Tax Re­form Con­cept Open for Pub­lic Dis­cus­sion

In ac­cor­dance with the de­cree of the head of state, the Na­tional Agency for Project Man­age­ment un­der the Pres­i­dent of Uzbek­istan has pre­pared a draft con­cept on the rad­i­cal re­form of the tax sys­tem. In Tashkent, a pub­lic dis­cus­sion of this document took p

Uzbekistan Today (English) - - TODAY IN UZBEKISTAN - Igor Ch­ernykh

Speak­ers noted that in re­cent years a num­ber of mea­sures have been taken in the repub­lic to im­prove the tax sys­tem and tax ad­min­is­tra­tion. At the same time, the cur­rent sit­u­a­tion in this sphere does not yet meet the prin­ci­ples of a free mar­ket econ­omy; it does not al­low to in­crease the com­pet­i­tive­ness of the econ­omy be­cause of the con­tin­u­ing high tax bur­den on busi­ness, a large num­ber of taxes and the com­plex­ity of their ad­min­is­tra­tion pro­ce­dures.

A high level of tax bur­den leads to the with­drawal of cap­i­tal in the shadow turnover. A sig­nif­i­cant dif­fer­ence in the level of tax bur­den be­tween small and large busi­ness en­ti­ties (an av­er­age of 3-4 times) hin­ders the ex­pan­sion of pro­duc­tion and the en­large­ment of busi­ness en­ti­ties.

The high rate and com­plex­ity of the VAT col­lec­tion sys­tem lead to a di­ver­sion of the tax­payer's work­ing cap­i­tal, a rise in the cost of in­ter­me­di­ate and final con­sumer prod­ucts, and the lack of ef­fec­tive co­op­er­a­tion be­tween large and small busi­nesses.

The cur­rent sys­tem of tax­ing prop­erty of le­gal en­ti­ties re­strains in­vest­ment in pro­duc­tion cap­i­tal fa­cil­i­ties and in­fra­struc­ture, lead­ing to an in­crease in the costs of cap­i­tal-in­ten­sive in­dus­tries.

The im­per­fec­tion of the sys­tem of tax­a­tion of in­comes of in­di­vid­u­als leads to an un­der­es­ti­ma­tion of the wage fund and, ul­ti­mately, to ‘gray’ salary schemes.

In­ef­fi­cient tax ad­min­is­tra­tion gen­er­ally neg­a­tively af­fects the level of rev­enues of the State bud­get.

These and many other short­com­ings of the cur­rent sys­tem sig­nif­i­cantly re­duce the in­vest­ment at­trac­tive­ness of the repub­lic, be­cause in the eyes of most in­vestors, Uzbek­istan does not pro­vide an un­der­stand­ing of the norms of tax leg­is­la­tion, healthy com­pe­ti­tion, trans­parency of tax ad­min­is­tra­tion, ac­cept­able level of tax bur­den and guar­an­tees for pro­tect­ing in­vestors’ rights.

Dur­ing the dis­cus­sion, it was stressed that the tax re­form should re­duce taxes on ‘la­bor’. To­day they make up 30.5% -55%. Such a high level of tax­a­tion leads to the fact that out of 12 mil­lion able-bod­ied cit­i­zens, only 5 mil­lion pay tax. The busi­ness ‘saves’ on pay­roll taxes, with­out draw­ing up work­ers or ap­ply­ing ‘gray’ wage schemes.

The pro­posed rate of sin­gle tax on in­come from la­bor (25%) is only at first glance high. Ac­cord­ing to ex­perts, in fact, it will be di­vided be­tween the em­ployee and the busi­ness - by 10% and 15%. If this is the way to look at this tax, then with­drawals from wages will de­crease by an av­er­age of 1.6 times. For skilled work­ers with a high level of pay, the tax bur­den will be 2-3 times lower!

The de­vel­op­ers ex­plained that it was a ques­tion of the rate of the tax on in­come from la­bor. Tax rates for other in­come may be lower.

The au­thors of the con­cept ex­plained in de­tail that it pro­vides for re­duc­ing the tax bur­den, re­duc­ing the VAT rate, uni­fy­ing and abol­ish­ing a num­ber of taxes and manda­tory pay­ments, as well as mea­sures to im­prove tax ad­min­is­tra­tion.

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