IMF recommends Uzbekistan adopt progressive income tax, end inefficient customs exemptions

In its analysis, the IMF notes that the Uzbek government is planning to introduce new tax exemptions and extend existing ones in its 2025 budget. Such policies, however, hinder the expansion of the tax base — which, the IMF argues, urgently needs to be broadened.

“If certain excise tax rates — such as those on alcoholic beverages, fuel, vehicles, and sugar — are raised, revenues could increase by up to 1.1% of GDP. Reassessing profit-based tax exemptions on investments and corporate income, and refraining from expanding or introducing new incentives, could similarly raise revenues by another 1.1% of GDP. Moreover, eliminating inefficient customs exemptions and refraining from granting new ones could boost revenue collection by up to 3.2% of GDP,” the report states.

The IMF also recommends introducing a progressive personal income tax structure, whereby individuals with higher earnings would be taxed at higher rates. This, it says, would enhance equity within the tax system.

“The Tax Committee should expedite the approval of its reform strategy for 2025–2030. It is also essential to support the strategy aimed at combating the shadow economy, where encouraging non-cash transactions will play a critical role,” the IMF suggests.

Previously, it was reported that Uzbekistan’s unpaid tax liabilities had reached 8.5 trillion UZS.