Eligibility for export preferences
The legislation of the Republic of Uzbekistan covers following preferences for exporters:
· for value added tax (VAT)
· for excise tax
· for income tax
· for property tax
Preferences for value added tax (VAT)
According to Tax Code of the Republic of Uzbekistan (article 212), export of goods for free convertible currency is liable to nil rates of duty, which means exemption from VAT for material resources, used for production of exported goods. There is an exception for intermediary organizations and enterprises, which make export of raw materials such as precious metals.
Preferences for excise tax
An exemption from payment of excise tax for exporting excised goods is allowed to products, which were defined by the Cabinet of Ministers of the Republic of Uzbekistan (Tax Code of the Republic of Uzbekistan, article 230).
Excise tax is not charged for:
- realization of excised goods to export by their producers, except certain types of excised goods, which were defined by Cabinet of Ministers of the Republic of Uzbekistan.
- transfer of excised goods – recycling goods which were produced from goods that are under customs regime “recycling in customs territory”, only if they are exported from customs territory of the Republic of Uzbekistan afterward.
Preferences for income tax
According to the Decree of the President of the Republic of Uzbekistan on June 5, 2000 “On additional measures for stimulation of export-oriented goods’ producers” (№ УП-2613 on 05.06.2000), enterprises-exporters with all forms of ownership (except trade-intermediary and enterprises which export raw materials) exempt from income tax, gained from export of self-produced goods for free convertible currency. This measure is applied to small enterprises, which are taxpayers of single tax.
There is determined an order of tax payments for enterprises-exporters depending on a share of self-produced exported goods for free convertible currency out of total amount of realization:
- with the share of exports from 15 to 30% - determined rate of income tax decreases by 30%;
- with the share of exports over 30% - determined rate of income tax decreases two times.
This preference does not apply to commercial-intermediary enterprises, and to manufacturing plants, which export goods that are in the List approved by the Decree of the President of the Republic of Uzbekistan № УП-1871 on 10.10.1997.
Preferences for property tax
According to the Decree of the President of the Republic of Uzbekistan on June 5, 2000 “On additional measures for stimulation of export-oriented goods’ producers” (№ УП-2613 on 05.06.2000), there was determined an order of property tax payments, where its size depends on a share of self-produced exported goods from total amount of realization.
This preference is applied to enterprises with all forms of ownership, which produce export-oriented goods and sell it themselves or through specialized foreign trade unions or firms.
This preference does not apply to commercial-intermediary enterprises, and to manufacturing plants, which export goods such as cotton fiber, cotton yarn, petroleum, petroleum products, gas condensate, natural gas, electricity, precious, ferrous and non-ferrous metals for free convertible currency.
According to the Resolution of the President of the Republic of Uzbekistan №ПП-1512 on 28.03.2011 “On additional measures to stimulate the rapid development of the textile industry”, enterprises of the textile industry are exempt from property tax until January 1, 2016 which sell 80% and over of their production, including semi-finished products (yarn, fabric, knitted fabric and cotton waste) for free convertible currency.
Micro-and small firms are exempt from the mandatory sale of 50% of foreign exchange earnings, which came from export of goods produced with an exception of enterprises specified in the export and transit of gas (ПКМ РУз № 245 on 29.06.2000).
Industrial enterprises of all forms of ownership, exporting their own products are allowed to open trading houses and offices abroad for marketing research of foreign markets and advertising of products with the supply of goods to them on consignment (ПКМ РУз № 189 on 09.08.2005).
Exporters that supply their products to the trading houses abroad are exempt from the provision of a bank guarantee or insurance policy of export contracts from political and commercial risks, if they export goods of own production and exporter’s share of own produced goods should not be less than 51 percent in capital share (ПКМ РУз № 189 on 09.08.2005).
Within 180 days from the date of customs clearance, exporter must provide earnings of the foreign currency which received from exporting goods on the basis of agreements (contracts) to the company abroad, either return the goods to the territory of the Republic of Uzbekistan.
In pursuance of the Order of the President of the Republic of Uzbekistan on 14.01.2011 №P-3557 "On measures to implement the priorities of the concept of further deepening democratic reforms and formation of civil society in the country in deepening democratic market reforms and liberalization of the economy", there was developed a draft of the Customs Code of the Republic of Uzbekistan in the new edition and entered to the Oliy Majlis for consideration. In order to standardize and simplify the application of customs legislation, this bill combined the Customs Code and the Law of the Republic of Uzbekistan "On Customs Tariff", and it was brought in appliance with international norms and standards.
In accordance with the Resolution of the Republic of Uzbekistan №122 on 28.04.2011., there was created the Bureau of Export Promotion by the Agency of "Uzstandard" whose main tasks are:
- free consulting services which help enterprises- producers of export-oriented goods to get information about international and country requirements for standards, certification, labeling, packaging products and other parameters;
- development of proposals for the implementation and achievement of compliance in standards with international and country requirements for export-oriented goods produced by enterprises – producers;
- providing information and consulting assistance to enterprises-producers to obtain the necessary information to promote the products in overseas markets;
- development and implementation of a continuously updated directory of international and country requirements for standards, certification, labeling, packaging products and other parameters, and then make it available on the website of Agency "Uzstandard" on the Internet.
