10.10.2019 – THE GIADAR READINGS IN TASHKENT (UZBEKISTAN)
On October 10, 2019, the Gaidar Readings: “The Tax Reforms in the CIS: Lessons and Prospects” were held in Tashkent.
PROGRAM
The sponsors of the Readings were the Gaidar Institute for Economic Policy and the Academy of Public Administration under the President of the Republic of Uzbekistan.
PROGRAM
The sponsors of the Readings were the Gaidar Institute for Economic Policy and the Academy of Public Administration under the President of the Republic of Uzbekistan.
The Readings were opened by Rustam Kasimov, Advisor to the President of the Republic of Uzbekistan, Rector of the Academy of Public Administration under the President of the Republic of Uzbekistan.
Bekhzod Musayev, Chairman of the State Tax Committee of the Republic of Uzbekistan spoke about the reforms which were currently under way in Uzbekistan, particularly, the reform of tax administration (tax reduction, introduction of a flat tax rate schedule and other).
Sergei Prikhodko, moderator of the session and Executive Director of the Gaidar Institute spoke about the activities of the Gaidar Institute and the history of the Gaidar Readings.
In his report “The Symbiosis of the Tax Policy and Administration: Why Uzbekistan Needs a Tax Audit”, Modestas Kaseliaskus, IMF Resident Advisor to the Tax Committee of the Republic of Uzbekistan put forward the idea of creating within the tax reform a “good” audit which would identify individual tax-dodgers, check the “soundness” of the fiscal system, test new tax schemes, explain laws and promote voluntary payment of taxes.
Presentation to the report
In his report “The Measures Used to Upgrade the Tax Administration in the Republic of Uzbekistan”, Mubin Mirzayev, First Deputy Chairman of the State Tax Committee of the Republic of Uzbekistan touched upon the Concept of Upgrading the Tax System of the Republic of Uzbekistan which was adopted in June 2018 and envisaged the reduction of the tax burden, simplification of the taxation system and upgrading of the tax administration.
The speaker touched upon the reform’s outputs which had been received so far: the budget revenues increased 1.6-fold and the number of VAT payers, 11-fold. Thanks to the reduction of the tax burden, about 10.2 trillion of soms were left at the disposal of the business.
In July 2019, the Tax Administration Upgrading Strategy was adopted. It was aimed at further upgrading of the tax administration, reduction of the shadow turnover in the economy, implementation of the main guidelines of the Concept and development of the “road map” for its realization, Mubin Mirzayev noted.
Presentation to the report
In his report, Sergei Shatalov, Chief Researcher of the Financial Research Institute of the Ministry of Finance of the Russian Federation touched upon the main stages of development of the fiscal system of the Russian Federation and the achieved results, as well as the specifics of the Russian model of the tax system.
Presentation to the report
In his report “The Tax Reforms in 2019. Further Upgrading of the Fiscal Policy”, Dilshod Sultanov, Deputy Minister of Finance of the Republic of Uzbekistan, pointed out the following major changes which took place in the current year: 1) reduction of the tax burden on the labor remuneration fund (reduction of the single social payment; introduction of a flat tax rate schedule for individuals’ incomes); 2) optimization of the generally established regime of taxation (reduction of the profit tax base rate; abolishment of deductions charged on the turnover (revenues)); 3) equalization of the tax burden between the generally established regime and the simplified tax regime (introduction of the threshold value of the annual turnover (revenues); 4) upgrading of the VAT (introduction of the comprehensive offset system; expansion of the coverage of taxpayers).
Presentation to the Report
At the Readings, Sergei Drobyshevsky, Academic Director of the Gaidar Institute presented his report “Taxes as a Backbone Factor of Economic Development”. Sergei Drobyshevskystarted started his report with economists’ view of the indicators of the quality of the tax system and the main mechanisms of influence of taxes on the behavior of economic agents.
Also, the expert touched upon the issues of the effect of the tax burden on economic growth in the OECD countries in 1970–2005. In particular, Sergei Drobyshevsky noted that growth in taxes on revenues had a significantly negative effect on GDP growth, while taxes on consumption and property did not. At the same time, the effect of taxes on the corporate income was stronger than that of taxes on personal incomes.
Growth in taxes both on consumption and property led to higher growth rates of GDP per-capita than in cases of growth in income taxes, while the effect of growth in property taxes was stronger than in case of growth in consumption taxes. Distortive taxes had a negative effect on GDP per-capita growth due to the reduction of stimuli to carry out manufacturing and innovation activities and make savings, while non-distortive ones, a positive effect owing to budget replenishment and redistribution of funds.
