posted 12 Nov 2017, 09:34 by Webmaster Ambasciata


President of Uzbekistan received the Governor of St. Petersburg


"Uzavtosanoat" and "KAMAZ" to launch joint production in Uzbekistan


Representatives of the National Bank for Foreign Economic Activity of Uzbekistan signed in Istanbul a loan agreement with Turkish export-credit Türk Eximbank.


Taxation Improving for Small Business of Uzbekistan

International cooperation

EBRD has opened its office in Tashkent



President of Uzbekistan received the Governor of St. Petersburg

On November 8, the President of the Republic of Uzbekistan Shavkat Mirziyoyev received the Governor of the city of St. Petersburg Georgy Poltavchenko, who arrived in our country on a working visit.

The Head of our state, welcoming the guest, noted with satisfaction that the fruitful meetings that were held this year at the highest level and the agreements reached on their results, including the Intergovernmental Agreement on Cooperation between the regions of the two countries, signed in April, served to enhance the practical cooperation of the regions of the Republic of Uzbekistan with entities of the Russian Federation, first of all, in trade-economic and cultural-humanitarian spheres.

At the meeting, issues of further expansion and strengthening of traditionally close and mutually beneficial relations of Uzbekistan with St. Petersburg were considered.

Today, the trade turnover reaches 200 million dollars. About 1 million of our citizens are working in St. Petersburg. More than 3 thousand people of Uzbekistan are studying in the leading universities of this city.

The need to effectively use the existing potential for increasing the volume of mutual trade and deepening cooperation between the leading enterprises was emphasized.

Particular attention was paid to the implementation of joint programs and projects in the sphere of healthcare, education and tourism.

The Governor of the city of St. Petersburg Georgy Poltavchenko expressed sincere gratitude to the President of our country Shavkat Mirziyoyev for the warm welcome. He noted the interest in developing a full-scale partnership with Uzbekistan in priority areas.

(Source: UzA)


"Uzavtosanoat" and "KAMAZ" to launch joint production in Uzbekistan

On November 2, the Chairman of the Board of JSC "Uzavtosanoat" Umidjan Salimov and Director General of JSC "KAMAZ" Sergey Kogogin signed an agreement on cooperation providing for the organization of production of commercial vehicles in Uzbekistan.

The production of commercial vehicles under the brand name KAMAZ is set to be organized at the facilities of LLC "UzAutoTrailer" (subsidiary of JSC "Uzavtosanoat"). In addition, in the long term it is planned to establish a joint venture to assemble vehicles in the territory of the Republic, the press service of JSC "KAMAZ" said.

According to the agreement, JSC "KAMAZ" and JSC "Uzavtosanoat" will carry out the activities through JSC "Foreign trade company "KAMAZ" and JSC "UzAutoTrailer", respectively.

The first manufactured vehicles are to be presented at the joint Day of the client, which will be held in early 2018. The final collaborative product will be sold in the domestic market of the Republic of Uzbekistan and will be exported to foreign markets through the dealer network.



Representatives of the National Bank for Foreign Economic Activity of Uzbekistan signed in Istanbul a loan agreement with Turkish export-credit Türk Eximbank.

The document provides for the attraction by the Uzbek side of loan funds amounting to $ 44 million, which is planned to be used to finance investment projects and trade transactions involving the purchase of goods and services of the Republic of Turkey. The loan agreement does not provide for a government guarantee.

In addition, Uzbekistan intends to attract a loan from the Turkish state bank Ziraat for housing construction with a total cost of about $ 200 million. The funds are planned to be received in two tranches of $ 100 million in 2018 and 2019. They will be directed to erect multi-apartment houses throughout the country.

It should be reminded that Turkey is one of the important trade partners of Uzbekistan. In 2016, the volume of trade amounted to $ 1.2 billion. Over the first

9 months of this year, the indicators of mutual trade grew by 29%. About

500 Turkish companies and companies operate in the republic. Only this year in Uzbekistan, more than 20 enterprises with the participation of Turkey's investments are organized, 53 companies are accredited.

