Effective June 1, 2026, the Decree of the President of the Republic of Uzbekistan “On Creating Even More Favorable Economic and Administrative Conditions for the Growth of Small Business Entities” has been adopted. The document aims to improve the taxation system for small businesses and further stimulate entrepreneurial activity.
Tax and administrative incentives aimed at developing entrepreneurship and the tourism industry:
According to the document, the threshold for small business entities to transition to the general taxation regime has been increased from 1 billion soums to 5 billion soums. This will serve as a crucial factor in supporting business stability and expanding growth opportunities.
Furthermore, a simplified procedure for the payment of Value Added Tax (VAT) is introduced for the trade, services, and tourism sectors, including the hotel industry, public catering, guiding services, and other tourism services. In accordance with the new procedure, entrepreneurs may voluntarily opt to pay VAT at a rate of 6% while being exempted from corporate income tax, or they may choose to continue their operations under the current general regime.
The following procedures have been introduced for public catering entities:
- Simplified registration of certain categories of employees (via the mobile application of the labor authorities) and the disbursement of their salaries;
- A 40% refund of the paid VAT, irrespective of the share of revenue received in cashless form.
A series of amendments are envisaged as part of simplifying VAT administration. Specifically, for low-risk entrepreneurs, an automated refund of negative VAT variance, automation of the bank account opening process, and a reduction in the reporting burden will be implemented.
Additionally, to mitigate administrative pressure on small businesses, the decree provides for the limitation of redundant audits in cases of low tax risk, granting entrepreneurs the opportunity to rectify errors independently, as well as further digitalization and increasing transparency in tax administration.
The Decree also provides for additional incentives starting from January 1, 2027:
- Fees for the right to engage in the retail trade of alcoholic products and the right to realize such products by public catering enterprises shall be unified. The rate of the unified fee is set at 10% of the Base Calculating Amount (BCA);
- When individuals or legal entities lease real estate with a total area exceeding 1,000 square meters to business entities, minimum lease rates shall not apply for taxation purposes, with the exception of the city of Tashkent;
- Small business entities are permitted to deduct expenses incurred for engaging auditing firms and tax consultants in double the actual amount.
Simplified procedure for the calculation and payment of VAT:
From June 1, 2026, until January 1, 2030, economic entities whose primary business activities are public catering, trade, or the provision of services (excluding large taxpayers and enterprises with a state share of 50% or more) are granted the right to voluntarily transition to a simplified procedure for the calculation and payment of VAT. Under this framework:
- The VAT rate is established at 6% relative to all turnovers from the sale of goods (services);
- The corporate income tax rate is established at 0%, with the abolition of the obligation to submit tax returns;
- The right to deduct the amount of VAT paid on acquired goods (services) shall not be granted;
- Existing tax incentives, preferences, and the procedure for refunding a portion of the paid VAT provided under the generally established taxation regime shall not apply. Any accumulated negative VAT variance shall be written off;
- Buyers of goods and services from economic entities applying this simplified procedure retain the right to offset the VAT.
