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Guide for Investor

Obtaining a license for legal entities

The Law of the Republic of Uzbekistan “On licensing certain types of activities” in the Article 14, the list of necessary documents for obtaining a license is specified.

For obtaining a license, a license applicant submits to the appropriate licensing authority:

an application for issuing a license indicating: the name and organizational-legal form of the legal entity, its location (postal address), the name of the bank institution and the current account number in the bank institution – for the legal entity; the surname, name, patronymic, data of the document certifying the identity of the citizen – for an individual; licensed type of activity (its part), which a legal entity or individual intends to carry out, as well as in cases provided for by the legislation, the period during which the specified type of activity will be carried out. The application for issuing a license may include the electronic address of the license applicant;

a document confirming that the applicant has paid a fee for consideration by the licensing body of the application of the license applicant in cases provided for by the legislation;

other documents confirming the ability of the license applicant to comply with the requirements and conditions imposed for obtaining a license for a particular type of activity and are determined by the legislation.

The requirement from the applicant of a license to submit documents that are not provided by this Law and other acts of legislation on the licensing of certain types of activities is not allowed.

The documents required for obtaining a license are submitted by the license applicant to the licensing authority directly, via mail or electronically, with notification of their receipt. Documents submitted in electronic form are confirmed by a digital signature of the license applicant. The indication in the application for issuing a license of the electronic address of the license applicant is his consent to receive notification of the decision taken on his application in electronic form through the information system.

Documents sent to the appropriate licensing authority for obtaining a license are received by an inventory list, a copy of which is sent (delivered) to the applicant with a note on the date of receipt of documents by the specified authority.

The license applicant is responsible for providing inaccurate or distorted information in accordance with the law.

In cases when the licensing body for licensing certain types of activities requires obtaining documents issued by other organizations, licensing of certain types of activities is carried out in a simplified procedure using the “one window” principle, in which the licensing body receives these documents independently without participation of the business entity.

(Article 14 (1). Licensing of certain types of activities on the principle of “one window”)

Forms of investment in Uzbekistan

  • Share participation in statutory funds and other property of business entities and partnerships, banks, insurance organizations and other enterprises established together with legal entities and (or) individuals of the Republic of Uzbekistan;
  • Creation and development of economic societies and partnerships, banks, insurance organizations and other enterprises wholly owned by foreign investors;
  • – Acquisition of property, shares and other securities, including debt instruments issued by residents of the Republic of Uzbekistan;
  • Investing intellectual property rights, including copyrights, patents, trademarks, utility models, industrial designs, brand names and know-how, as well as business reputation (goodwill);
  • Acquisition of concessions, including concessions for the exploration, development, extraction or use of natural resources;
  • Acquisition of the right to objects of trade and services, housing, together with the land on which they are located, as well as the right to own and use land (including on the basis of rent) and natural resources.
  • and in other forms that do not contradict the current legislation.

Enterprises with foreign investment

To register an enterprise with foreign investments in Uzbekistan, it is necessary to fulfill 3 conditions:

  1. The size of the authorized capital is not less than 400 000 000.00 sums
  2. The presence of the founders of a foreign legal entity or persons;
  3. The share of a foreign legal entity or individual must be at least 15% of the total size of the statutory fund.

Joint Venture in the form of LLC (JV LLC):

Registration conditions:

– the size of the authorized capital of the enterprise can not be less than 400 000 000.00 sum

– at least one of the founders of the joint venture must be a foreign legal entity or individual with a share in the authorized capital of this JV LLC at least 15%;

Foreign enterprise in the form of LLC (FE LLC)

Registration conditions:

– the size of the authorized enterprise can notbe less than 400 000 000.00 sums;

– the founder / founders of a foreign enterprise is a foreign legal entity (s) or individual (s) with a set of shares in the statutory fund of 100%

Registration of enterprises with foreign investments is held in the district centers of public services, depending on the postal address of the enterprise.

The requirement for the mandatory participation of a foreign legal entity as a participant in an enterprise with foreign investment has been abolished. The size of the state duty for state registration of enterprises with foreign investments has been reduced by three times.

