Business Opportunities in Uzbekistan
Uzbekistan, located in Central Asia, has seen economic development and liberalization in recent years, creating several commercial prospects. Hence, if you start a business in Uzbekistan, it may be worth your while. In recent years, Uzbekistan has implemented economic reforms and liberalization initiatives to establish a conducive business climate. Being situated at the intersection of Europe and Asia and close to crucial transportation routes like the Silk Road, this location is an important hub with promising opportunities for commerce and transportation companies.
Nevertheless, the country has experienced continuous economic development, with the World Bank projecting 5.4% GDP growth in 2021. This signifies a favorable economic outlook and the possibility of new business prospects. Foreign investors planning on setting up a company in Uzbekistan can also flourish in sectors like agribusiness, textile, and tourism.
Benefits of Starting a Business in Uzbekistan
There are several advantages of doing business in Uzbekistan. Here are the main benefits that you can refer to before starting a venture in this country:-
- Economic growth: This country has had constant economic expansion and rapid economic growth. This indicates a positive economic outlook for setting up a company in Uzbekistan and the likelihood of new business opportunities.
- Strategic location: Uzbekistan’s strategic position provides excellent potential for international enterprises engaged in trade and transportation, making it ideal for setting up a company in Uzbekistan.
- Robust market size: Uzbekistan has a population of approximately 34 million, making it a large market. This shows that the country’s market offers enormous potential for foreign-based enterprises, which may thrive by providing new services and products.
- Access to natural resources: Access to natural resources is abundant in Uzbekistan. This includes oil, gas, minerals, and agricultural land, which creates tremendous potential for setting up a company in Uzbekistan that relies on energy, mining, and agriculture industries.
- Government incentives: To entice foreign investment, the Uzbek government has implemented a variety of incentives, including tax reductions, customs exemptions, and streamlined procedures for business registration and licensing.
- Priorities for development: Uzbekistan has selected agriculture, industry, tourism, infrastructure, and renewable energy as crucial areas for development. Government assistance and investment possibilities may be available to businesses in these fields.
- Reformation and improvement: Uzbekistan has implemented measures to enhance its economic climate, such as cutting bureaucracy, enhancing transparency, and strengthening intellectual property rights. These measures attempt to make the business climate more friendly and ideal to start a business in Uzbekistan.
Requirements for Starting a Business in Uzbekistan
Foreign businesses planning on setting up a company in Uzbekistan must be well-versed with the employment laws in the country and ensure that they comply with them. The legal requirements to do business in Uzbekistan have been elucidated below:-
- An IP OOO: Foreign business owners not residents of the country must establish an IP OOO, similar to a specialized, limited liability company (LLC).
- A starting capital: They should also ensure that their starting capital is at least 400 million Uzbek Soms (Around $42,000 but is subject to fluctuation).
- A legal business address: All foreign companies must have a registered legal address once they commence with the procedures for company incorporation in Uzbekistan. As a business owner, if you cannot establish a domestic legal address, you can use your accountant.
- The shareholders’ agreement and company charter: This is a standard legal requirement for company incorporation in Uzbekistan. You are free to hire any local lawyer to help you. Hiring an interpreter before seeing a local lawyer is the more affordable option because hiring lawyers offering their services in English can be expensive.
- Other documents: Some of the other requirements to do business in Uzbekistan as a foreign entity are:-
- Commercial register extract
- Copy of your registration certificate as a taxpayer
- Copy of the documents of the foundation of the foreign headquarters
- Temporary INN registration (taxpayer number)
- POA to the foreign director (any representative)
- POA to the foreign director (any representative)
- A direct statement of decision to establish a company (branch or representative office)
- Passport and photographs
- Identification code (CIC) (make sure you have a pre-prepared copy)
- Receipt of payment confirmation of compulsory state duty
Types of Business Structures in Uzbekistan
Foreign investors are required to know about the different organizational-legal forms before setting up a company in Uzbekistan. As decreed by the Uzbekistan laws, the types of business structures legalized in this country are:-
- Limited Liability Corporation (LLC): In Uzbekistan, the limited liability company (LLC) is the most common type of business structure. It provides the least liability protection for its stockholders but is relatively easy to set up. This company structure combines the advantages of a sole proprietorship or partnership with the liability protection provided by a corporation. Since an LLC is a separate legal entity from its members, any liabilities or debts committed by the company are protected from the individuals’ assets.
