Individual Entrepreneur as a tax agent for the self-employed: mandatory or not?

Analyzing Article 465 of the Tax Code of the Republic of Uzbekistan: who withholds and remits tax for a self-employed person.

Legal entity — YES. If a legal entity purchases services from a self-employed person, it is recognized as a tax agent: it files reports and withholds tax at the source of payment.

Individual Entrepreneur (IE) — NO. An individual entrepreneur is not a tax agent for a self-employed person. In this case, the self-employed individual bears the tax obligations independently.

What the Tax Code says

When working with self-employed persons, a key question for entrepreneurs and accountants is who is responsible for paying the tax: the performer or the service customer. The answer depends on the legal status of the buyer.

Regarding the income of self-employed persons received from legal entities for the sale of goods (services) up to one billion soums per tax period, said legal entities are recognized as tax agents. In this case, the due tax is withheld at the source of payment based on a notification from the tax authorities.

The regulation directly and exhaustively names only one subject — the legal entity. Individual entrepreneurs are not mentioned in the text of the article, which means this mechanism does not apply to them.

Interaction scheme

Buyer (Legal entity or IE) — customer of the service → Performer — self-employed person, taxpayer.

Legal entity: procedure

When an organization enters into a contract with a self-employed person and pays remuneration, it is obliged to:

• Request confirmation of the person's self-employed status.
• Receive notification from the tax authorities regarding the amount of tax to be withheld.
• Withhold the tax at the source of payment and remit it to the budget.
• Reflect the payments in tax reporting.
• Comply with the self-employed person's income limit of up to 1 billion soums per tax period.

Individual entrepreneur: what changes

• Reporting for the self-employed person is not submitted.
• Tax is not withheld or remitted.
• The self-employed person independently declares and pays the tax.

Thus, an IE works with a self-employed person under a civil law contract without assuming tax agent functions.

Comparative table

Practical recommendations

For legal entities

Before paying for the services of a self-employed person, it is recommended to request an up-to-date registration certificate and keep it along with the certificate of completion (act). This will allow for the correct reflection of the payment in reporting and avoid disagreements during tax audits.

For individual entrepreneurs

It is recommended to state in the contract that the performer is independently responsible for paying taxes on their income. This eliminates possible disputes.

For the self-employed

If the customer is an IE or an individual, the income must be independently declared and the tax paid. When working with a legal entity, the tax is withheld and remitted by the customer.

Frequently asked questions

What happens if the income exceeds 1 billion soums?

After exceeding the threshold, the self-employed person loses their special status and switches to the general taxation regime.

Can an IE voluntarily become a tax agent?

No. This is an obligation established by law. Voluntary payment does not release the self-employed person from their tax obligations.

Does a legal entity need to enter into a contract with the tax authorities?

No. Tax agent status arises automatically by law.

How can an IE account for expenses on self-employed services?

A contract, an act of completed work, and confirmation of self-employed status at the time of service provision are required.