Tax Overpayment in Uzbekistan: Offset or Refund

What a tax overpayment is and how it differs from over-collection

The Tax Code defines an overpaid amount as the positive difference between the tax (penalty interest, fine) paid and the amount actually due. It is determined as of the calculation date, taking into account amounts already offset or refunded (Article 60). In other words, an overpayment is what you paid above your liability, on your own initiative or by mistake.

An over-collected amount is also an overpayment, but one that results from unlawful actions of the tax authorities — for example, when money is debited from your bank account under an erroneous decision (Article 60). Separate rules on the claim period and interest apply to it, set out in Article 105.

• the rules of Chapter 12 also apply to advance and current payments, levies, penalty interest and fines, and extend to tax agents and payers of levies (Article 103);
• the same rules expressly apply to tax, penalty interest and fines paid in error (Article 103);
• offsets and refunds, including accrued interest, are made in the national currency (Article 103).

Offset or refund: what happens to the overpayment

What happens to an overpayment depends on whether the taxpayer has tax arrears. The Code treats as arrears any taxes assessed and not paid on time, including advance and current payments, as well as unpaid financial sanctions and penalty interest (Article 55).

If there are no arrears, the overpayment is refunded or offset against upcoming payments of the same tax or other taxes (Article 103). If there are arrears, the overpayment first goes towards paying them off, and the tax office does this on its own initiative (Article 104). At the taxpayer's request, the overpaid amount may be refunded in full or in part (Article 103).

• 1) against arrears of penalty interest on the same tax;
• 2) against arrears of other taxes and penalty interest on them;
• 3) towards fines for tax offences.

How the tax office offsets an overpayment against arrears

The tax office decides on an offset against arrears within ten days of discovering the overpayment, of signing a joint reconciliation statement (if one was carried out), or of a court decision entering into force (Article 104). You do not have to wait for the inspectorate to notice: the taxpayer may file a written application for an offset, in which case the ten days run from receipt of the application or signing of the reconciliation statement.

It matters when the tax is treated as paid out of the overpayment. The payment obligation is deemed fulfilled from the day the tax office issues its decision to offset the overpaid or over-collected amounts (Article 89). So if a current tax payment is due soon while the overpayment sits under another tax, file the offset application early to avoid penalty interest for the days spent waiting for a decision.

How to get a refund of overpaid tax: procedure and deadlines

A refund is made only on the taxpayer's written application. It may be filed within three years of the date the amount was paid, unless the tax legislation provides otherwise (Article 104). Missing the three-year window is the most common reason an overpayment can no longer be recovered, so old balances on your taxpayer account should be reviewed every year.

Documents can be submitted through the taxpayer's personal account — an online resource on the official website of the Tax Committee (Article 56). A document sent through the personal account is deemed received by the tax office on the day it is sent; one sent by post, five days later (Article 19). The review deadlines run from that date.

• the tax office decides on the refund within ten days of receiving the application or signing the joint reconciliation statement (Article 104);
• the amount itself must be refunded within fifteen days of receipt of the application (Article 104);
• businesses with a high Business Sustainability Rating get shorter deadlines — a decision in two days and a refund in three; this does not apply to VAT, state enterprises or legal entities with a state share of 50 percent or more (Article 104);
• the tax office sends the refund order to the Treasury, which transfers the money in accordance with budget legislation (Article 104);
• if an offset or refund is refused, the tax office must notify the taxpayer within three days of the decision (Article 104).

Reconciling settlements with the tax office: where to start

Before filing an application, make sure the overpayment really exists and has not been absorbed by assessments you are unaware of. Where there are signs of a possible overpayment, a joint reconciliation of settlements for taxes, penalty interest and fines may be carried out at the initiative of the tax office or the taxpayer (Article 103). A signed reconciliation statement both confirms the amount and starts the clock on the decision deadlines.

Taxpayers are entitled to obtain the information the tax authorities hold on the fulfilment of their tax obligations (Article 21). In practice, reconciliation starts with a statement of your taxpayer account: assessments under returns and calculations are compared with payment orders to find where the credit balance came from.

• collect payment orders and bank statements for the period in which the overpayment arose;
• match the amounts against the returns and amended calculations you filed;
• check for arrears of penalty interest and fines — the overpayment will go to them first;
• state the tax, amount, period and bank details for the refund in your application.

Interest on late refunds and special cases

If the tax office refunds an overpayment late, interest accrues on the unrefunded amount for every calendar day of delay. The rate equals the Central Bank refinancing rate in effect on the days of delay, and the interest is paid from the budget (Article 104).

The rules on over-collected tax are more favourable to the taxpayer: the application may be filed within three years of the day the taxpayer learned of the over-collection, or of a court decision entering into force (Article 105). Interest accrues provided the taxpayer applies within thirty days of that date — from the day after the collection until the day of the actual offset or refund.

• tax, penalty interest and fines paid in error are refunded on the taxpayer's written request, or on the request of the bank or the Treasury if the error was theirs (Article 104);
• PIT overpaid as determined from the annual total income return is refunded to the individual on application, regardless of where they are registered for tax (Article 105);
• when a legal entity is liquidated, the overpayment is first offset against arrears of other taxes and, if there are none, refunded no later than fifteen days after the application (Article 91);
• on reorganisation, the overpayment is offset against the successor's arrears and, if there are none, refunded to the successor no later than one month after the application (Article 92);
• banks charge no fee for executing orders to refund overpaid (over-collected) taxes, penalty interest and fines (Article 90).