First of all, it is important to note that there is no mechanism for the relocation of business, or in other words, the redomicilation (migration) of business in the Republic of Uzbekistan (“RUz“). However, it is clear that in all cases when it comes to the relocation of a business in the part concerning the host jurisdiction, we can talk about options (forms) of the appearance of an existing, intending to continue or cease to exist legal entity in it.

1.1. PU, subsidiary, representative office

To date, there is a plenty of mechanisms for doing business in Uzbekistan, starting from an independent company, ending with permanent establishment (“PE“), representative offices and subsidiaries. The first and most significant difference between a PE and a representative office is that a representative office does not carry out economic or other commercial activities, while a PE involves the implementation of commercial activities by a foreign enterprise. In particular, foreign enterprises open a representative office in order to represent and protect their interests on the territory of Uzbekistan. As soon as a foreign enterprise begins to carry out commercial activities through a representative office, it will be reclassified into a PE with all the consequences that follow from this. In turn, subsidiary, unlike the aforementioned structures, is a legal entity. However, the common feature of all three corporate structures is that they are more or less dependent on another (foreign) enterprise.

1.1.1. Permanent establishment

PE by its legal nature is a tax status and was created precisely for the purpose of solving taxation issues of foreign legal entities. PE is not an organizational and legal form according to the legislation of the RUz, and accordingly is not an independent subject of civil turnover. However, in practice, when a foreign legal entity carries out economic activities through the PE, the status of the latter is interpreted broadly by a number of state bodies. A non-resident operating in the Republic of Uzbekistan must apply to the tax authority for registration no later than 183 days from the date of commencement of this activity. If a non-resident has concluded an agreement or several agreements, the execution of which leads to the formation of a permanent establishment and for which the total period of activity will be more than 183 days, he must apply to the tax authority no later than thirty calendar days. If a non-resident is a participant in a simple partnership (joint activity agreement), the activity of which leads to the formation of a permanent establishment, he must be registered within 30 days from the date of commencement of the activity.

The PE is registered at the place of activity. Registration of the PE is carried out in the following order:

Stage 1: The representative of the PE, within 183 days, submits the necessary documents to the tax authority.

Stage 2: The tax authority within 3 working days, having studied all the documents, registers the PE, and in case of non-compliance with the documents, notify the applicant about it.

Stage 3: The tax authority issues a certificate of registration with the tax authority to a foreign legal entity operating through the PU. For more information about PU, follow the link.

1.1.2. Representative office

Foreign commercial organizations can be present in Uzbekistan through the accreditation of a representative office. At the same time, the representative office is not a legal entity and cannot carry out economic or other commercial activities, it is created to represent and protect interests of the foreign legal entity on the territory of the Republic of Uzbekistan. Accreditation is possible for a period of 1 to 3 years. If the representative office plans to carry out its activities for less than 1 year, accreditation should be obtained for 1 year. For accreditation, a foreign company must submit the necessary documents to the Ministry of Investment and Foreign Trade of the Republic of Uzbekistan (“MIFT“). The MIFT reviews the application for accreditation of the Representative Office and makes a decision on the authorization or refusal of accreditation within 10 working days from the day following the day of submission of the application. The MIFT informs the applicant in writing within 3 days from the moment of making a decision on accreditation or refusal of accreditation. Accreditation is carried out with the collection of a state fee – 48 times of the BRV (approximately 1,000 US dollars). The certificate of accreditation is issued within 5 days after receiving the accreditation fee to the MIFT account. At the same time, the MIFT requests information from a foreign company and subsequently sends this information to the tax authorities in order to obtain a TIN.

Within 10 days after receiving the certificate of accreditation, the representative office is obliged to:

submit to the accrediting body a written notification of its postal address;
register with the tax authorities at the location of the representative office;

submit a certificate of registration with the tax authorities to the MIFT.

The head of the representative office once a year sends information to the MIFT in the prescribed form about the activities of the representative office. For more information about the representative office, follow the link.

1.1.3. Company in the new Jurisdiction

Another form of presence of a foreign company in Uzbekistan may be the establishment of a legal entity. Below we give a brief description of the possible forms of a legal entity which can be established in Uzbekistan.

A) Limited liability Company

General description

A Limited Liability Company (LLC) is a company established by one or more physical (individuals) or legal entities with a charter capital divided into shares whose size is determined by the foundation documents. In contrast to a closed JSC, shares in an LLC are not securities. The constitutive documents of an LLC established by two or more entities are the foundation agreement and the company charter. If an LLC is established by one entity, the foundation document of an LLC would be the charter only. A company with the sole founder cannot form LLC in Uzbekistan with its 100% ownership. The number of shareholders may not exceed 50 (otherwise, the company must be transformed into an open JSC within one year). The participants in an LLC are not liable for its obligations and they bear the risk of losses connected with the company’s activities within the limits of the value of their personal contributions (subject of few excerptions). Participants in the company, who have not paid their contributions in full, are jointly and severally liable for its obligations to the extent of the unpaid part of the contribution of each of the participants. The liability of the company is limited to the extent of its assets.

Charter capital

The amount of the charter capital is determined by the Charter of LLC and consists of the nominal value of shares of its participants. Regarding certain spheres of activity which are subject to obligatory licensing (banking, insurance, tourism, etc.) there are certain requirements to the minimum amount of the charter capital.

Management bodies

The supreme management body of an LLC is the General Meeting of Participants (GMP). The GMP has exclusive powers with respect to those specific issues stipulated in the Uzbek LLC Law as being within the competence of the supreme management body. It mainly covers the business, financial, management and structural issues of the company. The meeting is convened not less than once a year. Participants jointly holding not less than 10% of votes have the right to demand an extraordinary GMP at any time and for any reason. For most decisions a simple majority of participants present at the meeting is sufficient. A supermajority (75%) and unanimous vote is required for issues of high priority related to amending the charter, and increasing or reducing the charter capital. An LLC has a director (chief executive officer) or a directorate (collective executive body) carrying out the day-to-day management of the company. A director or the members of the directorate are elected at the GMP. The scope of the authority of the directorate is specified in the foundation documents of the company. Unlike a JSC, there is no mandatory requirement for establishing a Supervisory Board in an LLC. However, an LLC may have a Supervisory Board, if this is provided in the constitutive documents. In addition, the company is prohibited from issuing shares and obligations as securities.

You can find out how to open an LLC by following the link.

B) Joint stock company

General provisions

A joint stock company (JSC) is a legal entity which provides its shareholders with limited liability to the extent of value of their shareholding (with few exceptions from this rule). Shareholders who have not fully paid for their shares bear joint and several liability for the JSC’s obligations within the limits of the unpaid portion of the value of their shares. The number of founders of the JSC is unrestricted (i.e. from 1 to any). Shareholders of open JSC may freely dispose of their shares without the consent of other shareholders. JSC may have closed subscription for shares except in cases where such closed subscription is limited by the company’s charter and by the Joint Stock Company Law. An JSC may close subscription to shares, with the exception of cases when such a closed subscription is limited by the company’s charter or the Law on Joint-Stock Companies.

Charter capital

The charter capital of a JSC comprises the nominal value of the company’s shares acquired by the shareholders. All shares must have the same nominal value. The nominal value of preferred shares distributed may not exceed 20% of the company’s charter capital. The amount of the charter capital shall be determined by the Charter. Regarding certain spheres of activity which are subject to obligatory licensing (banking, insurance, tourism, etc.) there are certain requirements to the minimum amount of the charter capital.

