From 10th to 12th July 2023, a successful Tax for SDGs mission on Tax Expenditures took place in Tashkent, Uzbekistan.
In times of SDG financing gap rising every year, optimization of tax expenditures is on many governments’ to-do lists. Quite often, the provisions providing tax benefits were drafted a long time ago and were hardly reviewed ever since, while the reality they apply to, as well as the government’s priorities, have both changed significantly. As a result of this mismatch, many tax expenditures lose their effectiveness in achieving their policy goals, and lead to significant revenues foregone without the benefits the government was hoping to achieve when introducing them.
Optimization of tax expenditures is an ambitious undertaking. It requires gathering of all the data on tax expenditures provided in one place – many of them are not reflected in tax codes or other laws but are provided in investment treaties, for instance, - assessment of the legal framework governing tax expenditures, and developing a mechanism capturing their effectiveness.
UNDP’s support in Uzbekistan
UNDP appreciates an opportunity to support the work on optimization of tax expenditures in Uzbekistan. While previously the country’s government attempted both ex-ante and ex-post assessment of tax expenditures, it was lacking one well-designed and thought-through approach to the process. During a short but intensive visit to Tashkent, a UNDP expert Agustin Redonda, with the support of UNDP country office, was able to present a UNDP Toolkit on Aligning Tax Expenditures with the Sustainable Development Goals to officials of the Ministry of Economy and Finance of Uzbekistan including Irodaxon Abbosxonova, Head of Fiscal Policy Department, Azimjon Bobojonov, Head of Shadow economy reduction and fiscal administration division of the Fiscal Policy Department, and Ashrafxon Salaxiddinov, Chief Specialist of Fiscal Policy Department. During the mission, the UNDP expert assisted with the review of the draft methodology for assessing tax expenditures developed by the Ministry of Economy and Finance and made multiple suggestions on its improvement.
The collaboration between UNDP and Uzbekistan MoEF will continue with a more detailed review of the process of assessing various tax expenditures and, hopefully, a study visit for learning about world’s best practices.