Uzbekistan Proposes Reducing Digital Labeling Fines

Tashkent, Uzbekistan (UzDaily.com) — Jamshid Urunov, Deputy Business Ombudsman under the President for the Protection of Entrepreneurs’ Rights, proposed revising the calculation of fines under Article 227−1 of the Tax Code, which allows penalties of up to 20% of quarterly revenue for violations of digital labeling rules.

Urunov presented the proposal on 27 March during an open dialogue of the Interagency Commission on WTO Engagement with business representatives. He noted that the current rules place excessive financial pressure on large retail chains and industrial enterprises.

For instance, a labeling violation at a single store could trigger fines based on the total quarterly revenue of all outlets in a network, potentially leading to bankruptcy. He cited Coca-Cola Ichimligi Uzbekistan as an example, where five factories produce up to 15 bottles per second, noting that a 20% revenue fine would be prohibitive.

Deputy Prime Minister Jamshid Khodjaev called the current sanctions excessive and instructed the Tax Committee to study the issue and submit recommendations for adjusting fines. A representative of the tax authority emphasized that overly low penalties do not ensure compliance, but a new system with gradually increasing fines will be implemented starting in 2026.

Article 227−1, effective from 13 June 2022, mandates digital labeling for producers, importers, and sellers of alcohol, tobacco, beverages, pharmaceuticals, and household appliances. Since its introduction, over 1,500 enterprises have been fined more than 735 billion soums under this article.

Previously, following President Shavkat Mirziyoyev’s initiative, the penalties were softened: 2% of quarterly revenue for the first violation and 20% for repeat offenses. From 2026, fines will increase progressively: 0.2% for the first violation, 0.4% for the second, 1% for the third, and 2% for subsequent violations within a year.

The business ombudsman’s initiative aims to reduce bankruptcy risks for entrepreneurs and ensure fair application of tax sanctions while maintaining incentives for compliance with digital labeling rules.