Moreover, in order to create more favorable conditions for enterprise-producers, as well as improving the procedures for certification and implementation of quality management systems, in accordance with this Resolution, certification of products manufactured for export is on a voluntary basis.
In accordance with the Resolution of the President of the Republic of Uzbekistan №ПП-1604 on 25.08.2011 "On measures to remove bureaucratic barriers and further enhance the freedom of entrepreneurship", there were approved new rates of customs clearance fees payable to the export of goods, providing them a decrease on average not less than 2 times in contrast to the current one.
At the same time, this Resolution establishes that from October 1, 2011 for micro firms and small enterprises - exporters of goods and services (except for commodity exports, the list of which is approved by the Decree of the President of the Republic of Uzbekistan №УП-1871 on October 10, 1997) registration of export contracts in the State Customs Service organs is carried out at the customs posts directly in the process of customs clearance of goods. So, from October 1, 2011 the mechanism on the principle of "one window" works for exporter companies that allows the simultaneous implementation of customs clearance, declaration, certification, sanitary and epidemiological surveillance and the activities of other organizations involved in the process of customs clearance of goods.
In addition, after this Resolution a foreign trade company specialized in the export of small business and private entrepreneurship “Uztadbirkoreksport” was established, whose main tasks are:
- assistance to subjects of small businesses and private entrepreneurship in the implementation of their products for export through direct export contracts, as well through trading houses abroad;
- organization of pre-export financing against a pledge of existing export contracts of subjects of small business and entrepreneurship;
- delivery of technological equipment, spare parts, components and raw materials which are not produced in the country through orders of subjects of small business and entrepreneurship;
- assistance to small businesses in the certification of export products, promotional activities, the organization and participation in international fairs and exhibitions, the provision of information and consultation of interested subjects of small business and entrepreneurship.
Resolution of the President of the Republic of Uzbekistan № ПП-1604 on 25.08.2011 made changes in 5th paragraph of the Resolution of the Cabinet of Ministers on 29.06.2000 № 245 "On measures of further developing and strengthening the OTC Market", which provides facilitation of penalty provision for enterprises-exporters who delay foreign currency earnings from abroad, in particular:
“to the exporter who has made a delay of foreign currency earnings by more than 30 business days (for subjects of small business and entrepreneurship - 60 business days), after that date the tax authorities apply the following sanctions:
- 10 percent of the uncollected currency amount is charged if there is a delay up to 180 days;
- additional 20 percent of the uncollected currency amount is charged if there is a delay from 180 days to 365 days from the date set;
- additional 70 percent of the uncollected currency amount is charged if there is a delay more than 365 days from the date set”.
At the same time, in accordance with the Decree of the President of the Republic of Uzbekistan № УП-4399 on 30.12.2011 "On Amendments and Repeal of certain Decrees of the President of the Republic of Uzbekistan", prohibition of poultry meat’s export was canceled.
Furthermore, in accordance with the Resolution of the President of the Republic of Uzbekistan №ПП-1731 oт 26.03.2012 "On additional measures to strengthen the promotion of enterprises - exporters and expand export of competitive products", domestic enterprises-producers have the right to:
- participate in international tenders for projects carried out in the territory of the Republic of Uzbekistan at the expense of international financial institutions, donor countries, foreign governments, and other non-residents on equal terms with foreign participants, including placement of contracts in foreign currency for the supply of manufactured goods (works, services);
- placement of contracts with non-residents in foreign currency under the direct supply contracts provided for use on the territory of the Republic of Uzbekistan of own produced goods (works, services);
Contracts declared in this paragraph (number 5) give the same status as the export contracts with setting on the account only in the service authorized bank and with provision of tax incentives for enterprises - exporters.
In addition, the above mentioned Resolution (paragraph 6) states that, from 01.04.2012 enterprises-exporters are exempt from the mandatory sale of part of foreign exchange earnings if it is directed to current repayments of principal on foreign currency loans for new construction, modernization and technological upgrading of existing facilities, until full repayment of the debt is occurred.
In accordance with paragraph 7, during the acquisition of new technological equipment for the amount of funds allocated for the implementation of quality management systems, certification of products for compliance with international standards, as well as for the purchase of facilities for laboratory tests, it is declared to reduce the tax base for the single tax payment for micro firms and small enterprises.
According to paragraph 8 of this Resolution, commercial banks are recommended to expand the volumes of factoring services on export operations with the increase of the deadline of factoring services for export operations from 60 to 90 days.
Moreover, there was provided set of measures to encourage the introduction of management systems by domestic enterprises that meet international standards ISO 9000 whose basic tasks are to decrease taxable income (profit) of corporate bodies during calculation of the income tax (profit) reducing by the amount equal to investments which were directed to implement and maintain management systems quality; exemption from customs duties, including VAT for technological equipment imported by testing laboratories for laboratory research and testing of products.
This year, the government has continued to create additional conditions aimed for the development of the export potential of the country. In accordance with the Resolution of the President of the Republic of Uzbekistan №ПП-2022 on 08.08.2013, Fund to support exporters of small and private entrepreneurship under the National Bank of Foreign Economic Activity was established in order to increase the export potential of small and private entrepreneurship in the Republic of Uzbekistan.