(Source: «Uzbekistan Today» newspaper)


Taxation Improving for Small Business of Uzbekistan

Odiljon IMINOV,Professor of the Academy of Public Administration under the President of the Republic of Uzbekistan, Doctor of Economics.

Taxes are one of the oldest and most important tools of the relationship between a person and the government. The first documented evidence of their existence is over two and a half thousand years old.

Even at the dawn of the "human-state" relationship, it became clear that through the payment of taxes, every single member of society makes his own contribution to maintaining the viability and success of his country.

Since the introduction of the concept of "tax", humanity has tried and continues to try to improve taxation mechanisms countless times.

One of the first tax reformers was the Emperor of Ancient Rome, Julius Caesar. During his reign in the country there were so many different taxes and their size was so great that citizens preferred to bribe tax collectors, just to avoid their full payment. As a result, the revenues to the treasury of Rome fell significantly, which prompted Caesar to commit one of the first acts of tax reform in the history of mankind - he removed or reduced many types of mandatory payments.

Two millennia passed, but these tasks continue to be relevant for many states.

Taxes fulfill four fundamentally important tasks in the state construction of any society - fiscal (filling the treasury), distributive (social), regulating (stimulating one or another area of the economy) and control functions.

Today, Uzbekistan is undergoing fundamental changes in all spheres of life. our country is becoming more open, serious processes of both external and internal liberalization are taking place.

One of the key areas of modernization of the republic is the improvement of the economic sphere, and first the simplification and simplification of the tax system. The goal is to make sure that this most important area is favorable, first, for the main layer of entrepreneurship - small business, which today creates 55% of the gross domestic product in our country.

Clear, transparent and affordable tax rates will facilitate the rules of the game for small businesses and private entrepreneurship. That as a result should stimulate both the creation of new business projects and increase the collection of taxes from already existing subjects of taxation.

Current system: experience, problems, prospects

The choice of the tax system and its further development was determined by the tasks of the creation and development of small business and private entrepreneurship at that stage before the country, stimulation of investment and production activity of the population.

In 1998, a simplified taxation mechanism was introduced for small businesses and microfirms -  the unified tax payment (UTP). At the same time, his rate for 18 years has decreased from 15% to 5%, that is, three times. Keeping all these years a single criterion for the use of UTP and a multiple reduction in the tax rate allowed many small businesses to significantly increase production turnover.

The only criterion for transition to the payment of UTP was the number of employees of the enterprise. Their maximum number for payers of the UTP for this period has been increased from 10 people in the non-productive sphere and

40 people in the industry, up to 20 and 200 people respectively.

The granting of ever greater tax benefits to small businesses was accompanied by an increase in the tax burden on large enterprises. As a result, in order to simplify the reporting system and reduce the tax burden, they began to "divide" into small ones.

This practice has become contrary to the long-term interests of the country's economic development. Instead of objective concentration of capital necessary for the introduction of the most advanced and expensive technologies, the process of its fragmentation is going on, the conditions for the introduction of effective corporate governance that is possible only in medium and large enterprises are deteriorating, and the budget revenues are significantly reduced. And given that our republic is socially-oriented, the state needs centralized funds to protect socially unprotected strata of the population in the new conditions of large-scale market reforms.

In general, the preservation of the existing tax policy starts to work not for the development of the economy and the social sphere, but for their stagnation.

First, the basis of technological development of industry of any country is medium and large enterprises that can accumulate significant funds for the implementation of competitive projects, as well as the introduction of modern technologies and innovations.

However, for large enterprises, the tax burden, in contrast to small business entities, was practically not reduced, due to the introduction of turnover taxes for them (3.5% of turnover).

Under these conditions, there is a clear increase in the unevenness of the tax burden between business entities, the main factor of which is the occurrence of distortions in the tax regimes of large enterprises and small businesses.

