Free Lease and Taxes: What Businesses in Uzbekistan Need to Know?

Free property lease in Uzbekistan may sound tempting for business, but in practice, it generates numerous tax issues. How to properly arrange a gratuitous transfer of property? What taxes arise if there is no income? This topic causes disputes among accountants and entrepreneurs, especially under constantly changing legislation. TURANOS analyzes controversial points, legal norms, and real risks for business.

Why is the topic of free lease relevant?

The issue of taxing free leases hides a whole tangle of contradictions. It is important for accountants and entrepreneurs to understand when a free lease turns into a tax problem. Formally, there is no income, but taxes are still accrued — this is the paradox often encountered in practice.

Legislative framework: what does the Tax Code of the Republic of Uzbekistan say?

According to Article 375 of the Tax Code, income from leasing property is recognized as property income of an individual. However, if the property is transferred free of charge, no actual income arises. It might seem that there is nothing to calculate the 12% PIT on, but it is not that simple. In such cases, legal entities act as tax agents (Articles 386 - 387 of the Tax Code), and according to Article 299, even free use is interpreted as deemed income. Minimum lease rates are applied in accordance with Law No. 1105, including for gratuitous agreements. That is, the law establishes a basis for calculating taxes even in the absence of real cash inflows.

Application practice: how do tax authorities act?

In fact, tax authorities interpret free leases as regular ones — at the minimum rate. The individual incurs deemed income subject to 12% PIT, and the legal entity incurs a "gratuitous benefit" subject to 15% corporate income tax. As a result, despite the absence of real cash payments, taxes are charged on both sides. This creates an additional burden on business and forms risks, especially for small and medium-sized enterprises.

Problems and contradictions: the main difficulty

The main problem is that no money is received within the framework of a free lease, but taxes are still accrued. The question arises: how correct is such taxation? Here, it is worth recalling the principle of the presumption of the taxpayer's rightness (Article 13 of the Tax Code): all irremediable contradictions should be interpreted in their favor. However, in practice, entrepreneurs face aggressive interpretation by the tax authorities.

Expert position of TURANOS

TURANOS is certain: the problem lies not in the legal norms, but in an overly rigid interpretation. Automatically assuming that "free" means "there is income" is debatable and often unfair to business. This is felt particularly sharply in small businesses, where additional taxes can become a serious obstacle to development.

Practical recommendations: how to minimize tax risks?

To avoid unpleasant surprises, it is worth acting in advance: Do not leave a "free lease" as it is — draw up a contract with a minimum rate; Evaluate and plan tax risks in advance; Stay ahead of the curve: consult with experts to avoid additional assessments; Choose transparent schemes and document all terms of property transfer.

Why is TURANOS a reliable partner for your business?

Working with TURANOS is more than just accounting. We: Prevent tax risks; Build safe operational schemes for your business; Protect the client before audits — helping to avoid additional assessments and sanctions; Provide practical recommendations on drafting lease agreements, including free options. Our team knows how to effectively minimize tax risks and ensure peace of mind for the entrepreneur.

Conclusion: act consciously — together with TURANOS!

A free lease does not mean the absence of tax risks. To secure your business, act professionally, follow recommendations, and choose experienced experts. TURANOS is ready to become your partner and protector in matters of tax security.

Contact TURANOS today — get a consultation and minimize your tax risks!