Documents and information required for registration:

  1. Options for the name of the enterprise
  2. Distribution (in%) of the shares of the founders
  3. Information about the size of the authorized capital
  4. Postal address of the company
  5. Extract from the trade register of a foreign company at the place of registration or another document confirming the activities of this legal entity (the extract must contain: full name of the legal entity, location, data of persons entitled to sign on behalf of this legal entity). This statement is valid for 1 year from the date of issue.
  6. Power of Attorney for Representative 
  7. Copy of Director’s Passport / Gene. Directors of the enterprise

To start the registration of the JV LLC / IP LLC it is necessary to prepare the following:

  1. From founders – individuals, citizens of the Republic of Uzbekistan:

– copies of passports with registration of all founders;

1.1. If the founders include a legal entity-resident of the Republic of Uzbekistan, then it is also necessary to provide:

– A copy of the charter with the previous amendments to the charter (if any)

– A copy of the certificate of registration (guvohnoma)

– A copy of the passport of the enterprise manager

1.2. If there is a foreign citizen among founders, you must provide:

– In case of self-presence: a copy of the passport with a note of temporary residence permit and visa, TIN

– In case of personal absence: A copy of the passport + the original power of attorney for the representative

1.3. If the founders are a foreign legal entity, then it is necessary to provide:

– an extract from the trade register of a foreign legal entity at the place of registration or another document confirming the activity of this legal entity (the extract must contain: full name of the legal entity, location, individuals having the right to sign on behalf of this legal entity). This statement is valid for one year from the date of issue:

– the representative power of attorney

– A copy of the certificate of registration (in case there is not sufficient information on the statement)

– a copy of the charter (in case there is not sufficient information on the statement)

– a copy of the memorandum of association (in case there is not sufficient information on the statement)

The founding documents can be prepared either by the founders themselves, or by agreement with them by the third parties (consulting centers, law firms, etc.). You can contact the nearest division of the Chamber of Commerce and Industry, whose specialists will develop necessary documents on a contractual basis. Founders can use standard forms of constituent documents that are available on the official website of the Ministry of Justice. http://www.minjust.uz/ru/interactive/documents/

A newly created enterprise with participation of a foreign investor acquires the status of a legal entity and the right to carry out activities after its state registration. The registration procedure does not depend on the status of the enterprise that is being created (FDI or FIC) – both are registered by Single Centers for provision of public services to business entities on the principle of “one window”.

It is necessary to contact the “one window” center at the location of the founder – a legal entity or at the place of permanent residence of the founder – an individual. From April 1, 2017, an enterprise can be registered via the Internet using an automated system for registering business entities integrated into the Unified portal of interactive state services

 

Rights of foreign investors

A foreign investor has the right to:
— independently determine the volumes, types and directions of investment;
— conclude agreements with legal entities and individuals for implementing investment activities;
— to own, use and dispose their investments and results of investment activities. By decision of a foreign investor, the right of possession, use, disposal of investments, their results may be transferred to other legal entities and individuals in the manner established by the legislation of the Republic of Uzbekistan.
— independently decide on patenting abroad and in the Republic of Uzbekistan of inventions belonging to it, utility models and industrial designs obtained as a result of investment activities in the Republic of Uzbekistan;
— independently and freely dispose of income (including its unimpeded repatriation) received as a result of investment activities;
— to attract funds in the form of loans and borrowings to the Republic of Uzbekistan;
— use funds in national currency on their accounts for the purchase of foreign currency in the domestic foreign exchange market;
— acquire rights to land plots in cases and on conditions stipulated by the legislation;
— use the property and any property rights belonging to it on the basis of property rights as a security for all types of obligations undertaken by it, including obligations aimed at raising borrowed funds in accordance with the legislation of the Republic of Uzbekistan;
— receive adequate compensation in the case of requisitioning of its investments and other assets;
— to receive compensation for losses caused as a result of illegal actions (inaction) and decisions of the state governing bodies, local government bodies and their officials.
— in the Republic of Uzbekistan, there are no restrictions on investments in the context of industries or regions in which direct foreign investments are directed.

