Local budgets to receive half of income tax revenues starting in 2025

Uzbekistan is set to introduce a new system designed to enhance the responsibility and accountability of local governments while fostering greater initiative and ownership of regional reforms and economic changes. This initiative is outlined in the Presidential Decree "On establishing a new system for ensuring high economic growth and employment in regions and measures to increase the role and responsibility of local governments in this regard," signed on December 20.

The decree establishes specific targets for economic growth, unemployment reduction, and poverty alleviation across the republic and its regions for 2025. As part of the reforms, local government bodies will be granted expanded financial opportunities and powers aimed at boosting their role in economic development.

• Under the new system, beginning January 1, 2025, the full amount of turnover tax, property tax on legal entities, land tax from legal entities, and revenues generated from leasing state assets will be transferred directly to the budgets of districts and cities. Additionally, at least 50 percent of personal income tax revenues will be allocated to local budgets, ensuring that a larger portion of tax income remains within the regions.
• In a further step to empower local governments, 90 percent of proceeds from the sale of shares or stakes belonging to local government bodies will be distributed equally among the republican budget of Karakalpakstan, regional budgets, the city budget of Tashkent, and the budget of the district or city where the asset is located.