How should a new business partner be checked before signing a contract?
A cheap offer may have a sham company behind it. Such a partner puts your VAT and expenses at risk. A checklist and one cautionary story.
Shahlo is an accountant at a construction firm. One day the procurement department came back with a new supplier: rebar much cheaper than on the market, documents "all in order". Before signing the contract, Shahlo set aside an hour to check the company. That one hour later saved the firm from a big problem.
Why does a partner matter for tax?
The supplier gives you an invoice. On the basis of this document you credit VAT and deduct the expense from the tax base. If it later turns out that the supplier was not actually operating and the transaction existed only on paper, the tax authority may: - refuse to accept the VAT you credited - exclude the expense from the tax base - charge late payment interest (penya) on the underpaid tax
In other words, someone else's fault ends up coming out of your pocket.
What should be checked?
| What is checked | Why it matters |
|---|---|
| TIN and state registration | Shows that the company really exists and is active |
| VAT payer status (if you intend to credit VAT) | VAT on an invoice from a company that is not a VAT payer cannot be credited by you |
| Director and founders | If one person heads dozens of companies, this is a warning sign |
| Actual address and warehouse | You need to know where the goods will be shipped from |
| Authority of the person signing the contract | If it is not the director, ask for a power of attorney |
| Documents confirming you actually received the goods | Waybill, acceptance certificate, warehouse receipt: proof that the transaction was real |
| Payment method | Only through the bank, to the account number stated in the contract |
What did Shahlo notice?
The company had been registered three months earlier, and the address given turned out to be an ordinary residential flat. The director also turned out to be the director of several other companies. Shahlo wrote an opinion against the contract, and the firm stayed with its familiar, reliable supplier.
Half a year later, a number of companies that had worked with that "cheap" firm began receiving questions from the tax authority.
What should be kept after the check?
- The results of the check (with the date)
- A copy of the partner's registration details
- The contract, invoices and all documents confirming that the goods were received
This folder will be the strongest evidence in a tax audit that "we were careful".
Test yourself
5 questions on this topic: pick an option or reveal the answer.
In a pre-audit analysis, the tax authority found a discrepancy in the return of "Sayhun mebel" and sent a notice to its personal account to make a correction. Under the Tax Code, within what period from the day the notice is received must the company submit an amended return or an explanation of the discrepancy?
"Mir texno" LLC is concluding an employment contract with a new employee. Under Article 127 of the Tax Code, what is the rule on the taxpayer identification number (TIN) in an employment contract?
"Yangiyer qog'oz" LLC (a VAT payer) bought raw materials for production. Under Article 266, part 1, clause 2 of the Tax Code, what condition must be met for the input VAT on the purchase to be offset?
"Anhor shisha" LLC delivered glass containers to a buyer and issued an invoice. The parties then agreed to change the price of the delivered goods. Under Article 47 of the Tax Code, what must the seller do?
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?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- Tax Code of the Republic of Uzbekistan · conditions for crediting VAT, requirement for documentary support to deduct expenses; check the current version
- Example and checklist · prepared by the author