The proposal of Uzbekneftegaz to increase the excise tax on gasoline imports from 5% to 20% in order to support local oil refineries is widely discussed on social networks.
The Antimonopoly Committee has the following opinion on this issue.
It is known that the excise tax on petroleum products is applied in almost all countries.
Excise tax is an indirect tax paid on goods produced and imported from within the country, usually with a clear list.
In international practice, in developed countries, the excise tax is considered a source of revenue for the country’s budget. In this case, the excise tax is set at a single rate, regardless of whether the goods are domestic or imported.
At the same time, the practice of setting excise taxes at different levels has been observed in Belarus and Kazakhstan. At the same time, it is done in terms of preventing price increases for consumers and, conversely, lowering them, or creating equal conditions for businesses. For example, in Belarus, from February 28 to December 31, when selling gasoline produced by domestic gasoline producers, excise tax payers will be given a discount of 0.25. That is, in order to support domestic producers while ensuring the priority of consumer interests, the excise tax exemption was applied to domestic gasoline, rather than raising the excise tax on imported gasoline.
In addition, in order to prevent a shortage of gasoline in the market in Kazakhstan, the excise tax on imported gasoline was previously almost three times lower than on domestic gasoline, in order to reduce the price of socially important gasoline. However, from 2018, the amount of excise tax has been equalized in order to create equal conditions for market participants.
Until 2020, a number of privileges and preferences have been applied at the oil refineries of Uzbekneftegaz JSC. For example, the conditions set by the Decree of the President of the Republic of Uzbekistan dated November 14, 2017 No. PP-3386 are among them.
At present, Uzbekistan has created equal conditions for businesses engaged in the production, import and sale of petroleum products. The Bukhara and Ferghana refineries, which are monopolies, have been exempted from price-fixing restrictions since May 2020. Now prices are formed on the basis of supply and demand in exchange trading.
The proposal submitted by Uzbekneftegaz to the Ministry of Energy to increase the excise tax on imported oil products is not sufficiently economically justified.
Based on the above, the Antimonopoly Committee considers it inexpedient to ensure a healthy competitive environment and increase the excise tax in the interests of consumers.
It should be noted that the issue of establishing an excise tax on imports of products should be considered by the Council for Tariff and Non-Tariff Regulation under the Ministry of Investment and Foreign Trade of the Republic of Uzbekistan. In the event that the Council considers the matter, the Committee shall participate and defend with the above mentionnef position.
Press office of the Antimonopoly Committee