Economy and Business Climate
During the years of Independence, Uzbekistan has accomplished large-scale economic reforms. In the past several years, despite the global financial crisis, Uzbekistan's GDP amounted to 7 to 8 percent. Today, Uzbekistan is a dynamically developing country, where all sectors of the economy are functioning successfully. These include aviation, the automobile industry, machinery, electronics, chemical, textile, pharmacological industries, food processing, agriculture, and others.
Measures for improving the investment environment have significantly increased the volume of foreign direct investments (FDI), which amounted to 85 percent in gross investments in 2011. Over the years of reform, total investments into the economy of Uzbekistan has exceeded USD $100 billion, $35 billion of which are FDIs.
Foreign companies investing in Uzbekistan get an opportunity to enter the largest and most dynamically growing markets among CIS countries, Asia, and Europe. Agreements on Most-Favored-Nation treatment with 45 countries, including the U.S., Japan, China, Korea, EU countries, and the free-trade area among CIS countries, significantly enhance the competitiveness of goods produced in Uzbekistan.
By legislation, foreign investors are given the following guarantees:
- Stable legislation for ten years;
- Foreign investments and other foreign assets are not subject to nationalization;
- Income derived in Uzbekistan can be used at the discretion of a foreign investor; and
- Insurance protection and guarantees against political and other risks.
Incentives and preferences include:
Income tax rate decreases, if the profit is invested into business expansion and modernization, and
If the share of export goods and services in the total sale is:
- From 15 to 30 % - the fixed income tax rate is decreased by 30 %;
- From 30 % and over - the fixed income tax rate is decreased by 50 %.
- Property sale, if it is sold within the framework of state property privatization;
- Sale of goods, bought by legal entities on loans, extended by international and foreign governmental financial institutions;
- Sale of property, transferred as an investment liability;
- Imported technological equipment, property and raw materials to be used in the production process; and
- Newly established enterprises within a two-year period as of the date of incorporation.
When calculating property tax, the taxable base decreases by the amount of:
- Equipment, financed by loan, for five years;
- Property, received in leasing, for the period when the leasing contract is in force; and
- Newly installed technological equipment for a five-year period.
Property, goods, services, and technological equipment are exempted from customs duties if utilized for production purposes.
Along with customs and tax incentives, there are a number of benefits granted to enterprises located in the regions. These enterprises are exempted from profit tax levied on legal entities, property tax on legal entities, tax on modern services, utilities and development of social infrastructure, unified tax payment, and obligatory deductions into the Republican Road Fund. Tax incentives are applied if investments are made into radio-electronic industry and production components for computers, light industry, textile, construction materials, industrial production of poultry and eggs; food industry; dairy; chemical; and the pharmaceutical industry.
The incentives are granted if the volume of FDI is:
- from USD $300,000 up to USD $3 million - for a three-year period;
- over USD $3 million up to USD $10 million - for a five-year period;
- over USD $10 million - for a seven-year period.
Within investment projects worth more than USD $50 million and with a share of foreign investors no less than 50 percent, the construction of the necessary external engineering and communication networks will be carried out at the expense of national budget funds and other domestic sources.
Business registered in the free industrial economic zone "Navoi" are exempted from customs duties, land, property, profit taxes, social infrastructure development tax, unified tax payment (for small businesses), and compulsory contributions to the Road and Schools Funds, depending on the volume of deposited foreign direct investments. The Special Industrial Zone "Angren" will be operating for 30 years with an option for further extension. Throughout the duration of the zone, it will provide a special tax regime and customs facilities.