July 23, 2024
Preferences and benefits for special economic zones
Special Economic Zones (SEZs) are territories with a special legal regime created to attract investment and accelerate economic development. These zones offer tax and customs benefits, as well as guarantees of legal protection for participants. SEZs can be of different types, including free economic zones, scientific and technological zones, and tourist and recreational zones. SEZ participants enjoy tax, customs and legal benefits, including exemption from a number of taxes and customs duties, while the main objective is to create favorable conditions for business and stimulate regional growth.
Legislation.
- The Customs Code of the Republic of Uzbekistan;
- The Tax Code of the Republic of Uzbekistan;
- Law of the Republic of Uzbekistan “On Special Economic zones” No. 604 dated 02.17.2020;
- Resolution of the President of the Republic of Uzbekistan No. 5243 dated 14.09.2021 “On measures to further support participants in special economic zones”;
- Decree of the President of the Republic of Uzbekistan No. 5600 dated 21.12.2018 “On measures to further improve the system of coordination and management of free economic zones”;
- Decree of the President of the Republic of Uzbekistan No. 153 dated 13.06.2022 “On additional measures to improve the efficiency of special economic, small industrial, youth industrial and entrepreneurial zones”.
Types of special economic zones.
A special economic zone is a territory with defined borders and a special legal regime, specially allocated in order to attract foreign and domestic investments, high technologies and managerial experience for accelerated socio-economic development of the relevant region.
They can be created in the form of the:[1]
– free economic zones; [2]
– special scientific and technological zones; [3]
– tourist and recreational areas; [4]
– free trade zones. [5]
-special industrial zones.[6]
| List of preferences and benefits for special economic zones | ||
| General provisions | Examples | |
| Special legal regime | A participant in a special economic zone has the right to enjoy guarantees of legal protection, benefits and preferences provided for by law for participants in special economic zones. | Participants in special economic zones, when changing tax legislation, have the right to apply, during the period of validity of benefits, but not more than ten years, the rules and regulations for the payment of taxes, fees and other payments in force on the date of their inclusion in the Register of Participants in the special economic zone, with the exception of the rules and provisions of legislative acts regulating the taxation of excisable goods. In addition they have the right to use conditions convenient for them, forms of payment and settlements for exported and imported goods.
In special economic zones, compliance with all guarantees and benefits for participants in special economic zones provided for by law is ensured. Additional guarantees and benefits may be provided by the decision of the President of the Republic of Uzbekistan. Losses, as well as lost profits and moral damage caused to legal entities and individuals as a result of unjustified interference in their activities by state and other bodies or officials, are subject to compensation or compensation in court. |
| Special customs regime | A special customs regime may provide for:
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Thus, they are exempt from paying: – customs duties (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 an investment agreement during the construction period;[8] -customs duties (except for customs clearance fees) upon import of technological equipment 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 into the territory of the Republic of Uzbekistan. |
| Special tax regime |
Participants in special economic zones have the right to receive a deferral on payment of value added tax when importing goods for up to 120 days. The amount of value-added tax resulting from the excess of the amount of value-added tax attributable to the offset over the amount of accrued tax is reimbursed to the participant of the special economic zone according to a simplified procedure within seven days. The amount of value added tax paid is reimbursed to participants of special economic zones from the republican budget of the Republic of Uzbekistan in accordance with the procedure determined by the Cabinet of Ministers of the Republic of Uzbekistan. |
Participants of the free economic zone are exempt from paying: [9] land tax, income tax, property tax of legal entities, a single tax payment for microfirms and small enterprises, as well as mandatory contributions to the Republican Road Fund under the Cabinet of Ministers of the Republic of Uzbekistan and the extra-budgetary Fund for the development of the material and technical base of educational and medical institutions under the Ministry of Finance of the Republic of Uzbekistan; |
| Investments |
