Investment Guide

Privileges and Preferences for foreign direct invesments

Foreign investments in the Republic of Uzbekistan enjoy the national treatment which provides foreign investors with conditions not less favorable, than corresponding conditions for investments, made by legal entities and natural persons of the Republic of Uzbekistan.

The legislation, alongside with the general guarantees and measures of protection of foreign investors, may envisage additional guarantees and measures of protection, including providing unconditional performance by partners.

In some cases on the basis of concluding investment agreement additional guarantees and measures of protection can be given to foreign investors at investment in:

-the priority sectors providing steady economic growth, progressive structural changes of a national economy;

-the priority projects providing strengthening and expansion of an export potential of the country, its integration into world economic relations;

-projects in sphere of small business oriented at processing of raw material and materials, production of consumer goods and services, providing population with employment. 

In case the Government of the Republic of Uzbekistan provides the foreign investor with additional guarantees and measures of protection (privileges and preferences), without fail, the investment agreement shall be concluded.

The investment agreement shall be concluded on behalf of the Government of the Republic of Uzbekistan between the Ministry for Foreign Economic Relations, Investments and Trade of the Republic of Uzbekistan and the foreign investor.

Also, the state guarantees and protects the rights of the foreign investors carrying out investment activity within the Republic Uzbekistan.

In case the subsequent legislation of the Republic of Uzbekistan deteriorates investment environment to foreign investors, within ten years from the moment of investment, the legislation acted on date of investment shall apply. The foreign investor is entitled to apply at own discretion those provisions of the new legislation which improve investment environment.

The legislation stipulates the notifying order of use of a ten years' guarantee. Thus, at approach of deterioration investment environment, the foreign investor notifies the corresponding authorized body on application of a guarantee.

In particular, the newly established enterprises with foreign investment, in which the foreign investor's contribution in cash of not less than five million U.S. dollars, in case of changing tax laws may be used within 10 years from the date of state registration rules and regulations in the payment of income tax lawthose value-added tax (turnover of sales of goods and services), property tax, tax on improvement and development of social infrastructure, unified social tax, single tax, as well as mandatory contributions to the Republican Road Fund and reconstruction,repair and equipping of educational and medical institutions operating on the date of their registration.

Authorized agencies, which shall be notified of the application by a foreign investor guarantees are state organizations involved in state registration of legal entities - Ministry of Foreign Affairs, Ministry of Internal Affairs, Ministry for Foreign Economic Relations, Investments and Trade, the State Tax Committee of Uzbekistan and the servicing banks.

Notification to the foreign investor is the basis for the application of the authorized body for the foreign investor legislation in force at the date of investment

In the framework of investment projects worth over U.S. $ 50 million and the share of foreign investors is not less than 50 percent of the construction of the necessary external, outside the production site, engineering and communication networks at the expense of budget funds and other domestic sources of funding

Taxed profit for legal entities is reduced for the amount of:

- means addressed to expanding of major production in the form of a new construction, reconstruction of buildings and erections used for production needs and payment of credits received for these purposes with deduction of depreciations calculated in a corresponding tax period, but not more than thirty (30) percents of taxed profit;

- means addressed for modernization and technological reequipping of production, obtaining of new technologic equipment, payment of credits issued for the above purposes, compensation of the cost of a leased object with deduction of imposed depreciation in a corresponding tax period. Reduction of taxed base in carried out within five (5) years starting from a taxed period in which the above expenses were carried out and on technologic equipment from the moment of putting it into operation. In case of realization and gratis transfer of new technological equipment within three (3) years from the moment of its obtaining, this privilege is annulled with the rehabilitation of duties on payment of income tax for the whole period of application of the privilege.

Moreover, the enterprises - domestic manufactures who export the produced goods (works, services) for the foreign currency, except raw materials, independently of the origin of production, are granted with:

-50 % reduction in the income (profit) tax if the company exports  not less than 30 % of total amount of sales of produced goods (works, services);

-30 % reduction in the income (profit) tax if the company exports from 15 % up to 30 % of total amount of sales of produced goods (works, services);

From Value Added Tax (VAT) are exempted:

- turnover on realization of property realized in the order of privatization of public property;

- turnover on realization of goods (works, services) obtained by legal entities at the cost of loans (credits) provided by international and foreign representation financial organizations on contracts (agreements) signed with the Republic of Uzbekistan and received at the expense of grants;

- turnover on realization of property transferred as investment obligations in accordance with the contract between investor and authorized public agency on management of public property;

- provision of services on contract for financial lease (leasing), with regards to interest income of the tenant in life (leaser);

- import of the technological equipment, imported to the territory of the Republic of Uzbekistan along with the list approved in accordance with the with the legislation and spare parts under conditions if their delivery is envisaged by conditions of contracts for delivery of technological equipment. In case of realization and gratis transfer of imported technological equipment for export within three (3) years from the moment of its import, this privilege is annulled with the rehabilitation of duties on payment of value added tax for the whole period of application of the privilege;

- import of goods imported as investment obligations in accordance with the contract between investor and authorized public agency on management of public property;

- import of raw products, materials and half-finished products imported for use in domestic production by the enterprises with foreign investments, specialized on the manufacture of child footwear.

