VAT refunds fall 17% in Uzbekistan, dragged down by service sector slump

According to data from the Tax Committee, Uzbekistan saw a noticeable decline in VAT refunds in the first half of 2025.

From January to June, the total value of refunded VAT dropped by 17.7%, amounting to UZS 8.79 trillion. For comparison, in the same period of 2024, VAT refunds had increased by 20%, exceeding UZS 10.69 trillion. In 2023, the figure was UZS 8.89 trillion, marking a 13.7% rise.

In the first six months of 2025, tax authorities received 5,488 VAT refund applications from 3,272 companies. The number of applications rose by 18.2%, and the number of applicants grew by 16.9%. Despite the increase in requests, the average refund amount fell to UZS 1.6 billion – a drop of 30.4% compared to the first half of 2024.

More than half of the reviewed applications came from exporting companies, which collectively received UZS 3.13 trillion in VAT refunds – an increase of 32.8%. The number of applications from exporters surged by 38.8% to 3,089, while the number of exporting companies seeking refunds rose by over 50%, surpassing 1,400.

Industrial enterprises accounted for over two-thirds of the total VAT refunds – UZS 5.99 trillion, up 15.4%. This was followed by the services sector, which received UZS 956.2 billion (down 29.2%), and the transport sector, which saw UZS 641.4 billion in refunds – a 3.3-fold increase.

Tax Committee Chairperson Sherzod Kudbiyev addressed the delays businesses face in receiving VAT refunds. One logistics company founder reportedly said they had been waiting since February to receive a refund of UZS 750 million.

“If a mistake is made when refunding budget funds, you could go to prison. It’s a highly sensitive issue – 32 tax officials have already been prosecuted for misconduct and bribery related to VAT refunds,” Kudbiyev said.

He likened the current refund process to “an inspector taking a bottle of water from the fridge, blowing on it, and then demanding a certificate to prove it’s cold.” Kudbiyev urged businesses to raise their compliance rating to AAA, which qualifies them for automatic VAT refunds.

In 2024, the Tax Committee processed VAT refunds totaling UZS 22.8 trillion – a 15.9% increase over 2023. This was largely driven by the introduction of a business sustainability rating, which enables the highest-rated businesses (AAA) to receive VAT refunds within one day and without inspections.