Tax Inspectorate demands UzPost pay $2.6 million in VAT

Reportedly, the Interregional Tax Inspectorate – overseen by First Deputy Chairman of the Tax Committee Mubin Mirzayev – issued a protocol in July 2024 following a tax audit, ordering UzPost to pay an additional UZS 26.46 billion in taxes for transit services rendered to foreign firms transporting goods through Uzbekistan.

UzPost disagreed with the order and filed a lawsuit. The Tashkent inter-district and city administrative courts ruled that the tax inspectorate’s demand for VAT in the amount of UZS 26.33 billion and a UZS 5.26 billion fine was unfounded. The courts determined that the points of departure and destination were outside Uzbekistan, meaning a zero VAT rate should apply.

However, on 17 March, the Interregional Tax Inspectorate for Large Taxpayers issued a new order, revising the payable tax amount in line with the court rulings and reducing it by UZS 126.67 million to UZS 26.21 billion. The agency again demanded a fine of UZS 5.24 billion.

UzPost once more filed a lawsuit with the Tashkent inter-district administrative court, which on 1 July upheld the company’s claim and invalidated the inspectorate’s decision to recover the allegedly unpaid VAT.

On 6 August, the appellate instance of the Tashkent City Administrative Court rejected the tax authority’s appeal and upheld the lower court’s decision.

However, on 26 September, the same Tashkent City Administrative Court, acting in a supervisory capacity, overturned both prior rulings and dismissed UzPost’s claim to invalidate the tax authority’s order. The postal operator can now appeal only to the Supreme Court of Uzbekistan.

As a result, UzPost must pay VAT of UZS 26.21 billion and a fine of UZS 5.24 billion – a total of nearly UZS 31.5 billion.

According to UzPost’s official data, the company’s net profit for 2024 was UZS 843.9 million, up 4% from the previous year, while revenue reached UZS 603.4 billion (+58%). In the first half of this year, the average salary increased by 26% year-on-year – from UZS 2.93 million to UZS 3.69 million. The company employs over 7,500 people across 1,602 post offices and 163 postal communication centers.

Background

On 29 July 2024, the Interregional Tax Inspectorate under the supervision of Mubin Mirzayev issued a protocol following a tax audit, requiring UzPost to pay UZS 26.46 billion in additional taxes for transit services provided to foreign companies – including Tayger Layn Post, Clevtrans, Post+ B.V., and Daily Mail Zenith FZE – from 2021 to 2023.

The audit cited Article 224 of the Tax Code, under which incomplete tax payments due to “incorrect calculation or other unlawful actions (or inaction)” are subject to additional tax assessment and a 20% fine on the unpaid amount. Accordingly, UzPost was ordered to pay UZS 26.34 billion in taxes and a UZS 5.26 billion fine.

In response to UzPost’s appeals dated 5 and 30 August 2024, Deputy Minister of Economy and Finance Akhadbek Khaydarov clarified that under Article 263 of the Tax Code, services related to international transportation are subject to a zero VAT rate if either the departure or destination point is outside Uzbekistan and transportation is documented by unified international transport documents. The ministry decided to apply a zero VAT rate to international postal services.

On 17 December 2024, the Tashkent inter-district administrative court ruled in favor of UzPost. Judge Bosit Kamilov declared the tax authority’s demand for VAT and penalties unjustified, confirming that both the origin and destination points were outside Uzbekistan. The court ordered the inspectorate to review the tax calculation and reimburse UzPost UZS 3.78 million.

On 17 February, the appellate instance of the Tashkent City Administrative Court dismissed the tax authority’s appeal and upheld the lower court’s ruling but revoked the order to pay UZS 3.78 million to UzPost.

A month later, on 17 March, the Interregional Tax Inspectorate for Large Taxpayers issued a new order, reducing the additional tax to UZS 26.21 billion and maintaining the fine of UZS 5.24 billion.

A few days later, UzPost appealed to the Business Ombudsman – the Commissioner under the President for the Protection of Entrepreneurs’ Rights – requesting intervention regarding the additional tax claims.

On 26 March, UzPost, represented by CEO Alisher Fayzullayev, filed another lawsuit with the Tashkent inter-district administrative court, calling the tax inspectorate’s demand “illegal” and “baseless.”

Tax authority’s position

In May, the Interregional Tax Inspectorate for Large Taxpayers – under the supervision of Mubin Mirzayev – responded to media reports about its decision to recover more than $2 million from UzPost.

The agency confirmed that a tax audit had been conducted at UzPost in July 2024 concerning incomplete VAT payments for the period 2021–2023. The audit resulted in an additional tax charge of UZS 26.2 billion.

In its decision, the inspectorate cited two articles of the Tax Code allegedly violated by UzPost. Article 238 defines taxable turnover as the sale of goods or services where the place of supply is Uzbekistan. Article 241 states that services related to transportation are deemed to be provided in Uzbekistan if the departure and/or destination point is located within the country.

According to appendices to contracts and service acts with companies such as Daily Mail Zenith FZE (UAE), Post+ B.V. (Netherlands), Tayger Layn Post, and UAB Clevtrans (Lithuania), the place of service was listed as Tashkent. “An international tax avoidance scheme is being used,” the inspectorate concluded.

Following the Tashkent inter-district administrative court’s decision of 17 December 2024, the inspectorate revised UzPost’s tax liability downward – from UZS 26.4 billion to UZS 26.2 billion.

However, the appellate panel of the Tashkent City Administrative Court, in its ruling on 17 February, noted that the contracts with Daily Mail Zenith FZE and Post+ B.V. identified Tashkent as the place of service provision, thus justifying the application of Article 241 of the Tax Code, which recognizes Uzbekistan’s territory as the place of service.

The Interregional Tax Inspectorate also confirmed that a new order was issued to UzPost on 17 March, demanding payment of UZS 26.21 billion in VAT and a UZS 5.24 billion penalty. UzPost filed a new claim with the Tashkent inter-district administrative court to invalidate this decision.

On 28 March, based on UzPost’s request, a new case was opened, and a judicial-tax examination is underway. The inspectorate maintains that its actions are lawful and that supporting documents have been prepared and will be submitted upon request for the court’s expert review.