At the end of 2024, numerous international companies operating in e-commerce, information technology, and entertainment (Internet Companies) reportedly received notifications from the tax authorities of the Republic of Uzbekistan regarding the payment of value-added tax (VAT) on electronically supplied services (Electronic Services) provided to individuals and individual entrepreneurs in Uzbekistan.¹ These notifications have been issued to both foreign companies registered as VAT payers for Electronic Services and those that have not been registered.

According to the government website https://tax.uz/en, more than 60 Internet Companies are currently registered as payers of VAT on Electronic Services. Tax authorities reportedly are reviewing payments made with bank cards and, if the name of an international Internet Company is found in the payment description, they compare the payment amounts with the submitted VAT reports on Electronic Services. Given this trend, it is important to keep in mind the VAT rules for Electronic Services and the taxpayer registration procedure for foreign Internet Companies.

This Alert takes a brief look at the Uzbekistan taxation of Internet Companies providing services to residents.

General provisions

Since 1 January 2020, Internet Companies have been required to register and pay VAT on Electronic Services in Uzbekistan (if the place of supply of Electronic Services is deemed to be Uzbekistan). Electronic Services subject to these rules include:

• Granting rights to use software (including on-line games), as well as databases, their updates, and additional functionalities provided via the Internet, including by remote access
• Granting rights to use electronic books (editions) and other electronic publications, informational and educational materials, graphic images, musical works with or without text, audiovisual works, including by providing remote access to them for viewing or listening via the Internet
• Providing advertising services on the Internet, including using software for computers and databases operating on the Internet, as well as providing advertising space and time for ads on the Internet
• Providing services for placing offers to purchase (or sell) goods (or services) and property rights on the Internet
• Providing certain other services

Nonresidents providing Electronic Services to legal entities are not required to register and pay VAT in Uzbekistan. Instead, Uzbek legal entities are required to independently pay VAT using the reverse charge mechanism (or withholding, depending on the contractual terms).

Online marketplaces and platforms

The definition of digital services includes providing technical, organizational, informational and other capabilities via the Internet, using information technologies and systems to establish contacts and conclude transactions between the sellers and the buyers (including providing an online trading platform or marketplace where potential clients offer their prices through automated procedures, and parties are informed of sales through automatically generated messages).

Thus, services provided by online marketplaces and platforms may be subject to VAT (if provided to Uzbek individuals and individual entrepreneurs). If nonresidents provide Electronic Services through nonresident intermediaries collecting money from Uzbek individuals and individual entrepreneurs based on commission, agency or other similar agreements with the supplier, such foreign intermediary entity may be deemed a taxpayer for VAT purposes and could be required to independently calculate and pay VAT.

Registration procedure

Internet Companies must submit to the tax authorities relevant notification for VAT registration via the online platform website (https://tax.uz/en). The VAT registration application submitted via the platform is required to include the following information with regard to the company:

• Name
• Address
• Website
• Official email address
• Country of registration
• Other identifying information
• Services provided
• Authorized person

Additionally, the application must include an extract from the register of legal entities of the country where the nonresident is registered (or another document confirming the legal status of the nonresident in its country).

Implications

Affected entities should consider contacting their tax advisor for more information and assistance regarding:

• Applicability of VAT on Electronic Services to the company
• Assistance communicating with and responding to the tax authorities of Uzbekistan
• Formulating relevant queries for regulatory authorities (e.g., clarifications on the application of legislative rules)