set out the procedure for the submission to a tax authority of documents (information) pertaining to the calculation (withholding) and payment (remittance) of taxes and fees in electronic form and (or) for access to information systems of a legal entity which contain the above-mentioned documents (information).
A legal entity shall have the right to independently choose the procedure for information exchange.
In the Regulations on information exchange, a legal entity shall set out:
1) the manner in which a legal entity records income and expenses, objects of taxation in accounting ( tax);
2) provide details of analytical tax ledgers;
3) information on the system of internal control over the correct calculation (withholding) and full and timely payment (remittance) of taxes and fees.
Information on the system of internal control shall be provided where such a system is in place.
The form of and requirements relating to regulations on information exchange shall be approved by the State Tax Committee of the Republic of Uzbekistan.
Article 171. Decision to Conduct Tax Monitoring
An application for tax monitoring to be conducted shall be submitted by a legal entity to the tax authority for that legal entity’s location not later than 1 July of the year preceding the year for which tax monitoring is to be conducted.
The form of an application for tax control to be conducted shall be approved by the State Tax Committee of the Republic of Uzbekistan.
The following shall be submitted together with an application for tax monitoring to be conducted:
1) regulations on information exchange in the established form;
2) information on legal entities and physical persons who/which have a direct and (or) indirect participating interest in the legal entity which is submitting the application for tax monitoring to be conducted where that participating interest amounts to more than 25 per cent;
3) the legal entity’s accounting policies for taxation purposes which is effective.
A legal entity which has submitted an application for tax monitoring to be conducted may, before the tax authority has adopted a decision to conduct tax monitoring or to refuse to conduct tax monitoring, withdraw it on the basis of a written application.
In the event that an application for tax monitoring to be conducted is withdrawn, that application shall not be considered to have been submitted.
After considering an application for tax control to be conducted and documents (information) submitted by an organization in accordance with part three of this Article, the director (deputy director) of a tax authority shall, by 1 November of the year in which the application for tax control to be conducted has been submitted, adopt one of the following decisions:
1) a decision to conduct tax monitoring;
2) a decision to refuse to conduct tax monitoring.
A decision to refuse to conduct tax monitoring must be substantiated.
The grounds for adopting a decision to refuse to conduct tax monitoring shall be:
1) failure to present all or some of the documents (information) required in accordance with part three of this Article;
2) failure by an organization to satisfy the conditions stipulated by part five of Article 169 of this Code;
3) non-conformity of the regulations on information exchange to the prescribed form and requirements for regulations on information exchange.
A decision to conduct tax monitoring (a decision to refuse to conduct tax monitoring) shall be sent to the organization within five days from the day of its adoption.
Article 172. Early Termination of Tax Monitoring
Tax monitoring shall be terminated early in the following cases:
1) a failure by the legal entity to comply with the regulations on information exchange, where this has become an impediment to the conduct of tax monitoring;
2) discovery by the tax authority that the legal entity has presented inaccurate information in the course of the conduct of tax monitoring;
3) systematic (on two or more occasions) failure to present documents (information) and explanations in the manner prescribed by Article 173 of this Code in the course of the conduct of tax monitoring.
A tax authority shall notify a legal entity in writing of the early termination of tax monitoring within ten days from the day on which circumstances specified in paragraph 1 of this Article are established, but not later than 1 June of the year following the period for which tax monitoring is conducted.
Article 173. Procedure of the Conduct of Tax Monitoring
Tax monitoring shall be conducted by authorized officials of a tax authority in accordance with their official duties at the location of the tax authority
Where, in the process of conducting tax monitoring, inconsistencies are found in details contained in documents (information) submitted or inconsistencies are found between information submitted by the legal entity and information contained in documents in the possession of the tax authorities, the tax authority shall notify the legal entity of this with a request to present necessary explanations or to make appropriate adjustments. Such explanations shall be submitted by a legal entity within five days, and adjustments shall be made within ten days from the date of receipt of the request.
In the event that, after examining explanations presented or where none are presented, a tax authority finds evidence that taxes have been incorrectly calculated (withheld) or have not been paid (remitted) in full or on time, the tax authority shall be obliged to prepare a reasoned opinion in accordance with the procedure laid down in Article 174 of this Code.
When conducting tax monitoring a tax authority shall have the right to request a legal entity to present necessary documents (information) and explanations associated with the correct calculation (withholding) and timely payment (remittance) of taxes and fees.
Requested documents (information) and explanations may be presented to a tax authority in person or through a representative, sent by registered mail or transmitted electronically via telecommunications channels, through the taxpayer's personal account, or transmitted in the manner prescribed by the regulations on information exchange.
Documents in paper form shall be presented in the form of copies certified by the legal entity. It shall not be permitted to require notarial certification of copies of documents presented to a tax authority (to an official) unless otherwise provided by the legislation.
The procedure for sending a request to present documents and for presenting documents at the request of a tax authority in electronic form via telecommunications channels shall be established by the State Tax Committee of the Republic of Uzbekistan.
Documents (information) and explanations which have been requested in accordance with part four of this Article in the course of the conduct of tax monitoring shall be presented by a legal entity within five days from the day on which the relevant request was received
Where a legal entity is unable to present requested documents (information) and explanations within the established time limit, that legal entity shall, within a day following the day on which it received the request to present documents (information) and explanations, notify tax authority officials who are conducting tax monitoring in writing of its inability to fulfill it, with indicating the reasons and the time period within which the legal entity is able to present the requested documents (information) and explanations.
On the basis of the above-mentioned notification the director (deputy director) of the tax authority shall have the right, within two days from the day of receiving it, to extend the time period for the presentation of documents (information) and explanations by the legal entity or refuse to extend that time period, and a separate decision shall be issued accordingly
A tax authority shall not have the right, in the course of conducting tax monitoring, to request a legal entity to present documents which were previously presented to the tax authority in the form of copies certified by the legal entity.
Article 174. Reasoned Opinion of a Tax Authority
A reasoned opinion of a tax authority shall reflect the tax authority’s position regarding the correct calculation (withholding) and full and timely payment (remittance) of taxes and levies.
The tax authority shall prepare a reasoned opinion on its own initiative or at the request of a legal entity in the course of the conduct of tax monitoring.
A reasoned opinion shall be sent to the legal entity signed by the director (deputy director) of a tax authority.
The form of and requirements relating to the preparation of a reasoned opinion shall be established by the State Tax Committee of the Republic of Uzbekistan.
A reasoned opinion shall be prepared by a tax authority in the event that the tax authority establishes in the course of conducting tax monitoring that taxes and levies have been incorrectly calculated (withheld) or have not been paid (remitted) in full or on time by the legal entity.
The reasoned opinion shall be sent to the legal entity within five days from the day on which it is prepared.
A reasoned opinion of the tax authority may be prepared not later than three months before the period of the conduct of tax monitoring ends.
A request to provide a reasoned opinion shall be sent by a legal entity to a tax authority where the legal entity has doubts or where there is uncertainty over matters pertaining to the correct calculation (withholding) and full and timely payment (remittance) of taxes and levies with respect to the period of tax monitoring in relation to other completed economic activity facts of the legal entity.
A request to provide a reasoned opinion shall set out the position of the legal entity on these issues.
A request to provide a reasoned opinion may be sent no later than June 1 of the year following the period of tax monitoring.
A reasoned opinion of the tax authority at the request of a legal entity must be sent to that legal entity within fifteen days from the day on which that request was received.
The specified time period may be extended by a tax authority by one month for the purpose of obtaining from that legal entity or from other parties documents (information) which are needed for the preparation of the reasoned opinion.
The tax authority shall notify the legal entity of the extension of the period for sending a reasoned opinion in writing within three days from the day on which the relevant decision is adopted.
A legal entity shall notify a tax authority which has prepared a reasoned opinion of its agreement with that reasoned opinion within one month from the day on which it is received, attaching documents confirming implementation of that reasoned opinion (if available).
A legal entity shall implement a reasoned opinion by means of taking the position of the tax authority which is expressed therein into account in tax accounting and tax reporting stated therein, by submitting updated tax reports or by other means.
In the event that a legal entity disagrees with a reasoned opinion, it shall, within one month from the day of receiving it, present disagreements to the tax authority which prepared that reasoned opinion.
A tax authority which has received disagreements shall be obliged, within three days from the day of receiving them, to send those disagreements together with all materials in its possession to the State Tax Committee of the Republic of Uzbekistan for the purpose of initiating the conduct of a mutual agreement procedure.
A tax authority shall, not later than two months from the end date of tax monitoring, notify the legal entity of the existence (non-existence) of outstanding reasoned opinions which were sent to the organization in the course of the conduct of tax monitoring.
Article 175. Mutual Agreement Procedure
The State Tax Committee of the Republic of Uzbekistan, shall, after receiving disagreements and materials presented by a tax authority in accordance with part fifteen of Article 174 of this Code, initiate the conduct of a mutual agreement procedure.
A mutual agreement procedure shall be conducted by the director (deputy director) of the State Tax Committee of the Republic of Uzbekistan within one month from the day of the receipt of disagreements and materials presented by a tax authority and with the participation of the tax authority which prepared the reasoned opinion and the legal entity (or a representative of the legal entity) which presented the disagreements.
Upon completion of the mutual agreement procedure the State Tax Committee of the Republic of Uzbekistan shall notify the legal entity of the modification of the reasoned opinion or of the upholding of the reasoned opinion.
The notification of the modification of a reasoned opinion or of the upholding of a reasoned opinion shall be signed by the director (deputy director) of the State Tax Committee of the Republic of Uzbekistan.
The notification shall be handed over or sent to the legal entity within three days from the day on which it was prepared.
A legal entity shall, within one month from the day on which a notification of the modification of a reasoned opinion or of the upholding of a reasoned opinion is received, notify the tax authority which prepared the reasoned opinion of its agreement (disagreement) with the reasoned opinion, attaching documents confirming implementation of the reasoned opinion (if available).
SECTION VI. TAX CONTROL FOR TRANSFER PRICING
Chapter 20. General Provisions Concerning Prices and Taxation Where Transfer Pricing Is Applied
Article 176. General Provisions Concerning Transfer Pricing
For the purposes of this Code, the transfer price shall be understood to mean the price which is established in transactions between interconnected parties and (or) that differs from objectively formed price which would be applied in comparable economic conditions for transactions between independent parties.
For the purposes of this Code, the transfer pricing shall be understood to mean the formation of commercial and (or) financial conditions and (or) results of activities of interconnected parties that differ from the conditions and results that would be formed in comparable economic conditions by independent parties.
Any income, which might have been received by one of those parties to the transaction, but was not received as a result of transfer pricing, shall be recognised for taxation purposes for the party concerned in the cases and in the manner established by this Section.
For taxation purposes, in the cases and in accordance with the procedure established by this Section, the income of participants of foreign trade activities may be increased by the amount of lost income which is due to the difference of the transaction price from market prices for goods (services) that are the object of the transaction. Account shall not be taken of whether the participants in such transactions are interconnected or independent persons. The same rules may be applied for transactions the participants of which are tax residents of the Republic of Uzbekistan, in the cases and in the manner established by this Section,
Income shall be recognised for taxation purposes in accordance with parts three and four of this Article as long as this does not cause the amount of tax payable to the budget system to be reduced or the amount of losses determined in accordance with the Special Part of this Code to be increased.
The income provided for in parts three and four of this Article shall be determined by the State Tax Committee of the Republic of Uzbekistan within the framework of tax control which is conducted for transfer pricing using the methods established by this Section. This rule shall not restrict the right of a taxpayer to use a price other than the price used in the above-mentioned transaction of its own accord when calculating the amount of tax, if the price actually used in that transaction does not conform to the market price, and unless otherwise provided by part five of this Article.
In exercising tax control for transfer pricing in the manner laid down by this Section, the State Tax Committee of the Republic of Uzbekistan shall check the proper calculation and payment of the following taxes:
1) tax on profit;
2) tax on income of physical persons;
3) tax for the use of subsoil;
4) value added tax;
5) excise tax.
Tax control for transfer pricing with respect to the tax for the use of subsoil shall be carried out, where one of the parties to a transaction is a taxpayer of that tax and the subject of the transaction is an extracted mineral which is recognised for the taxpayer concerned as an object which taxed at the ad valorem tax rate.
Tax control for transfer pricing with respect to the value added tax and excise tax shall be carried out, where one of the parties to a transaction is a legal entity or an individual entrepreneur which (who) is not a taxpayer of the relevant tax.
Tax control for transfer pricing may also be carried out with respect to transactions of participants of the special economic zones which involve persons who are not such participants.
Where amounts of taxes referred to in parts seven to ten of this Article are found to have been understated or the amount of losses is found to have been overstated, the State Tax Committee of the Republic of Uzbekistan shall make adjustments to the corresponding tax bases and (or) the amount of tax.
Article 177. Independent Adjustment of the Tax Base by the Taxpayer
Where the transfer pricing has caused amounts of one or more of the taxes (advance and current payments) referred to in part seven of Article 176 of this Code to be understated or the amount of losses to be overstated, the taxpayer shall have the right independently to adjust the tax base and amounts of relevant taxes (losses). This adjustment shall be made after the end of the calendar year which includes the tax period (tax periods) for the taxes for which amounts are to be adjusted.
Information which enables the identification of a transaction in relation to which a taxpayer has independently adjusted the tax base and the amount of tax shall be given in explanations accompanying a corresponding revised tax reporting.
The adjustments referred to in the first part of this Article may be made:
1) by legal entities — within the time limits established for the submission of tax reporting for tax on profit;
2) by physical persons — within the time limits established for filing a declaration on the aggregate annual income of a physical person.
An amount of unpaid taxes which has been discovered by a taxpayer independently on the basis of an adjustment made in accordance with part three of this Article must be settled not later than the date of payment of tax on profit of legal entities (tax on income of physical persons) for the relevant tax period. In this respect, penalties shall not be charged on the amount of unpaid taxes for the period from the date the tax obligation arises on the submitted revised reporting up to the date of expiry of the established time limit specified in part three of this Article.
For the purposes of calculating taxes (advance and current payments) for tax periods (accounting periods) which end during a calendar year, a taxpayer shall have the right to use the prices which were actually used in those transactions.
Article 178. General Provisions Concerning Market-Conforming Prices
For the purposes of this Code, unless otherwise provided by this Section, transaction prices, income and expenses of the parties to these transactions shall be recognized as market-conforming prices in the following cases:
1) transactions between independent persons;
2) transactions concluded as a result of exchange trades conducted in accordance with the legislation of the Republic of Uzbekistan or the legislation of a foreign state;
3) transactions, the prices of which are established in accordance with the instructions of the antimonopoly authority (with account taken of the considerations provided for in Article 179 of this Code for transactions in which regulated prices are applied);
4) transactions, the prices of which are established in accordance with the pricing agreement provided for in Chapter 25 of this Code.
In controlled transactions, the transaction price shall be recognized as market price, unless the State Tax Committee of the Republic of Uzbekistan has proved otherwise, or if the taxpayer did not independently adjust the amounts of tax (loss) in accordance with Article 177 of this Code.
Where the Special Part of this Code establishes other rules for determining the price of goods (services) or income (expenses) of the parties to the transaction for the calculation and payment of certain taxes for tax purposes, then the rules of the Special Part of this Code shall apply.
Article 179. Special Considerations Relating to Recognition of Prices as Market-Conforming Where Prices Are Regulated
Where a price regulation is applicable with respect to certain types of transactions by means of the setting of a price, the setting of maximum and (or) minimum prices, the prices of such transactions shall be recognized as market-conforming for taxation purposes with account taken of the special considerations established by parts fourth — seventh of this Article.
Where a price regulation is applicable with respect to certain types of transactions by means of the setting of maximum and (or) minimum price increments or price discounts or by means of other limitations on profit margins or profit in such transactions, then the prices of such transactions shall be recognized as market-conforming for taxation purposes with account taken of the special considerations established by part eighth of this Article.
The special considerations which are specified in parts one and two of this Article shall be taken into account where price regulation is carried out in accordance with the legislation of the Republic of Uzbekistan and the legislation of foreign states, as well as international treaties of the Republic of Uzbekistan.
Prices which correspond to the prices which are set and prices which correspond to the price formulas which are agreed shall be recognized as market-conforming prices.
Where a minimum price has been set, that price shall not be taken into account in determining the market price if the lowest value of the market price range determined in accordance with Chapter 23 of this Code without taking that minimum price into account exceeds that minimum price. Otherwise, the market price range shall be a range whose lowest value is equal to that minimum price and whose highest value is taken to be equal to the highest value thereof determined in accordance with Chapter 23 of this Code.
Where a maximum price has been set, that price shall not be taken into account in determining the market price if that maximum price exceeds the highest value of the market price range determined in accordance with Chapter 23 of this Code without taking that maximum price into account. Otherwise, the market price range shall be a range whose highest value is equal to that maximum price and whose lowest value is taken to be equal to the lowest value thereof determined in accordance with Chapter 23 of this Code.
Where both minimum and maximum prices have been set, those prices shall not be taken into account in determining the market price if the lowest value of the market price range determined in accordance with Chapter 24 of this Code without taking those minimum and maximum prices into account exceeds that minimum price and the maximum price set exceeds the highest value of that market price range. Otherwise, the highest and (or) lowest value respectively of the market price range shall be adjusted in the manner provided for by parts five to six of this Article.
Where, in relation to a transaction, minimum and (or) maximum price increments or price discounts have been established or other limitations have been imposed on the level of profit margin or profit, the market price ranges (profit margin ranges) determined in accordance with Chapter 23 of this Code must be adjusted in a manner similar to that laid down in parts five to seven of this Article.
Chapter 21. Controlled Transactions
Article 180. Controlled Transactions between Interconnected Parties
For the purposes of this Code controlled transactions shall be understood to mean transactions between interconnected persons with account taken of the special considerations laid down in this Article.
A transaction between interconnected persons which are the tax residents of the Republic of Uzbekistan shall be recognized as controlled if at least one of the following circumstances exists:
1) the amount of income from transactions (the amount of transaction prices) between the persons concerned for the relevant calendar year exceeds five billion soums;
2) at least one of the parties to the transaction is a taxpayer which applies the special tax regime or is a participant in a special economic zone, while there is among the other persons who are parties to that transaction a person who does not apply those special tax regimes;
3) at least one of the parties to the transaction is exempt from the obligations of a taxpayer of tax on profit, applies a reduced tax rate or other tax incentives, while there is among the other persons who are parties to that transaction a person who is not exempt from paying such tax and does not apply incentives;
4) the subject of the transaction is a mineral which is extracted by one of the parties to the transaction, while an ad valorem tax rate is used for subsoil use tax in relation to this mineral.
The transactions provided for in clauses 2-4 of part two of this Article shall be deemed to be controlled if the amount of income from transactions between the persons concerned for the relevant calendar year exceeds five hundred million soums.
For the purposes of this Code, a sequence or a set of transactions involving the sale of goods (rendering of services) which are concluded with the involvement (mediation) of persons who are not interconnected with the first seller and the final buyer of these goods (services), shall be equated with a transaction between interconnected persons where the specified seller and buyer are interconnected persons. The existence of third parties with whose involvement (mediation) the specified sequence or set of transactions is concluded shall not be taken into account.
The rule established by part four of this Article shall apply provided that such third parties participating in the specified sequence or set of transactions:
1) do not perform within that set of transactions any additional functions other than organizing the sale (resale) of goods (services) by one person to (for) another person;
2) do not assume any risks or use any assets in organizing the sale (resale) of goods (services) by one person to (for) another person.
For the purposes of this Article the amount of income from transactions with one person (interdependent persons) for a calendar year shall be determined by means of adding together the amounts of income received from such transactions with one person (interconnected persons) over the calendar year, taking into account the rules for the recognition of income which are established for tax in profit.
For tax purposes, in determining income in controlled transactions the State Tax Committee of the Republic of Uzbekistan shall compare the transactions or class of transactions in question (hereinafter in this Section referred to as “tested transaction”) with one or more transactions whose parties are not interconnected persons (hereinafter in this Section referred to as “compared transactions”). Such a comparison shall be made for the purposes of selection and applying the methods for determining income in transfer pricing provided for in this Section.
In determining the amount of income from transactions, the State Tax Committee of the Republic of Uzbekistan shall have the right to assess whether amounts of income received from transactions are consistent with the market level, taking into account the provisions of Chapters 22 and 23 of this Code.
On the petition of the State Tax Committee of the Republic of Uzbekistan, a court may deem a transaction to be controlled where there are sufficient grounds to consider that the transaction forms part of a group of homogeneous transactions concluded with the object of creating conditions whereby the transaction in question would not meet the controlled transaction criteria established by this Article.
Article 181. Foreign Trade Controlled Transactions
For the purposes of this Code, with account taken of the special considerations provided for by this Article, as controlled transactions shall be recognized to be:
1) transactions in the area of foreign trade in goods traded in global exchange trading;
2) transactions in which one of the parties is a person whose place of registration, place of residence or place of tax residence is offshore jurisdiction.
Where the activities of a legal entity of the Republic of Uzbekistan create a permanent establishment in an offshore jurisdiction and a controlled transaction is connected with those activities, the legal entity in question shall be regarded, insofar as that controlled transaction is concerned, as a person whose place of registration is this offshore jurisdiction.
For the purposes of this Code, as offshore jurisdictions shall be understood to mean states and territories which provide a preferential tax regime and (or) do not provide for the disclosure and provision of information concerning financial transactions which are conducted.
The list of offshore jurisdictions shall be approved by the State Tax Committee together with the State Customs Committee of the Republic of Uzbekistan and the Central Bank of the Republic of Uzbekistan.
Transactions such as are provided for in paragraph 1 of part one of this Article shall be deemed to be controlled if the subject of the transactions is goods falling within one or more of the following commodity groups:
1) non-ferrous metals;
2) precious metals;
3) mineral fertilizers;
4) hydrocarbons and petroleum products;
5) cotton fiber and cotton yarn.
The codes of the goods enumerated in in part five of this Article under the Goods Nomenclature for Foreign Economic Activities shall be determined by the State Customs Committee of the Republic of Uzbekistan.
On the petition of the State Tax Committee of the Republic of Uzbekistan, a court may deem a transaction to be controlled where there are sufficient grounds to consider that the transaction forms part of a group of homogeneous transactions concluded with the object of creating conditions whereby the transaction in question would not meet the controlled transaction criteria established by this Article.
Article 182. Notification of Controlled Transactions
Taxpayers shall be obliged to notify tax authorities of controlled transactions such as are referred to in Articles 180 and 181 of this Code which they concluded in a calendar year.
Information on controlled transactions shall be given in notifications of controlled transactions which shall be sent by a taxpayer to the tax authority for its location (place of residence) not later than the time limit for submitting annual financial statements for the calendar year in which controlled transactions were concluded.
Information on controlled transactions must include the following:
1) the calendar year for which information on controlled transactions by the taxpayer is provided;
2) the subject of transactions;
3) details of the parties to the transactions:
a) the full name of the legal entity and its taxpayer identification number (if the legal entity is registered with the tax authorities in the Republic of Uzbekistan);
b) the surname, first name, patronymic of an individual entrepreneur and his taxpayer identification number;
c) the surname, first name, patronymic and citizenship of a physical person who is not an individual entrepreneur;
4) the amount of income received and (or) the amount of expenses (losses incurred) in connection with controlled transactions with a separate indication of amounts of income and (or) expenses attributable to transactions for which prices are subject to regulation in accordance with legislation. The information referred to in this clause may be prepared in relation to a group of homogeneous transactions.
In the event that it is discovered that information was not entered fully or inaccuracies or errors were made when completing a submitted notification of controlled transactions, the taxpayer shall have the right to submit a revised notification.
Notification of controlled transactions may be presented to a tax authority using a standard paper form or using prescribed formats in electronic form.
The form (formats) of a notification of controlled transactions, the procedure for completing a form and the procedure for presenting a notification of controlled transactions in electronic form shall be approved by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
A tax authority which has received a notification of controlled transactions shall, within ten days after receiving that notification, forward it in electronic form to the State Tax Committee of the Republic of Uzbekistan.
Should a tax authority conducting a tax audit or tax monitoring discover evidence of the conclusion of controlled transactions regarding which information has not been presented in accordance with part two of this Article, that tax authority shall independently give notice to the State Tax Committee of the Republic of Uzbekistan of the discovery of controlled transactions and send the information which it has obtained concerning those transactions.
A tax authority conducting a tax audit or tax monitoring shall be obliged to notify the taxpayer of the sending of a notice and relevant information to the State Tax Committee of the Republic of Uzbekistan not later than ten days from the date on which notice is sent.
The form of the notice and the procedure for sending it shall be approved by the State Tax Committee of the Republic of Uzbekistan.
The sending by a tax authority which is performing a tax audit of information received by it concerning controlled transactions to the State Tax Committee of the Republic of Uzbekistan shall not prevent the audit from being continued and (or) completed or a decision from being issued on the basis of the audit materials examination results in accordance with the established procedure.
Chapter 22. Comparable Conditions of Transactions
Article 183. Comparability of Commercial and Financial Conditions of Transactions
For the purposes of this Code, compared transactions shall be deemed to be comparable with a tested transaction if they are concluded under the same commercial and (or) financial conditions as the tested transaction.
Where the commercial and (or) financial conditions of compared transactions differ from the commercial and (or) financial conditions of a tested transaction, the transactions in question may be deemed to be comparable with the tested transaction if the differences between those conditions of the tested transaction and the compared transactions do not have a significant bearing on the results of the transactions. Such transactions can also be recognized as comparable to the analyzed transaction if the differences may be taken into account with the use for taxation purposes of appropriate adjustments to the conditions and (or) results of the compared transactions or the tested transaction.
In determining the comparability of transactions and for the purpose of making adjustments to commercial and (or) financial conditions, an analysis shall be made of the main characteristics of the tested transaction and compared transactions which may have a significant bearing on the commercial and (or) financial conditions of transactions whose parties are not interdependent persons. Such analysis shall be made in accordance with Article 184 of this Code.
Article 184. Analysis of the Comparability of the Conditions of Transactions
When analyzing the comparability of the commercial and (or) financial conditions account shall be taken of their main characteristics, which may have a significant impact on the commercial and (or) financial conditions of these transactions or their financial results. The following shall be taken into account:
1) the quantity of goods and the volume of work performed (services rendered);
2) the time limits for the fulfilment of transaction obligations;
3) the conditions of payment which are applicable in such transactions;
4) the exchange rate of the foreign currency used in the transaction to the sum or to another currency, and changes therein;
5) other conditions of the allocation of rights and responsibilities between the parties to the transaction.
The main characteristics of transactions shall also include:
1) characteristics of goods (work and services) which are the subject of a transaction;
2) characteristics of the functions performed by the parties to a transaction in accordance with customary business practices, including the characteristics of assets used by the parties to the transaction, risks assumed by them, the allocation of responsibility between the parties to the transaction and other conditions of the transaction (hereafter in this Code referred to as “functional analysis”);
3) the conditions of agreements (contracts) concluded between the parties to a transaction which affect the prices of goods (work and services)
4) characteristics of the economic conditions of the activities of the parties to a transaction;
5) characteristics of the market (commercial) strategies of the parties to a transaction which affect the prices of goods (work and services).
When analyzing the comparability of the conditions of transactions, the characteristics of the markets in which the compared and tested transactions are concluded should be taken into account. The following factors shall be taken into account:
1) the geographical location and size of markets;
2) the existence of competition on markets and the relative competitiveness of sellers and purchasers on a market;
3) the existence of similar goods (work and services) on a market;
4) demand and supply on a market, and the purchasing power of consumers;
5) the level of development of the production and transport infrastructure;
6) other characteristics of a market which affect the price of a transaction.
When analyzing the functions performed by the parties to transactions, the tangible and intangible assets available to the parties shall be taken into account.
The principal functions of the parties to the transaction, which are to be taken into account when analyzing the comparability of the conditions of transactions, shall include, in particular:
1) product design and engineering;
2) manufacturing of goods;
3) assembly of goods or components thereof;
4) erection and (or) installation of equipment;
5) performance of research and development work;
6) acquisition of goods and materials;
7) conduct of wholesale or retail trade in goods;
8) repair and warranty maintenance functions;
9) promotion of goods (work and services) to new markets, marketing and advertising;
10) storage and transportation of goods;
11) insurance;
12) financing and performance of miscellaneous financial operations;
13) quality control;
14) operational and strategic management, including determination of pricing policy, strategies for the production, sales volumes and the range of goods (services) and their consumer attributes.
When analyzing the comparability of the conditions of transactions the risks which are assumed by each of the parties to a transaction in carrying out their activities and have a bearing on the conditions of the transaction shall also be taken into account. The commercial strategies of the parties may also be taken into account, including strategies aimed at updating and improving the products, entering new sales markets.
Where for the purpose of analyzing the comparability of the conditions of transactions, it is necessary to compare the conditions of a loan or a credit agreements, account shall also be taken of the credit history and solvency of the transaction parties, the period for which a loan or credit is granted, their currency and other conditions which affect the level of the interest rate for the agreement concerned.
The factors and characteristics specified in this Article shall be taken into account in those cases and to the extent that it is necessary for the functional analysis provided for in this Article.
