Uzbekistan to Raise Tax Threshold for Small Businesses to Nearly $417,000

Uzbekistan is significantly increasing the turnover threshold for small businesses to be subject to value-added tax (VAT) and corporate income tax, a move designed to foster entrepreneurship and ease regulatory pressures. Starting June 1, 2026, businesses will only be required to pay these taxes once their annual turnover exceeds 5 billion Uzbek soums (nearly $417,000), a substantial jump from the current limit of 1 billion soums (about $83,400).

This adjustment comes as the existing 2019 threshold has become increasingly challenging for businesses to navigate. Rising prices have reportedly led some companies approaching the limit to underreport their earnings, avoid issuing receipts, or divide their operations into multiple legal entities to remain under the simplified tax system. The government acknowledges the vital role small businesses play in job creation, income generation, and fostering competition within Uzbekistan's economy.

Beyond the main threshold increase, the government is introducing other tax incentives. Entrepreneurs in the catering, retail, and services sectors will have the option to pay a reduced VAT rate of 6% while being exempt from corporate income tax, or they can continue with the existing tax system. Furthermore, authorities plan to simplify employment procedures for certain worker categories and allow catering and hotel businesses to sell alcohol and tobacco products for cash.

These measures are part of a broader effort to improve the regulatory environment and create more favorable economic conditions for small businesses. The government has previously implemented various support measures, including reducing the tax burden and simplifying access to public services, but recognized that some existing rules hindered business growth. The revised threshold aims to provide more breathing room for expansion and encourage formalization within the small business sector.