The procedure for taxation of income of foreign individuals and legal entities received in the territory of the Republic of Uzbekistan:

— An individual permanently residing in the Republic of Uzbekistan or staying in Uzbekistan for 183 days or more, for any period up to twelve months beginning or ending in the financial year, is considered as a resident of the Republic of Uzbekistan.
Individuals who are not residents of the Republic of Uzbekistan are taxed on income derived from sources in Uzbekistan.
A similar situation arises with taxation of foreign legal entities. Thus, a resident of the Republic of Uzbekistan is a legal entity established or registered in Uzbekistan, as well as registered outside the Republic of Uzbekistan, the head office of which is located in Uzbekistan.
Legal entities that are not residents of the Republic of Uzbekistan are taxed on income (profits) received from sources in Uzbekistan.
At the same time, the collection of taxes and fees from foreign individuals and legal entities can be terminated or limited on the basis of reciprocity in cases where the same measures are taken in relation to individuals and legal entities of the Republic of Uzbekistan in the respective foreign state.
— Foreign investments and other assets of foreign investors of the Republic of Uzbekistan are protected by the Law “On guarantees and measures of protecting the rights of foreign investors” and are not subject to nationalization.

Common Tax System 

  1. Corporate income tax:
    • Corporate income tax for: commercial banks, producers of cement and polyethylene granule, mobile operators- 20%
    • Corporate income tax for other legal entities- 12%
  2. Tax on dividend and interest income (for residents)- 5%
    • Tax on dividend and interest income (for non-residents)- 10%
  3. VAT- 20%
  4. Personal income tax- 12%
  5. Unified Social Payment- 12%
    • For budgetary organizations and state enterprises, as well as legal entities with a state share in the authorized capital of 50% or more; legal entities, in the authorized capital of which 50% or more belongs to legal entities with a state share of 50% or more, and their structural divisions – 25%;
    • For other payers- 12%
  6. Property tax of legal entities- 2%
  7. Land tax of legal entities

The following link provides you with the basic land tax rates for the districts of Uzbekistan. (This version is available in Russian and Uzbek)

Appendix №16

 http://lex.uz/ru/docs/4131693#4135034      

  1. Water tax

The following link gives you the tax rates for the use of water resources for 1 cubic meter based on the types of payers (This version is available in Russian and Uzbek)

Appendix №14

       http://lex.uz/ru/docs/4131693#4135034 

Legal institutions established for protecting the rights of foreign investors

-On January 1, 2007, the Law “On arbitration courts” entered into force in the republic, which served as the legal basis for creation, functioning and activity of arbitration courts, both permanent and temporarily created. Thus, at present, along with the already existing means of protecting the rights and guarantees of foreign investors, by agreement of the parties, arbitration courts can be established in the republic with the involvement of independent experts acceptable to both parties.

At the same time, the task of ensuring the protection of the rights and legitimate interests of foreign investors and enterprises with foreign investments is entrusted to the Ministry of Justice. To this end, the Department of Legal Protection of Foreign Investments and Enterprises with Foreign Investments was established within the structure of the Ministry of Justice.

The International Commercial Arbitration (Arbitration) Court at the Chamber of Commerce and Industry of the Republic of Uzbekistan was established by a decision of the Executive Committee of the Chamber of Commerce and Industry of the Republic of Uzbekistan dated February 1, 2011 and placed on record registration by the justice authority on February 15, 2011.

It operates in accordance with the laws of the Republic of Uzbekistan “On the Chamber of Commerce and Industry of the Republic of Uzbekistan”, “On Arbitration Courts”, regulations and provisions.The following link provides you with the list of economic courts of the Republic of Uzbekistan in Russian and Uzbek languages:

http://oliysud.uz/ru/kontakty-mezrajonnyh-rajonnyh-gorodskih-ekonomiceskih-sudov-136

The following link provides you with the economic procedure code of the Republic of Uzbekistan:

http://lex.uz/ru/docs/3523895

Admission of foreign investors to the privatization process

One of the most important priorities for development of the country’s economy is all possible strengthening of activities on attracting foreign investment.

-At present, the republic is on the way of further deepening the process of denationalization and privatization of enterprises of leading sectors of the economy, aimed at increasing the role of private property in the economy, drastically reducing the state’s share in the statutory funds of economic societies, as well as widespread involvement in development and modernization of direct investment enterprises, including foreign. In addition, redemption of unplaced state assets at zero redemption value is possible, with investors taking investment commitments. All information about privatization process in the Republic of Uzbekistan can be found on the website gki.uz.