On the basis of the analysis of the conditions of compared transactions in accordance with parts one through eighth of this Article, the State Tax Committee of the Republic of Uzbekistan shall have the right to make adjustments aimed at ensuring that the conditions of compared transactions are adequately comparable with the conditions of the tested transaction. Such adjustments shall be made on the basis of the following principles:
1) income of the independent parties to an uncontrolled transaction is determined with account taken of assets used and economic (commercial) risks assumed under the economic conditions prevailing on the market for goods (services) and reflects the functions performed by each party to the transaction in accordance with the conditions of the agreement and customary business practices;
2) the performance of additional functions, the use of assets which materially affect the amount of income and the assumption of additional commercial (economic) risks by the parties to a transaction in accordance with a market (commercial) strategy is accompanied, all other things being equal, by an increase in expected income from the transaction.
Article 185. Information to be used in the Analysis of the Comparability of the Conditions of Transactions
In exercising tax control for transfer pricing (including when comparing the commercial and (or) financial conditions of a tested transaction with the commercial and (or) financial conditions of comparable transactions), the State Tax Committee of the Republic of Uzbekistan shall use the following information:
1) information on prices and quotations on exchanges of the Republic of Uzbekistan and foreign exchanges;
2) customs statistics relating to foreign trade of the Republic of Uzbekistan which are published or presented on request by the State Customs Committee of the Republic of Uzbekistan;
3) information on prices (price fluctuation limits) and exchange quotations which is contained in official information sources of authorized State bodies in accordance with the legislation of the Republic of Uzbekistan, in official information sources of foreign states or international organizations or in other published and (or) publicly available publications and information systems;
4) data produced by price information agencies;
5) information on transactions concluded by the taxpayer.
Where information such as is referred to in part one of this Article does not exist (or is not sufficient), the State Tax Committee of the Republic of Uzbekistan shall use the following information:
1) information on prices (price fluctuation limits) and quotations which is contained in published and publicly available publications and information systems;
2) information obtained from accounting (financial) statements and statistical reports of legal entities, including where that information is published in publicly available sources of information of the Republic of Uzbekistan or foreign publications and (or) is contained in publicly available information systems, as well as on the official websites of legal entities of the Republic of Uzbekistan and (or) foreign legal entities.
Information obtained from accounting (financial) statements of foreign legal entities may be used in determining the profit margin range for legal entities of the Republic of Uzbekistan (foreign legal entities whose activities in the territory of the Republic of Uzbekistan give rise to a permanent establishment) only if it is not possible for that profit margin range to be calculated on the basis of data in the accounting (financial) statements of legal entities of the Republic of Uzbekistan which have performed comparable transactions;
3) information on the market value of subjects of valuation which has been determined in accordance with legislation of the Republic of Uzbekistan or foreign states concerning valuation activities;
4) other information which is used in accordance with Chapter 23 of this Code.
Information constituting tax secrets and other information which is subject to restricted access in accordance with the legislation may not be used for the purposes of analyzing the comparability of the conditions of transactions. This restriction shall not apply to information concerning a taxpayer in relation to whom the State Tax Committee of the Republic of Uzbekistan is conducting tax control for transfer pricing.
Only publicly available information sources and information concerning a taxpayer shall be used for the purpose of analyzing the comparability of the conditions of transactions.
When analyzing the comparability of the conditions of transactions, preparing and presenting documentation in accordance with Article 193 of this Code, a taxpayer shall have the right to use any publicly available sources of information, in addition to information concerning its own activities, as well as information on the activities of persons related to him who carry out similar activities.
Where the State Tax Committee of the Republic of Uzbekistan has information concerning comparable transactions concluded by the taxpayer in relation to whom the tax control for transfer pricing is being performed, in which the other parties are independent persons, when comparing such transactions with a tested transaction the State Tax Committee of the Republic of Uzbekistan shall have the right to use this information for the purpose of determining the market price (profit margin) range.
Chapter 23. Methods to be used in Tax Control With Respect to Transfer Pricing
Article 186. General Provisions Concerning Methods to be Used in Tax control With Respect to Transfer Pricing
State Tax Committee of the Republic of Uzbekistan shall use the following methods in accordance with the procedure established by this Article in exercising tax control for transfer pricing (including when comparing the commercial and (or) financial conditions of a controlled transaction and the results thereof with the commercial and (or) financial conditions of comparable transactions and the results thereof):
1) the comparable market price method;
2) the resale price method;
3) the cost plus method;
4) the comparable profits method;
5) the profit split method.
Where necessary, it shall be permissible to use a combination of two or more of the methods provided for in the first part of this Article.
For tax purposes, the comparable market price method shall be used on a priority basis for the purpose of determining the conformity of prices used in controlled transactions to market prices, except as otherwise provided by part two of Article 189 of this Code.
The use of the other methods which are specified in clauses 2 — 5 of part one of this Article shall be permitted where the comparable market price method cannot be used or where the use of that method would not enable a conclusion to be drawn on whether or not prices used in controlled transactions conform to market prices.
The comparable market price method shall be used to determine the conformity of the price used in a controlled transaction to the market price in accordance with the procedure established by Article 188 of this Code where there has been at least one comparable transaction on the relevant market for goods (services) which involved identical (or, if these do not exist, similar) goods (services) and provided that sufficient information is available concerning that transaction.
In this respect, for the purpose of applying the comparable market price method to determine the conformity of a price used by a taxpayer in a controlled transaction, a transaction concluded by that taxpayer with independent persons may be used as a tested transaction provided that the transaction in question is comparable with the tested transaction.
Where there is no publicly available information on prices in comparable transactions involving identical (similar) goods (services) for the purpose of determining the proper calculation and payment of taxes in connection with transfer pricing, one of the methods referred to in paragraphs 2 — 5 of part one of this Article shall be used.
Except as otherwise provided in this Chapter, the method to be used shall be that which, taking into account the actual circumstances and conditions of a controlled transaction, best enables a reasoned conclusion to be drawn as to whether or not the price used in a transaction conforms to market prices.
The methods referred to in clauses 2 — 5 of the first part of this Article may also be used in determining income for taxation purposes for a group of homogeneous controlled transactions.
For the purposes of this Section, homogeneous transactions shall be transactions which may involve identical (similar) goods (services) and which have been concluded under comparable commercial and (or) financial conditions.
In selecting the method to be used in determining for taxation purposes income (profit, receipts) in controlled transactions, account must be taken of the completeness and reliability of source data and of the appropriateness of adjustments made for the purpose of rendering tested transactions comparable with the controlled transaction.
For the purposes of applying the methods provided for in part one of this Article, besides information on specific transactions publicly available information on the prevailing level of market prices and (or) exchange quotations and data produced by price information agencies on prices (price ranges) for identical (similar) goods (services) on the relevant markets for those goods (services) may also be used.
The sources of information on market prices which are referred to in this clause may be used in applying the methods provided for in the first part of this Article provided that it is ensured that the transactions for which data are contained in those information sources are comparable with the tested transaction.
For the purposes of applying the methods referred to in clauses 2 and 3 of the first part of this Article, data in financial statements on the basis of which the profit margin range is calculated must be put into a comparable form which ensures that differences in the treatment of expenses have no material effect on profit margin values and the profit margin range which are calculated in accordance with these methods.
Where it is impossible to guarantee the comparability of data in financial statements, the methods referred to in paragraphs 4 and 5 of part one of this Article shall be used for the purpose of calculating the profit margin range and determining for taxation purposes income (profit, receipts) in controlled transactions.
The methods referred to in clauses 4 and 5 of the first part of this Article may be applied without direct calculation of market price values. When using these methods the State Tax Committee of the Republic of Uzbekistan shall compare the financial indicators (results) of the tested transaction with the profit margin range for comparable transactions, and on that basis shall calculate the amount of income which would have been received if the parties to the transaction had been non-interdependent persons.
The financial indicators (results) of a group of controlled homogeneous transactions shall be compared with financial indicators of comparable transactions and the amount of income shall be calculated in a similar manner.
A court may take into account other circumstances which are relevant to the determination of the conformity of the price used in a transaction to the market price without being subject to the limitations provided for in in this Section.
Taxpayers shall not be obliged, when concluding transactions, to adhere to the methods referred to in part one of this Article in justifying their pricing policies for purposes other than those provided for in this Code.
Article 187. Financial Indicators and Profit Margin Range
The following profit margin indicators may be used in the manner prescribed by Articles 189-192 of this Code for the purpose of determining for taxation purposes income in controlled transactions:
1) gross profit margin, which is determined as the ratio of gross profit to receipts from sales calculated exclusive of excise tax and value added tax;
2) gross return on costs, which is determined as the ratio of gross profit to the cost of production of goods (services) sold;
3) return on sales, which is determined as the ratio of profit from the main activity to the receipts from the sale of goods (services), calculated exclusive of excise duties and value added tax;
4) return on costs, defined as the ratio of profit from core activities to the sum of the cost of goods (services) sold, sales costs and administrative costs associated with the sale of goods (services);
5) return on sales and administrative expenses, which is determined as the ratio of gross profit from the sale of goods (services) to sales and administrative costs associated with the sale of goods (services);
6) return on assets, which is determined as the ratio of profit from core activities to the current market value of assets (non-circulating and circulating) which are directly or indirectly used in the analyzed transaction.
In the absence of required information on the current market value of assets, return on assets may be determined on the basis of data in accounting (financial) statements.
For the purposes of this Chapter, the profitability indicators and other financial indicators shall be determined in the case of legal entities of the Republic of Uzbekistan on the basis of data in accounting (financial) statements which are prepared in accordance with the accounting legislation of the Republic of Uzbekistan.
In the case of foreign legal entities the specified financial indicators shall be determined on the basis of data in accounting (financial) statements which are prepared in accordance with the legislation of foreign states. In this respect, adjustments shall be made to render the data comparable with data in accounting (financial) statements which are prepared in accordance with the accounting legislation of the Republic of Uzbekistan.
The profit margin range shall be determined using profit margin values determined for no less than four comparable transactions, including transactions concluded by the taxpayer provided that those transactions were not controlled, or on the basis of data in the accounting (financial) statements of no less than four comparable legal entities.
The above-mentioned legal entities shall be selected according to the sector in which they operate and the particular types of activity carried out by them under comparable economic (commercial) conditions relative to the controlled transaction.
Where the sector to which a person who is a party to the controlled transaction belongs does not have legal entities which are independent of this person, the selection of legal entities for the purpose of carrying out the functional analysis shall be made by reference to the comparability of functions carried out by those legal entities, the risks taken by them and assets used.
In the absence of information on four or more comparable transactions or in the absence of information on the accounting (financial) statements of four or more comparable legal entities, the profit margin range may be determined using information on a lesser number of comparable transactions (the accounting (financial) statements of a lesser number of legal entities).
For the purposes of applying the methods referred to in clauses 2-4 of part one of Article 186 of this Code, the profit margin range must be determined in the following manner.
First, the set of profit margin values which are used to determine the profit margin range shall be arranged in ascending order, forming a sample set to be used in determining that range. In this respect, each profit margin value, starting with the lowest, shall be assigned a sequential number. In the event that a sample contains two or more identical profit margin values, all such values shall be included in the sample set.
The profit margin of the tested transaction shall not be taken into account in determining the profit margin range. Then, depending on whether the number of profit margin values in the sample set is divided by four without a remainder, the profit margin range shall be determined in one of two ways:
1) where this number is divisible without a remainder, the minimum value of the profit margin range shall be taken to be equal to half the sum of the profit margin values which have, in the sample set, a sequential number that is equal to the quotient of the division, and the next sequential number in ascending order. In this case, the maximum value of the profit margin range shall be taken to be equal to half the sum of the profit margin values which have, in the sample set, sequential number that is equal to three times the quotient of division, and the next sequential number in ascending order;
2) where this number is not divisible without a remainder, the minimum value of the profit margin range shall be taken to be equal to the profit margin value, which has, in the sample set, a sequential number that is equal to the integer part of the quotient of division, plus one. In this case, the maximum value of the profit margin range shall be taken to be equal to the profit margin value, which has, in the sample set, a sequential number that is equal to the threefold integer part of the quotient of division, plus one.
The profit margin based on results of activity carried out under comparable economic (commercial) conditions may be calculated on the basis of data in a legal entity’s financial statements on condition that the following conditions are simultaneously met:
1) the legal entity carries out comparable activities and performs comparable functions related to those activities. The comparability of activities may be determined by reference to types of economic activity provided for in the National Classifier of Types of Economic Activity of the Republic of Uzbekistan and international and other classifications;
2) the aggregate amount of the legal entity’s net assets is not a negative value according to data in accounting (financial) statements as at 31 December of the last of the years for which the profit margin is calculated;
3) the legal entity’s accounting (financial) statements do not show losses from sales in more than one of the years for which the profit margin is calculated;
4) the legal entity does not have a direct and (or) indirect participating interest amounting to more than 25 per cent in another legal entity or does not have as a participant (shareholder) another legal entity holding a direct participating interest of more than 25 per cent.
The criterion provided for in paragraph 4 of part eight of this Article shall not apply where information on consolidated accounting statements of legal entities is available which is used in calculating the profit margin range.
If fewer than four organizations remain as a result of applying the conditions set out in parts ten and eleven of this Article, the participating interest criteria set out in paragraph 4 of part eight of this Article may be raised from 25 to 50 per cent.
The profit margin range shall be calculated using information available as at the time of conclusion of a controlled transaction, or information close to this time, but not later than 31 December of the calendar year in which a controlled transaction was concluded,
To calculate the profitability interval, information is used that is available at the time of the controlled transaction, but no later than December 31 of the calendar year in which it was made.
Instead of the information specified in part eleven of this Article, data in accounting (financial) statements for the three calendar years directly preceding the calendar year in which a controlled transaction was concluded (or the calendar year in which prices in the controlled transaction were established) may be used.
The above-mentioned information shall include information held by the taxpayer on transactions concluded by it with independent persons.
For the purpose of ensuring comparability when determining the market profit margin range on the basis of data in accounting (financial) statements of comparable legal entities, profit margin data may change in order to adjust existing differences. Such adjustments shall be made, in particular to allow for differences in accounts receivable, accounts payable and inventories indicated by data in accounting (financial) statements of the taxpayer and of legal entities whose accounting (financial) statements contain data which are used for the purpose of determining the profit margin range.
Article 188. The Comparable Market Price Method
The comparable market price method is a method of determining the conformity of the price of goods (work and services) in a controlled transaction to the market price by comparing the price used in the controlled transaction with the market price range which is determined in the manner prescribed in parts two through seven of this Article.
Where information is available concerning only one comparable transaction involving identical (similar) goods (services), the price of that transaction may be taken as both the lowest and the highest value of the market price range only on condition that the commercial and (or) financial conditions of that transaction are wholly comparable with the commercial and (or) financial conditions of the controlled transaction. This rule shall be also applicable where those conditions are rendered fully comparable with the aid of appropriate adjustments. The rules provided for in this part shall not apply where the seller of goods (services) in the comparable transaction holds a dominant position on the market for those goods (services).
Where information is available concerning a number of comparable transactions (including transactions concluded by the taxpayer with independent persons) involving identical (similar) goods (services), the market price range shall be determined in the following order.
Initially, the set of prices used in comparable transactions which are to be used in determining the market price range shall be arranged in ascending order, forming a sample set to be used in determining that range. In this respect, each price value, starting with the lowest value, shall be assigned a sequential number. Where a sample set contains two or more identical price values, all such values shall be included in the sample set. The price used in the controlled transaction shall not be taken into account in determining the market price range. Where there is a sufficient number of comparable transactions concluded by the taxpayer with independent persons, information on other transactions may not be taken into account in determining the market price range. Then, on the basis of the formed sample set, a market price range shall be determined in the manner prescribed by part nine of Article 187 of this Code concerning determination of the profit margin range.
The market price range shall be determined on the basis of available information on prices used during the period examined or information as at the closest date prior to the conclusion of the controlled transaction.
Where exchange quotations are used, the market price range shall be determined on the basis of the prices of transactions involving identical (similar) goods which were registered by the relevant exchange on the basis of information published by or obtained upon request from that exchange. In this case, the market price range shall be taken to be the range between the lowest and highest transaction prices registered by the exchange at the date of their conclusion.
When determining the market price range on the basis of exchange quotations, allowance may be made for differences in the economic (commercial) conditions of the above-mentioned transactions, in particular by making the following adjustments:
1) reasonable expenses needed to deliver goods (work and services) to a particular market which are supported by documents and (or) information sources;
2) expenses for the payment of export customs duties;
3) conditions of payment;
4) commission (agency) fees payable to a trade broker (trader or agent) for the performance of intermediary trading functions.
Where data from price information agencies concerning prices (price ranges) for identical (similar) goods (work and services) are used for the purposes of applying the comparable market price method in accordance with parts twelve and thirteen of Article 186 of this Code, the lowest and highest values of the market price range may be taken to be the published lowest and highest values for such goods (services). In this respect, the prices in transactions concluded over an equivalent period of time under comparable conditions shall be taken into account.
Where the price used in a controlled transaction is within the market price range determined in accordance with the provisions of this Article, that price shall be deemed to conform to the market price for taxation purposes.
Where the price used in a controlled transaction is less than the lowest value or exceeds the highest value of the market price range determined in accordance with the provisions of this Article, that price shall not be deemed to conform to the market price. In the event of the specified discrepancy, the price which is assumed equal to the average value of the market price range shall be taken for taxation purposes.
The average value of the market price range shall be taken for taxation purposes in accordance with part nine of this Article provided that this does not cause the amount of tax payable to the budget system to be reduced or the amount of losses to be increased.
Article 189. The Resale Price Method
The resale price method provides for determining the conformity of the price in a controlled transaction to the market price whereby the gross profit margin obtained by the party which concluded the controlled transaction upon the subsequent sale (resale) of goods which that party acquired in the controlled transaction (or a group of homogeneous transactions) is compared with the market range of gross profit margins determined in the manner prescribed by Article 187 of this Code.
The resale price method shall be used in preference to other methods for determining the conformity to market prices of prices at which a good is acquired through a controlled transaction and is resold without being processed through a transaction in which the parties are independent parties. This method shall be used where the reseller does not have intangible assets which materially influence the level of its gross profit margin.
The resale price method may also be used in cases where the following operations are carried out for the purpose of reselling a good:
1) preparation of the good for resale and transportation (consignment splitting, grouping of packages, sorting, repacking);
2) mixing of goods if the characteristics of the end products (semi-finished products) do not differ substantially from the characteristics of the goods that are mixed.
Where, in transactions concluded under comparable commercial and (or) financial conditions between a reseller and parties which are independent of the reseller, a good is resold at different prices, the weighted-average price of the good in all such transactions shall be used as the resale price of the good for the purpose of determining the market profit margin range.
Where the gross profit margin of a reseller is within the profit margin range determined according to the procedure laid down in Article 187 of this Code, the price at which the good was acquired in the controlled transaction shall be deemed to conform to the market price for taxation purposes.
Where the gross profit margin of a reseller is less than the lowest value or greater than the highest value of the profit margin range determined according to the procedure laid down in Article 187 of this Code, the controlled transaction price which is taken for taxation purposes shall be a price determined on the basis of the actual resale price of the good and a gross profit margin which corresponds to the average value of the profit margin range.
For the purposes of applying the resale price method it shall be permissible to use data from price information agencies concerning prices (price ranges) for identical (similar) goods (services) and to determine the market price range for identical (similar) goods (services) in the manner laid down in part seven of Article 188 of this Code.
The average value of the profit margin range shall be taken for taxation purposes in accordance with part seven of this Article provided that this does not cause the amount of tax payable to the budget system to be reduced or the amount of losses of the taxpayer to be increased.
Article 190. Cost Plus Method
The cost plus method provides for determining the conformity of the price in a controlled transaction to the market price whereby the gross return on costs of a person who is a party to the controlled transaction (a group of homogeneous controlled transactions) is compared with the market range of gross return on costs in comparable transactions which is determined according to the procedure laid down in Article 190. 187 of this Code.
The cost plus method can be used, in particular, in the following cases:
1) where services are rendered by persons who are interconnected with the seller (except where the rendering of services involves the use of intangible assets which materially influence the level of the seller’s return on costs);
2) in the case of the rendering of services involving the management of monetary resources, including the performance of trading operations on the securities market and (or) the currency market;
3) in the case of the rendering of services involving the performance of the functions of the sole executive body of a legal entity;
4) in the case of the sale of raw materials or semi-finished products to persons interconnected with the seller;
5) in the case of the sale of goods (services) under long-term agreements between interconnected parties.
Where for a seller who is a party to a controlled transaction, its gross return on costs in respect of that transaction is within the profit margin range determined according to the procedure laid down in Article 187 of this Code, the price used in the controlled transaction shall be deemed to conform to market prices for taxation purposes.
Where a seller’s gross return on costs is less than the lowest or greater than the highest value of the profit margin range, the price used in the controlled transaction shall be taken for taxation purposes as a price determined on the basis of the actual cost of production of goods (services) sold and a gross return on costs which corresponds to the average value of the profit margin range.
For the purposes of applying the cost plus method it shall be permissible to use data from price information agencies concerning prices (price ranges) for identical (similar) goods (services) and to determine the market price range for identical (similar) goods (work and services) for the purposes of applying that method in the manner laid down in part seven of Article 188 of this Code.
The average value of the profit margin range shall be taken for taxation purposes in accordance with part four of this Article provided that this does not cause the amount of tax payable to the budget system to be reduced or the amount of losses of the taxpayer to be increased.
Article 191. The Comparable Profits Method
The comparable profits method provides for a comparison of the operating profit margin of a person who is a party to a controlled transaction with the market range of operating profit margins in comparable transactions as determined in the manner laid down in Article 187 of this Code.
The comparable profits method may be used, in particular, where there is no information or insufficient information available as a basis for reaching a reasonable conclusion as to whether the commercial and (or) financial conditions of transactions taken for comparison are properly comparable or for using the methods referred to in paragraphs 2 and 3 of the first part of Article 186 of this Code.
The following indicators of operating profit margin which are determined in accordance with parts one and two of Article 187 of this Code may be used for the purposes of this Article:
1) return on sales;
2) return on costs;
3) return on commercial and management expenses;
4) return on assets;
5) another profit margin indicator reflecting the relationship between functions performed and assets used and the economic (commercial) risks assumed and level of remuneration.
The factors to be taken into account in selecting a specific profit margin indicator shall be the type of activity carried out by the party to the controlled transaction, the functions which it performs, assets used and economic (commercial) risks assumed, the completeness, accuracy and comparability of data used to calculate the relevant profit margin and the economic justification for the indicator in question.
For the purposes of applying this Article, profit margin indicators shall be used with account taken of the following considerations:
1) return on sales shall be used where goods acquired from persons who are interconnected with the reseller are subsequently resold to persons who are not interconnected with the reseller, and where goods acquired from persons who are not interconnected with the reseller are subsequently resold to persons who are interconnected with the reseller;
2) gross return on commercial and management expenses shall be used in cases provided for in clause 1 of this part where two conditions are met simultaneously:
a) the reseller bears minor economic (commercial) risks in connection with the acquisition and subsequent resale of goods within a short period;
b) there is a direct relationship between the amount of the reseller’s gross profit from sales and the amount of commercial and management expenses incurred;
3) return on costs shall be used with respect to the rendering of services and the production of goods;
4) return on assets shall be used with respect to the production of goods (in particular, where transactions being controlled are concluded by persons who carry out capital-intensive activities).
The use of the comparable profits method shall involve making a comparison between the market profit margin range and the profit margin of a party to a controlled transaction which meets the following requirements:
1) the party to the controlled transaction carries out functions whose contribution to profit earned from transactions consecutively concluded with one and the same good is less than the contribution of the other party to the controlled transaction;
2) the party to the controlled transaction assumes lesser economic (commercial) risks than the other party to the controlled transaction;
3) the party to the controlled transaction does not possess intangible assets which materially influence the level of the profit margin.
Where a party to a controlled transaction does not meet the requirements laid down in clauses 1 — 3 of part six of this Article, the party to the controlled transaction which comes closest to meeting those requirements shall be taken for the purpose of comparison with the market profit margin range.
Where the profit margin for a controlled transaction is within the profit margin range determined according to the procedure laid down in Article 187 of this Code, the price used in that transaction shall be deemed to conform to market prices for taxation purposes.
Where the profit margin for a controlled transaction is less than the lowest value or greater than the highest value of the profit margin range, the average value of the profit margin range shall be recognised for taxation purposes.
On the basis of the average value of a profit margin range, profit (income, receipts) from the controlled transaction shall be adjusted for taxation purposes.
The adjustment of profit (income, revenue) in accordance with parts nine and ten of this Article shall be applied for taxation purposes provided that this does not cause the amount of tax payable to the budget system to be reduced or the amount of losses of the taxpayer to be increased.
Article 192. The Profit Split Method
The profit split method consists in comparing the actual division among the parties to a transaction of the aggregate profits received by all the parties to that transaction with the division of profit among parties to comparable transactions.
Where the parties to a controlled transaction (a group of homogeneous controlled transactions) are at the same time parties to homogeneous transactions involving persons interconnected with them, the results of those homogeneous transactions shall be assessed together with the controlled transaction results. At the same time, aggregate profits from the controlled transaction and the above-mentioned homogeneous transactions shall, for taxation purposes, be allocated in the same manner as profit from the controlled transaction.
Where legal entities whose aggregate profits are to be divided with account taken of the provisions of this Article maintain accounting records on the basis of different accounting requirements, for the purposes of applying the profit split method the accounting (financial) statements in question must be adapted to conform to common accounting requirements.
The profit split method may be used, in particular, in the following cases:
1) where it is impossible to use the methods provided for in paragraphs 1-4 of part one of Article 186 of this Code and the activities carried out by the parties to a controlled transaction (a group of homogeneous controlled transactions) are substantially interconnected;
2) where the parties to a tested transaction have ownership (use) of rights in intangible assets which substantially influence the level of the profit margin (in the absence of homogeneous transactions involving intangible assets concluded with independent persons).
The division of the amount of profits (losses) from a controlled transaction among the parties to the controlled transaction shall be carried out for the purpose of enabling the application of parts three and four of Article 176 of this Code.
The choice of principles of profit division shall depend on the circumstances of the controlled transaction (group of homogeneous controlled transactions) and must result in a division of profits from the controlled transaction which corresponds to the division of profits among persons who carry out similar activities under comparable commercial and (or) financial conditions.
The division of profits among the parties to a controlled transaction (group of homogeneous controlled transactions) in accordance with the profit split method shall take place by assessing the respective contributions of the parties to the controlled transaction (group of homogeneous controlled transactions) to the aggregate profits from the controlled transaction (group of homogeneous controlled transactions) in accordance with the following criteria or combinations thereof:
1) in proportion to the contribution to aggregate profit from the controlled transaction by virtue of functions performed by the parties to the controlled transaction, assets used by them and economic (commercial) risks assumed;
2) in proportion to the division among the parties to the controlled transaction of return on invested capital which is used in the controlled transaction;
3) in proportion to the division of profit among the parties to a comparable transaction.
The profit split method involves dividing among the parties to a controlled transaction the aggregate profit or residual profit of all the parties to that transaction.
For the purposes of this Article, the aggregate profit of all the parties to a controlled transaction shall be understood to be the sum of the operating profits of all the parties to the controlled transaction for the period examined.
For the purposes of this Article, residual profit (loss) shall be determined as follows:
first, the methods referred to in clauses 1-4 of part one of Article 186 of this Code are used to determine for each person who is a party to a controlled transaction (group of homogeneous controlled transactions), on the basis of the market price range, the attributed profit (loss) for that party, which is calculated with account taken of functions carried out and assets used by the person concerned and economic and commercial risks assumed;
then residual profit from a controlled transaction is determined as the positive difference between aggregate profit (loss) earned (incurred) as a result of the controlled transaction and the sum of attributed profits (losses) from sales for all parties to the controlled transaction, and the negative difference is determined as residual loss on this controlled transaction.
As a result of applying the profit split method, the total amount of the profit (loss) of each person who is a party to the controlled transaction (group of homogeneous controlled transactions) for taxation purposes shall be determined by means of adding together the respective imputed profit (loss) and residual profit (loss).
For the purpose of dividing the aggregate or residual profit (loss) among the parties to that transaction, the following indicators shall be taken into account:
1) the amount of costs incurred by a party to the controlled transaction for the creation of intangible assets;
2) characteristics of personnel employed by a party to the controlled transaction, including the number and qualification level of personnel (time spent by personnel, labour payment expenses);
3) the market value of assets which are used (disposed) by a party to the controlled transaction;
4) other indicators reflecting the relationship between functions carried out, assets used and economic (commercial) risks assumed and actual profit (loss) from sales resulting from the controlled transaction.
The indicators specified in part twelve of this Article shall taken into account provided that they affect the amount of actually obtained profit (loss) on a controlled transaction, and to the extent that they have such an impact.
The division of profit among the parties to a controlled transaction (a group of homogeneous controlled transactions) in accordance with the criterion laid down in paragraph 3 of part seven of this Article shall be made subject to the availability of information on the division of profits (losses) from sales in relation to homogeneous transactions concluded between independent parties. The procedure set out for the division of profits (losses) from a controlled transaction may be used as long as the following conditions are simultaneously met:
1) the accounting data of the parties to the controlled transaction must be comparable with the accounting data of the parties to the comparable transactions or must be rendered comparable by means of appropriate adjustments;
2) the aggregate return on assets of the parties to the controlled transaction must not differ substantially from the aggregate return on assets of the parties to the comparable transactions or must be rendered comparable by means of appropriate adjustments.
