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This legal alert highlights the most important legal developments of December 2018 that affect the Uzbek pharmaceutical industry as a whole and activities of foreign pharmaceutical producers and their representative offices in Uzbekistan in particular.

Changes in tax legislation

The Law introducing the following changes into the Tax Code came into legal force on January 1, 2019:

  • the corporate profits tax rate was reduced to 20% for commercial banks and to 12% for other businesses;
  • the dividends tax rate for residents was reduced from 10% to 5%;
  • the value-added tax with the standard rate of 20% will now applies to much more categories of businesses. With that, legal entities having the gross revenue of no more than UZS 3 bln are entitled to choose the simplified procedure for paying the value added tax. The standard rate of the tax in this case is 7%;
  • lists of deductible and nondeductible expenses for taxation purposes were amended;
  • legal entities were exempted from paying the fixed tax;
  • The way of levying the unified tax payment was changed. This tax is now collected from (1) legal entities having gross revenue of no more than UZS 1 bln; (2) sole entrepreneurs being managing partners in simple partnerships and having gross revenues of no more than UZS 1 bln; (3) family-owned enterprises having gross revenue of no more than UZS 1 bln; (4) sole entrepreneurs having gross revenue exceeding the established untaxed amount, but not more than UZS 1 bln; (5) non-commercial organizations having gross revenue of no more than UZS 1 bln. The standard tax rate has been decreased to 4 %. With that, the property tax, the land tax and the water use tax will now also have to be paid by these categories of taxpayers;
  • insurance contributions to the off-budget pension fund were canceled; whereas the single tax rate on personal income has been set at a flat rate of 12%, equal for all categories of individuals;
  • the excise tax now applies to mobile services as well as the retail sale of gasoline, diesel fuel and gas instead of the tax on the consumption of gasoline, diesel fuel and gas;
  • the State Road Fund was liquated and the relevant payments no longer have to be made.
  • In order to clarify the information on taxable objects and objects related to taxation, the tax authority has received a right, where necessary, but not more often than once a year, to examine and interview a taxpayer for subsequent adjustments.
  • A new type of the tax inspection has been introduced, called a thematic express study. It is carried out by accessing a site based on results of cameral control to confirm the accuracy of the information provided by a taxpayer and the application of tax and customs benefits.

* Law No. ZRU-508 of 24.12.2018

Establishment of new small industrial zones

  • Seven new small industrial zones have been created in the Fergana region where it is planned to establish production of import-substituting and export-oriented types of finished products, materials and components.
  • “Road maps” for specific projects will be developed within 2 months. Immovable state property located in the zones will be available for long-term rent for a period of 10 years with the possibility of subsequent buy out.

* Resolution of the of the Cabinet of Ministers No. 1007 of 12.12.2018

New certification requirements

  • From December 1, 2019, some imported consumer goods, according to the approved list, will be subjected to mandatory certification by organizations of the National Standardization Agency “Uzstandard” and organizations accredited by the Accreditation Centre under the National Agency for Project Management.
  • The certification of products becomes mandatory where technical regulations for products set mandatory safety requirements for these products, including a to be developed technical regulations for the shelf life of medicaments.
  • The Presidential Decree prohibits the import of goods – subjects to the sanitary, epidemiological and phytosanitary control from countries that have poor sanitary, epidemiological and/or phytosanitary situation. The list of these countries will be approved by the Cabinet of Ministers.

* Decree of the President № PP-4059 of 12.12.2018

Creation of national export system

  • The national export support system has been established. The system will assist in rendering informational and financial support to exporters. For these purposes, the Export Promotion Agency under the Ministry of Foreign Trade has been established. It is planned to spend at least USD 15 mln each year on its activities.
  • The National Export-Import Insurance Company Uzbekinvest has been transferred to the Ministry of Foreign Trade. The company will insure export credits and operations.
  • It is provided that embassies of Uzbekistan abroad will establish trade missions.

* Decree of the President No. UP-4075 of 24.12.2018

Compulsory health insurance and financing of medical institutions

  • From April 1, 2019, as an experiment, the introduction of a new system of financing medical organizations will begin in some parts of the country. It is based on the principles of payment for each “case of treatment” and per capita financing. From April 1, 2020, based on the analysis of results of the experiment, it is planned to begin widespread application of the system throughout the country.
  • Also from July 1, 2019, individual health care facilities will be transferred to private parties for outside management based on individual investment project.
  • Starting from January 1, 2021, the compulsory medical insurance will also be phased in.

* Resolution of the President No. UP-5590 of 07.12.2018