Benefits are provided for a period of 3 to 10 years, depending on the amount of investments made, including in the equivalent of: from 300 thousand US dollars to 3 million US dollars — for a period of 3 years; from 3 million US dollars to 5 million US dollars — for a period of 5 years; from 5 million US dollars to 10 million US dollars — for a period of 7 years; from 10 million US dollars and above — for a period of 10 years, with the application over the next 5 years of the income tax rate and a single tax payment in the amount of 50 percent lower than the current rates. |
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| Currency regime | The regulation on the functioning of the special currency regime in special economic zones (SEZ) implies, in particular, that the participants of the SEZ independently choose commercial banks of Uzbekistan for servicing and have the right to open accounts in foreign currency in one or several commercial banks, as well as have accounts abroad. Revenue in foreign currency, including from the export of goods (works, services), is subject to mandatory crediting to the accounts of SEZ participants. Settlements and payments in foreign currency are allowed within the zones, while even non-SEZ participants resident economic entities of Uzbekistan have the right to sell goods and services to SEZ participants for foreign currency. | |
| Additional |
SEZ participants have the right to – to lease land plots through an electronic online auction, to use buildings, structures, including on lease, and to build infrastructure facilities for carrying out production activities in accordance with the procedure provided for by this Law; – require the directorate of the special economic zone to provide its engineering, communication and road transport infrastructure in a timely manner in accordance with the investment agreement and network schedules for the implementation of the investment project; – to use on equal terms all types of services provided by the directorate of the special economic zone to the participants of the special economic zone, including on a contractual basis; – to carry out, at their own expense, the construction of infrastructure facilities necessary for the implementation of the investment project, in accordance with the general plan of the special economic zone, etc. |
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In addition, a number of separate benefits are provided, depending on the type of special economic zone. For example, residents of the technopark (it-park.uz ) are exempt from paying all types of taxes and mandatory contributions to state trust funds, including social tax, until January 1, 2028. Income earned before January 1, 2028 by employees under employment contracts with technopark residents is taxed on personal income at a rate of 7.5% (instead of the usual 12%). Residents of the technopark can carry out only permitted types of activities related to information technology, as well as monthly, no later than the 20th, transfer deductions to the technopark in the amount of 1% of total income.
[1] Article 9 of the Law “On Special Economic zones”
[2] The territory intended for the creation of new production facilities, the development of high-tech production, active involvement in the development of modern competitive, import-substituting, export-oriented finished industrial products, as well as ensuring the development of industrial, engineering and communication, road transport, social infrastructure and logistics services.
[3] The territory where scientific organizations and other organizations in the field of scientific activity (technology parks, technology distribution centers (technology transfer), innovation clusters, venture funds, business incubators and others) are concentrated in order to develop innovative infrastructure.
[4] The territory that is being created for the implementation of investment projects to create modern tourist infrastructure facilities in it (hotel complexes, cultural and recreational, shopping and entertainment and other tourist facilities), special functional and seasonal recreational recreation areas with the necessary conditions for servicing tourists.
[5] Consignment warehouses, territories with special customs and tax regimes, as well as sites for processing, packaging, sorting, and storage of goods.
[6] The territory where a special regime of management, economic and financial activities is being introduced. Special industrial zones include service and production zones, which are formed by allocating land plots to create the necessary administrative, scientific and technological, industrial, engineering and communication, road transport and social infrastructure.
[7] The special customs regime does not apply to the transit of goods through the territory of the special economic zone.
[8] Subparagraph 13 of the second part of Article 297 of the Customs Code of the Republic of Uzbekistan, paragraphs 2 and 3 of the Decree of the President of the Republic of Uzbekistan dated May 31, 2018 No.3756 “On measures to radically improve the procedure for granting benefits and preferences”.
[9] In accordance with paragraph 3 of the Decree of the President of the Republic of Uzbekistan dated October 26, 2016 No. 4853 “On additional measures to activate and expand the activities of free economic zones”. 