Guide to tax and legal issues

Penalties imposed on legal 
entities for tax violations include
the following:
• ►The penalty for non-registration or 
late registration by a foreign legal 
entity carrying on activities leading 
to a permanent establishment in 
Uzbekistan is 10% of income earned 
from the date on which the activities 
began, but not less than
UZS 10 million (approximately
USD 955)
• The penalty for late registration as
a VAT payer is 5% of revenue received 
from the registration date required 
by tax law to the date of actual 
registration, but not less than
UZS 5 million (approximately
USD 477)
• The penalty for the understatement 
of tax liability is 20% of the 
additionally assessed tax liability
• The penalty for concealing revenue is 
20% of the concealed revenue, etc.
In addition, administrative fines may be 
imposed on company officers for tax 
offences. In certain cases, they may also 
face criminal proceedings.

---

Doing business in Uzbekistan
22
4
Overview of 
other laws that 
affect business 
administration

---

23
Doing business in Uzbekistan
4.1. Employment 
regulations
The Uzbek Labour Code and other 
labour regulations apply to both local 
and foreign citizens, including stateless 
persons, working in Uzbekistan on 
the basis of employment agreements 
with their employers. Furthermore, 
employment relationships within 
organizations that are fully or partially 
owned by foreign legal entities or 
individuals are also regulated by Uzbek 
labour law.
An employment agreement with an 
employee must be concluded in writing. 
The terms of an employment agreement 
are determined by mutual consent of 
the employee and employer and must 
also comply with the requirements 
established by the Labour Code and 
other relevant labour regulations. 
Employment agreements may be 
concluded for a fixed or indefinite 
term. An employment agreement may 
establish a probation period, which 
should not generally exceed 3 (three) 
months. 
The Unified National Labour System 
was brought into use from 1 January 
2020 with the aim of standardizing 
and digitalizing employment relations. 
It serves as an electronic database 
of individuals’ employment histories, 
effectively replacing the old system of 
“labour books”. The Unified National 
Labour System includes information 
on work experience and registered 
employment relationships, including 
details (e.g. date, registered number) of 
employment agreements, amendments 
thereto and termination of employment 
agreements. All employment 
agreements must be simultaneously 
registered with the Unified National 
Labour System. 
At the time of writing, a new version 
of the Labour Code is being drafted. It 
is expected that the new Code may be 
enacted during 2021 and will include 
more extensive provisions on the rights 
and obligations of employees and 
employers, as well as provisions aimed 
at protecting the interests of various 
categories of employees, regulating the 
employment of foreign and stateless 
persons, and establishing, personal data 
protection and processing requirements.
4.2. Work permits
As a general rule, a foreign citizen who 
comes to Uzbekistan to work (i.e. who 
has been hired under an employment 
agreement) may work in the country 
only after obtaining confirmation of 
the right to work in Uzbekistan (“work 
confirmation”) issued in his/her name 
on the basis of the permit to hire foreign 
labour (“work permit”) obtained by the 
employer.
This rule applies to all foreign employees 
except for those who are specifically 
exempt, such as employees of ROs 
accredited by the Accreditation 
Authority (up to 5 (five) employees) or 
individuals hired within the framework of 
intergovernmental treaties.

---

Doing business in Uzbekistan
24
Although a work confirmation 
may appear to be a personal work 
permit for a foreign citizen, it is the 
responsibility of the employer to apply 
for it. Neither a work permit nor a 
work confirmation may be transferred 
to other employers. Hence, a foreign 
employee’s employment and his/her 
work confirmation are attached to that 
specific employer. Furthermore, only 
local employers may apply for work. 
Documents required to obtain a work 
permit and work confirmation must 
be submitted to a One-Stop-Shop 
Centre, after which the documents are 
transmitted to the government body 
responsible for issuing work permits 
and work confirmations - the Agency 
for External Labour Migration Matters 
(the «Agency»). As a rule, the Agency 
has 15 (fifteen) days to review the 
application and issue a work permit.
The same timeframe applies to work 
confirmations. In practice, when an 
employer applies for a work permit 
it should simultaneously apply for at 
least one work confirmation. In this 
case, the two processes are carried out 
consecutively, and both documents are 
normally issued within 30 (thirty) days.
A work permit is issued for a period of
1 (one) year and may be extended. 
In order to create favourable conditions 
for the attraction of qualified foreign 
specialists, increase the investment 
appeal of the Republic of Uzbekistan and 
stimulate the attraction of competitive 
human resources, qualified and highly 
qualified foreign specialists (experts) 
may be granted work confirmations for 
up to 3 (three) years with an unlimited 
number of extensions.

---

25
Doing business in Uzbekistan
Please note that starting from 2021 the 
requirement to obtain a work permit is 
expected to be abolished. Instead,
a maximum quota for the hiring of 
foreign personnel is expected to 
be introduced. At the same time, 
the requirement to obtain the work 
confirmation that authorizes a 
foreign citizen to work in Uzbekistan 
is expected to continue to apply. 
Updated regulations setting out the 
new requirements have not yet been 
published (at the time of writing).