RAISING THE VAT REGISTRATION THRESHOLD AS A TAX POLICY INSTRUMENT FOR SMALL BUSINESS DEVELOPMENT IN UZBEKISTAN

Abstract

The article examines the increase in the threshold for the transition of small business entities to the general tax regime and the payment of value added tax as one of the important instruments for supporting entrepreneurship in Uzbekistan. The role of small business in ensuring employment, increasing household income, developing a competitive environment, and expanding the state tax base is substantiated. Particular attention is paid to the provisions of Presidential Decree of the Republic of Uzbekistan No. UP-100 of May 26, 2026, which provides for raising the threshold for transition to the general tax regime from UZS 1 billion to UZS 5 billion. The article shows that the previous threshold of UZS 1 billion, under conditions of rising prices and expanding entrepreneurial activity, began to create certain limitations for small businesses. When approaching the established limit, entrepreneurs could have incentives to artificially restrict turnover, split their business into several entities, conceal part of their revenue, or avoid issuing receipts. In addition, the transition to VAT is associated with more complex accounting procedures, the need to issue electronic invoices, maintain VAT credit records, and fulfill additional reporting requirements. Based on the analysis, it is concluded that raising the threshold to UZS 5 billion contributes to reducing the administrative and financial burden on small businesses, creates conditions for the legal growth of turnover, decreases the risks of business fragmentation, and strengthens entrepreneurs’ trust in the tax system. This measure is considered not only as a tax relief instrument, but also as an important element in creating a favorable business environment, stimulating private initiative, and expanding the tax base in the long term.