The Ministry of Investment and Foreign Trade (MIFT) proposed to review and optimize import duties, the ministry said in a report.

The analysis of the foreign trade processes in Uzbekistan found that the current rates of customs duties could adversely affect the real sector of the economy.

“We now have a situation which encourages imports of goods, with the economy eventually losing its investment attractiveness and reorienting itself to goods importing, the ministry added.

In line with the recommendations of the Council on Tariff and Non-Tariff Regulation, as well as on the basis of discussions at meetings and round tables with business executives and manufacturers, a draft government resolution on revision and optimization of import customs rates has been agreed.

It is based on the following principles:

• for natural raw materials and important socially significant goods (cereals, flour, ores and metal concentrates), the customs duty rate is proposed to be at 0%;
• for raw materials; goods not produced locally; socially significant goods; goods that have not been imported in the last 3 years – the proposed rate - 2−5%;
• semi-finished products or finished products, the production of which is inefficient due to local climate or economically impractical; ready-made and processed food items produced in the country, but not meeting current demand; goods the production of which is increasing; food products with a relative negative impact on human health – the proposed rate is 10−15%;
• agricultural products produced in sufficient quantities locally and exported; finished consumer goods, produced locally in volumes covering demand; luxury and non-essential goods that have a negative impact on human health (tobacco and alcohol) - the proposed rate is 20−30%.

While, for 197 items that are not produced domestically, it is planned to reduce the rates of customs duties: from 5% down to 2% - for 89 items, from 10% to 5% - for 79 items, from 20% to 2% - for 7 items. Based on market conditions for 2,818 items of goods, rates will be unaltered.

In case the proposed rate of customs duties are adopted, the average rate will be about 9%, which will surpass the current average of 5.6%, but however will be lower than the level of 2017 - 14.9%.

The number of items subject to zero rate will decrease from 62.7% to 40.1%: more than 2500 imported items, that were not taxed before, will be taxed at a rate of 2%.

It is noted that the average rate when joining the World Trade Organization of the Republic of Korea was 16.5%, Israel 22%, Indonesia 37.1%, Norway 20.1%, India 48.5%, Iceland 24% and Morocco - 41.3%.

In addition, the zero rate of customs duty, for example, in the European Union, applies to 16.7% of goods, India - 2.1%, European Economic Union - 15.8%, Turkey - 37.5%, and in Iran the zero rate is not applied at all.

Establishing new customs rates is expected to promote high-value-added production and optimize imports, the ministry said.