Fiscal Analysis Institute calls for higher social tax payments by self-employed workers

The proposal was presented during a fiscal policy dialogue held on July 30 by the Institute for Macroeconomic and Fiscal Research under the Ministry of Economy and Finance.

Under Article 408 of Uzbekistan's Tax Code, sole proprietors are required to pay social tax of at least one basic calculation unit (BCU) per month. From September 1, the BCU will increase to UZS 440,000 from UZS 412,000, raising the minimum annual payment for sole proprietors to UZS 5.28 million.

Self-employed individuals, however, are currently allowed to pay social tax voluntarily at the rate of one BCU per year to have their employment period counted toward their pension record. According to the institute, this is equivalent to about UZS 36,700 per month, creating a twelvefold gap compared with the mandatory payments required from sole proprietors.

The institute argued that international practice generally relies on a single category for self-employed workers, with mandatory contributions linked either to declared income or the minimum wage rather than parallel tax regimes with significantly different payment obligations.

It therefore proposed replacing the current BCU-based calculation with a system tied to the minimum monthly wage.

Under the proposal, the minimum social tax would be set at 12% of the minimum monthly wage, matching the standard social tax rate established under Article 405 of the Tax Code. Based on the current minimum monthly wage of UZS 1.36 million, the monthly payment would amount to UZS 163,200, or approximately UZS 1.96 million per year.

That would be about 4.45 times higher than the current annual voluntary payment required for self-employed individuals to accumulate pensionable service.

The institute stressed that the transition should be gradual rather than immediate. According to the presentation, the monthly payment would initially be set at around UZS 50,000 before being progressively increased to UZS 163,200 under an approved implementation schedule.

The institute also emphasized that its role is limited to developing and presenting policy proposals, while any decision on whether to adopt the recommendations rests with the Ministry of Economy and Finance and other relevant government authorities.