Accounting for Non-Profit Organizations and Foundations in Uzbekistan: Targeted Funds and Reporting

Where an NGO’s funds come from

Article 29 of Law No. 763-I lists the sources of an NGO’s property:

• entrance and membership fees, if provided for by the charter;
• one-off and regular contributions from founders and members;
• funds and property from foreign states, international and foreign organizations and foreign citizens (added by Law ZRU-1083 of 21.08.2025);
• voluntary property contributions and donations;
• income from business activities used only for statutory purposes;
• other receipts not prohibited by law.

Targeted receipts for tax purposes

For the purposes of the Tax Code of the Republic of Uzbekistan, a non-profit is an entity registered in a non-profit form that does not aim to make a profit and does not distribute income or property among its members (Article 58). Targeted receipts are funds for the maintenance of the non-profit and its statutory activities that the recipient uses for their intended purpose (Article 48). They include, in particular:

• contributions from founders and members, and donations;
• services received free of charge under contracts;
• property received by inheritance;
• budget funds for statutory activities;
• funds and property received for charitable activities;
• rights to use state property free of charge under decisions of state bodies.

Accounts for targeted funds

The chart of accounts (NAS No. 21) assigns group 8800 to targeted receipts: 8810 Grants, 8820 Subsidies, 8830 Membership Dues, 8840 Tax Benefits for Targeted Use and 8890 Other Targeted Receipts (paragraph 366). Analytical records for the 8800 accounts are kept separately by purpose of funds and source of financing (paragraph 373).

Targeted receipts are shown in equity under three conditions: the funds are used for their intended purpose, there are no costs of raising them, and they are not repayable once the conditions are met (paragraph 367).

• when notice of a grant award is received, the amount is credited to 8810 against account 4890 Other Receivables (paragraph 369);
• cash or property received under the grant is debited to cash, capital investment or inventory accounts against 4890;
• a grant in foreign currency is translated into sums at the Central Bank rate on the transaction date (paragraph 369);
• membership dues set by the founding documents are credited to 8830 (paragraph 371).

Profit tax: when targeted funds are exempt

Provided the conditions of Article 58 are met, the following are not taxed: targeted receipts under Article 48, the excess of positive over negative exchange differences, and income from selling goods for religious use (Article 318). Other income of a non-profit is taxed under the general rules.

Expenses attributable to taxable income are determined in one of two ways: in proportion to the share of taxable income in total income, or based on separate tax records of expenses (Article 318).

• without separate records, or if targeted funds (other than budget funds) are misused, they are included in aggregate income and taxed under the general rules;
• Article 318 does not apply to non-profits operating in the social sector;
• NGOs file profit tax returns for the tax period, and no return is required if there was no aggregate income for the period (Article 339).

VAT and turnover tax

Turnover tax does not apply to non-profit organizations, including budget organizations (Article 461 of the Tax Code): non-profits switch to VAT and profit tax from the date of state registration (Article 462). Sales of goods and services within the business activities an NGO may carry on in line with its statutory purposes (Article 31 of Law No. 763-I) are therefore accounted for under the general rules.

Reporting and disclosure

• activity reports to the registering authority, the tax authorities and the statistics authorities (Articles 8 and 33 of Law No. 763-I);
• free access to information on the use of property and funds, including sources and purposes of financing (Article 8);
• quarterly publication of information on the use of funds and property received from foreign sources, and approval of such receipts by the registering authority (Article 8);
• a public foundation must publish an annual report on its activities (Article 12);
• a foundation’s property is used for its statutory purposes and to cover administrative expenses (Article 12).

Checklist for an NGO accountant

• open analytical sub-accounts under 8800 for each grant, donor and programme;
• set the method of allocating expenses between targeted and taxable activities in the accounting policy;
• keep donation agreements and grant agreements with the conditions of use;
• track business income, VAT and profit tax on it separately;
• reconcile the schedule of reports to the justice, tax and statistics authorities and the publications on foreign funds.