Directions for Improving Taxation Mechanisms of Commercial Banks

Abstract

The article evaluates tax procedures for commercial banks while specifically analyzing how profit tax influences their economic performance. The financial system depends heavily on commercial banks because profit taxes create substantial effects on their economic results and overall performance. Taxes directly impact how commercial banks make operational decisions and manage their investments while offering financial services. The banking sector reforms in Uzbekistan together with efforts to boost private sector participation have made tax policy an increasingly important issue in the country. TheResearchers use two research strategies that incorporate international benchmarking practices alongside domestic financial data and worldwide banking information. Higher profit tax rates create negative effects by negatively impacting bank net profit levels and discouraging investments and providing fewer lending options as well as increasing banking service costs. The profitability along with liquidity of Uzbek commercial banks face additional difficulties because of suboptimal asset-liability management and underdeveloped capital markets. The study outlines three main measures which involve bringing taxation structures into modern standards together with international compliance requirements and fostering investments in liquid financial products for boosting banking operational effectiveness. The analysis underlines the necessity to improve expected return and liability stability principles in banking theory when managing assets. The paper finds that the economy requires an efficient and transparent tax system focused on growth because this will improve banking sector performance for economic development. The implemented improvements will create benefits that guarantee both financial stability of banking institutions and enhanced accessibility to financial services together with expanded economic development.