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Uzbekistan extended tax incentives for imports and sale of potatoes

On January 11, 2022, the upper house of the Uzbek parliament approved a draft law whereby tax incentives for the imports and sale of a number of food products, including potatoes, will be extended until April 30, 2022, EastFruit experts report.

On October 21, 2021, with the view to restraining the rise in potato prices in the domestic market, the Senate of the Oliy Majlis (upper house of parliament) approved a law on amendments to the Tax Code, providing for a zero value added tax (VAT) on the import and sale of a number of food products, including potatoes. According to the document, imports and sales of these goods were exempted from VAT from October 10 to December 31, 2021.

Upon the expiration of these tax benefits, the country’s upper house of parliament approved a law on amending the Tax Code on January 11, 2022. It provides for the exemption of the imports and sale of a number of food products, including potatoes, from VAT until April 30, 2022.

From the beginning of January to the end of September 2021, the dynamics of average wholesale prices for potatoes was similar to the previous year, and prices were about the same as in 2020. But due to the rush in the potato market in Russia, potatoes in Uzbekistan began to rise in price as a domino effect at the end of September 2021. Three weeks later, the average wholesale prices for potatoes increased from 3 500 to 5 000 UZS/kg ($0.33-0.47), i.e. by 43%, in just one week – from October 14 to October 21, 2021.

The decision to exempt the imports and sale of potatoes from VAT adopted on October 21, 2021 served as a factor restraining further growth in potato prices in the domestic market. Average wholesale prices for potatoes in Uzbekistan ranged from 4 500 to 5 000 UZS/kg ($0.42-0.51) from November 4, 2021 to January 7, 2022.

As of January 7, 2022, the average wholesale prices for potatoes were 5 000 UZS/kg ($0.46), which is almost 1.5 times higher than on the same date in 2020 and 2.3 times higher than on the same date in 2019.

In 2021, imports of potatoes to Uzbekistan exceeded half a million tonnes for the first time, setting a new record. According to EastFruit analysts, the country imported 559,100 tonnes of potatoes in 2021, which is 33% more than in 2020.

Potatoes have become the main import commodity in Uzbekistan’s fruit and vegetable sector over the past few years. Until 2016, the annual imports volume of potatoes did not exceed 50 thousand tonnes per year, and in 2017 the imports amounted to 194 thousand tonnes. Accordingly, the volume of imports increased almost by 3 times from 2017 to 2021.

 

EastFruit

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