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Doing Business in Uzbekistan Deloitte Uzbekistan 2019 Brochure / Report Title Goes Here | Section Title Goes Here Doing Business in Uzbekistan Deloitte Uzbekistan 2019 Brochure / report title goes here | Section title goes here Introduction to Uzbekistan 04 Types of business presence 14 Employment regulations 17 Taxation 18 Customs duties 21 Tax administration 23 Free economic zones 25 02 Doing Business in Uzbekistan This guide has been designed as a basic reference guide for companies and individuals interested in doing business in Uzbekistan. The information in it is not exhaustive. Legislation and its interpretation change frequently in Uzbekistan and you should seek professional advice relating to your specific circumstances before making business decisions. Deloitte accepts no responsibility for the consequences of acting on the basis of this guide without seeking such advice. 03 Brochure / report title goes here | Section title goes here 04 Doing Business in Uzbekistan Geography Sixteen members of the Senate are Uzbekistan stretches 1,425 kilometres from appointed by the President from people west to east and 930 kilometres from north with outstanding experience, achievements to south, bordering Turkmenistan to the and contributions in science, literature southwest, Kazakhstan and the Aral Sea to and art. The President, with Constitutional the north, and Tajikistan and Kyrgyzstan to Court approval, is entitled to dissolve the the south and east. It also shares a short Oliy Majlis. border with Afghanistan to the south. There are five political parties in Uzbekistan is a dry, double-landlocked Uzbekistan: the Adolat Social Democratic country with intensely cultivated and Party, the National Democratic Party irrigated river valleys. of Uzbekistan, the Democratic Party Uzbekistan is divided into 12 regions “Milliy Tiklanish", the Liberal Democratic and the autonomous Republic of Party “Movement of Entrepreneurs and Karakalpakistan. According to the State Businessmen” and the Ecologic Party of Statistics Committee, the total population Uzbekistan. at 1 January 2019 exceeded 33 million. The Cabinet of Ministers is responsible for History overall regulation of the national economy. Regulatory authority has been entrusted Uzbekistan history in terms of culture to the Ministry of Finance (fiscal and and art stretches back many centuries. taxation policy), the Central Bank (banking In recent years, the country has found regulation and monetary policy), the State its place on the world stage due to its Tax Committee (tax collection), the State significant natural resources. The legendary Customs Committee (collection of customs Uzbek warrior Amir Temur conquered payments), the Ministry of Economy vast areas of Asia during the 15th century. (development and implementation of The Khanates of Khiva and Kokand and long-term social and economic strategy), the Emirate of Bukhara ruled the region the Ministry of Foreign Economic Relations, during the 18th and 19 th centuries. The 19th Investment and Trade (foreign trade century saw a serious struggle between and attraction of foreign investments), Russia and Great Britain for influence in the Ministry of Communication and Central Asia, but soon after the communist Information Technologies (IT and revolution in 1917, Soviet power was communication), the State Committee established in September 1919, and in May for Privatisation, Demonopolisation and 1925, Uzbekistan became part of the USSR. Development of Competition (privatisation Independence from the Soviet Union policy). was declared on 31 August 1991, with the country reverting to being known as the Uzbekistan is a member of the Republic of Uzbekistan. Commonwealth of Independent States (CIS), International Monetary Political structure Fund (IMF), World Bank Group, United Uzbekistan is a presidential republic with Nations, Organisation of the Islamic the Oliy Majlis (a parliament) consisting of Conference, Asian Development Bank, the Legislative Chamber (a lower chamber) Islamic Development Bank, the Shanghai and the Senate (an upper chamber). Cooperation Organisation and many other The Legislative Chamber consists of international organisations. 150 members elected based on ballot voting for five years. Senate members are elected from each region of Uzbekistan, Karakalpakistan and Tashkent. 