Uzbekistan expands preferential taxation levied on foreign investment firms

Uzbekistan, Tashkent, April 11 / Trend D. Azizov /

In Uzbekistan newly established enterprises where foreign investment amounts to at least $5 million, they reserve the right to pay for 10 years those taxes that operated at the time of registration. Such a right was granted to them by the decree of President Islam Karimov 'On additional measures to stimulate foreign direct investment'.

According to a decree published on Wednesday the right is reserved for those companies with foreign investments (FDI) when paying income taxes, taxes on the property, for the improvement and development of social infrastructure, the single social tax, single tax, as well as mandatory contributions to the Republican Road Fund and Reconstruction Fund, refurbishment and equipping of educational and medical institutions.

In addition, the president approved the procedure according to which under investment projects worth more than $50 million and with a share of foreign investors no less than 50 per cent of the construction of the necessary external engineering and communication networks is carried out at the expense of budget funds and other domestic sources of financing.

Also it is strictly forbidden to establish additional requirements and limitations for the FDI by supervisors and regulators, as well as local authorities.

The State Tender commission has the right to sell at the request of foreign investors to set up FDI illiquid facilities on the balance of state authorities at zero redemption cost, without the competition by signing direct contracts with the investor under specific investment obligations.

The decree also provides for simplification of procedures for obtaining multiple entries (up to 12 months) for investors involved in investment projects.

Relevant ministries and agencies are instructed to ensure access of foreign investors to the economic information necessary for the implementation of investment activities, including information on the state budget and its execution, monetary policy and foreign trade figures.

In February 2012 the lower house of the Uzbek parliament adopted the amendments and supplements to the law 'On foreign investments' providing for principle of the registration of foreign investment (FDI) in a 'single window' and visa regime simplification, the right to own and freely dispose of income (including its unhindered repatriation), obtained as a result of investment activities, 'subject to payment of taxes and other obligatory payments in accordance with the laws of the republic'.

A separate article of the amended law specified the right to the preferential application of tax and customs legislation within 10 years from the date of registration for FDI, in which the contribution of the foreign investor is $5 million or more.

In March the Uzbek Senate (upper house) rejected a law on introducing amendments and addenda to the law 'On foreign investments', sending it for revision.

Under the Uzbek law, enterprises with foreign investment are FDI with an authorised fund of at least $150,000, in which the share of foreign capital is 30 per cent.

According to official statistics, in Uzbekistan the total amount of capital investment increased in 2011 in comparable prices by 12.5 per cent and amounted to $10.7 billion, including the volume of mastered foreign investment at $2.686 billion against $2.794 billion last year (a 3.9 per cent decrease).

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