How Uzbekistan Recast Its Business Climate Over a Decade of Market Reform

Uzbekistan’s business environment has changed markedly since 2016, as a broad sequence of laws, presidential decrees and administrative decisions altered the rules for starting and running a company. From registration and foreign-currency access to taxation and licensing, the state has reworked many of the mechanisms that define day-to-day commercial activity. The shift, as analyzed by Vaqt.uz, was not limited to new incentives or lending programs. It also sought to change the relationship between the state and entrepreneurs by redesigning oversight, creating new channels for legal protection and laying a framework for access to foreign markets and investment.

The turning point came after Shavkat Mirziyoyev was elected president in 2016, when economic liberalization became one of the central directions of state policy. The legal foundation for that process was set on February 7, 2017, with the adoption of the 2017-2021 Action Strategy. Its second pillar was devoted to economic development and liberalization, and many later documents affecting entrepreneurship followed from that policy line. From 2022, the process continued through the New Uzbekistan Development Strategy, and at the end of 2023 the country adopted the Uzbekistan-2030 strategy, setting longer-term economic and social goals.

From an economic perspective, this matters because business reform is rarely reducible to tax cuts alone. Investment decisions depend not only on rates and subsidies, but on whether firms believe contracts, property and operating rights can be defended in practice. In that sense, Uzbekistan’s reform path resembles a broader pattern seen in transition and emerging-market economies: the state first lowers frictions, then tries to build institutions that make liberalization durable. The sequence outlined in the source suggests Tashkent increasingly treated institutional credibility as part of economic policy rather than as a separate legal issue.

Building institutions to protect entrepreneurs

Early in the reform cycle, the protection of entrepreneurial rights was established as a distinct policy direction. On August 29, 2017, Law No. O‘RQ-440 created the institution of the Authorized Representative for the Protection of the Rights and Legitimate Interests of Business Entities under the President, commonly referred to as the Business Ombudsman. The purpose was to establish a mechanism specifically designed to defend entrepreneurs’ interests in relations with state bodies.

The reforms aimed not only to expand business opportunities, but to create mechanisms through which entrepreneurs could defend their rights in dealings with the state.

That institutional architecture was strengthened on July 27, 2018, through Decree No. PF-5490, which further improved the system for protecting the rights and legitimate interests of business entities and included measures to write off certain tax arrears. Another decree, No. PF-5690 of March 15, 2019, was aimed at fundamentally improving the system for protecting entrepreneurial activity and optimizing the role of prosecutorial bodies in that process.

Recent reforms extended that trajectory. Decree No. PF-184, adopted on November 14, 2024, set out measures for more reliable protection of entrepreneurs’ rights. Under it, financial sanctions applied for engaging in entrepreneurial activity without registering a legal entity were abolished from 2025. Economically, such a move signals a further retreat from punitive regulation toward a compliance model that may lower the risks of formalization, especially for smaller operators moving from informal to formal business activity.

Cutting administrative friction

One of the main barriers to starting a business had been long and complicated administrative procedures. A major strand of reform therefore focused on simplifying registration, permits and licensing. On February 9, 2017, Cabinet of Ministers Resolution No. 66 approved a new procedure for state registration of business entities. On April 11, 2018, Decree No. PF-5409 targeted the reduction and simplification of licensing and permitting procedures, while also introducing mechanisms for electronic G2G and G2B interaction between state agencies and business.

In 2020, a new requirement was introduced: before new types of licensed activities could be added, their impact on business had to be assessed. The participation of the Business Ombudsman and the Chamber of Commerce and Industry was also envisaged. That is a notable procedural change because it inserts a form of regulatory impact review into the licensing system, a device often associated with more mature rule-making environments.

Another phase began in 2024. Under Decree No. PF-8, 22 types of licenses and permit documents were abolished from March 1, 2024. For two types of activity, a “license-free business” regime was introduced. Administrative reforms launched in 2025 were then directed at cutting the time and costs businesses incur in dealing with state agencies. According to the plans cited in the source, linking registration, the “License” system, the electronic archive and ID-card databases would reduce entrepreneurs’ administrative costs by about 90 billion soums and save up to 15 days in interactions with state institutions.

For the wider economy, these measures point to a familiar structural objective: lowering transaction costs. In practical terms, that can improve business formation rates, reduce compliance burdens and free management time for production and expansion rather than paperwork. Over time, such changes can matter as much as headline tax measures, particularly in economies where bureaucratic delay has historically acted as a hidden cost on private enterprise.

Tax reform as a systemic shift

Among the reforms of the past decade, changes in tax policy beginning in 2018 stand out as one of the most systemic. Tax rates were lowered, some payments were consolidated, and at the same time a large share of business was moved onto the general tax regime. This did not merely simplify the entrepreneurial environment; it also restructured tax relations across the economy.

On June 29, 2018, Decree No. PF-5468 approved the Concept for Improving Tax Policy. In line with that concept, a single 12% income tax rate for individuals was introduced. Social payments were also reduced, with the rate cut from 25% to 12%. For some entities under the simplified tax regime, a 15% arrangement was set.

Another significant change took effect on January 1, 2019. The scope for applying the unified tax payment was narrowed and preserved only for legal entities and sole proprietors with annual turnover not exceeding 1 billion soums. Other entities were transferred to the value-added tax and profit-tax system. Additional measures to improve tax administration were adopted in 2019, and a new version of the Tax Code entered into force on January 1, 2020.

In macroeconomic terms, this is the kind of reform that can deepen formalization while also expanding the state’s ability to standardize revenue collection. But it can also impose adjustment costs on firms brought into more complex reporting regimes. The Uzbek case, as presented in the source, suggests the government attempted to balance those pressures by pairing tax restructuring with procedural simplification and rights protection. That combination is significant. In many reform episodes, tax modernization without administrative relief can burden smaller firms; administrative relief without tax reform can leave the state with a fragmented revenue base. Uzbekistan’s approach appears to have pursued both tracks at once.

The longer-term question is whether these legal and procedural changes will translate into a more productive private sector, deeper investment and a more predictable commercial order. What is already clear from the past decade is that Uzbekistan’s reform agenda has moved beyond isolated pro-business measures. It has become a broader attempt to redefine how the state governs enterprise, and how enterprise participates in the economy.