Doing Business Guide in Uzbekistan

The country in numbers

The guide opens with the figures as they stood for 2022: a population of 36.2 million across 448,978 km², a presidential republic with the sum as its currency, nominal GDP of 92 billion US dollars — services 41.5%, industry 26.7%, agriculture 25.1%, construction 6.7% — GDP per capita of 2,774 dollars, real GDP growth of 5.3%, unemployment at 9% and inflation at 11.8%. Gold led exports at 4,110.3 million dollars ahead of services, textiles and food products; machinery and equipment led imports at 10,973.5 million. China took 15.9% of exports and Russia 13%; on the import side Russia supplied 20.9% and China 20.2%. At the time of writing Uzbekistan stood 69th in the World Bank’s Ease of Doing Business Index.

Choosing a form and registering it

Two forms dominate: the limited liability company and the joint stock company. Foreign investors generally prefer the LLC for its flexibility and ease of creation; the JSC suits larger formats and companies planning to place shares among the public. Liability in both is limited to the company’s assets, and neither carries a general minimum authorised capital requirement — though one remains for certain licensed activities.

The differences that matter are structural. A JSC may have from one to an unlimited number of founders; an LLC from one to fifty. In a JSC, shareholders may alienate their shares without the consent of the others, except that where shareholders number no more than fifty the charter may provide a pre-emptive right; in an LLC the charter may require the founders’ consent to alienation in favour of third parties. A supervisory board and the issue and registration of shares are mandatory for a JSC and not for an LLC. Audit is mandatory for all JSCs but not for small businesses. An LLC may not have as its sole founder another single-member company, unless that founder is a joint stock company with one shareholder.

Registration itself is fast: documents may be uploaded through a dedicated online platform or filed manually, and registration can be completed the same day. Before that, the guide lists eleven preliminary steps — choose the legal form, decide and reserve the company name, appoint a director and conclude an employment contract, appoint a chief accountant or a person replacing them, choose the location, conclude a lease for non-residential premises, define the economic activities, prepare the design of the seal and stamp, choose a servicing bank, issue a power of attorney to the founder’s representative, and assemble the constituent documents for the registration authority. The form is chosen once and shapes everything after it, from corporate governance to taxation, which is why the guide argues for taking advice before rather than after incorporation.

Tax regimes

Businesses choose between the general regime and a special one. Under the general regime: VAT at 12%; excise tax where excisable activity is carried on; profit tax from 0% to 20% depending on the taxpayer — banks, producers of polyethylene granules, mobile operators and profit from services rendered by markets and trade complexes pay 20%, electronic commerce in goods, works and services pays 7.5%, and dividend income 5%; personal income tax at 12%; property tax at 1.5% for legal entities; a subsoil use tax set by mineral group and object of taxation; a special rent tax on the extraction of precious, non-ferrous and radioactive metals, rare and rare-earth elements and hydrocarbons, from 25%; a water resources use tax per cubic metre running from 45 sums to 30,500 sums depending on taxpayer, object and water source; a land tax per hectare by region; and social tax from 4.7% to 25%.

The special regimes are turnover tax from 0% to 25% — taxpayers across all sectors pay 4%, while procurement organisations and individual entrepreneurs buying, sorting, storing and packing agricultural produce pay 4% of turnover or 25% of gross revenue; a fixed-amount tax of 20 to 30 million sums; special procedures for participants in production sharing agreements, for participants in special economic zones and certain categories of taxpayer, and for certain territories. Special regimes may exempt from particular taxes, apply reduced rates or grant other benefits, and are set for a defined period depending on investments made and other conditions in legislation or investment agreements.

Currency regulation

Liberalisation since 2016 removed the mandatory sale of foreign exchange earnings by state companies at the Central Bank’s official rate, simplified foreign currency lending, cut export taxes and import duties, and let citizens exchange currency freely at banks and exchangers. The Law “On Currency Regulation” of 22 October 2019 now sets the framework, including the rules for commercial banks in the foreign exchange sector and liability for currency offences.

Inside Uzbekistan all settlements for goods, works and services are made only in the national currency, as are tariffs, prices — including on national electronic trading platforms — and the authorised capital of legal entities. Linking prices to foreign currencies or conventional units is not allowed. The exception is projects with foreign investment attracted under public-private partnership agreements and investment agreements with the Government, where prices may be linked to foreign currency on the basis of a Presidential decision. State duties and other mandatory payments are charged only in national currency, consular fees excepted.

