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Uzbekistan cancels VAT on poultry and meat

Uzbek president, Shavkat Mirziyoyev, has exempted poultry and meat imports and sales on the domestic market from VAT payments until the end of 2021 in an attempt to curb the continuing rise in prices.
The price of poultry and meat has reportedly jumped by 30% to 50% in Uzbekistan since the beginning of the year. Photo: ANP
The price of poultry and meat has reportedly jumped by 30% to 50% in Uzbekistan since the beginning of the year. Photo: ANP

The decision is needed to cool down the domestic market, where a price hike has been seen over the past months, according to the explanatory note to the bill.

Dmitry Gordeev, director of the Center for Economic and Analytical Studies with the Russian Academy of Sciences, told Russian news outlet, Sputnik, that the decision was a forced measure since Uzbekistan is likely to face a shortage of poultry, beef, and lamb.

Gordeyev estimated that their combined consumption amounted to at least 1.5 million tonnes in 2021, while domestic production was expected to reach only 1.4 million tonnes.

The lack of supply drives up domestic prices, which the authorities are trying to constrain. To some extent, the existing imbalance in the market is associated with the local population’s rising purchasing power, which spurs poultry and meat consumption in the country.

Up to 50% inflation

The price of poultry and meat has reportedly jumped by 30% to 50% in Uzbekistan since the beginning of the year, despite the efforts made by the government. It is yet to be seen whether the elimination of VAT can really prove this situation.

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According to Gordeyev, price stabilisation is yet to be reached, as the domestic markets are still vigorously shaken by price fluctuations. On the other hand, the decision on VAT is a bit of an extraordinary measure, as usually in similar circumstances in other countries, the governments try to limit poultry or grain export or allocate additional production subsidies, Gordeev added.

$ 50 million to poultry farmers

In June 2021, Mirziyoyev called the authorities to facilitate an increase in Uzbek poultry production to 450,000 tonnes. Large-scale state aid was approved for poultry farmers, with the production subsidy tripled for eggs and doubled for poultry meat.

Mirziyoyev stipulated that poultry farmers and feed mills would get a reimbursement on the part of the loans received to replenish working capital. Last but not least, tax rates on profits, property, land, and water for poultry farmers were cut by 50% in 2021. In total, it was estimated that the Uzbek government would allocate $ 50 million through local bank Microcreditbank to support the domestic poultry industry in 2021.