TASHKENT — A survey by the International Finance Corporation (IFC) of no less than 1300 Uzbek companies reveals that the country's private sector spends US$184 million each year on book-keeping, which is an enormous sum for the economy. More is spent on tax reports in one year than the government has spent in the last three years on cotton processing facilities.
The book-keeping required by Uzbekistan's tax authorities consumes 0.7 percent of the country's GDP, notes Vsevolod Payevskiy, director of an IFC project to improve Uzbekistan's business environment. Although keeping track of a company's indicators is essential, the Uzbek process exacts a heavy toll from private enterprises.
Uzbek businessmen are required to submit up to a dozen financial reports to authorities each year, each of which requires an average of ninety-five hours to compile. Another 40 hours or so are spent on statistical accounting. Since the average Uzbek private company has seven employees, these requirements mean that one of these employees works full-time on nothing but tax filings, statistical reports and other tax documents.
IFC analysts note that financial reporting has become extremely time-consuming in Uzbekistan, partly because of shortcomings in the country's tax code. This spring, parliament was forced to adopt a new version of the code because of countless disparities between the Uzbek- and Russian-language versions of the tax laws. According to IFC analysts, however, the revised versions still contain at least 80 discrepancies. These differences allow officials to interpret financial reporting requirements arbitrarily, which is one reason why Uzbekistan’s government ranks186 in the world for transparency.
The IFC has prepared eleven recommendations for improving the Uzbek tax code and has invited more than 500 tax inspectors from seven of the country's regions to attend training sessions on current methods of processing company reports.
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