Accounting for sole proprietors in Uzbekistan in 2026 has become simpler on the rate and stricter on revenue records. From 1 January 2026, a sole proprietor (individual entrepreneur, YaTT) with annual turnover of up to UZS 1 billion pays turnover tax at 1%, and the fixed personal income tax for sole proprietors has been abolished (Law ZRU-1108 of 25 December 2025). Tax now depends on actual revenue, so every sale must go through a cash register, a bank account or an electronic document. Below we cover the available regimes, reporting, cash registers, hiring staff and when a sole proprietor should become an LLC.
Tax regimes available to sole proprietors in 2026
1% turnover tax: the main regime
The 1% rate applies to sole proprietors and self-employed individuals whose income from sales of goods and services for the tax period does not exceed UZS 1 billion. The rate is the same whether you work through payment organisations' digital platforms or through electronic document flow. From 1 January 2026, reduced turnover tax rate incentives do not apply to sole proprietors on the 1% rate, as the rate is already minimal.
What happened to the fixed tax
Previously, many sole proprietors paid a fixed personal income tax: an amount that did not depend on revenue. From 2026 this regime has been abolished. In practice, tax is now calculated on actual turnover, and the tax authority sees it through online cash register data, bank receipts and electronic invoices. If revenue is understated in your records, the discrepancy will quickly surface in desk control.
General regime with VAT
A sole proprietor on the 1% rate may voluntarily switch to paying VAT and profit tax instead of turnover tax. This makes sense if your clients are large companies that need input VAT to offset. If total income exceeds UZS 1 billion, the right to the 1% rate is lost from the day the threshold is exceeded.
What happens next changed in mid-2026. From 1 June, the threshold for small businesses' mandatory transition to the general tax regime was raised from UZS 1 billion to 12,000 base calculation units (almost UZS 5 billion), and sole proprietors no longer automatically become VAT payers on exceeding UZS 1 billion. A voluntary simplified 6% VAT with zero profit tax was also introduced for catering, retail and services (until 1 January 2030). Which turnover tax rate applies to a sole proprietor with revenue between UZS 1 billion and the new threshold is worth confirming with your accountant before you cross the threshold, not after.
| Parameter | Fixed personal income tax (before 2026) | 1% turnover tax (from 2026) |
|---|---|---|
| Status | Abolished from 1 January 2026 | In force from 1 January 2026 |
| Base | Fixed amount, independent of revenue | Actual income from sales |
| Threshold | — | Up to UZS 1 billion per tax period |
| What matters in records | Proof of eligibility for the fixed regime | Complete revenue records: cash register, bank, e-invoices |
| As the business grows | — | Above UZS 1 billion the 1% rate stops applying; mandatory general regime from 12,000 BRV (from 1 June 2026) |
Bookkeeping and reporting for sole proprietors
A sole proprietor is not required to keep full accounting under standards the way an LLC does, but must record income reliably and be able to support every figure in the return. The minimum set:
- Revenue records. Cash and card sales through an online cash register or virtual cash register, non-cash sales through the bank account, sales to companies with electronic invoices.
- Tax agents. If income comes through payment organisations' digital platforms, those organisations calculate, pay and report the tax for you as tax agents. The tax is recorded on your account with the tax authority, so check it to avoid paying twice.
- Returns. The turnover tax return and, if you have employees, personal income tax and social tax reporting. See each deadline in the 2026 reporting calendar.
- Document retention. Keep contracts, acts, receipts, bank statements and e-invoices for the limitation period: you will need them in an inspection.
If records for past years were kept loosely, it is better to restore them before the tax authority matches your data against bank and cash register data. For more on the regimes, see turnover tax vs VAT.
Online cash registers and virtual cash registers
When accepting payments from customers, a sole proprietor uses an online cash register or a virtual cash register. You may freely choose the model, but it must be listed in the State Register (Cabinet of Ministers Resolution No. 943 of 23 November 2019). Each receipt must contain mandatory details, including a fiscal sign and a QR code. Cash register data flows automatically to the tax authority, and the inspection compares your declared turnover against it. Operating without a cash register or without issuing receipts is one of the most common triggers for a timing survey and an inspection.
Hiring employees
A sole proprietor may hire employees. From that point the entrepreneur has employer obligations:
- Sign an employment contract and register it in the Unified National Labour System (my.mehnat.uz).
- Withhold personal income tax from salaries (12% for residents) and contributions to the individual accumulative pension account (INPS).
- Pay social tax for employees under the procedure set for sole proprietors.
- File personal income tax and social tax reports and keep HR records: orders, timesheets, leave schedules.
Mistakes in HR paperwork are a frequent cause of labour inspection claims. If you have more than two or three employees, it is easier to hand payroll to a payroll outsourcing service.
When a sole proprietor should become an LLC
Switching to an LLC is a business decision, not an obligation. Consider it if:
- annual revenue is approaching UZS 1 billion and the 1% rate will stop applying;
- large clients require you to work with VAT and electronic invoices showing VAT;
- a partner or investor is joining: shares and rights are easier to formalise in an LLC;
- risks are growing: a sole proprietor is liable for business obligations with personal assets, while an LLC participant is liable up to their contribution;
- you plan an activity that requires a legal entity, such as IT Park residency (see IT Park tax benefits).
Before switching, calculate the total burden under both options: taxes, accountant costs, reporting costs. An LLC also brings financial statements, an accounting policy and stricter requirements for primary documents.
How WealthWise helps sole proprietors
We keep revenue and expense records, reconcile cash register and bank data, file returns and monitor your tax account: see bookkeeping services and tax advisory. The Start plan begins at 3,890,000 UZS per month; the exact price depends on transaction volume.
Frequently asked questions
What tax does a sole proprietor pay in Uzbekistan in 2026?
A sole proprietor with annual sales income of up to UZS 1 billion pays turnover tax at 1%. The fixed personal income tax for sole proprietors was abolished from 1 January 2026.
What happens if a sole proprietor's income exceeds UZS 1 billion?
The right to the 1% rate is lost from the day the threshold is exceeded. From 1 June 2026, the mandatory move to the general regime with VAT applies once income exceeds 12,000 BRV (almost UZS 5 billion), so agree how tax is calculated in between with your accountant in advance.
Can a sole proprietor work with VAT?
Yes. A sole proprietor on the 1% rate may voluntarily switch to paying VAT and profit tax if it helps when working with large clients.
Does a sole proprietor need an online cash register?
Yes. Payments from customers are processed through an online or virtual cash register listed in the State Register, and its data goes to the tax authority.
Can a sole proprietor hire employees?
Yes. You must sign an employment contract and register it in my.mehnat.uz, withhold 12% personal income tax and pension contributions, pay social tax and file reports.
This information reflects the rules as of 2026. Tax rules for sole proprietors changed several times in 2026, so check the current version of the Tax Code or consult a specialist before making a decision.