Tax status of Permanent Establishments

Information for foreign companies

As the Uzbekistan tax system is developing quickly and prone to frequent changes, we recommend that you use this brochure as a starting point to understand the situation and contact us to discuss any questions or issues you may be facing.

Many foreign companies are involved in projects to upgrade, reconstruct or build facilities in Uzbekistan, which under domestic legislation are recognised as those foreign companies’ Permanent Establishments for taxation purposes.

The term “Permanent Establishment” in Uzbekistan is recognised as any place through which a non-resident carries out business activities in Uzbekistan, including activities performed through an authorised person. For instance, the term incorporates:

• business activities that lasts more than 183 calendar days during any successive twelve-month period;

• any place of activity connected with the produciton of natural resources such as mines, oil and gas wells or quarries;

• any place where activites (including control or supervisory) associated with oil or gas pipelines; the exploration and (or) exploitation of natural resources; the installation, assembly, commissioning, start-up and (or) maintenance of equipment;

• construction, assembly or installation project sites, and services to monitor work progress at these sites;

• any place where activities related to the operation of slot machines (including consoles), computer networks and communication channels, amusements, transport or other infrastructure actvities are performed;

• activities performed through an entity that based on a contract with a non-resident of Uzbekistan represents its interests in Uzbekistan, including by acting in Uzbekistan on behalf of the non-resident, and regularly uses its authority to conclude contracts on behalf of the non-resident of Uzbekistan;

• any place activities related to the production, assembly, packaging or sale of goods.

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This list is not exhaustive and it is worth remembering that double taxation treaties/agreements may contain different definitions of “permanent establishment“.

The term “permanent establishment“ is used solely to determine the an organisaiton’s tax status and has no legal status.

Tax law differentiates between registration and further tax execution responsibilities. For example, based on special government resolutions, companies participating in upgrade or renovation projests are entitled to tax and customs concessions.

However, this does not exempt companies whose activities fall under the definition of “permanent establishment“ from having to register with the authorities.

Tax law stipulates significant financial penalties that may affect overall project viability if registration deadlines are missed.

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