March 2019 – Kinstellar's regular look at the Uzbek market
The tax reform came into force from 1 January 2019. There have been significant changes to the tax system in Uzbekistan.
1. Unified Tax Payment
Before recent reforms, the criteria for payment of a unified tax payment was the number of employees and the carrying out of particular forms of activity. The amount of annual turnover (receipts) was not taken into account. However, in order to reduce regulatory work, it was decided to retain the existing tax name as unified tax payment instead of the turnover (receipts) tax. Since 1 January 2019, the unified tax payment is paid only by legal entities with annual turnover not exceeding UZS 1 billion
2. Corporate Profits Tax
Corporate Profits Tax reduced in the following ways:
- for commercial banks – from 22% to 20%;
- for other legal entities – from 14% to 12%.
3. Other Changes
The contributions required to be made by individuals to state pension, road and educational/medical development funds have been eliminated. This step will bring the tax system closer to the international tax standards. Moreover, it will ease the tax burden, which will allow to send free funds for investment, development of production and compensation of employees.
Personal income tax is paid at a fixed rate of 12% instead of 22.5% before. The tax rate on dividends and interest has been reduced from 10% to 5%. For non-residents, the tax rate on dividends and interest is retained at a rate of 10%.
Insurance contributions to public pension funds are canceled. Enterprises with an annual turnover of more than UZS 1 billion will pay value-added tax. And a temporary simplified VAT breakdown procedure is going to be introduced for enterprises with a turnover of up to UZS 3 billion.
Presidential Decree "The Concept for Improving Uzbekistan`s Taxation Policy" No. UP-5468 of 29 June 2018.
Creation of the Ministry of Transport
According to the Presidential Decree, the Agency for Automobiles was created under the Ministry of Transport of the Republic of Uzbekistan.
The Ministry is responsible for the development and implementation of unified state policy in the field of development of the road, rail, air, river transport, metro, as well as road facilities and issuance of licenses, permits and certifications. Therefore, six state organisations were transferred to the Ministry of Transport.
- The State Committee for Highways – now the Committee for Highways under the Ministry of Transport;
- The State Inspectorate for Flight Safety Supervision — now the Civil Aviation Agency under the Ministry of Transport;
- The State Inspectorate for Safety Supervision of Railway Transportation – now the Inspectorate for Safety Supervision of Railway Transportation under the Ministry of Transport;
- The State Inspectorate for Quality Control of Road Construction Works under the Cabinet of Ministers – now the Inspectorate for Quality Control of Road Construction Works at the Ministry of Transport;
- The Uzbek Ship Registry of the Ministry of Emergency Situations; and
- The Center "Uzbek air navigation" under the Cabinet of Ministers.
In addition, the Centre for the study of transport and logistics development will be created under the Ministry of Transport.
Presidential Decree "On Measures to Fundamentally Improve the System of Public Administration in the Field of Transport" No. UP-5647 of 1 January 2019.
The State Competition Committee is divided into three state bodies
According to the Presidential Decree No. UP-5630, the State Committee for Assistance to Privatised Enterprises and Development of Competition ("the State Competition Committee") has been abolished.
Instead of the State Competition Committee, three separate state authorities have been created. These are the Antitrust Committee, State Assets Management Agency and Capital Market Development Agency.
Presidential Decree "On the Fundamental Improvement of the State Assets Management, Antitrust Regulation and Development of the Securities Market" No. UP-5630 of 14 January 2019.
Reorganization in the structure of NMMC
In accordance with the Resolution of the Cabinet of Ministers No. PKM-8, the Project Office State Enterprise "Навоийский ГМК" has been created. The primary goal of the State Enterprise "Навоийский ГМК" is to deal with the implementation of modern methods of corporate governance and organization of works on conversion into a joint stock company.
Resolution of the Cabinet of Ministers "On Measures of Increase the Efficiency of Activities of the State Enterprise "Navoi Mining and Metallurgical Combinat" No. PKM-8 of 9 January 2019.
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