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Legislation

LEGISLATION IN FOREIGN ECONOMIC SPHERE

Legislation of the Republic of Uzbekistan in foreign economic sphere is directed to stimulating the attraction of direct foreign investments. For instance, the Decree by the President of the Republic of Uzbekistan dated April 11, 2005 No. UP-3594 “On additional measures on stimulating the attraction of direct foreign investments” was adopted for further improving the investment climate in the country, attracting private direct foreign investments for realization of privatization programs, modernization, technical reequipment and reconstruction of manufacturing enterprises.

Alongside with the existing legal base on guarantees and preferences for the foreign investors, including laws “On foreign investments”, “On foreign economic activity” and “On guarantees and protection measures of the rights of foreign investors” (find all texts below), the Decree has address orientation in granting tax privileges for direct foreign investments.
Since July 1, 2005, the enterprises attracting direct private foreign investments are exempted from income (profit) tax, property tax, tax on developing social infrastructure and territories improvement, tax on ecology, consolidated tax for microfirms and small enterprises, as well as obligatory deductions to National Road Fund.

Duration of tax exempt period depends on a size of direct private foreign investments:
– from 300,000 to 3 million US dollars - for the period of 3 years;
– from 3 to 10 million US dollars - for the period of 5 years;
– more than 10 million US dollars - for the period of 7 years.

Annotation to the Decree of the Cabinet of Ministers of the Republic of Uzbekistan «On the procedure of application of customs privileges to the property, imported by foreign investors to the Republic of Uzbekistan for own needs»

On December 6, 2007 the Cabinet of Ministers of Uzbekistan adopted the Decree ¹249 «On the procedure of application of customs privileges to the property, imported by foreign investors to the Republic of Uzbekistan for own needs».

Decree is adopted according to the Laws of the Republic of Uzbekistan «On customs tariffs» dated on August 29, 1997 and «On foreign investments» dated on April 30, 1998.

According to the Decree the property imported by foreign investors to the Republic of Uzbekistan for own needs, is not assessed with the customs duties, and as well as, foreign investors carry out their industrial activity on the territory of the Republic of Uzbekistan, as a rule, by creation of actions with foreign investments.

Decree is stipulated that privileges on free of taxation from customs duties of the property imported by foreign investors for own industrial needs, also used for enterprises with foreign investments.

It is regulated that from January 1 of 2008 a privilege on free of taxation from customs duties of the property imported by foreign investors for own industrial needs, operate to the enterprises with foreign investments from shares of the foreign investor in the capital not less than 33 percent.

The current Decree is entrusted to the Ministry of external economic relations, investments and trade together with the Ministries of Justice, finance, economy and the State customs committee of the Republic of Uzbekistan in two weeks period to make proposals on changes and amendments to the legislation, following of current decree.

 
ON FOREIGN INVESTMENTS

Law of the Republic of Uzbekistan, April 30, 1998 ¹609-1

Article 1. Purpose and tasks of the Law

The present Law defines a legal basis and the procedure for execution of foreign investments on the territory of the Republic of Uzbekistan.

The basic tasks of the present Law are the following:

- economy promotion in the Republic of Uzbekistan and its integration into world economical system by stimulation of flow of foreign investments;

- an attraction and efficient use of foreign financial, material, intellectual and other resources, modern foreign technologies and managerial experience.   

Article 2. Legislation on foreign investments

The legislation on foreign investments includes the present Law, the Law of the Republic of Uzbekistan "On guarantees and measures of protection of foreign investors' rights", other legislative acts.

If an international agreement concluded by the Republic of Uzbekistan established other rules than those provided by the legislation on foreign investments, than the rules of international agreement are applied.     

Article 3. Foreign investments

Foreign investments on the territory of the Republic of Uzbekistan are considered to be all kinds of material and non material benefits and rights on them including the rights for an intellectual property as well as any income received from foreign investments invested by the foreign investors to the object of entrepreneurial activity and other types of activity not prohibited by the legislation predominantly for the purpose to derive profit (income).

In present law an income invested by the foreign investors as reinvestments in the objects of entrepreneurial activity and other kinds of activity means any funds derived from investment in the Republic of Uzbekistan including profit, interest, dividends, royalty, license fee and agent's commissions, payments for technical assistance and maintenance and other forms of bonuses.

Article 4. Foreign investors

The following shall be granted the status of the foreign investors in the Republic of Uzbekistan:

- the foreign states, administrative or territorial bodies of the foreign states;

- the international organizations founded in accordance with the agreements or other contracts signed by the states or ones being the subjects of an international public right;

- the legal entities, any other societies, organizations or associations based and acting in accordance with the legislative acts of the foreign states;

- the natural entities being the citizens of the foreign state, persons without citizenship status and citizens of the Republic of Uzbekistan who have their constant residence abroad.

Article 5. The forms of implementation of foreign investments

Foreign investors can implement foreign investments on the territory of the Republic of Uzbekistan by the following ways:

- by share participation in authorized funds and other property of economic societies and companies, banks, insurance organizations and other enterprises established jointly with legal and (or) natural entities of the Republic of Uzbekistan;

- by creation and development of economic societies and companies, banks, insurance organizations and other enterprises, completely belonging to the foreign investors;

- by acquisition of the property, shares and other securities, including promissory notes, emitted by the residents of the Republic of Uzbekistan;

- by investment of rights for intellectual property, including copyrights, patents, trade marks, useful models, industrial samples names of firms and know-how as well as business reputation (goodwill);

- by acquisition of concessions including ones for prospecting, mining or use of natural resources;

- by acquisition of property right for object of trade and service, dwelling quarters with land where they are located, as well as the rights for tenure and use of land (including on the lease base) and natural resources.

The foreign investors can execute investments on the territory of the Republic of Uzbekistan in other forms, not contradicted the current law.

Changing of forms in which foreign investments are executed primarily or repeatedly, do not change their qualification as investments.

Article 6. Enterprises with foreign investments

The foreign investors can establish the enterprises with foreign investments on the territory of the Republic of Uzbekistan and use all the rights, guarantees and privileges granted them by the legislation of the Republic of Uzbekistan.

