Tashkent, Uzbekistan (UzDaily.com) — The International Monetary Fund has called on the government of Uzbekistan to intensify efforts to broaden the tax base and restore the share of tax revenues in the country’s gross domestic product. The recommendation was made in the concluding statement of the IMF mission following its recent visit to Uzbekistan.

According to the IMF, the 2025 budget includes not only new tax incentives but also extensions of existing ones. This trend weakens the tax burden and limits the budget’s ability to grow proportionally with the economy, undermining fiscal sustainability and reducing the state's capacity to fund priority social and infrastructure programs.

The Fund noted that progress in tax reform has been modest. The draft budget for next year, it said, lacks meaningful changes in tax policy, despite a need to offset the decline in tax revenues, which has dropped by around two percentage points of GDP since 2020.

In this context, the IMF recommends that the government develop a medium-term revenue strategy. Proposed measures include increasing specific excise taxes (on items such as alcohol, fossil fuels, transport, and sugar), streamlining investment incentives, eliminating the extension of tax holidays, and cancelling ineffective customs preferences. According to IMF estimates, such a package of reforms could increase revenues by at least two percentage points of GDP.

The Fund also highlighted the importance of improving fairness in the tax system. It recommended transitioning from the current flat personal income tax to a progressive tax structure, which it believes would enhance social equity.

In the area of tax administration, the IMF emphasized the need to update audit programs, improve oversight of large taxpayers, and address key administrative weaknesses identified through the TADAT assessment. It called for expanding tax authorities’ access to financial information, developing analytical tools to detect tax gaps, increasing transparency in staff operations, and incorporating public feedback to strengthen trust in the tax system.

The IMF positively assessed the ongoing development of Uzbekistan’s strategy to combat the shadow economy. It noted that to boost the effectiveness of this strategy, greater efforts should be made to promote cashless payments, which are considered an effective tool in bringing informal economic activities into the formal sector.

In conclusion, the IMF stressed that comprehensive tax reform and improved tax administration are vital to ensuring the sustainability of public finances. These steps are essential to creating the fiscal space needed to address social priorities and support the government’s planned fiscal consolidation.

The IMF also welcomed Uzbekistan’s efforts to prepare a tax administration reform strategy for 2025–2030 and expressed readiness to provide further technical assistance in implementing these initiatives.