Taxes on consumption and property had a less destructive effect on GDP than taxes on incomes, the speaker underlined. The largest distortion was caused by the corporate income tax because it reduced growth in the total factor productivity and investments. Also, the corporate tax led to the shrinking of entrepreneurial and innovative activities and the influx of direct foreign investments (due to a less favorable investment climate). On the contrary, the property tax was less distorting and, for this reason, the most proper one for stimulating GDP growth.
Then, Sergei Drobyshevsky touched upon the global trends in the VAT taxation, having stressed that VAT was a major source of funding budget tax revenues in the OECD and G20 countries (generating on average nearly 20% of tax revenues). The speaker pointed to large-scale reforms dealing with transition from multiple indirect taxes with a similar base to the classical VAT with a broad tax base in large developing countries (India and China).
In the EU countries, a change in the type of the VAT reform was underway from the raising of tax rates to upgrading of the administration and expansion of the tax base – a trend to increase standard tax rates on VAT in the OECD countries after the 2008 crisis stopped after average VAT tax rates across the OECD countries reached their peak of 19.3% in 2015.
The reforms on fiscal devaluation in Germany, Hungary and the UK consisted in the raising of the VAT rates accompanied by the reduction of the burden on the labor remuneration fund (social security contributions). The application of reduced rates as a social support measure was used more broadly (the efficiency of such measures was very low (OECD, 2018)) to facilitate tourism (Slovakia and Greece), culture (Spain, Greece and Portugal) and other. Also, the mechanisms of international harmonization of tax rules on indirect taxes to minimize barriers for trade in goods and services within the frameworks of trade alliances (the EEU and the EU) were developed.
Also, the speaker elaborated on the global trends in the corporate profit and individual income taxation. Sergei Drobyshevsky ended up his report with the discussion of the situation in the tax system of Russia. In particular, he drew attention to the fact that as regards the “Taxation” position in the Doing Business rating Russia had moved upwards from the 134th place in 2009 to the 45th place in 2017 and made substantial progress in the automation of tax administration.
Presentation to the report
In his report, Zhakhongir Negmatov, Director of the Institute of the Budget and Fiscal Research of the Ministry of Finance of the Republic of Uzbekistan spoke about the ways of upgrading the efficiency of taxation instruments to solve the most important (structural) issues of the national economy and improve the business climate for entrepreneurs. According to Zhakhongir Negmatov, large-scale tax reforms began in 2019; they included the introduction of a 12% flat income tax rate schedule, abolishment of deductions to state specialized funds, reduction of taxes on profits, dividends and property of legal entities, introduction of a threshold level (1bn of soms) of the turnover for a switchover to payment of the generally established taxes and the VAT.
The speaker noted that the analysis of the first outputs had revealed that changes in the fiscal policy could be both positive and negative. The positive changes included the legalization of over 570,000 jobs; a 6.2-fold growth in the number of VAT payers; reduction of the tax burden on large enterprises; a 1.6-fold growth in budget revenues in H1 2019 as compared to the same period of 2018 and the right of exporters to return the earlier paid VAT amounts.
Also, Zhakhongir Negmatov touched upon the main proposed lines of further reforming of the tax system of Uzbekistan, including the following: the abolishment of special tax privileges for individual sectors and enterprises (this measure was meant to expand the VAT tax base); revision of the turnover threshold introduced for identifying the organizational form of business entities depending on the type of their activities (this measure was aimed at preventing further splitting of enterprises and reducing a tax burden on enterprises with a smaller turnover without big losses to be incurred for the budget); a timely return of the excessive sum of the tax paid; a broader application of the VAT to the services sector; carrying out of tax control based on a risk analysis; introduction of new instruments to ensure payment of taxes; organization of a broad program of training of accountants and development of guidelines for calculation and payment of each type of a tax.
Presentation to the report
Galina Balandina, Senior Researcher, RANEPA delivered the report “On Measures on Further Upgrading of Foreign Economic Activity Procedures in the Russian Federation”, which dealt with global trends in customs administration and the Russian reforms in that field.
Among other things, the speaker touched upon the implementation in Russia of the International Cooperation and Exports national project, as well as the comprehensive departmental program of development of the Federal Customs Service of the Russian Federation till 2020, the program of restructuring of control and supervision in the customs sector within the frameworks of the program of reforming the supervisory activities in the Russian Federation until 2020, the Business Climate Transformation program and draft of the Customs 2030 Strategy.
At the end of her report, Galina Balandina noted that the strategic goal of such transformations and projects was “the formation of a leading edge artificial intelligence-based quickly adjustable smart customs service with information links to internal and external partners and being discreet to the law-abiding businesses and effective for the government”.
