BAKU, Azerbaijan, Nov. 6
By Fakhri Vakilov-Trend:
Income tax on legal entities in Uzbekistan will dominate in the direct tax exemption in 2020, Trend reports citing Uzbekistan’s Ministry of Finance.
Its share will be 17.1 percent in the expected revenues of Uzbekistan’s state budget (over $2.3 billion). Until recently, leadership in the direct tax group for almost two decades has been allocated to personal income tax. In 2020, the share of this tax will decrease to 12.5 percent in state budget revenues (a little more than $1.6 billion).
Ministry of Finance’s report noted that in the structure of State budget’s projected revenues in 2020, the trend of increasing the share of direct taxes remains, with a slight reduction in the share of indirect taxes. The projected increase in direct tax revenues is due to three factors - the growth of gross domestic product, the commissioning of new production facilities and the increase in wages. The expected increase in direct tax revenues in 2020 is also associated with changes in rates and other elements of taxes.
Uzbekistan’s President Shavkat Mirziyoyev’s decree “On measures to further improve the tax policy of Uzbekistan” of Sept. 26, 2019, provides for an increase in the corporate income tax rate to 15 percent while maintaining the tax rate on income paid in the form of dividends.
In 2019, the corporate income tax rate was reduced for commercial banks from 22 percent to 20 percent, for other legal entities, from 14 percent to 12 percent.
According to experts, this year income tax in Uzbekistan remains one of the lowest in the post-Soviet space, where it varies from 15 percent to 20 percent. The value of this tax in different years in Uzbekistan ranged from 35 percent to 24 percent, 15.5 percent, 14 percent.
The projected increase in direct tax revenues is also associated with the legalization of the number of employees and the wage fund by maintaining the personal income tax rate of 12 percent and equalizing the single social payment rate for all business entities (12 percent). Individual entrepreneurs are transferred to the payment of personal income tax in return for a fixed tax. In addition, revenue from a single tax payment will be fully credited to local budgets (in 2019, they will be distributed between state trust funds and the Council of the Federation of Trade Unions).
State budget revenues for 2020 are planned in the amount of $13.5 million (or 20 percent of GDP), which is $1.6 million more than expected by the end of 2019. According to the materials of the publication entitled “Budget for citizens", factors such as real economic growth, improved tax collection, cancellation of certain tax and customs benefits, as well as factors associated with the expected increase in prices and exchange rates are taken into account when assessing the expected revenues of the State budget in 2020.
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