Shares

Shares in a JSC may be registered shares (showing name of the owner). The nominal price of a share may not exceed 5,000 UZS (US$ 0.49). Value of shares in the Charter of the company must be recorded in Uzbek currency.

Preferred shares give their holders the priority right to receive dividends and other rights as stipulated in the Joint Stock Company Law. The procedure for paying for the company’s shares is determined at the time of its establishment by the Foundation agreement or the Charter. Payment for shares may be made in cash, securities and other assets or property rights having monetary value. The forms and terms of distribution of shares (open and closed) are specified in the company charter. A JSC may issue securities which may be further converted into shares pursuant to the terms stipulated in the company charter and/or in subsequent resolutions of the General Meeting of Shareholders.

General Meeting of Shareholders

The supreme management body of the JSC is the General Meeting of Shareholders (GMS). The meeting is held at least once a year. A meeting of shareholders other than the annual meeting is considered to be an extraordinary meeting. All exclusive issues of high priority connected with the company’s management, administration, business policy, corporate structure, financial aspects, elections and some other issues are within the sole competence of the GMS, as stipulated in the Joint Stock Company Law and in the company charter. Decisions within the exclusive competence of the GMS may not be delegated for resolution by any other body of the JSC. For most decisions, a simple majority vote is sufficient (more than 50%). A supermajority vote (75%) at the GMS is required for certain matters as stipulated in the Joint Stock Company Law. The GMS is valid if shareholders together holding more than 60% of the votes register and attended. The GMS may be attended either by a shareholder or its proxy. Any shareholder may at any time replace its proxy, and/or attend such meeting in person.

Supervisory Board

The Supervisory Board (the SB) is intermediate management organ. Formation of the Supervisory Board is not mandatory for the JSC with less than 30 shareholders. JSCs with bigger quantity of shareholders must form the SB.

The Supervisory Board exercises overall management of the JSC with the exception of those issues referred by the Joint Stock Company Law and the company charter to the exclusive competence of the GMS. If there are less than 30 holders of voting shares, the company charter may stipulate that the functions of the company’s supervisory board be performed by the GMS. The Supervisory Board handles issues of lower priority, mainly covering the implemented, preparatory, financial, and security market policies, as well as some supervisory and structural functions. Election of the Supervisory Board and its chairman, the procedure for calling and holding Board meetings, and also other issues related to the Board’s operation must be specified in the company charter and/or in internal regulations.

Executive Body

The Executive organ manages the company’s day-to-day activities through a director (chief executive officer), or a directorate (collective executive body). The director or directorate acts in the name and on behalf of the JSC within the scope of authority delegated by the GMS or Supervisory Board or as provided for in the company charter. The director and members of the directorate may incur joint and several liability for their actions.

Disclosure obligations

The JSC have obligation for the disclosure of certain information relating to the company and its shareholders, which is determined by the applicable laws and regulations.

C) The status of a company with foreign investments

The charter capital must be formed within one (1) year from the date of state registration of the legal entity.

Enterprise with foreign investments

The status of an “enterprise with foreign investments” could be granted to a company, which meets the following requirements:

According to Appendix No. 1 to the PCM of the Republic of Uzbekistan dated 09.02.2017 No. 66, the authorized capital should not be less than 400 million soums (approximately 38,000 US dollars);
one of the participants is a foreign individual or a foreign legal entity;
the participatory share of the foreign legal entity shall not be less than 15% of the total amount of the charter fun.

The status of an “enterprise with foreign investments” grants:

1) certain protection for foreign investments, as are provided under the Law of the Republic of Uzbekistan No 598 of 25.12.19 “On investments and investment activities”; and

2) other basic guarantees, benefits and preferences established for foreign investors and enterprises with foreign investments that are provided by the Presidential Decree No UP-4434 of 04.10.2012

The company with foreign investments may enjoy certain guarantees and economic privileges and exemptions. Economic privileges and exemptions include exemptions from customs fees on imported technological equipment and the right to obtain certain tax deductions and customs privileges in the event of participation in priority projects or sector of economy specified by the Government, that are mainly granted to manufacturing entities. In addition, special privileges are granted to legal entities included in the list of priority projects or operating in certain sectors of the economy or in certain administrative territories.

1.2. The main advantages and disadvantages of the forms of presence of a foreign company in Uzbekistan

		Pros	Cons
1.	Representative office of a non-resident company;	1. Does not pay corporate taxes (but pays only payroll taxes on salaries of employees of the RO, property tax applied to property that RO has for operation in the territory of Uzbekistan and also may pay taxes from sale-purchase transactions performed in the course of administrative activity (business activity not permitted). 2. Does not require carrying out accounting in Uzbekistan. The book-keeping can be carried out abroad or outsources to a third party accounting firm. 3. Non-resident employees, if duly accredited, can enjoy same rights as local citizen: acquire and sell real property, use and operate bank accounts in foreign and local currency in local banks. 4. All funds kept on the RO’s bank account shall be the funds provided and deposited by the parent legal entity. Such funds if not consumed could be easily transferred back to the parent entity. 5. May import equipment and goods for the needs of the RO (cars, furniture, supplies etc.), but not for sale. 6. May hire foreign and local personnel.	1. Cannot engage in any type of economic activity other than those specified below. 2. Any activity performed via repoffice may lead to occurrence of permanent establishment for the purposes of taxation of non-resident legal entity. 3. Cannot generate income. 4. The only direction for the use of fund acquired from the parent company is for the administrative needs of the RO itself (plus marketing). 5. The only permitted type of activity is – marketing (collecting, processing and distributing marketing and market data and materials in relation to parent company’s activity).
2.	Permanent Establishment	1. Does not have to pay all types of corporate taxes, but only the income tax and customs duties. 2. Enjoys simplified tax reporting. 3. Can perform payments in a foreign currency from the account abroad and therefore does need a conversion of Uzbek Soums. 4. Has the ability to make payments outside Uzbekistan. 5. Can be easily winded-up (without the liquidation proceedings).	1. May face difficulty with labor imports (usually this can be done only by the residents). 2. Has difficulties with the importation of equipment (usually importation can be made exclusively by the residents).
3.	Resident company (limited liability company) in Uzbekistan of a non-resident company	1. The company shall have legal status similar to the local (resident) legal entity irrespective of the country of residence of the parent entity the regulatory regime is same. 2. Can engage in any type of economic activity. 3. The company can employ foreign personnel (subject to obtaining necessary licenses and permits)	1. The company pays same local taxes as any other local resident legal entity (subject to certain tax exemptions and privileges). 2. Investors are guaranteed the free transfer of funds in foreign currency to and from the Republic of Uzbekistan without any restrictions, on condition that they pay taxes and payments, including currency conversion for repatriation.
4.	Performance of activity on cross-border grounds without opening any presence in Uzbekistan but conduct business remotely	1. The non-resident legal entity can perform any activity on the cross-border grounds, as long as such activity is in compliance with local regulations. 2. This arrangement would imply that any activity of the foreign company including sale of goods, works or services to and from Uzbekistan, would imply that in the territory of Uzbekistan the selling or purchasing party is a third-party resident of Uzbekistan, while the payments shall be performed on the cross-border grounds (i.e. as foreign exchange activity).	1. The non-resident legal entity cannot carry out any on-shore activity in Uzbekistan, as otherwise it will need to register permanent establishment or resident legal entity. 2. The non-resident legal entity cannot have or use any office or premises and personnel in the territory of Uzbekistan. Any activity in the territory of Uzbekistan, which is performed on behalf of or for the benefit of the non-resident legal entity shall be performed by a third-party resident of Uzbekistan (on pay grounds). 3. Income of a non-resident received from sources in the Republic of Uzbekistan and not associated with a permanent establishment for the purposes of taxation is calculated and withheld by a tax agent paying income to a non-resident.

