CABAR.asia says experts believe that the government has to reduce the tax burden on the private business, which provides up to 80% of tax revenues to the budget in order to ensure tax collections. Otherwise, the entrepreneurs will withdraw their capital from the country whenever possible.
Tajikistan is one of those countries where taxes make up the biggest share of the state budget revenues. On average, about 70% of revenue comes from taxes, which makes the budget dependent on them.
The planned revenue of the state budget for 2021 is 27.6 billion somonis (US$2.4 billion), which is 1.6 billion somonis (US$141 million) more than the state budget for 2020. The Ministry of Finance explains such rate of the revenue growth by finding new sources of taxation, increasing collection of basic taxes (VAT, excise tax, income tax), as well as ensuring real economic growth and creating new jobs.
The Tax Committee already instructed its regional divisions to find sources of taxation. Tax revenues are expected in the amount of 18.8 billion somoni, which is more than 68% of the total budget revenues.
Over the past decade, the state budget of Tajikistan was reportedly replenished mainly by taxpayers’ contributions.
Tax revenues to the budget in different years varied from 60.7% (in 2016) to 77.9% (in 2014). In 2010-2019, the average annual share of taxes in the total budget revenues was 68%.
Three types of taxes prevail in the structure of tax revenues: VAT (value added tax); income tax; and social tax.
The average annual share of these three taxes is 70% in total. In the tax structure, the VAT share is 44%, income tax share is 14%, and social tax share is 12%.
After the taxes, the non-repayable funds of international financial institutions, as well as preferential loans from bilateral (countries) and multilateral (international organizations) donors replenish the budget. The average annual share of such budget revenues reportedly reaches 15%.
The share of special funds of state-funded organizations in the revenue structure is, on average, 9% per year, non-tax revenues – 7%, and free balances from the previous year – 1.3%.
On average, it is planned to increase the revenue volume up to 10% annually by increasing the plans for collecting taxes and other compulsory payments.
However, these expectations do not always coincide with reality. For example, the budget revenues plan for 2020, by the results of 11 months, was not fulfilled by 1.4%, which is almost 300 million somonis (US$26.5 million).
Over the past 10 years, the budget revenues grew more than 2.3 times: from 7.024 billion somonis (US$620 million) in 2010 to 16.506 billion somonis ($1.4 billion) in 2019.
Tajikistan is one of the countries with the highest tax burden on business, while up to 80% of tax revenues to the budget are provided by the private sector.
According to the World Bank, the average business entity in Tajikistan spends about 65% of its income on taxes and other compulsory payments.
Experts believe that tax revenues to the budget could be even higher – up to 80%, if there had not been such a high burden on business.
Annually, the government’s tax collection requirements grow by an average of 10%, and the Tax Committee is forced to increase the burden on business, which causes entrepreneurs to close their business. According to official statistics, as of October 1, 2020, including previous years, 295,000 business entities were liquidated in the country. As of the same date in 2019, 270,000 entities were closed. That is, 25,000 business entities were liquidated in Tajikistan in a year to October 1, 2019. Some entrepreneurs withdraw their capital to neighboring countries where the adequate taxation of the private sector functions.
In recent years, after the thaw of relations with Uzbekistan, hundreds of Tajik entrepreneurs opened their businesses in this neighboring country. According to Uzbekistan’s State Committee for Statistics, as of September 1, 2020, 178 enterprises with Tajik capital operate in this country. Of them, 103 are joint Tajik-Uzbek enterprises, and 75 enterprises operate with Tajik investments only. It was also mentioned earlier about the outflow of Tajik capital to Kyrgyzstan, Kazakhstan, and even to politically unstable Afghanistan. It was mentioned by entrepreneurs, we could not obtain official data.
