Tashkent, Uzbekistan (UzDaily.com) —  On 26 November, Deputy Prime Minister and Minister of Economy and Finance Jamshid Kuchkarov addressed the planned termination of tax benefits for exporters at a session of the Legislative Chamber of the Oliy Majlis.

Under the draft state budget law for 2025, presented in its first reading, tax exemptions introduced in 2019 for profit tax and turnover tax will be abolished starting January 1. These benefits currently allow exporters and re-exporters to reduce their taxable profit base and single tax payment proportionally to their export volumes.

Deputy Atkham Nazirkulov from UzLiDeP expressed concern about the potential impact of the changes on Uzbekistan’s export potential.

Deputy Minister of Investments, Industry, and Trade Khurram Teshabayev highlighted that this decision aligns with the presidential decree of June 3, mandating compliance with World Trade Organization (WTO) regulations. The decree stipulates the cancellation of profit and turnover tax benefits for exporters and partial reimbursement of transportation costs from January 2025.

Teshabayev emphasized that the move is necessary to adhere to WTO rules on subsidies and countervailing measures. While tax benefits have contributed to export growth and diversification, their removal may increase exporters’ need for working capital, potentially reducing export volumes.

To mitigate adverse effects, plans are underway to develop the factoring services market, providing financial solutions to meet growing demands.

Kuchkarov revealed that profit tax exemptions amounted to 972 billion soums in 2022 and 1.1 trillion soums in 2023. Turnover tax exemptions were smaller, at 12 billion soums in 2022 and 14 billion soums in 2023.

The minister acknowledged that WTO membership promotes a fair trading system but may pose challenges. For instance, some WTO member countries impose import duties on Uzbekistan that are not applied to other states.

Kuchkarov emphasized the importance of creating favorable trade conditions unrelated to tax benefits to foster the country's export potential further.