1% turnover tax for individual entrepreneurs: who does it apply to, and who not?
An individual entrepreneur (sole proprietor) who sells up to one billion soum during the year pays 1 percent tax on revenue. But this regime does not suit an entrepreneur who imports goods himself, sells alcohol at retail in a fixed trading outlet or sells jewellery. On the example of a toy shop selling through a marketplace: who gets 1 percent and who does not, when to report, and what happens if the threshold is exceeded.
Sardor has set up a small warehouse at home and sells children's toys through a marketplace. He buys the goods at a wholesale base in Tashkent, packs them and ships them. He is registered as an individual entrepreneur (sole proprietor). His first question is simple: "How much tax do I pay, and does this apply to me at all?"
The answer is in the Tax Code chapter on turnover tax. Below we go through the parts of this chapter that matter for individual entrepreneurs one by one.
Who pays 1 percent?
Under clause 2 of part one of Article 461 of the Tax Code, turnover tax payers include individual entrepreneurs and self-employed persons whose income from the sale of goods (services) in the tax period has not exceeded one billion soum.
The rate is in the table in Article 467. It has a separate line for individual entrepreneurs:
| Article 467 table | Who | Rate |
|---|---|---|
| Clause 1 | Taxpayers in all sectors of the economy, except those in clauses 2–5 | 4% |
| Clause 2.1 | Retail trade: in cities with a population of 100 thousand or more / in other settlements / in hard-to-reach and mountainous districts | 4% / 2% / 1% |
| Clause 2.2 | Retail trade: regardless of location, on the turnover from selling tobacco products | 4% |
| Clause 5 | Individual entrepreneurs and self-employed persons | 1% |
Clause 3 of the table (procurement organisations for agricultural products) and clause 4 (special categories based on the labour of persons with disabilities) are not shown here; they are for separate categories.
The 4 percent in clause 1 is limited in the text itself by the words "except those provided for in clauses 2–5". Individual entrepreneurs are named separately in clause 5. But Sardor sells goods to consumers, and the table also has clause 2 for retail trade. The Code does not say separately which of clause 5 or clause 2 applies when an individual entrepreneur is engaged in retail trade. The calculation below uses the 1 percent of clause 5; check with the tax authority how it relates to the retail trade clause in your own case.
What is the tax calculated on?
Under part one of Article 465, the tax base for an individual entrepreneur is the total income from the sale of goods (services). Not profit, but revenue. The money Sardor paid the wholesale base and his packaging and delivery costs do not reduce the base.
Three more practical rules from this article:
- Personal property. Income from selling personal (family) property not related to the business is not included in the turnover tax base; it is subject to personal income tax (Article 465, part three). If Sardor sells his old personal car, it is not added to the toy revenue.
- Lease. If an individual entrepreneur leases out property, that income is subject not to turnover tax but to personal income tax at the rate in part one of Article 381 (Article 465, part seven).
- Digital platform. If an individual entrepreneur sells through digital platforms of payment organisations, for income up to one billion soum the payment organisation is the tax agent (Article 465, part four), and the agent also submits the return broken down by each individual entrepreneur (Article 470, part four). Whether the marketplace Sardor works with withholds the tax itself as a payment organisation needs to be checked in the platform agreement and with the tax authority. If there is no agent, Sardor calculates and pays the tax himself (Article 465, part six).
Sardor's calculation
Assume there is no agent and the 1 percent of clause 5 applies. The tax is calculated from the beginning of the calendar year on a cumulative basis (Article 470, part two), and the reporting period is one month (Article 469). Since the rate is the same, each month's tax equals 1 percent of that month's revenue.
| Month | Revenue for the month | Year to date | Tax for the month (1%) | Tax year to date |
|---|---|---|---|---|
| January | 74 000 000 | 74 000 000 | 740 000 | 740 000 |
| February | 79 000 000 | 153 000 000 | 790 000 | 1 530 000 |
| March | 86 000 000 | 239 000 000 | 860 000 | 2 390 000 |
| April | 81 000 000 | 320 000 000 | 810 000 | 3 200 000 |
| May | 92 000 000 | 412 000 000 | 920 000 | 4 120 000 |
| June | 97 000 000 | 509 000 000 | 970 000 | 5 090 000 |
| July | 103 000 000 | 612 000 000 | 1 030 000 | 6 120 000 |
| August | 108 000 000 | 720 000 000 | 1 080 000 | 7 200 000 |
| September | 112 000 000 | 832 000 000 | 1 120 000 | 8 320 000 |
| October | 118 000 000 | 950 000 000 | 1 180 000 | 9 500 000 |
Amounts in soum, compiled by the author. In ten months Sardor sold 950 million soum and calculated 9.5 million soum of tax.
Deadlines (Article 470, parts three and five):
- Monthly return: no later than the 15th day of the month following the reporting month. The return for October is submitted no later than 15 November.
- Annual return: no later than 15 February of the year following the tax period.