1.3. Production Sharing Agreement

An investor wishing to carry out prospecting, exploration and mining activities in Uzbekistan may conclude a production sharing agreement with the Republic of Uzbekistan (“PSA“). At the same time, the parties to such an agreement will be the Republic of Uzbekistan, on behalf of which the Cabinet of Ministers of the Republic of Uzbekistan or its authorized body and an investor who invests their own, borrowed or borrowed funds (property and/or property rights) in prospecting, exploration of deposits and extraction of minerals act in the agreement. At the same time, for the purposes of organizing the performance of PSA work, the investor must create a legal entity (operating company) or attract existing legal entities for these purposes, including foreign ones operating in the territory of the Republic of Uzbekistan. At the same time, the investor will be responsible for all the actions of such a company. In order to perform the work under the agreement, the investor must have special bank accounts in the Republic of Uzbekistan and (or) in the territories of foreign states used exclusively for the performance of these works.

1.4. The concept of SPV

A project company, or as it is called abroad Special Purpose Vehicle (“SPV“) in practice is created only within the framework of investment activities when concluding agreements with the state. In particular, in the legislation on public private partnership there is a concept of a special project company, in particular, it is “a legal entity created by the winner of the tender, a reserve winner, a private initiator or a participant in direct negotiations exclusively for the implementation of a public-private partnership project and registered in accordance with the legislation of the Republic of Uzbekistan.“[1] At the same time, it is important to note that there is no separate procedure for creating an SPV in the legislation. In practice, such a company is created on the basis of resolutions or decrees of the President, which establish the powers and responsibilities of such companies.

1.5. Termination of registration in the former jurisdiction and creation of a new registration in the new jurisdiction

As mentioned above, there is no mechanism of business redomiciliation (migration) in Uzbekistan, which, in turn, exists in many Western jurisdictions. In particular, an investor will not be able to transfer an existing company from one jurisdiction to Uzbekistan. Thus, he has only the following ways to quasi-transfer the business:

– liquidation of a business in another jurisdiction and opening of a new company in Uzbekistan;

– continuation of the business operation in another jurisdiction and its expansion into the territory of Uzbekistan by registering PE or accreditation of a representative office, as well as by conducting business on a cross-border basis.

1.5.1. The concept of a nominal address

As a general rule, a nominal (virtual) address is not allowed in Uzbekistan. The address of a legal entity must be a real one. However, in accordance with new legislative changes, the use of a virtual office as a legal address has recently been allowed exclusively for Technopark residents, i.e. for IT companies that are registered in the Technopark. However, the requirement of a real office as legal address still remains in force for other legal entities that are not Technopark residents. Moreover, when registering legal entities, non-residential premises must be listed as the location of the legal entity.

And there are also a number of restrictions for VAT payers with respect to the legal address. For the purposes of registering as a VAT payer the following cases, among others, constitute a high tax risk:

the taxpayer is absent at the state registration address;
there is no rented or rent-free immovable property
the taxpayer’s address is missing from the address registration database;
the address of the taxpayer is the same as the address of the nominal seat. In this case the address is deemed nominal if the area (office) of the legal entity on the basis of ownership, lease or free-of-charge use is on average less than eighteen square metres and is used for administrative purposes.

The abovementioned criteria do not constitute the basis for the prohibition of entrepreneurial activities, but only serve as an indicator of compliance with the VAT payer status.

The legislation does not provide for the concepts of “nominee director” and “nominee founder”.

1.5.2. The concept of a dormant company

There is no concept of a “dormant company” in the legislation. In Uzbekistan, there is no procedure for the voluntary “freezing” of companies upon its establishment, which is one of the main reasons why the market for the purchase and sale of ready-made companies has not developed. However, at the initiative of the regulator, a company can be reclassified as a non-operating company. There is a concept of a non-operating company. A company is considered non-operating if the following characteristics are present:

failure to deposit funds in bank accounts for financial and economic activities within nine months;
failure to submit tax reports within nine months.

The tax authority determines the status of a non-operating company. The registering authority shall transfer the commercial organisation to the category of non-operating on the basis of the tax authority’s report and make a corresponding entry in the state register. Commercial banks close the accounts of the commercial organisations that have been reclassified as non-operating within one business day and transfer the funds to the non-operating deposit accounts.

Activities can be restored on the basis of an application by the founder(s) of the company within three years or if the company is recognised as a plaintiff or defendant in court. If the company does not re-establish its operations within three years, it is liquidated by decision of the registering authority and removed from the state register.

1.6. Registration of participants in special economic zones

The special economic zone (hereinafter – the “SEZ“) refers to a territory with defined borders and a special legal regime, specifically allocated in order to attract foreign and domestic investments, high technologies and managerial experience for accelerating the socio-economic development of the relevant region. More information about the SEZ in Uzbekistan can be found here. To become a member of the SEZ, an investor must prepare a number of documents and go through the procedures established by the law. Below is a step-by-step instruction for obtaining the status of a SEZ participant.

Stage 1. Preparation and submission of an investment application

The investor needs to fill out a standard investment application (hereinafter – the “Application“) for the investment project proposed by him. Additional documents established by the legislation are attached to such application.

The investment application is submitted to the SEZ directorate. The application is registered in accordance with the established procedure.

Stage 2. Consideration of the Application

The directorate of the SEZ considers the Application and the documents attached to it within 2 working days. If the Application does not meet the requirements of the legislation, it is returned with a justification of the reasons. After eliminating such reasons, the Application can be submitted again.

Stage 3. Examination of the Application

In the absence of deficiencies, the Application and its appendices are sent for examination. The term of such examination is 20 working days. According to the results of the examination, the package of documents can be returned to the SEZ directorate for further improvement with an indication of the reasons. When the reasons are eliminated, the Application can be re-submitted for examination. The re-examination period is 10 working days. According to the results of the examination, a corresponding conclusion is issued.

Stage 4. Consideration of the Application by the SEZ administrative council

If there is a positive conclusion on examination, the directorate of the SEZ within 2 working days submits an Application to the administrative council of the SEZ for consideration within 5 working days. At this stage, changes may be made to the investment project. Based on the results of the consideration, the administrative council decides on the expediency (implementation) of the investment project or on its inexpediency.

Steps 1-4 can be carried out electronically.

Stage 5. Further actions

After receiving a decision on the expediency (implementation) of the investment project, the investor submits documents to the public services centres at the location of the SEZ for registration (incorporation) or re-registration of an (already existing) legal entity within 5 working days. After that, an investment agreement can be signed, and a created or re-registered legal entity can submit documents for inclusion into the Register of SEZ participants. Such documents are considered by the directorate of the SEZ within 2 working days, and the legal entity is included in the Register of SEZ participants, and a corresponding certificate is issued. A legal entity acquires the status of a SEZ participant after (1) signing an investment agreement and (2) inclusion into the Register of FEZ Participants.

The established procedure may differ for investment projects proposed for implementation on the territory of special industrial zones.

2. Employment issues

2.1. Remote work

During the COVID-19 pandemic, in order to prevent the spread of the virus, Decree of the President of the Republic of Uzbekistan No. UP-5969 of 03/19/2020 provided for the introduction of an order according to which certain groups of the population can be temporarily transferred to (1) a remote method of work, (2) a flexible working schedule or (3) home-based work during the quarantine period mer. This procedure was introduced on 28.03.2020 by the Order of the Minister of Employment and Labour Relations (reg. MJ No. 3228) (hereinafter – the “Regulation“). It should be noted that the Regulation applies to all employees, although priority was given to certain categories of the population more susceptible to the virus. The regulation applies if two factors are present (1) the quarantine period – the time of implementation of measures aimed at preventing the spread of coronavirus infection, (2) the employee’s consent.

