Issue №1, 2021

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The main directions of reforming property taxes (on the example of the Republic of Uzbekistan)

 

DOI: 10.34130/2070-4992-2021-1-1-58

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Niyazmetov I. M. — Doctor of Economics, Head of the Department of the Institute for Fiscal Research under the Ministry of Finance of the Republic of Uzbekistan, Tashkent, Republic of Uzbekistan, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Voronin S. A. — Doctor of Economics, Chief Specialist of the Institute for Fiscal Research under the Ministry of Finance of the Republic of Uzbekistan, Tashkent, Republic of Uzbekistan, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Koraboev B. U. — Chief Specialist of the Institute for Fiscal Research under the Ministry of Finance of the Republic of Uzbekistan, Tashkent, Republic of Uzbekistan, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Ugay D. S. — Leading Specialist, Institute for Fiscal Studies under the Ministry of Finance of the Republic of Uzbekistan, Tashkent, Republic of Uzbekistan, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The article examines the international and domestic experience of the functioning of the land tax in conjunction with the property tax, identifies the fundamental problems of this area. In particular, the inefficiency of the existing mechanisms of property taxation in the economy of Uzbekistan has been substantiated. The complexity and high cost of tax administration with a low fiscal value of property taxes levied on individuals has been proven. Based on the study of scientific literature and a comparative analysis of the international practice of property taxation, proposals were formulated for the implementation of the real estate tax in the republic, which has standard and special deductions for legal entities and individuals. The purpose of the study is to develop proposals and recommendations for improving the use of land tax in conjunction with property tax in the Republic of Uzbekistan based on the study of domestic and foreign experience. Methods and methodology of work: comparative analysis and synthesis, data generalization, systematization of factors, logical method, expert method, observation method, etc. Even though taxes on land and property play an important role in local budget revenues, their overall fiscal importance in Uzbekistan is very low. In terms of time, labor, and other resources, these taxes are more expensive than other taxes. In this regard, it is necessary to unify the mechanism of action of property tax and land tax. A mechanism for taxing real estate and land resources for legal entities and individuals has been developed based on a unified methodology. If in developed countries the problem of collecting taxes on real estate is mainly discussed from the point of view of equity, then in countries with economies in transition, the problem of introducing taxes on real estate is still being studied. Although the real estate tax has difficulties in administration, there is an urgent need for this type of tax in the tax system of any state. To increase the fiscal significance of the tax on property taxes, it is necessary to switch to the use of real estate tax, which will consist of two parts — land tax and property tax. It is advisable to gradually switch to a system for assessing land and property at market value. To ensure social justice in taxation, it is necessary to follow the principle of setting property tax rates based on a progressive mechanism as the value of property rises. To support the poor, it is advisable to include in the tax mechanism an element of “non-taxable value” of real estate. When introducing real estate tax, it is necessary to revise the existing system of benefits. In particular, it is recommended to establish an additional deduction (in addition to the standard deduction provided for everyone) only for elderly people and other persons recognized by the state in need of social protection, and for legal entities — to leave benefits in the form of exemption from taxes on social real estate. The results of the study will be used in the preparation of proposals in the Tax Code of the Republic of Uzbekistan in terms of improving the land tax and property tax. Separate recommendations for improving the land tax and property tax require practical testing, as well as comparative calculations (current and proposed tax regimes). Besides, due to the low incomes of farms and a significant part of the population, some of the proposed provisions of the authors should be used in stages, depending on the growth of their income. In the future, research will be carried out in the following area — development of methodological approaches for determining the cadastral value of land resources; differentiation of land tax rates depending on the region; optimization of tax incentives for land tax, taking into account the social factor. If we assess the overall mobilization associated with the calculation and collection of these taxes, we can say that in terms of time, labor, and other physical resources, land, and property taxes in Uzbekistan are more expensive than other taxes; to form a reliable tax base for local budgets, it is necessary to unify the effect of property tax and land tax in the near future; if in developed countries the problem of collecting taxes on real estate is mainly discussed from the point of view of fairness, in countries with economies in transition, the problem of the feasibility of introducing taxes on real estate is still being studied; In order not to put low-income people in a difficult position by taxing land and property, it is necessary to introduce an additional deduction mechanism from the taxable base and revise the existing system of benefits. In particular, it is recommended to establish an additional deduction (in addition to the standard deduction provided for everyone) only for elderly people and other persons recognized by the state in need of social protection, and for legal entities — to leave benefits in the form of exemption from taxes on social real estate.

Keywords: taxation, real estate, land tax, property tax, tax rate, tax incentives, social deductions.

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For citation: Niyazmetov I. M., Voronin S. A., Koraboev B. U., Ugay D. S. The main directions of reforming property taxes (on the example of the Republic of Uzbekistan) // Corporate Governance and Innovative Economic Development of the North: Bulletin of the Research Center of Corporate Law, Management and Venture Investment of Syktyvkar State University. 2021. Vol. 1, issue 1. Р. 58—73. DOI: 10.34130/2070-4992- 2021-1-1-58.