April 20, 2005
With a view of further improving the investment climate in the country, broadly attracting private direct foreign investments to realize the privatization programs, modernize, technologically re-equip and reconstruct the production, create new jobs in labor-dense areas in the republic, as well as provide for the reliable legal protection and guarantees for foreign investors:

1. Starting July 1, 2005, the economic enterprises, which draw the direct private foreign investments shall be exempt from the income taxes, property taxes, social infrastructure and territory improvement taxes, environment taxes, single taxes imposed on micro-firms and small companies, as well as mandatory payments to the Republican road fund.

To determine that the said tax privileges shall be granted provided the following volumes of direct private foreign investments:

From US$ 300,000 up to US$ 3 million ? for 3 years; More than US$ 3 million up to US$ 10 ? for 5 years; More than US$ 10 million ? for 7 years.

2. To provide that the tax privileges, as set in item 1 of this Decree, shall be applied given the following conditions:

To locate the said enterprises in the labor-dense areas ? the Republic of Karakalpakstan, Jizzakh, Kashkadarya, Syrdarya, Surkhandarya, and Khorezm provinces, as well as countryside residence areas in Navoi, Andijan, Namangan, and Ferghana provinces;

The private direct foreign investments by foreign investors with no guarantees from the Republic of Uzbekistan;

The share of foreign participants in the company founding capital must account for no less than 50 percent;

To make private direct foreign investments after the state registration of the said companies; To make foreign investments in the form of a freely convertible currency or the new latest technological equipment;

To channel income, gained as a result of the said privileges during the terms of their application, to the re-investment aimed at further company development.

3. The Interagency Council on foreign investments and loans at the Cabinet of Ministries of the Republic of Uzbekistan shall be charged with defining the conformity of companies, to which the private direct foreign investments are channeled, with the sectors of economy, as envisioned in appendix to the this Decree.

4. To set, that:

The interest rates on long-term loans, as drawn by companies with foreign investments with no guarantees from the Republic of Uzbekistan, shall not be included to the tax-basis, whilst calculating the income taxes;

The losses from the main activity, incurred by the new companies, established with foreign investments, are extended for up to 5 years by equal shares to pay off at the expense of income taxes at the time followed by the financial year, when such losses were incurred.

In case of deterioration of investment conditions by the said legislation, the privileges secured by item 1 of this Decree, shall be applied during the entire term, which they were granted for.

5. Provided that the company, that obtained privileges in line with item 1 of this Decree, discontinues its activity earlier than a year after the expiration of the term, for which they were given, the repatriation of the foreign investor profits and export of capital shall be carried out only after reimbursement to the budget of the sum of the granted privileges.

6. The Ministry of Finance jointly with the State Committee for Taxes, the Ministry of Economy, the Chamber of Commerce and Industry of the Republic of Uzbekistan within a month shall elaborate and approve in line with established procedure the Provision on the application terms of tax privileges for direct foreign investments set in this Decree.

7. To take notice that guarantees granted to foreign investors under Section 4, Article 3 of the Law of the Republic of Uzbekistan ?On Guarantees and Measures to Protect the Foreign Investor Rights? shall be applied in the following cases:

The increase in the volume (rate) of tax on income, gained in the form of dividends, which are paid to the foreign investor;

The introduction of additional terms, which complicate the procedure of repatriation, or diminish the volume of the foreign investor income (profit) transferred to abroad, except for the cases when the state suspends the repatriation of the foreign investor funds under conditions of non-discriminatory application of legislative documents due to the insolvency and bankruptcy of the enterprise with foreign investments, or protection of the creditor rights, criminal offences or administrative violations of law by the foreign investor ? the natural person, or other necessity of suspension of such a repatriation in conformity with the court or arbitration decision;

The introduction of quantitative limitations for the volume of investing and other additional requirements on the volume of investments to enterprises with foreign investment;

The introduction of limitations on the share-based participation of the foreign investor in authorized fund of companies in the republic;

The introduction of additional procedures of processing and extending visas for foreign investors, as well as other additional requirements on channeling the foreign investment.

8. The Cabinet of Ministers of the Republic of Uzbekistan within ten days shall approve the Provision on the applications terms of guarantees specified under Section 4, Article 3 of the Law of the Republic of Uzbekistan ?On Guarantees and Measures to Protect the Foreign Investor Rights?.

In this, to envisage that in case of emergence of any of the aforesaid forms of deterioration of investment conditions, the foreign investor shall notify the relevant empowered body on application of the said guarantee.

9. The Ministry of Justice of the Republic of Uzbekistan jointly with interested ministries and agencies within a month shall submit to the Cabinet of Ministries the proposals on amendments and addenda to the current laws in connection with adoption of the this Decree.

10. The First Deputy Prime Minister of the Republic of Uzbekistan R.S. Azimov shall be charged with supervision of the execution of this Decree.

President of the Republic of Uzbekistan I. Karimov

Tashkent, April 11, 2005


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