Uzbekistan

Ease of Doing Business Rank: 69

Overview

 

Geographic location

The Republic of Uzbekistan is a country located in Central Asia.

Kazakhstan lies to the north, the Caspian Sea lies to the west, Turkmenistan and Afghanistan to the south and Tajikistan and Kyrgyzstan to the east.

Spoken language

The official language of Uzbekistan is Uzbek language spoken by approximately 85% of the population. Russian is not an official language, but it is widely used in official documents as the country was once a Soviet Republic.

Minority languages include Dungan, Eryza, Koryo-mar, Kazakh, Kyrgyz, Southern Uzbek, Tajik and Tatar. English is limited to cities and tourist areas.

Population

The 2020 population estimate is 33.47 million.

Tashkent is the capital and most populous city (2,352,900), followed by Samarqand (509,000) and Namangan (475,700).

Popular industries

The top industries in Uzbekistan are natural gas and oil, oil refining, mining and mineral processing, machinery, cotton, textiles, metallurgy, chemicals and electricity and alternative power.

Education

The Legatum Prosperity Index ranks Uzbekistan 81st out of 167 countries.

Popular entity types

The most common type of business entities in Uzbekistan are Limited Liability Company, Joint Stock Company and Representative Office.

The overwhelming majority of businesses are in the form of a Limited Liability Company.

Uzbekistan incentives for business

Foreign investors are welcome in all sectors of the Uzbek economy. However, the government does retain control of many key industries including energy, mining, telecommunications, airlines and raw cotton and silk.

Foreign legal entities that earn income with or without a permanent establishment only pay tax on activities within the country. Most companies pay tax on the profit earned less deductible expenses and incentives at a rate of 15% up to UZS 1 billion. Exceptions include commercial banks and mobile operators which pay 20%.

An optional simplified tax regime is available to all legal entities earning less than UZS 1 billion in revenues. Generally, companies pay a unified tax payment (UTP) of 4%, but the rate depends on the company’s activities and location. Businesses may enjoy a lower rate if they operate in a remote location.

The UTP replaces corporate income tax, VAT, certain local taxes and duties. Under the UTP tax framework companies still pay property, land and water use taxes.

Entrepreneurs with an annual turnover of less than UZS 100 million are subject to minimum tax rates ranging from .25 to 4 times the monthly minimum wage amount, depending on activity type. When earnings range between UZS 100 million and UZS 1 billion the taxpayer is subject to UTP.

Companies producing goods subject to excise tax cannot opt for the UTP regime. Agricultural companies enjoy a .95% tax rate on land value.

History & Features

 

Main cities for business

Tashkent is the capital and financial center of the country.

Popular historical & tourist attractions

Uzbekistan has a rich cultural heritage and a long history steeped in tradition. It is home to five UNESCO World Heritage sites including the historic center of Bukhara.

Bukhara is a medieval city situated on the Silk Road. It is more than 2,000 years old and served as a major center of Islamic theological, science, and cultural center. It pioneered economic, scientific and urban development which impacted the entire Islamic world.

Silk has always played an important role in Uzbekistan. Visitors can see silk factory operations in Margilon including all aspects of production from steaming and unraveling cocoons to tie-dyeing and weaving.

The historic town of Samarkand on a large oasis in the northeastern area of the country has been the crossroads of world cultures for over two and a half millennia. The richly decorated buildings and the strategic location were so coveted that Alexander the Great and Genghis Khan conquered the town. It later became the capital of the Timurid Empire, responsible for significant Islamic architecture and art development.

The capital of Tashkent is a cosmopolitan, multi-ethnic city with many museums and Soviet-era architecture, metro, monuments and street planning. However, it retains some of its original charm such as the thriving Chorsu Bazaar that sells everything from sacks of grain to skullcaps.

Visitors can also escape the city to enjoy outdoor activities such as hiking, rafting and skiing in Ugam-Chatkal National Park. It is the largest protected area in the country and home to many rare and endangered animal and plant species.

Aidarkul Lake was unintentionally created by the Soviets. It is one of three brackish lakes that sit in the middle of the Kyzyl Kum desert and a favorite for visitors who want to experience sleeping in a yurt or riding a camel in the surrounding desert.

History

Archeological evidence suggests Uzbekistan was first populated in the early Paleolithic period, making it one of the most ancient areas of human habitation.

Later, Iranian nomads established towns along Uzbekistan’s rivers. They became lucrative transit points on the Silk Road between China and Europe. By the 7th century, the river area was overwhelmed by Arabs, who spread Islam throughout the region.

During the 8th and 9th centuries, the river area flourished under an Arab Caliphate. Turks entered the northern region and established their own states. Finally, in the 12th century all states united with Iran and another power located south of the Aral Sea.

Mongols led by Genghis Khan invaded in the early thirteenth century. Later, a Turco-Mongol Persianate ruled the region and established the Timurid Empire. He was a patron on the arts and architecture and sponsored some of the country’s most outstanding cultural and architectural masterpieces.

The Timur state fragmented and by 1510 Uzbek tribes had conquered all of Central Asia and ruled under several rival khanates. The once prosperous Silk Road cities declined as sea trade increased and the khanates weakened, despite attempts to unify.

The area was gradually incorporated into the Russian Empire during the 19th century. In 1924, the region became a republic of the Soviet Union known as the Uzbek Soviet Socialist Republic.

Large-scale agricultural collectivization during the 1920s and 1930s resulted in widespread famine in Central Asia. Stalin executed or removed the entire leadership of the Uzbek Republic and replaced them with Russian officials. Russian political and economic policies continued through the 1970s.

During the 1970s the Soviet Union’s power weakened which led to more Uzbek party leaders in power. However, the Soviet purged the leadership again in the 1980s hoping to regain power. This led to increased Uzbek nationalism.

The liberalized policies of the Soviet Union during the 1980s fostered political opposition and ethnic clashes. After the break-up of the Soviet Union, the region declared independence in 1991 and became the Republic of Uzbekistan.

The region experienced many violent incidents throughout the 1990s since the newly formed government banned the first democratic opposition party and suppressed the media. They also intensified activity against Islamic extremist groups, other forms of opposition and minorities.

Tensions also escalated between Tajikistan, Kyrgyzstan and Turkmenistan throughout the first decade of the 21st century. However, in 2016 the new president introduced a series of reforms to encourage investment and loosen travel restrictions. Relations with Tajikistan, Kyrgyzstan and Afghanistan improved drastically as well.

Uzbekistan operates as a republic and they are gradually transitioning to a market economy.

Other relevant facts

Most inhabitants identify as Uzbek (80%), followed by Russian (5.5%), Tajik (5%), Kazakh (3%), Karakalpak (2.5%) and Tatar (1.5%).

According to 2017 data, most Uzbeks practice Islam (92.2%) followed by Eastern Orthodox Christianity and other religions.

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Uzbekistan is 105th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Uzbekistan 140th globally and states, “The country has a long history of corruption, protectionism, and government intervention in various aspects of the economy that has hampered growth. The rule of law remains very weak, damaged by a seriously deficient legal framework. A weak legal framework, subsidies, and other forms of favoritism to state-owned enterprises, however, continue to obstruct greater economic freedom.”

World Bank’s “Doing Business” rankings rate Uzbekistan 69th for ease of doing business in the world.

    Other countries

    Check out some other countries we serve below.