March 24, 2022

Benefits for the construction of hotels in Uzbekistan

The tourism is currently becoming one of the rapidly developing economy sectors in Uzbekistan. In order to develop the tourism industry, in particular, accelerating the implementation of investment projects for the construction of modern hotels, the Resolution of the President of the Republic of Uzbekistan dated January 5, 2019 No. PP-4095 “On measures to accelerate the development of the tourism industry” was adopted.

  1. Compensation of part of the costs of investors

According to the Resolution, following mechanisms to support and develop the tourism industry will be introduced:

  1. the land plot allocated for the construction of the hotel, after its completion, can be sold to the investor on the basis of ownership, with the exception of the territory and the protective zone of the objects of material cultural heritage, as well as agricultural land plots;
  2. part of the costs of investors for the construction and equipping of a new hotel is compensated by the State Budget of the Republic of Uzbekistanon condition its commissioning by December 31, 2023 with at least 50 rooms for the 3-star category and at least 100 rooms for the 4-star category after confirmation of the hotel category.

It is important to mention that the amount of financing from the State budget for part of the costs of investors is provided until the number of rooms reaches 50 thousand nationwide.Financing for part of the costs of investors is provided in the amount of:

  1. 40 million soums for each room in hotels with a 3-star category (approximately USD 3830 at the exchange rate in force on December 11, 2020);
  2. 65 million soums for each room in hotels with a 4-star category (approximately USD 6230 at the exchange rate in force on December 11, 2020).
  3. Financing of royalties of organizations

For the development of the hotel business, it is established that royalties of organizations – residents of the Republic of Uzbekistanfor the use of well-known prestigious world hotel brandsare partially financed from State budget (according to the ratings of the top 50 hotel brands and top 5 hotel chains) for three years from the date of entry into force of the franchise contract account in the following amounts:

  • first 50 hotels with a 3-star category – annually equivalent to USD 200 per room;
  • the first 30 hotels with a 4-star category – annually equivalent to USD 400 per room.

The total amount of financing of royalties is no more than USD 10 million.

  1. Customs benefits

In addition to compensation of costs, customs duties exemption is also provided for the import of certain types of goods. For the period until January 1, 2022, imported vandal-proof sanitary and hygienic units, as well as equipment, inventory, turnstiles, software, payment and information terminals, video surveillance systems intended for use on objects of material cultural heritage in museums, theaters, galleries and protected natural areas according to the lists formed in accordance with the established procedure are exempted from customs duties.

You can find out about tax and customs benefits for investors here.

It should be noted that in case of misuse of imported goods, the amount of customs payments not paid in connection with the provision of benefits is paid to the State budget with the application of financial sanctions provided for by law.

  1. Responsible officials

Responsible persons have been identified to improve efficiency. The chairman of the Council of Ministers of the Republic of Karakalpakstan, khokims of regions, districts and cities are responsible for the timely allocation of land plots for the construction of hotels, their connection to the necessary engineering and communication networks at the request of investors.The deputy chairman of the Council of Ministers of the Republic of Karakalpakstan, deputy khokims of the regions and city Tashkent on investment issuestogether with the diplomatic missions of the Republic of Uzbekistan abroad are appointed as responsible officials for the search and attraction of foreign investors, as well as providing them with practical assistance at all stages of the implementation of relevant investment projects on the territory of the Republic of Uzbekistan.

  1. Conclusion

The intensive development of the tourism industry in the country is expected in the near future, thus, the question of increasing number of hotels throughout the country has arisen. To achieve this goal, the abovementioned benefits are introduced to investorsby the Resolution of the President of the Republic of Uzbekistan dated January 5, 2019 No. PP-4095 “On measures to accelerate the development of the tourism industry”.