Importing Services from Non-Residents in Uzbekistan: Tax Risks and Compliance Rules

Many companies face significant fines due to a lack of understanding regarding tax obligations when working with foreign contractors. It is crucial to understand the taxation mechanism for imported services to avoid tax assessments during audits.

Common Mistakes When Dealing with Foreign Partners

When paying a foreign contractor, an Uzbek company assumes the obligations of a tax agent. The most frequent issues include:

• Failure to pay VAT and withholding tax after transferring funds abroad.
• Submission of a residency certificate by the non-resident that does not meet the requirements of Article 358 of the Tax Code.
• Failure to register the contract in the EEISVO system.
• Payment of VAT without subsequently claiming it as a tax credit.

Taxation Mechanism for Imported Services

According to Article 241 of the Tax Code of the Republic of Uzbekistan, if the place of service delivery is recognized as Uzbekistan, the buyer incurs two obligations:

1. VAT (Payment Code 29): The rate is 15% of the amount. This amount can later be offset as a credit.

2. Non-resident Income Tax (Payment Code 137): The rate ranges from 10% to 20%. This burden can be reduced to 0% if the counterparty provides a valid residency certificate.

Step-by-Step Registration Guide

Analytics and Practice

According to statistics, more than a third of all tax assessments (38%) are related to residency certificates failing to meet legal standards. Another 27% of errors involve late VAT offsets. A professional approach to foreign economic activity allows companies to avoid these risks and optimize their tax burden.