Service Agreement in Uzbekistan (2026): Mandatory Terms, Acceptance Act, Taxes and Outsourcing

As of November 2026, a paid-services agreement in Uzbekistan is governed by Chapter 38 of the Civil Code (Arts. 703–708): the service provider performs actions or carries on an activity that has no material form, and the customer pays for it. It is not a contract work agreement (podryad), where the result is paid for, and not an employment contract, where a person submits to internal work rules. Losses recoverable from the provider are capped at twice the contract price of the services (Art. 706), while a customer who terminates the contract pays the full price under Art. 707. VAT on services is 12% (Art. 258 of the Tax Code), and an individual paid under such a contract has 12% personal income tax withheld and the customer adds 12% social tax on top.

In short

• Basis. Arts. 703–708 of the Civil Code (CC); legal entities contract in writing (Art. 108), and the general rules on contract work apply to services unless they conflict with the services chapter (Art. 708).
• Liability. The provider's losses are capped at twice the price of the services (Art. 706 CC). Unless the contract says otherwise, the penalty for failing to provide services is 0.5% a day and for late payment 0.4% a day, in both cases capped at 50% (Arts. 25 and 32 of Law No. 670-I).
• Exit. Under Art. 707 the customer may terminate by paying the full price. Unilateral withdrawal is possible only if the law or the contract allows it (Art. 15 of Law No. 670-I), so it should be written in.
• Taxes. VAT 12%; turnover tax 4%, or 1% for sole proprietors and self-employed persons (Art. 467 Tax Code). The Tax Code sets the turnover-tax ceiling at UZS 1 billion, while Presidential Decree No. UP-100 raises it from 1 June 2026 to 12,000 BRV, the base calculation value (UZS 5.28 billion).
• Individuals. The customer withholds 12% personal income tax and pays 12% social tax at its own cost (Arts. 371, 381, 405 Tax Code).
• Risk. A services agreement used in place of an employment contract is prohibited: a court may treat the relationship as employment from the date of the contract (Arts. 11 and 33 Labour Code), and a breach of labour law exposes an official to a fine of 5–10 BRV (UZS 2.2–4.4 million, Art. 49 Administrative Code).
• Outstaffing is lawful: a worker may be seconded for no more than nine months in a calendar year (para. 14 of the Regulation, Cabinet of Ministers Resolution No. 706 of 25 October 2024).

The BRV is set at UZS 440,000 from 1 September 2026 (Presidential Decree No. UP-115).

What the services agreement covers

Article 703 CC defines the contract: the provider, on the customer's instruction, performs a service (certain actions or an activity) that has no material form. The chapter covers consulting, information, audit and medical services, training and other services, except those governed by the chapters on contract work, carriage, agency, commission and storage, and a few others. Bookkeeping, legal support, cleaning and technical support are services.

Between businesses, Law No. 670-I on the Contractual and Legal Framework of Business Entities also applies: it requires writing (Art. 11), lists the mandatory sections (Art. 10) and sets penalties (Arts. 25, 32). If a contract mixes a service with a deliverable, it is a mixed contract and each part follows its own rules (Art. 354 CC).

Services or contract work

Ask what the customer holds at the end. If it is a thing, a document or another deliverable that can be accepted, it is contract work: the contractor chooses the methods (Art. 632) and delivers the result (Art. 631), and the customer may withdraw before delivery by paying for the work done (Art. 642). If the customer is buying time, advice and a continuing activity, it is a service. The provider then answers for proper performance, not for an outcome that suits you, unless the contract promises one. The distinction changes the liability cap (Art. 706), the way out of the contract and acceptance. For software, the choice of model is discussed in our article on software development contracts.

Services or an employment contract

The Labour Code defines employment in Art. 11: an employee personally performs a job function for pay, submits to the internal work rules and works in conditions the employer provides. Civil-law contracts that in fact regulate such a relationship are prohibited. If a court so finds, the employment contract is deemed concluded on the date of the civil-law contract (Art. 33 Labour Code), and leave, benefits and dismissal procedure follow. Warning signs: a schedule, an obligation to be in the office, a single customer, pay like a salary, and the customer's equipment and manager. A self-employed person also may not have an employer: if one exists, the status is lost (Art. 35 of the Law "On Employment of the Population" No. ZRU-642). A breach of labour law costs an official a fine of 5–10 BRV, and 10–15 BRV (UZS 4.4–6.6 million) for a repeat offence (Art. 49 Administrative Code).

Mandatory and important terms: subject, price and the rest

A contract is concluded when the essential terms are agreed: the subject, the terms the law names as essential and any term that one party insists on (Art. 364 CC). For a business contract Art. 10 of Law No. 670-I lists the subject, price, deadlines, payment procedure, obligations and liability, dispute procedure, details of the parties, and the date and place.