Thus, the tax burden for small enterprises applying the simplified taxation regime is at a level of 2-4 times lower, depending on the scope of activity, than for large enterprises that pay taxes on a generally established system. As a result, there is a clear trend of "overflow" of large enterprises into small ones due to their disaggregation, as well as understatement (concealment) of the number.

This is confirmed by the figures - if in early 1998 the number of VAT payers was more than 25 thousand enterprises, today - more than 5 thousand or decreased by 4.7 times.

Secondly, there is unfair taxation in the sectoral context - for example, a small wholesale enterprise with a staff of 10 people and with the same turnover a small industrial enterprise with a staff of 100 people pay the UTP in the same amount. This despite the fact that the industrial enterprise is significantly more labor-intensive, resource-intensive and capital-intensive.

At the same time, the overwhelming mass (97.4%) of small enterprises (SE) does not reach the turnover limit of 5 billion soums. The same 2.6% of SE, exceeding the limit of turnover of 5 billion soums, provides 52% of the total turnover of all small enterprises - that is, they are practically large enterprises that pay UTP. It should be noted that in most cases, the limit turnover exceeds the enterprises of wholesale trade (71.4% of the total number of wholesale enterprises) (currency rates of CB RU from 09.11.2017, 1$=8067,62 soum).

In order to overcome the consequences of the global financial crisis of 2008, the SEs were exempted from compulsory sale of foreign exchange earnings, and in order to further stimulate certain industries oriented to export products, measures were taken to increase the number of employees for them.

As a result, today in some industries, such as the light and electrical industry, as well as construction, small enterprises include enterprises with a population of up to 200 people. At the same time, their turnover often exceeds 30 billion soums, which is much higher than the turnover of large enterprises and does not comply with international practice.

The biggest negative result of this approach was that practically the same enterprises belong to small or large enterprises, depending on the Nationwide Classifier of Branches of a National Economy (NCBNE - OKONH) code or since 2017 - the Nationwide Classifier of Economic Activities (NCEA - OKED), which is given by the statistics body.

Considering the significant advantages received when referring to small businesses, this creates corruption risks. In addition, the privileges of small businesses force large enterprises with large turnover to understate the number of employees for reference to the SE.

Third, the decline in competitiveness in world markets and the efficiency of export-import operations. Due to the fact that small businesses are not VAT payers, they can not apply a zero VAT rate when exporting their products, that is, do not pay this tax and receive the opportunity to return it on raw materials and materials received from suppliers. On the other hand, when importing goods, small businesses pay VAT, but they can not take it into "offset" for further use, thereby increasing the value of their products.

Fourth, the uneven distribution of the tax burden on large and small enterprises. In order to ensure the balance of the state budget while reducing taxes for small businesses, the tax burden for large enterprises was increased.

In 1999, for large enterprises, turnover taxes were introduced in the form of mandatory deductions to the STF (the State Trust Fund) at a rate of 2.2% of turnover, and this rate in 2017 reached 3.5% of turnover.

In addition, an increase in the tax burden for large enterprises was also influenced by the release of small businesses from the payment of VAT, since in these conditions a tax that is not paid by a small enterprise is payable by a large enterprise - the buyer of its products.

This circumstance led to an increase in the cost of production and price uncompetitiveness of large enterprises, which drastically affected the profitability of their activities, and in some cases also to the loss of production.

At the same time, for small enterprises, it became unprofitable to use the products of large enterprises at the expense of classifying VAT at cost, and in this connection cooperation between small and large enterprises was disrupted.

Fifth, another negative factor for the introduction of the UTP in place of all taxes, including land, property and for the use of water resources, was the lack of incentives for the rational use of resources.

Small enterprises that own large land areas practically do not use them. So,

9422 payers, who have 1037.8 hectares of land, do not use them (they have a "zero" revenue).

Troubleshooting steps

Measures taken in the current year, allowed to some extent to eliminate problems for the solution of which the limiting number for reference to small business increased.