The enterprises with foreign investments established on the territory of the Republic of Uzbekistan are understood to be ones in which the foreign investments make not less than 30 (thirty) per cent of shares (parts) of an authorized fund. They shall operate in any organization and legal forms not contradicted the legislation of the Republic of Uzbekistan. One of the participants of the enterprise with foreign investments should be a foreign investor specified in second, third or fourth indentions of an article 4 of the present Law.

The enterprise with foreign investments can be created either by its establishment or as a result of purchase by the foreign investor of a share (a part) of participation in the enterprise established earlier without foreign investments or by purchase of such enterprise completely including during the process of privatization.

The enterprise with foreign investments acquires the rights of legal entity from the moment of its state registration. The procedure for creation and the state registration of the enterprises with foreign investments are defined by the Cabinet of Ministers of the Republic of Uzbekistan.

Article 7. Subsidiary enterprises, affiliates and representative offices of the enterprises with foreign investments

The enterprise with foreign investments shall be entitled to establish on the territory of the Republic of Uzbekistan subsidiaries, affiliates with the rights of a legal entity, as well as representative offices and other detached subdivisions without the legal entity status pursuant to the legislation of the Republic of Uzbekistan.

The subsidiary enterprises, affiliates, representative offices and other detached subdivisions of the enterprises with foreign investments can be established outside the territory of the Republic of Uzbekistan.

Article 8. Economic associations of the enterprises

Pursuant to the legislation of the Republic of Uzbekistan the enterprises with foreign investments can establish the economic associations, concerns, consortiums and other corporations on a voluntary basis on the territory of the Republic of Uzbekistan as well as to be included into current associations as their full member.

Article 9. Legal regime established for the foreign investments on the territory of the Republic of Uzbekistan

The state guarantees and protects all foreign investors' rights when they execute investment activity on the territory of the Republic of Uzbekistan.

Rightful and equal regime, complete and constant protection and safety are granted to foreign investors and foreign investments. Such regime is as favorable as that one specified by the international agreements signed by the Republic of Uzbekistan.

The legal regime established for foreign investments can not be less favorable than appropriate one established for foreign investments executed by legal and natural entities of the Republic of Uzbekistan.

According to common established norms of international law, the legislation of the Republic of Uzbekistan can include the restrictions or embargo for foreign investments executed in relevant spheres of economy and lines of activity with the purpose of protection of national security of the Republic of Uzbekistan.

Rehabilitation of violated rights and interests of foreign investors guaranteed by the law of the Republic of Uzbekistan, is regulated by the legislation as well as by international agreements signed by the Republic of Uzbekistan.

       

Article 10. Foreign investors' rights

In accordance with the principles of international law and the legislation of the Republic of Uzbekistan, the foreign investor has the right for the following:

- to define on his own account the amount, kinds and channels of investments;

- to conclude agreements with legal and natural entities to execute investment activity;

- to own, use and dispose his investments and the results of investment activity. On the decision of the foreign investor, the rights to own, use and dispose investments and their results can be assigned to other legal and natural entities in accordance with the procedure established by the legislation of the Republic of Uzbekistan.

- Interrelation of the parties under the aforesaid assignment shall be regulated by them on the basis of agreements;

- to take decision on their own account about patenting abroad and in the Republic of Uzbekistan of inventions, useful models and industrial samples belonging to foreign investor and received as a result of investment activity in the Republic of Uzbekistan;

- to dispose on his own account and freely an income (including its unobstructed repatriation) resultant from investment activity;

- to attract financial resources in the form of credits and loans to the Republic of Uzbekistan;

- to use means in national currency on his own accounts for the purpose of purchasing of foreign currency at the local foreign currency market;

- to acquire rights for land in cases and on terms provided by he legislation;

- to use property and any property rights belonging to him on the right of ownership, as a security on all kinds of obligations undertaken by him including ones directed to attract borrowed funds in accordance with the legislation of the Republic of Uzbekistan;

- for receipt of adequate compensation in case of requisition of his investments and other assets;

- to get compensation for losses inflicted as a result of unlawful activity (non-activity) and decisions of the state administration bodies, local authorities and their officials.

The foreign investor also has another rights provided by the legislation of the Republic of Uzbekistan.

       

Article 11. Obligations of the foreign investors

When execute investment activity on the territory of the Republic of Uzbekistan, the foreign investor has the following obligations:

- to observe the current legislation of the Republic of Uzbekistan;

- to pay taxes and effect other payments in accordance with the legislation of the Republic of Uzbekistan;

- to be responsible on contractual liabilities undertaken in connection with investment;

- to obtain the conclusions of examination expert of investment projects regarding to observation of sanitary, hygienic, ecological and other requirements following from the legislation of the Republic of Uzbekistan;

- to abstain from direct and (or) indirect unlawful influence his partners on investment activity or the state administration bodies and local authorities with the purpose to receive the additional privileges and advantages in comparison with his competitors.

The foreign investor is responsible for violation of the legislation of the Republic of Uzbekistan on common grounds and answers by his property belonging to him on the right of ownership, on which a claim can be made in accordance with the legislative acts of the Republic of Uzbekistan.

       

Article 12. Economic activity of foreign investors

Economic activity of foreign investors including creation, sale reorganization or liquidation of the enterprises with foreign investments, their subsidiary enterprises, affiliates and other structures as well as economic associations and corporations, formation of funds of the enterprises with foreign investments, conclusion of lease and other agreements is regulated by the legislation of the Republic of Uzbekistan.

The enterprises with foreign investments pay taxes and other payments in accordance with the legislation of the Republic of Uzbekistan including social insurance payments and social security payments for personnel being the citizens of the Republic of Uzbekistan.

All expenses of the enterprises with foreign investments in foreign currency should be secured at the expense of their own foreign exchange earnings as well as other sources of foreign exchange receipts permitted by the legislation of the Republic of Uzbekistan. Their self- repayment in foreign currency should also be secured within a framework of established consortiums, associations and other organizations.

