Uzbekistan Official Urges Swift Repeal of 1% Tax Cashback Program
Dilshod Sultanov, Deputy Director of the Institute for Fiscal Studies in Uzbekistan, has called for the immediate cancellation of the 1% tax cashback program. Sultanov stated that the program is a temporary measure and its early termination would be beneficial. He explained that approximately 80% of the funds allocated through this cashback system are already going to businesses that issue receipts to their customers anyway. Sultanov further elaborated in an interview with Kun.uz that allocating $150 million annually from the state budget for the remaining 20% of transactions under this program is illogical. He believes this significant budgetary expenditure for a limited portion of transactions is not justified.
The 1% tax cashback program in Uzbekistan, as described, appears to have been designed to incentivize consumer behavior and formalize transactions. However, the observation that 80% of the benefits accrue to businesses already issuing receipts suggests a potential inefficiency in the program's design or execution. The substantial annual budget allocation of $150 million for the remaining 20% of transactions raises questions about the program's cost-effectiveness and its alignment with broader fiscal policy objectives. Evaluating alternative mechanisms to achieve similar economic goals, such as direct business incentives or simplified tax structures, could offer more targeted and efficient outcomes, particularly in the context of evolving digital economies and fiscal sustainability.
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