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Uzbekistan may introduce tax on Google, Facebook, Amazon

Finance Materials 18 December 2019 12:49 (UTC +04:00)

BAKU, Azerbaijan, Dec. 18

By Fakhri Vakilov-Trend:

The introduction of the so-called “Google tax” is expected in Uzbekistan, Chairman of Uzbekistan’s State Tax Committee (STC) Behzod Musaev said at a press conference, Trend reports citing Uzbek media.

A new version of the Tax Code, recently approved by the Senate, includes a chapter on the specifics of taxation of foreign legal entities providing electronic services. The code states that if foreign companies sell services in electronic form in Uzbekistan, they are recognized as taxpayers.

Services in electronic form include the provision of rights to use software (including games) and access to search engines, the provision of advertising services on the Internet, services for searching and providing information about potential buyers, storage and processing of information, etc. Among companies providing such services are Internet giants Yandex, Google, Facebook, Alibaba and others.

Musaev noted that the issue of levying a “tax on Google” is now facing all tax authorities in the world.

“It is very difficult to determine the amount of Alibaba, Yandex, Google, Facebook, Amazon, Uber, Booking.com and others’ income, the amount of their commissions and taxation. Foreign countries are fighting today, trying to deduct tax. So far we have gone the other way. We know that our Russian colleagues introduced only VAT on their services," said the head of STC.

In his words, it is difficult to find this texture and the amount of services provided, as they easily change zones and addresses.

According to him, the Tax Code will legislate that such services will be subject to VAT.

Musaev said that so far he cannot name the forecasted amount of tax revenues from “Google tax”.

“Foreign companies have the opportunity to voluntarily register as a payer of value added tax. VAT as an indirect tax actually implies that the consumer is the paying party. That is, a citizen of Uzbekistan buys the service from Google; the company puts on top 15 percent of VAT and sells it. Then Google transfers this amount of VAT to the budget,” he said.

A foreign company will be required to register with the tax authority when opening a permanent establishment in Uzbekistan, but there is also voluntary registration with the tax authority if the opening of a representative office is not planned. Registration is carried out on the basis of an application and other documents on the list approved by the STC. The application shall be submitted no later than 30 calendar days from the date of commencement of the provision of services in electronic form.

“Google tax” is also available in other countries. Since 2016, a law on the payment of VAT on the sale of electronic services has been in force in Russia. The tax is levied on any services sold over the Internet: advertising, selling applications, games, hosting sites, music, movies and others. The first 200 companies began to pay this tax in 2017 - then the Russian budget received $150 million, and in 2018 - $190 million.

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