THE SHADOW ECONOMY AND FISCAL SECURITY: ASSESSING THE IMPLICATIONS FOR TAX REVENUES AND PUBLIC FINANCE

Abstract

This article looks at how the non-observed economy of Uzbekistan relates to the revenue side of public finance over 2021–2025. Official series from the National Statistics Committee and the Tax Committee are put side by side to compare the movement of tax receipts, nominal GDP and the shares of informal and hidden activity. Receipts collected by the tax authorities rose from about 128 trillion to 247.8 trillion soums, yet their ratio to GDP fell from 14.9 per cent in 2021 to 13.0 per cent in 2024 and recovered only partly, to 13.4 per cent, in 2025. The headline retreat of the non-observed economy, from 37.3 per cent of GDP to 26.9 per cent, comes almost wholly from the informal household segment, while the hidden segment that matters most for taxation stayed close to 8 per cent of GDP and grew in step with the economy. The article concludes that the fiscal position strengthened in 2025, but that the improvement leans on profit and subsoil taxes paid by a limited group of large taxpayers, and that further consolidation of the VAT and personal income tax bases is still required.