The enterprises with foreign investments on their own account execute export-import operations observing the demands of the legislation of the Republic of Uzbekistan. Export of indigenously produced output is not liable to licensing and allocation.

The enterprises with foreign investments have the right to import production for their own manufacturing requirements without license in accordance with the legislation of the Republic of Uzbekistan. The procedure for determination of the indigenously produced output supplied to export and produce imported by the enterprises for their own requirements is determined by the Cabinet of Ministers of the Republic of Uzbekistan.

Property imported by the foreign investors to the Republic of Uzbekistan for their own production needs as well as for the personal needs of foreign investors and citizens of foreign states residing in the Republic of Uzbekistan according to the labour contract signed with foreign investors, is not imposed a customs duty.

Patenting of inventions and introduction of industrial samples belonging to the foreign investors investing them in the form of investments as well as to the enterprises with foreign investments, is executed in accordance with a procedure established by the legislation of the Republic of Uzbekistan.

The enterprises with foreign investments on their own account establish a list, an order of creation and use of the enterprise's funds.

Labour relations of the personnel of the enterprises with foreign investments are regulated by the legislation of the Republic of Uzbekistan.

Social insurance and social security of the personnel of the enterprises with foreign investments (except for social insurance and social security of foreign workers) are regulated by the legislation of the Republic of Uzbekistan.

The enterprises with foreign investments can acquire land in cases and on terms provided by the legislation.

When the right of property for constructions and structures is transferred, the right of use of land is transferred jointly with these object in accordance with an order and on terms established by the legislation of the Republic of Uzbekistan.

Granting of property on lease to foreign investors is executed by the lessor on the basis of agreements and in accordance with the legislation.

The enterprises with foreign investments execute record and accountability in accordance with the procedure established by the legislation of the Republic of Uzbekistan. They keep books and records in national currency of the Republic of Uzbekistan as well as at their own discretion, in hard currency.

      

Article 13. Concession Agreements

Concessions for the prospecting, developing, and exploiting of natural resources and execution of other economic activity is fulfilled by the foreign investors in accordance with the concession agreements concluded by them with the authorized agencies of the state administration bodies of the Republic of Uzbekistan in accordance with the procedures established by the legislation.

Concessions are allowed in all spheres and all kinds of activity if they are not forbidden by the legislation of the Republic of Uzbekistan and serve the purpose of the concessions agreements.

      

Article 14. Attraction of foreign personnel

According to the Law of the Republic of Uzbekistan "On foreign investments" foreign investors and enterprises with foreign investments with the purpose of investment activity, have the right to conclude any labour contracts with the citizens of any foreign state and persons without citizenship residing outside the Republic of Uzbekistan. Those persons are entitled to come and stay in the Republic of Uzbekistan during whole period of the labour contract validity and obtain appropriate multiply visas.

- In accordance with the legislation of the Republic of Uzbekistan, the foreign investors and the enterprises with foreign investments with the purpose of execution of investment activity, have the right for free conclusion of the labour contracts with citizens of any foreign state and persons without citizenship having their residence outside the territory of the Republic of Uzbekistan. Such persons are entitled to come and stay in the Republic of Uzbekistan during the whole period of validity of the labour contract; they enjoy the right to get relevant visas many times.

Questions associated with payment for work, granting of holidays, pension security of foreign personnel should be discussed with every worker whom the contract signed with. The salaries of such personnel and other earnings got in a legal way, can be transferred by them to other states without any restrictions after payment of taxes and obligatory payments established by the law.

The foreign investor, the enterprise with foreign investments shall transfer social insurance and social security payments for every worker to relevant funds located in the country of constant residence of such worker.

 

Article 15. Movement liberty

The foreign investors, their representatives and foreign personnel residing in the Republic of Uzbekistan with the purpose to execute investment activity, enjoy the right for free movement throughout the whole territory of the Republic of Uzbekistan.

Special restrictions can be applied exclusively with the purpose to assure national security provided that such restrictions for free movement are specified by the legislation of the Republic of Uzbekistan.

      

Article 16. Insurance of the foreign investments

The insurance of the investments and risks of the foreign investors is executed on the voluntary basis. The foreign investors use the same right for insurance protection as local investors use in any insurance organization, acting legally on the territory of the Republic of Uzbekistan. An insurance of foreign investments against political and other risks can also be fulfilled by the international organizations, the foreign state export credit agencies and other insurance companies. Insurance organizations carrying out an insurance of foreign investments do not answer for obligations of the Republic of Uzbekist an. The state does not answer for obligations of insurance organizations except for cases stipulated in the agreements of the parties.

Insurance of foreign investments provides insurance protection and guarantees against political and other risks including the following:

- the expropriation of the property as well as any legislative or administrative measures leading to withdrawal of property or alienation from it, the loss of the control over it or income derived from it;

- the introduction of restrictions for transfer of foreign currency outside the country;

- the introduction of amendments, having discriminatory nature with regard to some groups of foreign investors to the legislation;

- the interference of the state administration bodies, local authorities and their officials to contract relations of investors;

- the wars, civil troubles and the same events;

- other kinds of political and other risks associated with foreign investors and foreign investments.

      

Article 17. Security of liabilities

Property and property rights of the enterprise with foreign investments can be used by it as a security for all kinds of its liabilities including attraction of borrowed funds. Its right of property for objects of trade and service as well as dwelling units with land where they are located, property rights for buildings, structures and equipment as well as other proprietary rights can be used as a security of the liabilities.

All property and property rights belonging to the foreign investor on the right of ownership irrespective of the place of their location, can be used by him as a security of his obligations.

      

Article 18. Reorganization and liquidation of the enterprise with foreign investments

The enterprise with foreign investments can be reorganized or liquidated in accordance with the procedure provided by the legislation of the Republic of Uzbekistan.

