Payroll taxes in Uzbekistan: calculating the full cost of an employee
Calculate gross and net salary, 12% PIT and social tax in Uzbekistan, plus leave, sick pay, insurance and reduced rates.
Payroll taxes in Uzbekistan in 2026 involve two 12% rates that work differently. The company withholds personal income tax (PIT) at 12% from gross salary as a tax agent. It reduces take-home pay but does not add to the employer’s cost. Social tax, normally 12%, is charged on payroll in addition to salary and paid from company funds. With a gross salary of UZS 10 million, the employee therefore receives UZS 8.8 million and the company spends UZS 11.2 million. Salary plus payroll taxes cost approximately 12% more than the contractual gross salary and almost 27% more than take-home pay. Other compulsory costs are not taxes: pay must meet the minimum wage, UZS 1,360,000 from 1 September 2026; from 1 July 2026 the employer remains responsible for the first five days of temporary incapacity in the calendar year, while the State Social Insurance Fund pays for subsequent days; and employers must provide leave and employers’ liability insurance. Reduced rates exist for particular categories, especially IT Park residents and certain service businesses employing workers under 30.
Which payroll taxes does the employer pay, and which does it withhold?
Article 381 of the Tax Code sets the resident PIT rate on employment income at 12%. Since 1 May 2022, the same rate has applied to non-residents’ Uzbek-source employment income, although older material may still refer to 20%. Tax is calculated monthly on a cumulative year-to-date basis and withheld on each payment. Economically it is the employee’s money, so an agreement to pay “UZS 10 million net” requires the gross-up calculation below.
The 12% includes mandatory funded-pension contributions to individual pension accounts, known as INPS, at 0.1% of taxable salary. They are not withheld on top of PIT. Under the contribution rules registered by the Ministry of Justice on 20 November 2024 as No. 3577, the contribution is deducted from the calculated PIT. On a UZS 5 million salary, total PIT is UZS 600,000: UZS 595,000 goes to the budget and UZS 5,000 to the employee’s pension account. The company submits a separate register and payment, but bears no additional cost. Participation is compulsory for citizens. Earlier explanations state that foreign nationals participate if permanently resident, so the position of each foreign employee should be checked with the accountant.
Social tax operates differently. Chapter 58 of the Tax Code, Articles 402–409, defines taxpayers, taxable payments, the base and rates. The general rate is 12%, except for budget-funded organisations at 25% and two narrow categories at 7% and 4.7%. The PwC corporate tax summary for Uzbekistan, updated in August 2026, stresses that 12% applies across company types and to the entire payroll of local and foreign staff. For small businesses, switching to turnover tax, 6% VAT or another special regime therefore does not remove social tax or PIT withholding obligations: payroll taxes are separate from taxes on revenue. Social tax applies to employment remuneration. According to expert explanations, certain material-assistance payments classified as other individual income under Article 377, point 10, are outside social tax, although PIT may apply subject to exemptions. Classification of each unusual payment affects the final cost.
A worked example: from contractual salary to total employment cost
Start with gross salary, because both rates use the same base. The following educational example concerns an Uzbek citizen employed by an ordinary company without incentives, earning UZS 10,000,000 gross per month. Amounts are rounded to the nearest UZS and exclude individual PIT reliefs.
| Item | Calculation | UZS per month |
|---|---|---|
| Contractual gross salary | — | 10,000,000 |
| PIT withheld from salary | 10,000,000 × 12% | 1,200,000 |
| Including INPS contribution paid out of PIT | 10,000,000 × 0.1% | 10,000 |
| Employee’s take-home pay | 10,000,000 − 1,200,000 | 8,800,000 |
| Company-funded social tax | 10,000,000 × 12% | 1,200,000 |
| Company cost: salary and payroll taxes | 10,000,000 + 1,200,000 | 11,200,000 |
Annual salary and social tax alone total UZS 134.4 million. If the candidate has instead been promised a net amount, divide it by 0.88 to find gross salary. To deliver UZS 10,000,000 net, gross pay must be UZS 11,363,636; PIT and social tax are UZS 1,363,636 each, and company cost is UZS 12,727,272. Each UZS of take-home pay costs the employer about UZS 1.27. If the offer fails to specify gross or net, the budget may be understated by approximately UZS 1.53 million per month for each UZS 10 million promised net—almost 14% of the assumed cost.
