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Uzbekistan expands activities of free economic zones

On October 26, Interim President of the Republic of Uzbekistan Shavkat Mirziyoev signed a Decree "On additional measures for the intensification and expansion of activities of free economic zones".
The document was adopted in order to create favorable conditions for further development of free economic zones - as an important factor in the expansion of attracting foreign direct investments to create new high-tech industries, more active involvement of regions of the Republic in development of production of modern competitive export-oriented ready-made industrial products, ensuring the accelerated development of production, engineering-communication, transport, social infrastructure and logistics services.
The decree of the head of state has unified the names of free industrial-economic zone "Navoi" and special industrial zones "Angren" and "Jizzakh" with renaming them, respectively, to the free economic zones "Navoi", "Angren" and "Jizzakh".
Followings have been identified as the main directions of further development of activities of free economic zones "Navoi", "Angren" and "Jizzakh":
- establishing a single legal regime for free economic zones, unification of tax and customs privileges and preferences to create the most favorable conditions for foreign investors;
- active attraction of direct investments, primarily foreign, to create modern high-tech and localizing production, ensuring deep processing of local mineral resources and production of competitive products with high added value, promotion of industrial specialization of free economic zones and development of industrial cooperation;
- gradual transition to “one window” principle in all free economic zones, that provides for rendering all types of public services, including licensing procedures;
- advanced development of production, engineering-communication, transport and social infrastructure, as well as development of modern infrastructure to provide high-quality logistics services;
- organization of training of highly qualified specialists in higher and secondary special, professional educational institutions, with regard to current and future needs of free economic zones in the profile employees, having provided manufacturing practices at existing enterprises located in free economic zones.
The document has also unified tax and customs regimes in force in the territory of free economic zones, with exempting the participants of free economic zones from payment of:
- land tax, income tax, tax on property of legal entities, tax for accomplishment and development of social infrastructure, single tax payment for microfirms and small enterprises, as well as also obligatory charges in the Republican Road Fund and Off-budget Fund for reconstruction, refurbishment and equipping of general schools, professional colleges, academic lyceums and medical institutions under the Ministry of Finance of the Republic of Uzbekistan;
- customs payments (except fees for customs clearance) for equipment, raw materials and component parts imported for own production needs, as well as building materials not produced in the Republic and imported within the framework of the projects on the lists approved by the Cabinet of Ministers of the Republic of Uzbekistan.
In terms of sale or donation of equipment, raw materials and component parts imported with the use of customs privileges for three years from the date of importation, customs duties are levied in full in the manner prescribed by law.
Privileges are provided for a period from 3 to 10 years depending on the amount of investments, including in the equivalent of:
- from $300 thousand to $3 million – for a term of 3 years;
- from $3 million to $5 million – for a term of 5 years;
- from $5 million to $10 million – for a term of 7 years;
- from $10 million and above for a period of 10 years, while profit and uniform tax rates for the next 5 years are established at 50 percent below the current rates.
According to the Decree, the participants of free economic zones "Angren" and "Jizzakh":
- exempt from payment of customs payments (except fees for customs clearance) for imported raw materials and components in terms of production aimed at export, for the entire period of activities at free economic zones;
- within the free economic zones, have the right to make calculations and payments in foreign currency in accordance with the concluded agreements and contracts;
- have the right to pay for the supply of goods (works, services) from other business entities-residents of the Republic of Uzbekistan in foreign currency, and use convenient terms and forms of payment and payments for exported and imported goods.
The document has also formed the Administrative Council of free economic zones, abolishing the previously established Administrative Council of free industrial-economic zone "Navoi", the Administrative Council of the special industrial zone "Angren" and the Administrative Council of the special industrial zone "Jizzakh".
The main tasks and functions of the Administrative Council of free economic zones are:
- coordination and state regulation of activities of free economic zones;
- decision-making on granting of the participant of free economic zone status to the enterprises and organizations;
- assistance to economic entities - participants of free economic zones in the implementation of the whole complex of works on development of promising investment projects, attracting foreign investors, identifying sources of funding and the establishment of sustainable cooperative ties and the promotion of local products for export;
- coordination of work of ministries and departments, business associations, responsible for the implementation of projects in free economic zones, for the timely preparation of design, tender and contract documentation, their examination;
- conducting a monitoring over implementation of approved investment projects, including their construction and commissioning;
- implementation of complex of measures for organization of effective functioning of free economic zones, the formation of the directorates of free economic zones and monitoring their activities.
In addition, the Administrative Council of free economic zones is granted the right to:
- make decisions on providing state-owned inactive enterprises and property to investors at zero redemption value under corresponding investment commitments;
- form independent budgets of free economic zones formed at the expense of income from services and other earnings not prohibited by the legislation;
- create funds for development of free economic zones, the funds of which are allocated towards the development of infrastructure and raising the efficiency of free economic zones.
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