How to choose a tax regime for an LLC in 2026
In 2026, a company with revenue of up to 1 billion soum a year can pay turnover tax: the base rate is 4%, and for sole traders (individual entrepreneurs) and the self-employed it is 1% (from 2026 to 2030). If revenue exceeds 1 billion soum, 12% VAT and 15% corporate income tax are mandatory. Switching to VAT voluntarily pays off if your clients are VAT payers and you have many expenses with input VAT.
The two main regimes
| Turnover tax | VAT + corporate income tax | |
|---|---|---|
| Who can use it | Revenue of up to 1 billion soum a year | Everyone; mandatory when revenue exceeds 1 billion soum |
| Rate | 4% of revenue (base); 1% for sole traders and the self-employed | 12% VAT and 15% corporate income tax on profit |
| Tax base | All revenue; expenses are not taken into account | Profit; VAT is the difference between output VAT and input VAT |
| Accounting complexity | Simpler | More complex: invoices, VAT offset, profit calculation |
When turnover tax pays off
- High margins and few expenses, for example consulting or services with no purchases.
- Your clients are individuals or companies that don't need to offset VAT.
- You are just starting out and want simple accounting.
The downside: the tax is paid on all revenue, even if the company is operating at a loss.
When VAT and corporate income tax are more cost-effective
- Your clients are VAT payers. It is better for them to work with a supplier that charges VAT, because they can offset it.
- You make many purchases with VAT: raw materials, goods, equipment. Input VAT reduces the tax payable.
- Low margins: the 15% corporate income tax is calculated on profit, not on revenue.
What changes in 2026
From 1 January 2026, sole traders and the self-employed with income of up to 1 billion soum pay turnover tax at a single rate of 1% (until 2030). Turnover tax and corporate income tax rates for marketplace sellers have risen to the general rates of 4% and 15%. There are incentives for those switching to VAT for the first time: according to reviews of the changes, these are a year without corporate income tax and partial reimbursement of accounting costs in the first months. The conditions of these incentives are worth checking separately for your company.
If you are an IT company
IT Park residents are a separate case: until 2028 they are exempt from corporate income tax, VAT, social tax and turnover tax. More in our article "Tax incentives for IT Park residents".
How to make the decision
Calculate the taxes under both regimes using your actual figures: revenue, expenses with and without VAT, and who your clients are. We do this calculation as part of a tax consultation, before the company is set up or when changing regime.
FAQ
What is the turnover tax threshold in 2026?
1 billion soum of revenue a year. If revenue is higher, the company must switch to VAT and corporate income tax.
What is the turnover tax rate in 2026?
The base rate is 4%. For sole traders and the self-employed with income of up to 1 billion soum, it is 1% (from 2026 to 2030).
What is the VAT rate in Uzbekistan?
12%. Corporate income tax is 15%.