Unless otherwise provided by the legislation, the enterprise with foreign investments which has not formed its authorized fund in the amount provided by the constituent documents within one year from the date of its state registration, is liquidated under the established procedure. At the same time, the enterprise which has not formed its authorized fund within the specified period in the amount provided by constituent documents, can decrease its amount up to actually formed one, but not less than minimum sum established by the legislation, or it may be transformed into other organizational and legal form. Assets of the enterprise with foreign investments under its liquidation are liable to tax in accordance with the established procedure. The rest part is distributed among the partners of the enterprise with foreign investments proportionate to their share in the enterprise's prop rty unless otherwise provided by the constituent documents.

The foreign investor, in case of his leaving the enterprise with foreign investments or its closing down, gets the right to refund his share in the enterprise's property in the form of money or goods in accordance with the market value.

The discharged personnel should be guaranteed the observance of their rights and interests in accordance with the legislation if the enterprise with foreign investments is reorganized or liquidated.

      

Article 19. Liabilities of the state on foreign investments

The state, the state administration bodies and local authorities answer only on those liabilities undertaken in relevant agreements with foreign investors and signed by officials authorized in accordance with the procedure established by the legislation of the Republic of Uzbekistan.

The state does not answer on liabilities of the residents of the Republic of Uzbekistan attracting foreign investments except for cases when such liabilities are guaranteed by the state in accordance with the established procedure.

      

Article 20. Functions of bodies attracting foreign investments

With the view of attraction, realization and protection of foreign investments, a body authorized by the government, the other state administration bodies and local authorities as well as interested non-governmental organizations execute the following:

- prepare and spread an information on possibilities and terms of investment activity in the Republic of Uzbekistan;

- consult potential investors on legal, economical and other matters of activity and render necessary assistance and promotion in solving arisen questions;

- elaborate suggestions on perfection of legal base of foreign investors' activity;

- represent within their power the Republic of Uzbekistan in international relations on matters of foreign investments;

- fulfill other functions directed to attract, realize and protect foreign investments.

      

Article 21. State authorities' powers on control for foreign investors' activity

The taxation bodies and other state authorities empowered by the government of the Republic of Uzbekistan within the limits of their powers established by the legislation of the Republic of Uzbekistan, execute control for observation of the law of the Republic of Uzbekistan by the foreign investors and the enterprises with foreign investments.

A control authority is to keep commercial secrets when control is executed. Divulging of commercial secrets is prosecuted according to the legislation of the Republic of Uzbekistan.

      

Article 22. Conflicting provisions

In case of some non-conformity between provisions of the present Law and other legislative acts or international agreements signed by the Republic of Uzbekistan, the provisions more favorable for foreign investments have an advantage.

 

President of the Republic of Uzbekistan                                                                             I. Karimov

 

 

Sources:

 

1. State Property Committee of Uzbekistan (www.gki.uz)

2. “Uzinfoinvest” Agency (www.uzinfoinvest.uz)

3. Chamber of Commerce of Uzbekistan (www.chamber.uz)


ON FOREIGN ECONOMIC ACTIVITY

Law of the Republic of Uzbekistan, May 26, 2000 No. 77-II

 

On the introduction of amendments and supplements to Law of the Republic of Uzbekistan
"On foreign economic activity of the Republic of Uzbekistan"

 

The Oliy Majlis  of the Republic  of Uzbekistan has  resolved as follows:

To introduce amendments and  supplements to Law of  the Republic of Uzbekistan dated June 14,  1999 "On foreign economic activity of the Republic of Uzbekistan" (Gazette of the Supreme Council of the Republic of Uzbekistan 1991,  No. 8, Art. 182; 1992, No. 9, Art.335), having approved its new version (enclosed).

 

President of the Republic of Uzbekistan                                                    I. Karimov

 

Article 1. Basic tasks addressed by the Law

 

The present Law regulates the scope of relationships associated with carrying out foreign economic activity. The basic tasks addressed by the  present Law are as follows: security of  economic safety, protection of economic sovereignty and economic interests of the Republic of Uzbekistan, when carrying out foreign economic activity, promotion of the national economy development,  creation of conditions for integration of the national economy into world economic system.

 

Article 2. The legislation on foreign economic activity

The legislation on foreign economic activity comprises the present Law, as well as other regulatory documents. If a certain international agreement signed by the Republic of Uzbekistan lays down rules and regulations other than those contained in the legislation of the Republic of Uzbekistan on foreign economic activity, the former is applicable.

 

Article 3. Foreign economic activity

Foreign economic activity is defined as the activity carried out by legal and natural entities in the Republic of Uzbekistan aimed at the establishment and development of mutually advantageous ties with legal and natural entities of foreign states, as well as with international organizations.

Both legal entities registered in the Republic of Uzbekistan and natural entities domiciled in the Republic of Uzbekistan and registered as individual entrepreneurs are entitled to carry out foreign economic activity.

Unless otherwise stipulated by the legislation, state bodies of the Republic of Uzbekistan may carry out foreign economic activity.

 

Article 4. Underlying principles of foreign economic activity

Underlying principles of foreign economic activity are as follows:

- freedom and economic self-sufficiency of subjects of foreign economic activity;

- equality of subjects of foreign economic activity;

- prevention  of discrimination when carrying out foreign economic activity;

- mutual advantage, when carrying out foreign economic activity protection by the state of rights and lawful interests of subjects of foreign economic activity.

 

Article 5. Subjects of foreign economic activity

Legal and natural entities of the Republic of Uzbekistan carrying out foreign economic activity are considered to  be subjects of foreign economic activity.

 

Article 6. Objects of foreign economic activity

Foreign economic activity may be carried out with regard to goods (work, services), any property, including securities, currency and currency values, as well as with regard to electric, thermal and other kinds of energy, transport facilities, objects of intellectual property considered to be objects of purchase and sale or exchange, with  the exception of those banned by the law to be used in foreign economic activity.

 

Article 7. Rights enjoyed by the subjects of foreign economic activity

Subjects of foreign economic activity have equal rights to carry out foreign economic activity.

Subjects of foreign economic activity are entitled:

independently,  within  the  framework  of  the  legislation, to define forms of participation in foreign economic activity;

to attract, at their own discretion and  in keeping with the established procedure, on  a  contract  basis,  other  legal  and natural entities to carry out foreign economic activity;

Subjects of  foreign  economic  activity  may  also enjoy other rights according to the law.

