Uzbekistan Diagnostic Assessing Progress and Challenges in

3.3 Governance and business environment challenges 
Uzbekistan has started tackling the challenging business environment.
 
Further 
strengthening of property and other business rights and enhancing the capacity of courts 
to review commercial disputes are important steps towards better protection of private 
businesses.
Visible progress has been made in addressing some business climate issues, and the 
current status has to be assessed in the context of a rapidly changing environment
. 
Currency liberalization, as noted above, has been a major step towards an effective and 
enabling business environment. Among other measures, non-scheduled inspections of 
companies have been limited by law and waiting times for some permits have been reduced.
 
There is now public-private dialogue, including through the Chamber of Commerce and a 
specialised web portal which collects comments on all new legal acts from interested parties. 
The government is working on public-private partnership legislation, a law on renewables 
and improvements to the law on state procurement. A Business Ombudsman has been 
established.
Taxation and tax administration are among the areas most in need of reform. 
The way 
tax obligations are defined strongly favours SMEs. While this is positive, the abrupt increase 
in taxation of companies not qualifying as SMEs hinders their growth beyond a certain size 
and provokes splitting of companies and suboptimal corporate governance. The government 
is now working on aligning definitions of micro, small and medium size enterprises with 
international practices. The structure of the tax system also impedes the creation of 
specialised businesses and optimal positioning in value chain due to the taxation of turnover 
instead of value added in many cases. The reform of the tax system has commenced and will 
likely to continue throughout 2018, at least.