The World Bank’s board of executive directors has approved the Tax Administration Reform Project in Uzbekistan. It is designed to improve the operational efficiency and effectiveness of the State Tax Committee (STC) and deliver better services to local taxpayers.

The project is to be supported with a $60mn concessional credit from the International Development Association (IDA), with financing provided to the government at a very low-interest rate and with a repayment period of 30 years.

“The Government of Uzbekistan has prioritized reforms in the tax administration system to create a better business and investment environment. The new project will help the STC improve its work in the interest of taxpayers,” said Marco Mantovanelli, World Bank country manager for Uzbekistan. 

He added: “In particular, the project will allow the broadening of the tax base, leading to a reduction in the informal sector of the economy, which is estimated to be around 50% of GDP; the increasing of tax revenues; and the helping of firms and companies in creating new jobs, benefiting from a more efficient tax administration system.”

The project includes three key components directed at improving the STC’s operational, institutional, technological and human resource capacities, and promoting voluntary compliance across Uzbekistan.

Component 1 is to invest in automating the STC’s core tax administration business processes. The second component aims at assisting with designing and implementing measures to reduce the informal sector of the economy. And the third component is to strengthen the STC’s human resource and institutional capacities to attract, develop, and retain skilled and knowledgeable tax officials.

Earlier this week, the World Bank approved a $100mn concessional loan to help Uzbekistan’s southern regions improve urban infrastructure and municipal services.