 

Article 8. Obligations of subjects of foreign economic activity

Those involved in  foreign economic activity are obliged:

to submit foreign economic activity reports in keeping with the procedure established by the legislation;

to  present documents confirming correspondence of goods imported tothe Republic of Uzbekistan to technical, pharmacological, sanitary, veterinary, phytosanitary, ecologica standards and requirements established in the Republic of Uzbekistan.

Besides, subjects  of foreign  economic activity  may have other obligations provided by the legislation.

 

Article 9. Main lines of foreign economic activity

Main lines of foreign economic activity are as follows:

- international economic and financial cooperation;

- foreign trade activity;

- attraction of foreign investment;

- investment activity outside the Republic of Uzbekistan.

 

Article 10. International economic and financial cooperation

International economic and financial cooperation is carrying out foreign economic activity aimed at establishment and expansion of mutually advantageous ties of subjects of foreign economic activity of the Republic of Uzbekistan with legal and natural entities of foreign states and international organizations in the following spheres: production, finance, bank and insurance activity, education, personnel training, tourism, public health, as well as in scientific and technical, cultural, environmental, humanitarian and other spheres in accordance with the procedure established by the legislation.

 

Article 11. Foreign trade activity

Foreign  trade  activity  is  considered  to  be entrepreneurial activity in the sphere of international interchange of goods, works (services).

Foreign trade activity is carried out in the form of export and import of goods, works (services). 

The removal of goods outside the customs territory of the Republic of Uzbekistan without obligation on their backward import is considered to be export.

Bringing of goods to the customs territory of the Republic of Uzbekistan without an obligation on their backward export is considered to be import.

Operating of works (rendering of services) by the legal and natural entities of the Republic of Uzbekistan to the legal and natural entities of foreign state regardless of place of their operating (rendering) is considered to be export of works (services).

Operating of works (rendering of services) by the legal and natural entities of foreign state to the legal and natural entities of the Republic of Uzbekistan regardless of place of their operating (rendering) is considered to be import of works (services).

 

Article 12. Attraction of foreign investment

All kinds of material and nonmaterial values and rights to them, including rights to intellectual property, as well as any income derived from foreign investment, invested by foreign investors into objects of entrepreneurial and other kinds  of activity not banned by the law is considered to be foreign investment in the Republic of Uzbekistan.

Forms and the procedure for the implementation of foreign investment in the Republic of Uzbekistan are defined by the legislation.

 

Article 13. Investment activity outside the Republic of Uzbekistan

Complex of actions of  subjects  of foreign economic activity associated with the investment of material and nonmaterial values and rights to them into objects of entrepreneurial and other activity outside the Republic of Uzbekistan is considered to be investment activity outside the Republic of Uzbekistan.

Investment activity outside the Republic of Uzbekistan may be carried  out  in accordance with  the  procedure  established  by the legislation by means of:

creation of legal entities or share participation in authorized funds (capitals), including by purchasing property and shares;

establishment of representative offices, affiliated branches and other separate sub-divisions outside the Republic of Uzbekistan;

purchase of securities, including  promissory notes,  issued by residents of foreign states;

purchase of concessions, including those for prospecting, exploration, extraction (mining) or use of mineral resources;

purchase  of  right  of ownership, as well as rights of possession and use of land and other natural resources.

Investment activity outside the Republic of Uzbekistan may also be carried out in other ways stipulated in the law of foreign states and the legislation of the Republic of Uzbekistan.

 

Article 14. Representative offices of foreign states and their legal entities in the Republic of Uzbekistan

Representative offices of foreign states for trade and economic affairs are established  in the Republic  of Uzbekistan on  the basis of international agreements signed by  the Republic of Uzbekistan  with the relevant foreign states.

Foreign legal entities are entitled to establish representative offices  in  the Republic  of Uzbekistan in  accordance  with the legislation of the Republic of Uzbekistan.

 

Article 15. Guarantees of rights and interests of subjects of foreign economic activity

The Republic of Uzbekistan guarantees implementation of the rights and lawful interests of subjects of foreign economic activity.

State bodies and their officials are not entitled to interfere into activity carried out by subjects of foreign economic  activity in keeping with the legislation.

In case where the state bodies of the Republic of Uzbekistan adopt acts violating rights of subjects of foreign  economic activity defined by  the present law, the losses inflicted to them, should be compensated under the legislation.

 

Article 16. Access to information

Subjects of foreign economic activity have the right to receive information, concerning their rights and interests in the sphere of foreign economic activity and considered to be not confidential, from state bodies according to the established  procedure. Confidentiality of information is defined under the law.

Legislative acts, regulating foreign economic activity and recognized as those with common obligatory character, are to be published in mass media and available to subjects of foreign economic activity.

 

Article 17. State regulation of foreign economic activity

State regulation of foreign economic activity is implemented by means of:

the formation  and improvement  of legislative  base of  foreign economic activity;

currency regulation;

tax regulation;

tariff and nontariff regulation;

the application of protective, compensatory and antidumping measures to observe economic interests of  the Republic of Uzbekistan;

the establishment of the procedure for carrying out foreign trade activity, including quantitative restrictions and  state monopoly on export and import of certain categories of goods;

the establishment of export control over goods, equipment, scientific and technical documentation, works and services, results of intellectual activity (specified in the lists of export control objects), which in view of inherent in their characteristics and features can to contribute significantly to creation of weapons of mass destruction (nuclear, chemical, bacteriological (biological) and toxin weapons), its delivery system (rockets and other hardware that capable of delivering of  weapons of mass destruction), other kinds of arms and defense technology;

the certification of imports and exports;

the  establishment  of  technical,  pharmacological, sanitary, veterinary, phytosanitary and ecological  standards and requirements;

granting of preferences and  privileges to  subjects of foreign economic activity.

Investment activity outside the Republic of Uzbekistan may also be carried out in other ways in keeping with the legislation.

