IMF: More businesses should pay VAT in Uzbekistan to increase state revenues (Exclusive)

Business Materials 3 August 2018 13:42 (UTC +04:00)

Baku, Azerbaijan, Aug. 3

By Fikret Dolukhanov – Trend:

As agreed with Uzbekistan’s authorities, more businesses should pay value added tax (VAT) to increase government revenues, International Monetary Fund’s (IMF) Mission Chief for Uzbekistan Albert Jaeger told Trend on Aug. 3.

He underlined that the VAT paying threshold should be based on turnover rather than the number employees.

Jaeger reminded that the IMF staff team visited Tashkent on July 17-26 to discuss macroeconomic policies and economic reforms with the Uzbek authorities, with the concluding statement and the technical assistance being published on July 31.

IMF mission chief added that even though missions by both IMF and World Bank (WB) are aligned, their purposes are different.

“The IMF focuses on promoting macroeconomic stability. The IMF works with its membership through annual ‘health check’ that includes financial support, capacity development and technical assistance. The Fund is also a platform for strengthening international economic relations. The WB, on the other hand, focuses on promoting economic development. This includes projects that improve health, education, irrigation systems and other developmental programs,” Jaeger noted.

He added that both institutions also provide technical assistance on a wide range of topics, including tax policy and tax administration, and in doing so they consult and coordinate.

Earlier, in its concluding statement the IMF Mission also noted that the government of Uzbekistan needs to bring tariffs and energy prices closer to the level of cost recovery.

Experts point out that due to the current situation, state-owned enterprises (SOEs) that provide utilities and produce energy bear considerable losses due to the growing costs of the resources used, and the situation of these SOEs is exacerbated by the established ineffective practices of their activities. The increase in energy prices, according to the IMF, will solve this problem.

The WB experts, headed by Alma Kanani, head of the Global Tax Department, have earlier offered Uzbekistan to keep the VAT rate and its distribution to small business entities, as well as to abandon the number criterion.


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