Returning to turnover tax in Uzbekistan: eligibility and procedure

A return to turnover tax in Uzbekistan is possible only from 1 January. A company paying VAT and profit tax, or an entrepreneur registered for VAT, may return to the simplified regime at the start of the following year if total income for the preceding year does not exceed the limit, currently 12,000 base calculation units (BCUs). At the BCU of UZS 440,000 in force from 1 September 2026, this is approximately UZS 5.28 billion. The business must also fall outside categories required to pay VAT regardless of income. The change is made by notifying the tax authority; published explanations require notification no later than ten working days before the year begins. Businesses that voluntarily registered for VAT cannot return until at least twelve months have passed. For those that became VAT payers after exceeding the former UZS 1 billion limit, the next opportunity is 1 January 2027. Preparation is needed before mid-December 2026, including a calculation of the VAT on remaining stock that must be adjusted when leaving VAT.

This article explains who can leave VAT, how the higher 2026 threshold affects existing VAT payers, how to submit the notification, what happens to previous input VAT credits and customer relationships, and when another option may make more sense.

Who can return to turnover tax?

Article 462(2) of the Tax Code establishes the right to switch back. A VAT and profit-tax payer not required to pay those taxes because of its activities may move to turnover tax from the start of the next tax period if total income for the preceding year does not exceed the limit. The turnover-tax period is the calendar year, so a mid-year return is not possible. Even if income falls well before December, the company must continue paying VAT and profit tax until 31 December. Until 1 June 2026, the threshold was UZS 1 billion. Presidential Decree No. UP-100 of 26 May 2026 replaced it with 12,000 BCUs. The rule applies under the decree. Professional publications reported that, by autumn 2026, it had not yet been incorporated into the Tax Code, which explains why the Code and older reference materials may still show UZS 1 billion.

The second condition concerns the nature of the activities rather than income. Businesses required to pay VAT regardless of income include, among others, excisable-goods manufacturers, subsoil users, fuel-market operators, lottery organisers, fixed retail outlets selling alcohol including beer, tax-consulting and audit organisations, markets and shopping complexes, and owners of vacant buildings or unfinished construction subject to a finding of inefficient use. Such businesses cannot return while the relevant activity or licence remains. Check who may use turnover tax and the activity restrictions before preparing a notification. Importers deserve separate attention. Previously, importing goods itself excluded turnover tax, but UP-100 removed the rule that automatically made an importer a VAT payer. An importer below the income limit is therefore no longer necessarily barred from returning, although import VAT remains payable at customs.

The third condition applies to voluntary VAT registration, for example to issue VAT invoices to customers. Professional commentary on Article 462(8) explains that these businesses may return no earlier than twelve months after the voluntary switch, and only at the start of the next year, provided income for the current year remains within the limit. A company voluntarily registered from 1 May 2026 cannot therefore return before 1 January 2028. One registered from 1 November 2025 may return from 1 January 2027 if its 2026 income stays within 12,000 BCUs.

Returning in 2027 after becoming a VAT payer in 2025–2026

The almost fivefold increase in the limit raised an obvious question: can a company that became a VAT payer after exceeding UZS 1 billion immediately return if it falls below the new 12,000-BCU limit? The decree does not answer this. It sets a new threshold for moving to the general regime but contains no return provisions. The view of Tax Committee specialists reported in a publication dated 26 June 2026 is that a business exceeding UZS 1 billion before the decree took effect remains a VAT payer until the end of 2026 and can move to turnover tax only from 2027, provided full-year 2026 income does not exceed 12,000 BCUs. The Committee also explained that businesses exceeding UZS 1 billion in January–May 2026 moved under the old rules; from June, the new threshold applies. The publication cautions that these answers are informational, not the authority’s official position or a provision of the Code. They nevertheless align with the general rule allowing regime changes only at the start of a year, and no other public explanations on this point were identified.

The practical implication is that a return from 1 January 2027 depends on all income for 2026, including months spent on turnover tax. For example, a company earning UZS 1.2 billion by April, switching to VAT and ending the year at UZS 4 billion falls within 12,000 BCUs under either BCU amount used in 2026: UZS 4.944 billion at UZS 412,000 per BCU, or UZS 5.28 billion at UZS 440,000. Cases approaching UZS 5 billion are less clear. There has been no official explanation of which BCU amount should be used to test annual income. A company between the two limits should clarify this with the tax authority in advance. If the threshold is exceeded after 1 June 2026, the company moves to VAT from the date the limit is exceeded, and its 2026 income itself rules out a return in 2027.

Submitting the notification and deregistering for VAT

The change is notified through the taxpayer’s personal account at my3.soliq.uz. Professional explanations from earlier years require notification no later than ten working days before the year in which turnover tax will apply. The stated deadlines were 16 December 2022 for a 2023 switch and 18 December 2023 for a 2024 switch. For 1 January 2027, the deadline will accordingly fall around mid-December 2026; check the exact date against the taxpayer calendar, allowing for weekends and public holidays. The account navigation has changed. In 2022, form 10102_5 was included in electronic turnover-tax reporting. For a 2024 switch, the notification was submitted through the interactive VAT registration service under “VAT payer deregistration”. At certain times, users reported that the button was missing. Find the relevant service in advance rather than waiting until the final days.

