When making a real estate purchase and sale transaction in Uzbekistan, all costs such as tax rates and exemptions should be considered to avoid getting into a sticky situation. It is important for owners and buyers to understand Uzbekistan tax law when settling matters relating to the purchase, renovation or acquisition of a home.
How to determine tax on sale?
As stated in paragraph 4 of Article 375 of the new edition of the Tax Code of Uzbekistan from December 30, 2019, personal income tax is calculated from the difference between the purchase price of the property according to the terms of the sale and purchase agreement and the amount of the alienation transaction (sale of property).
For example, if the apartment according to the papers was purchased for 10 million and sold for 20 million, the tax is calculated from the profit.
When an object is acquired as a result of a gift, inheritance or privatization, the cadastral value of such property is taken into account as the price.
The exception is when the property being sold has been owned by the citizen for not more than three years or 36 calendar months.
Article 378(p.7) of the Tax Code of the Republic of Uzbekistan:
– Gain from the sale of real property owned by the taxpayer under a lease:
– Housing that the owner has owned for less than 36 calendar months:
It should be taken into account that if the property has been owned for a period shorter than three years from the date of purchase, the above benefit no longer applies to the property and taxation is carried out at the standard rate.
Article 378(p.11) of the Tax Code of the Republic of Uzbekistan.
– Income in both monetary and in-kind forms, which was acquired from citizens as a result of receiving an inheritance, gift or remuneration on a gratuitous basis:
– Excluded are: real estate in relations between people who are not related, cars, active securities, shares, shares in the authorized capitals of commercial organizations:
Amounts of tax charges for Uzbek citizens and foreigners
Personal income tax for citizens of RUz is paid at the rate of 12% according to Article 381 of the Tax Code of the Republic of Uzbekistan, and income from the sale of real estate by citizens of other states is taxed at the rate of 20% according to Article 382 of the Tax Code of the Republic of Uzbekistan. It should be noted that the benefits do not apply to foreigners.
As it was said earlier in the example with the sale of an apartment, where the income was ten million and taxes were calculated from it, then according to this analogy, then without taking into account tax benefits, a citizen of Uzbekistan will pay taxes on the amount of 1.2 million of the 10 million profit, and a person who is a non-resident of the country in this case will pay 2 million soum.
It should be emphasized that the tax is paid after the transaction is formalized through a notary office, so it is important to remember that if the apartment being sold is not subject to preferential taxation and the seller is a citizen of Uzbekistan, you may be notified of the need to pay income tax on the property sold despite the fact that the transaction has already taken place. When purchasing real estate from a foreigner, a person may not pay income tax on it. A person purchasing real estate from a foreign citizen, after the registration of the purchase transaction with a notary, must necessarily take with him a certificate of tax payment by the seller (foreigner) for the further procedure of registration of ownership, otherwise the document will not be taken into consideration.