www.pwc.com/uz Guide to doing business and investing in Uzbekistan 2016 edition Guide to doing business and investing in Uzbekistan 2016 Edition The information in this Guide is based on taxation law and current practices. It is intended to provide a general guide only on the subject matter and is necessarily in a condensed form. It should not be regarded as a basis for ascertaining the tax liability in specific circumstances. Professional advice should always be taken before acting on any information in the Guide. UZBEKISTAN PROFILE AND INVESTMENT CLIMATE .......................................... 1 INTRODUCTION ......................................................................................................... 1 GOVERNMENT STRUCTURE AND LEGAL SYSTEM ............................................................. 2 PEOPLE .................................................................................................................... 2 ECONOMY ................................................................................................................ 3 FOREIGN TRADE ........................................................................................................ 4 BUSINESS ENVIRONMENT ................................................................................... 6 BUSINESS CLIMATE ................................................................................................... 6 INTERNATIONAL AGREEMENTS ................................................................................... 7 REGULATIONS FOR BUSINESS ..................................................................................... 7 PROPERTY MARKET ................................................................................................... 8 FOREIGN INVESTMENT AND PRIVATISATION .................................................... 9 FOREIGN INVESTMENT ............................................................................................... 9 LAND PRIVATISATION ............................................................................................... 13 BANKING, FINANCE AND INSURANCE ................................................................ 15 BANKING SYSTEM..................................................................................................... 15 FOREIGN CURRENCY MARKET AND FOREIGN CURRENCY RULES ..................................... 16 SPECIALISED FINANCIAL INSTITUTIONS ...................................................................... 17 IMPORTING AND EXPORTING ............................................................................ 18 TRENDS IN CUSTOMS POLICY .................................................................................... 18 NEW CUSTOMS CODE .............................................................................................. 18 IMPORT RESTRICTIONS ............................................................................................ 18 CUSTOMS PAYMENTS ............................................................................................... 19 IMPORT RELIEF ....................................................................................................... 20 DOCUMENTATION AND PROCEDURES .......................................................................... 21 CUSTOMS REGIMES.................................................................................................. 22 BUSINESS ENTITIES ........................................................................................... 23 LEGAL FRAMEWORK ................................................................................................ 23 FORMS OF BUSINESS ENTITIES .................................................................................. 23 REGISTRATION REQUIREMENTS ................................................................................ 25 PRODUCTION SHARING AGREEMENTS ........................................................................ 26 LABOUR RELATIONS AND SOCIAL SECURITY ................................................... 27 LABOUR MARKET .................................................................................................... 27 SOCIAL SECURITY .................................................................................................... 28 FOREIGN PERSONNEL .............................................................................................. 29 ACCOUNTING AND AUDIT REQUIREMENTS ...................................................... 30 ACCOUNTING .......................................................................................................... 30 CHART OF ACCOUNTS ................................................................................................ 31 AUDIT REQUIREMENTS ............................................................................................. 31 TAX SYSTEM AND ADMINISTRATION ................................................................ 32 TAX SYSTEM ........................................................................................................... 32 DIRECT AND INDIRECT TAX BURDEN .......................................................................... 32 PRINCIPAL TAXES .................................................................................................... 33 LEGISLATIVE FRAMEWORK ....................................................................................... 33 TAX TREATIES ......................................................................................................... 33 TAX RETURNS AND PAYMENTS .................................................................................. 34 OVERPAID TAXES .................................................................................................... 35 WITHHOLDING TAXES ............................................................................................. 35 TAX AUDITS ........................................................................................................... 35 PENALTIES ............................................................................................................. 36 TAXATION OF CORPORATIONS .......................................................................... 37 CORPORATE TAX SYSTEM ......................................................................................... 37 TAXABLE INCOME.................................................................................................... 37 DEDUCTIBILITY OF EXPENSES ................................................................................... 38 RELATED PARTY TRANSACTIONS ............................................................................... 39 FOREIGN EXCHANGE ............................................................................................... 39 TAX COMPUTATIONS AND RATES ............................................................................... 39 OTHER TAXES ......................................................................................................... 39 TAXATION OF SUBSURFACE USERS ............................................................................. 41 TAXATION OF INDIVIDUALS .............................................................................. 42 TERRITORIALITY AND RESIDENCE ............................................................................. 42 TAXABLE INCOME.................................................................................................... 42 NON-TAXABLE INCOME/DEDUCTIONS ........................................................................ 43 TAXATION OF FOREIGN NATIONALS ........................................................................... 43 TAX COMPLIANCE .................................................................................................... 43 VALUE ADDED TAX ............................................................................................. 45 INTRODUCTION ....................................................................................................... 45 SCOPE OF VAT ........................................................................................................ 45 ZERO RATING ......................................................................................................... 46 EXEMPT SUPPLIES ................................................................................................... 46 TAXABLE AMOUNT ................................................................................................... 46 NON-RECOVERABLE INPUT VAT ................................................................................ 47 VAT COMPLIANCE ................................................................................................... 47 INTRODUCTION TO PRICEWATERHOUSECOOPERS ......................................... 49 PRICEWATERHOUSECOOPERS WORLDWIDE ORGANISATION ......................................... 49 PRICEWATERHOUSECOOPERS IN UZBEKISTAN ............................................................ 49 APPENDICES ....................................................................................................... 50 APPENDIX A – TIPS FOR THE BUSINESS VISITOR .......................................................... 50 APPENDIX B – MAJOR TAX RATES (OTHER RATES ARE MENTIONED IN THE GUIDE) .......... 51 APPENDIX C – WITHHOLDING TAXES ........................................................................ 52 APPENDIX D – USEFUL SOURCES OF INFORMATION ..................................................... 54 Uzbekistan profile and investment climate