Measures on improving VAT administration have been adopted
According to the Resolution of the Cabinet of Ministers of Uzbekistan #595 dated 22 September 2021 (hereinafter – “The Resolution”), further measures for improving the system on controlling VAT are stipulated, including:
- VAT registration system
Application for special VAT registration submitted by a taxpayer is inspected by the tax authorities within 7-day period. Issuance of certificate on special VAT registration on automatized basis is stipulated if the results of inspection by the tax authorities is not provided to a taxpayer within established period.
Also, “Regulation on process of special registration accounting of VAT payers in tax authorities” is adopted according to which the process of categorizing the taxpayers into risk groups (high risk, medium risk and low risk) based on the analysis of data of taxpayers and process of invalidation, annulment, cancellation of VAT registration certificate of taxpayers have been envisaged.
VAT registration certificate of the taxpayer, which is categorized within high-risk group (based on 13 attributes determined by the Regulation), can be invalidated by the tax authorities on automatic basis. After eliminating the reasons for invalidation of the certificate and reflection of such changes in the database of the tax authorities, automatic recovery of validation of VAT registration certificate is carried out within 1 day. Thus, during the period of invalidation of VAT certificate of a taxpayer, output VAT issued by the taxpayer cannot be offset by the clients of the taxpayer, while input VAT incurred upon purchase of goods, services cannot be offset by the taxpayer either.
According to joint Informational instruction of the Ministry of finance and State tax committee of Uzbekistan dated 27 January 2022 on reconsideration of changes in tax legislation taking into account the critics of public and specialists which was issued further to the above Resolution #595, several attributes (5 out of total 13) determined to categorize taxpayers into high-risk group by the automatized system of the tax authorities will not be used until 1 January 2023.
- “E-aktiv” system
Starting from 1 January 2022 VAT payers and legal entities with the state share of 50% and more in the charter capital are required to:
- reflect all operations related to recognition (purchase (construction), commencement, revaluation, disposal) of fixed assets (including intangible assets), inventory, goods, products, as well as forming up and decrease of own charter capital in the automatized information system of the state tax authorities, so called “E-aktiv” (hereinafter – “E-aktiv system”)
- reflect write-off of inventory in the course of economic activities due to impairment, expiration, inventory count, deformation, etc. in E-aktiv system not later than 3 days.
According to joint Informational instruction of the Ministry of finance and State tax committee of Uzbekistan dated 27 January 2022 on reconsideration of changes in tax legislation taking into account the critics of public and specialists which was issued further to the above Resolution #595, involvement into using E-aktiv system will be implemented on step-by-step basis. Starting from 1 April 2022 the requirement to use E-aktiv system will be mandatory only for 4 categories of goods (cement, glass, wood, and cotton).
Based on the results of using the system for 4 pilot categories of goods, the list of goods will be gradually widened. Implementation of the system for all categories of goods is planned to complete in the 4th quarter of 2023. Penalties and financial sanctions for non-using E-aktiv system (except for the goods included into pilot usage) and using incorrect identification codes of goods and services will not be applied until 1 September 2022.
- “E-ijara” system
Starting from 1 January 2022,
- agreements of leasing (renting) or providing for free-of-charge use of immovable property by the legal entities is subject to registration in the tax authorities (in interactive online system “E-ijara”);
- balance of inventory stored in the objects of immovable property which are rented or used for free-of -charge based on the agreements not registered in the tax authorities is not accounted as inventory for tax purposes and is accounted as non-existing in the warehouse of a taxpayer.
It is suggested that input VAT incurred by a taxpayer upon purchase of inventory stored in rented warehouses (or other immovable property), which are not registered in the system “E-ijara”, is not eligible for offset against output VAT and is not refundable.