June 20, 2024

Jewelry business in Uzbekistan

In recent years, special attention has been paid to the revival of the jewelry industry and the creation of conditions for developing this business. Due to several reforms, gold and silver jewelry production in Uzbekistan jumped by 18% in 2022 and amounted to four tons. Thus, business entities can engage in activities for the manufacture of jewelry made of precious stones and their sale (wholesale and retail trade) on a notification basis by the Law of the Republic of Uzbekistan “On Licensing, licensing and notification procedures”.

Content:

1. Selling jewelry and fine products;

2. State regulation of precious metals and stones turnover;

3. Export;

4. Jewelry sales;

5. Measures for the development of the jewelry industry in Uzbekistan;

6. Taxes.

Legislation:

  1. Law of the Republic of Uzbekistan No. 710 “On Precious metals and precious stones” dated 08/23/2021;
  2. Law of the Republic of Uzbekistan “On Licensing, licensing and notification procedures” No. 701 dated 07/14/2021;
  3. Decree of the President of the Republic of Uzbekistan No.  5721 “On measures to accelerate the development of the jewelry industry in the Republic of Uzbekistan” dated 05/18/2019;
  4. Decree of the President of the Republic of Uzbekistan No. 185 “On amendments and additions to some decisions of the President of the Republic of Uzbekistan and the Government of the Republic of Uzbekistan” dated 10/31/2023;
  5. Resolution of the President of the Republic of Uzbekistan No. 452 “On additional measures to expand the production capacity of jewelry and comprehensive support for domestic jewelers” dated 12/23/2022;
  6. Resolution of the President of the Republic of Uzbekistan No. 3818 “On measures to further streamline foreign economic activity and improve the system of customs and tariff regulation of the Republic of Uzbekistan” dated 06/29/2018;
  7. Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 75 “On approval of the rules of retail trade in the Republic of Uzbekistan and the rules for the production and sale of public catering products (services) in the Republic of Uzbekistan” dated 02/13/2003;
  8. Order of the Head of the Department for Combating Tax, Currency Crimes and Money Laundering at the Prosecutor General’s Office of the Republic of Uzbekistan “On approval of the Rules of Internal Control on countering the legalization of income from criminal activities, financing of terrorism and financing the proliferation of weapons of mass destruction for persons engaged in operations with precious metals and precious stones” dated 03.11.2009 (registration number 2034).

1. Selling jewelry and fine products

According to the current legislation, the following types of activities are included in the concept of the sale of jewelry and other products made of precious metals [1]  and stones [2]:

  • retail trade in jewelry and other products made of precious metals and precious stones, precious and semi-precious stones (including those imported from foreign countries for sale), commission trade in jewelry and other products made of precious metals and precious stones);
  • retail trade in jewelry and other products made of precious metals and precious stones using information and communication technologies technologies (online stores);
  • retail trade in duty-free zones of jewelry and other products made of precious metals and precious stones (duty-free);
  • purchase of precious metals, precious and semi-precious stones, and products made from them, purchase of scrap and waste of precious metals;
  • wholesale of jewelry and other products made of precious metals and precious stones, precious and semi-precious stones (including those imported from foreign countries for sale).

2. State regulation of precious metals and stones turnover

State regulation in the sphere of turnover of precious metals and precious stones is carried out by:

  • issuing permits for the right to use subsurface areas for the extraction of precious metals and precious stones;
  • licensing of precious metals refining activities;
  • realization of the priority right to purchase mined precious metals and precious stones for the State Fund of Precious Metals and Precious Stones of the Republic of Uzbekistan, as well as the formation and replenishment of assets of the Central Bank of the Republic of Uzbekistan in precious metals;
  • establishing requirements for accounting, storage, and transportation of precious metals and precious stones and reporting on them, as well as a unified procedure for conducting transactions with precious metals and precious stones;
  • regulatory and legal regulation of the actions of business entities engaged in transactions with precious metals and precious stones;
  • carrying out by authorized bodies of state control over the geological study and exploration of subsurface areas, extraction of precious metals and precious stones;
  • conducting assay control by an authorized state body over the production, use and sale of precious metals and precious stones;
  • determining the procedure for the import into and export from the territory of the Republic of Uzbekistan of precious metals and precious stones;
  • conducting state control over the activities of refining enterprises;
  • establishment of state control over the testing and branding of jewelry and other products made of precious metals and precious stones.