Should profit earned by a party to a controlled transaction be equal to or greater than the profit calculated for that party in accordance with the profit split method, or should the loss incurred by such party be equal to or less than the loss calculated for that party in accordance with this method, the profit actually earned or loss actually incurred respectively shall be recognized for taxation purposes.
Should profit earned by a party to a controlled transaction be less than profit calculated for that party in accordance with the profit split method, the profit calculated for it in accordance with this method shall be recognised for taxation purposes.
Should the loss incurred by a party to a controlled transaction be greater than the loss calculated for that party in accordance with the profit split method, the loss calculated for it in accordance with this method shall be recognised for taxation purposes.
On the basis of a comparison of profit (loss) recognised for taxation purposes in accordance with parts sixteen and seventeen of this Article and the profit actually earned or loss actually incurred by a taxpayer, an adjustment shall be made to the taxpayer’s profit for the purposes of tax on profit.
Profit or loss calculated in accordance with the profit split method shall be recognised for taxation purposes on the basis of parts fifteen to eighteen of this Article provided that this does not cause the amount of tax payable to the budget system to be reduced or the amount of losses of the taxpayer to be increased.
Chapter 24. Tax Control With Respect to Transfer Pricing
Article 193. Preparation and Presentation of Information for Tax Control Purposes in Transfer Pricing
Upon the request of the State Tax Committee of the Republic of Uzbekistan, a taxpayer shall present documentation regarding a particular transaction (group of homogeneous transactions) indicated in the request. Documentation shall be understood to mean a set of documents or a single document prepared in arbitrary form (unless the legislation of the Republic of Uzbekistan prescribes a set form for the preparation of such documents).
The documentation provided for in the first part of this Article must contain information on the activities of the taxpayer (other persons) who concluded a controlled transaction (group of homogeneous transactions) related to that transaction:
1) a list of persons (indicating the states and territories of which they are tax residents) with whom the controlled transaction was concluded, a description of the controlled transaction and the conditions thereof, including a description of pricing methods (if any) and the conditions and timing of payments in respect of that transaction and other information on the transaction;
2) information concerning the functions of the persons who are parties to the transaction (where the taxpayer carries out a functional analysis), concerning assets used by them in connection with the controlled transaction and concerning the economic (commercial) risks assumed by them which the taxpayer took into consideration when concluding the transaction.
Where the taxpayer has used the methods provided for in Chapter 23 of this Code, the documentation shall include the following information on the methods used:
1) an explanation of the reasons for the choice of method used and the manner in which it was applied;
2) an indication of information sources used;
3) a computation of the market price range (profit margin range) for the controlled transaction with a description of the approach used to the selection of comparable transactions;
4) the amount of income (profit) received and (or) the amount of expenses (losses) incurred as a result of the controlled transaction, and the profit margin obtained;
5) information on the economic gain received from the controlled transaction by a person who concluded that transaction as a result of the acquisition of information, results of intellectual activity, rights in symbols which distinguish an enterprise and its products, its products and services (company name, trademarks, service marks) and other exclusive rights (where applicable);
6) information on other factors which influenced the price (profit margin) used in a controlled transaction, including information on the market strategy of the person who concluded the controlled transaction if that market strategy influenced the price (profit margin) used in the controlled transaction;
7) adjustments which the taxpayer made to the tax base and amounts of tax (losses) in accordance with part one of Article 177 of this Code.
A taxpayer shall have the right to provide other information which serves to demonstrate that the commercial and (or) financial conditions of controlled transactions are consistent with those which applied in comparable transactions with account taken of adjustments made to ensure the comparability of the commercial and (or) financial conditions of comparable transactions in which the parties are independent parties with the conditions of a controlled transaction.
The documentation which is referred to in part one of this Article may be requested from a taxpayer by the State Tax Committee of the Republic of Uzbekistan not earlier than 1 June of the year following the calendar year in which controlled transactions were concluded.
The provisions of parts one through four of this Article shall not apply in the following cases:
1) where prices are used in transactions in accordance with instructions of anti-monopoly bodies in accordance with paragraph 3 of part one of Article 178 of this Code, or the price is regulated and is applied in accordance with part three of Article 179 of this Code;
2) in the case of transaction is not controlled;
3) in the case of transactions involving securities and financial instruments of forward transactions which are circulated on the organized securities market;
4) in the case of transactions in relation to which a pricing agreement for taxation purposes has been concluded in accordance with Chapter 25 of this Code.
A taxpayer shall have the right to present the above-mentioned documentation in relation to transactions such as are referred to in part six of this Article on a voluntary basis.
The level of detail and comprehensiveness of documentation presented to the tax authorities must be consistent with the complexity of a transaction and the manner in which the transaction price is determined (the profit margin of the parties to the transaction).
Article 194. Tax Control With Respect to Transfer Pricing
An audit of the proper calculation and payment of taxes in connection with the conclusion of controlled transactions within the framework of tax control in transfer pricing (hereinafter referred to as “audit”) shall be performed by the State Tax Committee of the Republic of Uzbekistan at its location.
An audit shall be carried out on the basis of a notification of controlled transactions or a notice from a territorial tax authority, sent in accordance with Article 182 of this Code, or when a controlled transaction is discovered as a result of a tax audit.
When performing audits the State Tax Committee of the Republic of Uzbekistan shall have the right to perform the tax control measures established by Articles 150 — 152 of this Code. In this respect, the conformity of prices used in controlled transactions to market prices may not be inspected by territorial tax authorities or the Interregional State Tax Inspectorate for large taxpayers.
The State Tax Committee of the Republic of Uzbekistan shall not have the right to perform two or more audits in relation to one controlled transaction (group of homogeneous transactions) for one and the same calendar year, except as otherwise provided by this Article.
The State Tax Committee of the Republic of Uzbekistan shall have the right to perform repeat audits in relation to one controlled transaction (group of homogeneous transactions) in the following cases:
1) in the event that a taxpayer submits a revised tax reporting in which the stated amount of tax is less (the stated amount of losses is greater) than was previously declared in a tax reporting submitted in accordance with Article 177 of this Code;
2) in the event that inaccuracy was detected in the information which was previously submitted by the taxpayer with respect to the controlled transaction.
An audit may cover controlled transactions concluded over a period not exceeding the five calendar years preceding the calendar year in which the decision ordering the audit was issued.
The performance of an audit in relation to a transaction concluded by a taxpayer shall not affect the performance of tax audits or tax monitoring for that tax period in which that transaction was concluded.
Materials and information obtained by the State Tax Committee of the Republic of Uzbekistan in carrying out tax control measures in transfer pricing may be used in auditing other persons who are participants in the same controlled transaction.
Article 195. Procedure for Conducting Tax Control for Transfer Pricing
An audit shall be carried out by officials of the State Tax Committee of the Republic of Uzbekistan on the basis of a decision of the director (deputy director) concerning the performance of an audit.
Such a decision may be issued not later than four years after the receipt of a notification or notice such as are referred to parts one and two of Article 182 of this Code, unless otherwise provided by this Article.
The State Tax Committee of the Republic of Uzbekistan shall notify the taxpayer of the decision within three days from the date of its adoption.
In the event that a taxpayer, in accordance with Article 177 of this Code, submits an updated tax reporting in which the amount of tax calculated is stated as a lesser amount (the amount of losses is stated as a greater amount) than was previously declared, a decision to perform an audit may be issued not later than four years after the submission of that updated tax reporting. In this respect, the audit shall be performed only in relation to the controlled transaction for which an adjustment has been made.
An audit shall be carried out within a period not exceeding six months.
The period of performance of an audit shall be measured from the date of issuance of the decision ordering the audit to the day on which the statement of performance of the audit is drawn up.
In exceptional cases that period may be extended to twelve months by decision of the director (deputy director) of the State Tax Committee of the Republic of Uzbekistan.
The grounds and procedure for extending the time period for the performance of an audit shall be established by the State Tax Committee of the Republic of Uzbekistan.
Should the need arise for information to be obtained from foreign State bodies, for expert examinations to be performed and (or) for documents presented by the taxpayer in a foreign language to be translated into Uzbek or Russian, the time period for the performance of an audit may be extended for a further period not exceeding six months.
Where an audit was extended for the purpose of obtaining information from foreign State bodies and the State Tax Committee of the Republic of Uzbekistan has been unable to obtain the requested information within a period of six months, the extension period of the audit may be increased by three months.
A copy of the decision on the extension of the time period for the performance of an audit shall be sent to the taxpayer within three days from the day on which it was adopted.
Where a taxpayer has used the methods or a combination of the methods referred to in Chapter 23 of this Code to assess the comparability of the commercial and (or) financial conditions of controlled transactions with the conditions of compared transactions between independent persons, the State Tax Committee of the Republic of Uzbekistan shall apply the method (combination of methods) used by the taxpayer when exercising audit.
A different method (combination of methods) may be applied in the event that the State Tax Committee of the Republic of Uzbekistan is able to prove that, by reason of the conditions under which a controlled transaction was concluded, the method (combination of methods) used by the taxpayer does not make it possible to assess the comparability of the commercial and (or) financial conditions of controlled transactions with the conditions of compared transactions between independent parties.
The State Tax Committee of the Republic of Uzbekistan shall not have the right to use other methods not provided for in Chapter 23 of this Code when exercising audit.
The State Tax Committee of the Republic of Uzbekistan shall have the right to send to a taxpayer in the manner prescribed by Article 146 of this Code, a request for the presentation of documentation such as is provided for in Article 193 of this Code in relation to a transaction (group of homogeneous transactions) being audited.
Documentation requested shall be presented by a taxpayer within thirty days from the date of receipt of the relevant request.
An official of the State Tax Committee of the Republic of Uzbekistan who is conducting an audit shall have the right to request documents (information) from participants in transactions being inspected who possess documents (information) relating to those transactions. The requesting of documents shall take place according to a procedure similar to the procedure for the requesting of documents which is established by Article 147 of this Code.
On the last day of an audit the inspector shall be obliged to draw up a certificate of audit completion, specifying the subject-matter and dates of the audit.
The certificate of audit completion shall be handed to the person in relation to whom the audit was performed or that person’s representative against receipt or shall be transmitted by another means which provides evidence of the date of receipt of the certificate.
In the event that the taxpayer (the taxpayer’s representative) evades receipt of the certificate of audit completion, that certificate shall be sent to the taxpayer by registered mail.
Where a certificate of audit completion is sent by registered mail, the date of delivery shall be considered to be the fifth day counting from the date on which the registered letter was sent.
Where an audit has revealed deviations in the price used in a transaction from the market price which have caused the amount of tax to be understated (the amount of losses to be overstated), within two months from the date of preparation of the certificate of audit completion the authorized officials who carried out the audit must draw up an audit act in the prescribed form.
The audit act shall be signed by the officials who carried out the audit and the person in relation to whom the audit was carried out (or a representative of that person).
A refusal by the person in relation to whom the audit was carried out or a representative of that person to sign the audit act shall be noted in that act.
An audit act shall be prepared with account taken of the requirements set out in part five of Article 156 of this Code.
The audit act must also indicate documented instances in which the price used in a controlled transaction deviated from the market price by being above the highest price, and present evidence that the deviation caused the amount of tax to be understated (the amount of losses to be overstated) and a computation of the amount of that understatement (overstatement).
An audit act must be handed within five days of the date of the act to the person in relation to whom the audit was performed or a representative of that person against receipt, or must be transmitted by another means which provides evidence of the date of receipt of the act by that person (the person’s representative).
Should the person in relation to whom an audit was performed or a representative of that person evade receipt of the audit act, that fact shall be noted in the audit act, and the audit act shall be sent by registered mail to the location of the legal entity concerned or the place of residence of the physical person concerned.
Where an audit act is sent by registered mail, the date of delivery of the act shall be considered to be the fifth day from the date on which the registered letter was sent.
A person in relation to whom an audit has been performed or a representative of that person shall have the right, in the event that he disagrees with statements made in the audit act or with the conclusions and recommendations of the auditors, to present to the State Tax Committee of the Republic of Uzbekistan written objections in relation to that act as a whole or in relation to individual points therein.
In this respect, the person in question shall have the right to attach to the written objections, or to transmit to the State Tax Committee of the Republic of Uzbekistan within an agreed time limit, documents (certified copies of documents) substantiating the objections.
Such objections shall be submitted within twenty calendar days from the date of receipt of the tax audit act.
The examination of an act, other audit materials and written objections presented by a taxpayer in relation to an act and the adoption of a decision based on the results of an audit shall take place in a similar manner as is provided for in Articles 158-160 of this Code for the examination of materials relating to a tax audit.
Chapter 25. Pricing Agreement for Taxation Purposes
Article 196. General Provisions Concerning a Pricing Agreement for Taxation Purposes
A legal entity of the Republic of Uzbekistan which is a taxpayer classified as a major taxpayer (hereafter in this Chapter referred to as “taxpayer”) shall have the right to file an application with the State Tax Committee of the Republic of Uzbekistan for the conclusion of an agreement on pricing for taxation purposes (hereinafter referred to also as “pricing agreement”).
A pricing agreement shall constitute an agreement made between a taxpayer and the State Tax Committee of the Republic of Uzbekistan regarding the manner in which prices are to be determined and (or) pricing methods are to be applied in controlled transactions for taxation purposes, concluded for a certain period.
The purpose of a pricing agreement shall be the application of the market prices to transactions concluded by the taxpayer.
The subject of a pricing agreement shall include:
1) the types and (or) lists of controlled transactions and goods (services) in relation to which a pricing agreement is concluded;
2) the procedure for determining prices and (or) a description of and the procedure for applying pricing methods (formulae) for taxation purposes;
3) a list of information sources to be used in determining the conformity of prices used in transactions to the conditions of the agreement;
4) the term of the pricing agreement;
5) a list of and the procedure and time limits for presenting documents confirming fulfilment of the conditions of the pricing agreement.
Other conditions of a pricing agreement may be established by arrangement between the parties.
Article 197. Parties to a Pricing Agreement
The parties to a pricing agreement shall be the taxpayer and the State Tax Committee of the Republic of Uzbekistan in the person of the director (deputy director) of that body, except as otherwise provided in part two of this Article.
Where a pricing agreement is to be concluded in relation to a foreign trade transaction and at least one of the parties to that transaction is a tax resident of a foreign state, the taxpayer shall have the right to file an application with the State Tax Committee of the Republic of Uzbekistan for such a pricing agreement to be concluded with the participation of the competent executive body of the relevant foreign state. Such an agreement with the participation of an authorized executive body of a foreign state shall be possible provided that an agreement (treaty) has been concluded with this state on the avoidance of double taxation.
The procedure for the conclusion of such a pricing agreement shall be established by the Ministry of Finance of the Republic of Uzbekistan.
Where homogeneous controlled transactions are concluded between a number of interconnected legal entities of the Republic of Uzbekistan (group of legal entities), a multilateral pricing agreement may be concluded with those legal entities. In this respect, the conditions of that agreement shall apply to the entire group of legal entities which concluded it.
In the process of the conclusion of a pricing agreement, the amendment of the conditions and the performance of an inspection of the fulfilment of the conditions of a pricing agreement in accordance with the procedures established by Articles 199 and 200 of this Code respectively, the common interests of a group of legal entities may be represented by one legal entity from this group. The authority of this legal entity shall be confirmed by powers of attorney issued in accordance with the procedure established by the legislation.
A taxpayer who has concluded a pricing agreement shall have the right to notify persons with whom transactions are concluded of the conclusion of such an agreement and of the procedure established therein for the determination of the price to be used for taxation purposes.
Article 198. Term of a Pricing Agreement
A pricing agreement may be concluded in relation to one or more transactions (a group of homogeneous transactions) having one and the same subject for a period not exceeding three years.
The term of a pricing agreement may be extended to include the period which elapsed from the first day of the calendar year in which the taxpayer submitted the application to conclude the agreement to the State Tax Committee of the Republic of Uzbekistan up to the date of entry into force of that agreement.
Provided that it has complied with all the conditions of a pricing agreement, a taxpayer shall have the right to file an application with the State Tax Committee of the Republic of Uzbekistan for the term of the pricing agreement to be extended.
A pricing agreement may be extended by agreement between the parties by not more than two years in accordance with the procedure laid down in Article 199 of this Code.
A pricing agreement shall enter into force from 1 January of the calendar year following the year in which it was signed except as otherwise provided directly by that agreement.
Article 199. Procedure for Conclusion of a Pricing Agreement
A taxpayer’s application for the conclusion of a pricing agreement which is submitted by the taxpayer to the State Tax Committee of the Republic of Uzbekistan shall be accompanied by:
1) a draft of the pricing agreement;
2) documents relating to activities of the taxpayer which are connected with controlled transactions and relating to controlled transactions in relation to which the taxpayer proposes the conclusion of a pricing agreement;
3) copies of the taxpayer’s foundation documents;
4) a copy of the taxpayer’s certificate of State registration;
5) a copy of the taxpayer’s certificate of registration with the tax authority for its location in the territory of the Republic of Uzbekistan;
6) the taxpayer’s accounting (financial) statements for the last reporting period;
7) other documents containing information relevant to the conclusion of the pricing agreement.
The documents enumerated in part one of this Article shall be presented to the State Tax Committee of the Republic of Uzbekistan in arbitrary form, unless otherwise provided by legislation.
The State Tax Committee of the Republic of Uzbekistan shall have the right to make a request to a taxpayer to supply other documents not provided for in the first part of this Article which are needed for the purposes of a pricing agreement.
The State Tax Committee of the Republic of Uzbekistan shall consider the application and other documents presented by the taxpayer in accordance with parts one through three of this Article within a period of not more than six months from the day on which they are received. That period may be extended to nine months.
The grounds and procedure for the extension of the time period for the consideration of documents presented by a taxpayer shall be established by the State Tax Committee of the Republic of Uzbekistan.
Following consideration of the documents presented by the taxpayer in accordance with parts one — three of this Article, the State Tax Committee of the Republic of Uzbekistan shall adopt one of the following decisions:
1) a decision consenting to the conclusion of a pricing agreement;
2) a substantiated decision to refuse the conclusion of such an agreement;
3) a decision requiring modification of the draft pricing agreement.
The relevant decision shall be sent to the taxpayer (his representative) within five days from the date of adoption.
Where a decision is adopted consenting to the conclusion of a pricing agreement the decision shall indicate the place, date and time of signing of the pricing agreement.
The decision on the re-submitted draft agreement shall be adopted by the State Tax Committee of the Republic of Uzbekistan within three months.
The grounds for the adoption of a decision refusing the conclusion of a pricing agreement shall include, in particular:
1) the non-submission or incomplete submission of the documents specified in part one of this Article;
2) a substantiated conclusion to the effect that applying the price determination procedure and (or) pricing methods proposed by the taxpayer in the draft pricing agreement would not ensure the correspondence of transaction prices to market prices.
A copy of the pricing agreement concluded with a taxpayer shall be sent by the State Tax Committee of the Republic of Uzbekistan to the tax authority where the taxpayer is registered within three days from the date on which that agreement is signed.
An application for the conclusion of a pricing agreement which is submitted by the taxpayer to the State Tax Committee of the Republic of Uzbekistan may be withdrawn by that taxpayer.
A price agreement may be amended in accordance with the procedure laid down in this Article.
Article 200. Inspection of Compliance with a Pricing Agreement
Compliance by a taxpayer with a pricing agreement shall be inspected by the State Tax Committee of the Republic of Uzbekistan in accordance with the procedure laid down in Chapter 24 of this Code.
Where a taxpayer has complied with all the conditions of a pricing agreement, the State Tax Committee of the Republic of Uzbekistan shall not have the right to adopt a decision which provides for additional assessment of taxes, penalties and fines to be charged or amounts of losses to be reduced in relation to controlled transactions for which prices (price determination methods) were agreed upon in the pricing agreement.
Article 201. Procedure for the Termination of a Pricing Agreement
A pricing agreement shall be terminated upon the expiry of its term or may be terminated before the expiry of its term in cases provided for in this Article.
A pricing agreement shall be terminated early by decision of the director (deputy director) of the State Tax Committee of the Republic of Uzbekistan in the event that the taxpayer has committed a violation of the pricing agreement during its effective term which has caused taxes to be underpaid.
A pricing agreement may also be cancelled early by agreement between the parties or by decision of a court.
The decision of the State Tax Committee of the Republic of Uzbekistan to terminate a pricing agreement shall be handed to the taxpayer (a representative of the taxpayer) against receipt or transmitted by another means which provides evidence of the date of the receipt thereof by the taxpayer (the taxpayer’s representative), or shall be sent to the taxpayer by registered mail within five days from the day on which the relevant decision is adopted.
A decision to terminate a pricing agreement which has been sent to a taxpayer by registered mail shall be considered to have been received upon the lapse of five days from the date on which the registered letter was sent.
A taxpayer may appeal to a court in accordance with the procedure established by the legislation against a decision of the State Tax Committee of the Republic of Uzbekistan to terminate a pricing agreement.
Article 202. Stability of the Conditions of the Pricing Agreement
The conditions of a pricing agreement shall remain unchanged in the event that amendments are introduced to tax legislation with respect to the regulation of relations arising in connection with the conclusion, amendment or termination of a pricing agreement.
Should any amendments be introduced to the tax legislation which affect a taxpayer’s activities and pricing, the parties to the agreement shall have the right to amend the text of the pricing agreement accordingly.
SECTION VII. CONDITIONS AND GENERAL RULES OF TAXATION OF PROFIT OF CONTROLLED FOREIGN COMPANY
Chapter 26. General Rules for Taxation of Profit of Controlled Foreign Company
Article 203. Persons Which Pay Tax on Profit of Controlled Foreign Company
Tax residents of the Republic of Uzbekistan shall be obliged to pay tax on undistributed profit of controlled foreign companies in the manner prescribed by this Code, unless otherwise provided by this Section,.
The procedure of the recognition of foreign companies as controlled foreign companies and the procedure of the recognition of legal entities and physical persons as controlling persons of such foreign companies shall be established, respectively, by Articles 39 and 40 of this Code.
If a tax resident of the Republic of Uzbekistan is recognized as a controlling person of a controlled foreign company, he shall be obliged to include undistributed profit of that foreign company in his income, which is subject to taxation in accordance with this Code. Legal entities shall include the specified undistributed profit in the tax base for tax on profit, and physical persons shall include it in the tax base for personal income tax.
The rules provided for in part three of this Article shall apply separately to each foreign controlled company by each of persons controlling its.
In the cases provided for in Article 204 of this Code, undistributed profit of controlled foreign companies shall be exempt from taxation in accordance with this Code.
Article 204. Exemption of Profit of Controlled Foreign Company from Taxation
Profit of a controlled foreign company shall be exempt from taxation in accordance with the procedure and subject to the conditions established by this Code in the event that any of the following conditions is met in relation to the controlled foreign company in question:
1) it is a non-commercial organization which, in accordance with the legislation of a foreign state (territory) in which it was created, does not distribute profit (income) earned among shareholders (participants, founders) or other persons;
2) it is an active foreign company or an active foreign holding company
3) the effective rate of tax on income (profit) for the foreign company in question, determined in accordance with Article 207 of this Code for a period for which financial statements for a financial year are prepared in accordance with the legislation of the state (territory) of its permanent location, is not less than the size of the tax rate for tax on profit specified in paragraph 12 of Article 337 of this Code;
4) it is a bank or an insurance organization which carries out activities in accordance with the legislation of a foreign state (territory) on the basis of a licence or other special permit to carry out banking or insurance activities;
Profit of a controlled foreign company specified in paragraph 2 of part one of this Article shall be exempt from taxation in accordance with this Code if the state (territory) of its permanent location is not included in the list of offshore jurisdictions provided for in parts three and four of Article 181 of this Code.
Profit of a controlled foreign company specified in clauses 3 and 4 of part one of this Article shall be exempt from taxation in accordance with this Code if the place of permanent location of such a foreign company is a state (territory) with which there is an international agreement of the Republic of Uzbekistan on taxation issues.
The rules concerning the recognition of a controlled foreign company as an active foreign company or an active foreign holding company shall be established by Article 205 of this Code.
The rules concerning the calculation of the effective rate of tax on (income) profit shall be established by Article 207 of this Code.
Profit of an active foreign holding company shall be exempt from taxation for a legal entity of the Republic of Uzbekistan which is a controlling person of that active foreign holding company such as is referred to in Article 205 of this Code.
Profit of that active foreign holding company shall also be exempt from taxation for other controlling persons of that active foreign holding company which have a direct or indirect participating interest in a legal entity of the Republic of Uzbekistan which is the controlling person of the active foreign holding company. Specified profit is exempt from taxation to an extent corresponding to the participating interests of the persons in question in that controlling person.
The right to exemption from taxation of profit of a controlled foreign company in accordance with this Code on the grounds established by part one of this Article must be documented. In order to confirm this right, a taxpayer which exercises control over a foreign company shall submit to the tax authority for its location documents confirming that the conditions for such exemption are met.
These documents shall be submitted within the time limit stipulated by parts two through five of Article 209 of this Code, and must be translated into the state language insofar as is necessary to ensure compliance with the conditions for profit of a controlled foreign company to be exempted from taxation.
Article 205. Active Foreign Companies and Active Foreign Holding Companies
For the purposes of this Code, an active foreign company shall be deemed to be a foreign legal entity for which the share of income from passive activities for the period for which financial statements for a financial year are prepared account for no more than 20 per cent of the total amount of all income for that period.
For the purposes of this Code, a foreign holding company shall be deemed to be a foreign legal entity in whose charter (authorized) capital (fund) a legal entity of the Republic of Uzbekistan which is controlling person holds a participating interest amounting to not less than 75 per cent over a period amounting to not less than three hundred and sixty-five consecutive calendar days.
For the purposes of this Code, an active foreign holding company shall be deemed to be a foreign holding company in relation to which all of the following conditions are simultaneously met:
1) the foreign holding company does not have the share of its income from passive activities (excluding dividends from active foreign companies) account for not more than 5 per cent of the total amount of all income of that foreign holding company according to data in its financial statements for the financial year;
2) the direct participating interest of the foreign holding company in the charter (authorized) capital (fund) of each active foreign company with respect to which dividends therefrom are excluded from the composition of income from passive activities when calculating the proportion referred to in paragraph 1 of this part, amounts to not less than 50 per cent over a period amounting to not less than three hundred sixty-five consecutive calendar days;
For the purposes of this Article, a financial year shall to be understood as a period of time for which, in accordance with the legislation of the state in which this foreign legal entity is created, financial statements are prepared, and under its financial statements shall to be understood the unconsolidated financial statements of this legal entity.
Types of activity, income from the implementation of which shall be considered for taxation purposes as income from passive activities, shall be determined in accordance with Article 206 of this Code.
Article 206. Income from Active and Passive Activities
When determining the income of a controlled foreign company for the purposes of this Code, the following incomes shall be taken into account:
1) dividends received by this foreign company;
2) income which is received as a result of the distribution of profit or assets of legal entities, other persons or associations thereof, including upon their liquidation;
3) interest income from debt obligations of any kind, including profit-sharing bonds and convertible bonds;
4) royalties;
5) income from the sale of shares (participating interests) and (or) the assignment of rights in a foreign organization which is not a legal entity in accordance with foreign law;
6) income from operations with financial instruments of forward transactions (derivative financial instruments);
7) income from the sale of immovable property;
8) income from the rental or sublease of property, including income from leasing operations, with the exception of the income from the rental or sublease of marine vessels, or aircraft and (or) means of transport and containers used in international traffic. At the same time, the amount of income from leasing operations involving the acquisition and use of a leased item by the lessee shall be determined on the basis of the total amount of the lease payment less the reimbursement to the lessor for the cost of the leased property;
9) income from the sale (including redemption) of investment units in mutual investment funds;
10) income from the rendering of consulting, legal, accounting, auditing, engineering, advertising, marketing and data processing services and from the performance of research and development work;
11) income from secondment services;
12) other items of income which are similar to the items of income specified in clauses 1 — 11 of part one of this Article;
13) other income.
For the purposes of this Code, the income specified in paragraphs 1-12 of the first part of this Article shall be deemed as income from passive activity, and the income specified in paragraph 13 of the first part of this Article shall be deemed as income from active activity.
Where the main activity of a foreign company is aimed at receiving income specified in paragraph 3 of part one of this Article, and is carried out on the basis of a special license in accordance with the legislation of a foreign state (territory), this income can be attributed to income from active activities. In particular, for banks such income shall be deemed as income from active activities.
Article 207. Effective Rate of Tax on Income (Profit)
The effective rate of tax on income (profit) of a foreign company shall be understood to mean the ratio of the amount of tax on income (profit) calculated by a foreign company and its economically autonomous subdivisions in accordance with the legislation of the state (territory) of a foreign company, and income tax withheld on income (profit) of the company in question at the source of payment of that income, to the total amount of income (profit) of a foreign company together with its economically autonomous subdivisions.
When calculating the amount of tax on income (profit), the taxpayer shall have the right to adjust it for the amount of taxes which relate to income (profit) taken into account in calculating the indicator of the total amount of income (profit) of a foreign company, and are required to be calculated in accordance with the legislation of the state (territory) of a foreign company and (or) withheld in periods other than the period for which the total amount of income (profit) of a foreign company is calculated.
