For US citizens in Uzbekistan, tax compliance is defined by two key facts: a US-USSR income tax treaty from 1973 remains in force, but there is no social security totalization agreement. This combination means that while some cross-border investment income rules are simplified, self-employed Americans owe full US self-employment tax on top of any local taxes. Understanding the treaty's saving clause and the rules for foreign accounts and corporations is essential.
US filing basics every American abroad must know
US citizens and green-card holders are taxed on worldwide income wherever they live, and usually must file Form 1040 once gross income exceeds the IRS threshold ($15,750 for single filers, $31,500 for married filing jointly, and $23,625 for head of household for 2025), even when no tax is ultimately due. The tools that prevent double taxation are the Foreign Earned Income Exclusion (FEIE, up to $130,000 for 2025 under IRC §911) and the Foreign Tax Credit.
Two reporting rules catch most filers in Uzbekistan: the FBAR (FinCEN Form 114), required when foreign financial accounts exceed $10,000 in aggregate at any point in the year, and Form 8938 (FATCA) for specified foreign assets above the applicable threshold. Both can carry penalties even when no tax is owed. If you are behind, the Streamlined Filing Compliance Procedures are the usual penalty-free path back for non-willful taxpayers.
US tax treaty with Uzbekistan
The United States and Uzbekistan are bound by the 1973 income tax convention between the U.S. and the former Union of Soviet Socialist Republics (USSR). Article VII of the treaty contains a "saving clause," allowing the U.S. to tax its citizens as if the treaty did not exist. Consequently, while the treaty sets withholding rates for income flowing between the countries, it does not generally reduce the US tax liability for American citizens living in Uzbekistan. Its primary function for US citizens is to prevent double taxation through mechanisms like the Foreign Tax Credit, which is often necessary given Uzbekistan's own tax system.
Article VII (Saving Clause).
This clause reserves the right of the United States to tax its citizens residing in Uzbekistan on their worldwide income according to its domestic laws, irrespective of most treaty provisions. This is the main reason US citizens in Uzbekistan must still file a full US tax return and cannot use the treaty to exclude income.
| Income type | Treaty rate | Statutory rate | Notes |
|---|---|---|---|
| Dividends | 30% | 30% | The 1973 US-USSR income tax treaty provides no reduction for dividends, so the US statutory rate applies. |
| Interest | 0% | 30% | The treaty exempts interest connected with US-USSR trade financing; most other US-source interest paid to a nonresident is exempt under US portfolio-interest rules. |
| Royalties | 0% | 30% | Exempt from US withholding under the 1973 US-USSR income tax treaty. |
Because of the saving clause, a US citizen in Uzbekistan cannot use the treaty exemptions (such as the 0% rate on royalties) to reduce US tax on that income. The US taxes the income at normal rates. The treaty’s main value comes from providing a framework for applying the Foreign Tax Credit to avoid double taxation.
Uzbekistan Pensions and US Tax
Uzbekistan has a state pension system and individual accumulative pension accounts. For a US citizen, neither of these is treated as a "qualified" retirement plan by the IRS, which has significant consequences.
Employer contributions to, and earnings within, an Uzbek pension plan may be currently taxable by the US, even if they are tax-deferred in Uzbekistan. Distributions from these plans are reportable on a US tax return and are generally taxable, though the Foreign Tax Credit may offset any Uzbek tax paid.
Furthermore, these accounts are considered foreign financial assets. Their value must be included when determining if you meet the filing thresholds for:
- FinCEN Form 114 (FBAR): Required if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the year.
- IRS Form 8938 (FATCA): Required if the value of specified foreign financial assets exceeds higher thresholds (starting at $200,000 for single filers living abroad).
Depending on the structure, an Uzbek pension could be classified as a foreign trust, triggering complex reporting on Forms 3520 and 3520-A.