The main ones are steps to liberalize the foreign exchange market. Thus, the complete cancellation of compulsory sale, the provision of free conversion, the sale of goods on the domestic market exclusively for the national currency, provided equal conditions in access to the commodity and currency markets. In addition, the profitability of exports has significantly increased.

In these conditions, there was an urgent need to phase out the resulting distortions, reduce the tax burden for large enterprises and reduce the gap in taxation of small and large enterprises.

Based on the results of studying the international experience and proposals of foreign experts on tax issues, in connection with the current situation, it is necessary to abandon the practice of classifying small business subjects depending on the type of activity (NCEA - OKED) and industry affiliation with the transition to a single criterion for the number of all branches of the economy.

This will ensure transparency in classifying enterprises as small businesses and reduce the corruption component.

It is envisaged that individual entrepreneurs, microfirms with an average annual number of employees of no more than 20 people, small enterprises with an average annual number of employees from 21 to 100 people (and taking into account graduates of educational institutions and homeworkers - 180 people) should be included in the subjects of small entrepreneurship.

In order to ensure the rational use of land, for taxpayers of the UTP is introduced land tax. Simultaneously, for the sake of simplicity, the procedure for calculating the UTP is canceled, proceeding from the minimum amount of a single tax payment - a threefold amount of land tax.

In order to strengthen and develop cooperation, as well as create a competitive environment between small and large enterprises, an introduction is introduced for the UTP payers of a threshold value, over which an additional obligation arises to pay VAT. The size of the threshold is set at 5 billion soums per year ($ 625 thousand).

At the same time, in order to prevent a sharp increase in the tax burden for these enterprises, the procedure for reducing the UTP is reduced to the amount of VAT payable to the budget, but not more than 50% of the amount of the UTP.

It is also necessary to introduce a new category - medium-sized enterprises, with an average annual number of employees from 101 to 300 people (including

450 graduates of educational institutions) and sales turnover of less than 10 billion soums. At the same time, for them, the taxation regime is more milder than for large enterprises.

Thus, it is envisaged that medium-sized enterprises, with the exception of subsoil users and producers of excisable products, are not payers of mandatory contributions to the STF, as provided for small enterprises.

In addition, they envisage a single social payment rate of 20% (for reference: the USP rate for large enterprises is 25%)

It is necessary to reduce the tax burden for large enterprises by reducing the aggregate rate of mandatory transfers to the STF from 3.5% to 3%, and to exclude movable property from the object of taxation on property.

In the medium term, the tax burden of large enterprises is expected to gradually approach the level of medium-sized enterprises, primarily through a gradual reduction in the mandatory contribution rate to the STF with its total cancellation in the future.

The above standards apply from April 1, 2018, based on the actual parameters of the previous year.

(Source: «Uzbekistan Today» newspaper)

International cooperation

EBRD has opened its office in Tashkent

On November 8, the European Bank for Reconstruction and Development has opened its representative office in Uzbekistan.

The ceremony, organized within the framework of the visit to our country of the delegation led by the First Vice President of the European Bank for Reconstruction and Development Philip Bennett, was attended by the heads of ministries and departments, representatives of diplomatic corps, specialists of the sphere.

During the visit of the President of the EBRD Suma Chakrabarti to our country in March this year, a Memorandum of Understanding between Uzbekistan and the European Bank for Reconstruction and Development was signed. The Bank’s work in Uzbekistan focuses in the short term on advice and financing for small and medium-sized enterprises, tasks on increasing the competitiveness of the economy of Uzbekistan by attracting foreign direct investment, enabling the development of cross-border trade and cooperation, ensuring the exchange of technologies and know-how.

During the years of cooperation with the European Bank for Reconstruction and Development, more than 500 million dollars have been attracted to various sectors of the economy of our country, as a result of which 54 projects have been implemented.

Within the framework of the event, five documents worth about 215 million US dollars were signed on development of the water and heat supply system in Namangan and Khorezm regions and Tashkent. These projects will improve the health and living conditions of the population.

(Source: UzA)



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