President Shavkat Mirziyoyev, has approved a proposal to raise the revenue threshold at which small business entities must transition to the general tax regime. The announcement was made by the presidential press service.
The president reviewed a presentation outlining proposals to create more favorable economic conditions and a supportive regulatory environment to foster small business growth.
The presentation emphasized that small businesses are a vital cornerstone of the economy, providing employment, securing household incomes, and driving a competitive market environment. In recent years, Uzbekistan has consistently implemented measures to support businesses, lower the tax burden, and simplify public services.
At the same time, discussions revealed that certain existing regulations hinder the natural expansion of companies. Specifically, a simplified tax regime currently applies to small businesses with an annual turnover of up to 1 billion soums. Once a company exceeds this cap, entrepreneurs are required to transition to paying value-added tax (VAT) and corporate income tax.
This 1-billion-soum threshold was originally established in 2019. Over the intervening years, prices have risen significantly. As a result, many business owners approaching the 1-billion-soum limit begin misreporting their financial data, withholding sales receipts, or artificially splitting their business into multiple smaller entities to avoid the transition.
To rectify this issue, effective June 1, 2026, the turnover threshold for small businesses transitioning to the general tax regime will be increased from 1 billion to 5 billion soums.
In 2022, a potential revision of this threshold was also discussed, but the idea was ultimately shelved.
Since January 1, 2019, enterprises with an annual turnover (revenue) exceeding 1 billion soums in the preceding year, or those hitting this threshold mid-year, have been required to transition to the general tax regime, which entails paying Value-Added Tax (VAT) and corporate income tax. Below this cap, business owners are eligible to pay a simplified turnover tax.
According to the Concept for Improving Tax Policy dated June 29, 2018, this 1-billion-soum annual turnover threshold was originally intended to be reviewed at least once every three years.
Under the new changes, entrepreneurs operating in the catering, retail, and service sectors in Uzbekistan will have the option to pay a flat 6% VAT rate with a complete exemption from corporate income tax, or they can choose to remain under the existing general tax regime. Furthermore, businesses in the catering and hospitality industries will be permitted to sell alcohol and tobacco products for cash, and the administrative process for registering certain categories of employees will be streamlined.
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