Remote work is defined by the Regulation as a method of working with the fulfilment of labour duties specified in the employee’s employment contract, outside the location of the employer’s territory, outside the permanent place of work, territory or facility under the direct or indirect control of the employer. The Regulation also establishes the issues of working hours and vacations, wages, as well as the conditions that must be prescribed in the employment contract in connection with the transfer to the remote work. The legislation of the Republic of Uzbekistan also provides for the introduction of remote work methods in order to strengthen the guarantee of the protection of the legitimate interests of women within the framework of the Decree of the President of the Republic of Uzbekistan No. UP-87 dated 07.03.2022.

It is also worth noting that in accordance with Annex No. 3 to Presidential Decree No. UP-113 dated 20.04.2022, from July 1, 2022, when performing work remotely (online) while abroad, it is no longer required to obtain a work permit. For more information on work permit, see here.

A flexible work schedule means a change in the working hours, including a change in the start and end times of work, as well as the establishment of part-time work; all of the above is recognized as a change in working conditions. Making a transfer to a flexible work schedule is carried out in the same way as transferring to remote work (amending the employment contract and issuing an order). Flexible hours are regulated, among other legal acts, by the provisions of the Labour Code of the Republic of Uzbekistan, in particular on part-time work.

Home-based work is defined in the labour legislation of the Republic of Uzbekistan as a work carried out by an employee to produce goods and provide services on the orders of the employer at the place of residence of the employee or in other premises belonging to him or his family members. The concept of home-based work is regulated in detail by the labour legislation of the Republic of Uzbekistan, including issues of their social insurance, benefits, reimbursement of expenses, etc. A corresponding standard employment contract has also been approved for home-based workers.

It can be noted that the execution of the transfer on the above-mentioned three grounds is carried out according to the general procedure for execution of changes in working conditions, established in para. 7 of Article 96 of the Labour Code of the Republic of Uzbekistan, namely:

Amending the employment contract concluded between the employer and the employee;
Issue of the relevant order.

The working conditions on which the parties have come to an agreement and included in the employment contract become the terms of the employment contract, and as a general rule, their change is possible only with the mutual consent of the employee and the employer.

2.2. Regulation of labor imports

In general, there are no restrictions on the import of foreign labor, especially for senior-level specialists.

A foreign citizen can be employed on the territory of the Republic of Uzbekistan if he has a confirmation of the right to work in Uzbekistan (Individual work permit) issued to the receiving resident legal entity.

To obtain a permit, you must:

Apply in person to the Public Services Center; or
submit an application in electronic form through the Unified Portal of Public Services (my.gov.uz); or
submit an application via an online platform (not yet created).

Employers conclude a preliminary employment contract with a foreign citizen living abroad for employment in a certain vacancy for which they want to attract or use a foreign employee as a specialist. The employment contract is signed by both parties, after which the employer or his authorized representative submits an application to the Agency for obtaining an individual work permit for the relevant foreign specialist, certified by the employer’s EDS, either in person (through the Public Services Center) or electronically (through the Unified portal of interactive public services or a specialized online platform).

The following documents are attached to the application:

a questionnaire for a foreign specialist (certified by the employer’s EDS) (in the standard form);
a draft employment contract confirming a preliminary agreement with the employer on the intention and conditions of attracting a foreign employee to the territory of the Republic of Uzbekistan, indicating the salary;
the manager’s commitment, certified by the employer’s EDS (in the standard form);
photo size 3 x 4;
a copy of the national passport of a foreign employee (indicating the validity period of the entry visa);
certificate of absence of HIV infection issued by medical institutions of the Republic of Uzbekistan;
documents confirming the qualifications of a foreign employee (documents are required in case of hiring highly qualified and qualified foreign workers);
brief information about the employer (documents are required in case of hiring highly qualified and qualified foreign workers);
a copy of the passport of the employer- an individual or the head of the employer (documents are required in case of hiring highly qualified and qualified foreign workers).

For consideration of the application for Confirmation, a fee of 1 BRB is charged. The deadline for consideration of this category of requests is 15 working days. The Employer, within 5 working days after receipt of the notification of the issuance of Confirmation, pays the fee for the issuance of Confirmation in the following amounts:

for highly qualified specialists, as well as teachers and specialists attracted to work in Presidential schools and higher educational institutions – 1 BRV;
for qualified specialists – 2 BRV;
for compatriots – 2 BRV;
for other foreign citizens – 30 BRV.

It is important to note the list of persons to whom the procedure for obtaining a permit to work in Uzbekistan does not apply, or its distribution is being cut off:

from December 1, 2018, for foreign citizens who have invested in the Republic of Uzbekistan in the amount of at least 8,500 times the base calculated value established in the Republic of Uzbekistan at the time of making investments, in the form of the acquisition of shares and shares of business entities, as well as the creation of a foreign enterprise;
for employees of permanent missions of foreign states, representative offices of international intergovernmental organizations and governmental organizations of foreign states accredited to the Ministry of Foreign Affairs of the Republic of Uzbekistan, as well as other persons with diplomatic status;
for specialists employed in the field of tourism at the request of the State Committee of the Republic of Uzbekistan for Tourism Development, for a period of up to three months;
for founders of foreign and joint ventures operating or being established on the territory of the Republic of Uzbekistan, including the first managers (from the date of conclusion of employment contracts with them for the relevant positions), for up to three months;
for scientists and cultural workers engaged in labor activity on the territory of the Republic of Uzbekistan in organizations established in accordance with interstate agreements;
for students undergoing practical training during the holidays as part of the programs of educational institutions of higher education of the Republic of Uzbekistan;
press representatives accredited by the Ministry of Foreign Affairs of the Republic of Uzbekistan;
employees of non-governmental non-profit organizations, as well as representative offices and branches of international and foreign non-governmental (non-governmental) non-profit organizations accredited by the Ministry of Justice of the Republic of Uzbekistan;
for teachers and specialists attracted to work in Presidential schools in the Republic of Karakalpakstan, regions and the city of Tashkent, as well as in higher educational institutions;
for persons who have received a residence permit in the Republic of Uzbekistan;
for persons for whom international treaties of the Republic of Uzbekistan define a different order of employment.

For more information about the import of labor, click on the link.

2.3. Temporary labor collectives (TC) and transfer of employees (TC) from one legal entity to another

In Uzbekistan, there is no concept of temporary labor collectives, and there is also no mechanism for transferring employees from one legal entity to another. Such a mechanism is provided for a reorganized company. However, the legislation provides for outstaffing and outsourcing. Article 16 of the Law of the Republic of Uzbekistan No. ZRU-642 dated 20.10.2020 provides for the provision of outstaffing services on the basis of an agreement concluded between the employer providing the employee and a legal entity. In accordance with the contract for the provision of outstaffing services, employees perform labor functions in the interests, under the management and control of the legal entity to which they were sent by the employer. Employees are paid by the employer. It is important to take into account that outstaffing services may be provided by legal entities registered in the territory of the Republic of Uzbekistan. The provision of outstaffing services related to the employer sending its employees to perform their labor functions outside the Republic of Uzbekistan is not allowed. Thus, the legislation of the Republic of Uzbekistan provides for the provision of outstaffing services by companies registered in the territory of the Republic of Uzbekistan on the basis of an agreement on the provision of outstaffing services.

