Because freelancers are not Solar Staff's employees and we don't pay taxes on their payouts, they must declare any income received via Solar Staff by themselves.
To carry on tax accounting in the Republic of Uzbekistan for your Solar Staff income, you need to:
Uzbekistan taxes its residents on their worldwide income, while non-residents are taxed on income from sources in Uzbekistan only.
An individual is considered a tax resident of Uzbekistan if they meet one of the following criteria:
An individual is present in Uzbekistan for 183 days or more during any 12-month period beginning or ending in the tax period.
An individual is present in Uzbekistan for less than 183 days, but more than in any other country.
An individual may file an application to the tax authorities to become a tax resident prior to the expiration of a 12-month period, provided that they have a long-term employment contract that can be presented to the tax authorities.
Tax ID number
The taxpayer identification number (TIN) is a numerical code automatically assigned to each citizen upon their registration in the database of the State Tax Committee. It was used by all government agencies until July 2021. The TIN consists of 9 digits, with the first 8 digits being the taxpayer's number and the last digit serving as a check digit.
The personal identification number of an individual (PINI) is a unique number used to identify individuals accessing any public, banking, social, and other services. It consists of 14 digits and is assigned to individuals at birth or upon obtaining a passport, remaining unchanged throughout their lifetime. It is indicated in the passport and contains the gender and century of birth index, date of birth, district/city code and serial number of the citizen, as well as a check digit. Starting from July 1, 2021, the tax authorities and the pension savings system have relied on the PINI to identify taxpayers, meaning individuals no longer need to obtain the TIN (but legal entities still do).
Taxes and contributions payable by freelancers
Tax obligations depend on the freelancer's status and/or fulfillment of certain conditions. Uzbekistan has two tax status options for Solar Staff freelancers to choose from:
Read on for more details.
A self-employed person is an individual who independently carries out activities to provide services to individuals and legal entities with the aim of generating income. Self-employment can encompass various occupations such as tutors, programmers, couriers, and other permitted activities. If the chosen activity is among the permitted ones, it is advisable to begin a business as a self-employed person, and as the business grows, consider transitioning to more complex organizational and legal forms.
One can register as a self-employed person at no cost using one of the following methods: in person (by visiting the local tax office, where the tax office employee will assist in filling out the application form) or online (via the Soliq mobile application / taxpayer's personal account). The online registration process takes no more than 30 minutes (see a step-by-step guide for more details). Following completion of the registration process, a certificate of registration as a self-employed person with a QR code is issued. Note that in practice foreign nationals are not eligible for registering as self-employed.
Limitations. Self-employed persons may not hire employees to carry out their activities. Furthermore, it is not allowed to be self-employed while concurrently working under an employment contract at the primary place of work or being an individual entrepreneur.
There are no income limitations for self-employed persons, whether on a monthly or yearly basis. This means that even if a self-employed person earns as much as UZS 10 million per month, their activities will not be suspended, and they will not be required to re-register as an individual entrepreneur or a limited liability company.
Declaring and paying taxes. Income generated from self-employment activities is not subject to personal income tax. Self-employed persons are only required to make a voluntary social tax payment of at least 1 base calculation unit (BCU) per year (in accordance with Article 408 of the Tax Code of the Republic of Uzbekistan). As of May 1, 2023, the BCU has been set at UZS 330,000. Unlike individual entrepreneurs, self-employed persons are not required to keep accounting records, submit reports, or file tax returns. They have the option to voluntarily maintain records of their income and expenses using the Soliq mobile app.
Note the following aspects of self-employment:
When providing services or performing work online, self-employed persons may receive foreign currency payments from non-resident individuals or legal entities into their accounts in Uzbekistan banks and are not required (unlike individual entrepreneurs) to report them by filing the relevant data to the Unified Electronic Information System for Foreign Trade Operations (UEISFTO).
Self-employed persons are entitled to have their length of self-employment counted towards their work record and are eligible for stimulating benefits, but are not eligible for sick leave or vacation leave.
One may de-register and discontinue their activity as self-employed at any time by notifying the tax authorities accordingly through the Soliq mobile app prior to discontinuing their activity as self-employed. The tax authorities will cancel their status as self-employed upon receipt of the notification.
An individual entrepreneur is a natural person who provides services, performs work, or sells products for private or commercial use without forming a legal entity.
