Tax incentives provided to participants of the Free Industrial - Economic Zone "Navoi"
Amendments were introduced according to Section XXIV of the Law of RUz dtd.12.12.2003 No. 568-II, Article 22 of the Law of the RUz No. ZRU-59 dtd 10.10.2006
Article 1. Legislation on investment activity
The legislation on investment activity encompasses the present Law and other legislative acts.
Relations arisen when implement investment activity in the Republic of Karakalpakstan are also regulated by the legislation of the Republic of Karakalpakstan.
Peculiarities of relations connected with the implementation of foreign investment are also regulated by the legislation on foreign investment, guarantees and measures of protection of foreign investors' rights, as well as by international agreements concluded by the Republic of Uzbekistan.
If a certain international agreement signed by the Republic of Uzbekistan lays down rules and regulations other than those provided by the present legislation of the Republic of Uzbekistan on investment activity, the former is applicable.
Article 2. Basic notions
The following basic notions are included into the present Law:
investment - are material and non-material values and rights for them invested into the objects of economic and other activities;
investment activity - is totality of actions of subjects of investment activity connected with investment implementation;
an investor is a subject of investment activity who implements investing of own, loan and attracted funds, material values and rights for them as well as rights for intellectual property into the objects of investment activity;
a participant of investment activity - is a subject of investment activity who provides investment activity as an executive of investor's orders;
reinvestment is investment of profit (income) derived as a result of an investor's activity.
Article 3. Types of investment
There are the following types of investment: capital, innovation and social investments.
Capital investment are those used for creation and reproduction of capital assets as well as to develop other forms of material production.
Innovation investment - are those used to elaborate and master new technique and technologies.
Social investments are those used to develop human potential, skills and production experience as well as other forms of non-material values.
Article 4. Forms of investment implementation
Investors can implement investment in the way of:
- creation of legal entities or a share participation in their authorized funds (capital) including purchasing of assets and shares;
- purchasing of securities including promissory notes issued by residents of the Republic of Uzbekistan;
- acquisition of concessions including those either for exploration, mining or for use of natural resources;
- acquisition of right of ownership in keeping with the legislation, including rights of ownership for trade and service objects, dwellings with land where they are located as well as rights of possession and use of land (including that on lease basis) and other natural resources.
Investors can also implement other forms of investment that are not in variance with the current legislation.
Changing of forms of investment implemented first or second time, is not a reason to change their qualification as investment.
Article 5. Investment resources
Investment resources include the following:
- monetary and other financial resources including credits, shares and other securities;
- personal and real estate (buildings, constructions, equipment and other material values) and rights for them;
- objects of intellectual property including technical, technological, commercial and other knowledge in the form of technical documentation, as well as skills and factory-floor experience required to organize some or other production process, know-how;
- the right of possession and use of land and other natural resources, buildings, structures, equipment as well as corporeal rights proceeding from the right of ownership;
- other values in keeping with the legislation.
Article 6. Objects of investment activity
Object of investment activity are those produced material and non-material values.
Investment into objects whose creation and use do not correspond with sanitary, hygiene, radioactive, environmental, architectural, city planning and other demands established by the legislation and violate rights and interests of legal and natural entities protected by Law, are banned.
Article 7. Subjects of investment activity
Subjects of investment activity (investors and participants) can be:
- citizens (natural entities (persons), legal entities - residents of the Republic of Uzbekistan;
- local agencies of State power and agencies of State administration;
- foreign states, international organizations and foreign legal entities and citizens as well as persons without citizenship and citizens of the Republic of Uzbekistan residing abroad permanently;
- legal and natural entities as well as states and international organizations implemented joint investment activity.
Investors can act as customers (depositors), creditors, buyers as well as perform functions of a participant of investment activity in keeping with the current legislation.
Participants of investment activity can act as an executive of an investor's order under an agreement concluded with an investor.
Article 8. Investor's rights
Investors, irrespective of forms of ownership and type of activity have equal rights to implement investment activity.
Investment into any objects, with the exception of those whose implementation is banned or restricted either by Law currently in force or other legislative acts, is an investor's exclusive right; it is protected by Law.
An investor, at his own discretion, defines a purpose, a course, a type and a volume of investment; to implement such investment, an investor attracts legal and natural entities as participants of investment activity on agreed basis and, as a rule, by holding of competitive (tender) bids.
In accordance with the legislation, an investor has the right of possession, use, disposal of objects and results of investment as well as reinvestment.
Investment into objects that does not entail acquisition of the right of ownership established by the legislation, presumes the right of further investor's participation in possession, operative management (administration) or in profit (income) derved from operation of such objects.
According to an investor's decision, the right of possession, use and disposal of objects and results of investment can be transferred to the other legal and natural entities in keeping with the procedure established by the legislation. Relations of Parties under assignment of rights are adjusted on basis of contracts concluded by them.
