THE IMPACT OF VAT AND CUSTOMS DUTY REGIMES ON AGRO-IMPORTS AND EXPORTS: EVIDENCE FROM UZBEKISTAN

Abstract

Abstract: Uzbekistan has undertaken major tax and trade reforms since 2017, with significant implications for agricultural trade flows. This study examines the effects of evolving VAT and customs regimes on agro‐imports and exports during 2017–2025. We analyze official trade statistics and policy changes, focusing on VAT rate adjustments and tariff liberalization. The standard VAT rate was cut from 20% to 15% in 2019 and further reduced to 12% in 2023, while import tariffs were slashed (average rates falling from ~15.3% in 2017 to ~7–8% by 2020). At the same time, the government applied zero‐rate VAT and duty exemptions to key food and agricultural inputs (e.g. vegetable oil, meat, dairy products) as temporary relief measures. Empirical analysis shows that these policy shifts coincided with rising agricultural export volumes and increased food imports: for example, non‐precious goods exports (notably food) grew ~16.5% in 2024, while agro‐imports more than doubled from 2020 to 2023. The liberalized regime also supported farm incomes and consumer welfare, as evidenced by robust economic growth and a decline in poverty (from 13.4% in 2023 to 10.9% in 2024). Our findings suggest that maintaining stable VAT policies coupled with targeted trade tax incentives can stimulate Uzbekistan’s agricultural sector and help balance export promotion with domestic food security.