Turnover tax or VAT in 2026: turnover tax (a general rate of 4% of revenue, 1% for entrepreneurs and self-employed persons with income up to UZS 1 billion) is simpler and usually cheaper for businesses with high margins and few VAT-bearing purchases. The general regime — 12% VAT plus 15% profit tax — pays off when you buy a lot with VAT, your customers are VAT payers and margins are thin. From 1 June 2026, turnover tax is available to small businesses with turnover up to 12,000 BCU (about UZS 5 billion); above that, switching to the general regime is mandatory.
Turnover tax vs VAT: regime comparison
| Parameter | Turnover tax | General regime (VAT + profit tax) | Simplified 6% VAT |
|---|---|---|---|
| Rate | 4% (general); 1% for entrepreneurs and self-employed persons with income up to UZS 1 billion; special rates exist | 12% VAT + 15% profit tax | 6% VAT, 0% profit tax |
| Base | Revenue | VAT — value added; profit tax — profit | Entire turnover |
| Input VAT credit | No | Yes | No |
| VAT credit for the buyer | No | Yes | Yes |
| Who can use it | Small businesses with turnover up to 12,000 BCU, except prohibited activities | Everyone | Trade, catering, services; not large taxpayers or companies with 50%+ state ownership |
| Duration | Open-ended while conditions are met | Open-ended | 1 June 2026 to 1 January 2030 |
| Reporting | Turnover tax return (auto-generated) | Monthly VAT return by the 20th; profit tax quarterly plus an annual return | Monthly VAT return; no profit tax return |
Thresholds and rates in 2026
Turnover tax
The general rate is 4% of revenue. The Tax Code sets special rates for certain activities. From 1 January 2026, entrepreneurs and self-employed persons with income up to UZS 1 billion pay 1%; reduced rates for e-commerce were abolished, so it pays 4%.
Threshold
From 1 June 2026, the threshold for the general regime is 12,000 BCU instead of UZS 1 billion. In soums it depends on the BCU: about UZS 4.944 billion at a BCU of 412,000 and UZS 5.28 billion at 440,000 (from 1 September 2026). For entrepreneurs, the 1% rate in the Tax Code is still tied to income up to UZS 1 billion, so entrepreneurs earning more should confirm their regime separately.
General regime
VAT is 12% and profit tax 15% (20% for certain sectors such as banks and mobile operators). Companies whose income exceeds UZS 10 billion for the first time may, subject to conditions, apply a profit tax rate reduced by 50%.
When switching to VAT is mandatory
- Threshold exceeded. A small business's turnover has exceeded 12,000 BCU. Entrepreneurs and self-employed persons exceeding UZS 1 billion switch from the day the threshold is exceeded.
- New company. A newly established company that exceeds the threshold moves to VAT and profit tax from the start of the following year.
- Prohibited activity. Turnover tax cannot be used by, among others, producers of excise goods, subsoil users, fuel sellers at filling stations, sellers of pharmaceuticals and medical products, medical service providers, and producers and sellers of jewellery.
If you are moving to the general regime for the first time from 1 January 2026, note two reliefs: a profit tax exemption for one tax period (except dividends and interest), and no liability for breaching VAT registration rules if you register within one year.
Worked example (illustrative numbers)
The figures below are illustrative and simplified: revenue is the same under every regime, output VAT is extracted at 12/112 or 6/106, payroll taxes are the same under every regime and are excluded, and no reliefs are applied. Amounts are in UZS million per year.
Scenario A: trading company
Revenue 3,000; purchases of goods with VAT 2,240 (including VAT of 240); other expenses without VAT 400.
Scenario B: service company
Revenue 3,000; purchases with VAT 560 (including VAT of 60); salaries and other expenses without VAT 1,800.
| Item, UZS million | A: turnover tax 4% | A: VAT 12% + profit 15% | A: VAT 6% | B: turnover tax 4% | B: VAT 12% + profit 15% | B: VAT 6% |
|---|---|---|---|---|---|---|
| Turnover tax | 120.0 | — | — | 120.0 | — | — |
| VAT payable | — | 81.4 | 169.8 | — | 261.4 | 169.8 |
| Profit tax | — | 41.8 | 0 | — | 56.8 | 0 |
| Total taxes | 120.0 | 123.2 | 169.8 | 120.0 | 318.2 | 169.8 |
| Net profit | 240.0 | 236.8 | 190.2 | 520.0 | 321.8 | 470.2 |
How the general regime was calculated in scenario A: output VAT 3,000 × 12/112 = 321.4; minus input VAT 240 = 81.4. Profit: 2,678.6 − 2,000 − 400 = 278.6; 15% tax = 41.8.
What the example shows. For a trading business with a high share of VAT-bearing purchases, turnover tax and the general regime come out almost equal, while 6% VAT loses because input credit is lost. For a service company with few purchases, turnover tax is far cheaper than the general regime, and 6% VAT is a middle option for those already required to pay VAT. In practice other factors can decide it: if your customers are VAT payers, they need the credit, and without VAT you may lose orders or pricing power.
How to choose: 5 questions
- What is your 12-month turnover forecast against the 12,000 BCU threshold?
- What share of your costs are purchases with VAT?
- Are your customers VAT payers or individuals?
- What is your margin: high margins usually favour turnover tax, low margins the general regime?
- Do you plan imports or large equipment purchases?
We calculate the tax burden on your real data as part of our tax advisory service, and with accounting outsourcing we monitor the threshold every month. For the other changes, see our overview of 2026 tax changes.
Frequently asked questions
Which is better: turnover tax or VAT?
It depends on your share of VAT-bearing purchases, margin and customers. With high margins and few VAT purchases, turnover tax is usually cheaper; with large VAT purchases and VAT-registered customers, the general regime is.
What is the turnover tax threshold in 2026?
From 1 June 2026 it is 12,000 BCU — about UZS 5 billion depending on the current BCU. Before 1 June it was UZS 1 billion.
Can I switch to VAT voluntarily?
Yes, you can move to VAT and profit tax before reaching the threshold. First-time switchers from 1 January 2026 get a profit tax exemption for one tax period.
What happens if I switch to VAT too late?
The tax authority may assess VAT and profit tax, plus late-payment interest and penalties. That is why turnover should be tracked monthly.
Information current as of October 2026. Tax rules change — check the current rules and confirm with a specialist before choosing a regime.