Tax revenues decline as Uzbekistan imports more gas and produces less

On September 5, the Legislative Chamber of Oliy Majlis reviewed the report on the execution of the state budget and state-targeted budget funds for the first half of 2024.

It was noted that direct tax revenues decreased by 1.4% compared to the same period last year. According to Mubin Mirzaev, this decline was due to the reduction in gas production and the increase in imports.

"In the first half of 2024, the tax authorities collected 85.8 trillion UZS in tax revenues, which represents a 12.5% increase compared to the same period last year. However, the share of direct tax revenues decreased from 22.8% in 2023 to 21.4%. This is mainly related to a decrease in revenues from two types of taxes: VAT and excise duties.

In the first half of the year, 17.8 trillion UZS was collected in VAT, which is a 12.3% increase. However, 14 trillion UZS in VAT was refunded, which is 40% more than the previous year. For instance, gas imported at $160 per 1000 cubic meters incurs a customs duty of 240,000 UZS. To consumers and businesses, it is sold for 480,000 to 1.5 million UZS. As a result, 60 UZS is refunded per 1000 cubic meters. Thus, in the first half of 2024, UzGasTrade received a VAT refund of 1 trillion som.

Excise tax revenues amounted to 8 trillion UZS, with a 0.2% decrease in share. This decrease was also due to the lack of 1.4 trillion UZS in tax revenues from natural gas. For comparison, 2.3 billion cubic meters of gas were imported in the first six months of 2023, while 5.2 billion cubic meters were imported in the first half of 2024. This is almost 2.2 times more. Consequently, 1.3 trillion UZS in excise tax was not collected because a 0% rate applies to natural gas imports.

Secondly, 13.7 billion cubic meters of gas were produced in six months, which is 1.4 billion cubic meters less than the previous year. This led to a reduction of 104 billion UZS in excise tax revenues.

These factors are the reason for the decrease in direct taxes compared to the same period last year," said Mubin Mirzaev.