Tashkent, Uzbekistan (UzDaily.com) -- At a meeting of the Legislative Chamber on 9 December, a draft law “On Amendments and Additions to the Tax Code of the Republic of Uzbekistan” was presented in the second reading.

In the Presidential Decree from 29 June 2018 “On the Concept for Improving the Tax Policy of the Republic of Uzbekistan”, special attention is paid to the consistent reduction of the tax burden, simplification of the tax system and improvement of tax administration, as well as the resolution of a number of problems.

In his Address to the Oliy Majlis on 28 December 2018, the Head of State emphasized that the new version of the Tax Code should stimulate bona fide taxpayers who are the backbone of the country's development and strictly punish those who carry out activities in the “shadow”. Moreover, our citizens should be interested in the timely payment of taxes instead of tax evasion.

The creation of a new tax system was based on such basic principles as equality, simplicity, clarity and effectiveness. The new version of the draft Law on the Tax Code submitted by the Cabinet of Ministers to the Legislative Chamber of the Oliy Majlis was adopted from a conceptual point of view by deputies in the first reading at a meeting on 26 November. Over the past period, the project was thoroughly discussed and finalized in the factions of all political parties, committees of the lower house of parliament, as well as several times - at meetings of the working group.

The new version of the Tax Code acquires the status of a direct action document with the maximum reduction in it of reference norms, by-laws. It provides for the determination of rates for all types of taxes (excluding excise tax, land tax and tax for the use of water resources).

A number of rules are envisaged to simplify the application of tax legislation to the maximum, eliminate contradictions and conflicts, strengthen protection of the rights and legitimate interests of bona fide taxpayers by improving the forms and mechanisms of tax control, including through the widespread introduction of modern ICTs that provide the most complete coverage and accounting objects of taxation and taxpayers.

A risk analysis program is being introduced. In accordance with it, all operating economic entities on the basis of certain criteria, according to the danger, without the human factor are automatically divided into 3 segments (green, yellow, red tracks). Enterprises with a low degree of danger (green track) will not be assigned tax audits and they will be provided with high-level tax services. At that time, enterprises with an average level of danger (yellow track) will be assigned only desk audits and they will be given the opportunity to correct errors in their report. Enterprises with a high degree of danger (red carpet), where cases of tax evasion, falsification of accounting documents and invoices are identified, will be assigned tax audits. As a result, such enterprises will be constantly monitored.

The draft defines the rights and powers of taxpayers and tax authorities. The number of tax audits has been reduced from 13 to 3 types.

A mechanism is being introduced for the timely return of the amount of excessively paid tax and the offset (return) of the amount of excessively taxed tax. That is, the tax authority will pay the penalty to the taxpayer for each delayed day of the return of the tax amount. For foreign tourists, a VAT refund is introduced on the basis of the “Tax free” principle. Payment of VAT is canceled upon the gratuitous transfer of property (services). The single social payment rate is reduced from 25 to 12% for state-owned enterprises with a state share in the authorized capital, of which 50% or more.

The tax authorities will suspend transactions carried out by the taxpayer on bank invoices for a period not exceeding 30 days. A rule has been introduced to record all agreements and other economic relations a taxpayer enters into, based on its actual economic situation, regardless of the form of their legal registration.

The procedure for applying financial sanctions against business entities that have committed a tax offense is being reviewed. The draft Tax Code clarifies the procedure for pre-trial consideration of tax disputes. That is, it envisages the introduction in practice of mandatory pre-trial discussion of tax disputes.

In the process of preparing the draft for the second reading, more than 500 suggestions and opinions were expressed. They were considered by the working group together with the initiators of the law; over 70 editorial and conceptual amendments were introduced to the draft Tax Code in a new edition.

During the discussions, deputies made a number of opinions and suggestions. Following the debate, the draft was put to a vote. The law “On Amendments and Additions to the Tax Code of the Republic of Uzbekistan” was adopted.