0% VAT to be Applied to Dehkan and Farmers on Sales of Agricultural Products.

On September 4, Shavkat Mirziyoyev reviewed a presentation on measures to create a value-added chain in agriculture, the President’s press service reported. During the meeting, it was stated that the sector has undergone structural reforms in recent years; specifically, cotton and grain fields were reduced and reallocated for food products. Additionally, 160,000 hectares of new orchards and vineyards were established, and 1,500 food-related projects worth $1 billion were launched. However, it was noted that the share of the shadow economy in agriculture remains high, and not all produced goods are reflected in financial reports. Currently, the value-added tax on the sale of food products stands at 12 percent.

This issue was raised during the President’s open dialogue with entrepreneurs. The head of state instructed officials to create conveniences for dehkans and farmers and to ease their tax burden. Accordingly, proposals to bring agriculture out of the "shadow" were developed with the participation of the International Monetary Fund, as well as qualified foreign and local experts. According to the proposals, starting January 1 of next year, agricultural enterprises will benefit from a zero-rate VAT when selling self-grown agricultural products (except grain and cotton) to dehkans and farmers.

At the same time, the practice of refunding input VAT paid for production expenses, such as seeds, fertilizers, fuel, transport, and electricity, will remain in place. As a result, farmers and dehkans will retain 300 billion soums annually, with an additional opportunity to reclaim 400 billion soums in tax refunds, the report highlights.

These tax reliefs are expected to encourage sector representatives to operate transparently and pave the way for the growth of large industrialized plantations and processing enterprises locally. The President instructed officials to explain this new system to dehkans and farmers, ensure its effective implementation, and incentivize food production.

Earlier, it was reported that a series of draft laws aimed at improving VAT administration in Uzbekistan were being developed. Specifically, a draft presidential decree proposed introducing a simplified procedure for calculating and applying VAT in agriculture. On July 18, during the Chamber of Commerce and Industry's open dialogue, Bekzod Mamatkulov, an entrepreneur and Chairman of the Supervisory Board of BMB Holding, proposed reducing the VAT rate for agricultural producers from 12% to 1% to help farmers "get on their feet." He highlighted the high costs of production driven by expensive fertilizers and fuel, and called for a review of minimum export prices. "The VAT issue is currently the heaviest burden on agricultural enterprises. In developed European countries — such as the Netherlands, Germany, and Belgium — agricultural enterprises are 100% state-subsidized. In our country, the VAT is currently at 12%. Let's consider this matter," he stated.

Source: gazeta.uz