Unless otherwise established by the legislation, an investor has the right to purchase necessary equipment from legal and natural entities at prices and on terms defined by an agreement of Parties without restriction of volume and nomenclature.
An investor can also have other rights stipulated in the legislation.
Article 9. Investor's duties
An investor must:
- get conclusion of examination of investment projects regarding observation of sanitary, hygiene, radioactive, environmental, architectural, city planning and other requirements;
- observe the demands of antimonopoly legislation;
- pay taxes, charges and other compulsory payments;
- compensate for losses caused to a participant of investment activity by a failure to perform an agreement or its inadequate performance;
- execute claims of local agencies of State power and agencies of State administration made within the limit of their competence.
An investor can also incur other obligations provided by the legislation.
Article 10. Rights of a participant of investment activity
A participant of investment activity has the following rights:
- to be a participant of competitive (tender) bids;
- to conclude agreements with investors for performance of their orders;
- to attract other persons to perform his obligation to an investor, unless otherwise stipulated in the legislation or an agreement;
- to dispose funds received as a result of decrease in actual value of an object of investment activity independently unless otherwise stipulated in an agreement.
A participant of investment activity can also have other rights provided by the legislation.
Article 11. Duties of a participant of investment activity
A participant of investment activity must:
- observe norms, rules and standards established by the legislation;
- perform agreements properly and in good time;
- compensate for losses caused to an investor by a failure to perform an agreement or its inadequate performance;
- execute claims of local agencies of State power and agencies of State administration made within the limit of their competence.
To execute activity liable to licensing, a participant of investment activity must get a license in accordance with the procedure established by the Cabinet of Ministers of the Republic of Uzbekistan.
A participant of investment activity can also incur other obligations provided by the legislation.
Article 12. Mutual relations of subjects of investment activity
Conclusion of an agreement, choice of partners and guarantors, determination of obligations, as well as other terms of mutual relations of subjects of investment activity are adjusted by the legislation.
Article 13. Price formation in investment activity
Value of production (work, services) in the course of investment activity is defined, as a rule, according to results of competitive (tender) bids at contract prices.
If a subject of investment activity has monopoly position at the market, prices are adjusted by an authorized state agency in keeping with the legislative acts.
Article 14. Governmental regulation of investment activity
Governmental regulation of investment activity is implemented in the way of:
- improvement of legislative base of investment activity;
- application of levy machinery differentiating tax payers and objects of taxation, tax rates and privileges;
- implementation of accelerated depreciation of capital assets;
- laying down of norms, regulations and standards;
- taking of antimonopoy measures;
- carrying out of credit and price formation policy;
- determination of terms of possession and use of land and other natural resources;
- definition of examination mechanism of investment projects;
- monitoring of implementation of investment projects included into Investment Program of the Republic of Uzbekistan.
Governmental regulation of investment activity can also have other forms of implementation provided by the legislation.
Article 15. Centralized investment
Centralized investment are those implemented within the framework of state investment activity in the way of:
- direct financing at the expense of funds of national budget as well as off-budget funds;
- attraction of foreign investments and credits against security of Government of the Republic of Uzbekistan.
The control over centralized investment includes the determination of objects for the purpose of implementation of state investment, terms of investment and solving of other associated tasks.
The control over centralized investment is executed by local agencies of State power and agencies of State administration within their competence.
Article 16. Decision-making regarding centralized investment implementation
Decisions on centralized investment implementation are made by state agencies on basis of forecasts of social and economic development, purpose-oriented scientific, technical and comprehensive state programs and technical and economic substantiations defining expedience of such investment.
Drafts purpose-oriented comprehensive state programs are being worked out and approved in keeping with the procedure defined by the Cabinet of Ministers of the Republic of Uzbekistan.
The Oliy Majlis of the Republic of Uzbekistan approves volumes of investment financed from the state budget.
Article 17. Placement of centralized investment
The placement of centralized investment is executed, as a rule, on basis of state contract.
State contract is concluded on basis of competitive (tender) selection of an executive - a participant of investment activity. At the same time, specified privileges and benefits can be established by the legislation for above mentioned executive.
Article 18. Investment Program of the Republic of Uzbekistan
Investment projects designed for priority fields of social and economic development are included into Investment Program of the Republic of Uzbekistan that should be approved by the Republic's Cabinet of Ministers.
Participants who implement investment projects included into Investment Program of the Republic of Uzbekistan are granted tax and other privileges. List of privileges granted to every investment project or Investment Program of the Republic of Uzbekistan as a whole, is defined in keeping with the procedure established by the legislation.
Article 19. Examination of investment projects
Investment projects financed at the expense of budget and off-budget funds as well as with attraction of foreign investors against security of the Government of the Republic of Uzbekistan, are liable to obligatory examination. The examination procedure is established by the Cabinet of Ministers of the Republic of Uzbekistan.
