Starting from January 1, 2023 the VAT rate in the Republic of Uzbekistan was reduced from 15% to 12%. This decision was made by the Decree of the Cabinet of Ministers, which was published on the official website of the Government of Uzbekistan.

This decision was taken in order to reduce tax burden on businesses and to promote business development in the republic. Decrease of VAT rate will allow decreasing prices of goods and services for population and increasing their availability.

This decision will be valid for a number of years, until a new resolution is passed. Let us remind that VAT is a value-added tax, which is paid by taxpayers when selling goods and services. It is one of the most common taxes worldwide.

Reduction of VAT rate in the Republic of Uzbekistan from 15% to 12% has many advantages. Firstly, it will allow enterprises to reduce their costs and increase competitiveness. In turn, it will reduce the prices of goods and services for consumers.

It can also improve the quality of life of the population. For example, more affordable prices for food and consumer goods, especially in the current economic situation due to the pandemic, would make them more affordable for all citizens.

Lowering the VAT rate could also lead to more legal transactions in the economy. This would reduce the size of the gray economy that the country still has and therefore increase the amount of tax revenues in the budget.

In addition, lowering the VAT rate would increase the transparency of taxation and make prices more transparent and understandable to consumers.

Of course, this reduction may also have some negative consequences. For example, reduction of tax revenues to the state budget may cause undesirable consequences for other areas of financing, such as education, health care and other spheres. However, the government of Uzbekistan is rather cautious and selective in its economic policy in order to minimize such risks.