Uzbekistan will exempt farmers from VAT payments to reduce shadow economy and boost transparency

Uzbekistan will introduce a zero value-added tax (VAT) rate for farmers and dehkans selling their own produce starting January 1, in a move designed to reduce the role of the shadow economy in agriculture and encourage greater transparency.

President Shavkat Mirziyoyev reviewed the measures this week, which seek to strengthen value chains in the agricultural sector. Although productivity has improved in recent years, a large share of production remains unaccounted for in official statistics, officials said. The current VAT rate on food products is 12%.

The initiative follows Mirziyoyev’s dialogue with entrepreneurs, where he called for easing conditions for farmers and reducing their tax burden. The government developed the new measures in cooperation with the International Monetary Fund and both local and foreign experts.

Under the new rules, the 0% VAT will apply to fruits, vegetables, meat, milk, eggs and other farm products, excluding cotton and grain. Farmers will also continue to reclaim VAT paid on inputs such as seeds, fertilizers, fuel, electricity and transport. Authorities estimate the measures will save producers about 300 billion soums annually and return a further 400 billion soums through refunds.

Officials said the policy is intended to stimulate transparency in the sector, support the creation of large industrial plantations, and expand processing enterprises. Agencies have been instructed to explain the new procedures to farmers and ensure their effective implementation.