What is a tax incentive and how is it used?
An incentive is legal relief from tax. What forms it takes, who receives it and what to watch out for when using it.
A tax incentive (tax exemption or relief; in Uzbek, "soliq imtiyozi") is relief that the law grants to certain taxpayers. Its purpose is to support industries the state wants to develop or particular social groups.
What forms can an incentive take?
The form, size and conditions of each incentive are set out in the relevant article of the Tax Code. The result is always the same: thanks to the incentive, the taxpayer pays less tax than it would without it, or none at all. So before applying one, always read the article itself, not a retelling of it.
What should you watch out for when using an incentive?
- The incentive must be expressly set out in law; "I heard about it" is not enough
- It often comes with conditions: type of activity, region, number of employees, time period
- You may be required to use the funds saved through the incentive for a specific purpose
- If a condition is breached, the incentive may be cancelled and the tax recalculated
- Correctly disclose the use of the incentive in your tax return
A real-life example
Laylo opa, who opened a sewing workshop, heard about an incentive. Together with her accountant she checked the conditions in the Tax Code and established that her workshop qualified. Before applying the incentive, she documented that all the conditions were met.
Test yourself
5 questions on this topic: pick an option or reveal the answer.
In 2027, "Shahrisabz qandolat" LLC submitted its profit tax return for 2026 to the tax authority. Under Article 84, part 1, of the Tax Code (assume no other rule applies), until at least what date must it keep this return and its attachments?
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?
"Kumush ip" LLC accrued a dividend of 40 000 000 soum to its participant Malika Rustamova, a resident of Uzbekistan, on her share in the charter capital (the LLC does not issue shares; Malika does not belong to a special category granted a tax benefit). Under the Tax Code, how much personal income tax is withheld from this dividend?
Under the Tax Code, what are the tax period and the reporting period for corporate profit tax?
"Sayram choy" LLC accrued dividends of 30 000 000 soum to an individual who is its participant and a non-resident of Uzbekistan (assume no relief under an international treaty applies). Applying the rate in Article 382 of the Tax Code, how much personal income tax is withheld at source?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- Tax Code of the Republic of Uzbekistan · tax incentives; check the specific incentives and conditions here