11 July 2019

Reforms in tax administration

The President signed a Resolution “On Additional Measures to Improve Tax Administration” in order to further improve the tax system, reduce shadow turnover in the economy, and implement the main directions of the Concept of Improving the Tax Policy of the Republic of Uzbekistan.

The Resolution instructs the government to introduce the following new rules in tax administration:

establishing the procedure for the return of value-added tax paid to foreign citizens for purchased goods when they cross the border of the Republic of Uzbekistan (“taxfree”);

the introduction of the institution of “investment tax credits”, which provides for a reduction in tax payments by means of a further return with interest on installments;

introduction of a simplified procedure for the collection of financial sanctions, according to which in the case of a voluntary payment by a taxpayer – a legal entity or an individual entrepreneur – 50 percent of the amount of financial sanctions imposed on him within ten days from the date of receipt of the decision to impose financial sanctions, he is exempt from paying the remaining amount.

The Resolution also approved the Tax Administration Reform Strategy and the “Road Map” for the implementation of the strategy.

The main directions of the strategy are:

unification of taxes and tax regimes, as well as simplification of administrative procedures;

reduction and equalization of the tax burden;

determination of criteria and mechanisms for granting tax incentives based on an assessment of their degree of effectiveness;

reduction of shadow turnover and uncontrolled income in the field of economic activity;

Facilitating exit from informal sectors operating outside the sphere of tax legislation;

increase in tax payers of personal income tax by 1.5 times by 2021, value added tax payers by 2 times, payers of resource taxes and property tax by 2 times;

creating favorable conditions for taxpayers to fulfill tax obligations voluntarily;

simplified tax reporting forms;

development of the extraterritorial principle of taxpayer service;

creating a mechanism for an independent public assessment of the quality of tax services;

transparency of tax authorities and the availability of information in the field of taxation;

development of the system of pre-trial settlement of tax disputes;

simplification of insolvency resolution procedures and liquidation of enterprises (audit of expenses, time and rules);

ensuring transparency of tax control procedures, reducing corruption factors;

bringing the level of voluntary fulfillment of tax obligations to 90%.

In addition, by February 2020, a maximum cash payment threshold will be set for the purchase of goods and services at retail and a simplified invoice for transactions in the amount of more than 30 times the base calculated value will be introduced.