Every person, regardless of where they work, wants to labor honestly and retire with dignity and respect. It is everyone’s dream to receive a pension from the state in return for their work and to enjoy their old age in comfort. However, today some citizens continue to work without a formal employment contract, receiving their wages “in envelopes” without any guaranteed protection of their labor rights. These workers do not receive contributions to their individual pension accounts by their employers, which ultimately leads to problems when they reach retirement age.

The heart of a country's economy is entrepreneurship. Behind every job created, every product manufactured and exported, lies the courage, labor, and initiative of an entrepreneur. In recent years, large-scale reforms have been implemented in the country, and one of the key priorities has been easing the tax burden, making it simple and clear, and encouraging entrepreneurs to come out of the shadows.

“Starting from 2026, entrepreneurs with an annual turnover of up to 1 billion soums will be able to pay tax at only a 1% rate. This is a major relief for thousands of small business owners. With the money they retain, they will be able to expand their operations and create more jobs,” says Murodbek Karimov, a specialist from the Khorezm Regional Tax Administration.

He continues:

“Of course, tax authorities are also working to eliminate informal employment and prevent payment of wages in cash under the table. Awareness campaigns are being carried out under slogans such as ‘An employment contract – a guarantee of your social protection’ and ‘Your future is in your own hands.’ As a result, 17,923 employees have been brought under social protection. In particular, 2,032 workers in trade and catering, 10,688 in manufacturing and services, 475 in construction, and 4,728 in agriculture have been officially registered. At the same time, cases of hiding the number of employees and underreporting income in financial statements are being detected.”

Additionally, during awareness campaigns, detailed information is being provided about how failing to declare employees and their wages in tax reports is considered concealment of the tax base and may result in financial penalties.

According to Article 223 of the Tax Code, failure to declare the actual wage amount or employment of staff in tax reports is considered tax base concealment.

According to Article 175(5) of the Administrative Liability Code of the Republic of Uzbekistan, hiding the number of employees is subject to a fine of 10 times the base calculation amount.

If the same offense is committed again within one year after an administrative penalty is imposed, a fine of 20 times the base calculation amount is applied.

Naturally, if you are working in an organization or company without a formal employment contract—meaning you are receiving your wages in cash—it means your employer is trying to avoid paying income tax on your earnings. Your work record will not be documented, and this will result in your pension not being calculated in proportion to your labor. Additionally, social contributions will not be paid, and you will not be able to benefit from insurance payments.

No one guarantees compensation for any physical or moral damages you may incur during your work, because you are not officially registered as an employee.

However, if you work as a formal employee in either the public or private sector, you are choosing the right path—not only for yourself but for the development of society and the state as a whole. The path you choose benefits all of us.

Romon Atajanov
Head of Public Relations Department
Khorezm Regional Tax Administration