Subject and price. Do not write "consulting services"; write "up to 20 hours a month of procurement advice, a reply to each request within 1 working day, a monthly report". State whether the price is fixed or hourly, whether VAT is included and the payment period after the act. Between individuals, writing is mandatory above 10 BRV (UZS 4.4 million, Art. 108 CC); without it a party cannot rely on witness testimony (Art. 109). On protecting data, see our article on the NDA.

Unilateral withdrawal. The law does not give the customer an unrestricted exit; it gives a right to demand termination on payment of the full price (Art. 707), unless the provider is at fault, while the provider can obtain termination only by fully compensating the customer's losses, unless the customer is at fault. A business contract cannot be withdrawn from unilaterally unless the law or the contract allows it (Art. 15 of Law No. 670-I); if it does, the contract is treated as terminated (Art. 382 CC). So write: either party may withdraw on 30 days' notice, and the customer pays for services provided and documented costs. Contract work gives such a right directly (Art. 642), but whether it applies to services through Art. 708 is disputed.

Liability. The 2x cap (Art. 706) holds unless the contract provides for heightened liability of a provider acting as a business. A business is liable without fault, except for force majeure (Art. 333). A court may reduce a clearly disproportionate penalty (Art. 326). A dispute usually starts with a claim letter, although a lawsuit may be filed without one (Art. 19 of Law No. 670-I): the procedure is in our article on claims practice. The limitation period is three years (Art. 150 CC).

The act of services and documents

The Civil Code does not require an act, but without one it is hard to prove performance and acceptance. A party that has performed a written transaction may demand a document confirming performance (Art. 107 CC). For VAT, the date of a services supply is the date the invoice or other document confirming the service is signed, and for services supplied on a continuous basis the last day of the month in which they were provided (Art. 242 Tax Code). A customer's cost of the service is deductible from profit if it is justified and documented, including by a report on the service rendered under the contract (Art. 305 Tax Code).

The customer claims input VAT if it received an invoice with tax shown separately and the supplier is registered as a VAT payer (Art. 266 Tax Code). A non-payer may not show VAT on an invoice: the fine is 20% of the stated amount and the tax must still be paid (Art. 225 Tax Code). An act signed without checking is dangerous: defects that could have been noticed on acceptance cannot be raised later, and hidden defects must be reported within 10 days (Art. 646, applied to services through Art. 708).

Taxes under a services agreement

For a service priced at UZS 10,000,000 before taxes, the customer pays: a VAT payer UZS 11,200,000, of which UZS 1,200,000 is VAT to be credited; a turnover-tax provider UZS 10,000,000; a self-employed person UZS 10,000,000, of which UZS 100,000 is withheld and remitted; an individual UZS 10,000,000 plus UZS 1,200,000 of social tax, with the individual receiving UZS 8,800,000 after income tax. The figures ignore reliefs.

Regime thresholds. Article 461 of the Tax Code allows turnover tax for income up to UZS 1 billion. Presidential Decree No. UP-100 of 26 May 2026 set the threshold for moving to the general regime at 12,000 BRV from 1 June 2026 (para. 2): with the BRV at UZS 440,000 from 1 September 2026 (Decree No. UP-115) that is UZS 5.28 billion. The Tax Code text still says UZS 1 billion, so confirm the threshold and the mechanics of simplified VAT (including an invoice at 6%) with a tax adviser. Input VAT can be credited only against a VAT payer's invoice, so ask for the provider's regime before signing and fix the price as "with VAT" or "without VAT".

Non-resident providers. For services, the place of supply is Uzbekistan if the buyer is located or operates here (Art. 241 Tax Code). The Uzbek customer then calculates and remits the VAT as tax agent (Art. 255) and withholds 20% tax at source on management, technical and consulting services (even if performed abroad) and on other services performed in Uzbekistan (Arts. 351, 353). A double tax treaty may exempt the income or reduce the rate if the non-resident has provided a certificate of tax residence (Arts. 354, 358).

Outsourcing and outstaffing

Outsourcing bookkeeping, IT, cleaning or a legal function is an ordinary services agreement: the provider organises its own people and answers for quality, and the customer does not manage them. On choosing between staff and outsourcing, see in-house lawyer or legal outsourcing.

The Labour Code does not regulate outstaffing; it knows only secondment to another employer, with written consent, for up to one year (extendable by at most another year), under a separate fixed-term employment contract with the host employer, who also pays the wages (Art. 147). In outstaffing the outstaffer pays the wages, and the Regulation defines it as sending employees to work "in the interests, under the management and control" of the host organisation. If the provider's people sit in your office and report to your manager, there is a risk that "outsourcing" will be treated as outstaffing. Outstaffing is permitted by Art. 16 of Law No. ZRU-642 on Employment and by the Regulation approved by Cabinet of Ministers Resolution No. 706 of 25 October 2024.

An outstaffing contract must state the secondment period and the control mechanism, and employee data are entered in the "Unified National Labour System" (paras. 9 and 20).

