Measures to improve tax administration presented

On April 6, President Shavkat Mirziyoyev was briefed on proposals to improve tax administration and reform the activities of tax authorities.

Over the past two years, revenues have grown faster than the economy, due to the expansion of the tax base. The International Monetary Fund also notes that these results have been achieved through enhanced tax administration and a reduction in the shadow economy. At the same time, by 2030, through consistent tax system reforms, it is planned to increase tax revenues to 491.5 trillion soums and reduce the share of the shadow economy from 28 percent to 19.6 percent.

At the meeting, it was emphasized that reducing the shadow economy represents a key reserve for increasing tax revenues.

The President outlined the need to raise budget revenues this year by 30 trillion soums through the use of digital analytics and artificial intelligence, as well as the introduction of a “smart” control system. This can be achieved through the expanded use of P2P transaction monitoring, product labeling, strengthened digital oversight, the automatic identification of unregistered freight transport activities, and the formalization of informal employment, as well as other measures across sectors such as trade and services, industry, construction, and public catering.

As noted, due to insufficient control over activities in markets and shopping centers, as well as shortcomings in digitalization, the existing potential in this area is not fully utilized. Currently, more than 72,000 retail entities operate in such facilities. At the same time, over 38,000 of them report a monthly turnover of less than 1 million soums, while more than 40,000 issue only two to three receipts per day. In addition, rental agreements for 12,000 retail outlets in markets remain unregistered. As a result, 37,000 entrepreneurs pay less than 500,000 soums in taxes per month.

In this context, it was stated that the full digitalization of markets and shopping complexes is essential to unlock additional sources of revenue and to ensure the integration of control mechanisms, tax administration, and digital monitoring.

The meeting also addressed the provision of services to large taxpayers in regions not classified as strategic.

In particular, it was noted that, due to their distance from tax authorities, the efficiency of both service delivery and oversight for 209,000 VAT payers has declined. In this context, it was proposed to transfer 500 non-strategic enterprises to the regional level, and more than 103,000 enterprises in agriculture, trade, and public catering to the district level. This approach is expected to improve the quality of taxpayer services at the local level, ensure the prompt resolution of issues, and enhance the effectiveness of oversight.

Special attention was also paid to simplifying tax administration for entrepreneurs.

According to survey results, most entrepreneurs expressed dissatisfaction with the complexity of audit procedures, reporting requirements, and tax payments. In this context, it was emphasized that the auto-cameral control system should be transformed from a punitive instrument into a preventive mechanism for the early detection and correction of errors, and that enterprises should be classified into green, yellow, and red categories based on their risk level.

A report was also presented on the progress of automating the generation of six types of reports without human intervention, as well as the transition to a unified tax account. It was noted that, to date, reporting deadlines have been missed in 198,000 cases, 14,700 taxpayers have been fined a total of 396.6 billion soums for failing to submit reports, and approximately 20,000 errors have occurred due to the growing number of tax payment accounts.

It was noted that the implementation of the new system will reduce unjustified tax arrears, overpayments, and penalties, enabling entrepreneurs to save up to 8.4 trillion soums. The new approach is also expected to reduce the number of audits, significantly decrease reporting errors, accelerate the processing of appeals, and improve the efficiency of call centers.

The presentation also highlighted human resources as a critical issue in the functioning of tax authorities.

In recent years, staff turnover has increased due to shortcomings in work organization. It was noted that the level of employee professional development remains low, the financial incentive system does not meet modern requirements, and social support mechanisms are insufficient. In particular, while more than 3,000 employees underwent professional training in 2022, only 700 were retrained last year.

New proposals were presented to improve staff qualifications, establish continuous professional development, and provide material and social incentives for employees. Measures were also identified to strengthen personnel capacity, including enhancing the material and technical base of the Tax Academy under the Tax Committee.

The Head of State instructed responsible officials to implement a fundamentally new approach to tax administration based on digital technologies, analytics, and artificial intelligence, to reduce the shadow economy, to create a fair and favorable tax environment for entrepreneurs and to develop a highly qualified specialists in this field.

The priority task has been defined as transforming tax administration in line with the principle of “from audit to service”, improving service quality, and establishing modern, effective control mechanisms.