Currency transactions split into domestic and international, and international ones into current operations and capital movement operations. Current international operations — foreign trade payments, interest and other investment income, loan repayments within limits, and non-commercial transfers such as transfers between individuals up to the equivalent of one hundred million sums, payment for personal-use goods and services, salaries, scholarships, pensions and alimony, secondment expenses, education, treatment and tourism, notarial and investigative payments, court-ordered payments, royalties and licence fees, and contributions to international non-profit organisations — may be carried out by residents and non-residents without restriction, as may the purchase and sale of foreign currency for them. Capital movement operations cover everything else: investment activity, obtaining and granting loans, leasing, buying and selling real estate, placing funds abroad and acquiring exclusive intellectual property rights. Foreign direct investment transactions and their repatriation are carried out without restriction. Investment abroad above the equivalent of 10,000 US dollars, transfers to form the authorised capital of foreign enterprises and the replenishment of working capital of branches abroad each require a decree of the President, the Cabinet of Ministers or an international treaty; acquiring or building real estate abroad for diplomatic missions requires the permission of the Cabinet of Ministers.

Employing foreign nationals

An employer must obtain confirmation of the right to work for each foreign employee in advance. The guide recommends allowing at least 20 working days for the work permit and another 10 working days for the visa; applications go through public service centres or an online platform. A first permit is normally issued on the basis of a business, employment or service visa for the term of the employment contract but no longer than one year — up to three years for highly qualified specialists — and may be extended an unlimited number of times.

The two statutory categories turn on salary. A highly qualified foreign specialist is a graduate of a university in the world’s top 1,000 with at least five years’ experience in the specialty and a salary of at least the equivalent of 60,000 US dollars a year. A qualified foreign specialist has higher education, at least five years’ experience and a salary of at least 30,000 dollars a year.

Several groups may work without a permit at all: holders of a residence permit; holders of an IT visa or those eligible for one; holders of an investment visa or those entitled to one; persons who have invested at least 8,500 BCU in Uzbekistan by creating a foreign enterprise or acquiring shares in economic entities; directors and founders of foreign enterprises or joint ventures, but only during their first three months of work; and people working online from outside the country.

The permit itself is issued by the Agency for External Labor Migration under the Ministry of Labor and Social Protection. The application fee is 1 BCU; issuing the document costs 2 BCU for highly qualified specialists, 5 BCU for compatriots, 5 BCU for physicians from other countries and 30 BCU for other foreign citizens. Processing takes 15 days. For employers of highly qualified and qualified specialists and for higher education institutions the document runs for the term of the employment contract but not more than three years, extendable indefinitely in one-year steps; for other foreign citizens, for the contract term but not more than one year, likewise extendable a year at a time.

Investment law and the securities market

The Law “On Investments and Investment Activities”, adopted in 2019, covers four things: investment incentives — tax and customs benefits and terms on land and real estate rentals, granted according to the volume of investment, the conditions of the area, the expected socio-economic effect and job creation, and the scope and industry of the project; investment guarantees — protection of investors’ rights, fair and equitable treatment, and compensation on nationalisation or expropriation; investment disputes — settlement by negotiation, mediation or arbitration; and investment protection under international law, with a “one window” for investors. The law does not apply to participants in professional activity on the securities market, venture funds, concession transactions or profit sharing agreements.

Professional participants on the securities market are investment consultants, investment intermediaries, investment funds and trust managers. Except for investment funds, they must be legal entities with at least two employees holding a securities market specialist qualification certificate, which is issued for five years. A broker is an investment intermediary that is a member of the stock exchange and concludes exchange transactions on behalf of and at the expense of the client; client securities and funds must be held in accounts separate from the intermediary’s own, and client orders take priority over the intermediary’s own dealer operations. An investment fund is a joint stock company issuing shares to attract investors’ funds; it must be created as a new legal entity and cannot be formed by reorganising a legal entity that is not itself an investment fund.

Licences for investment intermediaries and trustees of investment assets are issued by the Ministry of Finance; investment consultancy operates on a notification basis. Acting as an investment intermediary or trustee in breach of the notification procedure carries liability of 200 BCU, and acting as an investment consultant in breach of it, 50 BCU.

Free economic zones

The Law No. LRU-604 of 17 February 2020 “On special economic zones” provides for five forms: free economic zones, special scientific and technological zones, tourist and recreational zones, free trade zones and special industrial zones. Free economic zones are for new production capacity and high-tech, import-substituting and export-oriented output together with the infrastructure and logistics around it. Scientific and technological zones concentrate technology parks, technology transfer centres, innovation clusters, venture funds and business incubators. Free trade zones — consignment warehouses, territories with special customs and tax regimes, and platforms for processing, packing, sorting and storage — are formed at border points, airports and railway junctions.