Presentation to the report
Shukhrat Toshmatov, Head of the Economics and Finance Department of the Academy of Public Administration under the President of the Republic of Uzbekistan spoke about the strategy of selection between growth in budget revenues and reduction of a tax burden.
Presentation to the report
In his address at the end of the session, Maxim Litvinov, Representative of the BAT, pointed out the progress of late in upgrading the investment climate in the Republic of Uzbekistan.
Bekhzod Musayev, Chairman of the State Tax Committee of the Republic of Uzbekistan spoke about the reforms which were currently under way in Uzbekistan, particularly, the reform of tax administration (tax reduction, introduction of a flat tax rate schedule and other).
Sergei Prikhodko, moderator of the session and Executive Director of the Gaidar Institute spoke about the activities of the Gaidar Institute and the history of the Gaidar Readings.
In his report “The Symbiosis of the Tax Policy and Administration: Why Uzbekistan Needs a Tax Audit”, Modestas Kaseliaskus, IMF Resident Advisor to the Tax Committee of the Republic of Uzbekistan put forward the idea of creating within the tax reform a “good” audit which would identify individual tax-dodgers, check the “soundness” of the fiscal system, test new tax schemes, explain laws and promote voluntary payment of taxes.
Presentation to the report
In his report “The Measures Used to Upgrade the Tax Administration in the Republic of Uzbekistan”, Mubin Mirzayev, First Deputy Chairman of the State Tax Committee of the Republic of Uzbekistan touched upon the Concept of Upgrading the Tax System of the Republic of Uzbekistan which was adopted in June 2018 and envisaged the reduction of the tax burden, simplification of the taxation system and upgrading of the tax administration.
The speaker touched upon the reform’s outputs which had been received so far: the budget revenues increased 1.6-fold and the number of VAT payers, 11-fold. Thanks to the reduction of the tax burden, about 10.2 trillion of soms were left at the disposal of the business.
In July 2019, the Tax Administration Upgrading Strategy was adopted. It was aimed at further upgrading of the tax administration, reduction of the shadow turnover in the economy, implementation of the main guidelines of the Concept and development of the “road map” for its realization, Mubin Mirzayev noted.
Presentation to the report
In his report, Sergei Shatalov, Chief Researcher of the Financial Research Institute of the Ministry of Finance of the Russian Federation touched upon the main stages of development of the fiscal system of the Russian Federation and the achieved results, as well as the specifics of the Russian model of the tax system.
Presentation to the report
In his report “The Tax Reforms in 2019. Further Upgrading of the Fiscal Policy”, Dilshod Sultanov, Deputy Minister of Finance of the Republic of Uzbekistan, pointed out the following major changes which took place in the current year: 1) reduction of the tax burden on the labor remuneration fund (reduction of the single social payment; introduction of a flat tax rate schedule for individuals’ incomes); 2) optimization of the generally established regime of taxation (reduction of the profit tax base rate; abolishment of deductions charged on the turnover (revenues)); 3) equalization of the tax burden between the generally established regime and the simplified tax regime (introduction of the threshold value of the annual turnover (revenues); 4) upgrading of the VAT (introduction of the comprehensive offset system; expansion of the coverage of taxpayers).Presentation to the Report
At the Readings, Sergei Drobyshevsky, Academic Director of the Gaidar Institute presented his report “Taxes as a Backbone Factor of Economic Development”. Sergei Drobyshevskystarted started his report with economists’ view of the indicators of the quality of the tax system and the main mechanisms of influence of taxes on the behavior of economic agents.
Also, the expert touched upon the issues of the effect of the tax burden on economic growth in the OECD countries in 1970–2005. In particular, Sergei Drobyshevsky noted that growth in taxes on revenues had a significantly negative effect on GDP growth, while taxes on consumption and property did not. At the same time, the effect of taxes on the corporate income was stronger than that of taxes on personal incomes.
Growth in taxes both on consumption and property led to higher growth rates of GDP per-capita than in cases of growth in income taxes, while the effect of growth in property taxes was stronger than in case of growth in consumption taxes. Distortive taxes had a negative effect on GDP per-capita growth due to the reduction of stimuli to carry out manufacturing and innovation activities and make savings, while non-distortive ones, a positive effect owing to budget replenishment and redistribution of funds.
Taxes on consumption and property had a less destructive effect on GDP than taxes on incomes, the speaker underlined. The largest distortion was caused by the corporate income tax because it reduced growth in the total factor productivity and investments. Also, the corporate tax led to the shrinking of entrepreneurial and innovative activities and the influx of direct foreign investments (due to a less favorable investment climate). On the contrary, the property tax was less distorting and, for this reason, the most proper one for stimulating GDP growth.
