Presidential Decree of the Republic of Uzbekistan No. UP-4434 dated 10.04.2012 “On Additional Measures to Stimulate the Attraction of Direct Foreign Investments” (hereinafter – “Presidential Decree UP-4434”).

Presidential Decree of the Republic of Uzbekistan No. UP-5495 dated 01.08.2018 “On Measures for the Radical Improvement of the Investment Climate in the Republic of Uzbekistan” (hereinafter – “Presidential Decree UP-5495”).

Presidential Decree of the Republic of Uzbekistan No. UP-5635 dated 17.01.2019 “On the State Program for the Implementation of the Action Strategy on Five Priority Directions of Development of the Republic of Uzbekistan in 2017–2021 in the ‘Year of Active Investment and Social Development’” (hereinafter – “Presidential Decree UP-5635”).

2. Introduction

Enterprises with foreign investments are enterprises in which foreign investments consist of at least fifteen percent of the shares (participatory interest, corporate stock) or authorized capital (share capital) (hereinafter referred to as “EFI”). With the purpose of attracting foreign investors (hereinafter referred to as “FI”) and to develop the process of transformation of the economic system, the Republic of Uzbekistan grants certain privileges to EFI, which will be described below.

3. Rights of a foreign investor

In accordance with Investment Law, the privileges of EFI primarily consisted in that it provides certain rights to investors, such as:

Freely conduct investment activities that do not contradict the legislation of the Republic of Uzbekistan;
Enter into contracts with both legal entities and individuals;
Own, use, and dispose of their investments and the results of investment activities, including the right to sell and export such results;
Independently and freely dispose of income after paying all taxes and mandatory payments stipulated by law;
Use property and property rights;
Use their property and property rights (e.g., buildings, equipment) as collateral for obtaining loans or fulfilling other obligations;
Attract loans and borrowings;
Receive compensation for damages in case of unlawful actions or inaction by state bodies, as well as adequate compensation in case of requisition (expropriation) of their investments and other assets;
Patent their inventions, utility models, and industrial designs both abroad and in Uzbekistan;
Obtain residence permits in Uzbekistan under a simplified procedure for foreign nationals, including founders of EFIs who have invested in enterprises engaged in the production of goods and provision of services within Uzbekistan;
Employment in Uzbekistan, access to educational services on an equal basis with citizens of Uzbekistan, and the right to receive secondary and higher education in educational institutions of Uzbekistan (available to holders and family members of “investment visas” and residence permits).

3.1 State guarantees, provided for foreign investors

The state provides several guarantees to investment entities in Uzbekistan, ensuring non-interference and non-discrimination. Government bodies may take action only to eliminate specific legal violations in investment activities. The presence of violations does not grant them the right to interfere with other lawful activities of the investor.
While exercising their rights, investors must not violate the rights and legitimate interests of other investors. It is important to note that when the state participates in entrepreneurial activities as a founder, shareholder, or participant, it has the same rights and obligations as other participants.
The income of investment entities resulting from investment activities may be freely used and reinvested. Any restrictions on use or forced withdrawal of funds from EFI accounts can only be done in accordance with the law.
After ceasing investment activities, a foreign investor has the right to freely repatriate their assets in monetary or in-kind form that were obtained as a result of terminating investment activities.
Foreign currency funds may be freely transferred into and out of the Republic of Uzbekistan by the investor without any restrictions, provided all legally required payments are made.
The state guarantees that requisition, i.e., seizure of property belonging to FIs by the state, is not allowed, except in cases of force majeure, such as natural disasters, accidents, epidemics, or epizootics.
Investments and other assets of investors are not subject to nationalization.

3.2 The provision of privileges and preferences

To attract foreign investments, the state also grants incentives and preferences in certain sectors, for example:

Tax and other payment benefits – EFIs in priority sectors may receive tax incentives under the Tax Code of Uzbekistan;
Transfer of state-owned properties or property rights to investors at preferential or zero redemption value;
Subsidization of interest rates on loans received by investors to implement investment projects.

3.3 Privileges for EFI

The state also provides all necessary conditions and facilities for an EFI, such as opening, using, and disposing of its accounts in any currency, in any bank on the territory of the Republic of Uzbekistan, as well as outside of it. In addition, the state provides an opportunity for an individual entrepreneur to establish subsidiaries, branches, as well as associations and other business associations in Uzbekistan.

4. Additional measures to attract FDI

According to Presidential Decree UP-4434, in investment projects exceeding USD 50 million and with a foreign investor share of at least 50 percent, the construction of external infrastructure (beyond the production site) is financed from the state budget and other domestic sources.

5. Improvement of investment climate

5.1 The provision of land for investment activities

Presidential Decree UP-5495 grants the Chairperson of the Council of Ministers of the Republic of Karakalpakstan, and the khokims of regions and Tashkent city, the right to conclude investment agreements with foreign investors for investment projects with foreign investment not exceeding USD 10 million, within the scope of powers and procedures defined by law.

5.2 Privatized enterprises and the development of competitiveness

The Presidential Decree stipulates reducing the minimum foreign investment share in a company’s charter capital from 30% to 15%, and reducing the minimum charter capital requirement for EFIs from 600 million UZS to 400 million UZS.
For joint-stock companies, the minimum charter capital is now 400 million UZS.
The state duty for registering EFIs has been reduced threefold.
The requirement for foreign legal entities to be among the founders of EFIs has been abolished.
Regarding contracts, the Decree abolished the requirement to conclude export contracts for fruit and vegetable products at prices not lower than those published by JSC “Uzagroexport”, and the mandatory customs clearance of these products based on an export contract. Now, clearance may be done based on invoices, also without price restrictions tied to “Uzagroexport”.

5.3 Benefits for foreign nationals and stateless persons

Foreign citizens and stateless persons who invest in Uzbekistan an amount not less than 8,500 times the base calculation value established at the time of investment (e.g., through acquisition of shares and stakes in business entities or creation of a foreign enterprise), are eligible for a multiple-entry three-year visa with unlimited extensions without having to leave Uzbekistan.

6. Additional Privileges

Presidential Decree UP-5635 grants the following privileges:

A three-year “investment visa” is issued to founders (participants) of EFIs and their family members, with the possibility of extension without leaving Uzbekistan;
Foreign nationals, including founders (participants) of EFIs who have invested at least USD 3 million into enterprises for manufacturing goods and services in Uzbekistan, are issued a 10-year residence permit under a simplified procedure;
Foreign investors holding a residence permit or an “investment visa,” and their family members, may use medical and educational services on the same terms as citizens of Uzbekistan;
Temporary registration for foreign investors, foreign specialists attracted by them, and their family members is carried out in the locality where the investment project is being implemented, for the duration of the visa (or for one year in the absence of a visa), without the need for re-registration when visiting other regions of the country.

6.1 Additional privileges for the individual entrepreneur

EFIs may invest by acquiring shares in the charter capital of existing or newly established business entities, issue loans, and securities.
They may also invest by selling shares in investment companies to domestic and foreign investors, or in any other form not prohibited by law.

Privileges of Enterprises with Foreign Investments

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