https://ijmri.de/index.php/jmsi
volume 4, issue 4, 2025
682
THE ESSENCE OF THE “NEIGHBORHOOD” SYSTEM IN THE TAX SYSTEM
Karimova Nilufar Sadriddin kizi
Tashkent State University of Economics
Abstract:
Today, at the new stage of the economic development of our country, special attention
is paid to the comprehensive socio-economic development of the regions, as well as increasing
their incomes through the development of the population’s entrepreneurship, and ultimately to
reducing poverty. Taking into account the potential of neighborhoods, it is important
to develop and implement projects aimed at generating income for the population. Additionally,
focusing on poverty reduction by ensuring employment and developing entrepreneurship in
neighborhoods, the “neighborhood” work system is being introduced. This system aims to
systematically study the population’s challenges based on the principle of “neighborhood-family-
citizen” and resolve them in a timely manner. In this article, the role of the local tax system in
Uzbekistan is analyzed, considering its current financial situation, achievements, shortcomings,
reforms, and innovations aligned with global standards.
Keywords:
Tax system, neighborhood work, employment, poverty reduction, entrepreneurship,
financial situation.
Introduction
The Decree of the President of the Republic of Uzbekistan No. DP-6155 dated February 3,
2021, approved the Strategy of Actions in five priority areas of development for 2017–
2021, titled “Year of Youth Support and Strengthening Public Health. It prioritized the
systematic support of entrepreneurial initiatives in 2021, including the introduction
of a “neighborhood” work system to promote income generation, youth empowerment, and
women’s entrepreneurship.
The President of Uzbekistan, Sh.M. Mirziyoyev, emphasized that “economic
agencies should organize their work at the neighborhood level, and commercial
banks must implement effective projects locally, particularly expanding opportunities for young
entrepreneurs.”
Working in the neighborhood-
is a new mechanism for all sector officials to work together to
solve problems in neighborhoods and important issues in the lives of the population. In order to
identify and eliminate problems in the neighborhoods, in particular, to ensure the implementation
of the “Prosperous Village” and “Prosperous neighborhood” programs in the regions, Working
Groups consisting of responsible employees of the Ministry of Neighborhood and Family
Support and its territorial divisions have been formed. As a result of this practice, many social
problems that plague people in the areas are being solved.
Research Methodology
In Uzbekistan, recent years have seen serious attention paid to neighborhoods in
creating advanced infrastructure. In the “Working in the neighborhood” framework, the first step
is a scientific and theoretical analysis of the population’s financial conditions to improve well-
being. This requires applying effective research methodologies, including theoretical observation,
logical approaches, and synthesis analysis of official data. Using deductive and inductive
methods, factors affecting financial management in cluster financing were studied. Proposals
were formulated through complex analyses involving logical, comparative, and statistical
methods.
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Analysis
Neighborhood work is a new mechanism for all sector officials to work together to solve
problems in neighborhoods and address important issues in the lives of the population. In order
to identify and eliminate these problems—particularly to ensure the implementation of the
“Prosperous Village” and “Prosperous Neighborhood” programs—Working Groups consisting of
responsible employees of the Ministry of Neighborhood and Family Support and its territorial
divisions have been formed. As a result of this practice, many social problems affecting people
in the areas are being resolved.
The “Working in the neighborhood” working system consists of three links, which are presented
in
Figure
1
below.
Figure 1. Elements of the “Working in the neighborhood” operating system
The central link is the neighborhood citizens’ assembly and a permanent representative of
the commercial bank attached to the neighborhood. The middle link is the sectoral management
offices. The final link is the district and regional coordination groups.
In the “Neighborhoodbay” system of work, qualified bank specialists are assigned to the
neighborhood citizens’ assembly as permanent representatives (one for each neighborhood or
one for every two smaller, neighboring neighborhoods). These representatives help create new
jobs in neighborhoods by training unemployed residents—especially youth and women—in
professional skills, developing entrepreneurial potential, and expanding existing businesses. In
short, these bank representatives provide economic advice to the chairman of the neighborhood
citizens’ assembly.
1
Developed by the author
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volume 4, issue 4, 2025
684
Figure 2: Structure of the links of the “Working in the neighborhood
”
operating system
In the process of developing a comprehensive program for the socio-economic
development of neighborhoods:
studying the sources of income of the population, including entrepreneurs
with informal income, through a household-based approach;
identifying the needs of the unemployed population, especially youth and
women, for professional and entrepreneurial skills training;
studying the problems of entrepreneurs in the neighborhood through a client-based
approach, and presenting proposals to district (city) coordination groups on expanding their
activities;
making proposals to management offices on the development of the neighborhood and
on providing the population with a sustainable source of income. In the process of implementing
the socio-economic development program of the neighborhood:
submitting biweekly proposals to the district (city) coordination group for
training the unemployed population, particularly youth and women;
assessing the population’s interest in entrepreneurship and assisting them in
launching business activities, including the implementation of business projects;
studying and monitoring the effectiveness and efficiency of projects
implemented in the neighborhood.
