Why is this important
Redistributing part of the VAT in favor of the regions should strengthen the financial independence of local budgets and increase the interest of the authorities in business development and the growth of the tax base. Regions will receive direct financial interest in the growth of enterprise turnover. Local authorities will more actively encourage businesses to legalize their turnover and transition to VAT.
What happened
- The Legislative Chamber adopted the draft law on the state budget for 2026 in the first reading.
- The document provides for the transfer of a portion of VAT revenues to local budgets as part of the expansion of their tax base.
- An exception will be made for individual large taxpayers, the list of which will be approved by the president.
- Jamshid Kuchkarov explained that the measure is aimed at motivating local authorities to monitor VAT collection.
- He noted that currently, khokimiyats and tax authorities are not interested in transferring businesses to VAT payments, as no additional revenues remain in regional budgets.
VAT
- The distribution of VAT is proposed as follows: Tashkent budget — 5% of the VAT collected in the city and other regions — 20%.
- At least 50% of these revenues will be mandatorily allocated to district and city budgets.
- The Ministry of Economy and Finance and the Tax Committee will monitor the situation.
- In the near future, amendments to the Budget Code are planned.
Context
- Previously, the main part of VAT revenues was accumulated at the republican level.
- The new distribution model is linked to the reforms of budget federalism and the strengthening of the role of local councils.
- District and city budgets will be able to receive additional stable sources of income.
- Tax discipline and transparency of the economy will be strengthened.