Information on restrictions for conversion of the amount of funds into foreign currency and its impact on repatriation of profits

Funds in foreign currency of non-residents operating in Uzbekistan through a permanent establishment can be transferred to accounts outside the country. In other words, for the first time in many years, repatriation of profits is permitted. Foreign investment funds have already taken advantage of this opportunity.

According to the Law of the Republic of Uzbekistan on guarantees and measures to protect the rights of foreign investors:

Foreign investors are guaranteed free transfer of funds in foreign currency to and from the Republic of Uzbekistan without any restrictions, provided that they pay taxes and other obligatory payments in the manner established by the legislation of the Republic of Uzbekistan. These transfers include:

Initial and additional amounts to maintain or increase foreign investment;

Income from investments

Funds received as compensation for damages in accordance with this Law

Payments made in the execution of contracts

Proceeds from the sale of all or part of foreign investment

Payments arising from the settlement of a dispute, including any judicial or arbitral award

Wages and other payments to employees

Funds from other sources received in accordance with the law

In accordance with the norms of international law, the state may suspend the repatriation of a foreign investor’s funds on conditions of:

Non-discriminatory application of legislation in cases of insolvency and bankruptcy of an enterprise with foreign investments or protection of creditors’ rights,

Criminal acts or administrative offenses committed by a foreign individual investor or other need to suspend such repatriation in accordance with a judicial or arbitral award. (Article 7. Guarantee of funds transfer)

A foreign investor has the right to terminate investment activities in the Republic of Uzbekistan in the manner prescribed by law.

After the termination of investment activities, a foreign investor has the right to free repatriation in cash or in kind of their assets obtained as a result of the termination of investment activities, without prejudice to the fulfillment of the obligations of a foreign investor in respect of the Republic of Uzbekistan or other creditors. (Article 8. Guarantees of the return of foreign investments in connection with the cessation of investment activities)

More detailed information on the law of the Republic of Uzbekistan on guarantees and measures to protect the rights of foreign investors in the Russian and Uzbek languages ​​can be found at the following link:

 http://www.lex.uz/acts/8522

According to Article 10 on the rights of foreign investors, the Law of the Republic of Uzbekistan on Foreign Investments, a foreign investor, in accordance with the principles of international law and legislation of the Republic of Uzbekistan, has the right to independently and freely dispose of income (including its unimpeded repatriation) obtained as a result of investment activity, after paying taxes and other obligatory payments;

More detailed information on the law of the Republic of Uzbekistan on foreign investments in the Russian and Uzbek languages ​​can be found at the following link:

http://lex.uz/ru/docs/7452

The most significant obstacle in attracting investments was the lack of conversion of the national currency into fully convertible and the impossibility of repatriating profits. The extremely limited access to fully convertible currency, non-transparent administrative system for regulating the foreign exchange market and the provision of inefficient benefits and preferences led to a significant deterioration in the investment climate.

The turning point in solving this problem that had been existing for many years was the signing of the Presidential Decree “On Priority Measures to Liberalize Exchange Rate Policy” dated September 2, 2017, which abolished the administrative regulation of the foreign exchange market by the Central Bank and provided access to free conversion without restrictions, and also the corresponding devaluation of the sum against the US dollar from 4210 to a market-based rate of 8100 to 1 US dollar from September 5, 2017.

According to the Decree №5177 of the President dated 2.07.17 “On the Priority Measures for the Liberalization of Monetary Policy”:

Legal entities of Uzbekistan can without limitation, acquire foreign currency from commercial banks to pay for current international operations (import of goods, works and services, repatriation of profits, repayment of loans, payment of travel expenses and other non-commercial transfers.