3. Export

Export by natural persons — residents and non-residents of the Republic of Uzbekistan crossing the customs border of the Republic of Uzbekistan, dimensional ingots and banknotes of the Central Bank of the Republic of Uzbekistan produced in the Republic of Uzbekistan, made of precious metals, may be carried out without restrictions, subject to the availability of appropriate certificates and with mandatory completion of a passenger customs declaration in case of exceeding the norm for the export of goods established by legislation. The following persons have the right to export standard and dimensional ingots, and banknotes made of precious metals: the Central Bank of the Republic of Uzbekistan; banks; and business entities that own them [3].

Precious metals and precious stones that become the property of a foreign investor following the terms of the production sharing agreement may be exported without any restrictions outside the Republic of Uzbekistan or sold on the domestic market on the terms and under the procedure provided for by agreements and the Law [4].

However, the import and export of precious metals and stones are limited by certain legal requirements regarding countering the legalization of proceeds from criminal activity. The purpose of such internal control is to effectively identify and suppress transactions with precious metals and precious stones aimed at legalizing income from criminal activities, financing the proliferation of weapons of mass destruction, identifying, evaluating, documenting, and reducing the risks of legalizing income from criminal activities. When importing and exporting precious metals, the transaction should not fall under the criteria of a “suspicious transaction” [5].

An operation with precious metals and precious stones is considered suspicious if one of the following signs is present:

  • when an individual purchases jewelry made of precious metals or precious stones on a one-time basis or repeatedly within 3 months if the total amount for which it is performed exceeds 600 times the minimum wage;
  • when an individual delivers jewelry made of precious metals or precious stones to the point of purchase on a one-time basis or repeatedly within 3 months if the total amount of the products exceeds 600 times the minimum wage;
  • when an individual delivers scrap containing precious metals or refined precious metals to the purchase point on a one-time basis or repeatedly within 3 months if the total amount of products exceeds 600 times the minimum wage;
  • when an individual or legal entity purchases precious metals or precious stones from points of purchase on a one-time basis or repeatedly within 3 months if their total amount exceeds 600 times the minimum wage;
  • when an individual submits jewelry made of precious metals or precious stones to the commission on a one-time basis or repeatedly within 3 months if the total amount of the products exceeds 600 times the minimum wage;
  • when ordering the manufacture of jewelry made of precious metals or precious stones on a one-time basis or repeatedly within 3 months, if the total amount of the products exceeds 600 times the minimum wage;
  • if it is impossible to complete identification or receive data based on the results of proper verification indicating the inexpediency of establishing a business relationship with the client;
  • in all other cases, if there are reasonable suspicions of the involvement of operations carried out to legalize proceeds from criminal activity, finance terrorism, or proliferation of weapons of mass destruction.

After recognizing the client’s transaction as suspicious, the responsible person decides on further actions concerning the client, including:

  • reporting a suspicious transaction to a specially authorized state body;
  • the need to pay special attention to conducting transactions with the client;
  • termination of relations with the client per the legislation or the contract concluded with him [6].

4. Jewelry sales

Retail trade in jewelry and other products made of precious metals and precious stones can be carried out by business entities — legal entities. There are certain rules of jewelry retail [7]. For example, in specialized jewelry stores, departments, sections of shopping centers or complexes, information on samples of precious metals and precious stones installed in the Republic of Uzbekistan, as well as extracts from regulatory documents establishing the procedure for testing, analysis, and branding of jewelry and other precious metal products, images of prints should be posted in a prominent place assay stamps, impressions of the marks of samples of the established sample, the registration certificate of the Assay Chamber for the right of retail trade, these Rules and other information required by the buyer. Domestic manufacturers licensed to manufacture jewelry are granted the right to independently test and affix jewelry and other products made of precious metals and precious stones. However, entities that violate the procedure for branding and testing are subject to entry into the register of unscrupulous business entities. Jewelry imported from abroad must undergo mandatory testing and branding according to the established requirements.

In addition, business entities have the right to participate in stock trading for the purchase and sale of precious metals, to buy precious metals from the population, including those extracted through prospecting, jewelry, scrap, and waste from production, to open points of purchase and sale of precious metals in the regions of the country [8].

