Legal Regime of Foreign Investments in Uzbekistan

Foreign investments are one of the most important factors of economic growth, innovative development, and integration of the Republic of Uzbekistan into the global economic system. The Law of the Republic of Uzbekistan “On Investments and Investment Activities” dated December 25, 2019, No. ZRU-598, establishes the legal regime of foreign investments, guarantees and measures for their protection, as well as the specific features of enterprises with foreign investments.

The purpose of this article is to examine the content of the legal regulation of foreign investments and the operation of enterprises with foreign investments, as well as to identify their legal features and guarantees.

1. Concept and Forms of Foreign Investments

According to the law, foreign investments are material and non-material assets, including intellectual property rights and reinvestments, contributed by foreign investors into objects of entrepreneurial, social, and scientific activity.

Forms of investment include:

• establishment of legal entities or participation in their charter capital;
• acquisition of securities of residents;
• participation in concessions and production sharing agreements;
• investments in intellectual property rights;
• acquisition of rights to land and natural resources.

2. Legal Regime of Foreign Investments

The legal regime of foreign investments is characterized by the following features:

• Principle of equality and non-discrimination: foreign investors are guaranteed a fair and equal regime, no less favorable than that granted to national investors;
• Full protection and security: the state guarantees the protection of investors’ rights and property;
• Stability of legislation: for 10 years, the legal conditions effective at the time of investment are preserved if subsequent changes worsen the investor’s position;
• Guarantees of repatriation of capital and income: free transfer of funds in foreign currency within and outside Uzbekistan;
• Protection against expropriation and nationalization: allowed only in exceptional cases with payment of adequate compensation.

3. Rights of Foreign Investors

The law grants foreign investors the following key rights:

• free disposal of investments and income;
• obtaining an investment visa and residence permit;
• employment and access to medical and educational services;
• free movement across the country;
• hiring foreign employees under contract;
• insurance of investments against political and other risks.

4. Enterprises with Foreign Investments

Enterprises with foreign investments (EFIs) are legal entities in which the share of foreign investments in the charter fund is at least 15%.

Legal status of EFIs:

• EFIs may open accounts in any currency in banks of Uzbekistan and abroad;
• they freely conduct export and import operations without licensing and quotas;
• may establish subsidiaries, branches, and representative offices;
• property and property rights may be used as collateral;
• may obtain land plots for lease for up to 25 years;
• have the right to participate in business associations and unions.

Benefits and preferences:

• tax incentives in priority sectors;
• investment tax credit;
• investment subsidies in the form of engineering and communication infrastructure;
• customs benefits for the import of equipment and property for production needs.

5. Guarantees and Protection of Foreign Investments

The state provides a wide range of guarantees, including:

• legal stability (10-year period of unchanged investment conditions);
• protection from unfavorable legislative changes;
• judicial and arbitration protection;
• possibility to apply to international arbitration if corresponding treaties exist.

Comparative Characteristics of Foreign Investments and Enterprises with Foreign Investments

Criterion	Foreign Investments	Enterprises with Foreign Investments (EFIs)
Subjects	Foreign states, international organizations, foreign legal and natural persons	Legal entities registered in Uzbekistan with at least 15% foreign investment share
Objects of investment	Tangible and intangible assets, securities, IP rights, real estate	Production of goods, provision of services, trade, investment projects
Legal regime	Equality, protection, freedom of capital transfer, 10-year stability	General guarantees + special tax and customs benefits
Guarantees	Protection against nationalization, repatriation of income, access to international arbitration	Land lease up to 25 years, simplified export-import operations
Restrictions	Possible bans for reasons of national security, environmental protection, or health	Obligation to comply with legislation, pay taxes, and ensure currency self-sufficiency

The legal regime of foreign investments in Uzbekistan is based on the principles of equality, legality, and protection of investors’ rights. Enterprises with foreign investments represent the key organizational and legal form of implementing foreign capital and enjoy significant state guarantees and incentives.

The combination of legal guarantees and state support measures creates a favorable investment climate, promoting the inflow of foreign capital and the integration of Uzbekistan into the global economy.