Uzbekistan moves to tax foreign digital vendors as e-commerce market expands twentyfold

The adjustments introduce strict requirements for digital marketplace operators to ensure a level playing field for domestic and international vendors. Senator Erkin Gadoyev, Chairman of the Senate Committee on Budget and Economic Issues, explained that the primary goals are to prevent tax revenue losses in cross-border e-commerce, improve VAT administration, and foster fair competition. He noted that even if a foreign entity is physically located outside the country, it must register with the local tax authorities because the final place of delivery for the goods or services is Uzbekistan.

Under the new regulatory framework, foreign businesses operating via electronic trading platforms, representative offices, or local dealer agreements can use these domestic entities as their sales or tax agents. In such cases, the local partners will carry the legal obligations and responsibilities stipulated by tax legislation. If a foreign firm sells products directly to Uzbek consumers without a local intermediary, the VAT will be calculated and collected based on the actual value of the transaction.

Statistical data shared during the Senate session highlights the urgent need for updated regulations. Over the past eight years, the e-commerce market in Uzbekistan has grown twentyfold, reaching an estimated value of $1.3 billion, with the number of digital platforms surpassing 90. Major international platforms like Yandex, Ozon, and Wildberries have already established legal entities or branches in the country, alongside more than 70 national digital platforms, including Uzum, Sello, and Zood Mall.

The scale of international delivery imports has also surged significantly. In 2024 alone, international courier shipments brought goods worth $167.5 million into the country. Approximately 400,000 individuals placed a combined total of 3.23 million orders. Notably, a small segment of 1,994 buyers made more than 100 orders each, accounting for a total value of nearly $2 million.

The Senate cited the local operations of Wildberries as a benchmark for compliance. The company established a domestic subsidiary named WB INT EXPORT, which contributed UZS 51.2 billion in total taxes between 2022 and 2024. Out of this total contribution, UZS 42.8 billion was paid specifically as value added tax.

Beyond taxation, the approved document updates the Law on Electronic Commerce by legalizing modern digital operations and integrating clear definitions into the legal structure. The law now formally defines terms such as "electronic trading platform", "order aggregator operator", "order aggregator", "digital streaming service", "digital streaming service operator", and "cross-border electronic commerce".

Operators of electronic trading platforms will bear specific statutory duties moving forward. They must verify the accuracy of the information provided on their networks, maintain strict personal data privacy, and fulfill all data security and cybersecurity protocols during payment operations. Furthermore, the legislation defines specific guidelines for cross-border transactions, requiring all electronic commerce participants to process settlements exclusively through designated bank accounts.