Do tax benefits apply under the simplified VAT procedure? The international treaty exception

The Tax Service published on its official channel an answer to a question: can an entrepreneur using the simplified procedure for calculating and paying VAT use tax benefits and preferences? The answer sets out the general rule and a separate case concerning international treaties.

Short answer

Why is an international treaty an exception?

The Tax Service relies on Article 2 of the Tax Code: if an international treaty of the Republic of Uzbekistan sets taxation rules different from those in tax legislation, the rules of the treaty apply. Based on the answer, the situation of a taxpayer under the simplified procedure depends on the source of the benefit:

1. A benefit provided by the general procedure (a benefit or preference): does not apply under the simplified procedure.
2. A VAT benefit established by an international treaty of the Republic of Uzbekistan: there is a right to use it if the relevant provisions of the treaty apply to the operation and the conditions provided in it are observed.

Practical checklist for the entrepreneur

The table below was prepared by the author; it contains no new legal requirement and only arranges the conditions from the answer.

Example (hypothetical). Zarafshon Metall LLC uses the simplified procedure for calculating and paying VAT. Suppose that for one operation there is a benefit under the general procedure, and for another (if such a treaty exists) a VAT benefit is established by an international treaty of the Republic of Uzbekistan. For the first operation the benefit does not apply. For the second, the benefit can be used, but only after checking that the treaty applies to this operation and the conditions stated in it are met.

Note

The announcement does not specify which international treaties and which operations are meant. Author's advice: in each case, read the text of the treaty separately.