Turnover tax or corporate profit tax: what is the difference?
One is calculated on revenue, the other on profit. The logic of the two taxes and which suits which kind of business better.
Two entrepreneurs each have the same sales of 100 million soum a month. One has high expenses, the other low. Which tax works better for each of them? The answer lies in the difference between the two taxes.
What is the main difference?
- Turnover tax (a simplified regime in Uzbekistan) is calculated on total revenue (turnover). Expenses are not deducted.
- Corporate profit tax is calculated on profit: the amount left after expenses are deducted from income.
Which one is better and when?
- A business with low costs and a high markup (services, consulting): turnover tax is often simpler
- A business with high costs and a small profit (wholesale trade, manufacturing): a tax on profit usually makes more sense
- Turnover tax is easy to calculate, while corporate profit tax requires all expenses to be fully supported by documents
Can anyone choose whichever they like?
No. The conditions for applying turnover tax (income threshold, type of activity and others) are set by the Tax Code. A company that exceeds the threshold moves to the general regime. Check the current conditions and rates in the Tax Code.
A real-life example
A barbershop has large revenue, and its expenses are mainly rent and tools. A wholesale store also has large revenue, but most of it goes on buying goods. A tax on revenue may be heavier for the second one, because its profit is only a small part of its revenue.
Test yourself
5 questions on this topic: pick an option or reveal the answer.
"Kumush ip" LLC accrued a dividend of 40 000 000 soum to its participant Malika Rustamova, a resident of Uzbekistan, on her share in the charter capital (the LLC does not issue shares; Malika does not belong to a special category granted a tax benefit). Under the Tax Code, how much personal income tax is withheld from this dividend?
"Sayram choy" LLC accrued dividends of 30 000 000 soum to an individual who is its participant and a non-resident of Uzbekistan (assume no relief under an international treaty applies). Applying the rate in Article 382 of the Tax Code, how much personal income tax is withheld at source?
Under the Tax Code, what are the tax period and the reporting period for corporate profit tax?
In 2027, "Shahrisabz qandolat" LLC submitted its profit tax return for 2026 to the tax authority. Under Article 84, part 1, of the Tax Code (assume no other rule applies), until at least what date must it keep this return and its attachments?
Under Article 59 of the Tax Code, at least what share of total annual income must income from social sector activities make up for social sector status to be granted for corporate profit tax purposes?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- Tax Code of the Republic of Uzbekistan · chapters on turnover tax and corporate profit tax; check the eligibility conditions and rates here
- Example · prepared by the author, hypothetical