The draft law consists of 5 articles, providing for amendments and additions to 37 existing articles of the Tax Code and 1 article of the Budget Code.

1. Through amendments and additions to Articles 133 and 261 of the Tax Code, it is established that electronic information from customs authorities confirming export will serve as the basis for value-added tax refunds on the export of goods (services).

Currently, entrepreneurs are required to submit documents stamped by customs authorities at the border to the tax authorities.

2. Through amendments to Articles 243 and 256 of the Tax Code, effective from January 1, 2025:
a) to ensure the value-added chain continuity, the following VAT exemptions are being abolished:
- turnover from the sale of goods by legal entities whose sole participant is a public association of disabled people;
- turnover from services provided for passenger transportation at unified rates.
b) It is being established that turnover from the sale of state property, including vacant land plots not intended for agricultural use, on the basis of ownership rights, will be exempted from VAT.

3. Effective January 1, 2025, the excise tax on mobile communication services (10 percent) is being abolished. Accordingly, amendments are being made to Articles 283, 284, 285, and 286 of the Tax Code.

4. Based on the requirement of the World Trade Organization that excise tax rates must be the same for domestically produced and imported goods, amendments and additions are being made to Articles 289¹ and 289² of the Tax Code to reflect the following:
1) excise tax rates for tobacco products are being equalized. Specifically, the ad valorem component of the excise tax rate (10 percent) is being abolished for filtered and unfiltered cigarettes, papirosas, cigarillos (small cigars), bidis, and kreteks, and the excise tax rate is set per 1,000 units as follows:
a) from January 1, 2025:
- 300,000 UZS per 1,000 units for domestically produced cigarettes;
- 330,000 UZS per 1,000 units for imported cigarettes.
b) from July 1, 2025, it is planned to equalize the excise tax rate for domestically produced and imported cigarettes, at 340,000 UZS per 1,000 units.

Excise tax rates for other tobacco products (such as hookah tobacco, smokable and roll-your-own tobacco, nicotine-containing liquids, and others) are also being increased.

2) from January 1, 2025, the excise tax rate for domestically produced and imported ethanol will be equalized and set at 15,000 UZS per liter.
- ethanol used in grain distillate production will be subject to the excise tax rate established for ethanol. Additionally, it is planned that the initial fraction of ethanol used in the production of technical ethanol will be exempt from excise tax.
3) excise tax rates for vodka, cognac, and other alcoholic products are being increased for domestically produced alcoholic products, while rates for imported ones are being reduced. Specifically:
a) from January 1, 2025:
- the excise tax rate for domestically produced alcoholic products will be indexed by 10 percent, set at 44,000 UZS per liter;
- the tax rate for imported alcoholic products will be reduced to 76,000 UZS per liter (currently 101,500 UZS);
b) excise tax rates for domestically produced and imported natural wines, other wines including vermouth, and beers are also planned to be gradually equalized by increasing rates for domestic production and reducing rates for imports.

5. Due to changes in excise tax rates on petroleum products and other excisable goods, it is proposed to introduce the following amendments and additions to Article 289³ of the Tax Code:
a) effective from April 1, 2025, excise tax rates on petroleum products (gasoline, diesel fuel, aviation kerosene, motor oil), as well as on the sale of gasoline, diesel fuel, and gas to final consumers, will be indexed by 10 percent;
b) the excise tax rate applied to the sale of domestically extracted natural gas will be reduced from 20percent to 12percent, with a similar 12percent excise tax rate set for the sale of imported natural gas to consumers.
c) effective from April 1, 2025:
- an excise tax of 500 UZS per liter will be introduced for non-carbonated sweetened beverages containing sugar, such as iced teas, fruit juices, industrially produced compotes, and other non-carbonated sugary drinks;

Natural fruit and vegetable juices that are naturally sweet (containing fructose, glucose) without added sugar will not be subject to this excise tax.

- the excise tax rate for carbonated drinks containing sweeteners or flavorings but no sugar will be reduced from 500 UZS to 300 UZS per liter. Similarly, an excise tax rate of 300 UZS per liter will be introduced for non-carbonated drinks of the same type.