Where the results for a tax period for a tax indicate that a foreign company does not have income, or where the total amount of income (profit) is a negative value or is equal to zero, the effective rate shall not be calculated and the controlled foreign company shall be recognized as satisfying the conditions provided for in part one of Article 204 of this Code.
Article 208. Tax Treatment of Profit of a Controlled Foreign Company in taxation
For the purposes of this Code, profit (loss) of a controlled foreign company shall be understood to mean the amount of that company’s profit (loss) which has been calculated in accordance with Section XI of this Code.
Where the profit of a controlled foreign company is calculated, account shall be taken of the special considerations provided for in Section XI of this Code, in particular, with respect to the existence of an international agreement with the state (territory) that is the permanent location of this foreign company.
Profit of a controlled foreign company shall be reduced by the amount of dividends paid by that foreign company in the calendar year following the year for which financial statements are prepared in accordance with laws of the state (territory) of such a company, including interim dividends paid during the financial year for which those financial statements are prepared.
In the event that the legislation of foreign state (territory) does not require the preparation of financial statements of that company, the calendar year shall be used for the purposes of this paragraph.
In the determination of profit of a controlled foreign company account shall not be taken of income in the form of dividends for which legal entities of the Republic of Uzbekistan are the source of payment if the controlling person of that controlled foreign company has an actual right to the income in question and is exempt from paying tax on such income or independently paid it in accordance with this Code.
Profit of a controlled foreign company which is a foreign structure without the formation of a legal entity shall be reduced by the amount of distributed profit in favor of the controlling persons of this foreign company and (or) its other beneficiaries which are recognized as such in accordance with its foundational documents.
Undistributed profit of a controlled foreign company which is determined in accordance with this Code shall be equated with income of taxpayer which is recognised as a controlling person of that controlled foreign company. Such income shall be taken into account in determining the tax base for controlling persons for tax on profit or personal income tax, depending on whether the controlling person is a legal entity or an physical person.
Undistributed profit of a controlled foreign company shall be taken into account in determining the tax base of a taxpayer-controlling person to an extent corresponding to that person’s participating interest in the controlled foreign company as at the date of adoption of a profit distribution decision.
If the decision on profit distribution is not adopted before December 31 of the year that falls on the end of the period for which, in accordance with the legislation of the state (territory) of such a company, the financial statements for the financial year are prepared, that profit is accounted for in the share to an extent corresponding to that controlling person’s participating interest at the end of corresponding period.
Where it is impossible to determine the share in the profit of a controlled foreign company in this way, profit of that controlled foreign company shall be taken into account in determining the tax base of a controlling person on the basis of the amount of profit to which he has (will have) a right in the event of its distribution among persons who have an actual right to that profit (income).
Where a controlling person has indirect participation in a controlled foreign company, provided that that participation is exercised through legal entities which are its controlling persons and are deemed to be tax residents of the Republic of Uzbekistan, profit of that controlled foreign company which is taken into account in determining the tax base of the taxpayer in question shall be reduced by amounts of profit which are required to be taken into account for taxation purposes for other controlling persons. Such a decrease shall be made to an extent proportional to the participating interest of the controlling person in question in the legal entity through which indirect participation in the controlled foreign company is exercised.
In this respect, where the amount of profit of a controlled foreign company which is required to be taken into account in determining the tax base for a controlling person is equal to zero, the taxpayer shall have the right not to reflect that in the tax reporting for tax on profit (personal income tax of physical persons).
A controlling person shall submit a tax reporting for the tax with respect to which profit of a foreign company controlled by that person is taken into account in determining the tax base together with the following documents:
1) the financial statements of the controlled foreign company for the period for which profit was taken into account in determining the tax base for the tax in relation to which the tax reporting is submitted, or, in the absence of financial statements, other documents;
2) the audit report on the financial statements of the controlled foreign company referred to in paragraph 1 of this part, if the auditing of such financial statements is compulsory in accordance with the legislation of the state (territory) or the foundational (corporate) documents of this controlled foreign company, or an audit is undertaken by the foreign company on a voluntary basis.
Documents (copies thereof) such as are referred to in part thirteen of this Article which have been prepared in a foreign language must be translated into the state language.
Where an auditor’s report on financial statements cannot be submitted at the same time as a tax reporting, it shall be submitted not later than one month from the day specified in the notification of controlled foreign companies as the date of preparation of the auditor’s report on the financial statements.
Profit of a controlled foreign company shall be taken into account in determining the tax base for a tax period for a particular tax in accordance with parts one and two of this Article if the amount of that profit, calculated in accordance with Section XI of this Code, exceeds three hundred million soums.
Where a controlled foreign company is unable to distribute profit (in whole or in part) among participants (shareholders, principals or other persons) at the end of the financial year, by reason of an obligation established by the legislation of foreign state (territory) to use that profit to increase charter capital, such profit shall not be taken into account in determining the tax base for a taxable controlling person.
Article 209. Notifications of Participation in Foreign Companies and of Controlled Foreign Companies
Taxpayers who are deemed to be tax residents of the Republic of Uzbekistan shall, in the cases and in accordance with the procedure laid down in this Code, notify a tax authority:
of their participation in foreign legal entities (of the foundation of foreign structures without the formation of a legal entity);
of controlled foreign companies of which they are controlling persons.
A notification of participation in foreign legal entities shall be submitted not later than one months from the date of the commencement of (or of a change in the size of) the participating interest in such foreign legal entity, which is the basis for submitting the notification in question.
A notification of controlled foreign companies shall be submitted not later than 20 March of the year following a tax period in which a controlling person recognises income in the form of profit of a controlled foreign company in accordance with Article 208 of this Code.
If, after a notification of participation in foreign organizations was submitted, the grounds for the submission of such a notification have not changed, repeat notifications shall not be submitted.
In the event that participation in foreign organizations is terminated, the taxpayer shall inform the tax authority of this not later than one months from the date of termination of participation.
Taxpayers shall submit notifications of participation in foreign legal entities and notifications of controlled foreign companies to the tax authority for their place of registration.
Taxpayers shall submit notifications of participation in foreign legal entities and notifications of controlled foreign companies to a tax authority in electronic form.
Notices of participation in foreign legal entities and notices of controlled foreign companies are submitted to the tax authority in electronic form. Taxpayers who are physical persons shall have the right to submit the above-mentioned notifications in paper form.
The forms of a notification of participation in foreign legal entities and a notification of controlled foreign companies, as well as the procedure for completing and submitting them, shall be approved by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
A notification of participation in foreign organizations shall contain the following information:
1) the date on which the ground for submitting the notification arose;
2) the name of the foreign legal entity (foreign structure without the formation of a legal entity) in relation to which the notification of participation therein (of the foundation thereof) has been submitted by the taxpayer;
3) the registration number assigned to a foreign legal entity in the state (territory) in which it is registered (incorporated), the code (codes) of a foreign legal entity as a taxpayer in the state (territory) in which it is registered (incorporated), if these are available;
4) the participating interest of the taxpayer in a foreign legal entity, and disclosure of the manner of the taxpayer’s participation in a foreign legal entity in the case of indirect participation, giving the following details:
a) the details specified in for paragraphs 2 and 3 of this part — in relation to each subsequent legal entity through which indirect participation in the foreign legal entity is exercised;
b) the participating interest in each subsequent legal entity through which indirect participation in the foreign legal entity is exercised;
5) the date of the end of participation in a foreign legal entity (foreign structure without the formation of a legal entity).
A notification of controlled foreign companies shall contain the following information:
1) the period for which the notification is submitted;
2) the name of the foreign legal entity (foreign structure without the formation of a legal entity);
3) the registration number assigned to a foreign legal entity in the state (territory) in which it is registered (incorporated), the code (codes) of a foreign legal entity as a taxpayer in the state (territory) in which it is registered (incorporated), if these are available;
4) the date which is the last day of the period for which the financial statements of an legal entity (foreign structure without the formation of a legal entity) are prepared in accordance with the legislation of its state (territory);
5) the date of preparation of the financial statements of a legal entity for a financial year in accordance with the legislation of its state (territory), as well as the date of the end of the tax period for tax on profit (income) in accordance with the legislation of its state (territory);
6) the date of preparation of an auditor’s report on the financial statements of a foreign legal entity for a financial year (where the performance of an audit of such financial statements is compulsory in accordance with the legislation of the state (territory) of this legal entity);
7) the participating interest of the taxpayer in a foreign legal entity, and disclosure of the manner of the taxpayer’s participation in a foreign legal entity in the case of indirect participation, giving the following details:
a) the details specified in clauses 2 and 3 of this part — in relation to each subsequent legal entity through which indirect participation is exercised;
b) the participating interest in each subsequent legal entity through which indirect participation in the foreign legal entity is exercised.
8) a description of the grounds for considering the taxpayer to be a controlling person of a foreign legal entity;
9) a description of the grounds for exempting profit of a controlled foreign legal entity from taxation in accordance with this Code.
In the event that omissions, inaccuracies or errors are found to have been made in completing a submitted notification of participation in foreign legal entities or notification of controlled foreign companies, the taxpayer shall have the right to submit a revised notification.
Where a tax authority has information indicating that a taxpayer is a controlling person of a foreign company (a foreign structure without the formation of a legal entity), but the taxpayer in question has not sent a notification such as is provided for in part one of this Article to the tax authority, the tax authority shall send that taxpayer a demand to provide the necessary explanations or submit a notification such as is provided for in part one of this Article.
A demand shall be sent to the taxpayer, in particular, upon receipt of information from the competent authorities of foreign states in the framework of the exchange of information for tax purposes in accordance with international treaties of the Republic of Uzbekistan, including in cases not specified in part one of Article 40 of this Code. The specified demand shall be subject to fulfillment by the taxpayer within twenty calendar days from the date of its receipt.
A tax authority’s demand must contain the following information:
1) the name of the taxpayer to which (whom) the demand is sent;
2) the name of the foreign legal entities (foreign structures without the formation of a legal entity) in relation to which the tax authority has information indicating that the taxpayer is a controlling person thereof;
3) the registration number assigned to the foreign legal entity in the state (in the territory) of its registration (incorporation), the code (codes) of this foreign legal entity as a taxpayer in the state (in the territory) of its registration (incorporation), if available;
4) a description of the grounds which the tax authority has for deeming the taxpayer to be a controlling person of the foreign legal entity (foreign structure without the formation of a legal entity).
A taxpayer shall have the right to submit to the tax authority explanations regarding assertions made in a demand to demonstrate that there are no grounds for the taxpayer to be deemed a controlling person of the foreign legal entity, at the same time submitting to the tax authority documents (if available) supporting the explanations given.
The tax authority shall be obliged to examine explanations and documents submitted by a taxpayer.
If, after examining explanations and documents submitted, or where none are received, the tax authority establishes grounds for recognizing a taxpayer as a controlling person of a foreign legal entity (a foreign structure without the formation of a legal entity), a tax authority official sends this taxpayer a notification about foreign companies which are controlled by such a person for recognition him as controlling person.
The specified notification must contain the information provided for by paragraph 8 of part ten of this Article.
The person to whom such notification was sent shall have the right to challenge it in court within three months from the date of receipt. In this case, the specified person shall notify the tax authority of such a fact within three days from the date of filing the relevant application with the court.
Until the entry into force of a judicial act which is adopted upon the results of examination of an application for disputing the notification, the person to whom it was sent, for the purposes of this Code, cannot be deemed as a controlling person of a foreign legal entity (a foreign structure without the formation of a legal entity).
If a person has not contested the notification sent to him of foreign companies he does control, that person shall be deemed to have declared himself as a controlling person of the foreign company after three months from the date of receipt of notification. In this case, the specified person shall be subject to the provisions of this Code in relation to controlling persons.
SECTION VIII. TAX OFFENSES AND LIABILITY FOR THE COMMISSION THEREOF
Chapter 27. General Provisions Concerning Liability for the Commission of Tax Offenses
Article 210. Definition of a Tax Offense
A tax offence shall be understood to be a wrongfully committed unlawful (in violation of tax legislation) act (action or inaction) of a taxpayer, a tax agent or other persons for which liability is established by this Code.
Article 211. The Bearers of Liability
Liability for the commission of tax offences shall be borne by legal entities and physical persons in the instances provided for in Chapters 28 and 29 of this Code.
A physical person may be called to account for the commission of tax offences from the age of sixteen years.
Article 212. General Conditions of Amenability
No one may be called to account for the commission of a tax offence other than on the grounds and in accordance with the procedure which are stipulated by this Code.
No one may be called to account more than once for the commission of one and the same tax offence.
The basis for the calling of a person to account for violations of tax legislation shall be the ascertainment of the fact that a particular violation has been committed in a tax authority decision which has entered into force.
The fact that a legal entity has been called to account for the commission of a tax offence shall not exempt its officials from administrative, criminal or other liability provided for in the legislation where the appropriate grounds exist.
The fact that a person has been called to account for the commission of a tax offence shall not exempt it from the obligation to pay (remit) amounts of tax and penalties due.
A person shall be deemed innocent of committing a tax offence until his guilt has been proven in accordance with the procedure prescribed by legislation.
A person who is called to account shall not be obliged to prove his innocence of committing a tax offence. The obligation to prove the existence of circumstances which show that a tax offence has occurred and that the person is guilty of committing it shall rest with the tax authorities.
Article 213. Circumstances Which Prevent from Being Called to Account
A person may not be called to account for the commission of a tax offence if any of the following circumstances exist:
1) no tax offence has occurred;
2) the person concerned is not guilty of committing a tax offence;
4) the period of limitation for calling a person to account for the commission of a tax offence has expired.
A person cannot be called to account for the commission a tax offense where other circumstances provided for by this Code exist.
Article 214. Forms of Guilt with Respect to Commission of a Tax Offense
A person who has committed an unlawful act (action or inaction) deliberately or through negligence shall be deemed guilty of committing a tax offense.
A tax offence shall be deemed to have been committed deliberately if the person who committed it was aware of the unlawful nature of his actions (inaction) and desired or knowingly allowed the occurrence of the injurious consequences of such actions (inaction).
A tax offence shall be deemed to have been committed through negligence if the person who committed it was not aware of the unlawful nature of his actions (inaction) or of the injurious nature of the consequences of those actions (inaction), although he should and could have been aware of this.
The guilt of a legal entity with respect to the commission of a tax offence shall be determined according to the guilt of its officers or representatives whose actions (inaction) caused the tax offence to be committed.
Article 215. Circumstances in Which a Person May Not be Found Guilty of Committing a Tax Offense
Circumstances in which a person may not be found guilty of committing a tax offence shall include:
1) the commission of an act which contains elements of a tax offence as a result of a natural disaster or other emergencies and insurmountable circumstances. Such circumstances shall be established by the existence of generally known facts and of publications in the mass media and by other means not requiring special proof;
2) the commission of an act which contains elements of a tax offence by a physical person who, at the time of committing the act, was in a condition in which that person could not have been aware of or able to control his own actions as a result of an illness. Such circumstances shall be proved by the provision to the tax authority of documents which, by virtue of their meaning, content and date, relate to the tax (computation) period in which the tax offence was committed;
3) observance by a taxpayer (levy payer, tax agent) of written explanations concerning the procedure for the calculation and payment of a tax (recovery) or on other issues relating to the application of tax legislation which were given to that taxpayer or to an indefinite circle of persons by a tax or other authorized body (official of this body) within the limits of its competence. These circumstances shall be established by the existence of a relevant document of such a body which, in terms of its meaning and content, relates to the tax periods in which a tax offence was committed, irrespective of the date of adoption of that document.
4) execution by the taxpayer (levy payer, tax agent) of the reasoned opinion of the tax authority which was sent to him in the course of tax monitoring.
The provision of clauses 3 and 4 of the first part of this Article shall not apply where such written explanations or reasoned opinion of a tax authority are based on incomplete or inaccurate information provided by a taxpayer (levy payer, tax agent).
Where the circumstances referred to in part one of this Article exist, the person concerned shall not be called to account for the commission of a tax offence.
Article 216. Circumstances Which Mitigate and Increase Liability
Circumstances which mitigate liability for the commission of a tax offence shall include:
1) the commission of an offence as a result of a confluence of difficult personal or family circumstances;
2) the commission of an offence under the influence of threat or force or by reason of material, professional or other dependence;
3) other circumstances which may be regarded by the court or tax authority which is examining the case as mitigating liability.
A circumstance which increases liability shall be the commission of a tax offence by a person previously called to account for a similar offence.
Where a person, against whom a measure of liability for a tax offense has been applied, has not committed the same offense again within a year from the date of its application, then he shall be considered not to be called to account.
Circumstances which mitigate or increase liability for the commission of a tax offence shall be established by the court or tax authority which is examining the case (material of the offense) and shall be taken into account when imposing financial sanctions.
Article 217. Period of Limitation on Amenability
A person may not be called to account for the commission of a tax offence if a period of five years (the limitation period) has elapsed from the day on which it was committed or from the day following the end of the tax (computation) period during which the offence was committed up to the moment when the decision on the imposition of sanctions is issued.
The measurement of the limitation period from the day on which the tax offence was committed shall apply for all tax offences other than those provided for in Articles 223 and 224 of this Code.
The measurement of the limitation period from the day following the end of the tax period during which the offence was committed shall apply for the tax offences provided for in Articles 223 and 224 of this Code.
The running of the period of limitation for the imposition of sanctions shall be suspended if a person who is called to account for a tax offence has actively obstructed the performance of an tax audit and this has become an insurmountable obstacle to the performance of that audit and to the determination by tax authorities of the amounts of taxes payable to the budget system.
The running of the period of limitation for the imposition of sanctions shall be considered to have been suspended from the day of the preparation of the act which is provided for in part three of Article 144 of this Code. In this case, the running of the period of limitation for the imposition of sanctions shall be resumed from the day on which the circumstances obstructing the performance of the on-site tax inspection have ceased to exist and a decision to resume the tax audit has been issued.
Article 218. Financial Sanctions
A tax sanction shall be a measure of legal impact for the commission of a tax offence.
Financial sanctions shall be prescribed and imposed in the form of monetary penalties (fines) in the amounts prescribed by Chapters 28 and 29 of this Code.
Where at least one mitigating circumstance exists the amount of the fine shall be reduced by half against the level which is prescribed by the relevant Article of this Code.
In case where a tax payer admits of guilt in the revealed tax violations and voluntarily pays the amounts of financial sanctions within ten days from the date of receipt of the decision of the tax authority on calling to account for the commission of a tax offense, the amount of the fine shall be reduced by two times in comparison with the amount established by the relevant Article of this Code.
Where the circumstance, which is provided for in part two of Article 216 of this Code, exists, the amount of the fine shall be doubled.
Where one person commits two or more tax offences, financial sanctions shall be recovered for each offence separately.
Chapter 28. Tax Offenses and Lability for the Commission Thereof
Article 219. Violation of the Procedure for Registration with a Tax Authority
A violation of the established procedure for registration with the tax authorities as a value-added tax payer —
shall entail the imposition of a fine of five percent of the income received for the period from the date of registration which was provided for by tax legislation, to the date of actual registration, but not less than five million soums.
Violation of the time limits for registration with tax authorities for taxable objects in the cases provided for in Article 131 of this Code, if from the established registration time limit have passed:
no more than thirty days, shall result in the recovery of a fine in the amount of one million soums;
more than thirty days, shall result in the recovery of a fine of two million soums.
Carrying on of activities, which leads to the formation of a permanent establishment on the territory of the Republic of Uzbekistan by a foreign legal entity, without registering with a tax authority —
shall entail the imposition of a fine in the amount of ten percent of the income received from the date of commencement of such activities until the actual registration, but not less than ten million soums.
Carrying out by a physical person of the entrepreneurial activity without state registration as an individual entrepreneur —
shall entail the imposition of a fine in the amount of ten percent of the income received from such activity, but not less than one million soums.
Article 220.Failure to Submit a Tax Reporting
A failure to submit tax reporting within the time limit established by tax legislation —
shall entail the imposition of a fine of one percent for each day of delay in the amount of tax which was not paid within the specified time limit, and which was subject to payment (additional assessment) on the basis of these tax reporting, but not more than ten percent of the specified amount.
Article 221. Violation of the Procedure for the Use of Cash Registers and Payment Terminals
Carrying out the trade and (or) the provision of services without the use of cash registers and (or) payment terminals, where their use is mandatory, as well as the sale of goods and the provision of services without releasing to the buyer receipts, issuance of coupons, checks or other documents equivalent to them, where such release or issuance of those documents is mandatory, as well as the refusal to accept payments through payment terminals —
shall entail the imposition of a fine in the amount of five million soums.
Carrying out the trade and (or) the provision of services with the use of cash registers or with the issuance to the buyer of a receipt, coupons, check or other equivalent documents which were not registered with the tax authorities —
shall entail the imposition of a fine in the amount of seven million soums.
A use by a taxpayer of payment terminals registered for names of other persons -
shall entail the imposition of a fine in the amount of twenty million soums.
A use of cash registers that does not meet technical requirements, or in violation of the electronic service program, -
shall entail the imposition of a fine in the amount of twenty million soums.
Article 222. Violation of the Rules for Accounting for Income and (or) Expenses
A violation of the rules for accounting for income and (or) expenses (books for accounting for income and expenses) by an individual entrepreneur —
shall entail the imposition of a fine in the amount of five hundred thousand soums.
Article 223. Concealment (understatement) of the Tax Base
A concealment (understatement) of the tax base -
shall entail the imposition of a fine in the amount of twenty percent of the amount of the concealed (underestimated) tax base.
Taxes shall be charged on the amount of the concealed (understated) tax base in accordance with this Code.
For the purposes of this Article, concealment (understatement) of the tax base shall be understood to mean as:
non-reflection in the accounting registers of the amount of income from the sale of goods (services);
transportation of goods without issuance of shipping documents or under false documents;
absence of goods which are registered as unsold in the warehouse or at the place of sale;
storage, use and sale of unregistered (non-documented) goods;
substitution, counterfeiting or destruction of documents which testify the fact of the sale of goods (services);
use of false primary accounting documents;
illegal modification of the program for servicing the fiscal memory of cash registers;
inclusion in the production reporting of unused material costs as used;
transfer of proceeds from the sale of goods (services) to the next reporting period (deliberate underestimation of the volume of sales and income (profit);
artificial overestimation (of limits) of expenditure of material, fuel and energy resources and the rate of depreciation, or incorrect application of standards;
non-reflection in the tax reporting of the actual amount of wages of employees who are in an employment relationship with the employer;
non- reflection in the tax reporting of employees engaged in labor activities;
reflection in accounting documents of the cost of goods which are sold at lower prices than their actual cost of sale.
An amount of the concealed tax base for tax violations, specified in paragraphs thirteen and fourteen of part three of this Article, shall be determined for the last twelve months preceding the date of the commencement of the tax audit.
Article 224. The Non-Payment or Incomplete Payment of a Tax
The non-payment or underpayment of amounts of a tax as a result of the incorrect calculation of the tax (levy) or other unlawful actions (inaction), where such act does not bear the elements of the tax offences provided for in Articles 223, 226 and 227 of this Code, -
shall entail the imposition of a fine in the amount of twenty percent of the unpaid amount of tax (levy).
Article 225. Violation of the Procedure for Issuance of Invoices
A reflection of value added tax in an invoice where the sale of goods (services) is exempt from value added tax, as well as where the sale of goods (services) is carried out by the suppliers who are not value added tax payers, -
shall entail the imposition of a fine on suppliers in the amount of twenty percent of the value added tax amount which is indicated in the invoice. In this respect, the supplier shall be obliged to pay to the budget the amount of tax which is indicated in the invoice.
Article 226. The Non-payment or Incomplete Payment of Taxes in Case of Transfer Pricing
The non-payment or underpayment of tax amounts by a taxpayer as a result of the application, for taxation purposes, in controlled transactions of commercial and (or) financial conditions, which are not comparable with the commercial and (or) financial conditions of transactions between independent persons, -
shall entail the imposition of a fine in the amount of forty percent of the unpaid tax amount.
Article 227. Non-Payment or Incomplete Payment of Amount of Tax as a Result of the Non-Inclusion in the Tax Base of a Share in the Profit of a Controlled Foreign Company
The non-payment or underpayment of amounts of tax by a controlling person who/which is a taxable physical person or legal entity as a result of the non-inclusion in the tax base of a share in the profit of a specified company,-
shall result in a fine in the amount of twenty percent of the amount of unpaid tax on profit of the controlled foreign company which should be included in the tax base for tax on profit or for tax on income of physical persons respectively, but not less than ten million soums.
Chapter 29. Liability of Banks for Violation of Tax Legislation
Article 228. Violation of the Time Limits for the Execution of an Instruction to Transfer a Tax (Levy), Advance Payment, Penalty Interest, Fine
Non-execution (delay in execution) by a bank of a taxpayer’s instruction, a collection instruction of a tax authority for the transfer of amounts of tax (levy), advance payment, penalty interest, fine -
shall entail the imposition of a fine in the amount of one hundred and fiftyth of the refinancing rate of the Central Bank of the Republic of Uzbekistan, but not more than one-fifth of a percent of the unpaid amount for each calendar day of delay.
Article 229. Non-Submission by a Bank of certificates (extracts) Concerning Transactions and Accounts of a Taxpayer to a Tax Authority
Non-submission by a bank of certificates (extracts) provided for in Article 134 of this Code, as well as submission of certificates (extracts) in violation of the established time limit or submission of certificates (extracts) which contain inaccurate information -
shall entail the imposition of a fine in the amount of two million soums.
SECTION IX. APPEALING AGAINST THE ACTS OF TAX AUTHORITIES AND THE ACTIONS (INACTION) OF THEIR OFFICIALS
Chapter 30. The Procedure for Appealing Against The Acts of Tax Authorities and Actions (Inaction) of Their Officials
Article 230. Right of Appeal
Every person shall have the right to appeal against acts of tax authorities of a non-normative nature and the actions or inaction of their officials if, in the opinion of that person, such acts, actions or inaction violate his rights.
An act of a tax authority of a non-normative nature shall be understood to be a document which is drawn up in accordance with tax legislation or state departmental normative regulations, which contain an order of a tax authorities to perform certain legally significant actions that is addressed to one or more physical persons or legal entities.
Appeals against normative legal acts of tax authorities may be made in accordance with the procedure prescribed by legislation.
In the event of the rescinding by a higher tax authority or court of a decision of a tax authority which has been adopted as a result of an on-site tax inspection or tax audit, the recovered (paid) amounts of taxes and financial sanctions with respect to this decision shall be refunded (credited), with account taken of interest which are calculated on the basis of the refinancing rate of the Central Bank of the Republic of Uzbekistan, which was in effect in the period when these amounts were recovered (paid).
Article 231. Appeal Procedure
Appeals against decisions of tax authorities and actions (inaction) of their officials shall be filed with a higher tax authority in accordance with the procedure established by tax legislation.
An appeal shall be understood to mean a representation made by a person to a tax authority with the object of contesting non-normative acts of a tax authority which have entered into force and actions or inaction of officials of a tax authority where, in the opinion of that person, the contested acts or the actions or inaction of officials of the tax authority violate his rights.
The filing of an appeal with a higher tax authority or a court shall suspend the execution of a contested decision of a tax authority or the performance of a contested action by an official of a tax authority, including the recovery of taxes and levies assessed additionally, as well as the application of financial sanctions, until a decision is adopted on the appeal by a higher tax authority or until the entry into force of the court decision on this, respectively. The taxpayer shall be obliged to give a notice to the tax authority, the decision or actions (inaction) of the official of which is being appealed, about filing an appeal with a higher tax authority or with a court, with attachment of the relevant supporting documents.
Decisions of tax authorities, which are adopted in the basis of results of on-site tax inspections and tax audits, may be contested through the court only after they have been contested by appeal to a higher tax authority. This rule shall not apply to appeal against the decision of the State Tax Committee of the Republic of Uzbekistan.
In the event that a decision on an appeal is not adopted by a higher tax authority within the time limits established by parts eight and nine of Article 235 of this Code, non-normative acts of tax authorities and actions or inaction of their officials may be contested through the courts.
Non-normative acts of tax authorities which are adopted following consideration of appeals may be contested through the courts.
Non-normative acts of state tax inspectorates of districts (cities), state tax departments of the Republic of Karakalpakstan, regions and the city of Tashkent, which are adopted following consideration of appeals may be contested by appeal to the State Tax Committee of the Republic of Uzbekistan.
Non-normative acts of the State Tax Committee of the Republic of Uzbekistan, actions (inaction) of its officials shall be contested through the court.
The contesting by legal entities and physical persons through the courts of acts (including normative acts) of tax authorities and actions or inaction of their officials shall take place in accordance with the legislation of the Republic of Uzbekistan.
A person who has filed an appeal may, before a decision is adopted on the appeal, withdraw it in whole or in part by means of sending a written application to the tax authority which is considering the relevant appeal.
The withdrawal of an appeal shall deprive the person who filed that appeal of the right to file a repeat appeal on the same grounds.
Article 232. Procedure and Time Limits for the Filing of an Appeal Against Decisions of Tax Authorities Made Based on the Results of Tax Audits
Decisions of tax authorities which are adopted following the results of on-site tax inspections and tax audits shall be contested by appeal with a higher tax authority through the tax authority, whose decisions are contested.
