February 3, 2025

Tax Regimes in Uzbekistan

1. Introduction

The tax system of the Republic of Uzbekistan comprises a general tax regime and several special tax regimes designed for specific categories of taxpayers. Depending on the nature, scale, and geographical location of the business, taxpayers can choose a suitable taxation regime.

2. General Tax regime and Special Tax Regimes

The general tax regime requires taxpayers to pay certain taxes from a list of ten specified in Article 17 of the Tax Code of the Republic of Uzbekistan (the“Tax Code”).

Special tax regimes are designated for certain groups of taxpayers, such as small businesses, foreign investors, and participants of the special economic zones (the “SEZ”). These regimes establish unique taxation conditions, often involving tax incentives or reduced tax rates, distinguishing them from the general regime.

The following special tax regimes are established for specific categories of taxpayers:

turnover tax;
special taxation for participants in product-sharing agreements;
special taxation for participants in special economic zones and other specific categories of taxpayers;
special taxation for certain territories of the Republic of Uzbekistan.

3. Turnover Tax

This tax regime covers payment of turnover tax instead of corporate income tax and value-added tax («VAT»). The taxpayers are legal entities and individual entrepreneurs. Turnover tax applies to those whose revenue from goods (services) sales over the past year does not exceed 1 billion sums.

According to Article 161 of the Tax Code, turnover tax does not apply to imports, the production of excisable goods, extraction of minerals, agricultural producers with irrigated areas over 25 hectares, fuel sales, lotteries, participants of simple partnerships responsible for business management, owners of inefficient and unfinished construction projects, construction funded by centralized sources (excluding repairs), alcohol retail, markets, as well as tax consultants, auditors, non-profit organizations, and budgetary institutions

Upon registration, legal entities can choose to immediately switch to turnover tax payment or follow the general tax regime, which includes income tax and VAT. Taxpayers already paying corporate income tax and VAT may switch to turnover tax starting from the next tax period. To transition, legal entities notify the tax authority at their place of tax registration. The object of taxation is the taxpayer’s total income.

4. Special Taxation for Participants in Production – Sharing Agreements

According to Article 475 of the Tax Code, a production–sharing agreement is a contract under which the Republic of Uzbekistan grants a foreign investor, on a compensatory basis and for a specified term, exclusive rights for the exploration, development, and extraction of natural resources at a subsoil site specified in the agreement.

This agreement provides for: (1) accounting and reporting procedures, (2) taxation conditions and other payments, and (3) export procedures for the foreign investor’s share.

Investors, along with their contractors and subcontractors, are exempt from all types of taxes and other mandatory payments associated with exploration and development activities at subsoil sites mentioned in the agreements, per Article 20 of the Law of the Republic of Uzbekistan “On Production – Sharing Agreements” dated December 7, 2001, No. 312 – II.

Investors, except for the activities specified above, pay the taxes listed in Article 17 of the Tax Code. The production-sharing agreement may specify tax rates different from those established by the Tax Code.

Article 476 of the Tax Code establishes specific taxation rules for foreign investors concerning income tax and subsoil tax.

Foreign investors’ income tax separately on income earned from work under the agreement and on income from other activities. The object of taxation for income tax on income from agreement–related activities is the value of profitable production belonging to the foreign investors under the agreement terms, without deductions.

Subsoil use tax for foreign investors is established under the terms of the production-sharing agreement as a percentage of the volume of extracted mineral resources or the value of production output, payable in cash or as part of the extracted resources.

5. Special Taxation for Participants in Special Economic Zones and Specified Taxpayer Categories

According to the statistics of the Agency for Statistical Reforms, as of April 2024, 20 SEZ were operating in Uzbekistan. A special legal regime applies in SEZs, establishing special tax conditions for conducting investment and other business activities.

According to Article 473 of the Tax Code, SEZ participants are exempt from property tax, land tax, and water resource use tax for the following periods based on the investment amount:

from 3 million USD to 5 million USD – 5 years;
from 5 million USD to 10 million USD – 7 years;
10 million USD and above – 10 years.

They are also exempt from income tax for 3 years with investments from 3 to 5 million USD, 5 years with investments from 5 to 15 million USD, and 10 years with investments from 15 million USD and above.

The specified tax incentives only apply to the SEZ participant’s activities mentioned in the Investment Agreement signed between the investors and the SEZ Directorate.

The Tax Code also provides special tax regimes for other categories of taxpayers. For example, legal entities created with direct private foreign investments (investments without state guarantees) and specializing in the production of goods or the provision of services in economic sectors as specified by legislation, are granted tax incentives, including exemptions from land tax, property tax, and water resource use tax, depending on the amount of direct private foreign investment, for a period determined by a Presidential decree.

The Tax Code also establishes special tax regimes for law firms and notaries.

6. Special Taxation for Certain Territories of the Republic of Uzbekistan

Per Article 480¹ of the Tax Code, a special taxation regime may be established in certain territories of Uzbekistan, providing for the application of special tax rates. The specific territories of the Republic of Uzbekistan with special tax regimes include: the Sokh district, the Chungara neighborhood of the Rishtan district, as well as the neighborhoods of Shakhimardan, Yordan, and the Tashtepa Street — 2 in the neighborhood of Khosilot in the Fergana district of the Fergana region. Most of these territories are considered exclaves.

Reduced tax rates are effective in these territories. Income tax is set at 1% and applies to organizations registered and operating in these territories. Personal income tax (“PIT”) is also set at 1% and applies to labor income. For entrepreneurs, PIT is fixed at 25,000 sums (2 USD) per quarter (one quarter equals 3 months).

Social tax for legal entities (excluding budget organizations) is set at 1% of the payroll fund, while for individual entrepreneurs, it is no less than one basic calculation value per year (approx. 30 USD). Turnover tax is set at 1% and applies to revenue from activities in these territories. Additionally, property tax, land tax, and water resources use tax rates are multiplied by a factor of 0.1 for objects located in these territories.

Tax Regimes in Uzbekistan

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