50 Questions on Investment Law of Uzbekistan

1. What is the purpose of the Law on Investments and Investment Activity?

Answer: The purpose of the Law is to provide legal regulation of investment relations arising in the course of investment activity carried out by both domestic and foreign investors. The Law is aimed at creating a stable, predictable, and legally protected investment environment, except for centralized investments, which are governed by other regulatory acts.

2. Which relations are expressly excluded from the scope of the Law?

Answer: The Law does not regulate centralized investments, as well as relations in the fields of concessions, production sharing agreements, public-private partnerships, venture and mutual funds, the capital market, and special economic zones, which are governed by special legislation.

3. How do the provisions of the Law correlate with international treaties?

Answer: In the event of a conflict between the provisions of the Law and an international treaty of the Republic of Uzbekistan, the provisions of the international treaty shall prevail, reflecting the principle of the priority of international law in the investment sphere.

4. What is understood by investments in a broad legal sense?

Answer: Investments include tangible and intangible assets, property and intellectual property rights, as well as reinvestments made by an investor at their own risk for the purpose of generating profit or achieving another beneficial effect.

5. What is the legal significance of the presumption of good faith of the investor?

Answer: The presumption of good faith means that the investor is deemed to act lawfully and reasonably unless proven otherwise, and it protects the investor from arbitrary restrictions and interference by the state.

6. What types of investments are provided for by the Law based on their purpose?

Answer: The Law distinguishes capital, financial, and social investments, covering both material production and investments in securities and human capital.

7. What forms of investment are permitted under the legislation?

Answer: Permitted forms include the establishment of legal entities, acquisition of shares and equity interests, securities, concessions, intellectual property rights, land rights, and other forms not prohibited by law.

8. Can the form of investment be changed without altering its legal qualification?

Answer: Yes. A change in the form of investment (for example, reinvestment of profits) does not affect the recognition of funds as investments.

9. Who is recognized as an investor?

Answer: Investors include individuals and legal entities, including foreign states and international organizations, that invest their own or attracted funds.

10. What are the main rights granted to investors?

Answer: Key rights include freedom of investment, disposal of income, transfer of funds, protection against expropriation, compensation for losses, and judicial protection.

11. How is the guarantee of non-interference by the state expressed?

Answer: State authorities are not entitled to interfere in investment activity, except in cases of eliminating specific violations within the limits of their competence.

12. What does the guarantee of free transfer of funds mean?

Answer: Investors are guaranteed the free transfer abroad of income, dividends, compensation, and proceeds after payment of taxes and mandatory charges.

13. In which cases may the repatriation of funds be suspended?

Answer: Only in strictly limited cases, such as bankruptcy, criminal or administrative offenses, or protection of creditors’ rights, and exclusively on a non-discriminatory basis.

14. How is the guarantee of stability of legislation (“stabilization clause”) implemented?

Answer: If subsequent legislation worsens investment conditions, the investor is entitled, for a period of ten years, to apply the provisions that were in force at the time of investment.

15. Is nationalization of investments permitted?

Answer: No. Nationalization is prohibited. Requisition or expropriation is permitted only in exceptional circumstances with mandatory, adequate, and timely compensation.

16. What are the objectives of state regulation of investment activity?

Answer: The objectives include implementation of investment policy, socio-economic development, enhancement of investment efficiency, and ensuring investment security.

17. What methods of state regulation are applied?

Answer: Methods include improvement of legislation, establishment of special economic zones, accelerated depreciation, support of competition, and regulation of land rights.

18. Which body is authorized in the investment sphere?

Answer: The Ministry of Investments and Foreign Trade of the Republic of Uzbekistan, which coordinates investment policy and interaction with investors.

19. What are the functions of local authorities in the investment sphere?

Answer: They identify projects, support investors, analyze investment efficiency, and eliminate administrative barriers at the local level.

20. In what forms is state support provided to investors?

Answer: Support includes tax incentives, preferences, financial co-financing, as well as advisory and information assistance.

21. What does the “one-stop-shop” principle for investors mean?

Answer: The investor receives a comprehensive range of public services through a single authority without the need to contact multiple agencies.

22. What is the role of the Commissioner for the Protection of Entrepreneurs’ Rights?

Answer: The Commissioner reviews investors’ appeals, facilitates out-of-court dispute resolution, and submits proposals for improving legislation.

23. What types of incentives and preferences are provided for by the Law?

Answer: These include tax incentives, transfer of state property on preferential terms, and subsidization of interest on loans.