- Payment: no later than the deadline for submitting that return. October's 1 180 000 soum is also paid no later than 15 November.
What happens when the threshold gets close?
By the end of October Sardor had accumulated 950 million soum, so only 50 million soum is left to one billion. If in November he sells 4 million soum a day on average, 50 000 000 ÷ 4 000 000 = 12.5 days, that is, he reaches the threshold in the middle of the month.
Part seven of Article 462 addresses this situation directly: taxpayers whose total income during the tax period exceeds one billion soum, including newly registered individual entrepreneurs and self-employed persons, switch to paying VAT and corporate profit tax from the day their total income reaches that amount. There is no waiting until the end of the year.
Practical tip: Sardor should watch the "year to date" column every month. It is useful to check with the tax authority in advance how invoices, the VAT return and other obligations are to be handled for sales after the day the threshold is reached, because the switch day itself is determined by revenue.
Two more situations:
- For an individual entrepreneur registered in the middle of the year, the threshold is calculated not for the whole year but proportionally: one billion soum is divided by 365 and multiplied by the number of days from the registration date to the end of the year. If income exceeds this amount, the switch to VAT and corporate profit tax takes place from the following year (Article 462, part eight).
- If a self-employed person's income exceeds one billion soum, or the person voluntarily switches to VAT and corporate profit tax, they pay taxes (except social tax) in the manner set for individual entrepreneurs (Article 462, last part).
Even without exceeding the threshold, an individual entrepreneur may switch to VAT and corporate profit tax of his own choice (Article 462, part three). A taxpayer who switched voluntarily and whose total income from sales at the end of the current tax period then did not exceed one billion soum may return to turnover tax no earlier than twelve months later (Article 462, part six).
What about importing? Kamola's case
Kamola is also an individual entrepreneur and also sells toys. But she wants to bring goods in directly in her own name from a factory abroad rather than buying at a wholesale base.
Under clause 1 of part two of Article 461, turnover tax does not apply to legal entities, individual entrepreneurs and self-employed persons carrying out the importation of goods across the customs border of the Republic of Uzbekistan. This clause names individual entrepreneurs directly.
From when? Under Article 462, an importing individual entrepreneur switches to paying VAT and corporate profit tax from the date the import contract is concluded or the goods are brought in, whichever is earlier. If Kamola signs a contract with a foreign factory on 3 March and the goods cross the border on 20 April, the count starts on 3 March. Even if her income is far below one billion, the 1 percent no longer applies to her.
Sardor, on the other hand, buys goods at a wholesale base in Uzbekistan: he does not carry out importation across the customs border himself. The text of the Code refers to the person who carries out the import himself. In a doubtful case (for example, importing through an intermediary) it is better to obtain a written explanation from the tax authority.
The full list of exceptions in Article 461: which clause concerns individual entrepreneurs?
Part two of Article 461 has 15 clauses. Some of them are written only about legal entities or organisations, while others also cover individual entrepreneurs:
| Clause | Who it does not apply to | Relevance to individual entrepreneurs |
|---|---|---|
| 1 | Legal entities, individual entrepreneurs and self-employed persons importing across the customs border | Individual entrepreneurs named directly |
| 2 | Legal entities producing excisable goods (services) and extracting minerals | Legal entities only |
| 3 | Legal entities that are agricultural producers with 25 hectares or more of irrigated cropland | Legal entities only |
| 4 | Legal entities selling petrol, diesel fuel and gas | Legal entities only |
| 5 | Legal entities organising lotteries | Legal entities only |
| 6 | The trustee entrusted with managing the affairs of a simple partnership, for activities under that agreement (except agreements concluded with banks and microfinance organisations for Islamic finance operations) | The general word "trustee" is used |
| 7 | Legal entities owning vacant buildings, non-residential structures, unfinished construction and unused production premises for which a conclusion on inefficient use has been issued | Legal entities only |
| 8 | Legal entities constructing facilities with centralised financing (except current and capital repairs) | Legal entities only |
| 9 | Fixed trading outlets selling alcoholic products, including beer, at retail | Written in general terms, the owner's form is not specified |
| 10 | Markets and shopping complexes | Written in general terms |
| 11 | Organisations of tax consultants | Organisations |
| 12 | Audit organisations | Organisations |
| 13 | Non-profit organisations, including budget organisations | Organisations |
| 14 | Enterprises trading in medicines and medical devices and (or) organisations providing medical services | The text says "enterprise" and "organisation"; if an individual entrepreneur is in this activity, check with the tax authority |
| 15 | Business entities engaged in the production and (or) sale of jewellery | "Business entities" is used; under Presidential Decree PF-21 an individual entrepreneur is also a business entity |
Persons in clause 9, related to alcohol, switch to VAT and corporate profit tax from the date they obtain a permit (licence) or notify the authorised body that they have started activity (Article 462).