Then, Sergei Drobyshevsky touched upon the global trends in the VAT taxation, having stressed that VAT was a major source of funding budget tax revenues in the OECD and G20 countries (generating on average nearly 20% of tax revenues). The speaker pointed to large-scale reforms dealing with transition from multiple indirect taxes with a similar base to the classical VAT with a broad tax base in large developing countries (India and China).
In the EU countries, a change in the type of the VAT reform was underway from the raising of tax rates to upgrading of the administration and expansion of the tax base – a trend to increase standard tax rates on VAT in the OECD countries after the 2008 crisis stopped after average VAT tax rates across the OECD countries reached their peak of 19.3% in 2015.
The reforms on fiscal devaluation in Germany, Hungary and the UK consisted in the raising of the VAT rates accompanied by the reduction of the burden on the labor remuneration fund (social security contributions). The application of reduced rates as a social support measure was used more broadly (the efficiency of such measures was very low (OECD, 2018)) to facilitate tourism (Slovakia and Greece), culture (Spain, Greece and Portugal) and other. Also, the mechanisms of international harmonization of tax rules on indirect taxes to minimize barriers for trade in goods and services within the frameworks of trade alliances (the EEU and the EU) were developed.
Also, the speaker elaborated on the global trends in the corporate profit and individual income taxation. Sergei Drobyshevsky ended up his report with the discussion of the situation in the tax system of Russia. In particular, he drew attention to the fact that as regards the “Taxation” position in the Doing Business rating Russia had moved upwards from the 134th place in 2009 to the 45th place in 2017 and made substantial progress in the automation of tax administration.
Presentation to the report
In his report, Zhakhongir Negmatov, Director of the Institute of the Budget and Fiscal Research of the Ministry of Finance of the Republic of Uzbekistan spoke about the ways of upgrading the efficiency of taxation instruments to solve the most important (structural) issues of the national economy and improve the business climate for entrepreneurs. According to Zhakhongir Negmatov, large-scale tax reforms began in 2019; they included the introduction of a 12% flat income tax rate schedule, abolishment of deductions to state specialized funds, reduction of taxes on profits, dividends and property of legal entities, introduction of a threshold level (1bn of soms) of the turnover for a switchover to payment of the generally established taxes and the VAT.
The speaker noted that the analysis of the first outputs had revealed that changes in the fiscal policy could be both positive and negative. The positive changes included the legalization of over 570,000 jobs; a 6.2-fold growth in the number of VAT payers; reduction of the tax burden on large enterprises; a 1.6-fold growth in budget revenues in H1 2019 as compared to the same period of 2018 and the right of exporters to return the earlier paid VAT amounts.
Also, Zhakhongir Negmatov touched upon the main proposed lines of further reforming of the tax system of Uzbekistan, including the following: the abolishment of special tax privileges for individual sectors and enterprises (this measure was meant to expand the VAT tax base); revision of the turnover threshold introduced for identifying the organizational form of business entities depending on the type of their activities (this measure was aimed at preventing further splitting of enterprises and reducing a tax burden on enterprises with a smaller turnover without big losses to be incurred for the budget); a timely return of the excessive sum of the tax paid; a broader application of the VAT to the services sector; carrying out of tax control based on a risk analysis; introduction of new instruments to ensure payment of taxes; organization of a broad program of training of accountants and development of guidelines for calculation and payment of each type of a tax.
Presentation to the report
Galina Balandina, Senior Researcher, RANEPA delivered the report “On Measures on Further Upgrading of Foreign Economic Activity Procedures in the Russian Federation”, which dealt with global trends in customs administration and the Russian reforms in that field.
Among other things, the speaker touched upon the implementation in Russia of the International Cooperation and Exports national project, as well as the comprehensive departmental program of development of the Federal Customs Service of the Russian Federation till 2020, the program of restructuring of control and supervision in the customs sector within the frameworks of the program of reforming the supervisory activities in the Russian Federation until 2020, the Business Climate Transformation program and draft of the Customs 2030 Strategy.
At the end of her report, Galina Balandina noted that the strategic goal of such transformations and projects was “the formation of a leading edge artificial intelligence-based quickly adjustable smart customs service with information links to internal and external partners and being discreet to the law-abiding businesses and effective for the government”.
Presentation to the report
Shukhrat Toshmatov, Head of the Economics and Finance Department of the Academy of Public Administration under the President of the Republic of Uzbekistan spoke about the strategy of selection between growth in budget revenues and reduction of a tax burden.
Presentation to the report
In his address at the end of the session, Maxim Litvinov, Representative of the BAT, pointed out the progress of late in upgrading the investment climate in the Republic of Uzbekistan.