If corporate profit tax on services at bazaars and shopping complexes is 15 percent, how much is saved and how should the accounts be split?
Decree PF-175 lowers the rate on profit from services provided at bazaars and shopping complexes from 20 percent to 15 percent. How large is the saving, and how does a company with two lines of business allocate its common costs?
Under Presidential Decree PF-175 of 27 August 2026, the corporate profit tax rate on profit from services provided at bazaars and shopping complexes is lowered from 20 percent to 15 percent. The rate applies only to this type of profit. If the company also has other activities, a question arises: which profit belongs to which line of business?
Below we calculate two things: how large the saving is, and how the method of allocating common costs changes the result.
How much are 5 percentage points really worth?
When the rate falls from 20 to 15, the tax decreases not by 5 percent but by a quarter: 5 / 20 = 25%. In other words, out of every 100 soum of profit from this line of business, 15 soum goes to the budget instead of 20.
Example: a company with two lines of business
"Ko'kterak savdo majmuasi" LLC does two kinds of work (amounts are hypothetical): - Line A: providing services in a shopping complex. In the example we assume it falls within the definition in the Decree - Line B: other activity outside the complex, taxed at its own rate
For simplicity, the tax base is taken to equal accounting profit. In practice there may be adjustments under the Tax Code.
| Indicator | Line A | Line B | Total |
|---|---|---|---|
| Revenue | 1 200 000 000 | 800 000 000 | 2 000 000 000 |
| Direct costs | 700 000 000 | 650 000 000 | 1 350 000 000 |
| General administrative expenses (by share of revenue: 60% / 40%) | 90 000 000 | 60 000 000 | 150 000 000 |
| Profit | 410 000 000 | 90 000 000 | 500 000 000 |
Tax on line A:
| Rate | Calculation | Tax |
|---|---|---|
| 20% | 410 000 000 × 20% | 82 000 000 |
| 15% | 410 000 000 × 15% | 61 500 000 |
| Saving | 82 000 000 − 61 500 000 | 20 500 000 |
Check: 20 500 000 / 82 000 000 = 25%, which matches the "quarter" above.
Why does the allocation base matter?
In this example the administrative expenses (the director's salary, the accounting staff's salaries and the office rent) serve both lines of business. The basis on which they are split affects the result. Now let us split the same 150 000 000 soum by headcount: 14 of the 20 employees work in line A, that is 70%.
| Allocation base | Administrative expenses charged to A | Profit of A | Tax of A (15%) |
|---|---|---|---|
| Share of revenue (60%) | 90 000 000 | 410 000 000 | 61 500 000 |
| Headcount (70%) | 105 000 000 | 395 000 000 | 59 250 000 |
The difference is 61 500 000 − 59 250 000 = 2 250 000 soum, that is 15 percent of the 15 000 000 soum moved away from A. But these 15 000 000 soum do not disappear: they move to B and reduce B's profit. That is why the base should be chosen according to the real cause of the cost, not according to which line of business it favours. It is important that you can answer the question "why exactly this base?" with documents during an audit.
How is it recorded in the accounts?
Even if corporate profit tax is calculated separately by line of business, the expense is accumulated in a single account (NAS No. 21, paragraph 434):
| Transaction | Debit | Credit | Amount |
|---|---|---|---|
| Corporate profit tax accrued on line A (on the share-of-revenue base) | 9810 | 6410 | 61 500 000 |
| Corporate profit tax accrued on line B | 9810 | 6410 | At the rate for B |
| 9810 closed at year end | 9910 | 9810 | Total amount |
Practical tips
- From the very start, keep revenue and direct costs by line of business in separate sub-accounts or under an analytical code: splitting them at year end is much harder
- Write the base for allocating common costs into your accounting policy and do not change it during the year
- Check in the official text of the Decree which services fall within its definition and from what date the rate applies; in doubtful cases, ask the tax authority for a written explanation
- State the name of the service precisely in contracts and invoices: the documents should show that it is a "service provided in a bazaar complex"
Test yourself
5 questions on this topic: pick an option or reveal the answer.
Under Presidential Decree PF-175, to what level was the corporate profit tax rate on services of markets and shopping complexes reduced?
Under Article 59 of the Tax Code, at least what share of total annual income must income from social sector activities make up for social sector status to be granted for corporate profit tax purposes?
An individual, Karim, has died. His land tax debt is 6 000 000 soum, the late-payment interest accrued on it is 900 000 soum and the fine is 500 000 soum. The documented value of the inherited property is 10 000 000 soum, and there is one heir. Under Article 94 of the Tax Code, how much must the heir pay on the tax debt?
What is the rate under the simplified VAT procedure introduced by Decree PF-100 for businesses in trade, catering and services?
What is the corporate profit tax rate for an entrepreneur who has chosen the 6% simplified VAT procedure?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- Decree of the President of the Republic of Uzbekistan No. PF-175 dated 27 August 2026 · the corporate profit tax rate on profit from services provided at bazaars and shopping complexes is lowered from 20 percent to 15 percent
- NAS No. 21 "Chart of Accounts", paragraphs 433 and 434 (lines 1 and 2) · corporate profit tax 9810 / 6410; at the end of the period 9910 / 9810
- Example, amounts, allocation bases and calculations · compiled by the author, hypothetical