The key macroeconomic figures, the concept of tax and budget policies and the draft 2019 budget, as well as the forecast figures for 2020–2021 were approved at the meeting of the Cabinet of Ministers of Uzbekistan on Saturday, UzA said. The documents are due to be submitted to the Legislative Chamber of the Oliy Majlis.

As of 2019, Uzbekistan will for the first time implement a mechanism for medium-term budget planning by approving the state budget for the next year and the budget guidelines for the next two years.

As envisaged by the Tax Policy Improvement Concept, approved by the June 29 presidential decree, as of 2019:

1) tax burden on salary fund shall be reduced through:

• introduction of flat personal income tax rate of 12% and scrapping the payment of insurance premiums by citizens (8% of wages);
• reducing the unified social contribution rate down to 12% (currently 15%) of the salary fund;

2) mandatory contributions of 3.2% to state trust funds levied on turnover (revenue) will be canceled;

3) reduction of: corporate income tax rate from 14% to 12%, bank income tax from 22% to 20%, tax at source paid for income on dividend and interest from 10% to 5%; property tax of legal entities - from 5% to 2%.

As a result, about 10 trillion soums should remain at the disposal of economic entities and the public.

The meeting also considered the following proposals for improving tax policy:

• adjustment of tax rates established in the absolute amount (land tax, water tax, excise tax);
• introduction of combined excise cigarette tax, which provides for the use of ad valorem rate along with fixed rate;
• introduction of single social payment for individual entrepreneurs in place of insurance contributions of citizens (due to its cancellation);
• introduction of minimum fixed rates in absolute amount for subsoil use tax for some minerals (sand, limestone, crushed stone, etc.).

In 2019, the social sphere and social support of the public will be in the center of the state budget expenditures (at 54% of total expenditures).

From January 1, an increase in pay is scheduled for:

• teachers and school principals- by 10%, teachers with a qualification category - differentially by 15% to 25%;
• low-paid public servants – differentially by 5-15%.

The proposed measure for low-paid categories of workers will affect more than 360 thousand people only in the public sector.

The 2019 budget provides funds to increase the pay of university teachers and staff at research institutes by 1.5 times, medical and pharmaceutical workers at state companies by an average of 26.5% (in addition to the 20% increase from December 1, 2018). The overall increase in pay of public servants should not be lower than the inflation rate. Budget funds for the payment of social benefits will increase by 20%.

Investment expenditures are estimated at 11.9 trillion soums, which will be used to implement strategic projects determined by the decisions of the President and the Cabinet, including projects for the construction and reconstruction of drinking water distribution networks, water facilities, construction and reconstruction of the transport and communications infrastructure educational and medical-social institutions.

More than 12 trillion soums will be contributed to finance the health sector. In particular, the purchase of medicines and medical products - about 1 trillion soums, for basic health sector programs - 661.5 billion soums, equipping medical institutions with modern diagnostic, laboratory and medical equipment - 58 billion soums.

In connection with the falling incomes of the extra-budgetary Pension Fund due to a radical reduction in the unified social payment rate and the abolition of insurance contributions of citizens and mandatory deductions, the budget expenditures provide for 4.7 trillion soums to cover the deficit.

The Ministry of Finance was instructed to publish the “Citizens Budget” project on its official website until November 15.