6. Through amendments and additions to Articles 337 and 467 of the Tax Code, effective from January 1, 2025:
a) in line with World Trade Organization requirements, the zero-rate profit tax and the exclusion from the tax base for turnover tax on income derived from the export of goods (services) will be abolished.
b) for entrepreneurs in the field of e-commerce, the profit tax rate will be set at 10 percent (currently 7.5 percent), and the turnover tax rate at 3 percent (currently 2 percent).

7. Through amendments and additions to Articles 383, 385, and 408 of the Tax Code, the following changes are introduced for individual entrepreneurs from January 1, 2025:
a) the fixed rates of personal income tax for individual entrepreneurs are indexed by 10 percent, and minimum and maximum rates (range) are set based on the type of activity and location.

In this regard, the Councils of People’s Deputies of the Republic of Karakalpakstan, the regions, and the city of Tashkent (currently, district (city) Councils may set coefficients) are granted the authority to determine tax rates based on the level of economic development of the regions.

b) individual entrepreneurs with an annual income of up to 100 million UZS are given the option (voluntarily) to pay personal income tax for their employees either at the general rate (12 percent) or at 50 percent of the fixed rate established for individual entrepreneurs.
c) the social tax rate for employees of individual entrepreneurs operating in markets and trading complexes is reduced from six times of the base calculation amount per year (2.2 million UZS) to one times of the base calculation amount (375,000 UZS).

8. For individuals paying social tax at least the base calculation amount per year (375,000 UZS) to be credited for employment history (such as self-employed people, members of dehkan farms, apprentices in "Master-Apprentice" schools, etc.), the deadline for paying this tax is extended to December 31 of the reporting year instead of December 1.

Accordingly, amendments are made to Article 408 of the Tax Code.

9. Through amendments and additions to Articles 266, 269, 343, 470, and 4701 of the Tax Code, effective from January 1, 2025, fixed rates for turnover tax are set at 30 million UZS per year for entrepreneurs with a turnover of up to 500 million UZS and at 40 million UZS for those with a turnover exceeding 500 million UZS.

The duration of this tax regime is set to end on January 1, 2026.

10. While maintaining the main property tax rate at 1,5 percent for non-residential properties of legal entities and individuals, the minimum value per square meter used to determine the tax base is set as follows:

for Tashkent city – 3.3 million UZS (currently 3 million UZS), for Nukus city and regional centers – 2.2 million UZS (currently 2 million UZS), for other locations – 1.3 million UZS (currently 1.2 million UZS).

Accordingly, amendments are made to Article 412 of the Tax Code.

11. Through amendments to Article 415 of the Tax Code, the reduced tax rate of 0.6 percent on the property of legal entities is set at 0.65 percent through indexing by 10 percent.

The reduced tax rate applies to public railways, main pipelines, communication and power transmission lines, as well as structures that are an integral technological part of these facilities, and immovable property and unfinished construction projects for which a conservation decision has been issued by the Cabinet of Ministers of the Republic of Uzbekistan.

12. Through amendments to Article 422 of the Tax Code, the property tax rates on residential properties for individuals are indexed by 10 percent and set as follows:
a) for houses and apartments with a total area of up to 200 square meters, as well as country cottages located across the republic – 0.34 percent.
b) for houses, apartments, and country cottages located in cities:
- for properties over 200 square meters and up to 500 square meters – 0.45 percent;
- for properties over 500 square meters – 0.6 percent.
c) for houses, apartments, and country cottages with a total area exceeding 200 square meters located in other populated areas – 0.45 percent

13. Through amendments and additions to Article 428 of the Tax Code, effective from January 1, 2025, the tax exemption on land tax for newly established orchards, vineyards, and mulberry plantations held by legal entities is canceled. Instead, a tax benefit is provided by reducing the tax rate by 50 percent.

IIn this case, the preferential period is maintained at five years, and for orchards and vineyards deemed economically inefficient and low-yield by the authorized body, the land tax is calculated at three times of the standard rate.

14. To maintain the stability of local budget revenues and the share of land tax in total budget revenues, amendments to Articles 429 and 437 of the Tax Code introduce an average 10 percent indexation of land tax rates for legal entities and individuals.

Additionally, for land occupied by buildings and structures intended for the production and storage of agricultural products, the land tax for legal entities will be calculated by applying a coefficient of 0.2 to the rate set for non-agricultural land.

