Self-Employment in Uzbekistan

Self-employment is increasingly popular in Uzbekistan, offering individuals a flexible way to utilize their skills and talents without the complexities of traditional business setup. For those looking to embark on this path, understanding the regulatory landscape is crucial. Advizen Consulting is here to shed light on key aspects of self-employment in Uzbekistan.

Key Advantages and Simplified Registration

Uzbekistan has significantly streamlined the process for self-employed individuals. Since July 1, 2020, registration is a straightforward notification-based procedure through a dedicated mobile application or taxpayer's personal cabinet. This eliminates the need for temporary labor certificates and provides a QR code as proof of registration.

Self-employed individuals benefit from a simplified tax regime. Their income is generally exempt from personal income tax up to 100 million UZS within a tax period. This threshold was updated in January 2024. If annual income exceeds this amount, the individual will be taxed like an individual entrepreneur at a 4% turnover tax rate.

Social Security and Pension Contributions

A significant benefit for self-employed individuals is the ability to contribute to their pension fund. They pay a social tax for the year, which is fully directed to the off-budget Pension Fund. This ensures that their work as self-employed individuals contributes to their future retirement benefits, similar to how it's calculated for individual entrepreneurs. For 2020, this amount was at least 50% of the Basic Calculated Value (BCV), and currently, it's at least 1 BCV per year. This contribution is voluntary and can be paid up to December 31st.

Expanding Opportunities: Over 100 Permitted Activities

The list of permitted activities for self-employed individuals has expanded considerably, now encompassing over 100 diverse types of work and services. These range from tutoring and childcare to IT services, creative professions, and various craft and agricultural activities. This broad scope allows many professionals to operate legally and efficiently. While you can perform many activities, you can concurrently choose no more than three at any given time.

Flexibility and Online Tools

The government has prioritized ease of doing business for the self-employed. The Soliq mobile application serves as a central hub for registration, obtaining a QR code, accepting orders, processing payments, issuing electronic invoices to legal entities, and even voluntarily tracking income and expenses. This digital infrastructure aims to minimize the need for accounting assistance, making self-employment accessible to a wider audience. Furthermore, self-employed individuals can suspend their activities remotely at any time through the Soliq app.

International Freelancing Made Easy

For self-employed individuals offering services online (freelancing) to non-resident individuals and legal entities abroad, Uzbekistan has introduced specific facilitations:

• Receiving payments in foreign currency into bank accounts in Uzbekistan without needing to register information in the Unified Electronic Information System for Foreign Trade Operations.

• Providing services without formal contracts, by accepting public offers (ofertas), exchanging electronic messages, or issuing invoices, including electronic ones.

  
  

When Legal Expertise Becomes Invaluable

While the self-employment framework in Uzbekistan is designed to be user-friendly, navigating its nuances can still present challenges. This is where legal consultation becomes a valuable asset:

• Tax Compliance: Understanding tax obligations, deadlines, and reporting forms, especially as income approaches the 100 million UZS threshold.

• Contract Drafting: Ensuring robust agreements with clients and contractors, safeguarding your interests.

• Dispute Resolution: Representation in case of disagreements with clients or tax authorities.

• Licensing and Permits: Assistance with obtaining any necessary licenses or permits for specific activities.

Self-employment in Uzbekistan offers a promising avenue for personal and professional growth. By understanding the regulations and leveraging available resources, including expert legal guidance, individuals can confidently embrace this flexible and rewarding career path.