Entering the market of Uzbekistan presents a unique opportunity for foreign investors due to the country’s extensive economic liberalisation efforts and its strategic position in Central Asia.
The government has streamlined business registration and introduced numerous incentives to attract foreign direct investment, with a particular focus on key growth sectors. Establishing a business requires careful planning regarding the legal structure, a largely digitalised registration process, and adherence to local tax and labour requirements.
Choosing the Legal Entity and Investment Structure
Foreign entrepreneurs have several options for establishing a legal presence in Uzbekistan, with the choice depending on the scope of planned commercial activities and investment size.
The most common and flexible legal structure is the Limited Liability Company (LLC). It is favoured by foreign investors because it permits 100% foreign ownership in most sectors and limits the liability of the founders to the extent of their contributions to the authorised capital. For a standard LLC, there is no minimum charter capital requirement, and the registration process is relatively fast, often taking only one to two business days after all documents are submitted.
For companies that meet specific investment thresholds, the status of a Company with Foreign Investments (CFI) is applicable, which unlocks further incentives. To be classified as a Joint Venture LLC (JV LLC), the minimum authorised capital must be at least 400,000,000 Uzbek Soums (UZS), with the foreign investor’s share being at least 15%. For a Foreign Enterprise (FE), the minimum capital is also UZS 400,000,000, but the foreign share must be 100%.
Alternatively, a foreign company may establish a Representative Office (RO), which is limited to non-commercial activities such as market research, marketing, and accreditation. An RO does not have the legal right to conduct income-generating business operations. For foreign companies that conduct commercial activities in Uzbekistan for a period exceeding 183 days without establishing a legal entity, a Permanent Establishment (PE) status may be triggered under the Tax Code, which requires registration with the Tax Committee for corporate taxation purposes.
Registration Process and Documentation
The process for registering a new legal entity, such as an LLC, has been significantly digitalised and simplified. The registration is typically handled through the “One Stop Shop” centres or the unified state service portals, such as my.gov.uz or fo.birdarcha.uz.
Key Steps for Registration
First, the company name must be selected and reserved using the relevant online platforms. Second, the founding documents must be prepared. These typically include the Charter (Articles of Association) and, if there is more than one founder, a foundation agreement, all of which may require notarisation and certified translations into Uzbek or Russian.
Third, all foreign founders and directors must obtain a local Personal Identification Number of an Individual (PINI). Foreign individuals and representatives must also obtain an Electronic Digital Signature (EDS), which is essential for filing forms and signing documents online within the government portals.
Fourth, the applicant must secure a legal address for the company, which is confirmed by a lease agreement or a guarantee letter from a landlord, and the cadastral number of the premises must be provided during the application.
Fifth, the complete package of documents is submitted via the online portal, and the relevant state duty is paid. For a standard LLC, the fee is approximately 270,000 UZS, but for a company with foreign investments (CFI) exceeding UZS 400,000,000, a higher state fee is applicable.
Upon successful registration, the company receives a state registration certificate and a Taxpayer Identification Number (TIN). Following registration, a corporate bank account must be opened to deposit the minimum authorised capital, if required, and the company seal must be produced.
Investment Incentives and Special Economic Zones
Uzbekistan actively encourages foreign investment by offering a range of substantial tax and customs incentives, particularly within designated zones and for projects in priority sectors.
Free Economic Zones (FEZ) and Tax Holidays
The country operates several Free Economic Zones (FEZs), such as those in Navoi, Urgut, and pharmaceutical zones. Companies operating within these zones benefit from significant tax exemptions, including Corporate Income Tax (CIT), property tax, and water usage tax for specific periods, which are generally tied to the volume of investment. For example, an investment exceeding $15 million USD can qualify for a tax exemption period of up to 10 years. Furthermore, FEZ participants are often granted customs benefits, such as exemptions on customs payments for imported construction materials and technological equipment not produced locally.
IT Park Residency
For the rapidly expanding Information and Communication Technology (ICT) sector, the IT Park offers a highly attractive package of benefits for its residents. Companies that meet specific criteria, such as a commitment to export-oriented services, can benefit from a 0% rate on Corporate Income Tax, property tax, and social payments until at least 2040. IT Park also streamlines the hiring of foreign employees by removing restrictions and quotas.
General Investment Protection
In a key provision designed to provide stability for long-term investors, the legislation ensures that if subsequent laws worsen the conditions for foreign investors, the investor may apply the original, more favourable legislation that was in force on the date of their investment for a period of up to 10 years. This guarantee applies to companies with significant investments and serves as an important measure of protection against regulatory changes.
Key Investment Sectors and Strategic Opportunities
Uzbekistan’s strategic economic focus is on sectors that drive modernisation and export growth, aligning with its extensive privatisation programme.
The Renewable Energy Sector stands out as a top priority. With over 300 days of sunshine annually, there are massive opportunities in large-scale solar and wind power projects, often developed through Public-Private Partnerships (PPPs). The government is actively seeking foreign investment to modernise the energy grid and transition away from a natural gas dependency.
The Information and Communication Technology (ICT) and BPO sectors are booming, driven by a young, educated population and government support through the aforementioned IT Park.
Other strategic areas include Agriculture and Food Processing, where there is demand for modern processing, packaging, and logistics technologies to improve the sector’s output and export quality. The extensive Privatisation Programme, which includes state-owned banks, utilities, and manufacturing companies, offers foreign investors opportunities to acquire significant state assets. Furthermore, the Tourism sector, focused on developing the historical Silk Road cities like Samarkand and Bukhara, is a high-growth area receiving government incentives for infrastructure development.
Compliance, Labour, and Banking
A new company must immediately address ongoing compliance, including accounting, payroll, and banking.
For foreign citizens appointed as directors or employees, a work permit is generally required from the Agency for External Labour Migration. However, an important temporary exemption exists: the first appointed foreign director of a Company with Foreign Investments (CFI) is often released from the work permit requirement for the first three months of their appointment.
In terms of banking, foreign currency accounts are available, but corporate accounts are subject to rigorous Know-Your-Customer (KYC) checks and currency control regulations. It is highly advisable to start the banking conversation early as account opening can often take several weeks. Maintaining books and filing taxes must be done in compliance with Uzbek standards, requiring local accounting expertise.
The recent introduction of a special tax regime for foreign individuals, where payment of a substantial fee exempts their overseas income from personal income tax, further demonstrates the government’s commitment to attracting foreign capital and high-net-worth residents. Overall, a successful entry into the Uzbek market requires leveraging the simplified digital registration process, capitalising on the significant investment incentives, and securing competent local legal and accounting support.