The President of Uzbekistan signed the Investments and Investment Activities Bill into Law. The Law was passed by the Legislative Chamber on December 9, 2019, and approved by the Senate on December 14, 2019.
The basic principles of investment activity are:
- transparency and openness;
- freedom of investment activity;
- fairness and equality of investment actors;
- non-allowance of discrimination against investors;
- presumption of investors' good faithness.
The basic principles of the regulation on investments and investment activities shall apply at all stages of the investment and investment activities.
Investments can be divided into capital, financial and social types based on the purpose.
Investors may also invest in other ways that are not contrary to the law.
Investment activity can be carried out by combining different forms of investment.
Changing the primary or secondary forms of investment does not lead to change of the form of investment.
Investment resources include:
- cash (including foreign currency) and other financial assets, including loans, stakes, shares and other securities;
- movable and immovable property (buildings, structures, equipment, machinery and other materials and resources) and rights to them;
- intellectual property, technical documents, skills and R&D products necessary for organization of a particular type of production units;
- right of possession and use of land plots and other natural resources, as well as other property rights arising from property rights.
Investor has the right to:
- freely carry out investment activity, not contrary to the Uzbekistan legislation, independently determine the volume, types, forms, areas of investment;
- enter into agreements with legal entities and individuals for investment activities;
- own, use and dispose of their investments and the results of his investment activities, as well as to sell and export the results of his/her investment activities;
- independently and freely dispose of the income received from investment activity after taxes, fees and other duties provided for by the legislation;
- use the property and any proprietary rights, which he/she owns as security/collateral for all assumed obligations, including debt obligations;
- get adequate compensation in the event of expropriation of his/her investments and other assets;
- attracting cash in the form of loans and borrowings;
- get compensation for damage caused by unlawful actions (inaction) and decisions by state authorities, local authorities and their public officials.
Investor is obliged to:
- pay taxes and duties;
- perform contractual obligations undertaken by him/her in connection with investment;
- comply with the legislation, including the regulations on competition, anti-corruption, investment and investment activities, labor, urban planning, environmental protection, as well as industrial, health & safety norms and rules;
- indemnify damage cause to participant of investment activity due to non-performance or improper performance of some contract terms and conditions;
- perform the requirements of the authorities and local authorities that are within their competence.
Guarantees of the rights of investors
The state guarantees the investors’ rights. State bodies and their officials are not entitled to interfere in the investors activities carried out in accordance with the law.
If state bodies and their officials find violations of the law in the activities of investors, they can take the measures to which they are authorized and which are directly related to the recitification of a specific violation.
State bodies and their officials cannot use the fact of a violation as a basis for interference or restriction of other, not related to investment, activities of investors.
The state guarantees non-discrimination against investors on their citizenship, place of residence, place of business, and also depending on the country of origin of investors or investments.
The exercise of rights by an investor should not violate the rights and legally protected interests of other investors. Moreover, the state, as a co-founder (shareholder, participant) of a business entity, has equal rights and obligations along with other founders (shareholders, participants).
These guarantee provisions shall not apply to the adoption, amendment or cancellation of regulations that are directly related to ensuring the national security of the Republic of Uzbekistan, determined in accordance with generally recognized principles and norms of the international law.
Guaranteed use of funds
Investor’s income, obtained as a result of investment activity, may be reinvested after taxes or payments, or used in any other way at own discretion.
Restrictions on use or forced withdrawal of funds from accounts of a company with foreign and local investments by state bodies can be carried out exclusively in accordance with the procedure established by law.
Guarantees for free transfer of funds
Investors are guaranteed the free transfer of funds in foreign currency to and from the Republic of Uzbekistan without any restrictions, provided that they pay taxes and duties, including currency conversion for repatriation. Such transfers include:
- initial and additional sums to maintain or increase foreign investment;
- proceeds from investment;
- funds received as compensation for losses in accordance with this Law;
- payments made for performance of contract terms;
- proceeds from sale of all or part of foreign investment;
- payments received from a settled dispute, including any judicial or arbitral ruling;
- salaries and other payments to employees;
- funds from other sources received in accordance with the law.
In accordance with laws and international treaties of the Republic of Uzbekistan, the state may suspend the repatriation of funds of a foreign investor on the basis of non-discriminatory application of legislative acts in cases of insolvency and bankruptcy of an enterprise with foreign investment or violation of the rights of lenders, criminal acts or administrative offenses committed by a foreign investor - an individual, or other need to suspend such repatriation in accordance with judicial or an arbitral ruling.
Guarantees of return of foreign investment due to termination of investment activity
A foreign investor has the right to terminate investment activity in the Republic of Uzbekistan.
After termination of investment activity, a foreign investor has the right to freely repatriate in cash or in kind his assets received as a result of the termination of investment activity, without prejudice to the performance of obligations of a foreign investor in relation to the Republic of Uzbekistan or other creditors.
Guarantees against adverse changes in investment-related regulations
Acts of legislation are not retroactive in cases where their performance is detrimental to the investor or investment.
In the event that subsequent legislation of the Republic of Uzbekistan worsens the conditions for investment, then the laws in force on the date of investment shall apply to investors within ten years from the date of investment. The investor has the right, at own discretion, to opt for provisions of the new legislation that improve the conditions for his investment.
These provisions shall not apply to the adoption, amendment, supplement or repeal of legislative acts that are directly related to ensuring the protection of the national security interests of the Republic of Uzbekistan, determined in accordance with generally recognized principles of international law.
Guarantees of transparency and openness
Regulations that are not officially published for public shall not entail legal consequences as they have not entered into force and cannot serve as a basis for regulating investment relations or application of any sanctions to investors for failure to comply with the requirements contained therein.
State and local authorities are obliged to publish through the media, including on their official websites, information on their participation and decisions made in the field of investment.
Individuals and legal entities are provided with openness and the possibility of unhindered access to information on the activities of government bodies and public authorities in the field and the decisions they make in the field of investment activity.
Protection of investments
The state guarantees protection of investments in accordance with the legislation and international treaties of the Republic of Uzbekistan.
Investments and other assets of investors cannot be nationalized.
Investments and other assets of investors are not subject to requisitioning (expropriation), with the exception of cases of natural disasters, accidents, epidemics, epizootics and in other circumstances of an emergency nature.
The decision on requisition and expropriation of investments shall be taken by the Cabinet of Ministers of the Republic of Uzbekistan subject to to be compliant with the requirements for which requisition or expropriation shall be:
- limited by the minimum size of investments or other assets of investors necessary to solve the problems arising from the cases specified in part three;
- not carried out on a discriminatory basis;
- accompanied by the payment of compensation adequate to the loss. The state acts as a guarantor of the timely implementation of these compensatory payments.
Investor have the right to dispute in court and arbitration, in particular:
- the legality of the purpose used to carry out the requisition (expropriation);
- size of requisition (expropriation);
- assessment of requisitioned (expropriated) investments and other assets;
- compliance of the payment of compensation payable;
- the procedure followed by government and local authorities in the requisition (expropriation).
Investment and investor risk insurance is carried out on a voluntary basis.
Additional guarantees and investment protection measures
Additional guarantees and investment protection measures may include the guarantees by the Government of the Republic of Uzbekistan, assistance in financing investment projects, the creation of a special tax and payment regimes, state monitoring of the implementation of investment projects and other measures based on investment agreements with the Government of the Republic of Uzbekistan.