Special Economic Zones in Uzbekistan

Special Economic Zones (SEZs) are one of the key instruments for attracting investments, introducing innovative technologies, and accelerating the socio-economic development of regions. The Law of the Republic of Uzbekistan “On Special Economic Zones” (Law No. ZRU-604 of February 17, 2020) defines the legal framework for the establishment, operation, and liquidation of SEZs, establishing a special legal regime for participants and investors.

The legislation on SEZs in Uzbekistan is based on the principle of prioritizing national interests when attracting foreign and domestic investments. In cases of conflict with international treaties, the provisions of the latter prevail, which is consistent with international practice on harmonizing legal systems.

Key Concepts

• Special legal regime — a set of specific legal norms regulating investment activities in SEZs;
• Investment project — a set of measures aimed at attracting capital investments;
• Register of SEZ participants — a database of legal entities and investment projects.

Types of Special Economic Zones

The law provides for several types of SEZs, each oriented toward a specific type of economic activity:

• Free Economic Zones (FEZs) — promote industrial production and exports;
• Science and Technology Zones — ensure innovation and the development of high technologies;
• Tourism and Recreation Zones — focus on developing tourism infrastructure;
• Free Trade Zones — provide preferential conditions for logistics and foreign economic activities;
• Special Industrial Zones — include production clusters with special management regimes.

State Regulation and Management

The Cabinet of Ministers of the Republic of Uzbekistan plays a central role in approving development programs for SEZs, coordinating the activities of SEZ directorates, and overseeing the implementation of investment projects.

The SEZ Directorate is a legal entity established as a state institution responsible for management, investor support under the “one-stop shop” principle, maintaining the participant registry, and ensuring compliance with legislation. In special industrial zones, these functions may be performed by management companies organized as joint-stock or limited liability companies, reflecting the introduction of public-private partnership (PPP) elements.

Investment Projects: Requirements and Restrictions

Investment projects must meet several criteria, including environmental standards, energy efficiency, and alignment with the zone’s specialization. Additional requirements apply depending on the SEZ type:

• In free economic zones, only new types of production or products not serving the domestic market are allowed;
• In science and technology zones, patents and scientific novelty are mandatory;
• In tourism and recreation zones, tourist safety is a key requirement.

The law also specifies prohibited activities within SEZs (e.g., production of weapons, nuclear materials, tobacco products, and waste disposal activities).

Special Legal Regime and Guarantees

SEZ participants are granted significant benefits and guarantees, including:

• Tax and customs incentives (e.g., exemption from customs duties on imported equipment and raw materials, VAT deferral, accelerated tax refunds);
• Simplified permitting procedures;
• State guarantees protecting the rights and interests of investors.

An important provision is the stability of the tax regime: participants may apply the tax rules in effect at the time of registration for up to ten years.

The SEZ legislation of Uzbekistan reflects the state’s commitment to creating a favorable investment climate and diversifying the economy. However, further development requires:

• Refining the “one-stop shop” mechanism;
• Expanding opportunities for public-private partnerships;
• Improving environmental control systems;
• Harmonizing national laws with international standards.

Thus, SEZs in Uzbekistan serve as vital instruments for economic modernization and integration into global markets, while Law No. ZRU-604 provides a solid legal foundation for their sustainable development.

Types of SEZs: Objectives and Features

Type of SEZ	Main Objectives	Specialization and Features
Free Economic Zone	Development of new production capacities; stimulation of exports and import substitution	Production of high-tech, competitive products; infrastructure and logistics development
Science and Technology Zone	Creation of innovative infrastructure and implementation of advanced technologies	Technoparks, clusters, business incubators, venture funds; patents and scientific novelty required
Tourism and Recreation Zone	Development of the tourism sector and enhancement of regional attractiveness	Hotels, cultural and wellness complexes, recreation areas; focus on safety and service quality
Free Trade Zone	Promotion of foreign trade and logistics activities	Consignment warehouses, preferential customs regime; located near borders, airports, and transport hubs
Special Industrial Zone	Formation of industrial clusters and production cooperation	Special management regime; construction of engineering and social infrastructure; involvement of management companies (JSCs, LLCs, including with foreign capital)

 

Benefits and Guarantees for SEZ Participants

Category	Benefits and Preferences	Legal Basis
Tax	Exemption from certain taxes as per the Tax Code; ability to apply the previous tax regime for up to 10 years from registration (except for excise goods)	Arts. 37, 39, 42 of the Law
Customs	Exemption from duties (excluding VAT and processing fees) on: • Construction materials not produced in Uzbekistan; • Technological equipment without domestic equivalents; Exemption for raw materials and components for export products; VAT deferral up to 120 days	Arts. 38, 39
Investment Guarantees	Protection of investors’ property rights; possibility to claim compensation for damages and lost profits in court in case of unlawful interference by authorities	Art. 42
Administrative	Simplified permitting (“one-stop shop”); simplified customs clearance	Arts. 24, 38
Financial	Accelerated VAT refund within 7 days; flexible payment terms for export-import transactions	Arts. 39, 42
Legal	Application of a special legal regime (customs, tax, labor, etc.); additional benefits may be granted by Presidential decrees	Arts. 37, 42
Labor	Guarantees under the Labor Code and ILO conventions; at least 90% of employees must be citizens of the Republic of Uzbekistan	Art. 40

 

Prohibited Activities in SEZs

Category	Prohibited Activities
Environmental Safety	Production not meeting environmental and occupational safety standards
Military Production	Manufacture and trade of weapons and ammunition
Nuclear and Radioactive Materials	Production and trade of nuclear materials and radioactive substances; placement of nuclear power plants, reactors, and waste storage facilities
Alcohol and Tobacco	Production of alcoholic beverages and tobacco products
Livestock and Raw Material Processing	Processing of raw hides; slaughtering or herding of animals
Construction Materials	Production of cement, concrete, clinker, bricks, reinforced concrete panels, coal, lime, and gypsum products
Waste Management	Processing, incineration, gasification, storage, and disposal of all types of waste (including temporary or underground storage)
Oil Refining and Energy	Establishment of oil refineries, radioactive sources, and facilities for radioactive waste disposal
Other Restrictions	Additional prohibitions may be established by Presidential or Cabinet of Ministers’ decisions