2.4. Visas and permits of imported workers

2.4.1. Registration

Visitors on any type of visa staying in Uzbekistan for more than three days must be registered with the Ministry of Internal Affairs within three working days.

If a foreign citizen arrived in Uzbekistan by invitation, then the obligation to ensure registration at the place of temporary stay is assigned to the employer.

To do this, the employer must:

– If the period of stay of a foreign person does not exceed 30 days, then his registration, except for a personal appeal to the internal affairs bodies, can be carried out by sending an online notification using the online platform

– if the period of stay of a foreign person exceeds 30 days, then his registration can be carried out only by personal appeal to the territorial bodies of internal affairs.

If a foreign person checks in upon arrival at the hotel, most hotels register automatically on behalf of the person who checked in.

The cost of this service is 0.018 BRV (5,400 UZS)

2.4.2. Visas (regime and receipt)

In order for a foreign person or stateless persons to enter the territory of the Republic of Uzbekistan, an entry visa is required. Types of work visas may vary depending on the purpose of the trip:

Official visas, on official trips at the invitation of government agencies
Business (B-1, B-2)
Working, for the exercise of labor activity (E)
Teaching, issued to the teaching staff in educational institutions

In order to get a visa, foreign citizens and stateless persons need to get visa support. Legal entities or permanent representations of foreign states, representative offices of international intergovernmental organizations and governmental organizations of foreign states accredited with the Ministry of Foreign Affairs of the Republic of Uzbekistan, as well as representative offices and branches of international and foreign non-governmental non-profit organizations, send invitations to foreign citizens only after submitting an application for visa support to the Ministry of Foreign Affairs of the Republic of Uzbekistan.

Further, visa support is issued on the basis of the application of inviting legal entities and individuals permanently or temporarily located on the territory of Uzbekistan, submitted to the Ministry of Foreign Affairs of the Republic of Uzbekistan.

To apply for visa support, the following list of necessary documents for inviting foreigners by legal entities must be provided to diplomatic missions and consular offices of the Republic of Uzbekistan abroad:

Visa application on the letterhead of the organization of the established sample;
Electronic questionnaire from the website mfa.uz;
Copies of the passports of the invited person, the head of the organization and the authorized person of the organization, for the submission of documents;
Copies of documents for the organization (license, certificate, certificates, etc.);
Copies of orders for the head and authorized person;
A copy of the organization’s power of attorney to the authorized person;
When applying for a visa on arrival at Tashkent airport, it is also necessary to provide copies of air tickets or reservations;
Certificate from the place of work of the invited person.

And if an individual invites:

Visa application of the established sample;
Electronic questionnaire from the website mfa.uz
Copies of the passports of the invited and the inviting person;
The original of the invitation notice issued by the internal affairs bodies of the Russian Federation;
Copies of documents confirming family ties (if any);
When applying for a visa on arrival at the Tashkent airport, it is also necessary to provide copies of air tickets or reservations.

The deadline for consideration of petitions of legal entities and individuals in the Ministry of Foreign Affairs is 10 working days, subject to the established procedure for submitting documents.

If a foreign person wants to obtain a visa at the invitation of an employer under a contract for a period of more than three months, then in this case a foreign citizen must obtain confirmation of the right to work issued to a foreign citizen by the Agency for External Labor Migration.

Also, the deadline for issuing a permit for a foreign citizen to issue a visa to enter Uzbekistan at the invitation of citizens should not exceed 15 days.

To obtain a visa, foreign citizens and stateless persons must submit the following documents to the diplomatic mission or consular office of Uzbekistan abroad:

passport or document of a stateless person, the validity period of which must exceed the validity period of the visa for at least 3 months;
completed visa application form in 2 copies;
2 passport-sized color photos.

The period of consideration of visa documents and registration of an entry visa for a foreign citizen should not exceed 10 days.

There are single, double and multiple entry visas to Uzbekistan.

Single entry visa

A single entry visa gives the right to enter the territory of Uzbekistan only once. Therefore, after this visa has been used to travel to Uzbekistan, if a visitor wants to re-enter Uzbekistan, it is first necessary to re-apply for another visa at his local consulate.

Multiple entry visa

A multiple entry visa allows a foreign person to leave and return to Uzbekistan on the same visa before the expiration of the visa. If “02” is indicated in the “Entries” field on the visa, it means that the person is allowed to enter Uzbekistan twice with this visa.

The cost of obtaining a visa:

In accordance with the legislation of the Republic of Uzbekistan, the following consular fees are established for the registration and issuance of visas:

a) For single-entry visas:

Up to 7 days – 40 USD;
Up to 15 days – 50 USD;
Up to 30 days – 60 USD;
Up to 3 months – 80 USD;
Up to 6 months – 120 USD;
Up to 1 year – 160 USD.

b) For multiple-entry visas:

Up to 6 months – 150 USD;
Up to 1 year – 250 USD;
Up to 2 years – 300 USD;
Up to 3 years – 350 USD.

Note: The bid will be increased by 10 USD for each additional entry.

The procedure for obtaining a visa for employees of representative offices and branches of international and foreign non-governmental non-profit organizations

Foreign citizens arriving in Uzbekistan at the invitation of legal entities or permanent missions of foreign states, representative offices of international intergovernmental organizations and governmental organizations of foreign states, foreign citizens accredited with the Ministry of Foreign Affairs of the Republic of Uzbekistan, as well as representative offices and branches of international and foreign non-governmental (non-governmental) non-profit organizations, for receipt, you must apply to the consular offices of the Republic of Uzbekistan abroad and provide the following documents:

a completed visa application form of the prescribed form
invitation
a national passport or a document replacing it, then the Ministry of Foreign Affairs considers written requests from the above organizations or citizens, and sends appropriate instructions to consular offices abroad, which in turn prepare a visa.

2.5. PINI

PINI is a personal identification number of an individual, which, according to the requirements of the ICAO international standard for machine-readable documents, is necessary for use in passports of citizens of the Republic of Uzbekistan and in other documents. To obtain a PINI, an individual (a foreign citizen or a stateless person) must apply to the migration and citizenship registration department of the internal Affairs bodies (MaCRD) at the place of temporary registration (assigned upon application) or permanent residence (assigned upon receipt of a residence permit). Citizens of the Republic of Uzbekistan do not need to receive a PINI, since it is already available in a biometric passport. For more information about the PINI, follow the link.

2.6. TIN

When registering with the tax authorities (in case of tax obligations), each taxpayer is assigned a single taxpayer identification number (TIN) throughout the territory of the Republic of Uzbekistan, and his credentials are entered into the Unified Register of Taxpayers of the Republic of Uzbekistan. The identification number is assigned by the State Tax Committee of the Republic of Uzbekistan through the Central State University or the official website of the State Tax Committee of the Republic of Uzbekistan by filling out the relevant questionnaire by the applicant.

3. Permits for a resident legal entity of the Republic of Uzbekistan to conduct activities outside the jurisdiction of the Republic of Uzbekistan

3.1. Notification of the authorized body on the establishment of a legal entity abroad

After the state registration of the organization abroad, the founder of the local legal entity notifies the MIFT about it within a month. At the same time, the founder must provide the approved constituent documents of the organization abroad, legalized (if necessary) in accordance with the established procedure by the diplomatic mission or consular institution of the Republic of Uzbekistan abroad at the place of accreditation or by the Consular Department of the Ministry of Foreign Affairs of the Republic of Uzbekistan with the appropriate translation. In addition, the founder is also obliged to notify the MIFT within a month if the constituent documents of the organization abroad are changed and supplemented, its reorganization or liquidation, as well as the change of the founders of the organization abroad, including foreign founders.