There are twenty-two such zones in the country. Navoi FEZ sits at the crossroads of the transport routes linking Central Asia, China and Europe and focuses on transport and logistics, mining and metallurgy and chemical production. Jizzakh FEZ works on agriculture, food processing and light industry; Angren FEZ, in the Tashkent region, on electronics, machinery and construction materials; Urgut FEZ, in the Samarkand region, on textiles, leather goods and handicrafts. Each offers a 10-year tax holiday, simplified customs procedures and developed infrastructure — investors are exempt from corporate income tax, property tax and customs duties for up to ten years.

IT Park

IT Park is an extraterritorial free economic zone for IT companies, integrating with scientific and educational organisations and providing accounting, legal, marketing and educational support. Its complex is to include an IT academy, an IT university, office buildings, a hotel, a coworking centre, a sports complex and underground parking, all built to the BREEAM environmental standard.

To become a resident, a legal entity must be registered in Uzbekistan, carry out an activity from the list in Cabinet of Ministers Resolution No. 589 of 15 July 2019, and hold an economically sound business plan for those activities. Two documents are required — the certificate of registration and the business plan, which must set out the specific measures, the services and their scope, the justification for them, the monetisation model and the planned financial results in the form approved by the Directorate. A decision takes 25 to 35 days.

Residents are exempt from all types of taxes, mandatory contributions to state trust funds and social tax; exempt from customs payments other than customs duties on imported equipment, components, parts, assemblies, technological documentation and software not produced in Uzbekistan; may pay dividends and salaries to foreign founders and specialists in foreign currency by crediting international payment cards; may use the virtual office service; may bring in foreign specialists without confirmation of the right to work; and may export through online stores without an export contract. Monthly deductions to the Directorate fall by 25% once service exports exceed 10 million US dollars over twelve consecutive months, and by 50% above 20 million. Employee remuneration under contracts with residents is taxed at a fixed 7.5% and excluded from total annual income for tax purposes.

Residence permits, visas and the IT-visa

A residence permit confirms the right of a foreign citizen or stateless person to reside permanently in Uzbekistan; the ID card is the identity document carrying a chip with biographical and biometric data. Permits are issued to foreign citizens and stateless persons permanently residing in the country on reaching the age of 16, to those who have received a permanent residence permit, to persons permanently resident who have not taken or have lost Uzbek citizenship, and to citizens of the countries listed in Annex No. 6 to Presidential Decree No. UP-5611 of 5 January 2019 who acquire immovable property worth at least the equivalent of 300,000 US dollars in the Tashkent region and Tashkent city, 200,000 dollars in the Samarkand, Bukhara, Namangan, Andijan, Ferghana and Khorezm regions, or 100,000 dollars in Karakalpakstan and the remaining regions.

Applications run through the automated “E-Chet el fuqaro” system. Consideration and issue takes 68 working days across eight stages, and the state fee for an ID card is 89% of 1 BCU — one BCU being 330,000 sums as the guide records it. The permit is valid for five years, and from the age of 60 for the term of the national passport.

On entry: a bilateral visa-free regime applies with Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Moldova, Russia and Ukraine without a time limit, with Kyrgyzstan up to 60 days and Tajikistan up to 30. More than 70 countries, among them Turkey, Germany, France, the UAE and Japan, have visa-free entry for up to 30 days; for Chinese citizens including Hong Kong the period is 7 days. Over 80 countries can use the simplified tourist visa procedure at e-visa.gov.uz, and business visas are issued on an official invitation from local partners. Foreign nationals who have invested at least 8,500 BCU by creating a foreign enterprise or acquiring shares may obtain a three-year multiple-entry visa. Temporary registration at the place of stay is required on arrival, except for travellers spending no more than three documented days in each place; hotels register their guests themselves, landlords must register tenants with the territorial internal affairs subdivision, and registration for up to 30 days can be done remotely through emehmon.uz while anything longer must be done in person.

