Uzbekistan Cuts VAT To 15%

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Country Looks To Stimulate Trade & Investment

In efforts to stimulate consumer demand and give the economy a boost, Uzbekistan will cut VAT to 15% from 20% from the 1st October. Uzbek officials said that the VAT cut would slice around 10 trillion Soum (US$1.05 billion) from the annual state budget. To recoup some of this loss, the government said that as well as reducing VAT, it would increase excise duties on certain products.

Uzbekistan has been remoulding its economy since Shavkat Mirziyoyev took over from the Islam Karimov in 2016. Mr Mirziyoyev has attracted investors and tried to stimulate domestic demand.

Earlier this year, the President of Uzbekistan signed a decree making the entire territory of Navoi Province a free economic zone (FEZ). Navoi, located in the central part of the country, is the largest region of Uzbekistan (110,800 sq. km.). The region’s subsoil is rich in precious metals (including gold), tungsten, phosphorites, basalt, kaolin, quartz sand, cement raw materials, limestone and other minerals. Navoi region is therefore already one of the centers of the mining, chemical and energy industries of the country. Navoi Mining and Metallurgical Plant, Navoi Thermal Power Plant JSC, Navoiazot JSC, Kyzylkumcement JSC and other large enterprises are located in this region. Navoi International Airport operated by Korean Air is the largest air cargo terminal in Central Asia. An investment guide to Navoi can be found here

Uzbekistan is one of the more progressive Central Asian states and has been moving towards a market based economy for the past two years. It has a current annual GDP of about US$50 billion, and a growth rate of 5.8% which it is expected to maintain into 2020. Although Uzbekistan’s economy is relatively closed, it has been growing steadily due to its vast natural resources of oil, natural gas and gold. Receipts from these key industries allow the government to control the economy through investments in services (accounting for 48 percent of GDP) and industry (accounting for 40 percent of GDP). Uzbekistan is currently the world’s fifth largest producer of cotton, but is attempting to diversify its agriculture towards fruits and vegetables.

Uzbekistan Trade Partners
Country Percentage
China 18.5
Russia 17.9
Kazakhstan 7.7
Turkey 5.7
South Korea 5.1

The country is a member of the Shanghai Cooperation Organisation, but has not joined the Eurasian Economic Union as yet. However, Uzbekistan joined the Commonwealth of Independent States Free Trade Area in 2014, meaning it has free trade with EAEU member states.

 

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Silk Road Briefing is written by Dezan Shira & Associates. The firm assists foreign investors and advises Governments throughout Asia in facilitating trade and investment into the region, and maintains 28 offices throughout China, India, ASEAN and Russia. We also provide Belt & Road advisory and intelligence services. Please email us at silkroad@dezshira.com for enquiries or visit us at www.dezshira.com

 

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