Improving the Mechanisms for Reducing Tax Arrears in Uzbekistan

Tax arrears represent a significant challenge to fiscal sustainability, budget revenue stability, and the effectiveness of tax administration. Their accumulation reflects not only taxpayers’ failure to fulfil tax obligations on time but also the effects of liquidity constraints, institutional inefficiencies, limited tax awareness, and weaknesses in compliance management. This article examines the theoretical foundations, economic determinants, and institutional mechanisms of tax arrears reduction in Uzbekistan. It draws on international tax administration practices, behavioural economics, compliance risk management, and digital transformation to develop an integrated approach to preventing and managing tax arrears. Particular attention is paid to risk-based taxpayer segmentation, automated payment notifications, the integration of tax administration systems with electricity billing infrastructure, public disclosure of information on the use of tax revenues, performance-based incentives for mahallas, and the use of social information campaigns. The article also proposes a comprehensive Tax Discipline Index to assess regional tax compliance by combining arrears indicators with selected tax revenue indicators. The findings support a transition from predominantly enforcement-oriented debt collection towards a preventive, data-driven, transparent, and taxpayer-oriented model. The proposed measures could contribute to higher voluntary compliance, improved collection efficiency, and stronger public confidence in the tax system, provided that their implementation is supported by appropriate legal safeguards, data protection, and transparent performance evaluation.