UzbekistanTax Obligations Detailed

In Uzbekistan, employers face various tax obligations, including social tax, corporate income tax, and personal income tax withholding.

Employer Taxes

• Social Tax: The standard social tax rate is 12% of the total payroll. However, specific reduced rates apply:
  • 1% for companies hiring employees from low-income families earning above 1.7 million UZS (from January 1, 2025, to January 1, 2028).
  • 1% for companies hiring students under 30 from schools, colleges, or technical schools for vocational training (from September 1, 2024, to September 1, 2027).
  • 0% exemption for companies hiring foreign teachers (until January 1, 2030).
• Corporate Income Tax (CIT): The CIT rate is 7.5%. Quarterly payments are due by the 20th of the month following the quarter, and the annual payment is due by March 1st of the following year. Advance payments are required for taxpayers with annual turnover exceeding 10 billion UZS by the 23rd of each month.
• Personal Income Tax (PIT) Withholding: Employers must withhold PIT from employee salaries. The general PIT rate is 12%.
• Other Taxes and Contributions: May include pension contributions (0.1% according to source [6])

Employee Taxes and Deductions

• Social Security: Employees contribute 4% of their salary.
• Personal Income Tax (PIT): Taxed at a flat rate of 12% and withheld by the employer.
• Other Deductions: May include unemployment insurance (0.5%), housing loan regime (1%), and employee training contributions (0.5%), according to source [6].

Payroll and Reporting

• Payroll Frequency: Monthly.
• Minimum Wage: 980,000 UZS per month (as of 2025, source [6]).
• Overtime Pay: 200% of the regular hourly rate for hours worked over 40 in a week (source [6]).
• Tax Year: Calendar year (January 1st to December 31st).

Additional Information

• Tax Residency: Foreign individuals becoming tax residents before April 1st must file a tax return for the previous year's income. Those leaving Uzbekistan before February 1st are not required to file a departure tax return (source [8]).
• Subsidiary Setup: Companies looking to establish a presence in Uzbekistan must set up a subsidiary and comply with relevant regulations. Factors to consider include choosing a location, selecting the appropriate legal entity type (e.g., LLC, branch, representative office), and ensuring compliance with local laws.
• Employer of Record (EOR) Services: EOR services can simplify hiring and compliance by managing payroll, taxes, and other HR-related functions for companies expanding into Uzbekistan.

Please note that this information is current as of February 5, 2025, and is subject to change. Consulting with a local tax advisor is always recommended for the most up-to-date and accurate information.

Employee tax deductions in Uzbekistan are calculated based on the employee's gross income and include mandatory contributions for social security and individual income tax.

Social Security Contributions

• Social Tax: Employers contribute 4% of the employee's gross income towards social tax. There is also an individual accumulative pension fund contribution, where employers contribute 0.1% of the employee's gross income, which is deducted from the accrued individual income tax. As of today, foreign citizens without Uzbekistani residency permits are generally exempt from this contribution.

Individual Income Tax (PIT)

• Standard Rate: The standard PIT rate is 12% for tax residents. Non-residents are taxed at a 20% rate. A reduced rate of 6% applies to highly skilled foreign workers.
• Tax Deductions: Several deductions can reduce the taxable income base for PIT calculation. These include obligatory pension fund contributions, educational expenses (for self-education or children under 26 studying in Uzbek higher education institutions), and premiums for long-term life insurance policies from licensed Uzbek insurers.
• Tax Exemptions: Certain income types are exempt from PIT, including business trip allowances (within established norms), employer-paid insurance contributions (obligatory and accumulative), and financial assistance for burial expenses of close relatives.

Additional Considerations

• Minimum Wage: The minimum wage is reviewed and adjusted periodically. As of 2025, the exact figure requires confirmation with official sources.
• Payroll Frequency: Salaries in Uzbekistan are typically paid monthly.
• Deadlines: Monthly tax returns for individual entrepreneurs with employees are due by the 15th of the following month. Annual social tax returns are due by February 15th.
• Reduced Tax Rates: Temporary reductions in social tax and PIT rates are available for specific groups and situations. For example, employers hiring young employees (under 25) may be eligible for social tax reimbursements, and reduced rates may apply to members of low-income families or students under certain conditions. Always verify the latest regulations for current applicability.
• Tax Relief for Job Creation: Tax relief and deferrals are available for businesses outside Tashkent creating new jobs as part of the "20,000 entrepreneurs - 500,000 qualified specialists" program. These benefits include property and land tax reductions or exemptions based on the number of jobs created.

This information pertains to the current tax regulations as of February 5, 2025, and might be subject to change with new legislative updates. Consulting official Uzbek government resources or tax professionals is always recommended for the most accurate and up-to-date details.

In 2025, Uzbekistan's Value Added Tax (VAT) system maintains its standard 12% rate. However, recent legislation has introduced key changes impacting various sectors and exemptions.

VAT Rates and Registration

• Standard Rate: 12% applies to most goods and services.
• Zero Rate (0%): Applies to exports, international transportation, and utilities for private consumers.
• Exemptions: Financial and insurance services, pharmaceuticals, educational services, veterinary services, and certain passenger transport services remain exempt.
• Registration: Businesses making any sales in Uzbekistan, regardless of volume, must register for VAT. Foreign digital service providers serving Uzbek individuals also need to register within 30 days of their first sale.

