Tax incentives for business in Uzbekistan

A tax incentive allows a business to pay no tax or a reduced amount, but only as part of a statutory category and while every condition is met. The principal rules are in the Tax Code (Art. 75 TC), while special regimes are governed by specific acts. This guide covers current forms, eligibility, compliance, and the 2025–2026 changes.

In brief:

• An incentive may be an exemption, a zero or reduced rate, a smaller tax base, an investment deduction, or accelerated depreciation. A deferral or instalment arrangement is not an incentive.
• A provision in the law does not by itself establish eligibility: the taxpayer, activity, territory, time limit, and every continuing condition must match.
• A VAT exemption is different from a zero rate. Exempt turnover generally loses the related input VAT credit, whereas a zero-rated supply retains it if the requirements are met.
• Before filing, record the legal basis, incentive code, start date, evidence, calculation, and separate-accounting method.

Updated: 04 September 2026

What counts as a tax incentive

Under the Tax Code, an incentive is an advantage granted by tax legislation to a category of taxpayers, rather than to a named company. It may remove the tax or reduce the amount due. Individual incentives are prohibited. A deferral or instalment plan merely changes the payment date and therefore is not an incentive.

Not every special arrangement is an incentive. Turnover tax, for example, is a special tax regime. A partial VAT refund, an investment deduction, and accelerated depreciation also work in different ways. Classifying the measure correctly determines the return, input VAT treatment, accounting entries, and consequences if eligibility is lost.

How to apply an incentive

Begin with an exact provision in the Tax Code or a special act. Then confirm six points: the eligible taxpayer; the tax concerned; the qualifying activity or object; the start and end dates; the required documents; and the conditions that must remain satisfied throughout the period.

As a general rule, a taxpayer may use an incentive once the legal basis exists, waive it, or suspend it. An exception applies to VAT-exempt turnover: the business cannot elect ordinary taxation unless the Code expressly permits it. Tax authorities track incentives electronically and assign a specific identification code to each type.

A company combining incentivised and ordinary operations must keep separate tax records (Art. 80 TC). Direct income and expenses are allocated to the relevant stream, while shared amounts are apportioned. Funds released for a specified purpose are tracked separately.

For a purpose-bound incentive, the company must substantiate eligibility and spending. An unused balance may still be spent for the prescribed purpose for one year after the incentive ends. It is then paid to the budget. Misuse results in recovery of the amount plus late-payment interest.

Since 2025, accounting treatment is governed by Regulation No. 3590. A working file should contain the provision, code, calculation, primary documents, start and end dates, continuing-condition tests, and reconciliation to the tax return.

Tax incentives by tax and special regime

Profit tax incentives

The standard profit tax rate is 15%, but special rates (Art. 337 TC) provide 0% for particular taxpayers and income. A sector label alone is insufficient: the statutory definition, qualifying-income percentage, and any ring-fencing requirement must be met.

The investment deduction (Art. 308 TC) is not a refund of 20% of equipment cost. The qualifying part first reduces the tax base, and the tax saving then follows from the applicable rate.

Example. A company commissions new technological equipment costing UZS 500,000,000. The deduction is UZS 500,000,000 × 20% = UZS 100,000,000. If the company has sufficient taxable profit and the 15% rate applies, tax falls by UZS 100,000,000 × 15% = UZS 15,000,000.

See the separate guide to corporate profit tax for the base and general rates.

VAT incentives

For VAT, distinguish an exempt supply, a zero-rated supply, an import exemption, and a refund of part of VAT paid.

Exempt turnover (Art. 243 TC) includes listed education and social services, specified goods and services for persons with disabilities, financial transactions, and other express cases. The list is prescriptive; similarity to an exempt activity is not enough.

For an exempt supply, related input VAT is included in cost (Art. 267 TC), rather than credited. A business with mixed turnover uses separate or proportional allocation. An exemption can therefore remove output VAT while increasing the cost of purchases.

Exports of goods and specified international transport are zero-rated (Art. 260 TC). The input credit is retained if the contract, customs declaration, and transport documents meet the Code. The VAT guide explains the general VAT rules.