2
Developed by the author
Structure of the “Mahallabay”
operating system links
Republican
Commission on
the Organization
of the
“Makhallabay”
Work System in
the Territories
of the Republic
Council of
Ministers of the
Republic of
Karakalpakstan
Regions,
districts (cities)
governorates,
Coordination
groups
Management
offices and
permanent
representatives
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685
Figure 3. Main functions of the “Neighborhoodbay” operating system
Discussion
Tax authorities assist local entrepreneurs through a “Taxpayer-Assistant” principle. Tax
inspectors assigned to neighborhoods provide information on water tax, land tax, income tax, and
others. They also emphasize the formalization of labor relations and the legal employment of
informal workers.
In short, tax inspectors explain legislation on the ground, clarify the benefits of official
income for retirement, and guide business entities on using online cash registers, issuing
purchase receipts, reporting employee numbers honestly, and submitting reports on time.
3
Developed by the author according to current procedures.
The main tasks of the “Working in the neighborhood”operating
system
In the
process of
developing a
comprehensi
ve program
for the socio-
economic
development
of
In the
process of
implementin
g the socio-
economic
development
program of
the
neighborhoo
d:
studying the sources of income of the population,
including entrepreneurs with informal income, through a
household-based approach
identifying the needs of the unemployed population,
especially youth and women
“Client-based” approach of the problems of entrepreneurs
in the neighborhood and submission of proposals to district
(city) coordination groups for expanding their activities
submitting biweekly proposals to the district (city)
coordination group for training the unemployed
population, particularly youth and women
assessing the population’s interest in entrepreneurship and
assisting them in launching business activities, including
the implementation of business projects
studying and monitoring the effectiveness and efficiency
of projects implemented in the mahalla
making proposals to management offices on the
development of the neighborhood and on providing the
population with a sustainable source of income
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686
Face-to-face interaction and the “neighborhood” work system have proven effective.
Inspectors hold direct conversations with entrepreneurs, address their concerns, explain tax
obligations and benefits, and highlight the fight against the shadow economy, including the
requirement to issue online-NKT receipts along with receipts from payment terminals.
Conclusion and Suggestions
In conclusion, the neighborhood-based system introduced in our country contributes to
poverty reduction, ensures the targeted delivery of public services, and provides financial support
down to the neighborhood level. It facilitates the resolution of local issues such as infrastructure
development, landscaping, material assistance, social support, and the construction of libraries
and sports grounds.
In 764 neighborhoods across 14 districts where the “Neighborhood Budget” system was
piloted, 45.249 billion soums were collected in property and land taxes in the first quarter of this
year—1.8 times more than last year.
Key recommendations for improving the tax mechanism of the “Neighborhoodbay” system
include:
– Improving the mechanism for collecting property and land taxes from individuals;
– Educating neighborhood residents on how tax debt arises from a lack of tax knowledge;
– Strengthening the work of authorized bodies in implementing financial relations within the
“Neighborhoodbay” system and developing clear coordination mechanisms.
References
1.
Decree of the President of Uzbekistan No. DP-29 (2021),
on the Priority Directions of
State Policy for the Development of Entrepreneurship in the Neighborhood, Ensuring
Employment, and Reducing Poverty
.
2.
Resolution No. 152 of the Cabinet of Ministers of the Republic of Uzbekistan dated
March 19, 2021,
on Measures to Implement the “Neighborhoodbay” Work System and Further
Support the Entrepreneurial Initiatives of the Population
3.
Decree of the President of the Republic of Uzbekistan No. DP-6314 dated September 15,
2021,
on Measures to Further Reduce the Administrative and Tax Burden on Business Entities
and Improve the System of Legal Protection of Business Interests.
4.
Tax Code of the Republic of Uzbekistan. – Tashkent
: Gʻafur Gʻulom Publishing House,
2020
.
5.
Mishustin, M.V. (2010). To Improve the Quality of Tax Administration, a
Comprehensive Modernization of the Tax Service is Necessary. Interview // Russian Tax
Courier.
6.
UZA.
7.
LexUZ. (n.d.).
