NEWS

Special forex regime may be introduced in Uzbek free economic zones

TASHKENT (TCA) — The Government of Uzbekistan on December 16 posted for public discussion a draft decree on a special foreign-currency regime in the country’s free economic zones (FEZs), Novosti Uzbekistana news agency reports.

The document would allow FEZ participants:
– to conduct settlements and payments in foreign currency within the FEZs;
– to pay with foreign currency for goods and services provided by companies and organizations that are residents of Uzbekistan;
– to use convenient forms of payment for exported and imported goods.
 
The document would also allow Uzbekistan-registered companies and organizations that are not FEZ participants to deliver goods and services to FEZ member-companies for foreign currency.  

Uzbekistan now has three FEZs — in Navoi, Angren and Jizzakh.

Last month it was reported that the Ministry of Foreign Economic Relations, Investment and Trade of Uzbekistan planned to create four new free economic zones in the country.

The new FEZs — Urgut, Gizhduvan, Kokand, and Khazarasp — are to be established in the Samarkand, Bukhara, Fergana, and Khorezm provinces.

The main tasks of the new FEZs are to attract direct foreign and local investments for creation of modern facilities producing import-substituting and export-oriented products with high added value.   

On October 26, then acting Uzbek President Shavkat Mirziyoev signed a Decree “On additional measures for the intensification and expansion of activities of free economic zones”.

The document identified the following main directions of further development of the free economic zones:
– establishing a single legal regime for free economic zones, unification of tax and customs privileges and preferences to create the most favorable conditions for foreign investors;
– active attraction of direct investments, primarily foreign, to create modern high-tech and localized production, ensuring deep processing of local mineral resources and production of competitive products with high added value, promotion of industrial specialization of free economic zones and development of industrial cooperation;
– gradual transition to “one window” principle in all free economic zones, which provides for rendering all types of public services, including licensing procedures;
– advanced development of production, engineering-communication, transport and social infrastructure, as well as development of modern infrastructure to provide high-quality logistics services.

The document also unified tax and customs regimes in force in the free economic zones, exempting the participants of the free economic zones from the payment of:
– land tax, income tax, tax on property of legal entities, tax for accomplishment and development of social infrastructure, single tax payment for microfirms and small enterprises, as well as obligatory fees to the Republican Road Fund and Off-budget Fund for reconstruction, refurbishment and equipping of general schools, professional colleges, academic lyceums and medical institutions under the Ministry of Finance of Uzbekistan;
– customs payments (except for fees for customs clearance) for equipment, raw materials and component parts imported for own production needs, as well as building materials not produced in Uzbekistan and imported as part of projects on the lists approved by the Cabinet of Ministers of Uzbekistan.

According to the decree, privileges are provided for FEZ participants for a period from 3 to 10 years depending on the amount of investments:
– from $300 thousand to $3 million – for 3 years;
– from $3 million to $5 million – for 5 years;
– from $5 million to $10 million – for 7 years;
– from $10 million and above – for 10 years, while profit and uniform tax rates for the next 5 years are established at 50 percent below the current rates.

According to the decree, the participants of free economic zones Angren and Jizzakh:
– are exempt from payment of customs payments (except for fees for customs clearance) for imported raw materials and components in terms of production aimed at export, for the entire period of activities at the free economic zones;
– within the free economic zones, have the right to make calculations and payments in foreign currency in accordance with the concluded agreements and contracts;
– have the right to pay for the supply of goods (works, services) from other business entities-residents of Uzbekistan in foreign currency, and use convenient terms and forms of payment and payments for exported and imported goods.