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13 February 2019

Privileges for textile and knitting industry

In order to accelerate the development of the textile and garment and knitwear industry, the President signed a decree “On measures to further deepen reforms and expand the export potential of the textile and garment and knitwear industries”. The decree provides for the provision of large financial support, which should contribute to the accelerated development and diversification of the industry, increasing investment in the deep processing of semi-finished textile and export of finished products.

From April 1 2019 an order is introduced, according to which:

a) the costs associated with the payment of interest on loans of commercial banks allocated to garment and knitwear enterprises in 2019-2021, exporting at least 80 percent of finished goods produced, are covered by the State Fund for Supporting the Development of Business Activities under the Cabinet of Ministers of the Republic of Uzbekistan following order:

  • in the amount of 25 percent of the interest rate established by a commercial bank on loans issued in national currency for replenishing working capital (for the purchase of yarn, linen, fabrics and materials for the production of finished textile products), but not more than 5 percentage points;
  • in the amount of 50 percent of the interest rate established by a commercial bank on loans issued in foreign currency for the modernization of production (purchase of buildings and equipment);

b) the refund to the taxpayer of the amount of value added tax is carried out in an expedited manner, resulting from the application of the zero rate, within 7 working days from the day the required documents are submitted in full. This cancels the requirement to provide information that is available to the state tax service, including the act of reconciliation of taxes and other obligatory payments and calculations of value added tax;

c) the exclusive requirement to provide a bank guarantee for the sale of cotton fiber through exchange trading is canceled. In this case, the method of ensuring the fulfillment of obligations is determined between the parties on a contractual basis.

Starting from the harvest of 2019, when selling cotton fiber to organizations of the republic, the value-added tax will be calculated on the basis of the actual price of its sale, regardless of the prevailing world prices for cotton fiber.