Uzbekistan: New support measures for catering and hotels

published on 30 August 2024 | reading time approx. 2 minutes

President of Uzbekistan Shavkat Mirziyoyev met with entrepreneurs in Nukus on 29 August 2024 to announce new support measures for catering and hotel services. The main problems facing these industries, he said, are related to the administration of value-added tax (VAT) and employee records.

Refunding part of VAT in the form of a cashback

From 1 January 2025, catering companies will be refunded a portion of VAT in the form of a cashback. Companies that have 60 percent of their monthly turnover by cashless means will be able to refund 40 percent of VAT as soon as the tax is paid. If the non-cash turnover is less than 60 percent, the amount of the cashback will be reduced to 20 percent.

Profit tax reduction

Profit tax for restaurants and cafes that have switched to paying VAT will be halved. Starting from 1 December 2024, these enterprises will not be required to submit any documents for the receipt of agricultural products purchased for cash.

Simplification of conditions for catering

In the spring and summer seasons, catering enterprises will be allowed to set up tables, chairs and umbrellas in adjacent areas. Restaurants and cafes will also be able to conclude short-term simplified labor contracts with employees.

Support for the hotel business

From 1 October 2024, 20 percent of VAT paid by hotels and tour operators will be returned to them in the form of cashback.

Opinions of entrepreneurs

Restaurant owner Timur Musin noted in February that for catering VAT is paid not on income but on turnover. The 20 percent margin, from which VAT is paid, as well as other taxes and payments, does not allow businesses to operate transparently. He proposed halving the VAT rate for catering businesses from the current 12 percent to 6 percent.

In August 2022, former Deputy Finance Minister Dilshod Sultanov stated that the effect of removing of VAT on a number of products for the purpose of social support of the population had led to a break in the tax chain in the catering sector. He opposed differentiated VAT rates, pointing out that the reduction of this tax or its abolition does not allow to reduce the cost of goods.