NEWS AND EVENTS
December 19, 2012
Compass for Development: Investors have new incentives
Uzbekistan continues to build its economic model based on the development of market mechanisms and to attract investments. Today in the country more than 4.2 thousand enterprises with foreign investment has successfully operated. Recently, a new step was taken to improve the investment climate of the domestic economy.
By resolution of the Ministry of Finance, State Tax Committee, the Ministry of Economy, the Regulations on the use of tax incentives for businesses to attract direct private foreign investment were amended.
First of all, the list of industries was significantly expanded - twenty instead of eight, which are subject to exemptions provided to enterprises, attracting direct private foreign investment. In particular, it encompasses industries such as packaging materials, the construction of power plants based on alternative sources of energy, petrochemicals, and others.
Also, the conditions under which the applicable tax benefits have been changed. According to the document, businesses located in all cities and villages of the republic except the Tashkent region now can look forward to benefits. Previously, businesses could be eligible for benefits if they were situated only in labor-surplus regions of specified areas. In addition, for the application of exemptions now enough 33% of foreign participation in the share capital of the companies, not 50%, as it was previously.
An important factor for investors is the fact of approval to keep funds derived from the provision of tax exemptions and mandatory contributions to the National Road Fund. Previously, all the resulting income had to be re-invested for the future development of the enterprise. The distribution of income among the founders was not anticipated. In accordance with the document, only profit at the expense of tax exemption - at least 50% - to be part of the re-investment.
The changes anticipate the possibility for businesses to use tax benefits even if share of foreign investors in the authorized fund is reduced below 33% during the application of the privilege, but with condition of preservation of the paid private direct investment. The document came into force on 14 December 2012. (Source: Uzbekistan Today newspaper)