In pursuance of the decision of the President of the Republic of Uzbekistan from 12 on July 2007 the year № DP-670 “On measures on further improvement of capitalization of banks and activate their participation in investment processes of modernization of the economy”, the Cabinet of Ministers decides:

1. To approve the Regulations on the order of application of benefits for income tax on profits of commercial banks providing loans to the implementation of investment projects, according to the Appendix.

2. The control over the implementation of this resolution shall be assigned to the Deputy Prime Minister of the Republic of Uzbekistan R.S. Azimov and Chairman of the Central Bank of the Republic of Uzbekistan F.M. Mullajanov.

1. This Regulation defines the procedure for the application of tax exemptions, established by paragraph 3 of the decision of the President of the Republic of Uzbekistan from 12 on July 2007 the year No. DP-670 “On measures on further improvement of capitalization of banks and activate their participation in investment processes of modernization of the economy” and provides for the right to commercial banks in the period up to 1 January 2012 the year to reduce the tax base for the tax on the profits on the amount of revenue derived from the provision of loans for a period of more than three years on the implementation of the investment projects on modernization, technical and technological re-equipment and renewal of production in priority sectors of the economy in accordance with the approved target programs.

The present Regulation does not apply to the profits of commercial banks, resulting from the provision of domestic enterprises investment loans on term over three years and aimed at increasing the own capital of banks, according to which the decision of the President of the Republic of Uzbekistan from 15 on April 2005 the year No. DP-56 “On measures for further reform and liberalization of the banking system” provided a separate tax benefit.

2. The purpose of the present Regulation used the following basic concepts:

modernization — work aimed at changing the technological or office purpose of an item of fixed assets, increasing their productivity or improving other quality characteristics;

technical and technological re-equipment — a complex of measures on improvement of technical and economic indicators of the main assets or their individual parts on the basis of the introduction of advanced equipment and technology, mechanization and automation of production, replacement of morally obsolete and physically worn-out equipment to new, more productive. Technical and technological re-equipment includes in itself also the creation of new and expansion of existing production facilities.

3. Under the profit of commercial banks obtained from the provision of loans, is understood:

of loans issued for the expense of borrowed funds — the positive difference (margin) between the interest income of the bank on the loan and interest expenses on these attracted funds;

for groos loans — interest income from these loans of each participant in gross lending;

of loans issued for the expense of own funds — interest income on these loans.

4. Target programs and the list of investment projects of priority sectors of the economy are approved by acts of the President of the Republic of Uzbekistan or the Cabinet of Ministers of the Republic of Uzbekistan.

5. When drawing up the calculation of the tax on profits of legal persons the sum of income on which decreases the tax base is reflected in the corresponding subline of line “Reduction of taxable income in accordance with the regulatory acts” form of the tax reporting of income tax on profits of legal persons.

6. The fact of providing a loan in addition to the loan agreement is also confirmed by the business plan or the feasibility study of the project.

7. Commercial banks perform control of the target using credit borrower.

In the case of improper use by the borrower of loans issued for the indicated purposes, the application of credit benefits shall cease from the date of misuse.

Intended use of credit confirmed by the relevant act, drawn up between the commercial bank and the borrower after admission to the borrower purchased the equipment , or the completion of works on modernization, technical and technological re-equipment.

8. Commercial banks are responsible for the correct application of this Regulation in accordance with the law.

9. Control over the correct application of this Regulation is carried out by the state tax service in the manner prescribed by law.