Taxation in the Digital Economy in Uzbekistan

Abstract

AbstractDigital economy taxation plays a crucial role in the modern globalised world, where digital businesses and transactions are increasingly prominent. As digitalisation continues transforming various aspects of society and the economy, governments face challenges of effectively regulating and taxing digital activities. This chapter focuses on Uzbekistan, exploring the importance of regulating digital businesses and implementing taxation. Here, I aim to understand the significance of digital economy taxation and its implications for Uzbekistan's legal system, business environment, investment climate, societal change, and governance. Specifically, I delve into identifying non-resident businesses subject to value-added tax (VAT) and the associated challenges faced by tax authorities. I discuss the complexities of determining who should pay taxes and the difficulties in establishing the necessary nexuses to enforce taxation on digital service providers. Furthermore, I highlight the limitations of existing methods used to identify VAT-liable businesses, including the limited technical capacity and access to financial data. From my analysis, I outline recommendations for improving digital economy taxation, and recommend developing enforcement mechanisms, exchanging information between non-resident companies and tax authorities, utilising technology, and considering thresholds to support startups and small businesses. These recommendations should foster a fair and efficient tax system supporting the evolving digital landscape and promoting economic growth.