 

Article 18. Powers of the Cabinet of Ministers of the Republic of Uzbekistan in the sphere of regulation of foreign economic activity

The Cabinet of Ministers of the Republic of Uzbekistan fulfills the following:

elaborates a  strategy of  the development  of foreign economic activity;

ensures economic  security, protection  of economic sovereignty and economic interests of the Republic of Uzbekistan;

concludes international treaties of the Republic of Uzbekistan in the sphere of foreign economic activity;

works out the Republic's balance of payments;

issues guarantees of the  Republic of Uzbekistan under obtained foreign credits;

possesses, uses and  disposes  property  of  the  Republic of Uzbekistan abroad;

executes other powers under the legislation.

 

Article 19. Authorized state body in the sphere of regulation of foreign economic activity

The Ministry for Foreign  Economic Relations, Investments and Trade of the  Republic of Uzbekistan is considered  to be an authorized state body  in the sphere of regulation of foreign economic activity.

The Ministry for Foreign  Economic Relations, Investments and Trade of the  Republic of Uzbekistan fulfills the following:

ensures the  pursuance of a state policy in the sphere of foreign economic activity, the implementation of  tasks for protection of economic interests  of the Republic  of Uzbekistan when  carrying out foreign economic activity;

works out proposals on improvement of legislative  base of foreign economic activity;

coordinates  and  regulates activity of subjects of foreign economic activity within the  competence defined by the legislation;

coordinates work of bodies of state management in the sphere of regulation of foreign economic activity;

executes other powers in keeping with the legislation.

 

Article 20. Prohibition and restriction of export and import

The legislation  of  the  Republic  of Uzbekistan may establish prohibition and restriction of export and import with a view to:

- ensure national security;

- protect life  and health  of citizens,  as well  as flora, fauna and  environment;

- observance of social moral and legal order;

- preserve  cultural  heritage  of  people  of  the  Republic of Uzbekistan;

- protect cultural  values  from   illegal  export,  import  and transfer of property rights;

- support  balance  of  payments  of  the  Republic of Uzbekistan;

- fulfill international obligations of the Republic of  Uzbekistan;

- prevent depletion of nonrenewable natural resources;

- protect other interests of the Republic of Uzbekistan.

 

Article 21. Licensing and fixing quotas of export and import of certain categories of goods

Export and import of certain categories of goods  may be carried out only after receipt of  an appropriate permit  (license) for their  import or export. Licenses for export and import of certain categories of goods are issued by the agencies authorized by the Cabinet of Ministers of the Republic of Uzbekistan.

The Cabinet of Ministers of the Republic of Uzbekistan may establish quantitative restrictions (quotas) with regard to export and import of certain categories of goods.

Allocation of quotas, as a rule, is executed on a competitive or an auction basis.

A list of  certain categories of  goods which export  and import is  liable  to  licensing  and  fixing  quotas, as well as the procedure for  issue  of  licenses  and  allocation  of  quotas are defined by the Cabinet of Ministers of the Republic of Uzbekistan.

 

Article 22. Export control

With a  view to  protect national  interests of  the Republic of Uzbekistan when carrying  out foreign economic  activity with regard  to goods, equipment, scientific and technical documentation, works and services, results of intellectual activity (specified in the lists of export control objects), which in view of inherent in their characteristics and features can to contribute significantly to creation of weapons of mass destruction (nuclear, chemical, bacteriological (biological) and toxin weapons), its delivery system (rockets and other hardware that capable of delivering of  weapons of mass destruction), other kinds of arms and defense technology, as well as observation of international obligations, a system of  export control operates  in the  Republic of  Uzbekistan. A list of objects of export control, as well as the  procedure for  their export  or transit  are established  by the Cabinet of Ministers of the Republic of Uzbekistan.

 

Article 23. Protection of economic interests of the Republic of Uzbekistan and subjects of foreign economic activity

In case  where foreign  state takes  measures violating economic interests  of  the  Republic  of  Uzbekistan  and  subjects  of  foreign economic activity, as well as in case where such state fails to perform liabilities  to   the  Republic   of  Uzbekistan   under international agreements,  the  Republic  of  Uzbekistan  is  entitled  to introduce counter-measures  in  the  sphere   of  foreign  economic  activity in accordance  with   generally  acknowledged   norms  and   principles  of international law.

 

Article 24. Safeguards

Safeguards can be applied with respect to increased import by resolution of Cabinet of Ministers of the Republic of Uzbekistan.

The  procedure  for  the  application of safeguards is defined by the legislation.

 

Article 25. Antidumping duties

Antidumping duties can be applied with respect to import of goods by dumping prices by resolution of Cabinet of Ministers of the Republic of Uzbekistan.

The procedure  for the  application of  antidumping duties is defined by the legislation.

 

Article 26. Countervailing duties

Countervailing duties can be applied with respect to import of goods by dumping prices by resolution of Cabinet of Ministers of the Republic of Uzbekistan.

The procedure  for the  application of  antidumping duties is defined by the legislation.

 

Article 27. Technical, pharmacological, sanitary, veterinary, phytosanitary and ecological standards and requirements imposed on imported goods

Goods  imported  to the  Republic  of  Uzbekistan should meet technical, pharmacological,  sanitary,  veterinary, phytosanitary and ecological requirements established in the Republic of Uzbekistan.

The following goods are banned to  be imported to  the Republic of Uzbekistan:

those not complying with standards and requirements specified in part one of the present Article;

those  without  certificate,  marking  or mark of correspondence in cases stipulated by the legislation.

 

Article 28. Free economic zones

Special conditions  to carry  out foreign  economic activity may be established in  the Republic of  Uzbekistan (tax treatment, exchange and customs control, etc.) for free economic zones; such conditions are regulated by the legislation on free economic zones.

 

Article 29. Free trade

The Republic of  Uzbekistan  may conclude international treaties  with foreign  states  on  free  trade  aimed  at abolition of customs duties and  taxes, as well  as related charges  and quantitative restrictions  for  export  and  import  of  goods,  elimination of other obstacles preventing free movement of goods.