If the founder forms his share in the authorized capital of the organization abroad with goods from Uzbekistan, then the export of such goods is processed under the customs regime of “temporary export”, in particular “export of goods as investments”. At the same time, the founder must submit a decision on the establishment of an organization abroad to the customs authority. After notifying the MIFT, the customs authority, based on the information provided by the MIFT, reissue the goods in the “export” regime. After the re-registration procedure, the founder is released from the obligation to return the goods sent to the account of the formation of the authorized fund (capital) of the organization abroad.[2]

3.2. Notification of tax authorities by banks of the Republic of Uzbekistan

If the founder forms his share in the authorized capital of the organization abroad with funds from Uzbekistan, as well as in case of receipt of funds from abroad to the accounts of an individual resident of the Republic of Uzbekistan from a foreign legal entity, the commercial bank of Uzbekistan is obliged to provide information on such transactions to the tax authorities. The tax authorities, in turn, monitor the above operations.[3]

3.3. Currency control over individual transactions

Also, it should be noted that the following operations are performed only in the presence of resolutions of the President of the Republic of Uzbekistan, the Cabinet of Ministers or international treaties of the Republic of Uzbekistan:

Investment activity for an amount exceeding US$10,000 – transfer of funds from residents’ accounts in banks of the Republic of Uzbekistan for the formation (or equity participation) of enterprises abroad, replenishment of their branches abroad with working capital;
Provision by residents of the Republic of Uzbekistan of loans and money, loans in the form of goods (services) and leasing to non-residents;
Transfer of funds from accounts of residents of the Republic of Uzbekistan in commercial banks of the Republic of Uzbekistan to foreign accounts (deposits) and purchase of real estate.[4]

4. Financial component of relocation

4.1. Transfer pricing control

Transfer pricing (TP) is a method of setting prices in transactions between members of a group of companies or other interdependent entities used to reduce the tax burden.

In accordance with Section VI of the Tax Code “Tax control in Transfer pricing”, the tax authorities will have the right to require taxpayers to submit documents confirming transfer prices for 2022.

The documents must disclose the following information:

information about the parties to controlled transactions;
functional analysis;
transfer pricing method;
sources of information;
calculation of the market price interval (yield interval) of a controlled transaction with a description of the approach to the selection of comparable transactions, etc.

Penalties for non-payment or incomplete payment of taxes in the Republic of Uzbekistan as a result of the application of tax control measures for the shopping center are set at 40% of the unpaid tax amount.

In addition, the subjects should not forget about the competition law, namely, the concept of economic concentration. Economic concentration implies the commission of transactions and (or) other actions leading to the predominance of an economic entity or group of persons, which affects the state of competition in the commodity or financial market. It is important to take into account the antimonopoly regulation of economic concentration in transfer pricing.

4.2. The concept of a controlled foreign company

For tax purposes, a controlled foreign company is a foreign legal entity that simultaneously falls under the following conditions:

it is not recognized as a tax resident of Uzbekistan;
its controlling persons (legal entity or individual) are tax residents of Uzbekistan.

It is worth noting that a controlled foreign company is also recognized as a foreign structure without the formation of a legal entity, whose controlling persons are a legal entity and (or) an individual recognized as tax residents of the Republic of Uzbekistan.

Controlling persons of a foreign company are recognized (Article 40 of the Tax Code of the Republic of Uzbekistan):

from January 1, 2023, a legal entity or individual recognized as a tax resident of the Republic of Uzbekistan, whose share in a foreign company is more than 25 percent;
a legal entity or individual whose share in this company is more than 10 percent, if the share the participation of all persons recognized as tax residents of the Republic of Uzbekistan in this company is more than 50 percent.

It should be noted that Article 6 of the Law No. ZRU 599 of 30-12-2019 states that paragraph 1 of Part 1 of Article 40 of the Tax Code will come into effect from January 1, 2023. Until January 1, 2023, the controlling person of a foreign company is a legal entity or an individual whose share in a foreign company is more than 50%.

The exercise of control over the company is recognized as the provision or ability to have a decisive influence on the decision regarding the distribution of net profit (income) of the company.

In this way, the exercise of control over a foreign structure without the formation of a legal entity is recognized as providing or being able to exert a decisive influence on decisions made by the person managing the assets of such a structure in relation to the distribution of profit (income) received by it. As a general rule, the founder (founder) of this structure is recognized as the controlling person of a foreign structure without the formation of a legal entity.

If a person who is not the founder exercises control over the structure and at the same time at least one of the following conditions is fulfilled in relation to him, he is also recognized as a controlling person of a foreign structure without forming a legal entity if:

such a person has the actual right to income (part of it) received by this structure;
such a person has the right to dispose of the property of this structure;
such a person has the right to receive the property of this structure in the event of its termination (liquidation, termination of the contract).

Legally, a tax resident of the Republic of Uzbekistan has the right to independently recognize himself as a controlling person of a foreign company. In such cases, a person identifying himself as a controlling person is obliged to notify the tax authorities at the place of his registration in accordance with the procedure provided for by the Tax Code of the Republic of Uzbekistan.

4.3. Activity taxes

4.3.1. VAT

The following persons engaged in the sale of goods, services or business activities in the Republic of Uzbekistan are recognized as VAT taxpayers:

legal entities of the Republic of Uzbekistan;
Sole proprietors whose income from the sale of goods (services) for the tax period exceeds 1 billion soums, or who voluntarily transferred to the payment of VAT;
foreign legal entities selling goods (services) on the territory of the Republic of Uzbekistan, if the place of sale of such goods (services) is recognized as the Republic of Uzbekistan;
foreign legal entities operating in the Republic of Uzbekistan through PU;
proxy – a participant in a simple partnership agreement, who is entrusted with the management of the affairs of a simple partnership – for activities carried out within the framework of a simple partnership agreement (a joint activity agreement);
persons moving goods across the customs border of the Republic of Uzbekistan, in accordance with customs legislation.

VAT taxpayers are required to register for special registration with the tax authorities.

At the same time, the object of taxation is:

– turnover in the sale of goods (services), the place of sale of which is the Republic of Uzbekistan;[5]

The turnover for the sale of goods is:

transfer of ownership of the goods on a reimbursable basis;
gratuitous transfer of goods, except in cases where such transfer is economically justified;
leasing of property;
transfer of goods on the terms of installment payment;
transfer of goods (provision of services) as a contribution to the authorized fund (authorized capital) of a legal entity;
transfer of goods (provision of services) between the parties to a simple partnership agreement (joint activity agreement) within the framework of such an agreement;
transfer of goods (provision of services):

a participant of a legal entity upon its withdrawal (retirement) from the membership of the participants or upon reduction of the share of participation in a legal entity or redemption by a legal entity from a participant of the share of participation (part of the share) in this legal entity;
to a shareholder when a legal entity-issuer repurchases shares issued by this issuer from a shareholder;
to a shareholder or participant in the liquidation of a legal entity;

and others. in accordance with Part 4 of Article 239 of the Tax Code of the Republic of Uzbekistan.

– import of goods into the territory of the Republic of Uzbekistan.

Will not be subject to VAT:

the sale by an individual entrepreneur of personal (family) property not related to the implementation of his entrepreneurial activity;
the transfer of the property of a legal entity during its reorganization to the legal successor(s);
the transfer by the founder of the trust management of the property to the trustee and the return by the trustee of the property transferred to him in the trust management upon termination of the trust management agreement;
carrying out operations related to the circulation of national currency or foreign currency (except for numismatics purposes).

