Business outlook in Uzbekistan in 2024

Business outlook in Uzbekistan in 2024

The year 2024 brings a mix of opportunities and challenges for those considering doing business in Uzbekistan. The Uzbek government's efforts to attract foreign investment and improve the business environment make the country an attractive destination for entrepreneurs and investors alike.

Key business opportunities

• Export potential: Uzbekistan's strategic location in Central Asia positions it as a promising export gateway, facilitating access to the wider regional market through various trade agreements.
• Skilled workforce: Uzbekistan has a young and increasingly skilled workforce, making it an attractive choice for industries requiring skilled and semi-skilled labor.
• Infrastructure development: significant government investment in infrastructure, including transportation and logistics, will support trade and business activities and create an efficient environment for trade.
• Economic growth: robust economic growth is underway, driven by reforms in various sectors, including agriculture, manufacturing, and services. These reforms are opening doors to diversified market opportunities.
• Investment climate: The Uzbek government's commitment to attracting foreign investment is evident through incentives such as tax benefits, reduced import duties, and simplified procedures for foreign investors. UzInvest plays a key role in guiding foreign investors through the business establishment process.
• Legal reforms: ongoing legal reforms aim to improve the business environment by protecting investors' rights and streamlining bureaucratic processes related to business registration and operations.
• Strategic location: situated at the crossroads of Europe and Asia, Uzbekistan's central location provides access to a vast market of over 70 million people, making it an attractive hub for international trade and logistics companies.
• Natural resources: Uzbekistan's abundant natural resources, including gold, copper, uranium, and natural gas, provide significant opportunities for companies in the mining and energy sectors.
• Tourism: the country is known for its historical and cultural heritage, which attracts tourists to cities such as Samarkand, Bukhara, and Khiva. The growing tourism sector offers opportunities in hospitality, travel and related services.
• Agribusiness: Uzbekistan has a significant agricultural sector, and there is potential for investment in agricultural modernization, including agro-processing and the export of fruits and vegetables.

Norms and requirements for foreign businesses in Uzbekistan in 2024

If you're considering opening a company in Uzbekistan, it's crucial to understand the existing norms and requirements imposed by local authorities on foreign businessmen.

• Corporate tax: 15%
• VAT: 15%
• Dividends: 5-10%
• Royalty: 20%

Initiating a company in Uzbekistan: Options and requirements

For foreign investors and entrepreneurs looking to establish a legal entity in Uzbekistan, there are several options to consider. Here are the main types of companies that can be created in Uzbekistan:

1. Limited Liability Company, or LLC
   1. A common choice for small and medium-sized businesses.
   2. Offers a flexible management structure.
   3. Limits the liability of its members.
2. Joint Stock Company, or JSC
   1. Suitable for larger enterprises.
   2. It can issue shares and has a more complex structure than an LLC.
3. Limited Liability Company in a Free Economic Zone, or FZ LLC
   1. If you're interested in benefiting from free economic zones, you can establish an LLC in these zones.
   2. Often comes with tax breaks and preferential terms.
4. Limited Liability Partnership, or LLP
   1. A form of partnership in which the liability of each partner is limited.
   2. Typically used for professional service businesses.
5. Representative office
   1. Foreign companies can open representative offices in Uzbekistan to represent their interests, conduct market research, and engage in advertising activities.
   2. Representative offices cannot conduct commercial activities.

Registration of LLCs and JSCs in Uzbekistan

When considering registering an LLC or JSC in Uzbekistan, it's important to be aware of the following rules and requirements:

• The director of the LLC must be a resident, while the shareholder of your JSC must be a non-resident. Foreign directors may need to obtain a work permit.
• Maintaining accounting records, filing annual financial statements, and conducting audits are mandatory.
• A registered office is required.
• It's worth noting that tax incentives may be available for companies with full foreign ownership and an authorized capital of more than $150,000.

The process of registering a company in Uzbekistan in 2024 involves several key steps, including document preparation, company seal creation, corporate bank account opening, registration fee payment, and document filing with the Trade Register. Typically, the process can be completed in about 14 days.

Uzbekistan offers numerous advantages, including the ability to open a local bank account relatively quickly, avoid double taxation through double taxation agreements (DTAs), register a company without having to visit the country, and take advantage of tax breaks in free zones for certain activities. Additionally, Uzbekistan is known for its simplified business registration procedures, ranking 8th in the Doing Business 2020 ranking for ease of business registration.