Photo courtesy of mk.ru
Beginning January 1, 2025, local government administrations in Uzbekistan, known as khokimiyats (regional, district, and city administrations), will gain expanded administrative powers and increased financial autonomy. These changes stem from a presidential decree titled “On Measures to Implement a New System for Ensuring High Economic Growth and Employment in Regions and Enhancing the Role and Responsibility of Local Khokimiyats,” signed on December 20.
Key Administrative Changes:
Establishment of Public Councils of Entrepreneurs to improve collaboration between government agencies and businesses.
Authority to appoint and dismiss heads of district or city-level departments within specific ministries and agencies, as well as to apply incentives or disciplinary measures. This includes departments responsible for economy and finance, poverty reduction, employment, investments, industry, agriculture, construction, culture, family and youth affairs, and more.
Pilot legal experiment titled “Serving the Interests of the Population and Entrepreneurs” to be conducted in select districts and cities from January 1, 2025, to January 1, 2026.
Creation of project offices directly reporting to khokims (local governors) to oversee projects from inception to completion.
Use of extrabudgetary funds to reward project office staff.
Temporary assignments of deputy khokims to central ministries for training and experience-sharing.
Staff rotations across agencies to enhance management competencies.
Financial Reforms:
These reforms aim to gradually enable local budgets to cover their expenditures entirely through local revenues and internal sources. Key provisions include:
Allocation of 100% of revenue from several taxes—such as turnover tax, corporate property tax, and land tax—to local budgets.
Retention of at least 50% of personal income tax revenue within local budgets, with specific exceptions.
Allocation of 90% of proceeds from the sale of shares or assets owned by khokimiyats among regional and local budgets.
Additional Financial Autonomy for Khokimiyats:
Authority to increase minimum property rental fees up to twice the established minimum.
Flexibility to adjust water resource tax rates within a range of 0.7 to 1.5 times the standard rate.
Permission to raise subsoil resource tax rates up to 1.3 times for certain construction materials.
Direct sale or lease of buildings and land plots exceeding 10,000 square meters or valued under 1.875 billion soums ($146,000) that remain unsold for six months.
Regional and district leaders in Karakalpakstan and other provinces will also have access to funds from the Entrepreneurial Infrastructure Development Fund to implement key projects and improve engineering and communications networks.