The IT-visa is a multiple-entry visa for citizens of countries under a visa regime — it is not an entry visa and does not confer or guarantee a residence permit. A recommendation for one may be obtained by a foreign investor or the head of an investing company in the IT field, by a foreign IT specialist whose income over the last 12 months in the field was at least the equivalent of 30,000 US dollars, or by a founder of a legal entity resident in the Technopark. The visa is issued by the territorial internal affairs bodies at the applicant’s place of temporary residence on the recommendation of IT Park, with guest visas for spouse, parents and children; the IT-Card is the recommendation the Directorate issues, and serves on its own for citizens of visa-free countries. It runs for up to three years and may be extended without leaving the country. Holders of an IT-visa and IT-Card — and their family members — may receive education and medical services on the terms available to citizens of Uzbekistan, stay in any region without re-registering at the place of residence, and purchase real estate of any value.

Personal data

The Law “On Personal Data” No. LRU-547 of 2 July 2019 and Cabinet of Ministers Decree No. 570 of 5 October 2022 govern the field, with the State Personalization Center as the authorised body. Processing is allowed on the subject’s consent; where needed to perform a contract to which the subject is a party or to take steps at their request before conclusion; to fulfil the owner’s or operator’s statutory obligations; to protect the legitimate interests of the subject or another person; to exercise the rights and legitimate interests of the owner, operator or a third party or to achieve socially important goals without violating subjects’ rights; for statistical or other research with mandatory depersonalisation; and where the data comes from publicly available sources. Purposes must be fixed in the documents governing the owner’s or operator’s activity, must match those stated at collection, and a change of purpose requires fresh consent.

Cross-border transfer is permitted to countries providing adequate protection — and Uzbekistan has no list or register of such countries. Transfer elsewhere is possible on the subject’s consent, where needed to protect the constitutional order, public order, citizens’ rights and freedoms or the health and morals of the population, or where an international treaty so provides. Databases must be registered in the State Register of personal data bases by notification, and any change to the registration details must be reported no later than ten calendar days after it occurs. Personal data of Uzbek citizens processed using information technologies, the internet included, must be collected, systematised and stored on technical means physically located in Uzbekistan and registered in that state register.

Intellectual property

Protected objects include works of science, literature and art; computer programmes and databases; inventions, utility models and industrial designs; undisclosed information including know-how; trade names; trademarks; and appellations of origin. The Department of Intellectual Property of the Ministry of Justice regulates the field, and patent attorneys represent applicants before it.

Copyright arises automatically on creation and needs no registration. It protects the form of expression, not ideas, principles, methods, processes, systems or concepts, and covers literary works, music with or without text, audiovisual works, painting, sculpture, graphics and design, and computer programmes of all kinds in any programming language and any form including source and object code. It lasts for the author’s life and 70 years after death, while the right of authorship and protection of the author’s reputation are protected indefinitely. Copyright over software does not extend to ideas, principles, interface organisation, algorithms or programming languages.

Patents run 20 years for an invention, 10 years for an industrial design and 5 years for a utility model from the filing date. Where several authors create an object independently, priority goes to whoever filed first. Legal protection requires novelty, inventive step and industrial applicability for inventions; novelty and originality for industrial designs; novelty and industrial applicability for utility models. A trademark certificate runs 10 years from the filing date and is renewable for ten more; products using a trademark or a similar designation without authorisation are counterfeit. Uzbekistan participates in WIPO, the Paris Convention, the Berne Convention and the Madrid Agreement.

The guide’s practical notes: register every transfer of intellectual property rights and every licensing agreement with the relevant authorities, because failure to do so may invalidate the agreement; the author of a service work keeps personal non-property rights whether or not it was created under official duties, while exclusive rights to use it belong to the employer unless the contract says otherwise; property rights pass by inheritance, but the right of authorship cannot be alienated or transferred, and personal non-property rights are valid indefinitely.

Cybersecurity

The Law “On Cybersecurity” of April 2022 defined critical information infrastructure — the complex of automated control systems, information systems, network resources and technological processes of strategic and socio-economic value — along with its objects, which span public administration and public services, defence, national security, law enforcement, the fuel and energy complex including nuclear energy, chemicals and petrochemicals, metallurgy, water use and supply, agriculture, healthcare, housing and utilities, banking and finance, transport, ICT, ecology, extraction and processing of strategic minerals and the production industry — and its subjects, the bodies and legal entities that own or operate them.

The President determines unified state policy; the State Security Service is the authorised body. It may use technical installations and services free of charge for urgent measures against cyber-attacks; visit state bodies and other organisations, examine documents and materials and request information for use in investigative actions related to cybersecurity incidents; issue mandatory instructions to eliminate the causes and conditions of offences threatening cybersecurity; and, where necessary, enter and inspect premises of individuals and legal entities — breaking locking devices if required — when pursuing persons suspected of information-technology crimes or where delay may endanger life or health, with notification of the prosecutor within twenty-four hours and compensation for damage.