A tax authority whose decisions are contested shall be obliged, within three days of receiving such an appeal, to transmit it together with all materials to a higher tax authority.
An appeal to a higher tax authority against decisions of tax authorities adopted as a result of on-site tax inspections and tax audits may be filed within one month from the day on which the person concerned became aware or should have become aware of the violation of his rights.
In the event that the time limit for the filing of an appeal is missed for a valid reason, that time limit may be restored by a higher tax authority at the petition of the person who files the appeal.
Article 233. Form and Content of an Appeal
An appeal and the documents attached to it may be sent to the tax authority in writing or in electronic form via telecommunications channels.
An appeal shall be signed by the person who filed it or by his representative.
The following shall be stated in an appeal:
1) the surname, first name and patronymic and the place of residence of the physical person filing the appeal, or the name and address of the legal entity filing the appeal;
2) the non-normative act of the tax authority or the actions or inaction of its officials which are contested;
3) the name of the tax authority whose non-normative act or the actions or inaction of whose officials are contested;
4) the grounds on which the person filing the appeal considers that his rights have been violated;
5) the demands of the person filing the appeal.
Telephone, electronic mail addresses and other information needed for the timely consideration of an appeal may be stated in the appeal.
Where an appeal is filed by an authorized representative of a person who is contesting a non-normative act of a tax authority or actions or inaction of its officials, the appeal shall be accompanied by documents confirming that representative’s authority.
An appeal may be accompanied by documents supporting the arguments of the person filing the appeal.
Article 234. Dismissal of an Appeal
A higher tax authority shall dismiss an appeal in whole or in part if it finds that:
the appeal has not been signed by the person who filed it, or by his representative, or documents, which must confirm the authority of the representative to sign an appeal, have not been developed and submitted in compliance with the established procedure;
the appeal was filed after the expiry of the time limit established by this Code for the filing of an appeal, and it does not contain a petition for the restoration of the time limit or the restoration of the missed time limit for the filing of the appeal has been refused;
before a decision has been adopted on the appeal an application for the withdrawal of the appeal in whole or in part has been received from the person who filed it;
an appeal was previously filed on the same grounds;
an appeal was filed against the decision of the tax authority, which, in accordance with this Code, was previously contested in the prescribed manner;
an appeal was filed in violation of the procedure established by Article 232 of this Code;
an appeal has not been completed in accordance with the requirements of Article 233 of this Code;
an appeal was filed within the framework of an criminal file, which has been initiated, or where the taxpayer applied to the court with respect to that appeal.
A tax authority which is considering an appeal shall adopt a decision to dismiss the appeal in whole or in part within five days of receiving the appeal or an application for the withdrawal of the appeal in whole or in part.
The person who filed the appeal shall be informed about the decision which was taken in writing within three days of the adoption of that decision.
The dismissal of an appeal shall not prevent a person from filing a repeat appeal within the time limits which are established by this Code for the filing of the relevant appeal, except where an appeal is dismissed on the grounds specified in paragraphs four and five of part one of this Article.
Article 235. Consideration of an Appeal by a Higher Authority
In the course of the consideration of an appeal, the person who filed that appeal may, at any time before a decision is adopted thereon, present additional documents supporting his arguments.
A higher tax authority shall consider an appeal, documents supporting the arguments of the person who filed the appeal, additional documents presented in the course of the consideration of the appeal and materials presented by the lower tax authority.
A tax authority, which is considering the appeal, may arrange for a hearing of the appeal on its own initiative or at the petition of the applicant.
Following consideration of an appeal, a higher tax authority:
shall dismiss the appeal;
shall rescind the non-normative act of the tax authority;
shall rescind the decision of the tax authority in whole or in part;
shall rescind the decision of the tax authority in full and adopt a new decision on the case;
shall declare the actions or inaction of the officials of the tax authorities unlawful and issue a substantive decision.
Documents presented together with an appeal against a decision and additional documents presented in the course of the consideration of such an appeal before the adoption of a decision thereon, shall be considered by a higher tax authority if the person who filed the appeal in question has presented explanations as to why such documents could not be presented in a timely manner to the tax authority whose decision is being contested. This rule shall be applied when an appeal was filed against decisions which are adopted in the manner prescribed by Articles 159 or 166 of this Code.
Where, following consideration of an appeal against a decision issued in accordance with the procedure prescribed by Articles 159 or 166 of this Code, a higher tax authority has established the occurrence of a violation of essential conditions of the procedure for the examination of tax audit materials, it shall have the right to rescind the decision in question.
Upon having rescinded that decision, the higher tax authority shall examine the above-mentioned materials, documents supporting the arguments of the person who filed the appeal, additional documents presented in the course of the consideration of the appeal and materials presented by the lower tax authority in accordance with the procedure prescribed by Articles 159 or 166 of this Code and issue a decision which is provided for in part four of this Article.
A decision on an appeal against a decision concerning the imposition of sanctions for the commission of a tax offence or a decision concerning assessment of additional tax amounts, which was issued in accordance with the procedure prescribed by Article 159 of this Code, shall be adopted by a higher tax authority within one month of the receipt of the appeal. That time limit may be extended by the director (deputy director) of the tax authority in order to enable documents (information) needed for the consideration of the appeal to be obtained from lower tax authorities, or in the event that the person who filed the appeal presents additional documents, but not by more than fifteen days.
A decision on an appeal not referred to in part eight of this Article shall be adopted by a tax authority within fifteen days of the receipt of the appeal. That time limit may be extended by the director (deputy director) of the tax authority in order to enable documents (information) needed for the consideration of the appeal to be obtained from lower tax authorities, or in the event that the person who filed the appeal presents additional documents, but not by more than fifteen days.
A decision of a director (deputy director) of a tax authority to extend the time limit for the consideration of an appeal shall be delivered or sent to the person who filed the appeal within three days of its adoption.
A decision adopted by a tax authority following consideration of an appeal shall be delivered or sent to the person who filed the appeal within three days from the date of its adoption.
Article 236. Consideration of Appeals Lodged with a Court
Appeals against acts of tax authorities and the actions (inaction) of officials of those authorities which are lodged with a court shall be considered and determined in accordance with the procedure which is established by legislation.
SPECIAL PART
SECTION X. VALUE ADDED TAX
Chapter 31. Taxpayers and Object of Taxation
Article 237. Taxpayers
Taxpayers of value added tax (hereinafter in this Section referred to as “taxpayers”) shall be those who sell goods (services) and (or) carry out entrepreneurial activity in the Republic of Uzbekistan:
1) legal entities of the Republic of Uzbekistan;
2) individual entrepreneurs, whose income from the sale of goods (services) for the tax period exceeds one billion soums, or who switched to the payment of value added tax voluntarily;
3) foreign legal entities which sell goods (services) on the territory of the Republic of Uzbekistan, where the Republic of Uzbekistan is recognized as the place of sale of those goods (services);
4) foreign legal entities which operate in the Republic of Uzbekistan through permanent establishments;
5) a proxy who is a participant in a simple partnership agreement, and who is entrusted with the duty to conduct the affairs of a simple partnership with respect to activities which are carried out within the framework of a simple partnership agreement (joint activity agreement);
6) persons who convey goods across the customs border of the Republic of Uzbekistan. These persons shall be deemed to be taxpayers in accordance with customs legislation.
In the cases and in the manner established by this Section, tax liabilities for value added tax shall be fulfilled by tax agents.
With the exception of the cases provided for by paragraph 6 of part one of this Article, they shall not be deemed as taxpayers:
1) government and administrative bodies within the framework of the implementation of the tasks assigned to them;
2) persons paying tax on turnover.
Taxpayers shall register for special registration as a taxpayer of value added tax (hereinafter in this Section referred to as tax) with tax authorities in the manner determined by the State Tax Committee of the Republic of Uzbekistan.
Article 238. Object of Taxation
The object of taxation shall be deemed to be:
1) sales turnover of goods (services), the place of sale of which is the Republic of Uzbekistan;
2) import of goods into the territory of the Republic of Uzbekistan.
Foreign legal entities which operate in the Republic of Uzbekistan through permanent establishments shall determine the turnover with respect to the sale of goods (services) on the basis of activities of such a permanent establishment.
The following shall not be deemed to constitute an object of taxation:
1) the sale by an individual entrepreneur of personal (family) assets which are not related to his entrepreneurial activities;
2) transfer of the assets of a legal entity in course of its reorganization to the legal successor (legal successors);
3) the transfer by the principal of the fiduciary management of the assets to the fiduciary and the return by the fiduciary of the assets transferred to him in fiduciary management upon termination of the fiduciary management agreement;
4) carrying out operations which relate to the circulation of national currency or foreign currency (except for the purposes of numismatics).
Chapter 32. Sales Turnover of Goods (Services). Place of Sale of Goods (Services)
Article 239. Sales Turnover of Goods (Services)
Sales turnover of goods shall be deemed to be:
1) the transfer of ownership rights with respect to the goods with consideration, including under a commodity loan agreement;
2) the transfer of goods without consideration, except for cases where such transfer is economically justified;
3) the transfer of property to financial lease (leasing);
4) the transfer of goods on conditions of payment by installments.
The sales turnover of services shall be deemed any activity other than the sale of goods, including:
1) the provision of services with consideration;
2) the provision of services without consideration, including the provision of the taxpayer's property without consideration, except for cases where such provision of services is economically justified.
Transfer of goods or provision of services without consideration shall be deemed to be economically justified if one or more of the following conditions are satisfied:
1) conducted for the purpose of carrying out activities which aim at deriving income;
2) are necessary for the maintenance or development of such entrepreneurial activity, and the connection of expenses with entrepreneurial activity is justified;
3) follow the provisions of the legislation.
For the purpose of applying this Section, the sales turnover of goods (services) shall be equally deemed:
1) the transfer of goods (provision of services) as a contribution to the authorized capital (charter fund) of a legal entity;
2) the transfer of goods (provision of services) between the parties to a simple partnership agreement (joint activity agreement) under such an agreement;
3) transfer of goods (rendering of services):
a) to a participant of a legal entity upon its withdrawal (departure) from the participation or when the participating interest in a legal entity is reduced or the legal entity buys out a participating interest (part of a share) in this legal entity;
b) to a shareholder, where a legal entity buys out from a shareholder the shares which are issued by this entity;
c) to a shareholder or participant upon the liquidation of a legal entity;
4) the transfer of goods which are produced by the taxpayer, the provision of services on its own for the taxpayer's own needs, the costs of which are not deductible when calculating tax on profit in accordance with Article 317 of this Code (except for the costs provided for in paragraph 20);
5) the transfer of goods (provision of services) on account of the remuneration of physical persons or on account of the payment of dividends;
6) the transfer by the taxpayer of the assets belonging to him (provision of services) to members of the management body, employees, members of their families, or other persons for their use for personal purposes which are not related to the entrepreneurial activity of the taxpayer, if the amount of tax on such assets (services) is fully or partially accepted for credit;
7) the transfer of goods and other property on a tolling basis, if the goods and (or) property are not returned in the form of a processed product within the period established by the contract;
8) the loss of goods which are placed under the customs procedure of a free customs zone without paying tax, if it is necessary to pay tax under other circumstances;
9) the transfer by the seller of reusable packaging which is subject to return, if it is not returned by the recipient within the time period established by the contract for the supply of products in such a packaging.
The sale or transfer of vouchers without consideration which grant the right to receive that goods (services) shall be deemed as a sales turnover of these goods (services).
Article 240. Place of Sale of Goods
The place of sale of goods shall be deemed to be the territory of the Republic of Uzbekistan where one or more of the following circumstances exist:
1) the goods are situated in the territory of the Republic of Uzbekistan and as a result of the transaction does not leave its territory;
2) the goods are situated in the territory of the Republic of Uzbekistan at the time of the commencement of shipment and transportation.
Article 241. Place of Sale of Services
Unless otherwise provided by this Article, the place of sale of services shall be deemed to be the territory of the Republic of Uzbekistan, provided that the buyers of such services carry out activities or are situated on the territory of the Republic of Uzbekistan.
The place of activity of the buyer of services shall be deemed to be the territory of the Republic of Uzbekistan if the buyer actually has a presence on the specified territory on the basis of the State registration of a legal entity (its branches and representations) or a physical person.
In the absence of state registration, the actual presence of the buyer of services on the territory of the Republic of Uzbekistan shall be established on the basis of a place indicated in the foundation documents of a legal entity, the place of management of a legal entity, the location of a permanent establishment (if the services are acquired through that permanent establishment) or the place of residence of a physical person.
The place of sale of services shall also be deemed to be the territory of the Republic of Uzbekistan if:
1) the services are directly connected with immovable property which is situated in the territory of the Republic of Uzbekistan. Such services shall include, in particular, construction, installation, construction and installation, services related to the development of an architectural project, preparation and coordination of construction activities, with author's and (or) technical supervision of architectural and construction activities, commissioning, repair, restoration work with real estate, and landscaping work and as well as the provision of real estate for rent;
2) the services (are directly connected with movable property, except for the lease of vehicles, which are actually rendered on the territory of the Republic of Uzbekistan. Such services shall include, in particular, installation, adjustment, assembly, processing, processing, repair, technical maintenance, storage of movable property;
3) the services in the field of public catering, entertainment, leisure and other similar services, tourism, hotel services and accommodation, culture, art, physical education and sport, training (education), including services for organizing qualification exams, seminars, qualification improvement courses, paid exhibitions, conferences, symposia and other similar events are actually rendered on the territory of the Republic of Uzbekistan. The provisions of this clause shall not apply to services in the field of training (education) provided in electronic form;
4) carriage and (or) transportation services or services which are directly connected with carriage and (or) transportation services, are rendered:
a) by legal entities of the Republic of Uzbekistan or individual entrepreneurs where the departure point and (or) the destination point are situated in the territory of the Republic Uzbekistan.
The rule stipulated by this subparagraph shall also apply where means of transport are provided under a charter contract (for a time with a crew), which provides for a carriage (transportation) on those means of transport. In this respect, the territory of the Republic of Uzbekistan shall not be deemed as the place of sale of services for the provision of aircraft for use under a charter contract, if these vessels are used for transportation between points outside the territory of the Republic of Uzbekistan;
b) by foreign persons if the departure point and destination point are situated on the territory of the Republic of Uzbekistan (with the exception of services for the carriage of passengers, mail and baggage which are provided by foreign persons not through the permanent establishment of this foreign person). The provisions of this subparagraph shall not apply to services which are directly connected with the carriage and (or) transportation of goods placed under the customs transit customs procedure where goods are carried from a place of arrival in the territory of the Republic of Uzbekistan to a place of exit from the territory of the Republic of Uzbekistan, and the services specified in paragraph 5 of this part;
5) services which are directly connected with the carriage and (or) transportation of goods placed under the customs transit customs procedure (except for the services specified in paragraph 7 of this part) where goods are carried from a place of arrival in the territory of the Republic of Uzbekistan to a place of exit from the territory of the Republic of Uzbekistan, are rendered by a legal entity of the Republic of Uzbekistan, a permanent establishment of a foreign legal entity or an individual entrepreneur;
6) services are rendered directly at the airports of the Republic of Uzbekistan and in the airspace of the Republic of Uzbekistan for aircraft maintenance, including air navigation services;
7) services involving the organization of the transportation of natural gas by pipeline through the territory of the Republic of Uzbekistan are rendered by legal entities of the Republic of Uzbekistan;
8) services which are connected with the provision of means of transport for short-term lease, which are situated in the territory of the Republic of Uzbekistan at the time of their transfer to lease. If the services are connected with the provision of means of transport for long-term lease, the place of sale of such services shall be the place of carrying out the activities (location) of the purchaser of services, irrespective of the location of the means of transport. In this respect, a contract concerning aircrafts, sea ships, helicopters and railway rolling stock shall be deemed a short-term if it is concluded for a period of up to 90 days. For other means of transport, such a contract shall be deemed as short-term if it is concluded for a period of up to 30 days;
9) services for placing advertisements on television and (or) radio, in the media and in other forms are rendered on the territory of the Republic of Uzbekistan;
10) services in electronic form, specified in Article 282 of this Code, are purchased by persons who are situated or carrying out activities in the territory of the Republic of Uzbekistan. In this case, the place of purchase of services in electronic form by a physical person shall be deemed the territory of the Republic of Uzbekistan, if one or more of the following conditions are satisfied:
a) the place of residence of the buyer is the Republic of Uzbekistan;
b) the bank with which the account used by the purchaser to make payment for services is held or the electronic money operator through which the purchaser makes payment for the services is located in the territory of the Republic of Uzbekistan;
c) the network address of the purchaser which was used in the process of acquiring the services is registered in the Republic of Uzbekistan;
d) the international country code of the telephone number used for the purpose of acquiring or making payment for the services is the code assigned to the Republic of Uzbekistan.
The Republic of Uzbekistan shall not be deemed as the place of sale of the services provided for in part three of this Article, if the place of their sale does not satisfy the criteria established therein.
Where the provision of services has an auxiliary nature with respect to the sale of main services, the place of such sale shall be the place of sale of the main services.
Article 242. Date of the Sales Turnover of Goods (Services)
Unless otherwise provided by this Article, the date of the sales turnover of goods shall be deemed to be the date on which the supplier issues an invoice or the date on which the shipment (transfer) of goods takes place where the specified date is earlier than the date on which the invoice is issued.
Where the shipment (transfer) of the goods is not carried out, the date of the sales turnover of the goods shall be the date on which the transfer of ownership rights for the goods to the buyer took place.
Where immovable property is being sold, the date of the turnover shall be the date of the transfer of the immovable property to the buyer according to the transfer act which is signed by the parties to the agreement on the alienation of immovable property.
The date of the sales turnover of services shall be deemed the date on which an invoice or other document, which confirms the fact of the provision of services, is issued (signed).
The provisions of part four of this Article shall also apply to services, the commencement of the provision of which falls on one reporting (tax) period, and the termination falls on another reporting (tax) period.
Where an electric and (or) heat energy, water, gas, utilities, communication services, services for the transportation of goods through the pipeline system are being sold, in other cases where goods (services) are sold on a permanent (continuous) basis, the date of the sales turnover of goods (services ) shall be the last day of the calendar month in which the goods are delivered (services are rendered).
Where the construction of facilities, including the construction of facilities according to turnkey principle, is being carried out, as well as under long-term contracts with a long (more than one tax period) technological cycle, if the terms of the concluded long-term contracts do not provide for monthly delivery and acceptance of services, the date of turnover shall be the last day of each calendar month.
In the event of transferring asset for the financial lease (leasing), the date of the turnover shall be the date of the provision (transfer) of the asset to the disposal of the rentier (lessee) according to the act of transfer which is signed by the parties to the financial lease (leasing) contract.
In the event of transferring goods (rendering services) for the taxpayer's own needs, the date of the turnover shall be the day of the transfer of goods (rendering services), which is fixed by the corresponding internal document of the taxpayer.
In the case of exporting goods outside the territory of the Republic of Uzbekistan with placement under the customs export procedure, the date of the sales turnover of goods shall be:
1) the date of actual crossing of the customs border, which is to be determined in accordance with customs legislation;
2) the date of registration of the cargo customs declaration for goods with the marks of the customs authority which has conducted the customs declaration, for the cases where periodic and (or) temporary customs declaration is used.
Chapter 33. Tax Exemption
Article 243. Tax Exempt Sales Turnover of Goods (Services)
Unless otherwise provided by Article 260 of this Code, the sales turnover of the following shall be exempt from taxation:
1) services involving supervision and care of children in preschool educational institutions (organizations) ;
2) services involving care for sick and elderly persons;
3) ceremonial services of funeral homes and cemeteries, religious items, services for conducting rituals and ceremonies by religious organizations and associations;
4) prosthetic and orthopedic appliances, equipment for persons with disabilities, including those which are sold by the manufacturers of these products and equipment, as well as services rendered to persons with disabilities in orthopedic prosthetics, repair and maintenance of prosthetic and orthopedic appliances and equipment for persons with disabilities;
5) products of medical production workshops at medical institutions, which are sold by these institutions;
6) goods and services of their own production which are sold by legal entities, the only participants of which are public associations of persons with disabilities, where disabled persons account for no less than 50 percent, and the share of the labor payment fund of disabled persons is no less than 50 percent of the total labor payment fund of association;
7) postage stamps (except for collectible), marked postcards, envelopes;
8) services involving the payment of pensions and benefits;
9) research and innovation works which are carried out at the expense of the budget. This exemption from taxation shall be applied where there is a conclusion of the corresponding financial authority concerning the allocation of funds from the budget;
10) services in the field of training (education), including the organization of testing and exams, in particular:
educational services in the field of primary, secondary, specialized secondary, technical and vocational, higher and postgraduate education;
services for additional education which are provided by educational institutions (organizations), as well as organizations which retrains and ensures advanced training of personnel;
services for the supervision and care of children in organizations which carry out educational and upbringing activities within the framework of preschool education and upbringing programs, services for conducting classes with minor children in circles, Sections (including sports) and studios;
11) medical services (except for cosmetology) which are provided by medical institutions. For the purposes of this clause, medical services shall include, in particular:
medical care and sanitary services;
services for diagnosis, prevention and treatment;
dental services, including dental prosthetics;
12) veterinary services. For the purposes of this clause, veterinary services include, in particular:
veterinary services, services for the diagnosis and treatment of animals;
protection of the population from diseases which are common to animals and humans;
protection of the territory of the Republic of Uzbekistan from the introduction of infectious animal diseases;
ensuring the veterinary and veterinary-sanitary safety of goods which are controlled by the state veterinary service;
13) medicines, veterinary medicines, medical and veterinary devices;
14) sanatorium and health resort services, as well as services of organizations of physical education and sport. For the purposes of this clause:
a) sanatorium and health resort services shall include services which are provided by sanatoriums, hospitals, dispensaries, resorts, boarding houses, recreation houses and zones, children's recreation camps and other recreation organizations within the framework of their main activity, and which are rendered through issuance of vouchers or courses, irrespective of whether they are rendered by legal entities or structural divisions of legal entities;
b) the services which are rendered by organizations of physical education and sport, in particular, shall include services for conducting classes for physical education and sport in educational groups and teams in sport facilities, schools, health-improving clubs on certain types of sport, services for general physical training, services for holding sports competitions or holidays, sports and entertainment events, as well as the lease of sports facilities for the preparation and conduct of these events;
15) services for the carriage of passengers at standard fares :
a) by public city passenger transport and public passenger motor transport (except for taxis, including fixed-route taxis);
b) by rail in suburban traffic;
16) services for the maintenance and repair of the housing stock, which are rendered to the population. Services for the maintenance and repair of the housing stock shall include the services of elevators, directorates and departments for land resources and the state cadastre, for the operation, maintenance and repair of the housing stock, which are paid for directly by the population, including payment for these services through associations of homeowners;
17) goods (services), if the transfer of goods (provision of services) is carried out without consideration on the basis of a decision of the President of the Republic of Uzbekistan or the Cabinet of Ministers of the Republic of Uzbekistan;
18) bank and measured ingots which are made of precious metals, bullion (investment) coins made of precious metals (except for coins used for numismatic purposes, as well as foreign coins which are made of precious metals), jewelry;
19) goods which are placed under the customs duty-free trade procedure;
20) services which are rendered by citizens' self-government bodies and authorized bodies, organizations for the purpose of granting certain rights to legal and physical persons, for which a state duty or other payments shall be levied within the framework of the exercise of the exclusive powers assigned to them in a certain field of activity in the event that the obligation to provide such services are established by legislation;
21) land cadastral, land management, soil and geobotanical works carried out at the expense of the budget;
22) geological services which are provided within the framework of annual state programs for the development and reproduction of the mineral resource base at the expense of the budget;
23) goods (services) which are purchased at the expense of loans from international financial institutions and international loans from government organizations, if the loan agreement provides for their exemption;
24) services of the security units of the National Guard of the Republic of Uzbekistan;
25) technical means of the system of operational-search activities on telecommunication networks, as well as services for their operation and maintenance;
26) goods (services) which are transferred (provided) in the form of patronage support;
27) financial services which are provided for in Article 244 of this Code;
28) life insurance services and other insurance services provided for in Article 245 of this Code.
The sales turnover of goods (services) enumerated in this Article shall be exempt from taxation provided that the taxpayer possess the appropriate licenses and other permits for such activities, which are licensable or requires permits in accordance with the legislation.
Where taxpayers carry out both taxable turnovers and turnovers which are exempt from taxation in accordance with the provisions of this Article, they shall be obliged to maintain separate records of such turnovers in accordance with Article 268 of this Code.
Article 244. Tax Exempt Financial Services
The following financial services shall be exempt from taxation:
1) banking operations, in particular:
the attraction of monetary resources from legal entities and physical persons into deposits;
the investment of monetary resources attracted from legal entities and physical persons in the name of and at the expense of banks;
the opening and maintenance of bank accounts for legal entities and physical persons, including bank accounts which are used for bank card settlements, and operations associated with the servicing of bank cards;
the carrying-out of settlements on the instructions of legal entities and physical persons, including correspondent banks, on their bank accounts;
the provision of cash services to legal entities and physical persons through bank cash desks or through special equipment (ATM, automatic deposit machines, etc.);
the purchase and sale of foreign currency in cash and non-cash forms (including the rendering of intermediary services in respect of operations involving the purchase and sale of foreign currency);
operations associated with the execution of bank guarantees (the issue and annulment of a bank guarantee, confirmation and amendment of the conditions of that guarantee, payment in respect of such guarantee, drawing-up and examination of documents relating to the guarantee);
the issue of surety bonds on behalf of third parties which provide for the fulfilment of obligations in monetary form;
the opening and servicing letters of credit;
the carrying out the settlements (payments) through payment systems, programs and equipment;
2) operations carried out by organizations which support information exchange and technological interaction between parties to settlements, including the rendering of services involving the collection, processing and provision to parties to settlements of information on operations carried out using bank cards;
3) sale of participating interests in the charter (authorized capital) fund of legal entities, units in mutual funds of co-operatives and mutual investment funds, securities and derivative financial instruments, with the exception of an underlying asset of derivative financial instruments which is assessable to tax.
For the purposes of this Section the sale of a derivative financial instrument shall be understood to mean the sale of its underlying asset and the payment of amounts of contract premiums and amounts of variation margin and other periodic or one-time payments of the parties to the derivative financial instrument which do not represent payment for the underlying asset in accordance with the conditions of the derivative financial instrument;
4) operations on the cession (assignment) of rights (claims) in respect of obligations which arise on the basis of derivative financial instruments, the sale of which is exempt from taxation in accordance with paragraph 3 of this part;
5) forfeiting and factoring operations;
6) operations involving the cession (assignment, acquisition) of the rights (claims) of the creditor in respect of obligations arising from agreements on the provision of loans in monetary form and (or) credit agreements, as well as on the fulfillment by the borrower of obligations to each new creditor under the original agreement underlying an assignment agreement;
7) provision of loans, borrowings in monetary resources and securities, including interest on them, as well as REPO transactions, including amounts of money payable for the provision of securities under REPO transactions;
8) services involving the provision of assets in financial lease (leasing) in terms of obtaining interest income on them;
9) operations with securities (stocks, bonds and other securities). Operations with securities shall include operations for storing securities, recording rights to securities, transferring securities and maintaining their registers, organizing trades in securities, with the exception of services for their production;
10) financial services involving payment systems which are connected with the implementation of transactions with the simultaneous distribution of commissions between the payment participants.
The Ministry of Finance of the Republic of Uzbekistan, together with the State Tax Committee of the Republic of Uzbekistan, in agreement with the Central Bank of the Republic of Uzbekistan, and the authorized body for the development of the securities market in part concerning the development of the securities market, shall have the right to provide explanations on the procedure for applying the provisions of this Article, including on detailing of certain turnovers.
Article 245. Tax Exempt Insurance Services
Insurance services which are carried out by professional participants in the insurance market of insurance, coinsurance and reinsurance services shall be exempted from taxation, as a result of which:
1) a professional participant in the insurance market of services receives:
insurance premiums under insurance, co-insurance and re-insurance contracts,;
commission and bonuses under contracts transferred to reinsurance;
commission fee for the provision of services of an insurance agent, insurance and reinsurance broker, surveyor and other professional participants in the insurance market;
income from the provision of services as a professional participant in the insurance market (actuaries, adjusters, surveyors, assistance, etc.);
resources from the sale of the right of claim of the insured (beneficiary) to the persons responsible for the damage, which is transferred to the insurer in accordance with the legislation;
the amount of return of a part of insurance premiums under reinsurance contracts in the event of their early termination;
other income which us received directly from insurance activities;
2) the insured (beneficiary) receives:
insurance payment (insurance compensation);
resources for taking preventive measures;
resources which are paid by the insurer for breaking even the insurance contract;
other resources in accordance with the insurance contract.
The Ministry of Finance of the Republic of Uzbekistan, together with the State Tax Committee of the Republic of Uzbekistan, shall have the right to provide explanations on the procedure for applying the provisions of this Article, including on detailing of certain turnovers.
