Tashkent, Uzbekistan (UzDaily.com) -- On 17 February 2020, the Press and Information Agency under the Presidential Administration held a press conference "On the abolition of tax privileges from 2020, as well as full communication to the population and clarification of proposed reforms on tariff regulation".

The event was attended by the leadership of the State Tax Committee of Uzbekistan, specialists, as well as media representatives.

Privileges possessing personality traits negatively affected the preservation of the principles of competition in some sectors, in many cases led to bankruptcy of enterprises and, as a result, led to the emergence of problematic issues related to the welfare of the population (reduction in the number of jobs).

A new stage in the tax system began with the adoption of the resolution of the President of the Republic of Uzbekistan dated 06.06.2018 UP-5468 “On the Concept of improving the tax policy of the Republic of Uzbekistan”.

The main goal of tax legislation reforms is to reduce the tax burden, simplify tax legislation, ensure healthy competition along with the creation of a favorable investment climate, as well as optimize taxes and fees.

As a result, as part of the phased implementation of tax reforms, starting in 2019, the corporate income tax rate was reduced from 14% to 12%, property tax rate from 5% to 2%, single tax rate from 5% to 4% and the rate of a single social payment from 15% to 12%.

Canceled 8% insurance premium levied on the salaries of individuals. Income tax previously levied on individuals with a maximum rate of 22.5% on a four-step scale is reduced to 12%

At the same time, it is a well-known fact that any measures, including the implementation of tax reform, should provide stable financial resources for an effective state policy.

In this regard, it was decided to switch to a differentiated system of business taxation, which would ensure fair fiscal policy and healthy competition.

The introduction of this system, along with the possibility of applying a value added tax, will also serve to reduce production costs in the economy and increase the competitiveness of products in the world market.

With the Decree of the President of the Republic of Uzbekistan UP-5755 “On measures to further streamline the provision of tax and customs benefits” dated 06/27/2019, VAT exemptions in agriculture, construction, import, trade and other industries, as well as individual exemptions in the automotive industry, were canceled.

Optimization is determined by the Decree of the President of the Republic of Uzbekistan dated September 26, 2019 No. UP-5837 “On measures to further improve the tax policy of the Republic of Uzbekistan” by creating a value chain and reducing the VAT rate from 20% to 15%.

With the adoption in accordance with the Law of the Republic of Uzbekistan "On Amendments and Additions to the Tax Code of the Republic of Uzbekistan" ZRU-599 of the Tax Code as amended:

- in order to abolish tax benefits that still impede the formation of a normal competitive environment in the economy, from April 1, 2020, the abolition of benefits provided for by the old version of the Tax Code was determined;

- tax privileges of social significance were preserved (education, medicine, culture, housing and communal services);

- the terms for the implementation of the benefits stipulated by the decisions of the President and the Cabinet of Ministers of the Republic of Uzbekistan for important sectors of the economy are determined

The new edition of the Tax Code introduced a new principle for the provision of tax benefits.

In particular, based on Article 75 of the Tax Code, tax benefits for certain taxes (excluding value added tax, excise tax and subsoil use tax) can be granted by decisions of the President of the Republic of Uzbekistan only in the form of a reduction in the established tax rate, but not more than by 50% and for a period not exceeding three years.

At the same time, in the new version of the Tax Code, in order to support enterprises experiencing financial difficulties, a norm has been introduced that allows you to change the timing of tax payments or provides the ability to pay tax payments by installments.