RESOLUTION OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF UZBEKISTAN, STATE TAX COMMITTEE OF THE REPUBLIC OF UZBEKISTAN, STATE CUSTOMS COMMITTEE OF THE REPUBLIC OF UZBEKISTAN

of April 16, 2004 No. 64, No. 2004-15, No. 01-02\19-22

About approval of the Regulations on the taxation of goods (works, services) delivered and acquired in the territory of the Republic of Uzbekistan at the expense of the borrowed funds raised and guaranteed by the Republic of Uzbekistan within investment projects with participation of the international financial institutions and foreign government financial organizations

According to the Tax code of the Republic of Uzbekistan, article 7 of the Law of the Republic of Uzbekistan "About the State Tax Service" and international treaties and agreements of the Republic of Uzbekistan with the international financial institutions, and also with the foreign government financial Ministry of Finance, State Tax Committee and State Customs Committee of the Republic of Uzbekistan organizations decide:

1. Approve the enclosed Regulations on the taxation of goods (works, services) delivered and acquired in the territory of the Republic of Uzbekistan at the expense of the borrowed funds raised and guaranteed by the Republic of Uzbekistan within investment projects with participation of the international financial institutions and foreign government financial organizations.

2. Enact this Resolution after ten days from the date of its state registration in the Ministry of Justice of the Republic of Uzbekistan.

Approved by the resolution of the Ministry of Finance, State Tax Committee and State Customs Committee of April 16, 2004 No. 64, No. 2004-15 and No. 01-02/19-22

Regulations on the taxation of goods (works, services) delivered and acquired in the territory of the Republic of Uzbekistan at the expense of the borrowed funds raised and guaranteed by the Republic of Uzbekistan within investment projects with participation of the international financial institutions and foreign government financial organizations

This Provision is developed according to the Tax code of the Republic of Uzbekistan, article 7 of the Law of the Republic of Uzbekistan "About the State Tax Service" and the international credit (loan) and (or) warranty agreements and agreements of the Republic of Uzbekistan with the international financial institutions (IBRD, MAR, ABR, the EBRD, IBR, OPEC Fund, etc., further - MFI), and also with the foreign government financial organizations granting on favorable terms the loans (Fund of assistance to economic development of the Republic of Korea, Institute of the official credits of the Kingdom of Spain, the Kuwaiti fund of the Arab economic development, etc., further - ZPFO) and determines procedure for the taxation of goods (works, services) delivered and acquired in the territory of the Republic of Uzbekistan within investment projects with participation of MFI and ZPFO.

1. Article 4 of the Tax Code of the Republic of Uzbekistan provides that if the international treaty of the Republic of Uzbekistan establishes other rules, than those which contain in the specified Code then are applied rules of the international treaty.

2. The borrowed funds provided within credit (loan) and (or) warranty agreements and agreements (further - loan agreements), are not drawn from account for payment of any taxes levied by the Borrower or the Guarantor or in their territory from goods and services or their import, production, acquisition and representation if it is provided in conditions the relevant loan agreements.

3. The main amount of the loan/credit, percent and other commissions added on it are paid without deduction of any taxes levied by the Republic of Uzbekistan, being the Borrower or the Guarantor, in its territory and shall be exempted from them if it makes a reservation in the loan agreement.

4. If provisions of the loan agreement of the Republic of Uzbekistan with MFI and ZPFO provide conditions of exemption from taxes (charges) and customs payments on goods (works, services) acquired at the expense of means of loans, then in this case provisions of such international agreements are applied.

This regulation extends as to imported goods (works, services), and to the goods (works, services) acquired in the territory of the Republic of Uzbekistan at the expense of means of loans of MFI and ZPFO.

At the same time, project participants within implementation of activities at the expense of means of loans of MFI and ZPFO do not pay:

value added tax;

excise tax;

customs duties;

charges in Republican road fund from the cost of the vehicles acquired within the project, the Ministries of Internal Affairs of the Republic of Uzbekistan paid by buyers in case of registration in bodies;

obligatory contributions from products sales amount (works, services) to the off-budget Pension fund, Republican road fund and off-budget fund of development of school education.

The specified taxes (charges) and customs payments are not paid also on goods (works, services) acquired due to joint financing of the Uzbek side if it is stipulated in the loan agreement or in the separate decision of the Government of the Republic of Uzbekistan.

Within implementation of activities at the expense of means of loans of MFI and ZPFO treat project participants:

executive body on the project (Project implementation team or the Project management group, etc.);

the legal persons contractors performing project works, including "on a turn-key basis" in case of delivery of amounts of completed work by them to the customer - to executive body on the project;

legal entities (subcontractors, suppliers) realizing goods (works, services) to executive body on the project, and also the contractors who won the tender for project implementation according to the signed agreements.

5. In case of sales of goods (works, services) within projects implementation by project participants in the invoice the tax amount is not specified value added and the stamp (or the text becomes) "without the value added tax" is put. At the same time, project participants VAT amount, paid in case of acquisition of material resources by them, carry on production costs.

Legal entities (subcontractors, suppliers) realizing goods (works, services) to the contractor who won the tender for project implementation in the invoice make reference to the basic agreement signed by the contractor with executive body on the project.

6. Privileges on customs payments extend to executive body on the project, and also to the contractors who won the tender for project implementation. At the same time for receipt of privilege in customs authorities confirmation of executive body on the project about financing sources within the project is represented.

7. If to the introduction in action of this provision of the company made calculation of taxes and fees without Provision regulations, by this category of payers recalculations on taxes, charges and customs payments are not made and financial sanctions against such companies are not applied.

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