Uzbek Fiscal Policy Institute Proposes New Tax Rules for Self-Employed
An institute under Uzbekistan's Economy Ministry has proposed introducing a unified tax system for sole proprietors and self-employed workers through phased changes to social tax payments.
Uzbekistan's Institute for Reducing the Shadow Economy, Improving Tax and Customs Administration, and Fiscal Analysis, operating under the Ministry of Economy and Finance, has put forward a proposition to implement a standardized tax framework for both sole proprietors and self-employed individuals. This proposal was unveiled on July 30 during a fiscal dialogue session.
The proponents of this initiative highlighted that current legislation mandates distinct approaches to social tax contributions. As per Article 408 of the Tax Code, sole proprietors are obligated to remit a monthly social tax equivalent to at least one base calculation unit. With the base calculation unit set to increase to 440,000 soums starting September 1, their minimum annual payment will total 5.28 million soums.
In contrast, self-employed individuals operate under a different system. They have the option to voluntarily contribute a social tax equal to one base calculation unit annually to ensure their employment period is recognized in their work record. This translates to approximately 36,700 soums per month, a figure the institute estimates to be roughly 12 times lower than the compulsory payment required from sole proprietors.
The institute noted that international norms typically categorize self-employed individuals under a single umbrella, with mandatory contributions determined by income or the minimum wage, rather than through parallel systems that impose vastly different tax burdens.
Consequently, the proposal advocates for replacing the minimum social tax, currently tied to the base calculation unit, with a payment linked to the minimum wage. This contribution would be fixed at 12% of the minimum monthly wage, aligning with the standard social tax rate stipulated in Article 405 of the Tax Code.
Based on the current minimum monthly wage of 1.36 million soums, the proposed monthly payment would be 163,200 soums, or approximately 1.96 million soums annually. This represents an increase of about 4.45 times compared to the current voluntary annual payment made by self-employed individuals for work record recognition.
The authors of the proposal suggested that these changes should be phased in gradually. Under their proposed framework, the initial monthly payment could be set at around 50,000 soums, with subsequent gradual increases to the target level according to an approved schedule.