 

Article 30. Settlement of disputes

Any  disputes  which  may  arise  in  the course of carrying out foreign economic  activity  are settled  in keeping with the procedure stipulated in the agreement. If provisions regulating the procedure  for settlement of disputes  are not available  in the agreement,  applicable law and place for examination  are defined in accordance with  generally acknowledged norms of international private law.

 

Article 31. Responsibility born for the infringement of the legislation on foreign economic activity

Persons identified  as  having  violated  the  legislation on foreign economic activity  are made answerable  to the law  according to the established procedure.

ON GUARANTEES AND MEASURES OF PROTECTION OF FOREIGN INVESTORS' RIGHTS

Law of the Republic of Uzbekistan (April 30,1998 ¹611-I) (with amendments)

 

Article 1. Purpose and tasks of the Law

The  present   law  determines   guarantees  and   measures   of protection  of   rights  of   foreign  investors executed   investment activity on the territory of the Republic of Uzbekistan.

The  basic  tasks  of  the   present  law  are the   following:

formation of a complex of measures on guarantees and  protection of foreign investors' rights;

determination  of   conditions  of   granting    of   additional guarantees  and  measures  of  protection  for particular categories of foreign investors and foreign investments.

 

Article 2. Legislation on guarantees and measures of protection of foreign investors' rights

Relations  associated  with granting and implementation of guarantees and measures of  protection of foreign investors'  rights are regulated by the present Law, the law of the Republic of Uzbekistan  "On foreign investments" and other legislative acts.

If  an  international  agreement concluded  by the Republic of Uzbekistan  established  other   rules  than  those   provided  by the legislation  on  guarantees  and  measures  of  protection of foreign investors' rights than rules of international agreement are applied.

 

Article 3. Guarantees of foreign investors' rights

The  state  guarantees  and  protects  the  rights  of   foreign investors  who  execute  investment  activity on the  territory of the Republic of Uzbekistan.

Discrimination  is   not  admitted  to  foreign investors in connection with their nationality,  place of residence, denomination,  a place of  execution of  economic activity,  as well  as depending on the country of origin of investors  or investments with taking into  account guarantee of realization of international agreements of the Republic  of Uzbekistan.

Legislative acts including departmental normative ones have  not retroactive effect if their execution causes damage to foreign  investor or foreign investments.

If  the  subsequent  legislation  of  the Republic of Uzbekistan makes worse investment conditions, than legislation current on the  date of investment  is applied  to foreign  investments within  ten years  of the date of investment.  The foreign investor has  the right at his  own discretion to  apply those  provisions of  a new  legislation which make better conditions of his investment.

Worsening conditions of investments refer to changes and amendments to the legislation current on the  date of investment or adoption of the new legal acts, providing:

- increase in the rate of tax on incomes, received as dividends, paid to the foreign investor;

- introduction of additional requirements that complicate procedure of repatriation or reduce the size of foreign investor's income (profit), being transferred abroad, except for the cases, when the state stops repatriation of cash of foreign investor on conditions of non-discriminative implementation of legislation acts in case of insolvency and bankruptcy of the enterprise with foreign investments or protection of the rights of creditors, criminal acts or the administrative offences accomplished by the foreign investor - the physical person, or other cases demanding necessity of stoppage of such repatriation according to judicial or the arbitral decision;

- introduction of quantitative restrictions to volumes of investments and other additional requirements to the size of investments, including in form of increase in the minimal volume of foreign investments in the enterprises with foreign investments;

- introduction of restrictions on share of the foreign investor in authorized capitals of the enterprises of the country;

- introduction of additional procedures of registration and prolongation of visas of foreign investors, as well as other additional requirements on making foreign investments.

Order of implementation of the parts four and five of the present article is determined by the Cabinet of Ministers of the Republic of Uzbekistan.

All  agreements  on  foreign  investments,  first of all private ones,  in  the  part  of  security  of unconditional guarantees of their fulfillment, are under  control of a  relevant bodies authorized  by the government of the Republic of Uzbekistan.

State administration bodies and  local authorities has no  right to  interfere  in  economic  activity  of  foreign investors executed in accordance  with  the  legislation of  the  Republic of Uzbekistan.

If, the state administration bodies and local authorities  under their  own  legal  power,  reveal  violation  of  the law by the foreign investor, they can assume only those measures which they are  authorized for  and  which  are  associated  directly  with elimination of relevant violation. The state administration bodies and local authorities  can not  use  the  fact  of  violation  as  a  ground  for  interference  or limitation  of   other  legal   activity  of   the  foreign    investor.

The  given  article  is  not  applied  to approval, amendment or abrogation  of  legislative  acts  which  are  connected  directly  with assurance  of  protection  of  interests  of  national  security  of the Republic  of  Uzbekistan,  specified  under  common  principles  of   an international law.

 

Article 4. Additional guarantees and measures of protection granted to foreign investors

Together with  common guarantees  and measures  of protection of foreign  investors,  additional  guarantees  and  measures of protection including ones providing absolute  fulfillment by the partners  of their obligations to  foreign investors,  can be  granted by  the legislation.

Additional guarantees and measures of protection can be granted to foreign investors  in every particular  case under investment  to the following:

to  priority  branches  providing  stable  economic  growth  and progressive structural changes of country's economy;

to priority  projects providing  consolidation and  expansion of export potential of the  republic, its integration into  global economic cooperation;

to  the  projects  of  small business which realization is directed  to  processing  of  raw  materials,   primary goods,  production  of  consumer   goods  and  services,  assurance   of employment of population.

Additional  guarantees  and  measures  of  protection to foreign investors  can  include  granting  of  the government's guarantee of the Republic  of  Uzbekistan,  rendering  of  assistance  in  financing   of investment projects, establishment of a special tax and payment  regime, the  state  monitoring  of  realization  of  projects and other measures in accordance with the legislation.

Additional guarantees and measures of protection are granted  to foreign  investors  by  the  special  Government's decisions in which in particular,  conditions  and  order  of  investment, use and security of recoupment of foreign investments are provided.

