President Holds An Open Dialogue with Entrepreneurs: Announces New Initiatives, Benefits and Preferences

On August 22, President Shavkat Mirziyoyev held an open dialogue with the entrepreneurs.

The President briefly dwelled on the work carried out since last year’s meeting. In particular, as a result of improving the business environment over the past year, the entrepreneurs built more than 55,000 business buildings. The number of business entities with revenues of over $1 million increased by 5,000 to 26,000. Another thousand entities brought their trade turnover from $1 million to $10 million, and the revenue of 220 enterprises reached $100 million. The number of exporting enterprises amounted to 7,5 thousand. The total volume of exports increased by 30%.

A call center was established before the current dialogue received more than 12 thousand requests from the entrepreneurs. In addition to personal or local problems, they have also raised the systemic issues. It was noted that analytical work would be carried out to find the most optimal solutions.

The President has outlined five main areas and put forward many initiatives for each of them.

First, it was determined to introduce separate approaches to supporting enterprises by dividing them into categories.

In particular, the enterprises with an annual turnover of up to 1 billion Uzbek soums shall be classified as micro-businesses, up to 10 billion Uzbek soums – as small businesses, up to 100 billion Uzbek soums – as medium-sized businesses.

Based on this, from January 1, 2023, a single tax rate of 4% shall be introduced for the micro businesses instead of the current turnover tax rates of 4% to 25%.

The enterprises with an annual turnover of more than 1 billion Uzbek soums and switching to the general tax payment procedure shall pay 2 times less income tax for one year. These opportunities shall facilitate the activities of 370,000 entrepreneurs.

The need for increasing the number of medium-sized enterprises with high growth potential was emphasized. The several tax incentives and compensations shall be established for them.

During the last year’s open dialogue, the President promised to continue the course towards reducing the tax burden on businesses. Despite the economic difficulties caused by the pandemic, a reduction in the value-added tax rate to 12% from January 1, 2023, has been announced.

Another relief for entrepreneurs is that from July 1 this year, the application of increased tax rates due to the non-use of an empty building or land plot has been canceled. The President has announced the write-off of the debt of entrepreneurs for 2 trillion Uzbek soums formed as a result of paying taxes at an increased rate.

Second, creating a favorable system of financing. To this end, 20 trillion Uzbek soums shall be allocated for the small business projects. In addition, the commercial banks shall attract funds from the international financial organizations for these purposes.

The Entrepreneurship Fund’s opportunities to provide guarantees shall be doubled. As a result, at least 15,000 entrepreneurs will be able to resolve the issue of collateral for loans.

Certainly, the credit is only one aspect of the problem. The business needs infrastructure and a guaranteed market. In this regard, for example, the opportunities are completely different in the Tashkent Region and the remote districts.

Third, the issue of introducing special approaches for a business based on the conditions of districts and cities was considered. Starting next year, all districts and cities shall be divided into 5 categories according to their conditions. They shall define the special regimes for taxation, subsidies, compensation for interest on loans, providing guarantees, as well as connecting to the infrastructure.

The established amount of payment for land privatization, which is 20 times the amount of land tax, shall be reduced to 10 times in the city of Tashkent and regional centers, 5 times – in other regions.

Fourth, concerning the protection of entrepreneurs’ property. It was emphasized that only the court could cancel decisions on the allocation of land and property, as well as consider the issue of seizure of property during the investigation.

The opportunity for entrepreneurs to apply to the courts shall also be expanded. In particular, when applying to the administrative courts, the state duty rate shall be reduced to 2 times. The term for entrepreneurs to appeal the decision of the tax authorities in court shall be extended from the current 1 month to 3 years.

Fifth, the issues of control over the activities of entrepreneurs and bringing them to the justice were discussed.

First of all, a moratorium shall be announced for 3 years on the introduction of new types of liability and penalties against the entrepreneurs. It was noted that from next year the duplicating control functions of 26 agencies would be canceled.

The President has paid attention to the receipt of many appeals about the large number and severity of fines related to tax audits.

For example, the small businesses paying an average of 1 million Uzbek soums of tax per month are subject to a financial penalty of 5 million to 10 million Uzbek soums for not issuing a check alone. That is, the punishment is the same for both small businesses and large enterprises.

The President has emphasized that all types of inspections should be agreed with the Business Ombudsman, and the number of fines should not exceed the amount of tax paid by an entrepreneur.

In general, the problem that has been troubling entrepreneurs operating in the trade for almost 30 years shall be eliminated now – that is, criminal liability for violating the rules of trade shall be completely abolished.

Having studied the proposals of entrepreneurs, the Minister of Justice and the Business Ombudsman were instructed to develop a draft law to reduce the time for inspections, establish a minimum threshold for financial errors and shortcomings.

A special attention was also paid to the issue of moral support for entrepreneurs. The President proposed to establish the honorary title «Honored Entrepreneur of Uzbekistan» to recognize the work of business representatives who have created many jobs, introduced innovations in their sphere, as well as gained respect among the people.

The need was noted for improving the activities of the Chamber of Commerce and Industry. Its tasks and powers shall be expanded. In particular, it shall be granted the right to submit issues to the government that are obligatory for consideration, to file lawsuits in the Supreme Court in the interests of entrepreneurs. The Chamber of Commerce and Industry will be completely withdrawn from the subordination of the government and will become an independent defender of the entrepreneurs’ interests.

In order to implement all the proposals made during the open dialogue, it was instructed to establish a Public Council for Entrepreneurship Support under the President.

At the end of the speech, President Shavkat Mirziyoyev has once again congratulated the businessmen of the country on the Entrepreneurs Day and wished them success in their activities.

«We are entering a very important and decisive stage on the path of building a New Uzbekistan. Your selfless work, innovative thinking and approach are more important today than ever, and I believe that you will set an example for the representatives of all spheres», the President has said.