Uzbek Fiscal Policy Institute Proposes New Tax Rules for Self-Employed

Tashkent, Uzbekistan (UzDaily.uz) — The Institute for Reducing the Shadow Economy, Improving Tax and Customs Administration, and Fiscal Analysis under Uzbekistan's Ministry of Economy and Finance has proposed introducing a unified taxation system for sole proprietors and self-employed individuals. The initiative was presented on 30 July during a fiscal dialogue.

The authors of the proposal said the current legislation provides different approaches to social tax payments. Under Article 408 of the Tax Code, sole proprietors are required to pay a monthly social tax of no less than one base calculation unit. Following the increase in the base calculation unit to 440,000 soums from 1 September, the minimum annual payment will amount to 5.28 million soums.

A different system applies to self-employed individuals. They may voluntarily pay social tax equal to one base calculation unit per year in order to have their employment period counted toward their work record. On a monthly basis, this amounts to about 36,700 soums, which the institute estimates is around 12 times lower than the mandatory payment required from sole proprietors.

The institute said that international practice generally uses a single category for self-employed individuals, with mandatory contributions calculated based on income or the minimum wage rather than through parallel systems with significantly different tax burdens.

The proposal therefore calls for replacing the minimum social tax linked to the base calculation unit with a payment based on the minimum wage. The contribution would be set at 12% of the minimum monthly wage, matching the standard social tax rate established under Article 405 of the Tax Code.

Based on the current minimum monthly wage of 1.36 million soums, the monthly payment would amount to 163,200 soums, or about 1.96 million soums per year. This is approximately 4.45 times higher than the current voluntary annual payment made by self-employed individuals to have their employment period counted toward their work record.

The authors of the proposal said the changes should be introduced gradually. Under the proposed concept, the monthly payment could initially be set at around 50,000 soums before being gradually increased to the target level according to an approved schedule.