Improving the tax system efficacy and increasing tax transparency: solutions, challenges, and the smart future of taxation

This study examines the efficacy and transparency of Uzbekistan’s tax system through the lens of digital transformation, institutional capacity, and taxpayer behavior. As the nation transitions toward market-oriented governance, its tax architecture though showing early digital adoption since 2017 remains fragmented, reactive, and unevenly distributed across regions. Empirical analysis reveals a strong, statistically significant correlation between digital tool adoption and revenue efficiency (R² = 0.76, p < 0.001), positioning digitalization not merely as a technological upgrade, but as a systemic driver of fiscal resilience. Regional disparities particularly in Tashkent (82% digital adoption, 74.2% compliance) versus Fergana (51%, 62.1%) underscore the need for localized, culturally adapted interventions. Taxpayer satisfaction and institutional trust are strongly linked to digital adoption (r = 0.78) and education (r = 0.83), yet remain lower among younger, rural, and lower-income groups highlighting gaps in platform accessibility and user-centric design. Comparative analysis with peer economies (Georgia, Kazakhstan, Azerbaijan) reveals that while Uzbekistan’s tax-to-GDP ratio (17.8%) is competitive, its digital readiness (62%) and institutional capacity (6.8/10) lag behind. Regression modeling further confirms that digitalization is the most powerful predictor of revenue efficiency, outperforming traditional variables such as GDP growth or income level.

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