Investments, property, and capital gains in Uzbekistan
Investing in Uzbekistan while being a US person involves navigating complex anti-deferral tax regimes. Any investment in a local Uzbek mutual fund or similar investment vehicle is almost certainly an investment in a Passive Foreign Investment Company (PFIC). Owning a PFIC requires filing Form 8621 for each fund, and without a timely election (like a QEF or Mark-to-Market election), the default tax treatment on distributions or sale is extremely punitive.
If you own a significant stake in an Uzbek business, such as a Limited Liability Company (LLC) or Joint Stock Company (JSC), you may have created a Controlled Foreign Corporation (CFC). This requires filing Form 5471, an extensive and complex information return. As a shareholder of a CFC, you may be required to pay US tax currently on the company's earnings under the Global Intangible Low-Taxed Income (GILTI) or Subpart F rules, even if you receive no distribution.
Self-employment and companies in Uzbekistan
This is a critical area for US expats in Uzbekistan. There is no US-Uzbekistan totalization agreement (also known as a social security agreement). This has one crucial consequence: a self-employed US citizen in Uzbekistan is fully liable for US self-employment taxes (Social Security and Medicare) on their net earnings from self-employment.
The tax is 15.3% on the first $176,100 (for 2025) of net self-employment income, and 2.9% on income above that. This tax is owed to the IRS regardless of any income or social taxes paid to Uzbekistan. You cannot obtain a Certificate of Coverage to claim an exemption. Furthermore, the Foreign Earned Income Exclusion (FEIE) can reduce your income tax, but it does not reduce your self-employment income for the purpose of calculating self-employment tax.
Worked examples
Self-employed IT consultant in Tashkent (2025)
Maria is a US citizen working as a freelance IT consultant in Tashkent. She earns $120,000 in net self-employment income. Because there is no totalization agreement with Uzbekistan, Maria owes US self-employment tax. Her net earnings from self-employment for US tax purposes are $120,000 * 0.9235 = $110,820. The self-employment tax is 15.3% of this amount, so she owes $16,956 in US SE tax. This is true even if she uses the Foreign Earned Income Exclusion to exclude all $120,000 from US income tax. The SE tax must be paid. She will also need to file an FBAR for her Uzbek bank accounts.
Salaried employee at an Uzbek company (2025)
John works for an Uzbek textile company and earns a salary equivalent to $90,000. He can use the Foreign Earned Income Exclusion (FEIE) to exclude his entire salary from US income tax, resulting in zero US income tax liability. However, he must still file a US tax return to claim the exclusion. He also has over $10,000 combined in his Uzbek bank account and his individual accumulative pension account, so he must file a FinCEN Form 114 (FBAR) to report these accounts to the US Treasury. If his account balances are high enough (e.g., over $200,000), he may also need to file Form 8938 with his tax return.
Retiree with US-source investments (2025)
David is a retired US citizen living in Uzbekistan. He receives $30,000 in dividends from his US brokerage account. The 1973 US-USSR treaty has no dividends article, so it provides no reduction; a nonresident would face the 30% US statutory rate. As a US citizen, David is taxed under US domestic law regardless of the treaty (the saving clause). He reports the $30,000 on his Form 1040 and pays US tax at the qualified dividend rates (0%, 15%, or 20%). His US broker generally will not withhold on a US citizen, but the tax is due when he files.
Common mistakes for Americans in Uzbekistan
- Believing there is a totalization agreement and that they are exempt from US self-employment tax. They are not.
- Using the Foreign Earned Income Exclusion (FEIE) and thinking it eliminates the need to pay US self-employment tax.
- Assuming the US-USSR treaty exemptions (which cover royalties and certain trade-related interest, not dividends) mean a US citizen owes no US tax on US-source income; the saving clause lets the US tax its citizens in full.
- Failing to file FinCEN Form 114 (FBAR) for Uzbek bank and pension accounts exceeding the $10,000 aggregate threshold.
- Ignoring the high probability that investments in Uzbek mutual funds are PFICs, which require filing Form 8621.
- Not realizing that owning a significant share of a local Uzbek company (LLC or JSC) could make it a CFC, requiring a complex Form 5471 filing.