Investment projects financed at the expense of other sources are liable to state examination regarding observation of sanitary, hygiene, radioactive, environmental, architectural, city planning and other requirements in accordance with the procedure established by the legislation.
Small and medium-sized investment projects financed at the expense of banks' credit resources are liable to examination by the commercial bank to define expedience of the given investment project implementation.
Investment projects implemented within the framework of international agreements signed by the Republic of Uzbekistan are liable to examination in keeping with the procedure provided by such agreements.
Article 20. Investment funds
The relevant investment funds can be formed for the purpose of implementation of investment activity.
Article 21. Guarantees of rights of subjects of investment activity
The state guarantees rights of subjects of investment activity.
State agencies and their officials have no right to interfere in activity of subjects of investment activity implemented in accordance with the legislation.
If state agencies and their officials reveal violation of legislation by subjects of investment activity when they implement their activity, they have the right to take those measures for which they are authorized and which are directly associated with the elimination of the given violation. The state agencies and their officials can not use the fact of violation as the ground to interrupt or restrict any legal activity of subjects of economic activity.
The rules of the present article are not applicable either to adoption or abolishment of legislative acts that are directly connected with assurance of national security of the Republic of Uzbekistan defined in keeping with the common principles of international law.
Article 22. Investment protection
The state guarantees protection of investment.
Investment and other investors' assets in the Republic of Uzbekistan are not subject to nationalization.
Investment and other investors' assets are not liable to requisition (withdrawal) with the exception of acts of God, accidents, epidemics, epizootics and other extraordinary circumstances.
Decision regarding requisition (withdrawal) of investment is taken by the Cabinet of Ministers with the observation of requirements under which requisition:
- is restricted by minimum amount of investment or other assets required to solve tasks, proceeding from cases mentioned in part three of the present article;
- is implemented not on discriminatory base and in keeping with the procedure established by the legislation;
- is liable to payment of compensation equal to inflicted loss.
The State acts as a guarantor of payment of indicated compensation in good time.
An investor has the right to contest decisions on investment requisition (withdrawal) in legal form.
Investment can be insured; and in cases provided by Law, they must be insured.
Article 23. Guarantees of use of funds
Income (profit) of a subject of investment activity derived as a result of investment activity can be, after payment of taxes, charges and other compulsory payments, reinvested or used in any way at his discretion.
In case of withdrawal (requisition) of shares or securities purchased by a subject of investment activity, his purpose bank deposits as well as the value of purchased assets or payment for lease, they should be compensated in accordance with the legislation.
Restriction to use or compulsory draw of funds from accounts of subjects of investment activity, can be executed in keeping with the procedure established by Law.
Article 24. Additional guarantees and measures designed to protect investment
Additional guarantees and measures designed to protect investment can include the following: granting of guarantees by the Government, rendering of assistance in financing of investment projects, creation of special tax and payment regime, conduction of state monitoring over the projects implementation and other measures in accordance with the legislation.
Additional guarantees and measures of investment protection are granted to subjects of investment activity on the grounds of decisions taken by the Cabinet of Ministers of the Republic of Uzbekistan.
Article 25. Free access to public information
Obligatory legislative acts affecting interests of subjects of investment activity in any way, should be available to them.
By request of subjects of investment activity, the local agencies of State power and agencies of State administration should provide them with interested information in accordance with the procedure stipulated by the legislation.
Article 26. Restriction, suspension or termination of investment activity
Restriction, suspension or termination of investment activity can be executed according to the decision taken by an investor, authorized state agency or a court.
A decision on restriction, suspension or termination of investment activity can be taken in the following cases:
- the declaration or recognition of an investor as a bankrupt in accordance with the procedure established by the law;
- the rise of extraordinary situations;
- the disclosure in the course of investment activity of circumstances that can be a reason of violation of sanitary, hygiene, radioactive, environmental, architectural, city planning and other requirements established by the law, as well as rights and interests of legal and natural entities protected by the legislation.
Restriction, suspension (with the exception of cases of restriction and suspension of investment activity for a term not exceeding ten working days in connection with prevention of beginning of extraordinary situations, epidemic and other real threat to life and health of the population) or termination of investment activity entailing suspension or termination of activity of the subject of entrepreneurship is carried out in legal form.
The procedure for the compensation for damages caused to a subject of investment activity in cases stipulated in paragraph thee, part two of the present article, are defined by the legislation.
Article 27. Responsibility for violation of the legislation on investment activity
Persons culpable in violation of the legislation on investment activity, are responsible according to the established procedure.
If the legislation on economic activity is violated, a subject of investment activity has the right for compensation for caused damages, including lost profit in keeping with the procedure established by the legislation.
Article 28. Settlement of disputes
Disputes connected with investment (investment disputes) are settled by a court.
