New legislative amendments in Uzbekistan

New legislative amendments in Uzbekistan

According to Law ZRU#-758 “On introduction of amendments and additions to several legislative acts of the Republic of Uzbekistan related to improvement of tax administration” dated 11 March 2022, certain amendments and clarifications were made in the Tax Code, The Code on administrative responsibility, and the Law “On currency regulation”.

The aim of this alert is to provide brief review of the most important amendments. However, it is recommended to get familiarized with the text of respective legislative acts, in order to understand the new rules fully.

Changes in the Tax Code

The order of continuous and consecutive videorecording by the tax authorities upon property arrest and inspection of territories (buildings) has been introduced. It is required during such inspections:

• to conduct continuous and consecutive videorecording;
• to provide the copy of video-file to the taxpayer;
• to mandatorily involve witnesses if videorecording is prohibited or there is no possibility of videorecording.

It is determined that regulations and processes, which set special tax concepts, relationships, and conduction of tax measures (events) following the Tax Code, are adopted by the Cabinet of Ministers of Uzbekistan (previously it was determined that the State Tax Committee in conjunction with the Ministry of Finance adopt such regulations and processes).

Financial penalty for violation of requirements:

• on reflection of fiscal marks;
• or on equipping with automatized means of accounting;
• or on maintenance of integration with the information systems of tax authorities
• or on mandatory digital marking of the goods by means of identification by producers, importers, and sellers;

have been set in the amount of 100% net revenue of the last reporting quarter in which there was sale of goods.

Changes in the Code on administrative responsibility

Responsibility for the following types of violations is tightened:

1. Violation of rules of trading and providing services:

The degree of violation	The amounts of fine, effective until 12 June 2022	The amounts of fine, effective after 12 June 2022
up to significant amount (up to UZS 27 mln ~ USD 2,3 thousand)	for citizens – from 1-fold to 5-fold SBV* for officials** – from 5-fold to 7-fold SBV	for citizens – 10-fold SBV for officials – 20-fold SBV
in significant amount (from UZS 27 mln to 81 mln ~ USD 2,3 thousand to 7 thousand)	for citizens – from 5-fold to 10-fold SBV for officials – from 7-fold to 15-fikd SBV	for citizens – 25 SBV for officials – 40 SBV
in considerable amount (from UZS 81 to mln to 135 mln ~ from USD 7 thousand to 11,7 thousand)	for citizens – from 10-fold to 50-fold SBV for officials – from 40-fold to 80-fold SBV	for citizens – 70-fold SBV for officials – 80-fold SBV

*SBV – specified base value, special denominated value for the determination of amounts of fines, sanctions, duties, state fees, etc., currently equaled to UZS 270 thousand ~ USD 24.

** Official – a person appointed or elected permanently, temporarily or by special authority, which conducts organizational-managemental, administrational-economical functions at the enterprises, institutions, organizations, i.e. – the Head, Director, Chief accountant, etc.

2. Penalty in the amount of 30-fold SBV (~UZS 8,1 mln ~ USD 700) for artificial price overstatement or understatement for goods (services) depending on the form of payment (cash or plastic card), which was earlier stipulated by Presidential Resolution PP#-2777 dated 15 February 2017 “On measures of further improvement of money circulation and development of settlements by means of bank plastic cards”, has been reflected in the Code on administrative responsibility.

3. Fines on officials for violation of requirements of digital marking of goods (the type of goods for which mandatory digital marking requirements are set) by producers and importers has been introduced in the amount of 100-fold SBV. Additions stipulated in this part 3. (except tobacco, alcohol, beer products) become effective which becomes effective after 6 months from official publication – 12 September 2022.

