The National Agency for Prospective Projects (NAPP) in Uzbekistan has developed a draft regulation to facilitate the opening of individual investment accounts (IIS), a significant step toward enhancing the local stock market's accessibility for citizens.
The draft regulation outlines the mechanism for citizens to open investment accounts with brokers for purchasing securities traded on the local stock market. According to Article 378 of the Tax Code, a portion of the taxpayer's salary and other income directed into an individual investment account for buying securities will be exempt from personal income tax. The maximum amount eligible for this tax exemption is set at 100 times the minimum wage, amounting to UZS 105mn ($8,317) per year. However, the funds must remain in the account for at least 12 months to qualify for the tax benefit.
The intermediary will then enter into an agreement with the client for opening and maintaining the account. The contract will be valid for one year, during which the client will direct contributions from their income to the IIS. The investment intermediary will manage the account and execute transactions involving securities on behalf of the client.
The investment intermediary can close the IIS upon the client's request or at the end of the contract period. Upon closing the account, the intermediary will calculate any applicable taxes on the investment income and transfer the net profit to the client. This mechanism ensures transparency and proper tax compliance.
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