One can register as an individual entrepreneur with the State Service Center at their place of residence or registration either online or, for certain types of activities, in person. To complete registration and other related actions online, one is required to have an electronic digital signature (EDS). The state duty for registering in person and online is 1 BCU and 90% of 1 BCU, respectively. To learn more about registering as an individual entrepreneur, follow the link.
Individual entrepreneurs are required to register their contracts in the Unified Electronic Information System for Foreign Trade Operations (UEISFTO), except for e-commerce export contracts worth up to USD 5,000 (Clause 17 of the Regulation on the Procedure for Monitoring and Controlling Foreign Trade Operations). An electronic digital signature (EDS) is necessary to access the system. Once the contract is registered in the UEISFTO, it is assigned a unique identification number, enabling the commencement of performance under the contract.
In Uzbekistan, individual entrepreneurs may apply the following tax regimes:
These tax regimes differ in terms of taxes, but regardless of the tax regime, individual entrepreneurs are required to pay salary taxes (if they have employees) and resource taxes (if applicable). Individual entrepreneurs applying the simplified tax regime may also voluntarily register as value-added tax (VAT) payers.
Read on for more details on the tax regimes.
Simplified tax regime
When applying this regime, the following taxes and contributions are to be paid:
The social tax is payable by individual entrepreneurs in the amount of at least 1 BCU per month regardless of their annual turnover.
The social tax payments are required to be made on a monthly basis, no later than the 15th day of the month in which entrepreneurial activities were carried out.
Individual entrepreneurs with employees are required to file monthly tax returns to the tax authorities on a cumulative basis no later than the 15th day of the month following the reporting month, with an annual return filed no later than February 15 (note that this applies to the social tax only; the tax on employee benefits shall be declared and paid differently). Learn more about the social tax here.
Individual entrepreneurs with an annual turnover of up to UZS 100 million are required to apply for one of the following personal income tax options:
The fixed-rate personal income tax (PIT) is a predetermined amount of tax payable by individual entrepreneurs on a monthly basis. The tax amount depends on the individual entrepreneur's type of activity and place of business (a complete list is provided in Article 383 of the Tax Code of the Republic of Uzbekistan). If an individual entrepreneur is engaged in several types of activities, the fixed-rate tax is paid separately for each type of activity. In cases where an individual entrepreneur has two or more places of business, the tax is payable at the highest of the rates set for those places of business.
Individual entrepreneurs do not need to file returns for the fixed-rate PIT, but are required to keep registers of income and expenses related to income generation, and submit quarterly reports on their activities to the tax authorities at their place of registration. The respective reports shall be submitted before the 10th day of the month following the reporting quarter.
The fixed-rate PIT payments are required to be made before the 15th day of each month (for example, for April, the tax is due before April 15). The fixed-rate PIT may be paid through the taxpayer's personal account at my.soliq.uz. To suspend the payment of the fixed-rate PIT, an individual entrepreneur may apply for the temporary suspension of activities and simultaneously turn in their certificate of state registration to the tax authorities. The tax calculator is available here.
The PIT payable on the basis of a tax return is calculated as the difference between income and confirmed business expenses, multiplied by the tax rate of 12%.
Taxpayers are required to file preliminary tax returns for their annual comprehensive income before February°1 of the current year and final tax returns°– before April°1 of the year following the reporting year. Learn more about completing and filing the tax return here.
Individual entrepreneurs are also required to keep records of income and expenses related to income generation.
The PIT based on the tax return is payable on a monthly basis, before the 15th day of the month following the month of income generation (for example, for March, the tax is due before April 15). At the end of the year, the annual amount of tax is calculated based on the actual income received, and the difference is payable no later than June 1 of the year following the reporting year.
Individual entrepreneurs whose annual turnover ranges between UZS 100 million and UZS 1 billion may choose one of the following income tax options:
The turnover tax is a tax payable on income at a standard rate of 4% or at a smaller rate depending on the business location (for more details, see Article 467 of the Tax Code of the Republic of Uzbekistan). The taxable income is defined as the individual entrepreneur's recognized income confirmed by invoices or online cash register revenue data (in retail).
The turnover tax returns are to be filed in the form of tax calculations on a monthly basis, before the 15th day of the month following the reporting month (for example, for March, the return must be filed before April 15), with the year-end returns filed no later than February 15 of the year following the reporting year. Learn more about completing and filing the tax return here.
