Uzbekistan Implements Stricter Regulations on Informal Wages
During a recent video conference focused on developing the service sector, Shavkat Mirziyoyev, President of Uzbekistan, unveiled plans to tighten oversight of concealed activities and the longstanding practice of paying salaries “in envelopes”. The meeting highlighted the success of a 1% social tax rate introduced two years ago for trade and service enterprises, resulting in a notable growth in both the number of enterprises and the number of employees in this sector.
The implementation of formal salary payments by many companies has not only significantly increased the total payroll fund by 3.2 times but has also generated an additional 2.1 trillion UZS in tax revenue. In light of this success, entrepreneurs have requested the extension of the tax incentive for another three years, which has been approved. The extended incentive will now cover service enterprises that employ workers under the age of 30 with a minimum salary of 3 million UZS.
Furthermore, companies operating in the construction, trade, and catering sectors will now have the opportunity to enter into short-term and simplified labor contracts, which can be based on piece rates or hourly wages. These new measures are intended to encourage more transparency and formalization within the service sector while supporting the growth of businesses and boosting tax revenues for the government.