An import exemption covers, among other items, technological equipment (Art. 246 TC) with no locally produced analogue, together with listed components and spare parts. Before importing, verify the commodity code, approved list, purpose, and recipient.

Property, land, and water reliefs

Property incentives may reduce the base, exempt an object for a period, or introduce a reduced coefficient. Property reliefs (Art. 414 TC) remove the value of specified social facilities, agricultural assets, new oil and gas wells, high-technology equipment, and renewable-energy installations from the base. Land reliefs (Art. 428 TC) cover listed cases separately.

Many complete property and land exemptions granted under temporary rules or presidential and cabinet acts are subject to a minimum payment of 1% of the amount otherwise assessed. Example. If the ordinary assessment is UZS 80,000,000, the minimum payment is UZS 80,000,000 × 1% = UZS 800,000.

For most legal entities, these reliefs also require prior-year sales revenue to exceed the incentive used, monthly pay for every worker of at least two minimum wages, and an average workforce of at least three. The Code contains exceptions, including foreign-invested companies and some FEZ participants.

For agricultural water, a reduced coefficient (Art. 445 TC) applies. At UZS 107 per m³, water-saving irrigation plus a meter gives a 0.5 coefficient. Example. For 10,000 m³, tax is 10,000 × 107 × 0.5 = UZS 535,000 instead of UZS 1,070,000. Meeting only one condition gives a 0.7 coefficient.

See the guide to property and land tax for the underlying objects and calculations.

Small business and turnover tax

Turnover tax is a special regime (Art. 467 TC), not a general small-business exemption. Its standard rate is 4%, with other rates for particular activities and locations. Changing regimes affects VAT, profit tax, accounting, and returns; the turnover tax guide covers those mechanics.

From 1 June 2026, the mandatory threshold for moving to the general tax regime is 12,000 BRV (cl. 1, Decree UP-100). The UZS equivalent changes with the BRV and must be checked on the relevant date.

Until 1 January 2030, qualifying catering, trade, and service businesses may elect simplified VAT (cl. 5, UP-100): 6% of all turnover and a 0% profit tax rate. There is no input VAT credit, ordinary incentive, preference, or VAT refund, although the customer may credit VAT shown by the supplier.

Example. On turnover of UZS 800,000,000, simplified VAT is UZS 800,000,000 × 6% = UZS 48,000,000. A proper comparison must also include the lost input credit and customer profile.

From the same date, catering businesses receive a 40% VAT refund (cl. 2, UP-100), regardless of their cashless-payment share. If qualifying VAT paid is UZS 120,000,000, the refund is UZS 48,000,000.

FEZ and foreign-investment incentives

Merely registering a company in a region does not qualify it for a free economic zone incentive. Relief applies only to activity in the zone stated in the investment agreement, as required by the FEZ Act (Art. 37). Assets and income outside the project must be separated.

The FEZ profit tax rules (Art. 473 TC) introduced accelerated depreciation for new status holders. Property and land reliefs depend on investment and the decision governing the zone.

The FEZ Act also permits import VAT deferral for up to 120 days and simplified refund of negative VAT within seven days. Conditions existing when the participant entered the register are protected within a ten-year guarantee (Arts. 39 and 42), subject to statutory exceptions.

A company in a listed industry with direct private foreign investment may qualify for property and land relief. It must satisfy the territory rule, have no sovereign guarantee, meet a foreign share of at least 33% — 15% for a joint-stock company — use an accepted investment form, and reinvest at least 50% of released income. These investor conditions appear in Article 472 TC.

Double-tax treaties are not examined in detail here. They mainly affect particular cross-border payments and do not replace domestic conditions for a business incentive.

IT Park resident incentives

An IT Park resident uses tax and customs exemptions only for permitted activity. It must comply with its agreement and business plan, submit reports, and pay the Directorate contribution. Loss of status ends the relief, while misuse of imported property or other breaches may restore amounts. These requirements follow from the resident regulation.

The regime does not automatically cover every income stream of a certified company. Non-qualifying income is taxed under ordinary rules and should be accounted for separately. For certain exporters and IT-education residents, incentives other than VAT are extended for 2028–2040, subject to special criteria.

The IT Park guide covers status, contributions, and reporting. Employee incentives are outside this article.