Article 246. Tax Exempt Importation of Goods into the Territory of the Republic of Uzbekistan
The importation of the following into the territory of the Republic of Uzbekistan shall be exempt from taxation:
1) goods which are imported by physical persons within the limits of duty-free importation approved by customs legislation;
2) goods which are imported as humanitarian aid, in the manner determined by the Cabinet of Ministers of the Republic of Uzbekistan;
3) goods which are imported for the purpose of charitable assistance, including the provision of technical assistance of foreign states, governments, international organizations;
4) goods which are intended for the official use of foreign diplomatic and equated missions, as well as for the personal use of the diplomatic and administrative and technical staff of such missions, including members of their families who reside with them;
5) cultural valuables which are classified in accordance with the legislation as highly valuable objects of the cultural heritage, and are acquired by state cultural institutions or gifted to them. Such exemption from taxation shall be applied where a corresponding confirmation of the Ministry of Culture of the Republic of Uzbekistan exists;
6) technological equipment which are imported into the territory of the Republic of Uzbekistan according to the approved list, and analogues of which are not produced in the Republic of Uzbekistan;
7) all types of printed publications which are received by state libraries and museums through international book exchange, as well as cinematographic works which are imported by specialized state organizations for the purpose of carrying out international non-commercial exchanges;
8) national and foreign currency, banknotes which are legal media of payment (except for those intended for collection), as well as securities;
9) goods which are imported under loans of international financial institutions and international loans of government organizations, where the loan agreement provides for their tax exemption upon import;
10) technical means of systems of operational-search activities which are purchased by telecommunications operators and a special body for certification of technical means of systems of operational-search activities, where a written confirmation of the authorized state body exists;
11) medicines, veterinary medicines, medical and veterinary devices, as well as raw materials imported according to the list determined by legislation for the production of medicines, veterinary medicines, medical and veterinary devices. The specified norm shall not apply to imported medicines, veterinary medicines, medical and veterinary devices which are equally produced in the Republic of Uzbekistan, according to the list approved by the Cabinet of Ministers of the Republic of Uzbekistan.
Chapter 34. Tax Base
Article 247. General Rules for Determination of the Tax Base
The tax base arising from the sale of goods (services) shall be determined by the taxpayer in accordance with this Chapter, according to the particular circumstances of the sale of goods (services) which it has produced or acquired from third parties.
Where goods are imported into the territory of the Republic of Uzbekistan, the tax base shall be calculated by the taxpayer in accordance with this Chapter and the customs legislation.
For the purpose of determining the tax base, receipts from the sale of goods (services) shall be determined on the basis of all income of the taxpayer which it has received in monetary form and (or) in kind, including payment in the form of securities.
For the purpose of determining the tax base, receipts (expenses) of a taxpayer in foreign currency shall be translated into national currency on the basis of the exchange rate of the Central Bank of the Republic of Uzbekistan as at the date of the sales turnover of goods (services) established in accordance with Article 242 of this Code.
Where the contract between the seller and the buyer provides for payment for goods (services) in national currency in an amount equivalent to a specified amount in foreign currency, and the payment date for the goods (services) which are sold does not coincide with the date of the sale turnover determined in accordance with Article 242 of this Code, then a positive or negative difference in the amount of proceeds arising from the difference in foreign exchange rates on the indicated dates shall not be taken into account for the purpose of determining the tax base. Account shall be taken of such a positive or negative difference by the seller as income or expense in accordance with Section XII of this Code.
In the case of the transfer of goods (rendering of services) for own requirements which are deemed taxable in accordance with Article 239 of this Code, the tax base shall be determined by the taxpayer in accordance with this Chapter.
Article 248. Procedure for Determination of the Tax Base
The tax base arising from the sale of goods (services) by a taxpayer shall, unless otherwise provided by this Article, be determined as the value of those goods (services) as calculated on the basis of prices (tariff) which are applied by the parties to the transaction and determined in accordance with Article 176 of this Code, including excise tax (in the case of excisable goods) and excluding tax.
The taxpayer who provides discounts (other commercial bonuses) to customers on the date of the sales turnover shall determine the tax base on the basis of the price (tariff) minus such discounts (commercial bonuses).
The tax base shall be determined on the basis of the market value of goods (services), determined in accordance with the procedure established by the State Tax Committee of the Republic of Uzbekistan, where:
1) the sale of goods (services) in exchange for other goods (services);
2) transfer of goods (services) without consideration, unless otherwise provided by paragraph 2 of part one or paragraph 2 of part two of Article 239 of this Code;
3) the use of the property of a legal entity for personal purposes in accordance with paragraph 6 of part four of Article 239 of this Code, took place.
Tax authorities shall have the right to adjust the tax base where the transaction price is lower or higher than the market value of goods (services). The taxpayer shall have the right to challenge such a decision through providing justification that the transaction price conforms to market prices and is not aimed at tax evasion.
The tax base arising from the sale of goods which were imported to the territory of the Republic of Uzbekistan, cannot be lower than the value which was the base for the calculation of the tax which is actually paid to the budget in the course of the importation of those goods.
The tax base arising from the sale of services involving the production of goods from customer-supplied raw materials (other materials) shall be determined as the cost of the processing with exclusion of tax, and for excisable goods — as the cost of the processing with inclusion of the excise tax calculated in accordance with this Code.
The tax base arising from the construction of facilities, including the construction of turnkey facilities, performance of the construction and installation, repair and construction, commissioning, design and survey and scientific works, as well as other long-term contracts with a long (more than one tax period) technological cycle, shall be determined as the cost of the volume of work actually performed at the end of each calendar month, which is determined in accordance with Article 303 of this Code, and excluding tax. Where the customer bears the obligation to provide materials for these works according to the contract, then the tax base shall be determined at the cost of the completed and confirmed works excluding cost of the customer's materials, with retaining the ownership of these materials for the customer.
The tax base arising from the transfer of goods (rendering services) as payment for the labor of physical persons or as payment of dividends, as well as in the cases established by paragraph 3 of part four of Article 239 of this Code, shall be determined with account taken of the tax based on the cost of goods (services rendered), determined in accordance with part one of this Article.
In case of loss of goods, which are placed under a free customs zone customs regime without tax payment, the tax base shall be determined in accordance with part one of Article 254 of this Code.
The tax base arising from the sale of a voucher which grants the right to receive goods (services), the tax base shall be the value of the voucher, including tax.
In the case of the sale of motor vehicles and residential property which were acquired from physical persons for resale, the tax base shall be determined as the difference between the selling price and the price at which the motor vehicles and residential property in question were acquired, inclusive of tax.
Where a taxpayer uses the goods he has produced (provides services on his own) for its own requirements and expenses associated with the goods (services) in question are not deductible for the purpose of the calculation of tax on the profit in accordance with Article 317 of this Code, the tax base shall be determined as the value of those goods (services) as calculated on the basis of the weighted average selling prices by such a taxpayer of identical (or, where these do not exist, similar) goods (services) which were prevailing during the previous 90 days, or, where these do not exist, on the basis of the market prices including excise taxes (in the case of excisable goods) and excluding tax.
In the case of the sale of tickets, season tickets, vouchers and other documents which grant the right to receive services, sales turnover of which is exempt from taxation in accordance with this Section, the tax base shall be determined as a positive difference between the selling price and the purchase price, inclusive of tax.
The special considerations with respect to determining the tax base with account taken into of other conditions and circumstances shall be established by Articles 249 — 256 of this Code.
Article 249. Special Considerations Relating to the Determination of the Tax Base When Performing Transactions under Financial Lease (Leasing) Contracts
The tax base of the lessor (lessor) arising from the transfer of assets in financial lease (leasing), shall be determined as the sum of all periodic lease (leasing) payments (including the redemption amount, where provided for by the contract), minus the interest income of the lessor (lessor) and excluding tax.
Where the lessee (lessee) returns an object of financial lease (leasing) due to non-fulfillment of the conditions of the financial lease (leasing) contract, the tax base shall be determined by the lessee (lessee) on the date of return in the amount of the lease (lease) payments which are unpaid by him for such an object, minus the interest expense and excluding tax.
The tax base arising from the transfer of imported technological equipment, which is tax exempt in accordance with Article 246 of this Code, in a financial lease (leasing), shall be determined on the basis of the positive difference between the purchase price and the selling price of this equipment.
Article 250. Special Considerations Relating to the Determination of the Tax Base When Performing Operations under Contracts of Commission (Delegation), Transport Expedition
The tax base arising from the sale of goods which belong to the committent (entrustor) on the basis of instruction from the committent (entrustor), the rendering services by the committent (entrustor) to a third party under a transaction which is concluded by the commission agent (attorney) with such a third party on the terms which correspond to the terms of the commission (delegation) contracts, shall be determined:
1) at the commission agent (attorney) in the amount of his commission, inclusive of tax;
2) at the committent (entrustor) in the amount of the value of goods which are sold by the commission agent (attorney) within the instruction of the committent (entrustor), as well as the value of services which are rendered by the committent (entrustor) to a third party under a transaction which is concluded by the commission agent (attorney) with such a third party, exclusive of tax.
Where the sale of services which are rendered on the basis of contracts of delegation (commission), transport expeditions, involve the sale of goods (services) which are not taxable (are exempt from taxation), the exemption from taxation shall not apply to those services.
Where the commission agent (attorney) transfers to the committent (entrustor) the goods purchased for committent (entrustor) by his instruction on terms which correspond to the terms of the commission (delegation) agreement, and when a third party renders services to the committent (entrustor) under a transaction concluded by such a third party with commission agent (attorney), the tax base of the commission agent (attorney) shall be determined in the amount of his commission, inclusive of tax.
Where the services, specified by the transport expedition agreement, are rendered by the carrier and (or) other suppliers for the party that is the client under the transport expedition agreement, the transport expeditor’s tax base shall be determined in the amount of his remuneration stipulated by the transport expedition agreement, inclusive of tax.
Article 251. Special Considerations Relating to the Determination of the Tax Base Upon the Sale of an Enterprise as a Whole as an Asset Complex
In the event of the sale of an enterprise as a whole as an asset complex, the tax base shall be determined separately for each object of asset of the enterprise at the price of its sale, which includes the tax, in the manner prescribed by this Article.
In the event that the selling price of an enterprise is lower than the balance sheet value of all assets, included in it, there shall be applied for taxation purposes an adjustment coefficient calculated as the ratio of the selling price of the enterprise to the balance sheet value of those assets.
In the event that the selling price of an enterprise is higher than the balance sheet value all assets, included in it, there shall be applied for taxation purposes an adjustment coefficient calculated as the ratio of the selling price of the enterprise less the balance sheet value of accounts receivable and the value of securities to the balance sheet value of all assets less the balance sheet value of accounts receivable and the value of securities.
In this respect, where the calculation of an adjustment coefficient in accordance with this part is being made, the value of securities shall be excluded only where they have been revalued at market value.
The selling price of each type of asset shall be taken to be equal to the product of its balance sheet value and the adjustment coefficient determined in the manner prescribed by parts two or three of this Article.
In the case provided for in part three of this Article, the adjustment coefficient shall not be applied to the accounts receivable. If in this case the value of the securities was revalued, the specified coefficient shall not be applied to their value either.
The seller of an enterprise shall prepare a consolidated VAT invoice, indicating the price at which the enterprise was sold.
In this respect, fixed assets, intangible assets, other types of production and non-production assets, the amount of accounts receivable, the value of securities and other balance sheet asset items shall be shown as individual items in the invoice. The consolidated VAT invoice shall be accompanied by an inventory report.
In the consolidated VAT invoice the price of each type of asset shall be taken to be equal to the product of the balance sheet value of the asset and the adjustment coefficient, with account taken of the considerations provided for in part five of this Article.
For each type of asset the sale of which is taxable, the tax rate and the corresponding tax amount shall be indicated, respectively.
Article 252. Special Considerations Relating to the Determination of the Tax Base in Respect of Carriage
With respect to the carriage of passengers, baggage, freight or mail by rail, road, air or river transport, the tax base shall be determined as the cost of carriage, excluding tax.
Where travel documents are sold at discount rates, the tax base shall be calculated on the basis of those discount rates.
Where money for unused travel documents is refunded to purchasers before the start of a journey, the entire amount of tax shall be included in the refundable amount.
Where travel documents are returned by passengers en route in connection with the termination of a journey, tax shall be included in the refundable amount in an amount corresponding to the distance which remained to be travelled by the passengers. In this case the amounts actually refunded to the passengers shall not be taken into account for the purpose of determining the tax base.
Article 253. Special Considerations Relating to the Determination of the Tax Base for the Sale of Goods (Services) under Forward (Term) Transactions
A forward transaction shall be understood to mean transaction which calls for the delivery of goods (rendering of services) upon the expiry of a period specified by the contract at a price which is directly specified in the contract
The tax base arising from the sale of goods (services) through forward (term) transactions shall be determined as the value of those goods (work and services) but not lower than the value thereof which is calculated on the basis of market prices which are current as at the date of sale.
The tax base arising from the sale of derivative financial instruments which are not circulated on the organized market shall be determined as the value of the underlying asset which is specified directly in the contract, but not lower than the value thereof which is calculated on the basis of market prices which are current as at the date of sale.
The tax base arising from the sale of the underlying asset of derivative financial instruments which are circulated on the organized market and call for the delivery of an underlying asset shall be determined as the value at which the underlying asset should be sold and which is determined in accordance with the conditions of the specification of the derivative financial instrument which has been approved by the exchange, unless otherwise provided for by part five of this Article.
The tax base arising from the sale of the underlying asset of option contracts which are circulated on the organized market and call for the delivery of an underlying asset shall be determined as the value at which the underlying asset should be sold and which is determined in accordance with the conditions of the specification of the derivative financial instrument which has been approved by the exchange, but not lower than the value thereof which is calculated on the basis of market prices which are current as at the date of sale.
For the purposes of this Section, an option contract (option) shall be understood to mean a transaction in which one party (option buyer) acquires from the other party (option seller) the right to buy (call option) or sell (put option) a certain amount of the underlying asset at a predetermined price.
For the purpose of applying parts two to five of this Article, the price of a good, service or an underlying asset shall be determined with account taken of excise taxes (for excisable goods) and excluding tax.
The market value of goods, services, or the underlying asset shall be determined in accordance with Section VI of this Code, and the date of their sale — in accordance with Article 242 of this Code.
For the purposes of this Section the specification of a derivative financial instrument shall be understood to mean a document issued by an exchange which sets out the conditions of the derivative financial instrument.
Article 254. The Procedure for Determination of the Tax Base Where Goods are Imported into the Territory of the Republic of Uzbekistan
Where goods are imported into the territory of the Republic of Uzbekistan, the tax base shall be determined as the value of these goods calculated as the sum of:
1) the customs value of those goods, determined in accordance with customs legislation;
2) excise tax and customs duty payable upon importation of goods into the Republic of Uzbekistan.
In the case of the importation into the territory of products processed from goods which were previously exported from that territory for processing outside the customs territory of the Republic of Uzbekistan in accordance with the processing outside the customs territory customs procedure, the tax base shall be determined as the value of such processing.
The tax base shall be determined separately for each group of goods of one description, type and marque which is imported into the territory of the Republic of Uzbekistan.
Where one consignment of goods imported into the customs territory of the Republic of Uzbekistan includes both excisable goods and non-excisable goods, the tax base shall be determined separately for each group of those goods.
The tax base shall be determined in similar fashion where a consignment of goods imported into the customs territory of the Republic of Uzbekistan includes products processed from goods which were previously exported from the territory of the Republic of Uzbekistan in accordance with the processing outside the customs territory customs procedure.
Article 255. Special Considerations Relating to the Determination of the Tax Base by Tax Agents Where Goods (Services) are Sold by Foreign Persons
Where goods (services) are sold by foreign persons which are not registered as taxpayers with the tax authorities and the place of sale of the goods (services) is the territory of the Republic of Uzbekistan, the tax base shall be determined by the tax agents as the amount of income from the sale of those goods (services) including tax and excise taxes (for excisable goods).
Tax agents shall be legal entities of the Republic of Uzbekistan, individual entrepreneurs (except for the cases provided for in part four of this Article), foreign legal entities operating in the Republic of Uzbekistan through permanent establishments which acquire goods (services) referred to in part one of this Article.
Where legal entities of the Republic of Uzbekistan, individual entrepreneurs or permanent establishments of foreign legal entities participate in settlements with foreign persons specified in part one of this Article on the basis of commission, delegation contracts or other intermediary agreements, then such persons shall be deemed as tax agents. In these cases, the tax base shall be determined by the tax agent as the value of such goods (services), with account taken of excise taxes (for excisable goods) and tax.
Where foreign legal entities provide in electronic form services specified in Article 282 of this Code, the place of sale of which is recognized to be the territory of the Republic of Uzbekistan, including services rendered on the basis of commission, delegation contracts or other similar agreements, to legal entities of the Republic of Uzbekistan or foreign legal entities which carry out activities in the Republic of Uzbekistan through permanent establishments, the specified buyers of such services shall be deemed as tax agents.
The tax base shall be determined separately for each transaction of the sale of goods (services) on the territory of the Republic of Uzbekistan, with account taken of the provisions of this Section.
Persons which are recognized as tax agents in accordance with this Article shall be obliged to calculate, withhold from the taxpayer and transfer to the budget the appropriate amount of tax irrespective of whether or not they are taxpayers.
Where foreign persons render services with exclusion of a tax in accordance with the conditions of contracts, then the tax base for these services shall be determined by tax agents on the basis of the value of the services rendered, with exclusion of a tax. In this case, the tax agent shall be obliged to independently calculate and transfer to the budget the appropriate amount of tax.
The provisions of this Article shall not apply to the sale of goods (services) specified in Articles 243 — 245 of this Code.
A payment document which confirms the payment of tax in accordance with this Article shall grant the right to credit the amount of tax paid, in accordance with Chapter 37 of this Code.
Article 256. Special Considerations Relating to the Determination of the Tax Base by Tax Agents Where Operation with State Property is Carried Out
Where State government and administrative bodies let state property in the territory of the Republic of Uzbekistan, the authorized body which let state property shall be recognized as a tax agent. The tax base in these cases shall be determined by the tax agent in the amount of lease payment established by the lease agreement for such property, including tax.
In the event of the sale (transfer) in the territory of the Republic of Uzbekistan of State property, the tax base shall be determined by the tax agent. In these cases the tax agents shall be the buyers (recipients) of the property in question, with the exception of physical persons who are not individual entrepreneurs. The tax base in these cases shall be determined by the tax agent as the amount of the value of the acquired (received) state property, established by the agreement exclusive of tax.
In the case of the sale in the territory of the Republic of Uzbekistan of confiscated property, property which is sold by decision of a court, ownerless assets, treasure-trove and bought-up assets and assets which have passed to the State by right of inheritance, the tax base shall be determined by the tax agent as the amount of income from the sale of this property (valuables) with account taken of excise taxes (for excisable goods) and tax). In this case, the tax agents is the body, organization or individual entrepreneur which have been authorized to sell that property.
The tax base shall be determined by tax agents separately for each transaction provided for in this Article.
Persons which are recognized as tax agents in accordance with this Article shall be obliged to calculate, withhold from the taxpayer and transfer to the budget the appropriate amount of tax irrespective of whether or not they are taxpayers.
A payment document which confirms the payment of tax in accordance with this Article shall grant the right to credit the amount of tax paid, in accordance with Chapter 37 of this Code.
Article 257. Adjustment of the Tax Base
Adjustment of the tax base at the taxpayer shall be carried out in the following cases:
1) full or partial return of goods;
2) refusal from rendered services;
3) amendments to the conditions of the transaction, including amendments in the price and (or) quantity (volume) of goods shipped, services rendered;
4) the provision of a discount by the seller of goods (services). The adjustment provided for by this clause shall decrease the tax base for the previously completed supply of goods (services), where the conditions of the contract or the price (tariff) policy of the taxpayer provide for a discount. Such conditions may provide for the fulfillment by the buyer of certain conditions of the contract for the supply of goods (provision of services), including the purchase of a certain amount of goods (services) and early payment.
Adjustment of the tax base towards its decrease or increase shall be carried out within a one-year period, and within the warranty period for goods (services) for which the warranty period is established.
Adjustment of the tax base of the taxpayer shall also be carried out in cases where the obligation to pay for goods (services) is recognized as a non-recovery and is subject to write-off in accordance with Article 313 of this Code. The procedure for adjustments in this case shall be determined by the State Tax Committee of the Republic of Uzbekistan.
Adjustment of the tax base (negative or positive) shall be carried out on the basis of an additional invoice or other documents which confirms the occurrence of the cases specified in part one of this Article and in the tax period in which the specified cases occurred.
The provisions of this Article shall not apply when the tax base is amended as a result of correcting errors, as well as when it is necessary to make changes and (or) additions to a previously issued invoice. In this case, the previously issued invoice shall be rescinded and a revised invoice shall be issued instead in the fashion prescribed by legislation.
Where the supplier of goods (services) corrects the tax base, the buyer shall accordingly adjust (increase or decrease) the tax amount previously accepted for crediting on the basis of an additional invoice which is to be issued by the supplier.
Chapter 35. Tax Rates. Tax Period
Article 258. Tax Rates
Unless otherwise provided by Chapter 36 of this Code, the tax shall be set at 15 percent.
In the cases provided for in Chapter 36 of this Code, the tax rate shall be set at 0 percent.
Article 259. Tax Period
The tax period shall be a month, unless otherwise provided by Chapter 39 of this Code.
Chapter 36. Turnover Which Shall be Taxed at a Zero Rate
Article 260. Taxation of Export and Equivalent Operations
Tax shall be levied at the rate of zero per cent in the case of sales of the following goods:
1) goods exported from the territory of the Republic of Uzbekistan under the export customs procedure;
2) goods exported from the territory of the Republic of Uzbekistan which were previously placed under the processing in the customs territory customs procedure in the customs territory of the Republic of Uzbekistan, and (or) goods (processed products, waste and (or) remnants) obtained (formed) as a result of the processing of goods placed under the processing in the customs territory customs procedure in the customs territory of the Republic of Uzbekistan;
3) stores exported from the territory of the Republic of Uzbekistan. For the purposes of this Article, stores shall be understood to mean fuel and lubricants which are required for the normal operation of aircraft;
4) services which are directly connected with the carriage or transportation of goods placed under the customs transit customs procedure in the case of the carriage of foreign goods from the customs authority at a place of arrival in the territory of the Republic of Uzbekistan to the customs authority at a place of exit from the territory of the Republic of Uzbekistan;
5) services which are directly connected with international carriage.
The special considerations of applying a zero rate in individual cases shall be established by Article 264 of this Code.
Documents which confirm the right for applying the zero rate shall be submitted together with tax reporting.
Article 261. Confirmation of Export Operations
The documents which confirm the export of goods shall be:
1) a contract (a copy of the contract, certified in accordance with the established procedure);
2) a cargo customs declaration with marks made by the customs authority which cleared the goods for their export from the customs territory of the Republic of Uzbekistan;
3) shipping documents with marks made by the customs authority which is situated at the checkpoint from the customs territory of the Republic of Uzbekistan, which confirm the shipment of goods to the country of destination.
Where the sale of goods for export is carried out through a commission agent (attorney) under a commission (delegation) contract, a commission contract or a delegation contract (copy of the contract) of the taxpayer with the commission agent or attorney shall be additionally submitted to confirm the export by the committent (entrustor).
Other documents may be submitted to confirm the export of goods subject to the type of activity which is carried out. The Ministry of Finance and the State Tax Committee of the Republic of Uzbekistan shall determine the list of documents which are required to confirm the right of a taxpayer to apply a zero tax rate, depending on the type of activity carried out, and the procedure for their submission.
Article 262. Taxation of Services Involving the Processing of Goods in the Customs Territory of the Republic of Uzbekistan
Services involving the processing of goods placed under the customs regime of processing in the customs territory of the Republic of Uzbekistan shall be taxed at a zero rate, with the condition of the export of processed products outside the customs territory of the Republic of Uzbekistan.
Services involving the processing of goods placed under the processing in the customs territory customs procedure in the customs territory of the Republic of Uzbekistan, with the subsequent placement of processed products under the customs regime of release for free circulation, shall be subject to taxation at the tax rate established by part one of Article 258 of this Code.
Article 263. Taxation of Services Connected with International Carriage
Tax shall be levied at the rate of a zero percent where the sale involves:
1) services involving the international carriage of goods. The international carriage of goods shall be understood to mean the carriage of goods by aircraft, by rail or by motor vehicle where the departure point or destination point of the goods is situated outside the territory of the Republic of Uzbekistan.
2) services which are directly connected with the carriage or transportation of goods placed under the customs transit customs procedure in the case of the carriage of foreign goods from the customs authority at a place of arrival in the territory of the Republic of Uzbekistan to the customs authority at a place of exit from the territory of the Republic of Uzbekistan;
3) services involving the carriage of passengers, mail and baggage, provided that the point of departure or destination of passengers, mail and baggage is situated outside the territory of the Republic of Uzbekistan, where the carriage is registered on the basis of uniform international shipping documents;
4) services which are rendered by carriers which are the legal entities of the Republic of Uzbekistan with respect to the carriage or transportation of goods which are exported outside the territory of the Republic of Uzbekistan, as well as the export of products, which are processed on the territory of the Republic of Uzbekistan, from the territory of the Republic of Uzbekistan. The provisions of this paragraph shall apply provided that the marks of the customs authorities are affixed on the shipping documents;
5) services which are rendered directly at the airports of the Republic of Uzbekistan and in the airspace of the Republic of Uzbekistan for aircraft maintenance, including air navigation services.
Article 264. Application of a Zero Rate in Individual Cases
The turnover from the sale of goods (services) shall be taxed at a zero rate by refunding (returning) of the tax paid where the goods (services) are purchased:
1) by foreign diplomatic and equivalent missions for official use, and also for the personal use of the diplomatic and administrative and technical staff of these missions (including families members who reside with them);
2) taxpayers who purchase the goods (services) within the framework of activities under the Production Sharing Agreement, where the Agreement provides for the application of a zero rate.
The application of a zero rate in accordance with paragraph 1 of part one of this Article shall carried out in cases where the legislation of the corresponding foreign state establishes a similar procedure for diplomatic and equivalent missions of the Republic of Uzbekistan, diplomatic and administrative and technical staff of these missions (including families members who reside with them), or where such a norm is provided for in an international treaty of the Republic of Uzbekistan.
The sale turnover of services which are rendered to the population for water supply, sewerage, sanitary cleaning, heat supply, including the purchase of such services by homeowners' associations on behalf of the population, as well as by units of the Ministry of Defense of the Republic of Uzbekistan and the National Guard of the Republic of Uzbekistan for the population living in the houses of the departmental housing stock, shall be taxed at a zero rate.
The zero rate shall apply with respect to the precious metals which are sold by the producers of these metals to the authorized body for the purchase of precious metals.
Chapter 37. Procedure for the Calculation and Payment of Tax. Tax Reporting Procedure.
Article 265. Procedure for the Calculation of Tax
When determining the tax base in accordance with Articles 247 — 257 of this Code the amount of tax shall be calculated as a proportion of the tax base corresponding to the tax rate.
The total amount of tax shall be calculated on the basis of the results for each tax period based on the tax base of operations for the sale of goods (services), the dates of the turnover of which in falls within the tax period in question with account taken of all adjustments which increase or decrease the tax base in the tax period in question.
The total amount of tax payable in connection with the import of goods into the territory of the Republic of Uzbekistan shall be calculated as a proportion corresponding to the tax rate of the tax base calculated in accordance with Article 254 of this Code.
Where, in accordance with the requirements established by part four of Article 254 of this Code, the tax base is determined separately for each group of imported goods, the amount of tax shall be calculated separately for each of those tax bases. In this respect, the total amount of tax shall be calculated as the amount obtained by adding together the amounts of taxes calculated separately for each such tax base.
Article 266. Crediting the Amounts of Tax Paid
Unless otherwise provided by Article 267 of this Code, where the amount of tax payable to the budget is determined, the taxpayer shall have the right to decrease the total amount of tax which is calculated in accordance with Article 265 of this Code, by crediting the amount of tax paid (payable) for the goods (services) which were actually received, provided that the following conditions are satisfied simultaneously:
1) the goods (services) are used in the performance of the taxpayer's activities with respect to the production and (or) sale of goods (services), the sales turnover of which is subject to taxation, including at a zero rate;
2) for the goods (services) received, the taxpayer has received an invoice or other document which is submitted by the supplier, in which the tax amount is separately highlighted, and the supplier of the goods (service) is registered as a taxpayer;
3) in case of carriage (import) of goods, the tax has been paid to the budget;
4) in the cases provided for by Articles 255 and 256 of this Code, the tax has been paid to the budget;
5) where the export of goods taxed at a zero rate, there is a bank statement which confirms payment by a foreign buyer (payer) for the exported goods.
The tax payable (paid) with respect to actually received goods (services) used for the export of goods taxed at a zero rate shall be accepted for crediting in a share of the amount of foreign currency earnings received to the taxpayer's accounts with the bank of the Republic of Uzbekistan.
In the case of exporting goods taxed at a zero rate through a commission agent, an attorney under a commission agreement, the delegation, tax shall be accepted for crediting in a share of the amount of foreign currency earnings received on the account of the commission agent, attorney or taxpayer.
Individual entrepreneurs and legal entities of the Republic of Uzbekistan providing services, the place of sale of which is not deemed to be the territory of the Republic of Uzbekistan, shall have the right to credit the amount of tax paid (payable) on actually received goods (services) in the fashion prescribed by this Chapter. In this respect, for the purpose of applying this Chapter, the sale turnover of such services shall be equal to taxable turnover.