4. Penalties for the following types of violations have been clarified:

Type of violation	The amounts of fine, effective until 12 June 2022	The amounts of fine, effective after 12 June 2022
Intentional evasion (understatement) of profit (income) or other objects of taxation or other ways of evasion from taxes and mandatory payments	for citizens – from 3-fold to 5-fold SBV for officials – from 5-fold to 7-fold SBV violation committed in significant amounts (from UZS 27 mln to 81 mln ~ USD 2,3 thousand to USD 7 thousand): for citizens – from 5-fold to 10-fold SBV for officials – from 10-fold to 15-fold SBV	for citizens – 10-fold SBV for officials –15-fold SBV violation, committed in significant amounts: for citizens – 20-fold SBV for officials – 30-fold SBV
Absence of profit (income) accounting or other objects of taxation or accounting of such items with the violations of existing regulations, if such actions lead to understatement of taxes, as well as non-provision of documents that are necessary for calculation and payment of taxes on time, including non-provision of explanations on discovered discrepancies or re-calculated tax returns on time as a result of in-house tax audit	from 1-fold to 3-fold SBV committed repeatedly within a year after applying administrative penalty first time – from 3-fold to 10-fold SBV	3-fold SBV
Failure to provide tax returns / reports on time	from 1-fold to 3-fold SBV committed repeatedly within a year after applying administrative penalty first time – from 3-fold to 10-fold SBV	for citizens – 3-fold SBV for officials – 10-fold SBV
Violation of payment disciplines, including failure to processing cash collection orders of the tax authorities from enterprises-debtors, violation of established deadlines for processing payments while having sufficient funds at the accounts of enterprises, as well as conducting activities violating the order of debiting the funds from the accounts	for officials – from 10-fold to 15-fold SBV	for officials – 15-fold SBV
Failure to provide or late provision of payment orders to servicing banks for payment of taxes and duties	from 3-fold to 5-fold SBV committed repeatedly within a year after applying administrative penalty first time – from 5-fold to 10-fold SBV	5-fold SBV
Violation of established requirements and processes on reflection of fiscal marks or on equipping with automatized means of accounting   or on maintenance of integration with the information systems of tax authorities	Absent	for officials – 100-fold SBV
Concealment of employees	for citizens – from 1-fold to 5-fold SBV for officials – from 5-fold to 10-fold SBV committed repeatedly within a year after applying administrative penalty first time: for citizens from 5-fold to 10-fold SBV for officials – from 10-fold to 15-fold SBV	10-fold SBV committed repeatedly within a year after applying administrative penalty first time: 20-fold SBV

Changes in Law “On currency regulation”

Responsibility for non-maintaining the repatriation of assets on foreign-trade operations on time have been eased – the amounts of fines decrease by two times. This way, fines for overdue of repatriation of assets on foreign trade operations for more than 45 days (for small business – 90 days) after expiration of established deadline of 180 days are as follows:

• in equivalent of 5% of unrepatriated amount (previously 10%) – for overdue of repatriation up to 360 days from date of payment or export to non-resident;
• additionally in equivalent of 10% of unrepatriated amount (previously 20%) – for overdue repatriation from 360 days to 545 days from the date of payment or export to non-resident
• additionally in equivalent of 35% of unrepatriated amount (previously 70%) – for overdue of repatriation from 545 days and more from the date of payment or export to non-resident.

In case of force-majeure, deadline for repatriation of assets is prolonged by the duration of such force-majeure in a specific country.

In case of receiving insurance reimbursement (in national and (or) foreign currencies) based on export contract insurance policy, the amount of unrepatriated amount is decreased by the amount of such insurance reimbursement amounts for the purposes of applying the penalty.

Penalty for non-maintaining repatriation of assets on foreign trade operations is not applied in the following cases:

• period of delivery of equipment and (or) spare parts based on import contracts where period of delivery is set as more than 180 days due to their technical properties and specifics;
• provision of document issued by the competent authority of foreign country certifying the destruction or confiscation of the goods by state bodies which were found as in unusable condition due to transportation or storage, or due to reasons not depending on parties;
• if the terms established in the following types of import contracts (for more than 180 days) are not violated:

1. • signed within framework of projects realized as per decisions of President or Cabinet of Ministers of Uzbekistan
   • verified by steering committee within framework of realization of production sharing agreements

• if overall amount of overdue receivable from export operations does not exceed 10% of foreign currency revenue collection maintained within last 36 months preceding the moment of arising overdue receivable.

In case of voluntary payment of penalty within 10-day period in the amount proportionate to repatriated assets on foreign trade operations within next 90 day, the paid amount of such penalty is returned.

In case of full repatriation of assets on foreign trade operations within 90-day period from the moment of court’s act becoming effective, paid amount of penalty is returned.

Levying of penalties exceeding 20% of current assets (as of the latest reporting date) of legal entity – resident of Uzbekistan is conducted by providing the possibility of monthly payment of penalties with the deferral to 6 months.

Changes into the Law become effective from the date of official publication – 12 March 2022.