- Joint-Stock Company (JSC): A JSC or a Joint-Stock Company functions like a corporation. It is managed by a board of directors and is owned by shareholders who possess shares in the firm.
- A Corporation with Additional Liability (CAL): A CAL, often referred to as a CLG (Company Limited by Guarantee), is another type of business structure that Uzbekistan permits. Under this structure, each member of the firm agrees to be personally liable for the liabilities up to a certain amount.
- Economic partnership: In Uzbekistan, an economic partnership is a legally recognized business entity with authorized capital divided into member shares, where some participate personally in business operations on the partnership’s behalf.
- A private enterprise (PE): A private enterprise (PE) is another business structure authorized in Uzbekistan. One individual is the founder and is in charge of it. Regarding tax planning, a private company’s profits after taxes belong to the owner and are not subject to dividend tax, which lowers operating costs.
- Representative Office: A Representative office is a form of legal business structure in Uzbekistan established to represent a foreign company’s interests. This business structure cannot participate in commercial activities and operations like promotion, networking, and market analysis.
Company Registration Process
There are several steps involved in the company registration process in Uzbekistan. First, ensure that you are compliant with the minimum statutory requirements. The steps to incorporate a company in Uzbekistan have been outlined below:-
- Choose an appropriate business structure: As a foreign business owner, choose an appropriate legal structure suited to your business requirements while setting up a company in Uzbekistan.
- Compile a legal document package: Make sure all statutory documents are compiled together. You can also add the incorporation of changes to the documents of an existing business.
- Reserve a brand name: You need to develop a brand name if you don’t have an existing brand. As per Uzbekistan laws, you cannot reserve an existing trademark. Please file the trademark application with the Patent Office of Uzbekistan.
- Re-registration of a legal business entity: For setting up a company in Uzbekistan, you need to apply for a State registration of the business structure of your choice so you can hire employees.
- Applying for the primary seal or angle stamp: This is an optional step in the company registration process in Uzbekistan. You can apply for the production of these seals for officially certifying documents.
- Opening a bank account: For your business to operate successfully in this country, you must open a corporate bank account. You can deposit the minimum capital initially to commence business operations. Make sure that you conduct adequate research and choose a suitable bank that will correlate with your business requirements, especially during the company incorporation in Uzbekistan.
The prerequisites of the company registration process in Uzbekistan may depend on your chosen legal structure.
How Much Does it Cost to Incorporate a Company in Uzbekistan?
The cost of incorporating a company in Uzbekistan depends on which legal business structure you have chosen, along with other requirements. However, the Uzbekistan company’s incorporation expenses can be around $8,760 in the first year. However, it will not cost anything in the second year and subsequent years.
The average charge for an Uzbekistan engagement is $15,620, which covers all administrative expenses and the cost of incorporating a company in Uzbekistan and opening a bank account.
Are Foreigners on Certain Passes Allowed to Start a Business in Uzbekistan?
Offshore businesses can start a business in Uzbekistan without facing any restrictions imposed by local legislation. Any chosen legal entity can be established and operated via an LLC (limited liability company), a branch, or a representative office.
Government Assistance for Foreign-owned Businesses
The Uzbekistan government has made many efforts to improve and reinforce laws and regulations to promote a healthy and fair business environment for foreign companies to flourish. As an offshore company, if you are keen on setting up a company in Uzbekistan, you are sure to benefit from the tax relief for the following sectors and production companies:-
- Chemical and petrochemical production
- Food production
- Alternative energy
- Other industries.
Eligible companies are exempted from the following:-
- Corporate profits tax
- Property tax
- Tax on the development and enhancement of social infrastructure
- Compulsory National Road Fund contributions
- Integrated taxes for small businesses and micro-firms
How Can Multiplier Help?
As a foreign investor, the procedure for incorporation of a company in Uzbekistan might seem challenging, especially if you are not thoroughly familiar with the statutory requirements involved. Multiplier is a highly reliable PEO that can provide holistic aid when starting a business in Uzbekistan. Our team of professionals assists you in overcoming any obstacles that you may encounter during the process.
From maintaining legal requirements to employing and onboarding candidates, streamlining payroll management, to handling offshore teams, our SaaS-integrated platform covers everything while ensuring that your business remains compliant.