When estimating the property tax for legal entities, the tax base shall be reduced by the cost of:

- equipment obtained for 5-year credit from the moment of putting it into practice, but not more than the term established for the reimbursement of the credit;

- leased property for the period of lease contract duration;

- new technological equipment reinstalled for implementation for the period of five (5) years. In case of realization and gratis transfer of new technological equipment within three (3) years from the moment of its obtaining (import), this privilege is annulled with the rehabilitation of duties on payment of property tax for the whole period of application of the privilege;

Moreover, the enterprises - domestic manufactures who export the produced goods (works, services) for the foreign currency, except raw materials, independently of the origin of production, are granted with:

- 50% reduction in the property tax if the company exports not less than 30% of total amount of sales of produced goods (works, services);

-30% reduction in the property tax if the company exports from 15% up to 30% of total amount of sales of produced goods (works, services).

From property tax for legal entities are exempted:

- newly established undertakings within two years from the moment of registration. The mentioned incentive is not applied to the enterprises, created on the basis of manufacturing capacities and capital assets of the liquidated (re-organized) enterprises, their separated divisions, and legal entities created under the existing enterprises, in case if they are working on the rented equipment.

From the customs duties also are exempted:

- the property imported by foreign investors and enterprises with foreign investments in the Republic of Uzbekistan for own industrial needs;

- the goods imported by foreign legal entities, which made direct investments into economy of the Republic of Uzbekistan for a total sum of more than USD 50 million provided that the imported goods are goods of their own production;

- the goods, works and the services intended for work under the Production Sharing Agreement and imported into the Republic of Uzbekistan according to project documentation by the foreign investor or other entities, participating in performance of works under the Production Sharing Agreement, and also goods exported by the investor belonging to him/her according to the Production Sharing Agreement;

- technological equipment imported to the territory of the Republic of Uzbekistan along with the list approved in accordance with the with the legislation and spare parts under conditions if their delivery is envisaged by conditions of contracts for delivery of technological equipment. In case of realization and gratis transfer of imported technological equipment for export within three (3) years from the moment of its import, this privilege is annulled with the rehabilitation of duties on payment of value added tax for the whole period of application of the privilege.

 Along with the customs and tax privileges established for all enterprises of the Republic of Uzbekistan, there are a number of benefits to enterprises following sectors of the economy, attracting foreign direct  investment:

Enterprises attracting direct private foreign investment and specializing in production of radio electronic devices and production of computers' components, light industry, silk industry, industry of building materials, Industrial production of poultry meat and eggs, food industry, meat and milk industry, processing and preserving of fish and fish products, chemical and petrochemical industry, medical industry and production of medicals for veterinary use, production of packaging materials, construction of power plants based on alternative sources of energy, coal industry, Production of elelctrical ferroalloys and hardwarefor production purposes, machinery and metalworking, machine tool and instrument industry, glass and porcelain industry, microbiological industry,toy industryare exempted from  payment  of  profit  tax imposed on legal entities,  property  tax,  tax  imposed  on improvement and development of social infrastructure, unified tax  payment imposed on micro companies and small enterprises, as  well as from  mandatory deductions to  the Republic Road Fund.

Aforesaid tax privileges are granted on  condition that a volume of direct foreign investment is as follows:

        from USD 300 ths. to USD 3 mln - for 3  years;

        over USD 3 mln to USD 10 mln - for 5 years;

        over USD 10 mln - for 7 years.

Abovementioned tax-related  privileges appply in the following cases:

       - location  of  enterprises in all region of Uzbekistan , with the exception of Tashkent and Tashkent region;

       - direct  private  foreign  investment  by foreign investors without providing a guarantee of the Republic of Uzbekistan;

       - a share of  foreign participants in  an authorized capital  of the enterprise should be not less than 33 per cent;

      -  foreign investment in the  form of freely convertible  currency or up-to-date manufacturing equipment;

        - use of income of at least 50 percent resulting from the provision of preferences during the term of their application for re-investment to further develop the company.

It is necesssary to note that residents of FIEZ Navoi are exempted from land tax, property tax, profit tax of legal entities, social infrastructure development tax, unified tax payment for micro firms and small enterprises, compulsory contributions to the Republican Road Fund and off-budget Republican School Fund. (More detailed information www.fiez.uz)

The privileges are available depending on the volume of foreign direct investments:

- from 3 to 10 million Euro - for 7 years;

- from 10 to 30 million Euro - for 10 years. For the following 5 years rates of profit tax of legal entities and unified tax payment for micro firms and small enterprises are fixed at the level of 50 percent of current rates;

- more than 30 million Euros - for 15 years. For the following 10 years rates of profit tax of legal entities and unified tax payment for micro firms and small enterprises are fixed at the level of 50 percent of current rates.

