Publication Details
Abstract
The Purpose of this study is to improve tax privileges system of Uzbekistan, currently operating tax privileges, its impact on fiscal sustainability and economic policy. Tax incentives were conceived as a tool of support for business activity and an attractive option for investment but their accelerated growth ad the absence of uniform approach resulted in new complexities. While recent research has emphasized the need for wide tax coverage, clear rules of the game and stable administration of taxes, there are also shortcomings in Uzbekistan, including but not limited to lack of well-defined criteria for granting tax preferences as well as mechanisms for post-grant monitoring. Based on the analysis of regulatory documents, tax policy practices, and macroeconomic data from 2020 to 2024, the study employs the methods of induction, deduction, synthesis, and comparative analysis. The results indicate a fiscal cost: tax privileges consumed RON 172.5 bln in 2024, accounting for 5 pc of GDP and 26.8 pc of state budget revenues. Tax policy also brought in losses for the budget, which minimized profit tax rates for large enterprises: this alone created a gap of 6 trillion soums in resources for the budget in 2022 and 2023. It also expose systemic issues such as the way taxpayer is segmented all the time imperfectly, the unequal and inconsistent manner of administration, and the lack of transparent procedures for the introduction or review of tax preferences. Our findings indicate that mores generous and poorly balanced tax-breaks are fueling larger budget deficits and heavier reliance on foreign debt. Accordingly, the study suggests that capping tax preferences not justified by the provision of public goods, streamlining administrative procedures, and harmonizing with WTO conditions would contribute to a more sustainable tax system. Dividing existing privileges in two will result in 36.3 trillion soums of additional revenue and will help avoid excessive borrowing from abroad.