Thursday, 20, June, 2024

The Interim President of Uzbekistan Shavkat Mirziyoyev on October 26 signed a decree "On additional measures aimed at strengthening and expanding the activities of free economic zones."

The document foresees renaming of Navoi free industrial-economic zone and Angren and Jizzakh special industrial zones into Navoi, Angren and Jizzakh free economic zones.

According to the decree, the decision was aimed at creating "the most favorable conditions to enhance further development of free economic zones as an important framework to boost attracting foreign direct investment, create new high-tech industries, engage the territories into production of modern competitive export-ready industrial products, to ensure the speedy development of manufacturing, engineering-communication, road transport, social infrastructure and logistics services."

The main vectors for further development of the three free economic zones are defined as:

  • establishment of a common legal regime for free economic zones, unification of tax and customs benefits and preferences iaimed at creating the most favorable conditions for foreign investors to invest in the real sectors of the economy;
  • attracting of direct investments, especially foreign investments, in view of creating modern high-tech and localized production capacities, providing deep processing of local mineral resources and production of competitive products with high added value, promoting specialization of free economic zones and facilitating industrial cooperation;
  • gradual achievement of the provision in free economic zones of all kinds of public services, including licensing procedures, on the "one window" principle;
  • advanced development of manufacturing, engineering-communication, road transport and social infrastructure, as well as the creation of a modern logistics infrastructure;
  • training of highly qualified professionals in colleges and universities, based on the current and future needs for specialists, with internships in existing plants located in free economic zones.

Participants of free economic zones are exempt from payment of:

  • land tax, income tax, property tax for legal entities, tax for improvement and development of social infrastructure, single tax for micro and small enterprises, and mandatory contributions to the Republican Road Fund and off-budget Fund of reconstruction, overhaul and equipping of schools, professional colleges, academic lyceums and medical institutions under the Ministry of Finance;
  • customs duties (except for fees for customs clearance) for equipment, raw materials and components imported for own production needs, as well as construction materials not manufactured in Uzbekistan and imported within the framework of the realization of projects on a list approved by the Cabinet of Ministers.

These benefits are granted for a term of 3 to 10 years depending on the amount of investments, including the equivalent of:

  • from 300 thousand US dollars to 3 million US dollars - for 3 years;
  • from $ 3 million to $ 5 million - for 5 years;
  • from $ 5 million to $ 10 million - for 7 years;
  • from 10 million US dollars and above - for 10 years, during the next 5 years the rates of income tax and single tax in the amount of 50% below current rates.

In addition to that, companies acting in Angren and Jizzakh free economic zone are subjected to a common procedure according to which they are:

  • exempt from customs duties (except customs clearance fees) for imported raw materials and components for products, aimed at exporting for the entire duration of operation of free economic zones;
  • within the free economic zones have the right to make settlements in foreign currency and make payments in accordance with the agreements and contracts entered into between them;
  • have the right to pay in foreign currency for goods, works (services) of other economic entities-residents of the Republic of Uzbekistan, as well as to use the convenient terms and forms of payments for exported and imported goods.

The Decree has established the Governing Body of the free economic zones and abolished previously created administrative boards of three zones.

In a month's time a program of measures is be prepared to further improve and expand the activities of Navoi, Angren and Jizzakh free economic zones. It should foresee the "concrete measures to improve the legislation, development of manufacturing, engineering, communications and transport infrastructure, and other issues of development of free economic zones."

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