Filing and Payment

• Frequency: Monthly for most businesses, quarterly for micro-firms and small enterprises, also quarterly for foreign e-service providers.
• Deadlines:
  • Monthly filers: Payment by the 25th of the following month.
  • Quarterly filers: Payment by the 25th of the month following the quarter.
  • Foreign e-service providers: Payment by the 20th day of the month following the reporting quarter.
• Method: Electronic filing is mandatory via the tax authority website.
• Invoices: Required for domestic transactions, with specific information including VAT number, invoice date, itemized services, VAT rate, and the total amount including VAT. Foreign e-service providers do not issue VAT invoices.

Key Changes and Exemptions as of February 5, 2025

• Passenger Transportation: The VAT exemption for passenger transport at unified rates has been removed since July 1, 2025.
• State Property Sales: Exempt from VAT since January 1, 2025.
• Export Documentation: Electronic confirmation from customs authorities now validates export, replacing physical documentation.
• Specific Exemptions: Prosthetic devices and parts (until January 1, 2027), railway container leasing services (November 1, 2024 - January 1, 2026), and educational/laboratory equipment for non-state institutions (until January 1, 2030). Projects by budget organizations with international financial institutions are also VAT-exempt in specified sectors.
• Mobile Communication Services: Excise tax abolished from January 1, 2025.
• Publishing and Printing Enterprises: Exempt from corporate income tax from January 1, 2025, to January 1, 2029.
• Pharmacies and Clinics: From April 1, 2025, pharmacies and clinics will pay VAT, with reporting based on cash register receipts and e-invoices.

Additional Information

• Tax rates for VAT (12%) and corporate income tax (15%) are set to remain stable until January 1, 2028.
• A preferential 1% rate applies to corporate income tax and personal income tax for businesses producing specific goods (knitwear, footwear, leather) under certain social conditions, also valid until January 1, 2028.
• Uzbekistan offers a 10-year stability guarantee against adverse tax law changes for investments over US$5 million.

Uzbekistan's tax incentives are undergoing changes, with some being phased out and new ones introduced to support specific sectors.

Tax Incentives for Specific Sectors

• Renewable Energy: Companies producing solar installations, wind power plants, and small hydroelectric plants may benefit from a 50% reduction in corporate income tax and property tax rates for three years. This incentive applies to existing companies and new companies established before September 1, 2025. As of February 5, 2025, this incentive is no longer available for new companies.
• Information Technology: Tax benefits are available for companies operating within IT parks. These include exemptions from VAT, corporate taxes, and reduced personal income tax rates.
• Textile Industry: As of January 1, 2025, certain tax incentives for textile and knitwear exporters have been abolished. However, exemptions from customs payments (excluding VAT) on imported raw materials like cotton, wool, and synthetic fibers remain in effect for all textile enterprises.
• Leather and Fur Production: Taxpayers engaged in leather, fur, and wool processing, livestock slaughter, and related production activities can benefit from specific tax incentives until January 1, 2026. Details on these incentives require further clarification.

General Tax Incentives

• Free Economic Zones: Several Free Economic Zones (FEZ) offer tax and customs benefits to attract foreign investment. These benefits vary depending on the FEZ and the amount of investment. Consult specific FEZ regulations for more details.
• Investment in Specific Industries: Tax relief is available for production companies in sectors such as chemicals, petrochemicals, engineering, food processing, and alternative energy. Eligibility criteria include minimum investment amounts, foreign ownership requirements, and reinvestment of profits.

Changes and Proposed Changes to Tax Incentives

• Export Incentives: As of January 1, 2025, tax benefits for exporters have been abolished, including the 0% CIT rate for export of goods and services. Exporters now include export income in the turnover tax base.
• Tax Incentives for Certain Sectors: While tax incentives in areas like education, tourism, and fruit and vegetable production have been removed, some sectors such as fisheries management and the silk industry may still benefit from incentives.
• Proposed Tax Changes for 2025-2027: The government has proposed new excise taxes on sugary drinks, a 10% increase in property and land taxes, the repeal of certain VAT benefits, and an increase in profit tax for e-commerce to 10% and turnover tax to 3%. These changes are proposals as of February 5, 2025, and may not yet be in effect.
• Land Tax: As of January 1, 2025, the zero-rate land tax for mulberry groves, orchards, and vineyards has been discontinued and replaced with a 50% discount. The land tax exemption for new orchards, vineyards, and mulberry plantations has also been removed.

Personal Income Tax

• Reduced Rate for Non-Residents: The personal income tax rate for non-residents is 12%, the same as for residents.
• Dividend Income Exemption: Dividend income from shares in joint-stock companies is exempt from PIT for both residents and non-residents until December 31, 2028.

It is important to note that this information is current as of February 5, 2025, and Uzbekistan's tax regulations are subject to change. It is advisable to consult with a tax professional for the latest updates and specific guidance on eligibility and application procedures for tax incentives.