The Institute of Fiscal Studies has presented its proposals for tax policy in 2027, which include a reduction in corporate profit tax for several enterprises and the introduction of VAT on certain financial services. These recommendations were put forward within the framework of the main directions of tax policy developed by the Institute for reducing the shadow economy, improving tax and customs administration, and fiscal analysis at the Ministry of Economy and Finance.
The authors of these proposals emphasize the need to expand the tax base, ensure tax neutrality, and implement digitalization in administrative processes. At the same time, they insist on maintaining the basic rates of major taxes: corporate profit tax should remain at 15%, and personal income tax and VAT at 12%.
The Institute suggests reducing the corporate profit tax rate from 20% to the standard 15% for specific groups of taxpayers. These categories include banks, mobile operators, producers of polyethylene granules, as well as markets and shopping centers. According to the institute's calculations, such a reduction will lead to a decrease in budget revenues by 859 billion soms.
To compensate for this amount, it is proposed to increase the VAT base through financial services. The Institute recommends separating such operations into commission-based and margin-based. VAT should be levied on services for which a clear commission is established. Such services include acquiring, account and bank card maintenance, cash settlement services, payment acceptance, foreign exchange operations, bank card processing, depositary, registration, and stock exchange services, as well as commissions for guarantees and letters of credit.
Interest and other margin-based operations, such as loan issuance, attracting deposits, placement of funds, interest on loans, REPO operations, the discount portion of factoring, and the interest portion of leasing, are proposed to be excluded from the scope of VAT. The authors justify this by referencing international practice where VAT is applied to clearly defined commissions, while interest margins are usually exempt from taxation. VAT revenues could increase by 4.9 trillion soms.
An additional source for replenishing the budget should be the modernization of tax administration and business. The Institute estimates the current State Efficiency of VAT (S-efficiency) at approximately 57%, determined by the ratio of actual revenues to potential revenues when taxing all final consumption at a 12% rate. It is proposed to raise this indicator to 63% by 2027, which, according to the institute's calculations, will provide an additional 4.871 trillion soms to the budget.
To achieve this goal, it is necessary to simplify and automate the process of fulfilling tax obligations, including the VAT refund procedure. It is also proposed to expand digital tools for control and automatic data processing, as well as to digitize the business processes of the taxpayers themselves. Control should be concentrated on high-risk payers, minimizing the need for mass inspections. It is expected that increasing operational transparency will help reduce the shadow economy and improve VAT collection.
The Institute insists on maintaining the basic rates of corporate profit tax at 15%, as well as PIT and VAT at 12% in 2027. However, it is recommended to index all taxes and fees set at a fixed amount to the projected inflation level, which is about 5–6%. To increase predictability for the business community, it is proposed to publish fixed rates three years in advance. In the authors' opinion, this will allow companies to plan production, contracts, and pricing in advance, thereby reducing regulatory uncertainty.
In the long term, the institute also advises considering the possibility of transitioning to a progressive scale for personal income tax. This measure, according to the authors, would contribute to strengthening the principle of vertical equity, according to which higher-income individuals should contribute more to tax revenues.
Separately, the institute analyzed the effectiveness of the reduced social tax rate for eight service sectors. This benefit, introduced by a presidential decree in January 2022 and extended until 2028, allows companies to pay the social tax at a rate of 1% instead of the standard 12%. According to the institute, during the 2022–2024 period, about 26.5 thousand companies utilized the benefit, which accounts for 30% of the total number of organizations eligible for it. Meanwhile, the remaining 60.8 thousand firms, or 70%, did not use it.
Furthermore, 80% of the entire benefit from this incentive went to the top 10% of companies, while only 20% went to the remaining 90%. The Institute concludes that the stated goal of the benefit—stimulating employment and combating informal employment—was not achieved. The authors believe that large enterprises, which were already conducting legal activities, benefited the most. It should be noted that all initiatives presented are analytical proposals of the institute and do not have the legal status of an adopted decision or bill.
The Institute for Reducing the Share of the Shadow Economy, Improving Tax and Customs Administration, and Fiscal Analysis at the Ministry of Economy and Finance has put forward an initiative to unify the approach to paying the social tax for individual entrepreneurs (IEs) and self-employed individuals in Uzbekistan. This idea was presented during a fiscal dialogue on July 30th.
Currently, both categories use the same basic calculation unit (BCU) of 412 thousand soms, which will increase to 440 thousand soms starting September 1st. However, the frequency of payments differs.