Short summary: who gets 1% and who does not
| Situation | Does 1% (Article 467, clause 5) apply? | Basis |
|---|---|---|
| Individual entrepreneur, annual sales up to 1 billion soum, buys goods on the domestic market | Yes (in retail trade, check the relation to clause 2 of Article 467 with the tax authority) | Article 461, part 1, clause 2; Article 467 |
| Self-employed person, sales up to 1 billion soum | Yes | Article 461, part 1, clause 2 |
| Individual entrepreneur imports goods himself | No, VAT and corporate profit tax from the date of the contract or import (whichever is earlier) | Article 461, part 2, clause 1; Article 462 |
| Individual entrepreneur sells alcohol or beer at retail in a fixed outlet | No (the clause does not distinguish the outlet owner's form) | Article 461, part 2, clause 9 |
| Individual entrepreneur produces or sells jewellery | No | Article 461, part 2, clause 15 |
| Individual entrepreneur is the trustee in a simple partnership, for the partnership's activities | No (except the Islamic finance exception) | Article 461, part 2, clause 6 |
| Individual entrepreneur's sales reached 1 billion soum during the year | No, from the day they reached it | Article 462, part seven |
| Individual entrepreneur voluntarily switched to VAT and corporate profit tax | No; if income at the end of the current tax period did not exceed 1 billion soum, a return to turnover tax is possible no earlier than 12 months later | Article 462, parts three and six |
PF-100 and the one-billion threshold
Presidential Decree PF-100 (26 May 2026) set the threshold for switching to the general tax regime from 1 June 2026 at 12 000 times the BCA (base calculation amount). In the text of the Tax Code we relied on (as of 06.08.2026), the threshold for individual entrepreneurs and self-employed persons in clause 2 of part one of Article 461 is still written as one billion soum. Check with your tax authority how the Decree's requirement applies to individual entrepreneurs.
Important note. All articles of the Code in this piece are cited from the text of the Tax Code as of 06.08.2026. The Code is amended often, so before making a decision check the current version on lex.uz.
Test yourself
5 questions on this topic: pick an option or reveal the answer.
"Ko'hna shahar savdo" LLC was reorganized by merger into another company. Under Article 79 of the Tax Code, to whom does the obligation to keep its accounting documents pass?
"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?
Under the Tax Code, which of the following is not among the taxes listed in Article 17, but among the special tax regimes in Article 18?
Under the Tax Code, what are the tax period and the reporting period for corporate profit tax?
"Ohangaron plitka" shipped tiles to a buyer on 28 October, issued the invoice on 3 November, and the buyer transferred the money on 10 November. Under Article 242 of the Tax Code, on what date is the turnover from the sale of the goods deemed to take place for VAT purposes?
Answered: 0 / 50 of 5 correct
All tests →See also
Sources
- Tax Code of the Republic of Uzbekistan, Article 461, part one, clause 2 · individual entrepreneurs and self-employed persons whose income from the sale of goods (services) in the tax period has not exceeded one billion soum are turnover tax payers
- Tax Code of the Republic of Uzbekistan, Article 461, part two, clauses 1–15 · list of persons to whom turnover tax does not apply (clause 1: legal entities, individual entrepreneurs and self-employed persons carrying out imports)
- Tax Code of the Republic of Uzbekistan, Article 462 · part three: an individual entrepreneur may voluntarily switch to VAT and corporate profit tax; part six: return no earlier than twelve months later; part seven: switch to VAT and corporate profit tax from the day income reaches one billion soum; part eight: proportional threshold for newly registered persons; importers switch from the date the import contract is concluded or the goods are brought in (whichever is earlier); persons in clauses 2, 4, 5, 9 and 11 switch from the date of obtaining a permit or giving notification; self-employed persons exceeding the threshold pay tax in the manner set for individual entrepreneurs
- Tax Code of the Republic of Uzbekistan, Article 465 · tax base of an individual entrepreneur: total income from sales under Article 463; income from the sale of personal (family) property is not counted; for income up to one billion soum through digital platforms of payment organisations, the payment organisation is the tax agent; income from leasing out property is subject to personal income tax (Article 381, part one)
- Tax Code of the Republic of Uzbekistan, Article 467 (table of rates) · clause 1: 4 percent (except those in clauses 2–5); clause 2.1: retail trade depending on location 4, 2 and 1 percent; clause 2.2: retail trade in tobacco products 4 percent; clause 5: individual entrepreneurs and self-employed persons 1 percent
- Tax Code of the Republic of Uzbekistan, Article 469 · the tax period is the calendar year, the reporting period is one month
- Tax Code of the Republic of Uzbekistan, Article 470 · tax is calculated on a cumulative basis; monthly return no later than the 15th day of the following month, annual return no later than 15 February of the following year; payment no later than the return deadline; tax agents submit returns broken down by each individual entrepreneur
- Presidential Decree PF-21 (10 February 2023) · individual entrepreneurs belong to small business entities
- Presidential Decree PF-100 (26 May 2026) · from 1 June 2026 the threshold for switching to the general tax regime is 12 000 times the BCA
- Example, entrepreneurs' names and amounts · compiled by the author, hypothetical