Uzbekistan is a landlocked nation in central Asia that shares borders with two other nations on either side. Kazakhstan borders Uzbekistan’s north and west to the east are Kyrgyzstan and Tajikistan. Afghanistan and Turkmenistan also border the nation to the south. Uzbekistani Som is the country of Uzbekistan’s official local currency (UZS). The official local language is Uzbek, and the capital is Tashkent. Russian, however, is the language of communication outside of Uzbekistan. In addition to having a rich artistic and cultural past, Uzbekistan also has abundant natural resources. In the past, in the late 1980s, the nation produced one-third of the cotton and 90% of the total cotton produced in the Soviet Union.
Uzbekistan, which became independent in 1991, has been working to lessen its heavy reliance on agricultural products for its economy. Uzbekistan is the world’s sixth-largest cotton producer and the world’s eleventh-largest exporter of cotton. Additionally, it exports petroleum goods and natural gas.
Uzbekistan’s corporate income tax (CIT)
The corporate income duties in Uzbekistan are levied on both resident corporations, whose worldwide income is subject to taxation, and non-resident corporations, which are foreign organizations and legal entities that are required to pay corporate income tax on any income derived from sources or activities located in Uzbekistan. The taxation of non-resident firms typically occurs at the level of their Uzbek private equity or through withholding tax (WHT), which is applied at the source of payments for their income derived from Uzbekistan.
The corporate income tax is assessed on the taxable profit, which is determined by subtracting expenses from gross income and any appropriate incentives provided by the tax code, current legislation, or presidential decrees. The levy Code has set the corporate income tax rate for Uzbekistan’s organizations for the year 2021 at 15%. Commercial banks, cement manufacturers, polyethylene granule manufacturers, mobile service providers, and markets or malls are also subject to a 20% duty. All legal entities and business owners in Uzbekistan have the option of a simplified tax regime if their annual revenue is between US $100 million and US $1 billion for organizations and US 100 million to US 1 billion for individuals. The turnover tax takes the place of the CIT and VAT under this tax system.
Personal income tax rates in Uzbekistan
Both citizens and non-residents of Uzbekistan must pay taxes there. While non-residents are only subject to taxes on income that is generated, residents are subject to taxes on their entire worldwide income. The basic turnover tax rate is 4%, however for legal businesses, depending on their nature and the services they offer, the rate may range from 1% to 25%. The sale of gasoline, diesel, or gas fuels, the production and importation of items subject to excise duty, and subsurface extraction are the only entities that are free from choosing the simplified duty system.
Two key criteria must be satisfied for a person to be considered a resident:
- If they have spent at least 183 days in the country during a tax year.
- If they spend more than 183 days in Uzbekistan but less than any other nation.
In light of this, the following are included in the statute that establishes the personal income tax rates for residents and non-residents:
- A 15% tax rate is imposed on capital gains, rental income, and employment income.
- Dividends and interest income are subject to a 10% withholding tax for non-residents.
- Paid taxes in a foreign nation with which Uzbekistan has a double taxation agreement.
Social tax
Employers are responsible for paying a social tax that is added to the gross pay of both domestic and international workers. The Uzbek government declared that all groups would receive compensation from the public budget. The quantity of social duty they paid for staff members who were under 25. Organizations, however, that have a state portion of their permitted capital are exempt from such social tax returns. The greatest ST rate, which is 25%, is found in budget companies. In Uzbekistan, the basic VAT (value-added tax) rate is 15%, and all legal entities and non-resident people must pay property taxes that range from 0.2% to 4% depending on the kind and value of the property.