For this purpose investments of legal entities and natural persons made without guarantee of the Republic of Uzbekistan are considered as foreign investments.

In case of increase by a FIEZ Navoi resident of the volume of direct investments to the level coming under the privileges, the privileges are applied from the month when the right to application of the privileges on the volume of investments has appeared, and are valid during the remaining period till the end of the term of validity of the privileges.

In case of increase of the volume of direct investments to the level coming under the term, exceeding the term granted earlier, the privileges are applied from the month when the right to application of the privileges on the preceding volume of investments has appeared, that is the term of privileges is prolonged taking into account the term of validity of the previously valid privileges.

The resident of special industrial zone "Angren"  ( SIZ "Angren")  are exempted from the payment of:

income tax, property tax for legal entities, the tax on improvement and development of social infrastructure, the single tax for small businesses, as well as mandatory contributions to the Republican Road Fund;

customs duties (except customs duties) on the equipment, components and materials not produced in the country, imported into the territory of SIZ  "Angren" in the implementation of projects on the lists approved by the Cabinet of Ministers.

The above exemptions are granted for a period of 3 to 7 years depending on the amount of investments made​​, including the equivalent of:

from 300 thousand U.S. dollars to U.S. $ 3 million - for a period of 3 years;

More than U.S. $ 3 million to 10 million U.S. dollars - a period of 5 years;

More than 10 million U.S. dollars - for 7 years.

PROVISION
on the order of functioning special currency regime
in the Navoi Free Industrial-Economic Zone

I. General provision

1. The Present Provision determines the order of operation of the special currency regime in the "Navoi" free industrial-economic zone (hereinafter - "Navoi" FIEZ)

2. The effect of this Provision applies only to activities carried out by business entities, registered by "Navoi" FIEZ directorate (hereinafter - "Navoi" FIEZ partners), solely in "Navoi" FIEZ.

3. To the purposes of the present Provision are applied the concepts used in the currency regulation law.

4. The procedures for conducting foreign exchange transactions, not provided by the present Provision are exercised in the statute-established manner.

II. The order of conducting of currency exchange transactions by "Navoi" FIEZ partners

5. "Navoi" FIEZ partners select the authorized banks for the service themselves and have the right to open foreign currency accounts in one or several authorized banks of the Republic of Uzbekistan (hereinafter - the authorized bank).

6. "Navoi" FIEZ partners have also a right to have accounts in banks abroad with obtaining the permission from the Central Bank of the Republic of Uzbekistan in the statute-established manner.

7. In order to open a poste restante deposit account in foreign currency, as well as secondary deposit account by "Navoi" FIEZ partners, the following documents should be submitted to the authorized bank:
a) an application for opening an account;
b) a copy of the certificate of the taxpayer identification number assignment, issued by the tax authorities, unless otherwise provided by law;
c) a copy of Certificate of registration as a partner of "Navoi" FIEZ;
d) two copies of cards with authorized signatures and stamp.

8. FIEZ "Navoi" participants foreign currency funds are kept in the accounts of authorized banks and used by them independently according to the present Provision.
Keeping the funds of "Navoi" FIEZ partners in foreign currency accounts opened in banks abroad, carried out according to the laws of the Republic of Uzbekistan, on the ground of which opening of bank accounts abroad was authorized.

9. Foreign currency proceeds, received by "Navoi" FIEZ partners, including from export of goods (works, services) are subject to enter in their accounts in authorized banks.
Receipt of funds in foreign currency to the accounts of "Navoi" FIEZ partners opened in banks abroad is carried out according to the legislation of the Republic of Uzbekistan, on the ground of which opening of bank accounts abroad was authorized.

10. "Navoi" FIEZ partners are authorized to:

- exercise within "Navoi" FIEZ settlements and payments in foreign currency according to the agreements and contracts concluded between them;

- pay in foreign currency for goods, works and services by other business entities - residents of the Republic of Uzbekistan;

- use convenient terms and forms of payments for exported and imported goods.

11. Business entities - residents of the Republic of Uzbekistan, non-residents of "Navoi" FIEZ have a right to sale goods, works and services in foreign currency to "Navoi" FIEZ partners.

