How can a foreigner open a company in Uzbekistan?

Uzbekistan serves as a gateway to Central Asia, offering a growing economy and business-friendly reforms.

Low operating costs, simplified procedures, and policies aimed at attracting investment provide a solid foundation for companies seeking to expand in the region. Developed infrastructure and a strategic location make Uzbekistan one of the best destinations for business development.

One of the most attractive features of Uzbekistan's business climate is the possibility of 100% foreign participation in most sectors. Having a local partner is not required, allowing you to fully own and manage your company both remotely and locally.

Advantages of Opening a Company in Uzbekistan

Uzbekistan offers many advantages for foreign entrepreneurs:

• Fast-growing economy - the country's GDP is steadily increasing, attracting international investors.
• Tax incentives - Tax holidays and incentives for startups and IT companies.
• Entering the CIS and Asian markets – Uzbekistan is concluding favorable trade agreements.
• Available labor force – average wages are lower than in neighboring countries.

IT Park

A special technology hub, IT Park, has been established in Tashkent, Uzbekistan, offering its residents significant tax and administrative benefits. This initiative was created by the government to attract investment, stimulate the export of IT services, and create a favorable ecosystem for technological development.

Residents receive a wide range of benefits, including exemptions from key taxes and mandatory contributions, reduced personal income tax rates, the ability to hire foreign specialists without a work permit, and the ability to work through a virtual office. Companies can also pay wages and dividends in foreign currency and export services with minimal barriers. These measures position IT Park as one of the most attractive entry points for international companies into Uzbekistan's technology sector.

PPP (Public-Private Partnership)

Public-private partnerships (PPPs) are actively operating in Uzbekistan and have become an important tool for attracting private investment in large-scale projects. They are regulated by the Law "On Public-Private Partnerships," along with concessions, production sharing agreements (PSA), and natural monopoly regulations.

Concessions grant private companies long-term rights to use and manage state assets, such as land, infrastructure, or natural resources, while ownership remains with the state. Production sharing agreements are widely used in the oil, gas, and mining industries, allowing investors to recoup costs and share production in exchange for assuming development risks.

To further stimulate investment, Uzbekistan offers a system of legal guarantees and industry incentives that ensure stability and create a reliable platform for long-term cooperation between the state and private investors.

Special Economic Zones (SEZs)

There are more than 20 SEZs operating in Uzbekistan. Residents of such zones receive:

• exemption from income, property, and land taxes for a period of 3 to 10 years;
• exemption from customs duties on imported equipment and raw materials;
• guarantees of legislative stability for the entire project term;
• simplified customs and administrative procedures.

Business Structures

• Limited Liability Company (LLC)

A limited liability company (LLC) is the most common and flexible legal form in Uzbekistan. It can be established by one or more founders, whose authorized capital is divided into shares in the manner determined by the company's charter. Participants are not personally liable for the company's obligations and bear risk only to the extent of their contributions.

LLCs are open to both local and foreign individuals and legal entities. With foreign investment, companies can receive additional benefits and incentives, making this structure particularly attractive to international business. These benefits include tax preferences, customs exemptions, and simplified administrative procedures, particularly for large or strategically important projects.

Foreign investors generally enjoy the same rights as local entrepreneurs, while certain support measures are provided to encourage international participation, particularly in innovative and technology sectors. Due to these features, LLCs remain the preferred vehicle for entering the Uzbek market.

• Joint Stock Company (JSC)

Joint-stock companies (JSCs) are better suited for large-scale projects and raising capital through share issuance. Shareholders' liability in this case is limited to the value of their shares. However, they are subject to more complex and stringent corporate governance requirements, including mandatory disclosure and reporting requirements. While this form offers greater financing opportunities, it also entails higher compliance costs compared to LLCs.

• Representative Offices

Foreign companies may establish representative offices in Uzbekistan. However, such representative offices do not have legal entity status and cannot engage in commercial, entrepreneurial, or other economic activities. Therefore, their primary function is limited to representing and protecting the interests of the parent company in Uzbekistan.

