On September 30, a resolution of the Cabinet of Ministers “On measures to further support grain processing enterprises and producers of unleavened bread” was signed.
As noted in the document, this decision was adopted in order to further support the grain processing enterprises and producers of unleavened bread by the state, as well as to prevent price increases.
In accordance with the resolution, until July 1, 2020, the production and sale of molded bread made from flour produced only using domestic grain is exempted from VAT.
What is the essence of the introduced norm, what is its impact on the production of unleavened bread?
In accordance with paragraph three of the Decree of the President of the Republic of Uzbekistan “On measures to further streamline the provision of tax and customs benefits” of June 27, 2019, to establish a full-fledged value added tax chain and ensure equal conditions for all business entities, it was established that from October 1, 2019 the year, the value-added tax benefits are canceled in relation to agricultural products of own production and food products produced in the Republic of Uzbekistan.
For which food products were benefits provided?
Thanks to the reforms related to the value added tax in order to prevent the rise in prices for food products of domestic production, at the beginning of this year, the government took some measures. For instance,
By a resolution of December 31, 2018, a list of food products manufactured in the Republic of Uzbekistan was approved, the sale of which is exempt from value added tax. Privileges are applied at wholesale and retail sales made by Uzbekistan:
1. Meat (beef, lamb, chicken), as well as animals (livestock and poultry) in live form and products of their slaughter (including their import – until October 1, 2019).
5. The eggs.
6. Rice (all varieties), including imported.
7. Sugar, including imported.
8. Bakery products (in the production and sale)
9. Milk (in the production and sale).
However, this decree has lost its force on October 1, 2019. In this case, the value added tax exemption for bakery products would have to be abolished. In order to prevent price increases until July 1, 2020, the production and sale of molded bread from flour produced only using domestic grain is exempted from VAT. If the manufacturer will produce and sell molded bread from flour made from imported grain, he needs to pay value added tax.
The decree of September 30 preserves the procedure in accordance with which the taxable value added tax turnover on the products of grain processing enterprises is calculated from the revenue volume minus the cost of grain. This procedure can be applied by grain processing enterprises only for the cost of local grain. According to the resolution of the Cabinet of Ministers of August 24, 2018, from September 1, 2018, a procedure was introduced according to which the taxable value added tax turnover on products of grain processing enterprises is calculated from the revenue volume minus the cost of grain (i.e. any grain, including local and imported).
From October 1, 2019, grain processing enterprises that process imported grain, taxed with VAT upon import (import), determine the taxable VAT turnover in the generally established manner.
In accordance with Article 204 of the Tax Code, the tax base is determined on the basis of the value of the goods (work, services) sold without the inclusion of value added tax.
According to the decree of the President of the Republic of Uzbekistan “On measures to further improve the tax policy of the Republic of Uzbekistan” dated September 26, 2019, the value added tax rate
The rate was reduced from 20 to 15 percent.
The norms introduced by the government will contribute to further social support of the population.