Deputy Prime Minister and Minister of Economy and Finance Jamshid Kuchkarov addressed concerns regarding the cancellation of certain tax benefits for exporters starting in 2025, at the November 26 meeting of the Legislative Chamber of the Oliy Majlis.
A question was raised by Deputy Atham Nazirkulov, who asked about the potential impact on Uzbekistan’s export potential following the proposed cancellation of profit tax and turnover tax benefits on income derived from the sale of goods and services. This change is part of the draft law on the state budget for 2025.
Khurram Teshabaev, Deputy Minister of Investments, Industry, and Trade, initially responded, noting that a presidential decree issued on June 3 aimed to align Uzbekistan’s national legislation with World Trade Organization (WTO) rules. The decree includes provisions for the removal of certain tax benefits, including the partial reimbursement of transport costs for exports, effective January 1, 2025.
Teshabaev acknowledged that these benefits had played a significant role in boosting export growth for many companies, particularly in expanding export geography. However, he also highlighted that the removal of these privileges could result in certain challenges, including the increased need for working capital and a potential decrease in export volumes.
To address these potential issues, Teshabaev emphasized the government's efforts to mitigate the negative effects, such as developing the factoring services market to support companies’ working capital needs.
Kuchkarov, in his response, outlined the financial impact of these benefits, stating that in 2022, benefits amounted to UZS 972bn ($75.6mn), and in 2023, they totaled UZS 1.1 trillion ($85.5mn). The turnover tax benefits were smaller, with figures of UZS 12bn ($933,142) in 2022 and UZS 14bn ($1.1mn) in 2023.
The Deputy Prime Minister also shared his perspective on the broader implications of these changes, particularly in the context of Uzbekistan’s long-term goals for trade.
“GST is fundamentally a fair trade system. There is inequality between countries that are members of the WTO and those that are not,” Kuchkarov explained. He pointed out that developed countries often impose import duties on Uzbekistan that they do not apply to other countries. "If we were a member of the WTO, these limitations on our exports would not exist."
Kuchkarov emphasized that WTO membership would allow Uzbekistan to trade with developed and rapidly developing countries on equal, fair terms. "Entering the WTO gives Uzbekistan the opportunity to trade under fair conditions. Someone may lose, but this is a fair system, and it’s something every Uzbek entrepreneur should learn to navigate."
He concluded by reaffirming that Uzbekistan’s goal of joining the WTO by 2026 is a key part of the country's long-term economic strategy.
Uzbekistan secures U.S. support for @wto membership as 21st nation to endorse accession
— Daryo | Central Asia & Afghanistan (@DaryoEng) November 4, 2024
Uzbekistan has secured U.S. support for its World Trade Organization (WTO) membership by concluding a 14-month negotiation process, marking the U.S. as the 21st country to endorse its bid.… pic.twitter.com/UMIjdA3yhI
Uzbekistan's path to WTO membership has been a lengthy process, beginning with the formation of the working group on accession in 1998. Following a period of slow progress, the country reinitiated the process in 2020, holding crucial meetings in the following years to implement the required reforms.
In April 2023, President Shavkat Mirziyoyev issued instructions to accelerate the process, emphasizing its significance for boosting the country’s export potential, especially in finished goods. By September, Uzbekistan had made strides in WTO negotiations, successfully concluding talks with 18 countries, including the recent signing of market access protocols with Brazil and Sri Lanka.
In early November, Uzbekistan wrapped up negotiations with the United States, securing Washington’s support for its WTO membership bid. This marks the U.S. as the 21st country to endorse Uzbekistan's accession to the global trade organization.
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