Ten-point checklist before signing

• Decide what you are buying: actions (a service) or a result (contract work).
• Describe the subject: volume, frequency, criteria, report, exclusions.
• State the price in soums, VAT "included" or "added", the advance and the payment period after the act.
• Find out the provider's regime: VAT, turnover tax, sole proprietor, self-employed, individual or non-resident.
• Set the time to review the act and the time for objections.
• Fix the penalty, fine and liability cap with Art. 706 in mind.
• Write in the right to withdraw unilaterally and payment for what was actually provided.
• Add confidentiality and the rules on using subcontractors.
• Check for signs of employment: schedule, subordination, equipment.
• Settle the document format: electronic invoice, act, signature, 5-year retention.

For a contract register, templates and an approval procedure, see our article on contract management in a company.

Common mistakes

• The subject is described as "services as agreed", with no volume or report.
• The contract is called services, yet the act accepts a result, or the other way round.
• No right to withdraw: the only exit is with full payment (Art. 707).
• VAT is shown by a non-payer (Art. 225 Tax Code).
• A self-employed person is put on regular scheduled work.
• The act is signed backdated or without checking.
• Outstaffing is called outsourcing and runs past 9 months.

How Pactum helps

• We draft a services agreement from UZS 1,000,000 and a contract work agreement from UZS 1,000,000.
• We review a counterparty's draft: subject, price, act, termination and liability.
• We assess the risk of a civil-law contract being recharacterised as employment and help choose an outsourcing structure.
• We prepare claim letters, and in court your interests are represented by an advocate of a partner bureau under a separate agreement.

See the page on corporate support for companies or a lawyer consultation: 60 minutes, UZS 300,000, credited toward the cost of the service. Phone +998 78 113 81 01, Telegram, info@pactum.uz, office: 21 Afrosiyob Street, Tashkent.

FAQ

Which terms are mandatory in a services agreement in Uzbekistan?

The essential term is the subject (Art. 364 CC). For a business contract Art. 10 of Law No. 670-I also lists the price, deadlines, payment procedure, liability, dispute procedure, details of the parties, and the date and place.

How does a services agreement differ from contract work?

In contract work the result is paid for and there is no 2x cap; in services the actions are paid for and the provider's losses are capped at twice the price of the services (Art. 706 CC). A customer can leave contract work before delivery by paying for the work done (Art. 642), but can leave a services agreement only by paying the full price (Art. 707).

Can a services agreement be terminated unilaterally?

There is no general right: the customer terminates by paying the full price (Art. 707 CC), and unilateral withdrawal is allowed if the law or the contract provides for it (Art. 15 of Law No. 670-I). Write in 30 days' notice and payment for services actually provided.

Are an act and an electronic invoice mandatory?

The Civil Code does not require an act, but it proves performance and acceptance, and its signing date fixes the VAT supply date (Art. 242 Tax Code). A legal entity, sole proprietor or self-employed person must issue an invoice on supplying services, as a rule electronic, unless the buyer was given a cash-register receipt (Art. 47).

What taxes apply when the provider is an individual?

The customer withholds 12% personal income tax and pays 12% social tax at its own cost: on UZS 10,000,000 that is UZS 1,200,000 withheld and UZS 1,200,000 on top. If the provider is self-employed or a sole proprietor, 1% of turnover is paid.

Can a services agreement be signed with a self-employed person?

Yes, if the activity is on the list of activities open to self-employed persons and the person does not work to a schedule under your management. On income of up to UZS 1 billion in the tax period, the legal-entity customer withholds the tax (1%) at source on the tax authority's notice (Art. 465 Tax Code).

Is outstaffing permitted in Uzbekistan?

Yes. Art. 16 of Law No. ZRU-642 and Resolution No. 706 of 25 October 2024 allow employees to be seconded temporarily, with their written consent, to legal entities, but for no more than 9 months in a calendar year. The host organisation is subsidiarily liable for payments to the employees.

Sources

• Civil Code, Part 2, Arts. 631–655, 703–708 (in Russian)
• Civil Code, Part 1, Arts. 107–109, 150, 326, 333, 354, 364, 366, 382 (in Russian)
• Law No. 670-I on the Contractual and Legal Framework of Business Entities, Arts. 10, 11, 15, 17–19, 25, 26, 32, 36 (in Russian)
• Tax Code, Arts. 47, 225, 237, 241, 242, 255, 258, 266, 305, 351–354, 358, 371, 381, 386, 405, 461–467 (in Russian)
• Labour Code, Arts. 11, 33 and 147 (in Russian)
• Law No. ZRU-642 "On Employment of the Population", Arts. 16 and 35 (in Russian)
• Cabinet of Ministers Resolution No. 706 of 25 October 2024, Regulation on Outstaffing Services (in Uzbek)
• Law "On Accounting", Arts. 14 and 29 (in Russian)
• Code of Administrative Liability, Art. 49 (in Russian)
• Presidential Decree No. UP-100 of 26 May 2026, paras. 2, 5, 6 (in Russian)
• Presidential Decree No. UP-115 of 23 June 2026, BRV of UZS 440,000 from 1 September 2026 (in Russian)