Tests of doing business and penalties for unregistered entities considered as doing business in Uzbekistan

1) What is considered doing business without registration?

According to the legislation of the Republic of Uzbekistan, illegal entrepreneurial activity without registration is considered to mean the conduct of entrepreneurial activity in cases where there is no entry in the state register of legal entities and the state register of individual entrepreneurs regarding the creation of such a legal entity or the acquisition of individual entrepreneur status by a natural person, or there is an entry regarding the liquidation of the legal entity or the termination of the natural person's activities as an individual entrepreneur.

2) What are the key indicators of doing business?

For any activity of a person to be recognized as entrepreneurial, two circumstances must be present: the systematic nature of the actions taken to make a profit and the performance of such activities as a primary, i.e., professional, activity.

3) What are the legal consequences of doing business without registration?

Carrying out activities without registration may result in administrative liability in the form of a fine with confiscation of the objects of the offense. If the activity is associated with obtaining uncontrolled income on an especially large scale, it may be classified as a criminal offense. 

It should be noted that a person who has committed a crime for the first time is exempt from liability if, within thirty days from the date of discovery of the crime, they voluntarily compensate the state for the damage in the form of taxes and fees, ensured the registration of the business entity, and obtained the necessary permits.

4) What is the penalty amount in 2025?

Engaging in business activities without state registration is punishable by a fine of:

• 5 to 7 base calculation values (BCV), which is approximately equal to US$170-240;
• from 7 to 10 BRV, which is approximately US$240-340, in the case of receiving uncontrolled income in a significant amount;
• from 10 to 15 BRV, which is approximately US$340-510, in the case of receiving uncontrolled income in a large amount.

5) Is criminal liability possible?

In accordance with Article 188 of the Criminal Code of the Republic of Uzbekistan, conducting business activities without state registration and receiving uncontrolled income in a particularly large amount is punishable by a fine of 300 to 600 BCV with deprivation of certain rights for up to three years or compulsory community service for up to 480 hours or restriction of liberty for 2 to 5 years, or imprisonment for up to 5 years.

6) Who identifies unregistered business activity?

The Tax Committee of the Republic of Uzbekistan is authorized to monitor compliance with the procedure for conducting business activities by legal entities and individual entrepreneurs in accordance with the law, to study, identify, and suppress mechanisms for evading registration with the state tax authorities of legal entities and individuals engaged in business activities.

7) What should be done if the activity is already ongoing without registration?

If activities are already being carried out without registration, immediate measures must be taken to reduce the risks of administrative and criminal liability.

First of all, activities should be suspended until all necessary documents have been completed, as continuing to work without registration increases potential liability.

Next, notify the tax authorities of the income actually received and pay taxes for the period of activity prior to registration. Here, it is important to keep documents as evidence of good faith elimination of violations in case of inspections. This will minimize possible fines and claims from regulatory authorities.

After that, you can register as an individual entrepreneur or legal entity by submitting an application to the nearest Public Services Center and registering with the tax authorities at the place of registration.

8) What obligations arise after registering a business?

After registering a business, an entrepreneur is required to fulfill a number of obligations. Within ten calendar days, it is necessary to open a bank account and register with the tax authorities.

If the entrepreneur has employees, it is necessary to conclude employment contracts with them, ensure timely payment of wages, maintain employment records and other personnel documents, and comply with labor protection standards and social guarantees.

The entrepreneur is obliged to regularly submit tax reports in accordance with the chosen taxation system and pay taxes and fees within the established deadlines. 

For activities subject to licensing or obtaining a permit, it is necessary to obtain the appropriate licenses/permits/notifications in advance.

9) From what income level must an individual register as an entrepreneur?

The obligation to register as an individual entrepreneur arises not from a specific amount of income, but from the fact of carrying out entrepreneurial activities. That is, when selling goods or providing services on a systematic basis, even with a small income, it is necessary to register as an individual entrepreneur, register with the tax authorities, and pay the corresponding taxes.

Authors: Bakhodir Karimov, Sitora Kozimjanova