12. To currency accounts of the "Navoi" FIEZ partners in authorized banks of the Republic of Uzbekistan can be entered in currency funds on:
a) payments, entailed foreign trade;
b) payments, in accordance with agreements and contracts, concluded by "Navoi" FIEZ partners;
c) purchased through authorized banks in the Republic of Uzbekistan;
g) effective foreign currency received by "Navoi FIEZ " partners, in statute-established cases;
d) contributed to the authorized fund (charter capital) of "Navoi" FIEZ partners in statute-established manner;
e) loans, foreign investments and mortgages in accordance with the legislation, and payments entailed their exercise;
g) payments on plastic and credit cards;
h) non-trade payments in statute-established cases;
s) received from abroad in the shape of grants in statute-established manner;
k) transferred from other accounts of account holder, opened in other banks;
i) in other cases, which are not prohibited by law .

13. Foreign currency funds which are in currency accounts of "Navoi" FIEZ partners in authorized banks of the Republic of Uzbekistan, on the order of owner can be:
a) transferred on payments, entailed current international transactions exercise;
b) transferred to the accounts of "Navoi" FIEZ partners in accordance with the concluded agreements and contracts;
c) transferred to the accounts of other business entities - residents of the Republic of Uzbekistan for the supply of goods, works and services;
g) used to pay for commissions fee on authorized banks transactions in foreign currency, pay of expenses for sending of employees on an business trips outside the Republic of Uzbekistan (including cash) in the established manner;
d) used to pay of credit, loans and interests repayment accounts;
e) transferred to an expanses on entering on authorized funds (charter capital) of legal entities in the statute-established manner;
g) sold the servicing bank on the territory of the Republic of Uzbekistan;
h) used to pay of the salaries to non-resident employees of "Navoi" FIEZ partners;
s) transferred to other accounts of the account holder, opened in other authorized banks of the Republic of Uzbekistan;
k) transferred for non-trade concerns in statute-established cases;
l) used in other statute-established cases.

14. All fund transfers through accounts of "Navoi" FIEZ partners, which are opened in banks abroad, must be carried out in accordance with the laws of the Republic of Uzbekistan, on the ground of which opening of bank accounts abroad was authorized.
15. Purchase and sale of foreign currency on the domestic market are carried by "Navoi" FIEZ partners through authorized banks by submitting an application and related documents in the statute-established manner.

III. Order of registration and execution of export contracts

16. Export contracts are subject to register in the authorized banks at the location of opening of the deposit account on foreign currency poste restante of the exporter.
In cases, if exporter has several foreign currency accounts in various authorized banks in Uzbekistan, the export contract must be registered only in one authorized bank, selected by exporter. Thus, all foreign currency funds under the contract must flow into account at the authorized bank in which the contract is registered, unless otherwise established by law.
The registration of export contracts at the customs authorities are carried out in accordance with the laws of the Republic of Uzbekistan.

17. The registration of export contracts at authorized banks are carried out within eight (8) hours since the time of submission of an application.

18. Any changes or amendments to the terms of the export contract must be recorded in the Supplementary Agreement. Supplementary agreements are subject to be registered with an authorized bank and customs authorities.

19. "Navoi" FIEZ partners have a right to use favorable terms and forms of payments for exported goods, works and services.

20. According to legislation, exporters are responsible for late or incomplete receipt of foreign currency transactions on their accounts for shipped goods, as well as, performed work and rendered services.

IV. Order of registration and execution of import contracts

21. Import contracts are subject to register only in the authorized bank on location of opening of the deposit account on foreign currency poste restante of the importer.
In case if the importer has several foreign currency accounts in various authorized banks in Uzbekistan, the export contract must be registered only in one authorized bank, selected by importer. Thus, all contract payments must be carried out through those authorized bank, in which the contract is registered, unless otherwise established by law.

22. Registration of import contracts at authorized banks are carried out within eight (8) hours since the time of submission of an application.

23. Any changes or amendments on terms of import contract must be recorded in the Supplementary agreement. Supplementary agreements are subject to registration at authorized bank, in the manner established for import contracts.

24. "Navoi" FIEZ partners have a right to use favorable terms and forms of payments for importing of goods, works and services.

25. In the case, if since the date of the payment by "Navoi" FIEZ partners the importer within the term established by law, the card with the corresponding marks of custom services on the arrival of goods to the territory of the Republic of Uzbekistan, as well as invoices, acts of the performed works on completed works and rendered services are not submitted to authorized bank, authorized banks are sent the relevant information to the tax authorities within ten days.

V. Monitoring and reporting

26. Control over the accuracy of currency transactions in "Navoi" FIEZ carried out by the tax authorities of the Republic of Uzbekistan, in accordance with the legislation.

27. Authorized banks are submitted to the Central Bank of the Republic of Uzbekistan reporting on foreign exchange transactions on the territory of the "Navoi" FIEZ in the form and terms established by the Central Bank of the Republic of Uzbekistan.

28. "Navoi" FIEZ partners, departing from requirements of the present Provision and the legislation on currency regulation are liable in the statute-established manner.

MFERITMEDEF InternationalInternational Business CenterGov.uzPress ServiceOliy MajlisUzASARIO