The tax payments are required to be made no later than the due dates set for filing the tax returns (both on a monthly and annual basis).
The fixed turnover-based tax is a fixed tax varying based on the amount of income:
UZS 20 million per year if the annual aggregate income does not exceed UZS 500 million
UZS 30 million per year if the annual aggregate income exceeds UZS 500 million
When switching to the fixed tax, the amount of tax due is calculated by dividing the fixed amount by 12 and multiplying the result by the number of months remaining until the end of the current tax period.
If during the tax period the taxpayer's aggregate income exceeds UZS 500 million, the amount of tax shall be recalculated from the month of exceeding the threshold until the end of the current tax period.
To switch to this tax type, the taxpayer needs to send a respective notice to the tax authorities at the place of their tax registration no later than 10 days before the beginning of the next month.
While no tax returns are mandatory for this type of tax, individual entrepreneurs are required to keep accounting records as the latter will be needed when the threshold of UZS 1 billion is reached and the tax regime changes accordingly. Individual entrepreneurs opting to voluntarily pay a tax of UZS 20–30 million per year are not required to keep or submit their accounting records to the tax authorities.
The tax shall be paid in equal monthly installments no later than the 15th day of the month following the calendar month.
General tax regime
Individual entrepreneurs whose turnover exceeds UZS°1°billion in a calendar year or who engage in imports are required to opt for (by submitting an application to that effect) the tax and other mandatory payments regime applicable to legal entities, which should be done no later than 10°days before the start of the next month.
The following taxes and contributions are payable under this tax regime:
The social tax is payable the same way as under the simplified tax regime.
The corporate income tax (CIT) is calculated using either a standard or simplified method.
The standard CIT calculation applies the rate of 15% (unless otherwise stipulated in Article 337 of the Tax Code of the Republic of Uzbekistan) to the total of income less expenses (except for non-deductible expenses such as fines, charitable contributions, and others).
The CIT rate may be reduced by 50% (down to 7.5%) for:
Payers of the turnover-based tax transitioning to the CIT for the first time – for the tax period of the transition, provided that their turnover in this tax period does not exceed UZS 10 billion.
Payers of the turnover-based tax whose income for any given year exceeds UZS 10 billion for the first time – for the tax period in which this threshold is exceeded and for the tax period following it, provided that the income earned during the year when the reduced rate is applied does not exceed UZS 100 billion.
The simplified CIT calculation applies the rate of 25% to the total amount of income (without deducting expenses). To apply this method, the taxpayer is required to submit an application.
The CIT returns are required to be filed in the form of quarterly tax calculations before the 20th day of the month following the quarter (for example, the return for the first quarter must be filed before April 20th), with the annual return filed before March 1 of the following year. Learn more about completing the tax return here.
The CIT payments are required to be made no later than the due dates set for filing the tax returns (both on a monthly and annual basis). If the taxpayer's income for the previous year exceeded UZS 5 billion, monthly advance CIT payments are required to be made before the 23rd day of each month.
Value-added tax (VAT) is an indirect tax that is borne by the final consumer rather than the taxpayer. While VAT does not directly affect profits, it does impact the price of goods and services. The VAT rate is 12%.
Registration as a VAT payer is mandatory and can be made by submitting an application online. The tax authorities will review and approve the application, issue a certificate of VAT registration, and assign a VAT registration number to the taxpayer (more details here) within 5 days of receiving the application.
The VAT returns are required to be filed in the form of a VAT calculation on a monthly basis before the 20th day of the month following the reporting month (for example, the return for March must be filed before April 20). Learn more about completing the tax return here. The tax calculator is available here.
The VAT payments are required to be made no later than the deadlines set for filing VAT returns.
The Tax Code of the Republic of Uzbekistan (Ўзбекистон Республикасининг Солиқ кодекси)
The Tax Committee under the Ministry of Economy and Finance of the Republic of Uzbekistan (Ўзбекистон Республикаси Иқтисодиёт ва молия вазирлиги ҳузуридаги Солиқ қўмитаси)
The Chamber of Commerce and Industry of the Republic of Uzbekistan (Ўзбекистон савдо-саноат палатаси)
The difference between an individual entrepreneur and a legal entity (freelancers may work for Solar Staff either as an individual entrepreneur or a natural person).
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].