In Uzbekistan, employers have several tax responsibilities. These include the Social Tax (ST), Personal Income Tax (PIT), Pension Fund Contributions, and Property Tax.

Social Tax (ST)

Employers are liable for a Social Tax on their total payroll costs. This tax funds social programs within the country. The standard ST rate is 12%. However, budgetary organizations generally pay a higher rate of 25%.

Personal Income Tax (PIT)

Employers must withhold PIT from employee salaries and submit this to the government.

Pension Fund Contributions

Employers are required to make contributions to the state pension fund on behalf of their employees.

Property Tax

A property tax is levied on the fixed assets of legal entities, including buildings and equipment.

Compliance

Staying up-to-date with Uzbekistani tax regulations and fulfilling reporting requirements accurately is critical for employers. Failure to comply can result in penalties and fines.

In Uzbekistan, the primary tax deduction for employees is the Personal Income Tax (PIT). The country operates on a flat income tax rate of 12%, which is directly withheld from employees' salaries by their employers.

Social Security Contributions

Employees are required to make mandatory contributions to the state social security fund. The standard contribution rate stands at 4%.

Other Deductions

Depending on individual circumstances, employees may have additional deductions. These include:

• Unemployment Insurance: A small percentage (0.5%) is deducted as unemployment insurance.
• Housing Loan: This is relevant for those with housing loans, with a 1% deduction.
• Employee Training: A 0.5% deduction is linked to employee development initiatives.

Tax Exemptions

In Uzbekistan, certain categories of income may be exempt from Personal Income Tax (PIT). These exemptions include:

• Disability Payments
• State Awards
• Certain Types of Scholarships

In Uzbekistan, a Value-Added Tax (VAT) system applies to the supply of most goods and services, which is crucial for businesses operating in the country to understand.

Standard VAT Rate

The standard VAT rate in Uzbekistan is 12%. Businesses are required to charge VAT on their taxable sales and remit it to the tax authorities.

VAT Registration

Businesses with an annual turnover exceeding UZS 1 billion are generally considered VAT payers and must register for VAT purposes. Additionally, foreign companies providing e-services to individuals in Uzbekistan, where the place of supply is considered Uzbekistan, also have VAT registration obligations.

VAT Exemptions

Certain types of services are VAT-exempt in Uzbekistan. These include financial services such as banking and insurance, medical services, and educational services.

Zero-rated VAT

The export of goods is generally zero-rated for VAT purposes in Uzbekistan. This means no VAT is charged on the sale, but input VAT incurred during the production process can be reclaimed.

In the realm of tax incentives, specific industries such as agriculture and agricultural engineering are often eligible for reductions in income tax and property tax for a set period. This is particularly true in Uzbekistan.

Agriculture and Agricultural Engineering Incentives

Companies developing these industries may be eligible for reductions in income tax and property tax for a set period.

Export-Oriented Businesses Incentives

If export sales exceed a certain percentage of total revenue, a reduced or zero-rate Corporate Income Tax (CIT) is applicable on export income. Additionally, an accelerated VAT refund process is available for exporters.

Free Economic Zones (FEZs)

Companies operating in designated FEZs may be eligible for significant tax holidays and exemptions. These include:

Tax Exemptions

Exemptions in areas like land tax, property tax, corporate income tax, and others are often available within FEZs. The length of exemptions depends on the value of foreign investment.

Customs Duties

Companies within FEZs may be exempt from customs duties on the import of equipment and raw materials needed for their production processes.

Additional Considerations

Specific Incentives

The full range of tax incentives may extend to other sectors and may change over time. It's essential to stay informed on the latest incentives available.

Eligibility Criteria

Incentives usually have specific eligibility criteria such as investment size, type of industry, and export thresholds.