05 Doing Business in Uzbekistan Economy Privatisation Despite the economic downturn in Russia, On April 2019, adoption of the Presidential which has adversely affected exports, Decree №ПП-4300 initiated a large- payments and investments, the Uzbekistan scale privatization program. Indicating economy has continued its strong government’s intention to liberalize the performance, with over 5.1% growth in economy and increase its efficiency by 2018. The government recently adopted selling its shares to potential foreign and measures to develop public infrastructure; local investors. provide tax breaks for and small and The decision approved the sale of shares of medium-sized export companies; increase about 64 business entities in the chemical, public sector salaries, and commercial bank oil and gas, engineering, banking and recapitalisation. insurance sectors. The government has declared its full The Presidential Decree also approves a commitment to honour its IMF Article VIII list of potential investment proposals for obligations. foreign investors and a list of public-private Since gaining independence in 1991, partnership projects to be developed in Uzbekistan has adopted an evolutionary 2019. reform strategy, with emphasis on state Legal system control, import reductions, and energy self- The Uzbekistan legal system represents sufficiency. itself as the civil law system and To protect locally manufactured goods, the incorporates the Constitution of the state adopts a restrictive policy towards Republic of Uzbekistan, Laws of the imports, manifesting itself in high import Republic of Uzbekistan protecting private and excise duties and active import property and guaranteeing owner rights; substitution. on investment activities; guaranteeing the The importance of cotton production freedom of entrepreneurial activity, the and exports to the Uzbekistan economy Civil Code of the Republic of Uzbekistan as is paramount, although it is production well as other Codes regulating significant has decreased later 2.4 times in 2018 areas of business, Decrees of the President compared to 2017 according to the State of the Republic of Uzbekistan, and Committee on Statistics. It is grown Resolutions of the Cabinet of Ministers throughout the country, with the largest and other normative legal acts. Economic production areas in the Surkhandarya, disputes, including intellectual property Kashkadarya, Djizakh, Fergana Valley, claims, can be settled in the Higher Bukhara, Samarkand and Syrdarya regions. Economic Court or the Supreme Court. Mining is another important economic Arbitration is regulated by the Economic sector, and after cotton, precious metals Procedural Code, the Law on arbitration (including gold, silver, platinum and copper) courts, and the Law on the activities of are the country’s second most significant commercial enterprises. export. Banking system Value-added production is relatively Banking activities in Uzbekistan are important in many regions, for example carried out by banks established and an automobile assembly plant in Andijan licensed according to the Uzbekistan laws (GM Uzbekistan), automobile power plant and regulated by the Central Bank of the in Tashkent (GMPT), bus production plant Republic of Uzbekistan (“CBU”). The main in Samarkand (Isuzu) and automobile purpose of CBU is to ensure stability of the assembly plant in Khorezm (GM local currency. CBU also establishes the Uzbekistan). rules for currency regulation and currency control, controls monetary policy, 06 Doing Business in Uzbekistan regulates settlements between business At present, there are 29 commercial banks entities and activities of local commercial operating in Uzbekistan with licences to banks, manages official foreign exchange perform all types of banking transactions, reserves, and licenses banking and credit including international transactions in activities in Uzbekistan. CBU reports to the foreign currencies. Senate of Oliy Majlis. Stability of legislation Commercial banks in Uzbekistan are The Law on Guarantees and Protective usually established in the form of a joint Measures for the Rights of Foreign stock company and can be split into three Investors protects against adverse categories: changes in investment, tax and customs • banks with different levels of state law within 10 years, starting from the ownership (the National Bank for Foreign date of registration of the legal entity. If Economic Activity, Uzpromstroybank, tax law is adversely amended during that Agrobank, Halq Bank, Asaka Bank, period, investors and investment targets Qishloqqurilishbank, Ipoteka Bank and are entitled to apply the more favourable Microkreditbank). This group accounts tax conditions, including VAT, for 10 years for more than 70% of the Uzbekistan starting from their incorporation date, if banking system in terms of capital; total investment amounts to more than US$ 5 million. • private banks (Asia Alliance Bank, Trast Bank, Ipak Yoli Bank, Hamkorbank and others); • commercial banks with foreign investment (Korean Development Bank of Uzbekistan, Savdogarbank and the Uzbekistan-Turkish Bank). 07 Doing Business in Uzbekistan National treatment Exchange controls The Law on Guarantees and Protective Under the current currency control Measures for the Rights of Foreign regulations in Uzbekistan,
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