Government prepares to phase out export tax benefits in push for WTO membership

The proposed changes, included in the draft state budget for 2025, involve the repeal of profit and turnover tax reductions currently granted to exporters. Since 2019, these incentives have allowed exporters to reduce taxable income derived from export sales, with similar concessions applied to turnover tax.

Kuchkarov highlighted that these incentives had significant economic impacts, leaving 972 billion UZS in exporters' hands in 2022 and 1.1 trillion UZS in 2023. However, the cancellation aligns with WTO agreements on subsidies and countervailing measures.

Khurram Teshabayev, Deputy Head of the Ministry of Investments, Industry, and Trade (MIIT), acknowledged the role of these incentives in expanding export geography and volumes but cautioned about potential consequences. He noted that reduced working capital could impact export performance, but measures such as the development of factoring services are planned to mitigate the effects.

Kuchkarov emphasized the importance of joining the WTO, describing it as a fair-trading system that levels the playing field among member states. He noted that WTO membership would protect Uzbekistan from unilateral trade restrictions imposed by some countries and ensure equal opportunities in global markets.

"Some businesses may face challenges, but WTO membership is about embracing a system of fair and open competition. Every Uzbek entrepreneur must learn to thrive under these conditions," Kuchkarov said.

Uzbekistan’s road to WTO membership

The Uzbek government has accelerated efforts to join the WTO, considering it a cornerstone of its economic reforms. In April 2023, President Shavkat Mirziyoyev instructed officials to expedite the accession process, citing the potential for significantly increasing exports, particularly of finished goods.

In the summer, Uzbekistan appointed a special presidential representative for WTO matters and established relevant units in 20 government agencies to ensure alignment with WTO standards. Regulatory acts that conflict with WTO norms are now prohibited.

At the 78th UN General Assembly in September 2023, President Mirziyoyev reiterated Uzbekistan’s commitment to joining the WTO, calling it a priority for achieving sustainable economic growth. Negotiations with countries such as Russia, the United Kingdom, and China are ongoing, with Uzbekistan aiming to finalize accession before the WTO Ministerial Conference in 2026 in Cameroon.