The minimum wage sets the lower boundary. From 1 September 2026, Decree No. UP-115 of 23 June 2026 raised it from UZS 1,271,000 to UZS 1,360,000. Monthly pay for a full working-time norm cannot be lower. At that gross salary, company cost is UZS 1,523,200 and take-home pay UZS 1,196,800. Tax authorities may compare payroll accruals with the minimum wage during pre-audit analysis. From 1 July 2026, Decree No. UP-95 of 19 May 2026 removed the obligation to submit amended returns or supporting documents for discrepancies identified through that analysis. According to the Tax Committee, failure to respond no longer automatically triggers a desk audit. The analysis remains, so voluntarily explaining a substantial difference from the minimum wage is sensible. Part-time hours, piece-rate work, secondary employment or joining mid-month may explain it, but timesheets and personnel records must support the explanation.
Compulsory costs beyond salary and taxes
The tax calculation describes only recurring costs. The Labour Code provides at least 21 calendar days of basic paid annual leave, with average earnings maintained. Additional days apply for long service with the organisation or industry, adverse working conditions and special natural or climatic conditions. Leave pay normally replaces salary for those days, but costs increase if a replacement worker is needed or unused leave must be compensated on termination. Leave pay is employment remuneration and is therefore also subject to PIT withholding and social tax.
Sick pay changed materially in 2026. Under the rules on temporary-incapacity benefits approved by Cabinet of Ministers Resolution No. 796 of 17 December 2025, for insured events beginning from 1 July 2026 the employer pays for the first five days of temporary incapacity in the calendar year. The State Social Insurance Fund proactively pays subsequent days. As buxgalter.uz explains in its analysis of the new procedure, sickness periods from 1 January 2026 count towards those five days. The benefit depends on the insured contribution record: 60% of average monthly earnings is used for a record of 6–96 months and 80% from 97 months. For persons with Group I or II disabilities, four or more children under 18, or a child with a disability, the coefficient increases by 20 percentage points. For incapacity beyond 77 days in a calendar year, excluding pregnancy and childbirth, it decreases by 10 points. The final benefit must therefore reflect the individual’s circumstances. For employment budgeting, the new procedure tends to reduce the burden: professional publications report that employers previously paid the full sickness cost, whereas the company now retains no more than five days per calendar year. The paperwork and calculation of these benefits and leave pay are discussed in our guide to documents for leave and sick-pay calculations.
The third compulsory item is employers’ civil-liability insurance for harm to employees’ life and health. The premium depends on activity. Cabinet of Ministers Resolution No. 443 of 15 July 2025 groups activities into 20 occupational-risk classes with coefficients from 0.571 to 7.714. The minimum premium is 0.25 BCU, or UZS 110,000 at a BCU of UZS 440,000. Office costs are relatively small; manufacturing and construction can cost substantially more.
Reduced rates: IT Park and service businesses
The most significant payroll incentive concerns IT Park. Under Decree No. UP-5099 of 30 June 2017, residents are exempt from social tax until 1 January 2028, while their employees’ income under employment contracts is subject to fixed-rate PIT of 7.5%. In the same UZS 10,000,000 gross-salary example, an IT Park employee receives UZS 9,250,000 and the company spends UZS 10,000,000 rather than UZS 11,200,000. The company saves UZS 1.2 million per employee per month in social tax, while the employee gains UZS 450,000 through lower PIT. An expert view published in September 2026 extends the 7.5% rate to secondary and remote employees because the decree does not exclude them; this is not an official explanation. Residency is conditional on activities, export revenue and reporting rather than automatic. Before budgeting for incentives, check whether the business meets IT Park residency requirements. Also account for Decree No. UP-157: after 1 January 2028, tax incentives continue only for residents whose exports exceed half of income.
