Over the first three months of this year, the revenue part of Tajikistan’s national budget for 2023 has stood at more than 9.5 billion somonis (equivalent to little more than 870 million US dollars), which is 5.7 percent or 520 million somonis (equivalent to 48 million US dollars) more than the revised plan for the reporting period, according to the Ministry of Finance (MoF). Taxes accounting for over 60% of revenues remain the main source of the budget’s revenue part.
Uncharacteristic for Tajikistan trend of regular overfulfillment of the budget has continued on a monthly basis since January 2022, when the new edition of the Tax Code was enacted.
Independent experts have expected that at the initial stage, the new tax legislation will lead to a reduction in the budget’s revenues as the rates on some taxes have been reduced.
Thus, the rate of the value added tax (VAT), which provides more than 40% of tax receipts to the budget, has been reduced from 18% to 15%.
The Word Bank economists noted in their recent report that “the budget deficit last year was financed primarily through external financing.”
The report entitled “Weak growth, high inflation, and cost-of-living crisis Europe and Central Asia economic update”, in particular, says Tajikistan is at high risk of debt distress (largely due to Eurobond and IMF Rapid Credit Facility principal repayments in 2025-2027) but on a sustainable debt path in the medium term.
The report notes that the deficit was partially compensated through grants of development partners and higher non-tax receipts.
The IMF staff statement of the 2022 Article IV mission, which was released in late December last year, noted that the 2023 budget envisages a fiscal deficit of 2 percent of GDP, with a possible widening to 2.5 percent if external financing for capital expenditure materializes.
Tax collection has benefitted from increased revenue from the mining sector, reflecting strong growth in mining and an increase in the income tax rate for mining companies, together with steps to begin phasing out some tax exemptions, the IMF report said.
Meanwhile, according to data from the Tax Committee under the Government of Tajikistan, last year’s budget revenues could be more by 25% due to internal taxation. Last year, the budget received 3.8 billion somonis (equivalent to more than 370 million USD dollars) less due to the various tax incentives and preferences provided.
The Tax Committee officials justify the provision of tax incentives by the attraction of more investments in the country's economy.
This is reportedly only about internal taxes and other obligatory payments collected by the Tax Committee.
In 2022, Tajikistan’s national reportedly received about 15.4 billion somonis (equivalent to 1.5 billion US dollars) from internal taxes and other obligatory payments, which is 537 million somonis (equivalent to 52 million US dollars) more than the refined plan.
The share of tax receipts (customs fees included) in Tajikistan’s national budget’s revenue fluctuates from 65% to 70%.
