Entrepreneurs’ long-standing problems resolved

Problems that had long troubled entrepreneurs and kept restaurant and cafe owners awake at night have been resolved. On May 26, President of Uzbekistan Shavkat Mirziyoyev signed a decree “On creating more favourable economic and administrative conditions for the growth of small business entities.”

Under the decree, several benefits have been introduced for business owners. One of the first changes concerns VAT cashback. Previously, restaurants and cafes had to meet difficult requirements to receive a partial refund of the VAT they paid. Most of their revenue had to come through plastic cards or QR-code payments. If a customer paid in cash, entrepreneurs risked losing the benefit. From June 1, 2026, this unreasonable practice will be abolished. It will no longer matter whether a customer pays in cash or by card. Entrepreneurs will receive a refund equal to 40 percent of the VAT paid directly into their bank accounts.

One of the biggest problems for small businesses, and a key reason behind various schemes, was the 1 billion soum threshold. Once turnover exceeded 1 billion soums, a small entrepreneur was treated as a “large player” and automatically transferred to the general taxation system. Under this system, the company no longer paid turnover tax. Instead, it had to pay 12 percent VAT on sales and 15 percent profit tax on net profit at the end of the year, as well as relevant taxes on buildings, land and employees’ salaries. Accounting under this system had to be highly accurate and fully documented. Today, reaching the 1 billion soum threshold is no longer as difficult as before. As a result, many entrepreneurs deliberately avoided expanding their businesses, closing companies once turnover exceeded 900 million soums and opening new firms in the names of relatives. This will no longer be necessary. The threshold has now been raised to 12,000 times the basic calculation amount, or 5 billion soums.

Hiring workers was another serious challenge for restaurants and cafes. Bringing in five additional waiters for a large one-day event or testing a new employee could become very costly for an entrepreneur. If a new worker was hired on a trial basis and a tax inspection happened to arrive that same day, the employer could almost be treated like an offender. They could be fined heavily for allegedly using undeclared labour.

There is now a solution: a special mobile application from the Ministry of Employment. Workers can be registered by phone on the same day in just a few seconds. If the trial period ends or the employee is not suitable, the process can be closed through the application. Tax inspectors will not be able to impose a fine in such cases.

Another important point concerns entrepreneurs whose turnover has increased and who are required to pay VAT. For accountants, this had become a major burden. Paying 12 percent VAT required properly documenting and accounting for every product, invoice and receipt. If even one receipt was missing, the entrepreneur could end up paying from their own pocket. The state is now offering a completely new simplified VAT system at a rate of 6 percent.

In Uzbekistan, turning a brand into a franchise and opening dozens of branches in the regions used to be very difficult. As soon as a network expanded, the tax burden increased, placing it in the same category as large enterprises and raising the cost of products. The decree opens a “green corridor” for franchise businesses.

Most importantly, the decree places a major barrier against unjustified inspections of entrepreneurs by tax authorities. If the tax system detects an error in a business, inspectors will not immediately arrive for an inspection. The entrepreneur will first be given an opportunity to correct the mistake independently. If the risk amount is up to 500 million soums, a tax audit will not be conducted. If it is up to 100 million soums, no on-site inspection will be carried out. In short, the state is telling entrepreneurs: do not be afraid, do not hide, work openly, and you will be given the opportunity to grow instead of being punished. The choice now belongs to entrepreneurs themselves.

Telegram | Instagram | Facebook | Youtube