Where a taxpayer acquires fixed assets (including equipment for installation), intangible assets and real estate objects, including construction in progress, as well as upon purchasing goods (services) to create assets which are intended for further use as their own fixed assets, the amount of tax which is presented by the seller to the taxpayer shall be credited in full amount. The amount of tax paid by the taxpayer upon importing such goods into the territory of the Republic of Uzbekistan shall be credited in a similar fashion.
Where the assets is receipted as a contribution to the authorized fund (charter capital), the recipient shall have the right to credit the amount of tax which was paid by the participant upon transferring asset to the authorized fund (charter capital). The tax paid by the participant upon the transfer of fixed assets, intangible assets and real estate, including construction in progress, as a contribution to the authorized fund (charter capital), shall be accepted for credit at the taxpayer who is the recipient of the transferred assets in accordance with the procedure, provided for in part three of this Article.
Where a person who was not a taxpayer is recorded on a special registration as a taxpayer in accordance with Article 237 of this Code, as well as when tax exemptions are rescinded, this person shall have the right to credit the tax amount accounted for in the balance sheet value of inventory balances and long-term assets which were available on its balance sheet at the date of special registration (rescinding of the exemption), with observance of conditions established by part one of this Article.
The amount of tax which is subject to acceptance for crediting in accordance with part five of this Article shall be determined:
with respect to the balances of inventories — according to the actual value of goods (services), purchased within the last twelve months preceding the date of registration of the person, related to the remains of goods and material stocks which are available with the taxpayer on the date of its registration (rescinding of the exemption);
for long-term assets — based on the balance (residual) value of the specified objects, excluding their revaluation, as at the date on which the person was registered for tax (rescinding of the exemption), which includes the corresponding amount of tax.
In the event that a commission agent (attorney) sells goods on conditions of a commission (delegation) contract, where the committent (entrustor) is a foreign legal entity which is not registered as a taxpayer, the amount of tax paid when importing this good into the territory of the Republic of Uzbekistan shall be accepted by the commission agent (attorney) to credit in the share attributable to goods sold by the commission agent (attorney) in the corresponding tax period.
Where a commission agent (attorney) carriages goods into the territory of the Republic of Uzbekistan which are purchased on behalf of the committent (entrustor) which is a legal entity of the Republic of Uzbekistan or an individual entrepreneur, the tax paid during customs clearance of the imported goods shall be credited at the committent (entrustor).
The amount of tax on services which are purchased by the transport expeditor from the carrier and (or) other suppliers in the course of performance of obligations under the transport expedition contract shall be credited at the party which is a client of the transport expeditor under such a contract.
Where a foreign person, who is not a taxpayer in the Republic of Uzbekistan, purchases goods (services) in the Republic of Uzbekistan or imports goods into the territory of the Republic of Uzbekistan for the purposes of production and (or) sale, the tax amounts presented by the sellers of goods to a foreign person, or paid by him upon importing, shall be credited. The specified amounts of tax shall be credited or refunded to such a foreign person after the tax payment to the budget is withheld by the tax agent in accordance with Article 255 of this Code from the income of such a foreign person, and only in the part in which the goods (services) purchased (imported) by him are used for the purpose of production and (or) sale of goods, on the value of which tax is withheld by a tax agent. In this case, the indicated amounts of tax shall be subject to credit or refund to a foreign person, upon his registration in a special registration account as a taxpayer in accordance with Article 237 of this Code.
Where a taxpayer sells goods (services), the sales turnover of which is subject to taxation, as well as goods (services), the sales turnover of which is exempt from taxation, the tax amount subject to credit shall be determined in the fashion prescribed by Article 268 of this Code.
The tax authorities shall have the right to rescind or adjust the credit where there is evidence that the right to credit arose as a result of an false or sham transaction for the purchase of goods (services).
Article 267. Amounts of Tax That are not Subject to Crediting
The amounts of paid tax shall not subject to crediting in accordance with Article 266 of this Code where the taxpayer purchases (imports) goods (services) in the following case:
1) purchase (import) of fixed assets, real estate objects and intangible assets to be used for the production and (or) sale of goods (provision of services), the sales turnover of which is exempt from taxation in accordance with this Section;
2) purchase of goods (services) for construction, modernization, reconstruction, technical re-equipment and repair of fixed assets, real estate objects specified in paragraph 1 of this part;
3) purchase of goods (services) for the production and (or) sale of goods (provision of services), sales turnover of which is exempt from taxation;
4) purchase of goods (services) by legal entities or individual entrepreneurs who are not taxpayers;
5) representation expenses;
6) receipt of goods (services) without consideration, except for cases where the recipient has paid tax on them;
7) purchase of goods (services) which are uses (have been used) for the taxpayer's own needs, the expenses of which are not deductible upon calculation of tax on profit in accordance with Article 317 of this Code.
The amounts of tax the taxpayer paid upon purchase (import) goods (services) shall also not be subject to credit where he purchase or imports the following goods (services), with the condition that the purchase of these goods (services) is not connected to the type of activity carried out by him:
1) light cars, motorcycles, helicopters, motor boats, airplanes, as well as other types of motor vehicles and fuel for them;
2) alcoholic and tobacco products.
The amount of tax which is not credited shall be counted in the cost of the purchased goods (services), unless otherwise provided by Articles 268 — 270 of this Code.
Article 268. Procedure for Crediting Tax Amounts Where The Sales Turnover is Tax Exempt
Where a taxpayer carries out turnover which is both subject to and exempt from taxation, the amount of tax from taxable turnover shall be credited.
The taxpayer shall choose either a separate and/or a proportional method for determination of the amount of tax to be credited.
According to the separate method, the taxpayer shall maintain separate records of turnovers of the purchased goods (services) and the amounts of tax paid on them, which are subject to taxation and exempt from taxation. In this respect, where the total costs are not possible to account separately, a proportional method shall be used for division of costs.
According to the proportional method, the taxpayer shall credit the amount of tax which is determined on the basis of the specific weight of the amount of taxable turnover in the total amount of turnover of the sale of goods (services) (excluding tax), that is determined on an accrual basis during the current calendar year.
Where the proportional method is used or the amount of tax, which is subject to credit in the manner provided for in Article 269 of this Code, is adjusted, the tax which is not credited shall counted by the taxpayer as part of deductible expenses upon calculation of tax on profit.
The taxpayer shall have the right to attribute the amount of tax paid (payable) on actually received goods (services) in full to the cost of purchased goods (services) in the current tax period, including on long-term assets, where the share of turnover which is subject to taxation, does not exceed 5 percent of the total turnover in this current tax period.
Article 269. Adjustment of Tax Amounts Accepted for Credit
The amount of tax, previously accepted for credit on purchased goods (services), shall be adjusted in the following cases:
1) their further use for tax exempt turnover;
2) their damage or loss in excess of the norms of natural loss established by the authorized body in accordance with the legislation, and in their absence — by the taxpayer. The provision of this clause shall not apply to damage or loss of goods due to emergency circumstances (natural disaster, fire, accident, road traffic accident and other similar circumstances);
3) recognition of the invoice issued by the supplier as invalid in the manner prescribed by legislation;
4) loss of taxpayer status (or receipt of tax exemption).
The amount of tax, previously not accepted for credit on purchased goods (services) in accordance with paragraphs 1-4 of the first part of Article 267 of this Code, shall be adjusted in cases of further use of goods (services) for taxable turnover.
The amount of tax which is subject to adjustment shall be determined on the basis of the value of goods (services) purchased during the last twelve months preceding such adjustment, attributable to inventory balances, the amount of tax on which is subject to restoration.
The amount of tax which is subject to adjustment with respect to fixed assets, real estate and intangible assets shall be determined based on the amount of tax previously accepted for credit for these objects (or included in their cost) attributable to their balance value excluding revaluation, in the manner prescribed by Article 270 of this Code.
The amount of tax is subject to restoration in the amount previously accepted for credit for such goods (services), and in respect of fixed assets, real estate and intangible assets shall be restored in the amount proportional to their residual (balance) value excluding revaluation.
Where a supplier of goods (services) adjusts the tax base in accordance with Article 257 of this Code, the buyer must accordingly adjust the tax amount previously accepted for credit on the basis of an additional (or revised) invoice to be issued by the supplier.
The amount of the tax adjustment shall be attributed to an increase (or decrease) in the balance value of the specified objects or shall be included in the expenses (or income) which are accounted upon calculation of tax on profit.
Where the goods are placed under the re-export customs procedure and the amounts of tax paid by taxpayer upon importing these goods are returned to him in the manner prescribed by customs legislation, the taxpayer shall adjust (reduce) the amount of tax credited by the amount of the tax returned to him.
The tax amount taken for credit shall be adjusted in the tax period in which the circumstances specified in this Article arose.
Article 270. Adjustment of the Tax Amounts Accepted for Credit for Certain Objects of Fixed Assets, Real Estate and Intangible Assets
The tax amount which is taken for credit for the objects specified in parts three and four of Article 266 of this Code, shall be adjusted in case of further use of the objects in accordance with Article 267 of this Code, excluding the objects that are depreciated in full or more than 10 years have passed since their commissioning.
The amount of the tax adjustment shall be calculated on the basis of the tax amount previously taken for credit for these objects, in proportion to their balance (residual) value as at the date of such adjustment (excluding revaluation). In this respect, the amount of the tax adjustment shall be attributed to the increase in the balance value of these objects.
Where the object specified in part one of this Article is further used by the taxpayer again for the production and sale of goods (provision of services) which are subject to taxation in accordance with this Section, the taxpayer shall have the right to adjust and credit the tax amount calculated in the similar manner as provided for in part second of this Article.
The tax amount which is not taken for credit with respect to the objects specified in paragraph 1 of the first part of Article 267 of this Code shall be credited, if those objects are used further by the taxpayer for the purposes specified in paragraph 1 of the first part of Article 266 of this Code, excluding objects that depreciated in full or more than 10 years have passed since their commissioning.
The amount of the tax adjustment in accordance with part four of this Article shall be calculated on the basis of the tax amount previously included in the value of the specified objects, in proportion to their balance (residual) value as at the date of such adjustment (excluding revaluation), which includes the corresponding tax amount. The amount of tax adjustment which is calculated in accordance with this part shall be credited in the manner prescribed by part three of Article 266 of this Code.
Where the object specified in part four of this Article is used again for the production of goods (rendering services), the sale of which is tax exempt, the taxpayer must adjust and restore the amount of tax calculated in similar manner as provided for in part two of this Article.
Where the object specified in the first part of this Article is used both for the production of goods (provision of services), the sale of which is subject to taxation, and goods (services) which is exempted from taxation, the amount of tax subject to restore shall be determined as part of the amount of tax credited with respect to the specified object attributable to its balance (residual) value (excluding revaluation) at the date of such adjustment. This part shall be determined in proportion to the share of the value of goods (services) sold, which are tax exempt, in the total value of goods (services) sold, determined on an accrual basis during the current calendar year.
Where the object specified in part four of this Article is further used both for the production of goods (provision of services), the sales turnover of which is tax exempt, and goods (services), the sales turnover of which is subject to taxation, the amount of tax that is not subject to crediting shall be determined in the following order:
1) the amount of tax accounted in the balance (residual) value of the object is allocated with calculation in the similar manner as provided for in part five of this Article;
2) the part of the allocated tax amount that is not subject to crediting and attributable to the turnover exempted from taxation is determined in accordance with the procedure provided for in part seven of this Article. The remaining amount shall be credited in accordance with this Chapter.
Article 271. Adjustment of the Tax Amounts Accepted for Credit Where Obligations are Written off
The tax amount previously taken for crediting upon purchase of goods (services) shall be excluded from the credit amount where the obligation to pay for these goods (services) is subject to be written off in accordance with Article 313 of this Code in the tax period in which such an adjustment was made, except the tax amounts which were taken for credit in accordance with paragraphs 3 and 4 of the first part of Article 266 of this Code.
In the event the taxpayer has paid for goods (services) for which the adjustment provided for in part one of this Article has been made, he shall have the right to make a reverse adjustment towards an increase in the amount of tax accepted for credit by the corresponding amount of tax in the tax period in which the payment was made.
Article 272. Amount of Tax Payable
The amount of tax payable to the budget shall be calculated on the basis of the results for each tax period as the total amount of tax calculated in accordance with Article 265 of this Code with account taken of the amounts to be credited and adjusted in accordance with this Chapter.
The amount of tax upon the import of goods into the territory of the Republic of Uzbekistan shall be payable to the budget in accordance with customs legislation.
Where the amount of tax payable to the budget, which is calculated in accordance with part one of this Article, is negative, the taxpayer shall have the right for reimbursement of that amount in accordance with the procedure established by Article 274 of this Code.
Article 273. Procedure of Submission of Tax Reporting and Payment of Tax
Taxpayers shall be obliged to submit to the tax authorities where they are registered an appropriate tax reporting not later than the twentieth of the month following a tax period which has ended, except as otherwise provided by this Chapter.
The payment of the tax which is calculated in accordance with Article 272 of this Code shall be made at the place where they are registered as taxpayers on the basis of the results of each tax period not later than the time limit established for submission of tax reporting, unless otherwise provided by this Article.
The amount of tax upon the import of goods into the territory of the Republic of Uzbekistan shall be payable to the budget in the manner and conditions established by customs legislation, with account taken of the provisions of this Section.
Tax agents shall pay the amount of tax at the place of their tax registration. Tax agents who are not taxpayers shall be obliged to submit to the tax authorities at the place of their tax registration the appropriate tax reporting not later than the twentieth of the month following a tax period which has ended and in which the tax has been paid in accordance with Articles 255 and 256 of this Code.
The tax reporting shall include the information specified in the register (ledger) of purchases and the register (ledger) of sales of the taxpayer.
The persons specified in part four of this Article, as well as persons engaged in entrepreneurial activities in the interests of another person on the basis of commission (delegation) and transport expedition contracts, shall also be obliged to submit, in the prescribed form, information from the logs of received and issued invoices. Where such persons are not taxpayers, they shall include in tax reporting only information reflected in the logs of invoices which are received and issued upon performance of transactions as a tax agent or intermediary operations in the interests of the committent (entrustor) on the basis of a commission contract (delegation), or in interests of the consignee (consignor) on the basis of a freight forwarding (transport expedition) agreement.
The forms and procedure for maintaining registers (ledgers) of purchases and sales, as well as logs for recording received and issued invoices shall be established by the State Tax Committee and the Ministry of Finance of the Republic of Uzbekistan.
Article 274. Tax Reimbursement
The amount of tax to be reimbursed in accordance with Article 272 of this Code shall be credited towards forthcoming tax payments, unless otherwise provided by this Article.
The taxpayer shall equally be entitled for a refund of the tax, which is subject to reimbursement, on the basis of the tax refund application filed with the tax authorities.
Where the tax authority adopts decision on the basis of the results of a cameral tax audit, to reimburse in full or partially of the amount of tax declared for refunding, the specified amount of tax shall be returned to the taxpayer not later than sixty days from the date of filing an application for a refund of the tax amount.
The following categories of taxpayers shall be entitled for an accelerated procedure for reimbursing the entire amount of tax upon requesting it in the tax refund application:
1) legal entities of the Republic of Uzbekistan classified in the established manner as a major taxpayer;
2) taxpayers who have submitted a valid bank guarantee together with a tax refund application or who have signed a pledge agreement with the tax authorities in the manner prescribed by Articles 107 or 109 of this Code;
3) persons which are engaged in export and equivalent operations, in the part of the amount arose as a result of applying a zero rate, if these persons were reimbursed the amount of tax earlier and no violations were revealed in this respect;
4) foreign diplomatic and equivalent representations;
5) to the parties to a production sharing agreement, if such an agreement provides for the application of a zero rate;
6) participants of tax monitoring.
In the case where an accelerated refund procedure is applied, the amount of tax declared by the taxpayer for refund shall be reimbursed to him within seven days in full. In this case, a cameral tax audit with respect to the validity of the amount of tax claimed for refund shall be carried out in accordance with the general procedure. Where the declared for refund amount of tax or part of it turns out to be unjustified on the basis of the results of a cameral tax audit, the taxpayer shall be obliged to pay to the budget the unreasonably refunded to him amount of tax with the accrual of a penalty from the date of refund to the date of payment to the budget.
The procedure and conditions for tax amounts reimbursement, a cameral tax control to be conducted in accordance with this Article, as well as the procedure and conditions for refunding citizens of foreign states of the tax amount (TAX FREE) shall be established by the State Tax Committee of the Republic of Uzbekistan in agreement with the Ministry of Finance of the Republic of Uzbekistan.
Chapter 38. Special Considerations with Respect to Taxation in Individual Cases
Article 275. Special Considerations Relating to the Calculation and Payment of Tax Where Operations are Carried Out within the Framework of Joint Activity, Fiduciary Management or Concession Agreements
For tax purposes, where one or more participants in a simple partnership agreement (joint activity agreement) is a legal entity of the Republic of Uzbekistan or an individual entrepreneur who is a tax resident of the Republic of Uzbekistan, responsibility for maintaining common records of operations which are taxable in accordance with Article 239 of this Code shall rest with this participant (hereafter in this Article referred to as “a trustee”).
This rule shall apply irrespective of who is entrusted with conducting the affairs of the partnership in accordance with the simple partnership agreement (joint activity agreement).
Where operations are carried out in accordance with a simple partnership agreement (joint activity agreement), a concession agreement or an agreement on the fiduciary management of assets, the duties of a taxpayer which are established by this Section shall be assigned to the trustee of the partnership, the concessionaire or the fiduciary.
Where goods (work and services) are sold in accordance with a simple partnership agreement (joint activity agreement), a concession agreement or an agreement on the fiduciary management of assets, the trustee of a partnership, the concessionaire or the fiduciary shall be obliged to issue appropriate VAT invoices in accordance with the procedure established by tax legislation.
A tax crediting in respect of goods (work and services), which are acquired for the production and (or) sale of goods (work and services) which are deemed to be an object of taxation in accordance with a simple partnership agreement (a joint activity agreement), shall be granted only to the trustee of the partnership, subject to the availability of VAT invoices issued by sellers to those persons, in accordance with the procedure established by tax legislation.
Where a trustee of the partnership carries out other activities, the right to credit amounts of tax shall arise provided that separate records are maintained of goods (services), which are used in carrying out operations in accordance with the simple partnership agreement (joint activity agreement),and those which are used by it in carrying out other activities.
Similar rules in terms of tax crediting shall be established for operations carried out in accordance with a concession agreement or an agreement on the fiduciary management of assets.
The trustee of the partnership which is responsible for maintaining tax records, the concessionaire, and the fiduciary shall maintain records of operations occurring in the process of the performance of the simple partnership agreement (joint activity agreement), the concession agreement and the agreement on the fiduciary management of assets separately for each such agreement.
Article 276. Special Considerations Relating to Taxation In the Event of the Re-Organization
When a legal entity is reorganized, its tax obligation shall be fulfilled by its legal successor (successors) in accordance with Article 92 of this Code, with account taken if the special considerations established by this Article.
In the event of reorganization of a legal entity, regardless of the form of reorganization, the amount of tax charged to the reorganized legal entity and (or) paid by it upon purchase (import) of goods (services), but not credited by it, shall be credited by the legal successor of this legal entity in the manner prescribed by this Section, where the legal successor is registered as a taxpayer.
Crediting of tax amounts shall be made by the legal successor of the reorganized legal entity on the basis of VAT invoices issued to the legal entity that has been reorganized upon purchase of goods (services), as well as invoices issued to the legal successor upon the purchase of goods (services). The crediting of the tax amounts shall be made in full after the transfer of the debt for the obligations with respect to the goods (services) purchased by the reorganized legal entity to its successor.
Where the reorganized person had the right for a tax reimbursement in accordance with Article 274 of this Code, but the amount of tax was not refunded to it before the completion of the reorganization, the specified tax amount shall be refunded to his successor.
Where a legal successor (successors) of a legal entity, which is being reorganized, is not a taxpayer, the person which is under reorganization must adjust the tax amount accepted for credit in the manner prescribed by this Section.
Article 277. Special Considerations Relating to Taxation When Goods are Imported into the Territory of the Republic of Uzbekistan and are Exported from the Territory of the Republic of Uzbekistan
When goods are imported into the territory of the Republic of Uzbekistan, depending on the selected customs procedure tax shall be levied as follows:
1) where goods are placed under the release for free circulation (import) customs procedure tax shall be payable in full;
2) where goods are placed under the re-importation customs procedure, the taxpayer shall pay the amounts of tax from the payment of which it was exempted or the amounts which were refunded to it in connection with the export of the goods in accordance with this Code. Payment of the indicated amounts shall be made in the manner prescribed by the customs legislation;
3) where goods are placed under the transit, customs warehouse, re-exportation, duty-free trade, free customs zone, free warehouse, destruction and abandonment to the State customs procedures and in the case of the declaration of stores for customs purposes, tax shall not be paid;
4) where goods are placed under the processing in the customs territory customs procedure, tax shall not be payable provided that the processed products are exported from the customs territory of the Republic of Uzbekistan within the specified time limit;
5) where goods are placed under the temporary importation customs procedure, a full or partial exemption from the payment of tax shall apply in the manner prescribed by customs legislation;
6) upon the import of products of the processing of goods which were placed under the processing outside the customs territory customs procedure, a full or partial exemption from the payment of tax shall apply in accordance with the procedure which is stipulated by the customs legislation;
7) where goods are placed under the of processing for domestic consumption customs procedure, tax shall be payable in full.
Where goods are exported from the territory of the Republic of Uzbekistan, tax shall be levied as follows:
1) where goods are exported from the territory of the Republic of Uzbekistan under the export customs procedure, tax shall not be payable. This rule shall also applies where goods are placed under the customs warehouse customs procedure with a view to the subsequent exportation of those goods in accordance with the export customs procedure;
2) where goods are exported out of the territory of the Republic of Uzbekistan under the re-exportation customs procedure, tax shall not be paid, and amounts of tax which were paid when they were imported into the territory of the Republic of Uzbekistan shall be refunded to the taxpayer in the manner prescribed by customs legislation. This rule shall also applies where goods are placed under the customs warehouse customs procedure with a view to the subsequent exportation of those goods in accordance with the re-export customs procedure;
3) tax shall not be paid in the case of the exportation from the territory of the Republic of Uzbekistan of stores or of goods for the purpose of completing a special customs procedure;
4) where goods are exported from the territory of the Republic of Uzbekistan in accordance with customs procedures other than those referred to in clauses 1 — 3 of this part, there shall be no exemption from the payment of tax and (or) refund of amounts of tax paid unless otherwise stipulated by the customs legislation.
Where goods intended for personal, family and domestic needs and other needs not connected with entrepreneurial activities are carried by physical persons, the procedure for the payment of tax which is payable in connection with the movement of goods across the customs border of the Republic of Uzbekistan shall be determined by the customs legislation.
Chapter 39. Special Considerations Relating to Taxation of Foreign Legal Entities Which Provide Services in Electronic Form
Article 278. Taxpayers
Where foreign legal entities provide services in electronic form the place of sale of which is deemed to be the territory of the Republic of Uzbekistan, these entities shall be deemed as taxpayers in part of such services provided to physical persons.
Where foreign legal entities provide services in electronic form such as are referred to in Article 282 of this Code, the place of sale of which is deemed to be the territory of the Republic of Uzbekistan, foreign intermediary legal entities which carry on entrepreneurial activities with involvement in settlements directly with purchasers of services on the basis of contracts of delegation, commission agency contracts, agency contracts or other similar contracts with the foreign organizations which provide those services shall be deemed to be tax agents with respect to operations connected with provision of such services.
Where such services are provided with multiple intermediary organizations involved in settlements, the tax agent shall be the foreign intermediary organization which carries on entrepreneurial activities with involvement in settlements directly with purchasers of services, irrespective of whether or not it has a contract with the foreign organization providing the services.
Where such services are provided to legal entities of the Republic of Uzbekistan and legal entities which are non-residents of the Republic of Uzbekistan and operate in the Republic of Uzbekistan through permanent establishments, these persons as buyers of such services shall be deemed as tax agents.
Article 279. The Procedure for Registering and Deregistering Foreign Legal Entities Which Provide Services in Electronic Form
Where a foreign legal entity provides services in electronic form to physical persons, which are specified in Article 282 of this Code, the place of sale of which is recognized to be the Republic of Uzbekistan, and where this legal entity makes settlements with physical persons receiving these services without intermediaries, registration (deregistration) with the tax authority of such a foreign legal entity shall be carried out on the basis of an application for registration (deregistration) and other documents according to the list approved by the State Tax Committee Republic of Uzbekistan. The registration (deregistration) of an intermediary foreign legal entity for such services which is to be recognized as a tax agent shall be carried out in a similar fashion.
An application for registration (deregistration) shall be submitted by foreign legal entities to the tax authority no later than thirty calendar days from the date of commencement (termination) of the provision of services in electronic form.
Article 280. Object of Taxation and Tax Base. Tax Period. The Procedure for the Calculation of a Tax by Foreign Legal Entities
The sale turnover of services in electronic form which are sold to physical persons shall be the object of taxation.
Where foreign legal entities provide services in electronic form to physical persons, specified in Article 282 of this Code, the place of sale of which is recognized as the Republic of Uzbekistan, the tax base shall be determined as the value of the services, inclusive of tax, calculated on the basis of the actual selling prices of the services.
The tax period shall be the quarter.
The tax base for each quarter shall be determined on the basis of the time of receipt of payment (partial payment) for the services rendered.
Where the tax base is determined in accordance with this Article, the value in foreign currency of services shall be translated into national currency using the exchange rate of the Central Bank of the Republic of Uzbekistan set on the last day of the month in which payment (partial payment) for those services was received.
Foreign legal entities shall independently calculate tax unless responsibility for the calculation of tax on operations involving the sale of those services is borne by the tax agent in accordance with this Article.
Article 281. The Procedure for the Submission of Tax Reporting and Payment of Tax by Foreign Legal Entities When Providing Services in Electronic Form
Foreign legal entities which provide services in electronic form, as defined in Article 282 of this Code, shall submit tax reporting to the tax authority in the established format in electronic form through taxpayer’s personal account.
In the period when the personal account of the taxpayer cannot be used by foreign legal entities for the purpose of submission of documents (information) and data to the tax authority, such documents (information) and data shall be submitted via telecommunication channels.
Tax reporting, documents (information) and other data shall be submitted not later than the twentieth of the month following the quarter has ended.
The payment of tax by the specified foreign legal entities shall be carried out not later than the time limit for the submission of tax reporting.
Article 282. Services in Electronic Form
For the purposes of applying of this Section, the services in electronic form shall include the services which are rendered via a data network, including the “Internet” data network (hereafter in this Article referred to as “the Internet”), on an automated basis with the use of information technologies. In particular, such services shall include:
1) the provision of rights to use computer programs (including computer games delivered via the Internet) and databases, including by providing remote access to them, including related updates and additional functionalities;
2) the provision of rights to use electronic books (publications) and other publications, informational and educational materials, graphic images, musical works with or without text and audio-visual works via the Internet, including by means of the provision of remote access to them for viewing or listening via the Internet;
3) the provision of Internet advertising services, including through the use of computer programs and databases operating on the Internet, and the provision of advertising space on the Internet;
4) the provision of services involving the posting of offers to acquire (sell) goods (work and services) and property rights on the Internet;
5) the provision via the Internet of services involving the provision of technical, organizational, information and other resources, carried out using information technologies and systems, for the purpose of enabling communication and the conclusion of transactions between sellers and buyers. In particular, such services include the provision of a trading platform operating on the Internet in real time through which potential buyers offer their price by means of an automated process and the parties are notified of a sale by means of an automatically generated notice which is sent to them;
6) the provision and (or) maintenance of a commercial or personal presence on the Internet for personal purposes or for the purpose of carrying out economic activities, the support of electronic resources of users (Internet sites and (or) pages), the granting of access to those resources to other network users and the granting to users of the ability to modify those resources;
7) automatic remote maintenance of the work of programs and online, the provision of services for the administration of information systems, sites and (or) pages of sites on the Internet;
8) the storage and processing of information, provided that the person who provided that information has access to it via the Internet;
9) the real-time provision of computing capacity for the storage of information in an information system;
10) the provision of domain names and the rendering of hosting services;
11) the provision of services which are performed automatically via the Internet upon the input of data by the purchaser of the service and automated services involving data search, selection and ordering upon request and the provision of those data to users via data networks. In particular, such deliveries of information include real-time stock exchange tickers and real-time automated translation of texts;
12) the provision of services involving the search for and (or) provision to a client of information on potential purchasers;
13) the provision of access to Internet search engines;
14) the maintenance of statistics on Internet sites.
Services in electronic form shall not include:
1) sales of goods (services) where goods (services) ordered via the Internet are supplied (rendered) without using the Internet;
2) the sale (transfer for use) of computer programs (including computer games) and databases on physical media;
3) the provision of consulting services by electronic mail;
4) the provision of Internet access services.