 

Article 5. Guarantees against nationalization.  Conditions of execution of requisition

Foreign investments  and other  assets of  foreign investors  of the  Republic  of  Uzbekistan   are  not  subject  to   nationalization.

Foreign investments  and other  assets of  foreign investors are not  subject  to  requisition  except  for  cases of natural calamities, accidents, epidemics, epizootics.

The  decision  on  requisition  is  taken  by  the  Cabinet of Ministers  of   the  Republic   of  Uzbekistan   under  observation   of requirements on which requisition:

is  limited  by  minimal  amount  of investments or other assets required   to   solve    tasks   following    from   indicated    cases;

is executed on non  discriminatory basis and in  accordance with the order established by the legislation;

is accompanied by payment of compensation adequate to  inflicted loss.  A  state  is  a  guarantor  of  timely  fulfillment  of indicated compensation payments.

A foreign investor has the right to contend in legal form and by arbitration the following:

legality  of  the  purpose  used  for  execution of requisition;

an amount of requisitions;

valuation   of   requisited   investments   and   other  assets;

correspondence of  payment of  compensation subject  to payment;

procedure which was observed by state administration bodies  and local authorities under execution of requisition.

 

Article 6. Guarantees of funds use

Foreign  investor's   profits  received   in  the   Republic  of Uzbekistan  can  be  re-invested  on  the  territory  of the Republic of Uzbekistan or used  by all means  at the foreign  investor's discretion.

According  to  the  legislation,  the  enterprises  with foreign investments have the right for the following:

to open, use and dispose  accounts in any currency and  any bank on the territory of  the Republic of Uzbekistan  as well as outside  it;

to receive and return loans in foreign currency.

Limitation of  use or  compulsory withdrawal  of resources  from the accounts of an enterprise  with foreign investments can be  effected by the  state administration  bodies and  local authorities  exclusively in accordance with the procedure established by the legislation.

 

Article 7. Guarantees of funds transfer

Foreign investors  are guaranteed  a free  transfer of  funds in foreign currency  to and  from the  Republic of  Uzbekistan without  any limitations provided payment of  taxes and other obligatory  payments by them in accordance with the procedure established by the legislation  of the  Republic  of  Uzbekistan.  Such  transfers  include  the following:

initial and  additional sums  designed either  to support  or to increase foreign investments;

income received from investment execution;

funds  received   as  compensation   for  inflicted   losses  in accordance with the present Law;

payments   executed   in   order   of   agreements  execution;

proceeds  of  sales  of  all  or  part  of  foreign investments;

payments arised on account  of dispute settlement including  any judicial or arbitral decision;

salary and other payments to workers;

funds  from  other  sources  received  in  accordance  with  the legislation.

In accordance  with the  rules of  international law,  the state can  stop  repatriation  of  foreign  investor's  funds  on terms of non discriminatory application  of legislative  acts in  cases of insolvency and bankruptcy of an  enterprise with foreign investments  or protection of creditors' rights, criminal acts or administrative infringement of  a law effected by a foreign investor - natural entity, or other  necessity to stop such repatriation according to arbitration or court decision.

 

Article 8. Guarantees of refund of foreign investments in connection with cessation of investment activity

The foreign investor has  the right to stop  investment activity in the Republic of Uzbekistan  in accordance with the order  established by the legislation.

After  cessation  of  investment  activity, the foreign investor has  the  right  for  free  repatriation  expressed  either  in money or natural form of his  assets got as a  result of cessation of  investment activity without loss for  fulfillment of foreign partner's  obligations with regard to the Republic of Uzbekistan or other creditors.

 

Article 9. Free access to open information

Legislative acts including  departmental normative ones  as well as  judicial  decisions  effecting   the  foreign  investors'   interest anywise, should be available to them; and in cases directly provided  by the legislation - they should be published.

State  administration  bodies  and  local  authorities  are   to provide information  interested for  foreign investor,  at their request in accordance with the procedure stipulated by the legislation.

 

Article 10. Settlement of disputes

Dispute associated with foreign investments (investment dispute) directly  or  indirectly,  can  be  settled  on agreement of the parties by  consultation  between  them.  If  the  parties  will  not be able to achieve agreed settlement,  than such dispute  should be settled  either by an economic court of the Republic of Uzbekistan or by arbitration  in accordance with  the rules  and procedures  of international  agreements (conventions)  on  settlement  of  investment  disputes,  to  which  the Republic of Uzbekistan has been joined.

The  parties  involved  in  investment  dispute  can,  on mutual agreement, determine  the authority  settling such  dispute, as  well as a county  which can  execute arbitration  legal procedure  of investment dispute.

Foreign  investors'   disputes,  not   associated  with    their investment  activity  on  the  territory  of the Republic of Uzbekistan, shall be settled in accordance  with the legislation of the  Republic of Uzbekistan except for cases when other procedure for dispute  settlement is provided by an agreement  in keeping with the rules  of international law.

 

Article 11. Amenability for violation of the legislation on guarantees and measures of protection of foreign investors' rights

If  violation  of  legislation  on  guarantees  and  measures of protection of foreign investments'  rights takes place, an  investor has the  right  to  get  adequate  compensation  for inflicted losses in due course of law.

In case of adoption by the state administration bodies or  local authorities of normative acts limiting foreign investors' rights as well as in  cases of  their unlawful  interference into  economic activity of foreign investors, than  inflicted losses shall  be compensated by  such authorities in due course of law.

Officials  of   the  state   administration  bodies  or local authorities who violated a law  on guarantees and protection of  foreign investors' rights, are responsible according to the established order.

 

Article 12. Conflict provisions

In  case  of  some  non-conformity  between  provisions  of  the present law and  other legislative acts  or international agreements  of the Republic of Uzbekistan,  the provisions, more favorable  for foreign investments have an advantage.

 

Article 13. Application of law to investments executed earlier

The present law  is applied to  foreign investments executed  in the  Republic  of  Uzbekistan  prior  to  coming of the present law into force, only in part of its more preference to foreign investor.

 

President of the Republic of Uzbekistan                                                                             I. Karimov

























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