Uzbekistan Considers Zero VAT for Catering Industry

Tashkent, Uzbekistan (UzDaily.com) — Uzbekistan is discussing the potential introduction of a zero value-added tax (VAT) rate for public catering enterprises, subject to the fulfillment of specific conditions. The proposal was raised during an open dialogue with representatives of the gastronomy sector on 21 April.

Chairman of the Tax Committee Farrukh Pulatov stated that the authority is currently studying international experience, including practices applied in Russia.

He noted that in the Russian Federation, a zero VAT rate is applied to catering establishments if they meet a set of criteria, including limits on annual revenue, a required share of income generated from catering services, and minimum wage levels tied to industry benchmarks.

According to Pulatov, the proposed model assumes that entrepreneurs would voluntarily commit to meeting defined obligations in exchange for preferential tax treatment.

“To apply a zero VAT rate, the entrepreneur assumes an obligation. They say: ‘I will ensure revenue of 10 million soums and pay salaries to 20 employees without reducing the established wage level.’ Otherwise, for example, they would pay 12% VAT under the current system.

If we can implement this approach and if most entrepreneurs agree, we could introduce it. That is, we could amend the legislation to apply two different tax rates,” he said.

Under the proposed framework, businesses would be able to choose between the standard VAT rate and a preferential regime. To qualify for the zero rate, companies would need to meet requirements related to turnover and staffing levels. In this case, the model also preserves a 12% social tax and a 15% profit tax.

Deputy Chairman of the Tax Committee Jahongir Abdiev noted that only a small share of existing tax incentives are truly targeted. He suggested that tax benefits should be viewed as instruments linked to the fulfillment of specific obligations by businesses.

“Please consult on this matter. We are raising it because this is an open dialogue. If it is feasible, let us gather, discuss it again, and try to launch it. If it works and satisfies everyone, we will implement it; if not, we will not. We are simply referring to international experience,” Pulatov concluded.