May 24, 2021
Privileges for enterprises with foreign investments
Table of Content
The Law No. 598 of 25.12.2019 «Оn Investments and Investment Activity»;
The Decree of the President of the Republic of Uzbekistan No. UP-4434 dated 10.04.2012 “On additional measures for attraction of foreign investments”;
The Decree of the President of the Republic of Uzbekistan No. UP-5495 dated 01.08.2018 “On measures for radical improvement of the investment climate in the Republic of Uzbekistan”;
The Decree of the President of the Republic of Uzbekistan No. UP-5635 dated 17.01.2019 “On the State Program for implementation of the Action Strategy in five priority areas of development of the Republic of Uzbekistan within 2017-2021 in the “Year of active investments and social development”.
Enterprises with foreign investments are enterprises in which foreign investments are consist of at least fifteen percent of the shares (participatory interest, corporate stock) or authorized capital (share capital) (hereinafter referred to as “EFI”). With the purpose to attract foreign investors (hereinafter referred to as “FI”) and to develop the process of transformation of the economic system, the Republic of Uzbekistan grants certain privileges to EFI, which will be described below.
In accordance with the Law No. 598 dated on 25.12.2019 «Оn Investments and Investment Activity», the privileges of EFI primarily consisted in that it provides certain rights to investor, such as:
- Free carriage of investment activities not contradicting the legislation of the Republic of Uzbekistan;
- Conclusion of agreements with legal entities and individuals;
- Ownership, usage and disposition of income received as a result of investment activities, as well as sell and export of income received as a result of investment activity;
- Independent and free management of the income received as a result of investment activity, after the payment of all necessary payments stipulated in legislation;
- Usage of property and any property rights belonging to him;
- Involvement of funds in the form of loans and borrowings;
- Receiving compensation for losses in case of illegal actions or omission and decisions of state bodies and local government bodies, as well as receiving an adequate compensation in case of requisition (expropriation) of his investments and other assets.
The state provides a number of guarantees to investment activities in the Republic of Uzbekistan. The State guarantees the absence of third-party non-interference and non-discrimination.Regarding to damaging EFI or FI by the acts of legislation and departmental regulations, it is established that the last will not be retroactive.
The state guarantees the right which gives the investor at his discretion to apply those provisions of new legislation that improve the conditions of his investment and, if the conditions of the investment deteriorate due to subsequent legislation, the FI has the right, within ten years of the investment, to apply the legislation that is in force at the date of the investment.
Funds in foreign currency can be freely transferred by the investor to and from the Republic of Uzbekistan without any restrictions, with a subject to payment of all required fees stipulated by the law. The state guarantees that requisition, in other words, seizure by the state of property belonging to FI is not happen, except in cases beyond human control, such as: natural disasters, accidents, epidemics, epizootics.
In order to attract FI, the state also provides privileges and preferences in various industries.For instance, the government provides privileges on taxes and other charges. An important factor for the FI is the subsidization of interest rates on loans received by the investor for the implementation of the investment project.
The state also provides all necessary conditions and facilities for a EFI such as: opening, using and disposing of its accounts in any currency, in any bank on the territory of the Republic of Uzbekistan, as well as outside of it. In addition, the state provides an opportunity for an individual entrepreneur to establish subsidiaries, branches, as well as associations and other business associations in Uzbekistan.
In accordance with the Decree of the President of the Republic of Uzbekistan No. UP-4434 dated 10.04.2012 “On additional measures for attraction of foreign investments”, if an FI has an investment of at least 5 million USD in a new foreign enterprise, he has the right to apply the tax laws and regulations within 10 years from the date of its state registration norms and provision of payments of:
-The Corporate Income Tax;
-VAT (turnover on the sale of goods, works, services);
-Corporate Property Tax;
For investment projects worth more than USD 50 million and with a foreign investor’s share of at least 50 per cent, the necessary external, outside of manufacturing area, engineering-communication networks shall be constructed using budgetary funds and other domestic sources of financing.
The Decree of the President of the Republic of Uzbekistan No. UP-5495 dated 01.08.2018 “On measures for radical improvement of the investment climate in the Republic of Uzbekistan” provide long-term lease of non-agricultural land for up to 50 years, for the implementation of investment projects through an electronic auction through a single electronic trading platform “E-IJRO AUKSION”.
The right to permanently own land for the construction of hotels, commercial facilities, cultural and entertainment complexes, consumer services, educational and health facilities, road infrastructure, etc. is also provided through an auction.
The Decree of the President stipulates: reducing the minimum amount of foreign investment in the authorized fund of an enterprise from 30 to 15 per cent, as well as reducing the minimum amount of the authorized fund of an enterprise with foreign investment from 600 million Soums to 400 million Soums. For joint stock companies, the minimum authorized fund now amounts to 400 million Soums. The state duty for state registration of enterprises with EFI has been reduced threefold.
With regard to the contract formation, the Decree of the President abolished the mandatory procedure for export contracts formation for horticultural products at prices no lower than those published by “Uzagroexport”, as well as the customs clearance of horticultural products conducted without formation of an export contract, based on an invoice, at prices no lower than those listed on the official website of “Uzagroexport”.
Foreign nationals and stateless persons who have invested in Uzbekistan in an amount not less than 8,500 times the basic calculation value that is established in Uzbekistan at the time of investment are entitled to acquire shares and stakes in business companies.
For the creation of a foreign enterprise, the privilege extends to obtain a multi-entry three-year visa with an unlimited number of extensions without leaving the territory of the Republic of Uzbekistan.
The Decree of the President of the Republic of Uzbekistan # UP-5635 dated 17.01.2019 “On the State Program for implementation of the Action Strategy in five priority areas of development of the Republic of Uzbekistan within 2017-2021 in the “Year of active investments and social development”, provides other privileges for the following individuals:
- for founders (participants) of enterprises with foreign investments and members of their families, an “investment visa” is introduced. The validity term of that visa is 3 years and it could be prolonged without need to leave the territory of the Republic of Uzbekistan;
- citizens of foreign countries, including founders (participants) of enterprises with foreign investments who have invested in foundation of enterprises producing goods and rendering services in the amount of not less than US$ 3 million in the territory of the Republic of Uzbekistan, will receive in the simplified manner a residence permit in the Republic of Uzbekistan for a period of 10 years;
- foreign investors holding a residence permit in the Republic of Uzbekistan or an “investment visa”, as well as members of their families, have the right to use medical and educational services under the conditions provided for citizens of the Republic of Uzbekistan;
- temporary registration of foreign investors, as well as attracted foreign specialists and their family members shall be carried out in the locality where the investment project is being implemented, for the term of visa (in case of absence of a visa – for 1 year) without need to re-register while staying in other regions of the country.
According to the Decree of the President, EFI can make investments by acquiring shares in the authorized capital of existing and newly created business entities, granting loans and issuing securities.