Session of the Ministry of Economics and Industry of Uzbekistan. Photo from Mineconomy.uz
From 1 April 2020 the concept of the “medium-sized business” may make an appearance in Uzbekistan. Proposals to introduce such a category have been included in a draft presidential decree drawn up by the Ministry of Economy and Industry.
Members of the category of medium-sized business will be drawn from the existing class of small businesses. Two parameters are to be used to determine which legal entities will make it into the new category – number of employees and annual turnover. In order to qualify for the new category, for example, enterprises will need to employ between 100 and 150 employees if they are engaged in manufacturing, or between 70 and 100 people if they are involved in construction.
For companies involved in wholesaling and agriculture, significantly smaller figures have been set: between 30 and 40 employees; and for companies in the retail and service industries, between 20 and 30 people.
The annual turnover of a medium-sized business must be somewhere in the range of 1 and 3bn Som ($105,000 — $316,000). It is proposed to exempt enterprises with such a turnover from having to pay VAT. Medium-sized businesses are also to be covered by the benefits currently extended to small businesses.
The introduction of a category of medium-sized businesses was proposed in September by President Shavkat Mirziyoyev. He justified the measure with the need to learn from international practice and underlined that this type of enterprise requires a special form of state support.
According to data from the State Committee of Uzbekistan on Statistics, in the period January-September 2019, 323,000 small businesses and microenterprises were active in the country, which represents a 25% increase on the equivalent period in 2018. The share of small businesses in GDP during the first nine months of the year was 57.2%.