• Permanent Establishments

A permanent establishment (PE) arises when a foreign company conducts business in Uzbekistan without establishing a separate legal entity. Although a PE is not considered an independent company, it allows foreign companies to conduct commercial activities, hire personnel, open bank accounts, and maintain a presence in the country. This model can be a practical alternative to establishing a subsidiary for companies seeking a long-term market presence.

Permanent establishment status may result from the presence of a management office, a branch office, a construction site, the provision of services beyond established deadlines, or resource extraction activities. Registration with the State Tax Committee is mandatory, after which the permanent establishment is considered a local taxpayer with the same obligations as domestic organizations.

Financial and Legal Requirements

• Minimum authorized capital for an LLC is About 400,000 soums (approximately 30 USD).
• Founders are free to contribute capital in cash or in kind.
• Profits can be freely repatriated abroad after paying taxes.
• All transactions are conducted in the national currency (soum), but settlements with foreign partners are possible in foreign currency.

Step-by-Step Guide to Registering a Company in Uzbekistan

• Step 1: Choose the Right Business Structure.

Starting a local business in Uzbekistan involves several steps. For those who decide to set up a local company, choosing the right structure is crucial, as it determines your legal, financial, and operational obligations.

• Step 2: Reserve your company name Company

Choose a unique name for your company that complies with the rules of the State Services Agency of Uzbekistan. You can check availability and reserve your desired name on the Agency's online platform. The business name must not contain words such as "Uzbekistan," "UZ," or the city names "Tashkent," or "National."

• Step 3: Prepare and submit the necessary documents.

Once you have chosen your business structure and decided on a company name, gather the necessary documents for submission. These include:

• Articles of Association (AOA) or equivalent incorporation documents.
• ID and proof of address of the company directors.
• Proof of registered office in Uzbekistan.
• Name reservation certificate from the Public Services Agency.

Options Submissions:

• Online: Submit documents through the Public Services Agency portal.
• Offline: You can also deliver documents in person to the Agency's offices.

If the registration is carried out by a local representative, a power of attorney will be required.

All documents must be apostilled and translated into Russian or Uzbek, followed by notarization.

• Step 4: Obtain a personal identification number (PINI/PINFL).

All foreign founders and directors are required to obtain a local personal identification number (PINI or PINFL) in Uzbekistan. This can be done by contacting the Department of Migration and Citizenship or the Public Services Center, and in some cases, Through a trusted person.

• Step 5: Open a business bank account.

A corporate bank account is necessary for conducting transactions, paying taxes, and fulfilling financial obligations in Uzbekistan. Documents required to open a bank account include:

1. Company incorporation certificate.
2. Constituent documents (e.g., Articles of Association).
3. Identification of directors and authorized persons.
4. Proof of registered office address.

• Step 6: Obtain an electronic digital signature (EDS).

An EDS is required for online reporting and the use of various government services. It serves as a secure login.

• Step 7: Register for Taxes.

Compliance with Uzbekistan's tax requirements is crucial to the smooth operation of your company.

Key tax registrations include:

• Corporate Tax: Mandatory for all businesses operating in Uzbekistan.
• VAT Registration: Required if your business's turnover exceeds the threshold for taxable goods or services.
• Payroll Taxes: Necessary if you hire employees, cover social security contributions and other employment-related obligations.

Licenses and Permits

In Uzbekistan, business activity is regulated by three main forms of permits: licenses, permits, and and a notification procedure. Depending on the sector, companies may be required to obtain one of these forms of permit before commencing operations. These mechanisms apply primarily to strategically important industries such as banking, healthcare, education, construction, and natural resource extraction.

However, all types of business activities that do not fall into these categories can be carried out freely and without special permission. In such cases, companies are entitled to begin operations immediately after state registration, which significantly simplifies market entry and reduces administrative barriers for most entrepreneurs.

Taxes

Both local and foreign investors are required to pay various taxes when conducting business. The main taxes that businesses should consider are:

• Corporate income tax - 15%.
• VAT - 12%.
• Social tax - 12%.
• Income tax for employees is 12%.
• Import and export duties vary depending on the type of product.

Tax incentives are also provided for IT companies and startups.

Reporting

Companies in Uzbekistan are required to submit the following reports:

• Tax reports are monthly or quarterly.
• Financial reports are annual.
• Social security and pension fund reports are monthly.
• Large companies are subject to audit requirements.