Starting in 2026, farmers in Uzbekistan will be exempt from paying VAT on agricultural products, which, according to the authorities, will reduce the share of the shadow economy and increase profitability.
In Tajikistan, the standard VAT rate remains at 14%, with plans to further reduce it.
On September 4, President of Uzbekistan Shavkat Mirziyoyev announced that from January 1, 2026, farmers and dehkans will be exempt from paying VAT when selling their products.
Until now, the VAT rate in Uzbekistan for food products was 12%, which forced many manufacturers to go into the "shadow." Starting from the new year, the discount will be valid for the sale of fruits, vegetables, meat, milk, eggs and other types of agricultural products. However, it will not apply to cotton and grain.
At the same time, the practice of refunding VAT paid for seeds, fertilizers, fuel, transport, electricity and other production costs will continue.
It is estimated that the annual savings of farmers and dehkans will reach 700 billion soums ($56.5 million), which will increase the profitability of farms.
The measures are aimed at reducing the share of the shadow economy, which reaches 45% in agriculture.
Agriculture Minister Ibrohim Abdurakhmonov noted that about 48,000 farmers will feel direct support. According to him, the profitability of farms can grow from 5-7% to 15%.
Davron Vakhabov, Chairman of the Chamber of Commerce and Industry, called the innovation "revolutionary," stressing that it would create conditions for exporting products from small orchards and increasing the number of large industrial plantations.
A mistake or an ineffective solution?
Meanwhile, renowned Uzbek economist Yuli Yusupov criticized the introduction of a zero VAT rate. He claims that this step will not solve the problem, but will only create additional difficulties.
Yusupov emphasizes that such a measure, aimed only at farmers, will not affect the entire supply chain, including retail and catering, where VAT will still have to be paid.
As a result, the end user may face higher prices, despite the benefits for producers.
In addition, he points out that VAT refunds, which theoretically farmers should receive, will be complicated by bureaucratic processes, and most of them will refuse this procedure. The economist believes that VAT should be reduced throughout the supply chain to ensure a real reduction in the tax burden and an improvement in the market situation.
Yusupov says that without comprehensive tax reform, such measures can only increase the burden and lead to new economic problems.
What about Tajikistan?
Starting from January 1, 2024, the standard VAT rate has been reduced from 15% to 14% in Tajikistan. This is stipulated in Part 1 of Article 264 of the new Tax Code of the Republic of Tajikistan. According to the document, starting from January 1, 2027, the VAT rate will be further reduced to 13%.
Unlike Uzbekistan, which has introduced a zero VAT rate on agricultural products since 2026, Tajikistan has its own taxation system for farmers.
Here they are required to pay two types of national taxes – the unified agricultural tax and the land tax.
The unified agricultural tax applies to legal entities, dehkan farms and cooperatives, where land is the main resource of production. It is the production and supply of primary products without processing that is taxed.
The rates are approved by the government for several years in advance and expressed in somoni per hectare, taking into account cadastral zones and the type of land — arable land, perennial plantations, pastures, etc.