15. In order to encourage the efficient use of water resources, prevent the increase in the burden of water taxes on agricultural producers, and ensure that these tax revenues are fully directed to local budget revenues, the following amendments are being made to Article 445 of the Tax Code:
– the rate is indexed by an average of 10 percent for industrial enterprises, power plants, and producers of non-alcoholic and alcoholic products;
– water tax rates for enterprises in other sectors are being equalized to the rate set for industrial enterprises, at 700 UZS per cubic meter for surface water (currently 345 UZS) and 850 UZS (415 UZS) for underground water;
– in order to encourage water conservation, in particular, to reduce water waste, the tax for 1 cubic meter (1,000 liters) of water used for washing cars is being set at 15,000 UZS (15 UZS per liter)
– when water-saving irrigation technologies are applied and the volume of water used for irrigation is determined based on water measuring equipment, it is envisaged that a reduction coefficient of 0.5 will be applied to the tax rate for the use of water resources, and when one of these technologies is introduced, a reduction coefficient of 0.7 will be applied;
– it is envisaged that the tax rate for the use of water resources will be paid with an increasing coefficient of 1.1 for the tax rate if water-saving technologies are not introduced at all.
– it is determined that the tax rate for the use of water resources will be paid with a reduction coefficient of 0.7 for the tax rate when the volume of water taken for fishing is determined based on water measuring equipment;

Also, local councils of districts (cities) are authorized to apply a reduction coefficient of up to 0.7 to the tax rate for the use of water resources, and increasing it by up to 1.5 (with the exception of agriculture, power plants, utility companies and large taxpayers, the list of which is approved by the resolution of the President of the Republic of Uzbekistan).

16. The following amendments and additions are being made to Article 452 of the Tax Code regarding the subsoil tax on non-ore construction materials:
a) while maintaining the 5 percent ad valorem tax rate, the following rates are established for 1 cubic meter:
– for marble – 20,000 UZS;
– for granite – 30,000 UZS;
– for natural ornamental stone – 30,000 UZS;
b) the fixed tax rate for sand and gravel mixtures (including construction sand and sandstones) is being set at 5,000 UZS per cubic meter, with the abolition of the 5 percent ad valorem rate.
 

In addition, the fixed rates set for minerals in the mining and chemical raw materials and other non-ferrous construction materials group are being indexed by 10 percent.

In this regard, the Councils of people’s deputies of districts and cities are authorized to set a coefficient of up to 1.3 times the fixed rates for non-ore construction materials (except for limestone intended for cement production).

17. The following amendments are being made to Article 483 of the Tax Code to provide additional benefits to the population, support production, and improve the investment climate:
a) from January 1, 2025 to January 1, 2028, the social tax rate for hired employees from members of poor families (with a salary of at least 1.7 million UZS) is set at 1 percent;
b) from September 1, 2024 to September 1, 2027, it is determined that personal income tax and social tax for school, college, and technical school students will be paid at the rate of 1 percent;
c) until January 1, 2028, young people (up to 30 years old) who organize mobile shops along highways are exempt from paying taxes for the first 6 months of their activity;
g) taxpayers whose income from publishing and printing activities constitutes at least 90 percent of their total income at the end of the reporting (tax) period are exempt from paying profit tax on this type of activity (excluding interest income) from January 1, 2025 to January 1, 2029.
d) benefits for IT park residents in the form of exemption from paying all taxes, except VAT and personal income tax, are being extended until January 1, 2040 (currently until January 1, 2028);

This benefit applies to legal entities providing IT training services with an export volume of more than 50 percent and more than 50 percent of graduates over the age of 18 are employed by exporting enterprises.

e) from February 1, 2025 to January 1, 2040, the dividend tax for founders of IT park residents with an export volume of more than 50 percent is set at 5 percent (currently 10 percent);
f) from February 1, 2025 to January 1, 2030, non-residents who provide services to IT park residents with an annual export volume exceeding 10 million US dollars are exempt from profit tax.

18. Starting from January 1, 2025, a procedure is being established for the implementation of norms providing for granting and cancelling tax and customs incentives or reducing and increasing the rates of other deductions during the year, starts from the following year. Based on this, an addition is being made to Article 143 of the Budget Code.

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Ministry of Economy and Finance