5. Measures for the development of the jewelry industry in Uzbekistan

As mentioned above, recent regulations have contributed to the development of the jewelry business. Among the important changes are the following:

  • Individuals are now allowed to export finished jewelry worth up to 100 million soums outside the customs territory of the Republic of Uzbekistan — without filling out a passenger customs declaration, worth 100 million soums or more — based on a passenger customs declaration;
  • Commercial banks and jewelry manufacturers have been granted the right to:

to purchase precious metals (gold and silver) in the form of measuring plates, as well as granules weighing 5 grams and above for the national currency from the state enterprise Navoi Mining and Metallurgical Combine and Almalyk Mining and Metallurgical Combine JSC for the national currency based on the price of the morning fixing of the London Precious Metals Exchange (in terms of the net weight of precious metals);

to sell the acquired precious metals to other jewelry manufacturers;

  • Individual entrepreneurs engaged in the production of jewelry are allowed to export jewelry outside the customs territory of the Republic of Uzbekistan for commercial purposes by filling out a passenger customs declaration without entering information into the Unified Electronic Information System of Foreign Trade operations;
  • For the period up to January 1, 2026, import customs duties on pearls, diamonds, precious and semi-precious stones (items 7101 – 7104 of the Customs Code ) are set at 0 percent;
  • It is allowed to sell jewelry made of precious metals and precious (semi-precious) stones on the domestic and foreign markets through e-commerce;
  • Verification of the client, his representative, and the beneficial owner (requesting identity documents, certificates of state registration, constituent documents, and other data) by persons carrying out transactions related to precious metals and precious stones is not required in the following cases:

settlements in cash, if the total amount of the transaction does not exceed 600 times the size of the base calculated value;

making mutual settlements in non-cash form or employing plastic cards of individuals, regardless of the total amount of the transaction.

  • From February 1, 2023, to February 1, 2026, discounts are provided for the sale of precious metals produced by Navoi Mining and Metallurgical Plant and Almalyk Mining and Metallurgical Plant to business entities that have created:

– from 100 to 300 jobs in the field of jewelry, in the amount of 1% of the price of the morning fixing of the London Precious Metals Market Association;

– from 300 to 500 jobs, – in the amount of 2 %;

– from 500 to 1,000 jobs, – n the amount of 3 %;

– 1,000 or more jobs — in the amount of 4%.

6. Taxes 

According to paragraph 1 of Article 260 of the Tax Code of the Republic of Uzbekistan, the sale of jewelry for export is subject to VAT at a zero rate. Following sales are exempt from taxation: banking and measuring ingots made of precious metals, bullion (investment) coins made of precious metals (except coins used for numismatic purposes, as well as foreign coins made of precious metals), jewelry, scrap and waste generated during the production of precious metals, measuring plates and granules of precious metals, precious and semi-precious stones, as well as semi-finished products made of precious metals and precious stones.

There are also import customs duties, the amount of which depends on the code. The amount of fees can be found at the link.

[1] – gold, silver, platinum, and platinum group metals (palladium, iridium, rhodium, ruthenium, and osmium) in any form and condition, including native and refined, as well as in raw materials, alloys, semi-finished products, industrial products, chemical compounds, jewelry and other precious metal products, banknotes from precious metals, scrap and waste products of production and consumption.

[2] — natural diamonds, rubies, emeralds, sapphires, alexandrites, and natural pearls in raw (natural) and processed form. Unique amber formations are equated to precious stones.

[3] Article 29 of the Law “On Precious metals and stones”

[4]  https://lex.uz/docs/6118259

[5] an operation with precious metals and precious stones that is in the process of preparation, commission, or has already been committed, in respect of which a person carrying out operations with precious metals and precious stones, based on the criteria established by these Rules, has suspicions about its implementation in order to legalize proceeds from criminal activity or terrorist financing, or financing the proliferation of weapons of mass destruction.

[6] Order of the Head of the Department for Combating Tax, Currency Crimes and Money Laundering at the Prosecutor General’s Office of the Republic of Uzbekistan “On approval of the Rules of Internal Control on countering the legalization of income from criminal activities, financing of terrorism and financing the proliferation of weapons of mass destruction for persons engaged in operations with precious metals and precious stones” dated 03.11.2009 (registration number 2034)

[7]   Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 75 “On approval of the rules of retail trade in the Republic of Uzbekistan and the rules for the production and sale of public catering products (services) in the Republic of Uzbekistan” dated 02/13/2003

[8]  Decree of the President of the Republic of Uzbekistan No.  5721 “On measures to accelerate the development of the jewelry industry in the Republic of Uzbekistan” dated 05/18/2019.