Sector-specific tax incentives

There is no permanent list applicable to every industry. Temporary sector rules (Art. 483 TC) and separate acts provide measures for particular projects, including electric-vehicle charging infrastructure, national films, greenhouse businesses, and satellite projects. Each has its own recipient, qualifying-income share, tax, term, and calculation.

From 1 January 2026, agricultural products on the list maintained by the Ministry of Agriculture and Tax Committee are zero-rated for VAT. Input VAT on purchases for that production is refundable; producers other than cotton and grain receive an automated refund within three days (cl. 3, UP-153).

Always check a sector act on the transaction date. Identify exclusions, the 1% minimum payment, revenue and workforce tests, status date, transitional rules, and amendments. Older summaries may describe programmes that have expired or been replaced by the Tax Code.

Consequences of losing an incentive

The specific provision determines the consequence. It may restore tax for the full period, end relief from the following month, recover purpose-bound funds, and add late-payment interest. For FEZ and investment projects, breach of the agreement, early cessation, or failure to reinvest may also trigger recovery.

An unlawful underpayment generally carries a 20% penalty (Art. 224 TC), in addition to tax and interest. Example. If an unsupported incentive causes an underpayment of UZS 60,000,000, the penalty is UZS 12,000,000, excluding the tax and interest.

On finding an error, recalculate and file an amended return. Liability may be avoided under the self-correction rule (Art. 83 TC) if correction occurs before the taxpayer learns of detection or an audit, and the missing tax and interest are paid before filing.

What changed in 2025–2026

• A new accounting procedure under Regulation No. 3590 has applied since 2025.
• From 1 January 2026, listed agricultural products became zero-rated and eligible producers obtained automated three-day VAT refunds.
• A turnover-tax payer first moving to profit tax from 1 January 2026 is exempt for the tax period following the transition year, except on dividends and interest; reorganised entities are excluded.
• From 1 April 2026, new FEZ participants use accelerated depreciation instead of the former profit tax exemption.
• From 1 June 2026, UP-100 introduced the 12,000 BRV threshold, elective simplified VAT for parts of trade, catering, and services, and a 40% refund for catering.
• For qualifying IT Park exporters and education residents, incentives other than VAT were extended for 2028–2040.

What to check before claiming relief

Create an incentive record before including it in a return. Note the exact provision and version effective on the transaction date, tax and object, taxpayer category, territory, start and end dates, incentive code, quantitative tests, supporting documents, and the event that terminates eligibility.

Then test the records: qualifying income, direct and shared expenses, property and land must be separated; input VAT must be treated correctly; the tax register, accounting entries, electronic invoices, and return should reconcile. Open separate analytical records for purpose-bound funds.

Finally, calculate the position with and without the incentive. This reveals the real saving and hidden costs such as lost input VAT. Retain evidence for continuing conditions in every period, rather than keeping only the document that granted the initial status.

Frequently asked questions

What is a tax incentive in simple terms?

It is an advantage established by law for a category of taxpayers, such as an exemption, lower rate, base reduction, or special deduction. The business may use it only while every condition is met. A deferral or instalment plan changes timing and is not an incentive.

Which tax incentives are available to an LLC?

There is no incentive based only on the LLC form. Eligibility normally depends on activity, object, location, investment, FEZ or IT Park status, and the share of qualifying income. An LLC can use general investment deductions and sector measures on the same terms as another qualifying legal entity.

How does a business obtain a VAT incentive?

First identify whether the measure is an exemption, zero rate, import exemption, or refund. Then substantiate the goods or services, code, documents, and period. For an exemption, verify input VAT treatment; for a zero-rated export, retain the contract, customs, and transport documents.

Can a business waive a tax incentive?

Generally, it may waive or suspend relief for one or more tax periods. It cannot opt out of a VAT exemption unless the Tax Code expressly allows that choice. The decision and period should be reflected consistently in the accounting policy and tax records.

Is a separate application always required?

No single rule applies. Some incentives arise when the statutory basis exists, while a special regime may require notice, a certificate, entry in a register, or a refund application. Check the procedure in the exact provision granting the measure and report the incentive code in the tax system.