Agricultural products will be exempt from VAT

Starting January 1, 2026, agricultural enterprises will be exempt from value-added tax on the sale of agricultural products, except for grain and cotton, to farmers. A presentation on this issue was made to President Shavkat Mirziyoyev on September 4.

During the presentation, it was noted that in recent years the agricultural sector has undergone structural reforms and measures have been taken to increase efficiency. Cotton and grain areas have been reduced and allocated for food production, 160,000 hectares of new orchards and vineyards have been established, and 1,500 food projects worth $1 billion have been launched.

However, the head of state pointed out that the share of the shadow economy in agriculture remains high. Not all products grown are officially recorded. The value-added tax on the sale of food products currently stands at 12 percent.

To address this, proposals were developed with the participation of the International Monetary Fund, as well as foreign and local experts, to bring agriculture out of the shadow economy. Under these measures, starting from January 1 next year, agricultural enterprises will apply a zero VAT rate to farmers and dehkans when selling their own agricultural products, excluding grain and cotton. At the same time, the existing practice of refunding VAT on costs incurred for seeds, fertilizers, fuel, transport, and electricity will be preserved.

According to the presidential press service, these changes will allow farmers and dehkans to retain 300 billion soums annually, while also creating an opportunity to refund an additional 400 billion soums in taxes.

“These incentives will encourage transparency in the sector, create a solid foundation for the growth of large-scale industrial plantations, and promote the development of processing enterprises in the regions. Officials were instructed to explain the new system to peasants and farmers, ensure its effective implementation, and encourage the production of food products,” the report stated.

It is worth noting that earlier it was announced that VAT and income tax rates in Uzbekistan would not be raised until January 1, 2028.