Doing Business in Uzbekistan
Doing Business in Uzbekistan
We have worked hard to make Uzbekistan a market which protects investors and enhances value. We are delighted to welcome businesses to Uzbekistan and want to make the process of setting up here as seamless and light-touch as possible.
Admission of foreign investors to the privatization process
One of the most important priorities for development of the country’s economy is a focus on strengthening Uzbekistan's attractiveness to foreign investors. The Government is currently accelerating and expanding the process of privatization in leading sectors of the economy, with the aim of increasing the role of private players in the economy.
In addition, Uzbek legislation now permits the redemption of unplaced state assets at zero redemption value, with investors adopting investment commitments.
Obtaining a license for your business
Article 14 of the law "On licensing certain types of activities” stipulates the list of documents required to obtain a license. Applicants must apply to the relevant licensing authority, listing details such as the entity's name, address, bank details, and, for individuals, information around personal identification.
The application must specify the type of activity to be licensed and its duration. Additionally, the applicant must demonstrate compliance with licensing requirements through the provision of proof of fee payment. Submissions can be made in person or via mail, or, alternatively, electronically, with such submissions requiring a digital signature.
The licensing authority will confirm receipt of documents via an inventory list, and the applicant is liable for any false information provided. In some cases, however, a simplified "one window" procedure is used, where the licensing body obtains necessary
documents from other organizations directly.
Foreign investor rights
Foreign investors in Uzbekistan enjoy a range of rights and protections under national law. Not only do foreign investors have the freedom to independently determine the volumes, types, and directions of their investments, they are entitled to conclude agreements with legal entities and individuals for the implementation of these activities. Investors can own, use, and dispose of their investments and the results of their investment activities, with the option to transfer these rights to other entities as established by Uzbek legislation. Moreover, foreign investors can make independent decisions regarding the patenting of inventions, utility models, and industrial designs resulting from their activities in Uzbekistan.
They have the right to freely dispose of their income, including the unimpeded repatriation of profits, and can attract funds through loans and borrowings. Investors can also use national currency to purchase foreign currency in the domestic market and acquire land rights under specific legal conditions. Furthermore, investors are entitled to use their property as security for obligations, including raising borrowed funds. In cases of requisitioning, they have the right to receive adequate compensation for their investments and other assets.
Investors can also seek ompensation for losses resulting from illegal actions or decisions made by state or local government bodies. it is important to note that there are no restrictions on foreign investments concerning specific industries or regions.
Procedure for opening a Bank account in the Republic of Uzbekistan
The Instruction on Bank Accounts in Uzbekistan was changed by a Resolution of the Board of the Central Bank in 2017 to align with the Cabinet of Ministers' Resolution No. 66. This reform was part of efforts to improve the state registration and record keeping of business entities.
The amendments grant wholesale enterprises the freedom to choose any bank for opening both primary and secondary accounts. Resident legal entities that are business entities no longer need to submit copies of state registration certificates or constituent documents when opening accounts, as banks now access this information through an automated system. For opening deposit accounts on demand in national currency, residents (including legal entities, individual entrepreneurs, and dehkan farms) must submit specific documents to the bank, including: an application form, copies of relevant certificates, notarized signature cards, and identification documents. The requirement for a seal on the application is now optional.
These changes simplify the account opening process for businesses in Uzbekistan, reducing paperwork and streamlining procedures in line with the country's efforts to improve its business environment.
The procedure for taxation of income of foreign individuals and legal entities received in the territory of the Republic of Uzbekistan
Tax residency for individuals is determined by their length of stay in the country. Those who reside permanently or stay for 183 days or more within a 12-month period in a financial year are considered residents. Non-resident individuals are taxed only on income derived from Uzbek sources.
For legal entities, residency is established based on their place of registration or the location of their head office. Uzbek-registered companies and foreign entities with their head office in Uzbekistan are considered residents. Non-resident legal entities are taxed solely on income obtained from sources within Uzbekistan. It's worth noting that taxation of foreign individuals and legal entities can be modified based on reciprocity agreements with other countries.
Additionally, foreign investments and assets in Uzbekistan are protected under the Law "On guarantees and measures of protecting the rights of foreign investors," which safeguards them against nationalization.
Legal institutions established for protecting the rights of foreign investors
On 1 January 2007, Uzbekistan implemented the Law "On Arbitration Courts," establishing a legal framework for both permanent and temporary arbitration courts. This law enhances the protection of foreign investors' rights, allowing for the creation of arbitration courts, with mutually acceptable independent experts.
The Ministry of Justice oversees the protection of these rights through the Department of Legal Protection of Foreign Investments and Enterprises with Foreign Investments. Additionally, the International Commercial Arbitration Court was established at the Chamber of Commerce and Industry on February 1, 2011, and officially registered on February 15, 2011. This court operates under Uzbek laws governing commerce and arbitration.
In 2021, Uzbekistan further strengthened its arbitration framework with the adoption of the Law on International Commercial Arbitration, based on the UNCITRAL Model Law, which modernizes procedures for resolving international commercial disputes.