* CONTENTS

1. Purpose of study 2. Key findings and recommendations A. Market price provisions B. Recommendations 3. Analysis A. Transfer pricing taxation provisions i. Current law ii. Recommendations iii. Laws of other countries B. Value Added Tax provisions i. Current law ii. Recommendations iii. Laws of other countries C. Corporate tax and individual income tax provisions 4. Uzbekistan Cabinet Resolutions A. Cabinet Resolution VQL-347/21: B. Cabinet Resolution ID-52585(V-4) 5. Market price (market value) provisions ? ROK, US and UK A. Republic of Korea i. The concept of market price in the tax laws ii. Comparison of the concept of market price and the concept of arm’s length price B. The U.S. i. General Overview of the US Tax Framework ii. Overview of Fair Market Value Concept C. The U.K. i. Taxation of Chargeable Gains Act 1992 ii. Inheritance Tax Act 1984 iii. Income Tax (Trading and Other Income) Act 2005 iv. Value Added Tax Act 1994 6. Anti-avoidance provisions -ROK, U.S., U.K. A. Republic of Korea B. The U.S. C. The U.K.

* SUMMARY

This study is to review and propose amendments to the market price provisions used in transfer pricing and other taxation provisions under the current tax code of Uzbekistan based on a comparative law analysis of the concept in used in other countries.

The current tax code of Uzbekistan stipulates the provisions of arm's length price under the transfer pricing system, that is, the market price. Such provisions allow the market price to be applied to both domestic and foreign transactions for the imposition of tax.

The transfer pricing method provisions for the current transfer pricing tax system are stipulated to be in accordance with the OECD Transfer Pricing Guidelines.

Transactions subject to the transfer pricing provisions are limited to transactions between related parties, but the market price concept originally developed for transfer pricing and stipulated in the transfer pricing provisions can also be applied to all domestic and foreign transactions.

Currently, the State Tax Committee announces the list of market prices for each good and service by region on a monthly basis. The list is also used for taxation purposes other than transfer pricing.

For the sake of this comparative analysis, the tax laws of the Republic of Korea, the United Kingdom, the United States, Australia and Canada have been reviewed.

In general, the arm’s length price provisions may be utilized for the valuation of goods or services if appropriate guidelines for such application are well stipulated in the statutes.

If the current Uzbekistan tax code is reviewed comprehensively, it seems that the application of the arm's length price provisions should be limited to test the transfer pricing of transactions between domestic or foreign related parties.

To use these provisions for other taxation purposes, first, it may be necessary to prepare separate provisions setting forth the requirements and the effect of the application of such arm’s length price provisions.

There seem to be no anti-avoidance rules that require the application of the market price concept under the current tax code.

Inheritance tax and gift tax systems, which would require application of valuation provisions, have not yet been introduced.

It may be necessary to carefully review whether the price list of goods and services announced by the Cabinet Resolutions conforms to the internationally accepted arm's length pricing principle internationally accepted.

To provide a possible tool to tackle the evasion of taxes - especially VAT, a provision making use of government price list system has been suggested in terms of the selection of tax audit cases and the burden of proof for ‘legitimate business reason.’