STRENGTHENING INVESTMENT ATTRACTIVENESS THROUGH TAX GOVERNANCE AND POLICY EFFECTIVENESS IN UZBEKISTAN

Abstract

This study examines how tax policy contributes to investment attractiveness in a reforming emerging economy, using Uzbekistan as a country case over 2021-2025. Rather than treating tax relief as an autonomous determinant of investment, the article advances a tax-governance perspective: investment attractiveness depends on the combined credibility of tax rules, administrative efficiency, disclosure of incentive costs, and the ability to direct capital toward productive activity. The empirical component triangulates annual fixed-capital investment statistics, regional financing structures, tax-administration performance indicators and international policy assessments. Nominal fixed-capital investment increased from UZS 236.6 trillion in 2021 to UZS 591.1 trillion in 2025, equivalent to a 149.8 per cent rise and a compound annual growth rate of 25.7 per cent. The share of non-centralised financing increased from 80.8 per cent to 89.4 per cent, while foreign investments and non-guaranteed foreign loans represented 65.9 per cent of total fixed-capital financing in 2025. At the same time, tax administration indicators show improved collection efficiency: the tax collection cost ratio fell from a 1.53 per cent baseline in 2021 to 0.83 per cent in 2024. The findings suggest that Uzbekistan's investment performance is consistent with an improving fiscal-administrative environment, but the available data do not permit causal attribution to tax incentives alone. The paper argues for a transition from broad exemptions to transparent, performance-based and regularly evaluated investment tax instruments supported by tax-expenditure reporting.