24. On which factors does the granting of incentives depend?

Answer: On the volume of investments, the region of project implementation, socio-economic impact, and sectoral affiliation.

25. What is an investment tax credit?

Answer: It is a form of deferral of tax obligations allowing the investor to temporarily reduce tax payments with subsequent phased repayment.

26. What is meant by non-centralized investments?

Answer: Non-centralized investments are investments made without the use of state budget funds and without state guarantees. Such investments are managed by the investor independently and at their own risk.

27. What sources of non-centralized investments are established by the Law?

Answer: Sources include the investor’s own funds, bank loans (including foreign loans without state guarantees), direct foreign investments, and other sources not prohibited by law.

28. Who decides on the implementation of non-centralized investments?

Answer: The decision is made by the investor independently or by a commercial (including foreign) bank if investments are made using loan funds.

29. Are projects with non-centralized investments subject to expert review?

Answer: Yes. Such projects are subject to state expert review regarding compliance with sanitary, environmental, urban-planning, and other mandatory requirements.

30. In which cases is an investment agreement with the Government concluded?

Answer: An investment agreement is mandatory if additional guarantees and state support measures (incentives and preferences) are granted to a foreign investor.

31. Who are the parties to an investment agreement with the Government?

Answer: The parties are the foreign investor and the Government of the Republic of Uzbekistan represented by an authorized state body.

32. Which terms are mandatory in an investment agreement?

Answer: Mandatory terms include the object and volume of investments, project timelines, rights and obligations of the parties, an anti-corruption clause, liability, and dispute resolution procedures.

33. Is the granting of exclusive rights to a foreign investor permitted?

Answer: No. The Law expressly prohibits including provisions in an investment agreement that place a foreign investor in a dominant market position.

34. What is the procedure for an investment agreement to enter into force?

Answer: The agreement enters into force after approval by the President or the Government of the Republic of Uzbekistan, unless otherwise provided by the approval decision.

35. In which cases may an investment agreement be terminated early?

Answer: It may be terminated by mutual agreement of the parties or unilaterally in the event of the investor’s failure to perform its obligations.

36. What legal regime is granted to foreign investors?

Answer: Foreign investors are granted a fair, equal, and no less favorable regime than that provided to domestic investors.

37. May legislation restrict foreign investments?

Answer: Yes, but exclusively for the purposes of protecting national security, public health, and the environment, in accordance with international law.

38. What additional rights are granted to foreign investors?

Answer: They have the right to independently decide on patenting matters, obtain an investment visa and residence permit, and enjoy social rights on an equal basis with citizens.

39. What is the legal regime of investment visas?

Answer: An investment visa and residence permit are issued under a simplified procedure to foreign investors and their family members for the duration of the investment.

40. What is recognized as an enterprise with foreign investments?

Answer: An enterprise in which foreign investments constitute at least 15 percent of the authorized capital (shares, equity interests, units).

41. What currency rights do such enterprises have?

Answer: They are entitled to open accounts in any currency in banks in Uzbekistan and abroad, and to receive and repay foreign currency loans.

42. What is the land regime for enterprises with foreign investments?

Answer: Land plots are granted on a lease basis by the Cabinet of Ministers for a term of up to 25 years, but not less than the duration of the project.

43. Are export operations of such enterprises subject to licensing?

Answer: Export of self-produced goods is not subject to licensing or quotas.

44. How is the liquidation of an enterprise with foreign investments carried out?

Answer: Liquidation is carried out in accordance with the general rules of legislation, with the investor’s right to recover its share at market value.

45. Do residents of Uzbekistan have the right to invest abroad?

Answer: Yes. Individuals and legal entities that are residents are entitled to carry out investment activities outside the Republic of Uzbekistan.

46. In what forms are foreign investments by residents permitted?

Answer: In the form of establishing legal entities, acquiring property and property rights, and other forms permitted by the legislation of the foreign state.

47. In which cases may investment activity be restricted or terminated?

Answer: In cases of investor bankruptcy, emergency situations, gross breach of contract, or threats to public interests.

48. How are decisions of state authorities appealed?

Answer: Decisions and actions (or inaction) of state authorities may be appealed to a higher authority or to a court.

49. How is compensation for investor losses provided?

Answer: Losses are compensated by the state on the basis of a court decision, including from extra-budgetary funds of the relevant authorities.

50. Where and how are investment disputes resolved?

Answer: Disputes are resolved sequentially through negotiations, mediation, and courts of the Republic of Uzbekistan, and, where an arbitration clause exists, through international arbitration.