- Thinking the saving clause in the treaty is a minor detail, when in fact it preserves the US's right to tax its citizens on worldwide income.
- Assuming an Uzbek pension plan is a 'qualified' plan like a 401(k), and failing to report contributions or growth as potentially taxable by the US.
Uzbekistan tax FAQ
As a self-employed American in Uzbekistan, do I have to pay US Social Security and Medicare taxes?
Yes, absolutely. There is no US-Uzbekistan totalization agreement. Therefore, you are required to pay the full US self-employment tax (15.3%) on your net self-employment income. This is in addition to any income tax you owe to the US or Uzbekistan. The Foreign Earned Income Exclusion does not reduce this tax.
Does the US-Uzbekistan tax treaty lower my US taxes?
Generally, no. The treaty contains a "saving clause" that allows the US to tax its citizens as if the treaty didn't exist. Its main practical benefit is in providing rules to prevent double taxation (for example, by allowing you to take a Foreign Tax Credit for taxes paid to Uzbekistan), but it does not typically reduce your overall US tax liability on its own.
Do I need to report my Uzbek bank account to the US?
Yes, most likely. If the total, combined value of all your foreign financial accounts (including bank, brokerage, and pension accounts in Uzbekistan and elsewhere) exceeds $10,000 at any point during the year, you must file a FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Higher thresholds may also trigger a requirement to file IRS Form 8938.
What happens if I own an Uzbek company?
If you have a significant ownership stake (typically more than 10%) in an Uzbek company, it may be classified as a Controlled Foreign Corporation (CFC). This would require you to file the very complex Form 5471 each year and potentially pay US tax on the company's profits even if they are not distributed to you.
Is my Uzbek pension treated like a US 401(k) for tax purposes?
No. The IRS does not consider Uzbek pension plans to be "qualified" retirement plans. This means employer contributions, employee contributions, and internal growth may be currently taxable by the US. The account is also a reportable foreign financial asset for FBAR and Form 8938 purposes.
Does the US-USSR treaty exempt my US-source dividends?
No. The 1973 US-USSR treaty has no dividends article, so it provides no reduction; US-source dividends paid to a nonresident face the 30% statutory rate. The treaty exempts only royalties and certain trade-related interest. As a US citizen, you are taxed on your worldwide income, including US-source dividends, under US domestic law regardless of the treaty (the saving clause).
What is a PFIC and should I be concerned in Uzbekistan?
A PFIC is a Passive Foreign Investment Company. If you invest in a non-US investment fund, like an Uzbek mutual fund, it is almost certainly a PFIC. Owning a PFIC requires filing Form 8621 and can lead to very high US tax rates unless you make specific, timely elections. It is a major compliance trap for US investors abroad.
Can I get a Certificate of Coverage to avoid double social security taxes?
No. Certificates of Coverage are issued only for countries that have a social security totalization agreement with the United States. Since Uzbekistan does not have such an agreement, you cannot use a Certificate of Coverage to get an exemption from US self-employment tax.
Sources and last reviewed
- IRS, Uzbekistan Tax Treaty Documents (verified 2026-06-07)
- U.S. Treasury, U.S.-USSR Tax Convention Text (verified 2026-06-07)
- U.S. Embassy in Uzbekistan, Internal Revenue Service (U.S. Taxes) (verified 2026-06-07)
- U.S. Department of State, 2025 Uzbekistan Investment Climate Statement (verified 2026-06-07)
Last reviewed .
Common services needed by expats in Uzbekistan
Most Americans abroad in Uzbekistan need help with at least one of the following core compliance areas, which frequently interact:
- US expat tax returns, Form 1040 with FEIE, FTC, treaty positions, and any required state returns.
- FBAR reporting, FinCEN Form 114 for foreign financial accounts exceeding $10,000 aggregate at any time during the year.
- Form 8938 (FATCA), IRS disclosure of specified foreign financial assets when thresholds are met.
- Streamlined catch-up filing, For eligible non-willful taxpayers with prior unfiled years.
Discuss your Uzbekistan return