Uzbekistan

Economic and Legal Climate

Uzbekistan, located in Central Asia, offers a rapidly developing business environment characterized by a growing economy, competitive labor costs, and strategic location. The country has strengths in sectors such as agriculture, textiles, mining, energy, and manufacturing. Uzbekistan’s legal system is based on civil law, and the government has been implementing various reforms to create a more business-friendly environment and attract foreign investment.

Official Languages

The official language of Uzbekistan is Uzbek. Russian is also widely used in business and government settings. While English is becoming more prevalent in business circles, proficiency levels can vary. Engaging local legal and business experts who are fluent in Uzbek and Russian is advisable for international investors.

Banking System

Uzbekistan has a developing banking system overseen by the Central Bank of Uzbekistan. The country hosts a variety of local and international banks offering financial services. The banking sector is growing and modernizing, but businesses may still need to engage with larger international banks for more comprehensive services.

Maintenance Costs

Maintenance costs for companies in Uzbekistan are relatively low. Annual compliance requirements include renewing business licenses, filing tax returns, conducting audits, and maintaining proper accounting records. These processes are straightforward and affordable, contributing to manageable ongoing operational expenses.

Setting Up Costs

Setting up a company in Uzbekistan involves several costs, including incorporation fees, legal fees, and registration with the State Committee on Statistics. The process includes drafting the company’s charter, obtaining a tax identification number, and registering for VAT if applicable. The incorporation process is relatively efficient and can typically be completed within a few weeks if all documentation is in order.

Corporate Tax Rate

Uzbekistan offers a competitive corporate tax regime with a standard corporate tax rate of 15% on taxable profits. The country provides various tax incentives and deductions for investments in specific sectors, particularly in agriculture, manufacturing, and renewable energy, enhancing tax efficiency for businesses.

Territorial or Non-Territorial Principles

Uzbekistan operates a worldwide tax system, meaning resident companies are taxed on their global income. However, specific incentives and tax treaties are available to help mitigate the impact of double taxation and enhance tax efficiency for foreign investors.

Currency Regulation

Uzbekistan imposes some regulations on foreign exchange transactions to maintain economic stability. The currency used is the Uzbekistani som (UZS). While the regulatory framework supports international trade and investment, engaging local experts can help navigate any specific currency regulations.

Advantages of Setting Up a Company in Uzbekistan

1. Strategic Location: Uzbekistan’s location provides access to markets in Central Asia, Russia, China, and Europe.
2. Competitive Labor Costs: Access to a cost-effective and skilled labor force, particularly in sectors such as agriculture, textiles, and manufacturing.
3. Natural Resources: Abundant natural resources, particularly in agriculture and mining, offer significant business opportunities.
4. Government Incentives: Various tax incentives and support programs for investments in priority sectors and economically disadvantaged regions.
5. Growing Economy: Emerging market with significant potential for growth in various sectors.

Disadvantages of Setting Up a Company in Uzbekistan

1. Bureaucratic Complexity: Navigating Uzbekistan’s regulatory and bureaucratic landscape can be challenging and time-consuming.
2. Language Barrier: While English is increasingly spoken, proficiency in Uzbek or Russian is essential for many legal and administrative matters, necessitating local expertise.
3. Infrastructure Development: While improving, some aspects of Uzbekistan’s infrastructure may not be as developed as in other major international business hubs.
4. Political and Economic Stability: While improving, Uzbekistan has faced political and economic challenges in the past, which may present risks for some investors.

Conclusion

Uzbekistan offers a unique environment for setting up a company, with its strategic location, competitive labor costs, and abundant natural resources. Despite challenges such as bureaucratic complexity and infrastructure development, the overall advantages make Uzbekistan a compelling choice for international investors. Global Expand can assist you in navigating the complexities of setting up a company in Uzbekistan, ensuring a smooth and successful entry into this dynamic and emerging market.