According to Part 1 of Article 408 of the Tax Code, IEs are obliged to pay the social tax monthly in an amount of no less than one BCU, equivalent to 5.28 million soms per year. Self-employed individuals, according to Part 2 of the same article, have the option to voluntarily pay 1 BCU per year to count this period towards their employment record. After the BCU increase, their annual payment will be 440 thousand soms, which is approximately 36.7 thousand soms per month.
The presentation noted that the financial burden on an individual entrepreneur is twelve times higher than the burden on a self-employed person. This difference is partly due to the fact that IEs, unlike self-employed individuals, can hire up to five employees and conduct retail trade, giving them a broader scope of activity and additional opportunities.
The Institute recommends abandoning the existence of two parallel systems with significant differences in payment amounts and transitioning to a single category of self-employed individuals. International experience is cited as a reference, where contributions are usually tied to declared income or minimum wage.
The proposal is to calculate the minimum social tax based on the minimum wage (MW) rather than the BCU. Applying the basic rate of the social tax established by Article 405 of the Tax Code to an MW of 1.36 million soms would result in a monthly payment of 163.2 thousand soms, or almost 1.96 million soms per year.
At the same time, the proposed amount would be approximately 4.45 times higher than the current voluntary payment of self-employed individuals (about 36.7 thousand soms per month), but it would be 2.7 times less than the minimum payment that IEs would have to make after the BCU increase.
The Institute does not insist on introducing a one-time targeted payment. Instead, it proposes starting with a monthly contribution of about 50 thousand soms, followed by a gradual increase to 163.2 thousand soms according to an approved schedule.
It is important to note that this initiative represents an analytical proposal from the Institute and does not yet have the status of an adopted legislative act or bill.
As of July 1, 2026, 375.1 thousand individual entrepreneurs were registered in the country. The number of self-employed individuals varies across sources—from 2.8 million to 5.5 million.
Economist Otabek Bakirov stated that the principle of equality when revising the social tax should apply not only to IEs and self-employed individuals but also to enterprises that benefit from 1% preferential or reduced rates. He suggested considering the introduction of a minimum mandatory payment for such beneficiaries, similar to the procedure for paying land tax and property tax by some exempted legal entities. Bakirov emphasized: 'Strength becomes justice only when it is applied equally not only to the weak and small, but also to the strong and large. Only then does trust in such justice appear.'
Furthermore, it was learned in mid-July that the authorities plan to make pension contributions mandatory for self-employed individuals. Currently, 2.8 million self-employed individuals are registered in Uzbekistan, but only about 800 thousand people, or 30%, voluntarily make the corresponding contributions. The existing system allows a self-employed person to pay one BCU—412 thousand soms—and receive one year of service for pension purposes.
The Cabinet of Ministers of Uzbekistan has approved changes to the procedure for returning a portion of the value-added tax (Tax Free) to foreign citizens for goods purchased in the country. The relevant resolution dated July 16, 2026, was published on the legal portal Lex.uz.
The amendments provide for a relaxation of requirements for receiving VAT refunds. Specifically, the minimum total purchase amount required to apply for Tax Free has been reduced from 1 million to 300,000 soums.
Furthermore, the list of goods subject to the VAT refund system has been significantly expanded. Almost all categories of goods are now eligible for the cashback system, with the exception of meat and meat by-products, fish and seafood, animal products, vegetables, fruits, nuts, coffee, tea, spices, cereals, flour, and baked goods, animal and vegetable fats, meat, fish, and other aquatic invertebrates products, sugar and confectionery made from sugar, cocoa, processed vegetable, fruit, nut, and other plant products, as well as other food products.
The fund transfer procedure has also been changed. VAT refunds will now be credited to the foreign citizen's bank card or account within three working days. Previously, payments were made through the general mechanism of the tax cashback system—after the 25th day of the month following the month of refund registration.
The new rules also introduce the possibility of receiving the refund in cash in US dollars upon leaving Uzbekistan. In this case, the foreign citizen will be paid 85% of the tax amount, and the remaining 15% will constitute the operator's commission for the Soliq Servis system. Cash payments are made on the day of the foreigner's confirmed departure from the country, and the system operator maintains separate records of persons entitled to this method of receipt.
The reform of the Tax Free system was initiated by a decree of the President of Uzbekistan, signed in March of this year. This document provides for reducing VAT refund periods and introducing a mechanism for receiving cash payments.
