Approved on April 20, 1997 by the Ministry of Finance of the Republic of Uzbekistan, State tax committee of the Republic of Uzbekistan of April 16, 1997, No. 04-02-05/155, No. 97-27, the Deputy prime minister of the Republic of Uzbekistan

Procedure for provision of the tax credits to the companies with the foreign investments making export-oriented and import-substituting products

1. General provisions

1.1. This procedure is developed according to the Presidential decree of the Republic of Uzbekistan of May 31, 1996 "About additional measures for stimulation of creation and activities of the companies with foreign investments" and determines conditions of provision of the tax credit to the companies with the foreign investments making export-oriented and import-substituting products.

1.2. The tax credit represents change of completion date of the tax liability in case of which the taxpayer is given opportunity during certain term to reduce the tax payments which are due from it with subsequent their step-by-step payment.

1.3. The tax credit, according to the above-named Decree, is provided due to delay of receivable payments in the budget for the income tax, the value added tax and the land tax for a period of up to two years.

1.4. The tax credit can be granted as on one and at the same time by three types of tax payments.

1.5. For use of the tax credit the payment in the form of percent, at the rate to equal 30 percent from refunding rate of the Central bank of the Republic of Uzbekistan which are transferred into the budget quarterly, from the total amount of the accrued (delayed) taxes to the 25th following reporting quarter on the Section of budget classification on the income tax is levied from the company (taxpayer).

1.6. The tax credit is granted only to those companies which have no current debt to the budget for taxes on date of registration of the credit.

In exceptional cases, when the debt to the budget formed for the reasons, independent of the companies, the tax credits can be granted to such companies with the permission of the Cabinet of Ministers.

1.7. The means released from the taxation shall be aimed at the development and expansion of production of export-oriented and import-substituting products.

1.8. The right to use of the tax credit arises at the company as a result of the conclusion of the agreement on provision of the tax credit not earlier than signature date of the agreement.

2. Procedure for provision and registration of the tax credit

2.1. The decision on provision of the tax credit is made by the Ministry of Finance of the Republic of Uzbekistan.

2.2. The basis for consideration of question of provision of the tax credit is the statement of the company with which the following documents shall be at the same time submitted:

- the certificate, confirmatory that the company makes export-oriented and import-substituting products, issued in accordance with the established procedure by Goskomprognozstat;

- the reference of tax authority in place of registration of the company, that it has no current debt to the budget;

- the feasibility statement with calculations about the amount of taxes of subjects delay, use of financial resources in connection with release from the taxation and loan repayment sources.

The specified data shall be provided to the relevant industry Managements of the Ministry of Finance of the Republic of Uzbekistan.

2.3. Branch management on the basis of the analysis of the relevant documents submits for approval of the Minister of Finance the conclusion, for the receipt of the tax credit approved with the Head budget department, Management of tax policy, the supervising Deputy Ministers of Finance and the State Tax Committee of the Republic of Uzbekistan.

2.4. The conclusion approved by the Minister of Finance is the basis for the conclusion with the company of the agreement on provision of the tax credit.

2.5. The agreement on loan granting is constituted in triplicate, the first copy remains in the Head budget department (the copy in branch management), the second is given to the company, and third goes to the State Tax Committee, for preparation of the corresponding instructions to tax authorities in place of registration of the company.

The standard form of the agreement is applied.

3. The termination of validity about provision of the tax credit

3.1. The contract is withdrawn on provision of the tax credit:

a) on expiration of the contract;

b) in case of early payment by the taxpayer of all amount of the tax credit and the corresponding percent;

c) in case of breach of agreement about provision of the tax credit regarding adherence to deadlines of payment of the amounts of the tax credit and receivable percent;

d) in case of the factual determination of inappropriate use of means of the tax credit and other conditions provided by the agreement.

3.2. The decision on early termination of validity on provision of the tax credit is made by the Ministry of Finance of the Republic of Uzbekistan, on provision of tax authorities.

3.3. Notices on agreement cancelation on provision of the tax credit goes the Head budget department of the Ministry of Finance to the payer (borrower) no later than 5 working days from the date of decision making.

The copy of this decision goes to the State Tax Committee for preparation of the corresponding instructions by it to tax authorities in place of registration of the company.

3.4. In case of early termination of validity about provision of the tax credit, except subitems and and, provided in Item

3.1., the borrower (payer) shall within 30 days from the date of receipt of the notice on agreement cancelation pay all the amounts of taxes unpaid earlier, and also percent for outstanding amounts of taxes on refunding rate of the Central bank of the Republic of Uzbekistan, at the time of termination of validity about the tax credit irrespective of the fact which the size of percent was provided by the agreement, and penalty fee for the untimely tax payment established by the tax legislation.

If the company made interest payment for use of the tax credit under the terms of the agreement, then the amount of paid interests is considered in case of their charge according to the above-named procedure.

3.5. In case of failure to carry out by the taxpayer with which the agreement on provision of the tax credit is terminated ahead of schedule requirements of Item 3.4. the tax authority in the place of its accounting collects the amounts which are due to payment, including percent and penalty fee, in indisputable procedure.

3.6. In case of insufficiency of money on accounts of the taxpayer the tax authority turns claim to property of debtor enterprise and uses other stipulated by the legislation measures for ensuring receipt of funds in the budget.

4. Accounting treatment for the amounts, tax credit, its repayment and interest payment

4.1. The companies which are granted the tax credit in accordance with the established procedure charge and represent to tax authorities calculations for the income taxes, on value added and on the land tax.

4.2. The lamenting taxes in the budget, are quarterly enlisted on types of tax into separate sub-accounts of account 89 "Reserves of the forthcoming expenses and payments" by posting:

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