Cybersecurity subjects must notify the authorised body of incidents and cybercrime, prevent the loss of digital traces and store the information needed for analysis and investigation; exchange data with the authority on protecting and monitoring cybersecurity objects; comply with the requirements it determines; and give it access to monitoring systems and cybersecurity objects. State support runs to improving the legal framework, tax and customs benefits and preferences, conditions for attracting private financing, state procurement of advanced products, and help with training, retraining and professional development.

Crypto-assets

Since 1 January 2023, citizens and legal entities may use crypto-assets only through national service providers. A crypto-asset is a property right — a set of digital records in a distributed data registry with a value and an owner — and using crypto-assets as a means of payment or receipt of payment is prohibited in Uzbekistan. Currency transactions in crypto-assets by licensed persons fall outside currency regulation legislation. The National Agency for Prospective Projects (NAPP) is the authorised body for the sector, its licensing and its permission procedures.

Activities split into mining and service provision, and service providers into crypto-exchange, crypto-shop, mining-pool and crypto-depository. Mining may be carried out only by a legal entity using electricity from a solar photovoltaic station; connection to the unified energy system is possible, but electricity consumed is then paid at twice the established tariff. Service providers must be legal entities resident in Uzbekistan.

Mining needs no licence but must be registered with the Agency. Service provision is licensed by NAPP, separately for each type, for an indefinite period, and licences may not be transferred. The state fee for a licence is 73,400 BCU for a crypto-exchange, 18,400 BCU for a crypto-depository, 2,600 BCU for a crypto-shop and 1,900 BCU for a mining-pool. On top of that come monthly charges: 10 BCU for miners, and for service providers 400 BCU for a crypto-exchange, 100 BCU for a mining-pool, 20 BCU for a crypto-store and 5 BCU for a crypto-depository. A licence obtained before the 20th of a month is charged in full for that month; obtained after the 20th, charging starts on the first day of the next.

Transactions of legal entities and individuals related to crypto-asset turnover, non-residents included, are not subject to taxation, and income from them is not included in the taxable base. A regulatory sandbox lets participants test pilot projects in a limited environment without the risk of breaching current legislation.

Courts and dispute resolution

The judicial system comprises the Constitutional Court, the Supreme Court, military courts, the courts of Karakalpakstan, the regions and Tashkent city, the administrative courts at that level, inter-district, district and city courts for civil cases, district and city courts for criminal cases, inter-district, district and city economic courts, and inter-district administrative courts. Under Article 25 of the Economic Procedure Code, the Economic Court hears disputes in the economic sphere between legal persons and individual entrepreneurs, cases establishing facts of legal significance in the economic sphere, bankruptcy cases, cases related to arbitration proceedings, corporate disputes, investment disputes, competition cases, and cases on the recognition and enforcement of foreign judgments and arbitral awards. It also hears disputes involving people who have lost individual entrepreneur status where the claim arises from their earlier business activity. Disputes from economic agreements between state administration bodies and local state authorities go to the Supreme Court.

Claims where the amount does not exceed twenty BCV against legal entities or five BCV against individual entrepreneurs are heard in summary proceedings, with decisions to be executed immediately and voluntarily or else enforced by writ.

Alternative dispute resolution covers mediation, arbitration and negotiation. Under Article 18 of the Law on Mediation, a state body party to a dispute should take measures to apply mediation. Two arbitration centres operate in the country — the Tashkent International Arbitration Centre and the International Commercial Arbitration Court under the Chamber of Commerce and Industry — and Uzbekistan is a party to the 1958 New York Convention, so foreign arbitral awards can be recognised and enforced. The guide cites the Tashkent City Court’s first-instance figures for the first six months of 2022: of 13 applications to set aside an arbitral award, 4 were satisfied, 7 rejected and 2 concluded; of 250 applications for a writ of execution on an arbitral award, 243 were satisfied, 3 rejected, 2 left without consideration and 2 concluded; all 9 applications to recognise and enforce a foreign court or arbitral decision were satisfied; and of 47 applications to execute a foreign court’s assignment, 34 were satisfied, 12 rejected and 1 left without consideration.

Choosing between the methods, the guide suggests weighing three things: the nature of the dispute, the cost and time each takes — mediation and negotiation are typically cheaper and quicker than arbitration, which can run months or years — and the enforceability of the outcome, where arbitral awards are generally easier to enforce than mediated agreements or negotiated settlements.

The full guide sets out each of these areas in detail, with comparison tables and the underlying legislation cited throughout.