Tax burden on sole proprietors and self-employed to be reduced in 2026

According to the draft budget message for 2026–2028 released by the Ministry, the priorities include creating equal conditions for businesses, improving the overall business climate and expanding available incentives.

Starting 1 January 2026, a turnover tax rate of 1% is proposed for individual entrepreneurs and self-employed persons with annual turnover of up to 1 billion UZS.

In line with this, the fixed personal income tax for individual entrepreneurs will be abolished, and self-employed persons whose annual income does not exceed 100 million UZS will be exempt from paying the turnover tax.

For turnover tax payers transitioning for the first time to VAT and corporate income tax, the draft provides:

– exemption from corporate income tax for one year;

– deduction of accounting service expenses of up to 3.5 times the minimum monthly wage per month for six months.

From 1 January 2026, the annual income threshold requiring mandatory monthly advance payments for corporate income tax is expected to be increased from 10 billion UZS to 20 billion UZS.

It is also expected that incentives for corporate income tax will be introduced for a period of up to three years in the form of accelerated depreciation of depreciable fixed assets, based on presidential decisions.

For legal entities, it is planned to introduce a mechanism allowing the reduction of the corporate income tax withheld from dividend payments to non-residents by the amount of corporate income tax previously withheld from dividends paid.

In addition, a new procedure is proposed for legal entities to use tax incentives for property tax and land tax based on performance indicators. The indicators include turnover and number of employees.

This procedure does not apply to legal entities with direct foreign investment, production-sharing agreement participants, non-profit and budgetary organizations, organizations fully owned by associations of persons with disabilities, and legal entities that obtained the status of a special economic zone participant before 1 January 2026.