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Uzbekistan urged to end CUs tax disadvantage
UZBEKISTAN (4/3/08)--The president of Uzbekistan urged reform of his country's Tax Code to remove disparities that put credit unions to a disadvantage. Under the current Tax Code, the interest earnings received by individuals who have deposits in credit unions are taxed, while the earnings of those with deposits in commercial banks are not, reported UzReport.com (April 2). President Islam Karimov, in his report to the Cabinet of Ministers on the results of the country's socio-economic development in 2007 and the top priorities for economic reforms for 2008, noted that simplifying and unifying the tax systems would be a main task on the way to liberalizing the economy. As of Jan. 1, credit unions accounted for 3.5% of the nation's individual deposits. Karimov noted that taxing earnings from credit union deposits while not taxing earnings from commercial bank deposits seemed unfair and contradicted the principles of fair taxation outlined in the code. The situation leads to the competitive disadvantage of deposit products of credit unions, since 98% of the resource base for credit unions is personal deposits, he said. He noted credit unions' main mission is to raise the welfare of their members and that they provide services to relatively more vulnerable groups. Taxation forces the credit unions to raise the interest rates to stay competitive, which in turn makes the financial resources more expensive for the consumer. Because the government aims to further develop the system of credit unions and micro-credit organizations, Karimov's report suggested agencies should work to amend the tax code for more unified treatment.
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