Jamshid Urunov, Deputy to the Business Ombudsman under the President of Uzbekistan, has proposed amending the mechanism for imposing fines under Article 227-1 of the Tax Code. He made the announcement in an interview with Spot.
Urunov noted that the office had previously initiated a review of this norm. Under the current system, fines for violations of online cash register and digital labeling requirements are calculated based on the legal entity's net revenue for the last quarter. This means a single violation in one branch can result in a massive fine for the entire company.
"Imagine a company with 100 or 300 branches. If one seller in one outlet violates the rules while selling one product, the fine is calculated based on the quarterly turnover of the entire company," Urunov said.
He argued that liability should be limited to the specific outlet and individual responsible for the violation. "I would propose fining only the seller who violated the rule and the branch where the violation occurred," he stated.
Urunov recalled a case where a large company was fined several billion soums due to a violation at a small catering outlet. The company's main business was construction or textile manufacturing, but the violation occurred at a café it owned, where drinks were sold in cups.
According to Urunov, even large enterprises risk bankruptcy under the current rules due to a single infraction in one division.
However, he described the digital labeling system as a necessary and useful tool, helping combat counterfeit and unaccounted products while protecting honest entrepreneurs from unfair competition.
"I know that from the perspective of protecting the economy and the market, accounting is a good thing. But I do not agree with applying such 'draconian rules' just to make this system work," he said.
Article 227-1 was introduced into the Tax Code on March 11, 2022, and came into force on June 13 of the same year. It establishes liability for violations of online cash register use, equipment integration with tax authority information systems, and mandatory digital labeling of goods.
Labeling applies to certain types of alcohol and tobacco products, beer, beverages, carbonated water, medicines, and household appliances.
For a first offense, a fine of 2% of the enterprise's net revenue for the last quarter is imposed. For repeat violations, the fine increases to 20%.
According to the Tax Committee, 254 enterprises were fined under Article 227-1 in 2022, and by 2025, this number had grown to 1,083. Entrepreneurs refer to this article as the "execution article."
In March, during an open dialogue of the Interdepartmental Commission for Cooperation with the WTO, Urunov criticized Article 227-1, noting that a single employee's mistake could bankrupt even a well-established brand.
He cited the example of a Coca-Cola plant producing 15 bottles per second: "If a 20% fine is applied for a single labeling error, even such a plant cannot withstand it, let alone retail trade."
Source: www.gazeta.uz