Setting up in Uzbekistan: legal structures, taxes, free economic zones and investor protections

For most foreign investors the first practical questions about Uzbekistan are not macroeconomic. They are: which entity should we use, what will we pay in tax, are the incentives we heard about still available, and what happens if something goes wrong? This guide sets out the current answers in the order an investor typically needs them, based on published tax references and official guides, and flags where the rules moved recently.

It is an overview, not advice. The rules in Uzbekistan are amended frequently, sometimes several times a year, and the details of an individual project will matter more than any general description.

1. Can a foreigner own the company outright?

As a rule, yes. Uzbek legislation does not restrict the participation of foreign investors in business entities, and the common route for an overseas founder is a limited liability company (LLC) with 100% foreign ownership. Exceptions are set by sector-specific laws, most often in media, banking, transactions in land and activities connected with national security. Sector licensing is the more frequent practical hurdle than ownership itself.

One point is unsettled in the public guides: some sources say no minimum charter capital is required, while others describe a temporary bank account for depositing capital during registration. Confirm the current requirement before incorporating.

2. Registration: what the process looks like

According to the official IT Park guide for foreign founders, registration is largely online, through the government’s one-stop-shop channels, and in many cases takes one to three working days. In outline:

1. Choose the structure and check the sector for licences and ownership limits.
2. Reserve the company name and prepare the founding documents. Constituent documents typically need to be notarised and translated into Uzbek or Russian.
3. Register the entity online through the official portals.
4. Open bank accounts. Expect a temporary account for charter capital, then a permanent account once registration is complete. Banks run know-your-customer checks that include identification of beneficial owners, and these are the most common source of delay for foreign-owned entities.
5. Register for taxes and obtain an electronic digital signature, which is required for filings.
6. Obtain sector licences and permits where the activity needs them.

Timelines differ between sources, and banking and licensing usually take longer than incorporation.

3. The tax picture

The tables below summarise the main taxes as published by PwC’s Worldwide Tax Summaries, reviewed in August 2026, with 2026 amendments from EY. They are headline rates; thresholds, exemptions and special regimes apply.

Payments to non-residents. Domestic withholding tax rates, before any treaty, are 10% on dividends, 10% on interest and 20% on royalties, services (including management and consulting services) and rents. Double taxation treaties usually reduce these; the treaty with Singapore, for instance, sets 5% on dividends and interest and 8% on royalties. The 20% rate on services is the one that most often surprises groups that plan to charge a local subsidiary a management fee, so it is worth modelling early.

2026 changes worth knowing. According to EY’s summary:

• E-commerce businesses face a higher corporate income tax rate of 15%, up from 10%, and turnover tax rising from 3% to 4%.
• Incentives granted by presidential decision are now limited to accelerated depreciation of up to three years; previously they could also cut the statutory rate by up to half.
• A new offset allows withholding on a non-resident’s dividends to be reduced by tax previously paid on dividends the Uzbek company received from other Uzbek entities, subject to holding at least 25% of the capital for 365 days.
• A zero VAT rate was introduced for a list of agricultural products (excluding cotton and grain).
• An AI-based risk rating of VAT invoices began in January 2026; input VAT on invoices classed as high-risk can be recovered only after the supplier has paid the tax.
• Land, water and property tax bases were indexed by about 7% on average.

4. Free economic zones and incentives

Uzbekistan operates a network of free and special economic zones, with the Ministry of Investment, Industry and Trade listing more than twenty, including Navoi, Angren, Jizzakh, Kokand, Termez and Namangan, the last of which launched as the country’s first export-oriented zone in March 2025. Industrial parks, technoparks and sector regimes such as IT Park add further options.

The historic zone package, as published by the Ministry, offered:

• exemption from corporate income tax for 3, 5 or 10 years, depending on whether the investment was $3–5 million, $5–15 million or above $15 million;
• exemption from land, property and water taxes;
• customs relief on imported equipment not produced locally and on raw materials for export goods.

Two developments matter. A presidential decree in March 2025 removed time limits on the operation of special economic zones and reduced land tax for zone administrations to 1% until 2028. But according to EY, from 1 April 2026 accelerated depreciation replaces the former corporate income tax exemption for zone residents. In practice, projects that were modelled on a multi-year tax holiday should be re-run, and written confirmation of the applicable regime obtained from the zone administration before a commitment is made.

Zones still make commercial sense for export-oriented manufacturing because of serviced land, infrastructure, customs procedures and one-stop administration, but the tax benefit should no longer be assumed to be the deciding factor.

5. What the law protects

The core statute is the Law on Investments and Investment Activities, signed on 25 December 2019 and in force from January 2020. It replaced three earlier laws and guarantees foreign investors, among other things, free disposal and transfer of funds, protection against nationalisation and expropriation, and protection against detrimental changes in legislation. A new edition was approved by the Senate in January 2025, so the current consolidated text should be checked.

Dispute resolution is where structure matters most:

• Uzbekistan acceded to the New York Convention on the recognition of foreign arbitral awards in 1996 without reservations, and is a member of ICSID.
• It is party to a substantial network of bilateral investment treaties (one legal guide counts about 50 in force). Treaties usually provide the route to international arbitration for disputes with the state.
• The investment law prescribes a stepwise process beginning with negotiation, and commentators note that it can require exhausting local remedies. Without a treaty that provides for international arbitration, an arbitration clause in a contract with a state body may not displace the jurisdiction of Uzbek courts. Disputes between private parties are generally dealt with in Uzbek courts or by arbitration agreed in the contract.

The practical conclusion for investors is to decide which entity holds the investment early. Holding through a company in a jurisdiction that has an investment treaty and a tax treaty with Uzbekistan can improve both protection and tax outcomes, and it is far easier to establish at the start than to restructure later.

6. A short checklist

1. Confirm that your sector has no ownership restriction or special licence.
2. Choose the vehicle (usually an LLC) and the holding structure above it.
3. Model tax with the 2026 rules: corporate tax, withholding on dividends and management fees, VAT and social tax.
4. If using a free economic zone, obtain written confirmation of the current incentive regime.
5. Prepare founding documents, translations and beneficial-ownership information for the bank.
6. Plan for banking and licensing time rather than incorporation time.
7. Settle governing law and dispute-resolution clauses in key contracts, with advice on treaty protection.
8. Appoint local legal and tax advisers and agree how rule changes will be monitored.

Where investors tend to go wrong

The pitfalls repeat. Treating a tax holiday as permanent when rules have changed. Underestimating bank onboarding. Charging management fees without modelling the 20% withholding. Assuming that a contractual arbitration clause will be enforceable against a state entity without treaty cover. None of them is hard to avoid with early attention.

This article is for general information and does not constitute legal, tax or investment advice. Rates, incentives and procedures change frequently; confirm current rules with the competent authority or qualified local advisers before acting.