SECTION XI. EXCISE TAX
Chapter 40. Taxpayers, Object of Taxation and Tax Base
Article 283. Taxpayers
The following persons shall be deemed to be payers of excise tax (hereafter in this Chapter referred to as “taxpayers”) who:
1) produces goods which are subject to excise tax (excisable goods) on the territory of the Republic of Uzbekistan;
2) sells natural gas to consumers;
3) sells gasoline, diesel fuel to end consumers, including through gas stations, as well as gas through gas stations. For the purpose of applying this Section, end consumers shall be understood to mean legal entities and physical persons who purchase gasoline, diesel fuel and gas for their own needs;
4) a trustee who is a member of a simple partnership and is entrusted with the conduct of the affairs of a simple partnership with respect to activities which is related to the production of excisable goods, carried out within the framework of a simple partnership agreement;
5) moves excisable goods across the customs border of the Republic of Uzbekistan. These persons shall be deemed as taxpayers in accordance with customs legislation.
The following shall be also deemed as taxpayers:
1) legal entities of the Republic of Uzbekistan which provide telecommunication services of mobile communication (excisable services);
2) foreign legal entities which operate in the Republic of Uzbekistan through permanent establishments and produce goods or import goods subject to excise tax.
Article 284. Object of Taxation
The following operations shall be deemed to be an object of taxation by excise tax (hereinafter in this Section referred to as “tax”):
1) sale of excisable goods, including transfer of excisable goods in exchange for other goods (services):
transfer of ownership rights in excisable goods;
transfer of the pledged excisable goods by the pledger in case of failure to fulfill the obligation secured by the pledge;
transfer of excisable goods without charge;
transfer of excisable goods (services) as payment in kind for the labor of physical persons or as payment of dividends;
2) the transfer of excisable goods as a contribution to the authorized capital (charter fund) of a legal entity or the contribution of a partner (participant) under a simple partnership agreement (joint activity agreement);
3) the transfer of excisable goods:
a) to a participant when he withdraws (departs) from the list of participants, or when the participating interest in a legal entity is decreased or the legal entity buys out a participating interest (a share) in this legal entity;
b) to a shareholder when a legal entity buys out shares issued by this legal entity from a shareholder;
c) to a shareholder or participant upon the liquidation of a legal entity;
4) the transfer of produced excisable goods for processing as customer-supplied materials (on a tolling basis), as well as the transfer by the manufacturer of excisable goods, which are the product of processing of customer-supplied raw materials and other materials, including excisable ones, to the owner of the customer-supplied raw materials and other materials;
5) the use of excisable goods for their own requirements;
6) import of excisable goods into the customs territory of the Republic of Uzbekistan;
7) sale to end consumers or use for own requirements of gasoline, diesel fuel and gas;
8) provision of excisable services;
9) damage, loss of excisable goods which are produced on the territory of the Republic of Uzbekistan and (or) excisable goods imported into the customs territory of the Republic of Uzbekistan, excluding cases in emergency. Where the insurance covers or the culprit compensates the costs of the goods, the excise tax shall be paid in share of the insurance coverage (compensation).
The following operations shall not be taxable:
1) the sale of excisable goods which have been placed under the export customs procedure with the exception of certain types of excisable goods;
2) the transfer of excisable goods which are produced from goods placed under the customs processing procedure in the customs territory, which are subject to subsequent export from the customs territory of the Republic of Uzbekistan;
3) the sale of liquefied gas to the population for household requirements through specialized gas supply enterprises;
4) import of excisable goods into the customs territory of the Republic of Uzbekistan which are imported:
as humanitarian aid in the manner determined by the Cabinet of Ministers of the Republic of Uzbekistan;
for charitable aid, including the provision of technical assistance by states, governments, international organizations;
within the loans of international financial institutions and international loans from government organizations, where the loan agreement provides for their exemption upon importation;
5) the import of excisable goods into the customs territory of the Republic of Uzbekistan by physical persons within the limits of the tax exempt norms for the import of goods. The maximum norms for the import by physical persons into the territory of the Republic of Uzbekistan of goods that are exempted from taxation shall be established by legislation;
6) the technical means of operational-search activities systems, purchased by telecommunications operators and a special body for certification of technical means of operational-search activities systems, subject to presence of a written confirmation by the authorized state body.
Article 285. Tax Base
The tax base shall be determined separately for each type of excisable goods (services), depending on the established tax rates.
For excisable goods (services), in respect of which tax rates are established in absolute amounts (fixed), the tax base shall be determined on the basis of the volume of excisable goods (services) in physical terms.
For produced excisable goods (services), in respect of which tax rates are established in percentage (ad valorem), the tax base shall be determined as the value of sold excisable goods (services), but not lower than their actual value.
For excisable goods which are transferred as payment for the labor of physical persons, accrued dividends, without charge or in exchange for other goods (services), the tax base shall be determined in the manner prescribed by parts two and three of this Article.
For excisable goods which are manufactured from customer-supplied raw materials and other materials, the tax base shall include the cost of works on the manufacturing of excisable goods and the value of customer-supplied raw materials and other materials.
For excisable goods in respect of which combined tax rates, consisting of a fixed and ad valorem tax rates, are established, the tax base shall be determined on the basis of the volume of excisable goods in physical terms and the value of sold excisable goods, unless otherwise provided by parts two and three of this Article.
For imported excisable goods, in respect of which tax rates are established in percentage (ad valorem), the tax base shall be determined on the basis of the customs value to be determined in accordance with customs legislation.
For imported excisable goods, in respect of which fixed tax rates are established, the tax base shall be determined on the basis of the volume of imported excisable goods in physical terms.
For imported excisable goods, in respect of which combined tax rates, consisting of a fixed and ad valorem tax rates, are established, the tax base shall be determined on the basis of the volume of excisable goods and (or) the customs value of excisable goods determined in accordance with customs legislation.
Where a gasoline, diesel fuel and gas are sold to end consumers, the tax base shall be the volume of gasoline, diesel fuel and gas which is sold and (or) used for own requirements in physical terms.
Article 286. Date of Performance of Taxable Transactions with Excisable Goods (Services)
The date of performance of taxable transactions with excisable goods (services) shall be defined as the date provided for in Article 242 of this Code for the relevant transactions.
The date of performance of taxable transactions with respect to imported excisable goods shall be the date of their release in accordance with the customs import procedure.
Article 287. Adjustment of the Tax Base
The tax base shall be adjusted by the taxpayer in the cases and in the manner provided for by Article 257 of this Code.
Article 288. Confirmation of The Export of Excisable Goods
The documents which confirm the export of excisable goods shall be:
1) a contract for the supply of excisable goods for export (a copy of the contract, certified in accordance with the established procedure);
2) a cargo customs declaration with a mark of the customs authority which releases goods in the export mode;
3) shipping documents with a mark of the customs authority which is situated at the checkpoint at the customs border of the Republic of Uzbekistan, which confirm the shipment of goods to the country of destination;
4) a bank statement which confirms payment by a foreign buyer (payer) for the exported goods.
Where the income from the export of goods in foreign currency is not receipted within one hundred and eighty calendar days from the date of release of goods in the export mode, the sale of goods for export shall be deemed as an object of taxation.
Where the sale of goods for export is carried out through a commission agent (attorney) under a commission (delegation) agreement, a commission agreement or a delegation agreement (copy of the agreement) of the taxpayer with the commission agent or attorney shall be additionally submitted by the committent (entrustor) to confirm the export.
Article 289. List of Excisable Goods and Services. Tax Rates
The list of excisable goods (services) and tax rates with respect to them shall be approved by the Law on the State Budget of the Republic of Uzbekistan.
Tax rates shall be established as a percentage of the value of a product or service (ad valorem), in an absolute amount per unit of measurement in physical terms (fixed), as well as combined, consisting of ad valorem and fixed tax rates.
Chapter 41. Procedure for Calculation of Tax, Submission of Tax Reporting and Payment of Tax
Article 290. Procedure for Calculation of Tax
The tax shall be calculated on the basis of the tax base and established tax rates.
For imported excisable goods, for which combined tax rates, consisting of ad valorem and fixed rates, are established, the tax shall be calculated on the basis of the tax base and the ad valorem tax rate. In this respect, the amount of tax cannot be less than the amount which is calculated using a fixed tax rate.
Article 291. Tax Period
The tax period is one month.
Article 292. Procedure for Submission of Tax Reporting
Tax reporting shall be submitted to the tax authorities for the place of tax registration on a monthly basis not later than the tenth day of the month following the tax period, unless otherwise provided by part two of this Article.
Where the sale of gasoline, diesel fuel and gas is carried out through filling stations, tax reporting shall be submitted to the tax authorities for the location of the filling stations on a monthly basis not later than the tenth day of the month following the tax period.
Article 293. Procedure for Payment of Tax
Tax shall be paid no later than the time limit for the submission of tax reporting.
The payment of tax with respect to the imported excisable goods shall be carried out within the time limits established by customs legislation. The tax with respect to imported excisable goods which are subject to labeling with excise stamps, shall be paid before the purchase of excise stamps.
SECTION XII. TAX ON PROFIT
Chapter 42. Taxpayers, Object of Taxation and Tax Base
Article 294. Taxpayers
The taxpayers of tax on the profit (hereafter in this Section referred to as “taxpayers”) shall be:
1) legal entities which are tax residents of the Republic of Uzbekistan (hereinafter in this Section referred to as “legal entities”);
2) legal entities which are non-residents of the Republic of Uzbekistan, as well as foreign structures without the formation of a legal entity, which operate in the Republic of Uzbekistan through permanent establishments (hereinafter in this Section referred to as “non-residents which carry out activities through permanent establishments”);
3) legal entities which are non-residents of the Republic of Uzbekistan and which receive income from sources in the Republic of Uzbekistan (hereinafter in this Section referred to as “non-residents”);
4) legal entities which are responsible members of a consolidated group of taxpayers;
5) individual entrepreneurs, whose income from the sale of goods (services) for the tax period exceeds one billion soums, or who voluntarily switched over to paying tax on profit;
6) a trustee of a simple partnership with respect to activities carried out within the framework of a simple partnership agreement (joint activity agreement).
Members of a consolidated group of taxpayers shall perform the obligations of taxpayers of tax on profit of organizations for the consolidated group of taxpayers to the extent necessary for that tax to be calculated by the responsible member of the group.
A physical person who performs the functions of an agent in accordance with part nine of Article 36 of this Code shall be deemed a taxpayer in accordance with paragraph two of part one of this Article.
Persons who pay tax on turnover (value added tax) shall not be deemed taxpayers, unless otherwise provided by this Code.
Article 295. Object of Taxation
The object of taxation for tax on the profit (hereafter in this Section referred to as “tax”) shall be profit earned by a taxpayer.
For the purposes of this Section, profit shall be understood to mean:
1) for a legal entity — the difference between the total income received and expenses incurred, which are provided for in this Section;
2) for a non-resident which carry out activities through a permanent establishment — the difference between the total income which are connected with the activities of a permanent establishment (including income received from sources outside the Republic of Uzbekistan which are connected with the activities of a permanent establishment) and the expenses provided for in this Section, with account taken of special considerations established by Chapter 49 of this Code;
3) for a non-resident — income from sources in the Republic of Uzbekistan, with account taken of the special considerations established by Chapter 50 of this Code;
4) for an individual entrepreneur — the difference between the total income received and expenses incurred which are provided for in this Section, with account taken of the special considerations established by Chapter 51 of this Code;
5) for a person who is entrusted with managing the affairs of a simple partnership — the difference between the income from the sale of a jointly produced product (provided service) and the amount of resources which are invested in joint activities attributable to the jointly produced product (service) sold.
Article 296. Tax Base
The tax base shall be taxable amount of profit, which is determined in accordance with Article 295 of this Code.
Where the tax base is determined in the manner and under the conditions established by this Section, certain types of income and (or) expenses (losses) of the taxpayer may be excluded or included according to special rules.
The taxpayer shall maintain separate records of income (expenses) for operations for which a non-standard procedure for accounting for profit and losses is prescribed.
The tax base shall be determined on a cumulative total from the beginning of the tax period, unless otherwise provided by Chapters 48 and 50 of this Code.
For tax purposes, losses which are made by a taxpayer in the reporting (tax) period, shall reduce the tax base in the manner and under the conditions established by Chapter 46 of this Code.
The tax base shall also include the total profit of controlled foreign companies which is determined in accordance with Section VII and Article 331 of this Code.
The tax base shall be adjusted in the cases and in the manner prescribed by this Section.
In the cases provided for in Section VI of this Code, income and (or) expenses (losses) of the taxpayer shall be adjusted.
Income and expenses in kind shall be accounted for by the taxpayer on the basis of the actual transaction price, unless otherwise provided by this part. Where the price of goods (services) in such a transaction differs from their market price and such a difference leads to a decrease in the tax base or an increase in the taxpayer's loss, the tax base shall be determined on the basis of their market prices determined in accordance with Section VI of this Code.
Chapter 43. Total (Aggregate) Income
Article 297. General Provisions
Total (aggregate) income shall consist of income which is received by a legal entity from sources in the Republic of Uzbekistan and abroad during the reporting (tax) period.
The total income shall be determined without taking into account value added tax and excise tax, unless otherwise provided by Article 299 of this Code.
For the purposes of this Section, the total income (hereinafter in this Section referred to as “income”) shall include income due to receive (hereinafter in this Section referred to as “received”) in any form and (or) from any activity, in particular:
1) sales income from the sale of goods (services);
2) income in the form of remuneration for a credit (loan, microcredit and other financial transactions);
3) income of an insurance, reinsurance organization under insurance, reinsurance contracts;
4) income from REPO transactions;
5) income from operations with securities and (or) financial instruments of forward transactions in accordance with Articles 327 — 329 of this Code;
6) income from the disposal of fixed assets and other assets in accordance with Article 298 of this Code;
7) income in the form of remuneration for the transfer of assets under a financial lease (leasing) agreement;
8) income from property lease (leasing), excluding financial lease (leasing);
9) royalties;
10) assets received (services received) without consideration in accordance with Article 299 of this Code;
11) income in the form of the value of surplus inventories and other assets which are identified as a result of inventory;
12) income received from writing off the obligation in the manner prescribed by legislation, excluding income from writing off expenses that were not previously deducted in accordance with Article 317 of this Code;
13) income received under the contract of assignment of the right of claim in accordance with Article 300 of this Code;
14) income received in the form of compensation for previously deducted expenses or losses in accordance with Article 301 of this Code;
15) income from service holdings in accordance with Article 302 of this Code;
16) income from participation in joint activities in accordance with Article 319 of this Code;
17) fines, penalties and other sanctions for violation of contractual obligations, as well as the amount of compensation for losses (damage) which are accepted by the debtor or payable by the debtor on the basis of a judicial act that has entered into legal force;
18) positive exchange rate difference in accordance with Article 320 of this Code;
19) dividends and interest;
20) income from fiduciary management of assets received by the principal of fiduciary management;
21) the amounts of the restored reserves, the expenses for the formation of which were taken as part of the expenses in the manner and on the conditions established by Chapters 44 and 45 of this Code;
22) income received in connection with a decrease in the authorized capital (charter fund) of a legal entity, in the event a shareholder or participant refuses to receive the value of his share (part of a share) in favor of this legal entity;
23) income from the sale of an enterprise as an asset complex;
24) income due to price adjustments in the cases and in the manner established by Section VI of this Code;
25) income in the form of profit of a controlled foreign company in the cases and in the manner prescribed by Section VII of this Code;
26) income in the form of earmarked funds in the absence of separate accounting and (or) their use not for their intended purpose (with the exception of budget funds for which the norms of budget legislation are applied);
27) other income not specified in clauses 1 — 26 of this subsection.
Income shall be determined on the basis of primary documents, other documents, including electronic ones, confirming income received by the taxpayer, and tax accounting documents.
For the purposes of this Section, the total income shall be determined on the basis of all receipts in cash, in kind and (or) other forms.
The income received by the taxpayer, the value of which is expressed in foreign currency, shall be accounted for together with the income, the value of which is expressed in the national currency.
Where a legal entity is reorganized, the value of assets and non-property rights that have been received (transferred) by (to) newly created, being reorganized and reorganized legal entities by way of legal succession and which have a monetary value and (or) obligations shall not be deemed as income, if they were acquired (created) by the legal entity which is under reorganization until the date of completion of their reorganization.
Where the recognition of income in accordance with the requirements of the accounting legislation differs from the procedure for determining and recognizing income in accordance with this Code, the specified income shall be recorded for tax purposes in the manner determined by this Code.
Unless otherwise provided for in this Section, income which is reflected in accounting due to changes in the value of assets and (or) liabilities when applying the accounting legislation, shall not be deemed as income for tax purposes, except for income that is actually received,.
The date of recognition of income shall be determined in accordance with the requirements of the accounting legislation, unless otherwise provided by this Code.
Adjustment of the taxpayer's income shall made in accordance with Article 332 of this Code.
Where the same income is provided for in several lines of income, when determining the total income, the specified income shall be included only once.
Article 298. Income from the Disposal of Fixed and other Assets
Profit from the disposal of fixed and other assets shall be deemed as income from the disposal of fixed and other assets, determined in accordance with the legislation on accounting.
Where the financial result (profit or loss) from the disposal of fixed and other assets are determined, the amount of revaluation of fixed and other assets that were previously revalued, the excess of the amounts of previous revaluations over the amount of previous markdowns of these fixed and other assets shall be included in income from the disposal of fixed and other assets.
Article 299. Assets (Services) Which are Received Without Consideration
Assets and (or) services which are received by a taxpayer without consideration shall be deemed as income of the taxpayer, unless otherwise provided by this Code.
Upon receipt of assets (services) without consideration, the income of the recipient shall be determined on the basis of the market value of this assets (service), unless otherwise provided by part four of this Article.
The market value of assets which are received without consideration (service received) must be documented. Such documents may be, in particular:
1) documents for shipment, delivery or transfer;
2) price data of suppliers (price lists);
3) data from the mass media;
4) stock exchange reports;
5) data of state statistics bodies.
Where a loan is received (financial assistance with consideration) without the obligation to pay interest income to the lender, the borrower's income shall be determined on the basis of the refinancing rate established by the Central Bank of the Republic of Uzbekistan at the date of receipt of the loan (financial assistance with consideration). A similar procedure for the determination of the borrower's income shall be applied to loans (financial assistance with consideration) with the obligation to pay interest payment the rate of which is lower than the refinancing rate established by the Central Bank of the Republic of Uzbekistan at the date of receipt of the loan (financial assistance with consideration).
The provisions of part four of this Article shall not apply:
1) to interbank transactions and loans issued by credit institutions;
2) loans (credits) provided by decisions of the President of the Republic of Uzbekistan, the Cabinet of Ministers of the Republic of Uzbekistan, as well as non-residents of the Republic of Uzbekistan;
3) loans (financial assistance with consideration) provided by one member of a consolidated group of taxpayers to another member of the same consolidated group.
The provisions of the first part of this Article shall also apply to income which is received by the beneficiary from the fiduciary management of assets, with account taken of the special considerations of taxation provided for in Article 322 of this Code.
Article 300. Income Which is Received Under the Contract for the Assignment of the Right of Claim
Income which is received under the contract for the assignment of the right of claim shall be determined as a positive difference between:
1) the amount to be received from the debtor upon demand of the principal debt, including the amount in excess of the principal debt on the date of assignment of the right claims, and the cost of acquiring the right of claim with respect to the taxpayer who purchases the right of claim;
2) the value at which the assignment of the right of claim was made and the value of the claim to be received from the debtor on the date of assignment of the right of claim, according to the taxpayer's primary accounting documents with respect to the taxpayer who ceded the right to claim;
3) the value at which the assignment of the right of claim was made, and the amount of expenses for the purchase of that claim with respect to the taxpayer who further enforces the right to claim the debt.
Income from the assignment of the right of claim shall be deemed in the reporting (tax) period on which the assignment of the right of claim is made.
The negative difference which is received under the contracts for the assignment of the right to claim, provided for in part one of this Article, shall be deemed as a loss of the taxpayer and is subject to deduction upon determination of the tax base.
Article 301. Income in the Form of Reimbursement of Previously Deducted Expenses or Losses
Income in the form of reimbursement of previously deducted expenses or losses shall include:
1) attributed to expenses the amounts of claims which were recognized as non-recoverable (risky) previously, and are reimbursed in the current tax period, including by assignment the rights of such claims;
2) the amounts which are received from the resources of the State budget of the Republic of Uzbekistan for the purpose of covering costs (expenses);
3) the amount of compensation for damage which are paid by the insurance organization or the person who caused the damage, excluding insurance payments specified in Article 304 of this Code;
4) other compensations which are received for reimbursement of costs that were previously attributed to deductions.
The compensation received shall be the income of the reporting (tax) period in which it was received.
Article 302. Income from Service Holdings
Service holdings shall be understood to mean holdings the activities of which are aimed at servicing the main activity of the taxpayer and are not connected to the production of goods and the provision of services, within the framework of the main activity of the taxpayer.
Service holdings shall include:
1) ancillary holdings;
2) objects of housing and utilities: housing facilities, hotels (excluding tourist hotels), guest houses and hostels, outside facilities and improvements, artificial structures, swimming pools, beach structures and equipment, public gas, heating and electricity supply facilities, sites, works, depots, workshops, garages, special machinery and mechanisms and storage facilities intended for the technical maintenance and repair of housing and utilities;
3) social and cultural facilities: health care facilities, cultural facilities, children’s pre-school establishments, children’s holiday camps, sanatoria (preventive clinics), holiday centres, holiday hotels, sports and fitness (physical culture) facilities and facilities for non-production types of consumer services (baths, saunas, laundries, sewing and other consumer service workshops).
4) caterings, training centers and other similar holdings, production units and departments which sell goods, work and services both to their own employees and to outside persons.
Income from service holdings shall be defined as the positive difference between the amount of monetary resources received from the sale of goods and services by service holdings and the amount of expenses connected with the activities of service holdings in sum.
The costs connected with the activities of service holdings shall be deemed deductible expenses in accordance with this Section.
The excess of deductible expenses over their income shall be recognized as a loss from service holdings.
Article 303. Income under Long-Term Contracts
In the case of production operations with a prolonged (more than one tax period) technological cycle where the conditions of agreements concluded do not provide for the phased handover of services, the taxpayer shall independently allocate income taking into account the principle of evenness in the recognition of income on the basis of accounting data.
The actual performance of a long-term contract at the end of the reporting period shall be determined on the basis of calculation of the proportion of expenses incurred since the beginning of the performance of the contract in the total amount of expenses for the performance of the contract.
Income at the end of the reporting period shall be defined as the product of the calculated share of expenses incurred and the total amount of income under the contract (contract price). Income, which were accounted previously under this contract, shall be deducted upon determination of income from the sale of services for the current reporting period.
Article 304. Income Which is Not Taken into Account Upon Taxation
The following shall not be considered as income:
1) funds which are received as a contribution to the authorized capital (charter fund);
2) the amount of excess of the offering price of shares (stakes) over their par value (original size);
3) funds which are received within the contribution to the authorized capital (charter fund) upon withdrawal (departure) from the participants’ list or when the size of the participant's share decreases, as well as during the distribution of the assets of a legal entity upon liquidation among its participants;
4) funds which are pooled for the implementation of joint activities under a simple partnership agreement;
5) funds received in the amount of a contribution by a partner (participant) of a simple partnership agreement, in the event his share in the common property of the partners (participants) of the agreement is returned or such property is divided;
6) funds which are received from other persons in the form of advance payment for the goods (services) sold;
7) funds which are received in the form of a pledge or a deposit as security for obligations in accordance with the legislation, until the transfer of ownership of them;
8) property and services which are received without charge on the basis of a decision of the President of the Republic of Uzbekistan or the Cabinet of Ministers of the Republic of Uzbekistan, as well as in accordance with international treaties of the Republic of Uzbekistan;
9) received grants, humanitarian aid and earmarked receipts, subject to the fulfillment of the requirements provided for in Article 48 of this Code;
10) funds which are received in the form of insurance compensation (insured sum) under insurance contracts;
11) assets (excluding remuneration) which are received by the commission agent or other attorney in connection with the fulfillment of obligations under a commission agreement, delegation or other contract for the provision of intermediary services, as well as reimbursement of costs incurred by the commission agent or other attorney for the committent or other entrustor. Such costs shall not be subject to deduction from a commission agent or other attorney, where compensation is provided for by the terms of the concluded contracts;
12) reimbursement of the value of the object of financial lease (leasing) in the form of a part of the lease payment received by the lessor;
13) property which is received under a property lease (renting) agreement, except for financial lease (leasing);
14) technical means of the operational-search activities on telecommunication networks which are received without consideration, as well as services for their operation and maintenance;
15) assets which are contributed as investment obligations in accordance with an agreement concluded between the investor and the authorized state body for state assets management;
16) funds or other assets under credit or loan agreements (other similar funds or other property, regardless of the method of borrowing, including debt securities), as well as funds or other assets in repayment of such borrowings;
17) assets which are received under a concession agreement in accordance with the legislation;
18) assets which are received by state institutions by decision of executive authorities at all levels;
19) income from government bonds and other government securities of the Republic of Uzbekistan, as well as income from international bonds issued by the Republic of Uzbekistan and legal entities of the Republic of Uzbekistan.
20) the amount of penalties and fines which are written off in accordance with tax legislation.
Chapter 44. Expenses
Article 305. General Provisions
Where the tax base of legal entities, specified in paragraph one of the first part of Article 294 of this Code, is determined, all expenses which are connected to deriving income shall be deducted from the aggregate income of these entities, except for expenses that are not deductible in accordance with this Section.
For the purposes of this Section, expenses which are connected to deriving income shall be understood to mean justified and documented expenditures (and, in the cases provided for in Articles 333 — 336 of this Code, losses) which are made (incurred) by a taxpayer both in the Republic of Uzbekistan and abroad during reporting (tax) period.
Justified expenses shall be understood to mean economically justified expenditures measured in monetary form.
Any expenditures shall be deemed as economically justified, provided that they satisfy one or more of the following conditions:
1) incurred in order to carry out activities which are aimed at deriving income;
2) are required or serve for the maintenance or development of such entrepreneurial activity and the connection of expenses with entrepreneurial activity is clearly justified;
3) follow from the provisions of the legislation.
Documented expenses shall be understood to mean expenditures which are confirmed by documents, prepared:
1) in accordance with the legislation of the Republic of Uzbekistan;
2) in accordance with the procedure which is applied in the foreign state, on the territory of which the corresponding expenses were incurred;
3) in other form, including a business trip order, travel documents, a report on the service provided in accordance with the contract.
The amount of value added tax which is credited in accordance with Chapter 37 of this Code shall not be deemed an expense, including where depreciable assets are purchased, except for the cases provided for in Article 314 of this Code.
Where the same expenses are provided for in several items of expenses, these expenses shall be deducted only once upon calculation of the tax base.
The expenses incurred by the taxpayer, the value of which is expressed in foreign currency, shall be accounted for together with the expenses, the value of which is expressed in the national currency.
Where the recognition of an expense in accordance with the requirements of accounting legislation differs from the procedure for determining and recognizing an expense in accordance with this Code, the specified expense shall be accounted for tax purposes in the manner determined by this Code.
Unless otherwise provided for in this Section, expenses which are accounted due to changes in the value of assets and (or) liabilities upon applying the accounting legislation, shall not be deemed expenses for tax purposes, with the exception of expenses actually paid out.
Expenditures, which are included in the historical cost of long-term assets and the cost of inventories in accordance with the requirements of accounting legislation, shall be expensed through depreciation and through the cost of such inventories.
The value of long-term assets, for which depreciation is not calculated in accordance with part two of Article 306 of this Code or in accordance with the requirements of the accounting legislation, shall be accounted when determining the tax base upon their disposal in accordance with the procedure provided for in Article 298 of this Code.
Adjustment of the taxpayer's expenses shall be carried out in accordance with Article 332 of this Code.
The expenses specified in Articles 306 — 316 and Chapter 45 of this Code shall be deducted subject to the conditions provided for by part two of this Article.
Article 306. Depreciation Expenses
Depreciable assets for the purposes of this Article shall be deemed fixed assets and intangible assets accounted for by the taxpayer in accordance with the accounting legislation.
The following shall not be deemed depreciable assets and depreciated:
1) land and other objects of natural resource (water, subsoil (subsurface) and other natural resources);
2) productive livestock;
3) information and library fund;
4) museum items;
5) fixed assets which are conserved in the manner prescribed by legislation;
6) objects of material cultural heritage;
7) highways, sidewalks, boulevards, public gardens, landscaping facilities under the jurisdiction of local government bodies;
8) assets, the value of which was previously fully attributed to expenses;
9) capital investments which are not transferred to fixed assets and intangible assets;
10) assets of non-commercial organizations, which are obtained or acquired at the expense of the funds specified in part one of Article 318 of this Code, and used for the implementation of non-commercial activities, with the exception of assets acquired in connection with entrepreneurial activities and used for entrepreneurial activities;
11) assets which are received or acquired (created) at the expense of funds received in accordance with paragraphs 8, 9, 14, 15 and 17 of Article 304 of this Code.
The value of the depreciable asset shall be charged to expenses through depreciation deductions and (or) investment deductions provided for in Article 308 of this Code.
Depreciation deductions shall be carried out in the manner prescribed by the accounting legislation, with account taken of the special considerations provided for by this Article.
The value of intangible assets shall be charged to expenses in the manner prescribed by Article 307 of this Code.
For tax purposes, depreciable assets, excluding intangible assets, shall be allocated to groups (subgroups) and the expenditures for their acquisition (creation) shall be expensed through depreciation deductions at the following maximum depreciation rates:

Group No.	Sub-group No.	Name of fixed assets	Annual maximum depreciation rate, in percent