Thus, transactions carried out without importing goods into the territory of the Republic of Uzbekistan are not subject to VAT. However, in the case of services, the territory of the Republic of Uzbekistan is recognized as the place of sale of services, provided that:

buyers of such services carry out activities or are located on the territory of the Republic of Uzbekistan;
services are directly related to real estate located on the territory of the Republic of Uzbekistan;
services directly related to movable property, with the exception of vehicle rental, are actually provided on the territory of the Republic of Uzbekistan;
services in the field of catering, entertainment, recreation and other similar services, tourism, hotel services and accommodation, culture, art, physical culture and sports, training (education), etc., which are actually provided on the territory of the Republic of Uzbekistan, except for services in the field of training (education), provided in electronic form;
transportation and (or) transportation services or services directly related to transportation and (or) transportation under the conditions specified in Part 3 (4) of Article 241 of the Tax Code of the Republic of Uzbekistan;
services directly related to transportation and (or) transportation of goods placed under the customs procedure of customs transit when transporting goods from the places of arrival on the territory of the Republic of Uzbekistan to the place of departure from the territory of the Republic of Uzbekistan, turn out to be a legal entity of the Republic of Uzbekistan, PU of a foreign legal entity or sole proprietor;
The buyer’s place of residence is the Republic of Uzbekistan;
the bank in which the account used by the buyer to pay for services is opened, or the operator of payment systems through which the buyer pays for services, is located on the territory of the Republic of Uzbekistan;
and others. conditions in accordance with Article 241 of the Tax Code of the Republic of Uzbekistan.

4.3.2. Income tax

The tax is charged on the profit that the organization has received, that is, on the difference between income and expenses.

Profit – the result of deducting the amount of expenses from the amount of income of the organization – is the object of taxation.

The basic rate is 15%;

Income tax at the rate of 20% is paid by:

banks,
manufacturers of cement and polyethylene pellets;
taxpayers whose main activity is the provision of mobile communication services;
with the profit received from the provision of services by markets and shopping complexes.

Income tax at the rate of 7.5% is paid by e-commerce entities included in the national register and engaged in electronic commerce.
Income tax at the rate of 5% is levied on income in the form of dividends.
The profit tax at a zero rate is calculated by:

agricultural producers and fisheries enterprises that meet the criteria provided for in Article 57 of the Tax Code, on the profit received from the sale of their own agricultural products, taxpayers engaged in social activities,
budget organizations that receive income from additional sources;
from the amount of profit from the sale of goods/services for export;
taxpayers whose sole participants are public associations of persons with disabilities and in whose total number persons with disabilities make up at least 50 percent, and the wage fund of persons with disabilities is at least 50 percent of the total wage fund,
from the amount of income received by the People’s Bank from the use of funds on individual accumulative pension accounts of citizens.

Also, when determining income tax, it is important to take into account the existence of double taxation avoidance agreements (“DTTs“). Such an agreement may give a subject the right to pay taxes only in one of the two states or prescribes a marginal interest rate of tax that can be levied on a certain type of income. At the same time, it is important to note Article 6 of the Tax Code of the Republic of Uzbekistan, according to which a certain DTTs will be applied. In particular, the term “a person who has the actual right to receive income”, which is most often used in the DTTs, is defined by Article 6 of the Tax Code of the Republic of Uzbekistan. A person who has the actual right to receive income paid by a legal entity is a person who has the right to independently use and (or) dispose of these incomes, or a person in whose interests another person is authorized to dispose of such income. At the same time, it does not matter whether this right arose due to direct and (or) indirect participation in or control over this legal entity or due to other circumstances. In addition, when applying the provisions of the DTT in the case of tax exemption or when applying reduced tax rates, the tax agent has the right to independently apply a tax exemption or a reduced tax rate if the recipient of income is a tax resident of the state with which the DTT is concluded. Such application is possible if the recipient of the income provides the tax agent with a document confirming tax residency (certificate of residency), no later than the date of payment of income.

The certificate of residency is an official document confirming that a non–resident recipient of income is a resident of the state with which the Republic of Uzbekistan has concluded a joint tax treaty. At the same time, the certificate of residence must be presented in one of the following types:

In the form of an original certified by the competent authority of the foreign state of which the non-resident is a resident. At the same time, the submission of such a document is made with the implementation of its consular legalization or with the affixing of an apostille in accordance with the procedure established by law.;
In the form of a notarized copy of the original document;
In the form of a paper copy of an electronic document confirming tax residency posted on the Internet resource of the competent authority of a foreign state.

A) Dividends and interest

According to Articles 343, 351 and 386, dividends paid by a legal entity of the Republic of Uzbekistan are subject to income tax or personal income tax at the source of payment. The tax rate on income received in the form of dividends for a non-resident of the Republic of Uzbekistan is 10%. However, as an example, in accordance with Articles 10 and 11 of the DTT with the Russian Federation dated 02.03.1994, and with Article 10 of the Tax Code of the Republic of Kazakhstan dated 12.06.1996, dividends and interest will be taxed both in Uzbekistan and in the Russian Federation or the Republic of Kazakhstan. However, if the recipient of dividends or interest is actually entitled to them, the tax levied should not exceed 10% of the gross amount of dividends. This means that the total tax rate in Uzbekistan and in the Russian Federation or the Republic of Kazakhstan should not exceed 10% of the amount of dividends or interest. Thus, when choosing a mechanism for withdrawing profits in the form of dividends or interest, taking into account the DTT between the Republic of Uzbekistan and the Russian Federation, the tax rate on income received in the form of dividends for a non-resident will not exceed 10% in general.

4.3.3. Property tax

Taxpayers of the property tax of legal entities are recognized as:

1) legal entities of the Republic of Uzbekistan that have property on the territory of the Republic of Uzbekistan that is subject to taxation;

2) legal entities — non-residents of the Republic of Uzbekistan who own immovable property on the territory of the Republic of Uzbekistan.

If it is impossible to establish the location of the owner of immovable property, the taxpayer is the person who owns and (or) uses this property.

If a legal entity acquires real estate for financial lease (leasing), it is also recognized as a taxpayer.

Real estate includes:

1) buildings and structures subject to registration with the bodies carrying out state registration of rights to immovable property;

2) objects of unfinished construction;

3) railway tracks, trunk pipelines, communication and power transmission lines, as well as structures that are an integral technological part of these facilities;

4) residential real estate objects listed on the balance sheet of construction organizations or developers for subsequent sale, after six months after the commissioning of the real estate object.

Immovable property objects are not considered as an object of taxation:

1) used by non-profit organizations, within the framework of non-profit activities;

2) housing and communal services and other municipal services of general civil purpose, used for their intended purpose. Objects of housing and communal services and other urban facilities of general civil purpose include sanitary cleaning, landscaping and landscaping, outdoor lighting of cities and towns, water supply (with water intake and treatment facilities), sewage (with treatment facilities), gas, boiler and thermal distribution networks (with facilities on them) for municipal needs and the population;

3) public highways;

4) irrigation and collector-drainage network;

5) civil protection and mobilization purposes that are on the taxpayer’s balance sheet and are not used in business activities;

6) used for environmental protection and sanitation purposes, fire safety. The assignment of objects to those used for environmental protection, sanitary and cleaning purposes and fire safety is carried out on the basis of a certificate from the relevant authority for ecology and environmental protection or fire safety;

7) land plots.

