In order to facilitate equal opportunities and a competitive environment for entrepreneurial activities, the President of the Republic of Uzbekistan signed a resolution on "Measures of Cardinal Improvement of Providing Tax and Customs Incentives" on June 1, 2018.
This resolution focused on two main purposes:
- Maximum debarment of providing incentives on an individual basis.
- Development and approval of procedures for targeted incentives.
It also limits the duration of temporary incentives to a maximum period of three years. Incentives that are provided on an individual basis will be granted only in exceptional cases for specific purposes, such as the development of spheres that have high social value but low-interest from the private sector. Only the Parliament and the President can grant incentives.
Another new regime introduced by the resolution was that now drafts of all normative acts envisaging incentives should be reviewed by the National Agency for Project Management. The agency is also authorized to make a reasoned offer to the Executive Office of the President to recall the granted incentives at any time in the future. It is expected that in such cases, all sums of money unpaid to the state budget due to incentives will be reimbursed to the government. The Ministry of Finance must implement a system of exact calculation of losses that incentives are causing to the budget. Responsibility for misused incentives might be high, bearing in mind that now they will be regarded as a 'loss' incurred during operation.
The National Agency for Project Management together with other ministries is assigned to approve the order of the system of monitoring and evaluating its effectiveness, the compliance of the number of incentives with the expected results in three months.
Changes in line with the concept of tax reform and its actual impact on the competitive environment remain to be seen.
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