The notification leads to VAT deregistration. The special-registration rules primarily link deregistration to the move to turnover tax, and from 1 January the company ceases paying VAT and profit tax. It then issues invoices without VAT, files monthly turnover-tax reports on a cumulative basis and pays tax on income at the rate for its activities. Obligations for the final general-regime year remain: the December VAT return is due by the usual 20 January deadline, and the annual profit-tax return for the preceding year is due within the Code’s prescribed deadlines.

VAT on remaining stock: the December adjustment

The most noticeable cash cost of returning concerns VAT already credited. Article 269 lists becoming a non-VAT payer as a reason to adjust earlier credits. VAT on goods acquired with VAT and still held at the transition date is removed from the credit and included in their cost. As explained in an analysis of this adjustment rule, inventory acquired in the twelve months preceding the adjustment is affected. The adjustment appears in the December VAT return, the final month in which the company remains a VAT payer.

Consider an illustrative example showing only the mechanics. A trading company returns to turnover tax on 1 January 2027. At 31 December 2026 it holds goods bought during the year from VAT payers for UZS 56 million, including UZS 6 million of VAT at 12% previously credited. The December return removes that UZS 6 million from the credit. If monthly output VAT is UZS 10 million and input VAT before adjustment is UZS 7 million, the amount payable by 20 January becomes UZS 9 million rather than UZS 3 million. The goods’ accounting cost rises from UZS 50 million to UZS 56 million. If the warehouse were almost empty at year-end, the inventory adjustment would be small. The cost of returning therefore depends primarily on year-end stock and, for a company that recently bought equipment, possible adjustments on long-term assets.

Fixed assets need separate consideration. The 2022 analysis of Article 269 covers inventories only, and no direct official explanation specifically addressing a return to turnover tax was identified in public sources. However, in August 2026, answering questions about moving to simplified 6% VAT, a Tax Committee representative referred to Articles 269 and 270 and stated that losing the right to input credits requires adjustments to previously credited VAT on inventories and long-term assets held at the transition date. Specialist commentators describe that procedure as analogous to moving from VAT to turnover tax. In planning a return, it is therefore prudent to allow for possible adjustments on equipment and other long-term assets purchased with VAT. The Committee takes a similar approach to a negative VAT balance where input tax exceeds output tax at deregistration. Its position for a 6% switch is that the existing negative balance is written off, whereas an overpayment on the taxpayer’s account is different and may be refunded. There is no direct explanation for a return to turnover tax, but using the same approach is more cautious. Clarify whether a negative balance can be refunded before deregistration, while the company remains a VAT payer, rather than waiting until January. In the opposite direction—from 6% VAT back to the general regime—the decree expressly permits a VAT credit on the book value of remaining inventories and long-term assets.

Customers, contracts and invoices after the switch

Returning changes the company’s position with customers as well as the budget. VAT-paying customers can claim credits only on VAT invoices, so from 1 January they lose credits on purchases from the company returning to turnover tax. Where the main customers are large general-regime companies, the switch may require repricing or risk losing customers that value input VAT. This problem does not arise for retail consumers, individuals or turnover-tax businesses. A return is therefore often most attractive to businesses serving those customers.

Review agreements that separately state VAT before 1 January so both parties understand what happens to the price when the seller leaves VAT. Pay particular attention to transactions spanning year-end: December advances for January deliveries, returns of goods originally sold with VAT, and corrections of earlier invoices. Tax treatment depends on the time of supply and the period in which the document is issued. Discuss these with the accountant before notifying the change, rather than discovering discrepancies in January.

When returning may not be worthwhile, and the alternatives

A return is not beneficial to every eligible business. It may make little sense for an exporter applying zero-rated VAT and recovering a negative balance, a company with substantial input VAT, or a supplier whose customers require VAT invoices. If income is growing and may exceed 12,000 BCUs next year, returning for only one year produces two successive regime changes and the associated adjustments. The threshold is linked to the BCU, so its UZS value changes when the BCU changes. Compare forecasts with the limit calculated using the applicable amount.

UP-100 offers another option for businesses unable or unwilling to wait until 1 January. A business whose principal activity is trade, catering or services may move to the simplified 6% VAT regime from the first day of the month following notification, with no input VAT credit and a 0% profit-tax rate. This regime is unavailable to large taxpayers and companies with state ownership of 50% or more, and runs until 1 January 2030. The company remains a VAT payer, preserving customers’ invoice credits. However, it also faces the questions surrounding adjustment of earlier credits on remaining assets, on which the Tax Committee has expressed its view despite the absence of an express decree provision. Choosing between 6% VAT and turnover tax depends on customer mix, input VAT and income forecasts; use the company’s own figures.

What to do before the end of 2026 if you plan to return

Preparation for 1 January 2027 begins with three checks. First, calculate full-year 2026 income, including months on turnover tax, with headroom below 12,000 BCUs and allowance for the unresolved question of which BCU amount applies. Second, check that no activity, licence or property makes VAT compulsory regardless of income. Third, check when and why the business became a VAT payer: a voluntary registrant must have completed twelve months by 1 January. Next, assess the cash effect: calculate the VAT adjustment on remaining assets at 31 December, including inventories and long-term assets; clarify whether a negative balance potentially written off on transition can first be refunded; and forecast changes in prices and terms for VAT-paying customers. Submit the notification by the December deadline, having located the relevant personal-account service in advance. After 1 January, confirm VAT deregistration and file the December and annual returns under the previous regime. Because incorporation of UP-100 into the Tax Code had not been confirmed by autumn 2026, check the threshold, calculation method and deadlines again before submitting the notification.