November 2, 2020

Measures to reduce the illicit economy

According to UP-6098 dated 31.10.20, the State is introducing measures to reduce the illicit economy.

In particular, from January 1, 2021:

  1. Until January 1, 2022, the income of enterprises in the field of public catering, which is received from individuals through non-cash payments, will not be included in total income. Thus, this income will be subject to the collection of generally established taxes;
  2. Persons engaged in real estate activities will now pay 13% of turnover tax instead of 25%;
  3. Construction companies will be able to hire workers on a temporary basis without entering into a contract:
  • Meanwhile, workers’ remuneration will be paid in cash, the amount of which will not exceed 10% of the total amount of the payment Fund for the reporting period (excluding social tax);
  • Construction companies shall also pay personal income tax and social tax;
  • Construction companies shall submit a register of workers hired without a contract, indicating the amounts paid to them, to the tax service;
  • Workers hired without a contract are entitled to social protection in the event of accidents at work.

It was also emphasized that:

  1. business entities have the right to purchase goods and services using corporate cards without entering into a contract, but they must receive invoices or online receipts;
  2. before January 1, 2022, the tax service must notify the Commissioner under the President of the Republic of Uzbekistan for the protection of the rights and legitimate interests of business entities about the appointment of a tax audit.

Moreover, a Special Commission is being created to reduce the illicit economy (hereinafter – the ” Commission») with divisions of territorial commissions. The Commission is responsible for preparing and implementing measures to encourage businesses to “come out of the shadows”. Specifically, the Commission will have to prepare a Strategy to reduce the illicit economy in 2021-2025.

Also, the number of ATMs and other machines for non-cash payments will be increased until January 1, 2021.