June 20, 2019

Preferences for investors in Agriculture

Decree of the President No. 5742 of  06/17/2019 approved Concept on the Efficient Use of Land and Water Resources in Agriculture and the Working Group on the implementation of the Public-Private Partnership in the framework of this concept. This year, the Concept was test launched in two districts of Namangan region – Pap and Minbulag. Until November 1 of this year, the Government should adopt a decree with specific PPP terms, tax break, concessional lending and the use of such lands and waters.

According to this Decree, resident investors (Art.19 of Tax Code) and agricultural corporations can conclude long-term (up to 50 years) investment agreements and agreements on PPP on the following conditions:

– reconstruction of irrigation and reclamation networks;

– water-saving technologies; and

– sowing of drought-resistant crops.

In an investment contract or agreement on a PPP, operating and interest expenses may be reimbursed by the state within the limits established by this Decree. Only upon conclusion of the contract, the state official (specified in art.23 (2) of Land Code) can pass the title. However, the Decree prohibits the use of such lands for non-agricultural purposes, including the construction of industrial and civil facilities. The exception are the lands, allocated by the provisions of Presidential Decisions which can be used for non-agricultural purposes.

Resident investors and agricultural corporations can acquire leasehold of lapastures, deposits, perennial plantings and other lands, were they can also construct additional infrastructure facilities. Moreover, this title will allow them to sublease it to the third parties, after the subsequent changes will be made into the existing legislation, which prohibits the sublease of the land plots (Art.24 (4) of Land Code).

Moreover, such land plots are exempt from payment of land tax for the period of development works and for five years afterthe development (Art.282 (1)para.23 of Tax Code). Besides the existing tax breaks, the tax rates will be “frozen” for 10 years and, accordingly, the rates established before start date of the use of this land plot are applied. Finally, such land plots cannot be subject to public restrictions, namely:

– not to be optimized, i.e. state agencies cannot decide best ways of land use; and

– such plots can be expropriated only with the consent of the investor after the reimbursement of funds expended and damages.