You can familiarize yourself with this decree in Russian and Uzbek at the following link:

http://lex.uz/docs/3326423

Guarantees for foreign investors provided by foreign investors when changing legislation

— The state guarantees and protects the rights of foreign investors engaged in investment activities in the territory of the Republic of Uzbekistan. If the subsequent legislation of the Republic of Uzbekistan worsens the investment conditions, then the legislation enters into force at the date of investment is applied to foreign investors within ten years from the date of investment. A foreign investor has the right to apply those provisions of the new legislation that improve the conditions of investment.
At the same time, the deterioration of the investment conditions is considered to be the introduction of amendments and additions to the legislation, as well as the adoption of new legislative acts of the Republic of Uzbekistan providing for:

— increase in the amount (rate) of tax on income received in the form of dividends paid to a foreign investor;

— introduction of additional requirements that complicate the repatriation procedure or reduce the amount of income (profit) of a foreign investor transferred outside the Republic of Uzbekistan, except for cases of suspension by the authorized state body of the repatriation of foreign investor’s funds on conditions of non-discriminatory application of acts of legislation in cases of insolvency and bankruptcy of an enterprise with foreign investments or protecting the rights of creditors, crimes or administrative offenses committed by a foreign investor

— an individual, or any other need to suspend such repatriation according to judicial or arbitral decision;

— introduction of quantitative restrictions on the volume of investment and other additional requirements on the amount of investment, including in the form of increasing the minimum amount of foreign investment in enterprises with foreign investment;

— imposing restrictions on the share of a foreign investor in the authorized funds (authorized capital) of enterprises;

— introduction of additional procedures for registration and extending visas of foreign investors

— individuals, as well as other additional requirements for foreign investment.

Documents required for state registration of enterprises with foreign capital participation

Application (electronic request – during registration via the Internet).
— Original of constituent documents in the state language (one copy).
— A copy of the payment document on the payment of the established amount of state duty.
— When registering via the Internet: the consent of each founder from the Uzbek side to join the founders’ composition (confirmation by e-mail).
— When registering via the Internet: the certification of the request of the digital signature of all foreign founders.
— When registering by personal delivery: power of attorney (for foreign investors – translated into the state language and legalized), if documents for registration are submitted by the representative of the founder.

Requests sent through an automated system for state registration of enterprises with foreign investments, enterprises with foreign capital, other legal entities, whose founders indicate persons who are not citizens of the Republic of Uzbekistan, must sign with an electronic digital signature (EDS) of these persons.

After state registration, an enterprise independently opens payment and other accounts in bank institutions. The bank must be provided with a card with signature samples of the head and chief accountant and a seal (if any).

The procedure for opening a Bank account in the Republic of Uzbekistan

The Resolution of the Board of the Central Bank (reg. No. 1948-12 of 24.03.2017) introduced amendments and additions to the Instruction on Bank Accounts opened in banks of the Republic of Uzbekistan. This was done in accordance with the Resolution of the Cabinet of Ministers of 09.02 2017 No. 66 “On measures of implementing the resolution of the President of the Republic of Uzbekistan of October 28, 2016 No. RP-2646 “On improving the system of state registration and registration of entrepreneurship entities”.

Wholesale enterprises are now entitled to choose any bank for opening both primary and secondary accounts.

Residents – legal entities that are business entities* for opening accounts should not submit to the bank a copy of the state registration certificate, as well as copies (notarized copies) of constituent documents. Banks receive this information from the “Automated system of state registration and registration of entrepreneurship entities”.

The seal in the application for opening an account is placed if available.

The following documents are submitted to the bank to open deposit accounts on demand in national currency by residents – legal entities that are business entities, individual entrepreneurs, as well as dehkan farms:

a) application for opening an account in the prescribed form;
b) individual entrepreneurs importing goods intended for commercial activities from abroad – a copy of the certificate of the state registration of an individual entrepreneur delivering goods intended for commercial activity, issued by the tax authority at the place of residence;
c) a copy of the state registration certificate;
d) two copies of notarized cards with sample signatures and unsubscribing print in the prescribed form;
e) residents-legal entities that are subjects of business activity – constituent documents (constituent document of the charter), as well as a notarized copy of introduced amendments and additions to them;
f) a document proving the identity of the person (a passport or a document replacing it) that has the authority to sign monetary settlement documents on behalf of the client. A copy is accepted by the bank after the presentation of the original ID. More details:

 https://www.norma.uz/novoe_v_zakonodatelstve/dlya_otkritiya_scheta_v_banke_uchreditalniye_dokumenty_ne_nujny