Many international companies operating in e-commerce, information technology, and entertainment sectors, commonly referred to as Internet Companies, began receiving notifications from Uzbekistan's tax authorities at the end of 2024, regarding the payment of value-added tax (VAT) on electronic services provided to individuals and individual entrepreneurs in Uzbekistan. These notifications were issued to both foreign companies that are already registered as VAT payers for electronic services, as well as those that are not yet registered.
According to the government’s official tax website, over 60 Internet Companies are currently registered to pay VAT on electronic services. The tax authorities are reportedly reviewing transactions made via bank cards and comparing these payments with VAT reports on services provided to Uzbek clients. This has led to an increased focus on the VAT rules for electronic services and the registration procedure for foreign Internet Companies.
Since 1 January 2020, Internet Companies have been required to register and pay VAT on electronic services provided to clients in Uzbekistan if the place of supply is deemed to be within the country. Electronic services subject to VAT include:
- Software use rights (e.g., online games) and updates,
- Electronic books, educational materials, graphic images, and music (with or without text), including audiovisual works provided via the Internet,
- Internet advertising services, including ads placed through software or databases operating on the Internet,
- Online platforms facilitating the sale or purchase of goods and services, and
- Other digital services.
It’s important to note that nonresidents providing electronic services to legal entities in Uzbekistan are not required to register or pay VAT. Instead, Uzbek legal entities are obligated to pay VAT using the reverse charge mechanism or withholding, depending on the terms of the contract.
Digital services also encompass services provided by online marketplaces or platforms, where buyers and sellers interact and transact through automated systems. If such services are provided to individuals or individual entrepreneurs in Uzbekistan, VAT may be applicable. Furthermore, foreign intermediaries collecting payments on behalf of nonresident companies may be deemed VAT taxpayers, meaning they could be required to calculate and pay VAT independently.
Nonresident Internet Companies must submit a VAT registration application through Uzbekistan's online platform. The registration form requires several details, including: company name and address, website and official email address, country of registration, other identifying information, services provided, and authorized contact person. The application must also include an extract from the register of legal entities in the country where the nonresident company is registered or another document confirming its legal status.
Internet Companies receiving VAT notifications should seek advice from their tax consultants regarding the applicability of VAT on electronic services, guidance on communicating with the tax authorities of Uzbekistan, and any queries regarding the application of Uzbekistan’s tax rules and VAT registration.
Follow Daryo's official Instagram and Twitter pages to keep current on world news.
Comments (0)