Tax Alert: 18 July 2013

Double Tax Treaty with Spain

Convention between the Republic of Uzbekistan and Kingdom of Spain for the avoidance of double taxation and prevention of fiscal evasion with respect of taxes on income and capital was signed on 8 July in Madrid. The Convention shall become effective once ratified by both countries.

Increase of the Minimum Monthly Wage

In accordance with Presidential Decree No. PP-4547 of 11 July 2013 effective from 15 August 2013 Minimum Monthly Wage is increased from UZS 79,590 to UZS 91 530. Minimum Monthly Wage affects, among others, calculation of salaries in public sector, retirement pensions, personal income tax, statutory fines and duties etc.

Resolution of the Cabinet of Ministers #127 of 13 May 2013

Resolution approves the list of certain imported consumer goods subject to obligatory labeling in Uzbek language at production facilities. Previously, labeling in Uzbek language could have been made by the importer of goods. 

The above requirement applies, among others, to: 

  • certain food items; 
  • alcoholic and non-alcoholic beverages;
  • cigarettes; 
  • certain types of medicines; 
  • personal hygiene and cleaning products; 
  • household appliances; 
  • toys.

Labelling requirements do not apply to imported consumer products not intended for resale or production/commercial use.

Regulation on monitoring of foreign currency transactions

Regulation on monitoring of foreign currency transactions carried out by legal entities and individuals (Regulation) was approved by joint Resolution of the State Tax Committee, State Customs Committee and Central Bank of Uzbekistan (registered by the Ministry of Justice under #2467 of 12 June 2013).

In general, Regulation reinforces existing legislation in this area along with introduction of certain changes. Thus, in accordance with the Regulation commercial banks shall provide information on foreign currency transactions carried out by their customers and having certain signs/characteristics, including, but not limited to:

  • payments for imported goods/services made to non-residents registered in ‘black listed’ countries (low tax jurisdictions and those restricting information exchange) or payments to non-residents’ accounts in banks situated in ‘black listed’ countries;
  • payments of fines for breaching contractual obligations under import contract;
  • payments for provision of services, royalties, as well as payment of dividends and repatriation of income;
  • payments to non-residents for sale of shares (stock) in charter capital of legal entities - residents of Uzbekistan and for sale of real estate located in Uzbekistan;
  • payments by the resident made under credit/loan agreements;
  • receipt of funds to the bank accounts of individual-residents of Uzbekistan from foreign legal entities.

The following ‘signs’, among others, were not included into the Regulation and should not be reported any longer:

  • import contracts envisaging advance payments to a non-resident of more than 30% of the contract value or greater than the equivalent of 100 thousand U.S. dollars;
  • failure to comply with terms of delivery of imported goods (works, services) under import contracts when residents make advance payments;
  • payment of liabilities under import contracts where such liabilities are older than three years.

We note that no changes have been introduced to the list of ‘black listed’ countries, which can be provided at request.

Resolution of the Cabinet of Ministers #139 of 22 May 2013

Resolution approves the Regulation on confirmation of customs value of goods imported by legal entities into the customs territory of the Republic of Uzbekistan and subject to exemptions from customs payments. 

Thus, under Resolution an importer utilizing exemptions on customs payments at the moment of clearing of goods under ‘free circulation’ regime should submit to customs authorities the export customs declaration (or other similar/substituting document) along with documents supporting expenses incurred before the imports had reached the customs territory of Uzbekistan.