Nephroplus Subsidiary in Uzbekistan Faces Tax Dispute of ₹14.79 Crore

Nephrocare Health Services Central Asia LLC (NCA), an overseas wholly-owned subsidiary of Nephrocare Health Services Limited, has received an Order on the Review of Tax Audit Results from the Tashkent City Tax Department, Uzbekistan. This order follows a tax audit for the period January 1, 2023, to December 31, 2025, and mandates additional taxes and a penalty.

The Tashkent City Tax Department has determined additional taxes of UZS 20,371,068,018 (approximately ₹16.50 crore), with reductions of UZS 6,167,012,658 (approximately ₹4.99 crore) allowed, resulting in a net additional tax assessment of UZS 14,204,055,360 (approximately ₹11.50 crore). Additionally, a financial penalty of UZS 4,064,086,532 (approximately ₹3.29 crore) has been imposed. The aggregate of the net additional tax assessment and financial penalty amounts to UZS 18,268,141,892 (approximately ₹14.79 crore), excluding applicable late-payment interest.

The additional tax assessment appears to stem from a discrepancy in revenue data used by the Tax Department to determine NCA's eligibility for tax exemption. Uzbekistan's tax framework exempts income from dialysis and related medical services if it constitutes over 90% of total revenue. NCA exclusively provides dialysis services and its audited records indicate revenue from operations predominantly came from these services, exceeding the exemption threshold. The company believes the Tax Department's figures differ from the Ministry of Health's payment data and NCA's audited records, suggesting a data reconciliation issue.

Nephrocare Health Services Limited is of the opinion that NCA continues to satisfy the conditions for the tax exemption. NCA is undertaking steps to reconcile revenue data with the tax department and evaluating legal remedies, including the right to appeal the order. Based on its preliminary assessment, the company believes the order should be set aside or quashed and does not anticipate a material adverse impact on its financial position, operations, or business. The order becomes effective one month after presentation to the taxpayer.