Proposals to create favorable conditions for small business growth were reviewed
Uzbekistan
President Shavkat Mirziyoyev reviewed a presentation of proposals to create a more favorable economic and regulatory environment for the growth of small businesses.
Small business is an important sector of the economy, providing employment, income, and a competitive environment. Therefore, in recent years, measures have been consistently implemented to support entrepreneurship, reduce the tax burden, and simplify government services.
However, some existing procedures hinder the natural expansion of businesses. Specifically, if small businesses' turnover does not exceed 1 billion soums, they are eligible for a simplified tax regime. Once they cross this threshold, they are subject to value-added tax and corporate income tax.
This threshold was established in 2019, and prices have increased significantly since then. As a result, some entrepreneurs, approaching the 1 billion soum mark, begin to resort to misrepresenting turnover, failing to issue receipts, or splitting their businesses into several entities.
At the presentation, it was proposed to increase the threshold for small businesses to transition to the general tax regime from 1 billion to 5 billion soums, effective June 1, 2026.
An initiative was also put forward to introduce a simplified procedure for paying value-added tax for the catering, trade, and services sectors. Under the new procedure, entrepreneurs will be able to choose to pay VAT at a rate of 6 percent and be exempt from income tax, or continue operating under the current general tax regime.
This will simplify the process of calculating and paying taxes for small businesses, reduce the administrative burden, and reduce incentives for concealing turnover and artificially splitting businesses.
Difficulties in VAT administration were also analyzed. Taxpayers who have transitioned to VAT double the number of reports they need to submit. In 2025, 77 percent of taxpayer reporting errors were attributable to VAT payers.
In this regard, it is proposed to automatically refund negative VAT differences for low-risk entrepreneurs, abolish the practice of temporarily suspending VAT payer certificates, revise the procedure for mandatory transition to VAT payment on imports, and automate the process of opening bank accounts.
To reduce the administrative burden on small businesses, it is proposed to allow entrepreneurs to independently correct errors and implement a procedure under which tax audits will not be conducted for tax risks of up to 500 million soums, and on-site tax audits will not be conducted for risks of up to 100 million soums.
A number of concessions are also envisaged for the catering and hotel services sector. Specifically, it is proposed to allow the sale of alcoholic and tobacco products in cash, eliminate the requirement for the share of non-cash proceeds when refunding a portion of VAT, and simplify the process for hiring certain employees.
These measures are expected to expand opportunities for legal growth for more than 600,000 small businesses. Increased tax transparency is expected to generate at least 2 trillion soums in additional budget revenue annually.
The head of state approved these proposals and instructed officials to take measures to create favorable and fair conditions for small businesses, encourage them to expand, and strengthen entrepreneurial confidence by simplifying and digitalizing tax administration.
However, some existing procedures hinder the natural expansion of businesses. Specifically, if small businesses' turnover does not exceed 1 billion soums, they are eligible for a simplified tax regime. Once they cross this threshold, they are subject to value-added tax and corporate income tax.
This threshold was established in 2019, and prices have increased significantly since then. As a result, some entrepreneurs, approaching the 1 billion soum mark, begin to resort to misrepresenting turnover, failing to issue receipts, or splitting their businesses into several entities.
At the presentation, it was proposed to increase the threshold for small businesses to transition to the general tax regime from 1 billion to 5 billion soums, effective June 1, 2026.
An initiative was also put forward to introduce a simplified procedure for paying value-added tax for the catering, trade, and services sectors. Under the new procedure, entrepreneurs will be able to choose to pay VAT at a rate of 6 percent and be exempt from income tax, or continue operating under the current general tax regime.
This will simplify the process of calculating and paying taxes for small businesses, reduce the administrative burden, and reduce incentives for concealing turnover and artificially splitting businesses.
Difficulties in VAT administration were also analyzed. Taxpayers who have transitioned to VAT double the number of reports they need to submit. In 2025, 77 percent of taxpayer reporting errors were attributable to VAT payers.
In this regard, it is proposed to automatically refund negative VAT differences for low-risk entrepreneurs, abolish the practice of temporarily suspending VAT payer certificates, revise the procedure for mandatory transition to VAT payment on imports, and automate the process of opening bank accounts.
To reduce the administrative burden on small businesses, it is proposed to allow entrepreneurs to independently correct errors and implement a procedure under which tax audits will not be conducted for tax risks of up to 500 million soums, and on-site tax audits will not be conducted for risks of up to 100 million soums.
A number of concessions are also envisaged for the catering and hotel services sector. Specifically, it is proposed to allow the sale of alcoholic and tobacco products in cash, eliminate the requirement for the share of non-cash proceeds when refunding a portion of VAT, and simplify the process for hiring certain employees.
These measures are expected to expand opportunities for legal growth for more than 600,000 small businesses. Increased tax transparency is expected to generate at least 2 trillion soums in additional budget revenue annually.
The head of state approved these proposals and instructed officials to take measures to create favorable and fair conditions for small businesses, encourage them to expand, and strengthen entrepreneurial confidence by simplifying and digitalizing tax administration.
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