Uzbekistan ranked 23rd out of 186 countries in the “Tax burden” indicator of the Index of Economic Freedom for the first 9 months of 2019.
As reported by the press service of the State Tax Committee, the ranking of countries in terms of economic freedom (of 186 countries) has been developed by the American Heritage Foundation center in partnership with the Wall Street Journal for the past 20 years.
The “Index of Economic Freedom” includes 12 components, combined into 4 groups, and is measured on a scale from 0 to 100. According to authors, the more the index is large, the more the state is free.
According to the methodology, the fiscal component of freedom (the “Tax burden” indicator) is formed on the basis of the arithmetic mean of 3 indicators:
- the upper marginal tax rate on personal income;
- the top marginal corporate income tax rate;
- total tax burden as a percentage of GDP.
Each of the three factors is translated into a 100-point scale and is included in the final indicator with equal weight.
To assess the indicator change in Uzbekistan, the followings were adopted for the first 9 months of 2018-2019:
- maximum personal income tax rate, reduced from 22.5% to 12%;
- maximum corporate income tax rate was 14% last year and 12% this year;
- total tax burden (ratio of tax revenue to GDP of the period);
Calculations of the “Tax burden” composite indicator show a decrease of 0.3 percentage points, from 22.2 to 21.9%.
Moreover, the values of composite indicators were as follows:
- at the maximum tax rate on personal income, an improvement of 10.9 percentage points - from 84.8 to 95.7;
- at the maximum corporate income tax rate of 1.6 percentage points - from 94.1 to 95.7;
- for the total tax burden of 0.4 percentage points - from 85.3 to 85.6.
Thus, the value of the “Tax burden” indicator in Uzbekistan is better than the world average by 14.7 percentage points (77.6% out of 100%), which corresponds to the 23rd place among 186 countries.