Taxpayers of the property tax of individuals are recognized as individuals, including foreign citizens, unless otherwise provided by international treaties of the Republic of Uzbekistan, as well as dehkan farms with and without the formation of a legal entity that own property recognized as an object of taxation in accordance with Article 419 of the Tax Code.

If it is impossible to establish the location of the owner of the property, as well as in the event of the death of the owner of immovable property, the taxpayer is recognized as the person who owns and (or) uses this property.

The object of taxation of the property tax of individuals is the following property located on the territory of the Republic of Uzbekistan:

1) residential buildings, apartments, country buildings;

2) non-residential real estate objects intended for entrepreneurial activity and (or) income extraction;

3) objects of unfinished construction for non-residential purposes.

4) parking-a place inextricably linked with an apartment building, as well as other buildings, premises and structures.

5. Customs regimes: general provisions

Сustoms regime	Processing in the customs territory	Bonded warehouse	Regime of a free customs zone
Definition	Import of goods into Uzbekistan with conditional exemption from customs duties and taxes for the purpose of processing and export in the form of processed products.	Storage of goods imported into Uzbekistan, without payment of customs duties, taxes and without application of economic policy measures and intended for export from the customs territory.	Placement and use of goods in certain places and territories without paying customs charges and without applying economic policy measures
Required documents	1. the cargo customs declaration (CCD) and 2. shipping documents, i.e. commercial (invoice, shipping and packing lists, etc.) and transport (bill of lading, consignment note, etc.) documents (hereinafter referred to as the “CD”).	1. CCD; and 2. CD	1. CCD; and 2. CD
Term	2 years (extendable).	3 years.	Not limited
Operations with goods	– direct processing or processing of imported goods changing their initial properties and individual indicators, but preserving in processed products characteristics of the goods that allow them to be identified; – manufacture of other goods using imported goods including installation, assembly or disassembly; – repair of goods including restoration and replacement of parts; – use of other goods as raw materials that facilitate production of processed products or simplify it in cases when these goods are used in whole or in part in the processing process (simultaneously with the other operations); – packaging, packing (including repacking), sorting, cleaning of goods, its adjustment to other goods and modernization of equipment;	– operations required to ensure safety of goods in an unchanged state; – inspection, examination and measurement of goods; – movement of goods within a bonded warehouse provided that the movement does not entail change in condition of goods, damage of packaging and (or) a change in applied customs identification means; – taking samples and specimens of goods for research and identification; – accomplishment operations required to prepare goods for sale and transportation including splitting them into consignments, preparation for shipments, sorting, packaging, repackaging, labeling (except for marking with excise stamps), other similar operations including simple assembly operations; – other operations required to improve commercial qualities, except mixing, processing or handling of goods.	Determined depending on the free economic zone in which the company is listed.

5.1. Changes in customs legislation resulting in simplification of customs regulation

According to the Decree of the President of the Republic of Uzbekistan “On additional measures to simplify the application of the customs regime “Processing in the customs territory”” No. UP-115 dated April 25, 2022 (“Decree“), the procedure for customs control in the territory of the Republic of Uzbekistan has been simplified and the procedure for customs regulation has been simplified. In particular,

In accordance with the Decree, from May 1, 2022, in order to simplify customs regulation, operations for packaging, packaging (including repacking), sorting, cleaning of goods, fitting them to other goods and upgrading equipment are also considered processing operations in the customs territory.

Operations for processing goods in the customs territory may be carried out by a person who has received permission to process goods in the customs territory or by another person on his behalf, provided that the person who has received the permit remains responsible to the customs authorities.

Also, from May 1, 2022, when placing goods under this customs regime, mandatory confirmation of compliance of goods with the requirements of regulatory acts in the field of technical regulation (i.e. certification) and submission of a sanitary and epidemiological conclusion are not required.

Also, according to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 429 dated July 8, 2021, the following changes were introduced:

processing operations, even in the absence of a foreign customer in the requirements of the customs regime, are allowed (previously they were banned);
new types of foreign trade contracts for export, import, sale and purchase, allowing a business entity to purchase raw materials from abroad, sell it to any foreign partner after processing it on the territory of the republic without paying customs duties;
domestic exporting organizations are now allowed to purchase products abroad and sell them directly to third countries without import (previously such 3-party transactions were prohibited);
the procedure for monitoring the binding of the import contract to the export contract, as well as the binding of the purchase contract to the sales contract;
the period of importation of goods into the republic under the import contract and registration in the customs regimes of the customs warehouse, free warehouse, free customs zone, processing in the customs territory, as well as the return of money paid for them, may not exceed 180 days from the date of payments under these contracts;
the period of receipt of revenue or re-import of goods under the export contract should not exceed 180 days from the date of registration of goods in the customs regime of “re-export”;
the refund of funds paid under the purchase contract or the receipt of funds under the sales contract may not exceed 180 days from the date of payment under the purchase contract. At the same time, the amount of funds received under the sales contract should not be less than the amount of funds paid under the purchase contract.

5.2. The ratio of these modes and FEZ. Relocation of business and work of a foreign company in the FEZ

Special customs regime

A special customs regime for FEZ participants may include:

temporary exemption or reduction of customs duties;
cancellation, easing of non-tariff restrictions on exports or imports.
Customs clearance of goods exported or imported by participants of special economic zones with the application of benefits for customs payments is carried out in accordance with the procedure established by law.

The provision of a special customs regime on the territory of the special economic zone is carried out by the customs authorities of the Republic of Uzbekistan. The special customs regime does not apply to the transit of goods through the territory of the special economic zone.

Tax and customs payment benefits

Under the above-mentioned customs regimes, goods are imported with conditional exemption from customs duties and taxes, such benefits are also provided to FEZ participants. They enjoy tax benefits in accordance with the procedure provided for by the Tax Code of the Republic of Uzbekistan.

Participants of special economic zones are exempt from payment:

customs payments (except for value added tax and customs clearance fees) for construction materials not produced in the republic and imported in accordance with the established procedure for the implementation of an investment project in accordance with the investment agreement during the construction period;
customs payments (except for customs clearance fees) when importing technological equipment, analogues of which are not produced in the Republic of Uzbekistan, according to the approved list.

Customs payments (except for customs clearance fees) are not paid when participants of special economic zones import raw materials, materials and components used for the production and sale of products for export to the territory of the Republic of Uzbekistan.

Participants of special economic zones have the right to receive a deferred payment of VAT when importing goods for up to 120 days. The amount of VAT formed as a result of the excess of the amount of VAT attributed to the offset over the amount of the accrued tax is reimbursed to the participant of the special economic zone according to a simplified procedure within seven days

[1] The Law of the Republic of Uzbekistan of 10.05.2019 No. ZRU-537 “On Public-private partnership”.

[2] Annex to the Resolution of the CM dated 27.03.2013 (MU reg. No. 2457) “Regulations on the procedure for notification of the establishment of organizations abroad by legal entities of the Republic of Uzbekistan or on equity participation in their authorized funds (capitals)”.

[3] Annex to the Resolution of the CM dated 05.04.2013 (MU Reg. No. 2467) “Regulations on the procedure for monitoring the validity of foreign exchange transactions by legal entities and individuals”.

[4] The Regulation approved by the Board of the Central Bank of the Republic of Uzbekistan, registered by the Ministry of Justice No. 2536 dated 17.12.13 “On the procedure for conducting certain currency transactions”.

[5] The territory of the Republic of Uzbekistan is recognized as the place of sale of goods if 1) the goods are located on the territory of the Republic of Uzbekistan and as a result of the transaction does not leave its territory or 2) the goods were on the territory of the Republic of Uzbekistan at the time of shipment or transportation.

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