President orders reduction of shadow economy

Uzbekistan has been tasked with reviewing the processes and deadlines for issuing licenses and permits, drastically reducing the human factor, and fully digitizing all steps. President Shavkat Mirziyoyev gave this instruction on August 11 while reviewing proposals to improve the system for combating the shadow economy.

It was noted that in the past, high administrative pressure and interference in business discouraged many from operating openly. In recent years, significant work has been carried out to reduce the tax burden and remove bureaucratic barriers. The number of types of taxes has been reduced from 13 to 9, and more than 100 types of licenses and permits have been abolished. As a result, the share of the unmonitored economy has declined from 45–50 percent in 2019 to 35 percent today. However, further reduction remains necessary.

The presentation outlined priority tasks in this area. Officials provided information on the causes of the shadow economy and measures to eliminate it. The most effective solution was identified as introducing new approaches based on advanced technologies. For example, the transition to fully automated payment in Tashkent’s public transport system has led to a 30 percent increase in recorded passenger numbers, while revenue from digitized farmers’ and commodity markets has risen two- to threefold.

Instructions were given to introduce similar systems in sectors with a high share of the shadow economy, such as agriculture, construction, transport, trade, and services. The processes and deadlines for issuing licenses and permits will be reviewed to fully digitize all steps and reduce human involvement. It was also stressed that factors enabling corruption must be eliminated in areas where entrepreneurs face frequent challenges, such as taxation, banking, customs, utilities, and certification.

The development of electronic payments was highlighted as a convenient and effective tool for reducing the shadow economy. The importance of promoting cashless transactions and increasing the number of payment organizations was emphasized.

The head of state underscored that the shadow economy cannot be reduced by control measures alone, but also requires raising the tax culture among citizens and entrepreneurs, and rewarding those who operate lawfully. Each sector will be approached individually, ensuring that entrepreneurs find it more profitable to work openly and legally. In line with this, instructions were issued to improve and digitize tax administration, provide additional benefits to businesses, and enhance labor relations.

“Tax culture must become a shared concern for society as a whole. The virtue of honesty, which our people have always cherished, ultimately brings prosperity and well-being in all spheres. It is important to promote these values among the population and ensure their broad acceptance,” the President’s press service stated.