Uzbekistan Proposes Capping Tax Penalties at Amount of Unpaid Tax

Uzbekistan is proposing a rule that would cap tax penalties at the amount of the unpaid tax. The provision is part of a bill supporting entrepreneurs, which the Legislative Chamber of the Oliy Majlis approved in its first reading on October 27. Presenting the bill, Deputy Minister of Economy and Finance Ahadbek Khaydarov said: “A rule is introduced whereby the penalty accrued on the unpaid tax amount must not exceed the amount of unpaid tax.” The idea was discussed with the president in early May.

The bill would also require tax authorities to automatically lift suspensions of a taxpayer's bank account operations once the taxpayer submits requested explanations or revised reporting after a desk audit. The Legislative Chamber said the measure aims to reduce administrative restrictions on business. The bill also proposes scrapping commissions on tax payments made through payment organizations and systems, expanding e-services via taxpayers' personal accounts, and widening accelerated VAT refunds for large taxpayers.

Under Article 110 of the Tax Code, penalties accrue daily at 1/300 of the Central Bank's refinancing rate on the unpaid amount. At a 14% rate and a 10 million som debt, the daily penalty is about 4,667 som. The current code has no overall cap, although the 2007 code had one in Article 120, which was not retained in the 2019 code. Separately, a presidential decree of August 27, 2026 declared a “Second Chance” economic amnesty for small and medium businesses, under which accrued penalties are written off if the tax debt is fully repaid by December 31, 2026, subject to set conditions.