A narrower incentive applies to services. From 1 January 2025 to 1 January 2028, businesses in retail, catering, hotels, passenger and freight road transport, vehicle repair and maintenance, computer services, household-appliance repair, agricultural and veterinary services, and entertainment-centre services may pay 1% social tax on salaries of employees under 30. The Tax Committee highlighted it in a notice dated 20 August 2026. Professional publications explain that Article 483, parts 20–21, establishes the rule and extends it until 2028. Two conditions apply: average monthly employee pay must be at least 2.5 minimum wages—UZS 3,400,000 from 1 September 2026—and income from the listed activities must be at least 60% of total income for the period. Concealing employee numbers results in loss of the incentive. The 1% rate does not apply to civil-law service contracts because it concerns employees only. Separately, until 1 September 2027, earnings of school, college and technical-school students aged no more than 30 undertaking vocational training with an employer are subject to both PIT and social tax at 1%.
Foreign and overseas remote employees: what changes?
A foreign national employed in Uzbekistan generally faces the same rates: 12% PIT is withheld regardless of whether the worker is tax-resident, and 12% social tax applies to salary as it does for a local worker. The differences lie in the details. A person present for more than 183 days in any consecutive twelve-month period is resident, and only residents may use PIT reliefs. As noted above, INPS contributions for a foreigner without permanent residence require a separate check. The main additional foreign-worker expense is not a tax: permission to work and the associated fees depend on the specialist’s category. Before budgeting, establish whether the candidate needs confirmation of the right to work and the applicable category.
The position is more complex where an employee lives and works outside Uzbekistan. Whether the Uzbek company must withhold PIT and accrue social tax depends on the income’s source, the employee’s tax residence, the applicable double-tax treaty and the rules of the country where the work is actually performed. That country may impose separate employer obligations. The “12% + 12%” calculation cannot simply be applied unchanged. Examine the arrangement when choosing the form of engagement, before hiring an employee working remotely abroad.
Payroll-tax payment and filing deadlines
PIT is remitted when income is paid, but no later than the reporting deadline. Social tax is due no later than that same deadline. The company files its combined PIT and social-tax calculation monthly by the 15th of the following month. INPS registers and contributions are due on the same day. For August 2026 payroll, for example, the final filing and payment date was 15 September. Where income is provided in kind, PIT and INPS contributions must be remitted within five days after the end of the payment month.
The company therefore needs both the net-pay amount and all withheld PIT in the payment month, and social tax by the 15th of the following month. Payroll reporting is linked to employment-contract information in the electronic system. Tax authorities automatically identify discrepancies, including below-minimum accruals and unregistered employees.
Building an employment budget before hiring
Begin with the nature of the relationship. If the individual works to a schedule, follows internal rules and performs an employment function, using a paid-services agreement does not reduce tax obligations; it creates risk. Professional publications warn that reclassification as employment leads to additional taxes and a separate administrative fine for each agreement. Before comparing figures, assess the distinction between employment and independent contracting instead of choosing a contract by its tax rates.
Then build the calculation step by step. Confirm whether the candidate’s agreed amount is gross or net and, if necessary, divide by 0.88 to gross it up. Check the minimum wage against the working arrangement and whether a reduced company rate applies: IT Park residency; the 1% service-sector rate with its conditions on age, pay of at least 2.5 minimum wages and a 60% revenue share; or sectoral rates, such as 1% for textiles, garments, knitwear and footwear, or a halved rate for creative-park residents. Add social tax at the applicable rate to gross salary. For the annual budget, allow for five days of sick pay, the risk-class insurance premium, unused-leave compensation on possible termination, and work-permission costs for a foreign employee. Revisit the budget whenever the minimum wage, BCU or law changes. The Ministry of Economy and Finance’s Fiscal Strategy for 2027–2029 sets out pension-reform directions, including restricting new social-tax incentives and gradually removing existing ones. As of October 2026, these are policy directions rather than enacted provisions. In September 2026, the Ministry published a draft pension-reform decree for consultation proposing no new social-tax incentives and abolition of existing incentives for enterprises and organisations from 1 January 2030. Until the decree and Tax Code amendments are adopted, this remains a proposal. It is nevertheless risky to assume a reduced rate will remain available for many years.