Doing Business in Uzbekistan: A Legal Guide for Foreign Investors

Market overview

Since the start of the reform programme in 2017, Uzbekistan has liberalised currency conversion, simplified business registration, reduced the tax burden and modernised large parts of its commercial legislation. Investment protection is anchored in the Law «On Investments and Investment Activity», which guarantees, among other things, protection against unlawful expropriation and the right to repatriate lawfully earned income. Uzbekistan is also a party to the ICSID Convention and to a network of bilateral investment treaties.

The legal system is based on civil law. The Civil Code sets the general rules on legal entities, contracts and property, and is supplemented by sector-specific laws and by-laws adopted by the President and the Cabinet of Ministers. Legislation changes frequently, so any structure should be checked against the rules in force at the time of entry.

Entry structures

Limited liability company (LLC)

The LLC is the default vehicle for most foreign investors. It is governed by the Civil Code and the Law «On Limited Liability and Additional Liability Companies». An LLC may be wholly owned by a single foreign participant, liability is limited to the contribution to the charter capital, and the corporate governance model is flexible: participants can tailor the charter to allocate powers between the general meeting, a supervisory board (optional) and the executive body. For most activities there is no meaningful statutory minimum charter capital, although regulated sectors set their own capital requirements.

Joint-stock company (JSC)

A JSC is governed by the Law «On Joint-Stock Companies and Protection of Shareholders' Rights». It is subject to a statutory minimum share capital, mandatory corporate governance bodies (including a supervisory board where required by law), share registration with the central securities depository and more extensive disclosure obligations. The JSC form is typically used for banks, insurers, large industrial projects and companies planning to raise capital on the stock exchange.

Subsidiary of a foreign company

A foreign company most often enters Uzbekistan by establishing a subsidiary: a separate Uzbek legal entity, usually an LLC, in which the foreign parent holds all or most of the shares. As a separate legal entity, the subsidiary is liable for its own obligations, and the parent's risk is generally limited to its contribution to the charter capital. A subsidiary can hold licences, own property, employ staff and sign contracts in its own name, which makes it the preferred structure for long-term operations and for regulated activities that may only be carried out by a locally incorporated entity.

Representative office

A representative office is accredited rather than registered as a legal entity. It may represent and protect the interests of the foreign company, conduct market research and support the parent's business, but it may not carry out commercial activity in its own right. It is a sensible first step for investors testing the market, but contracts and revenue-generating operations should sit with a properly established entity.

Registration overview

Business entities are registered under a one-stop-shop procedure through the Public Services Centres or online via the state services portal. Registration results in a single entry in the state register and the automatic allocation of a taxpayer identification number. The main practical bottleneck for foreign investors is document preparation: corporate documents of the foreign founder must be apostilled (or consular-legalised for non-Apostille countries) and translated into Uzbek or Russian with a notarised translation. After registration, the company opens a bank account, registers for VAT where applicable and obtains any required licences or permits.

Currency and tax at a glance

The national currency is the Uzbek sum (UZS). Since the 2017 currency liberalisation, companies may freely purchase foreign currency for current transactions, including import payments and the repatriation of dividends, through authorised banks. Settlements between residents are generally made in sum, while cross-border contracts may be denominated in foreign currency. Foreign trade contracts are subject to monitoring by banks and customs, and advance payments and deferred receipts should be planned with these rules in mind.

The Tax Code provides for a corporate income tax at a general rate of 15%, value added tax at 12%, and personal income tax at 12%, with employer social tax payable on the payroll. Withholding tax applies to certain payments to non-residents, subject to relief under Uzbekistan's double tax treaties. Special regimes exist for free economic zones, technology parks (including IT Park residents) and priority projects. Rates and incentives are revised regularly and should be confirmed at the time of structuring.

Employment

Employment relations are governed by the Labour Code that took effect on 30 April 2023. Employment contracts must be in writing and are registered electronically in the unified national labour system. Fixed-term contracts are permitted only on grounds set out in the Code. Termination by the employer is possible only on statutory grounds and subject to procedural requirements, including notice and severance in certain cases. Foreign nationals generally require a work permit unless an exemption applies; simplified rules exist for highly qualified specialists.

Licensing and permits

Many activities do not require a licence, but banking, insurance, telecommunications, pharmaceuticals, alcohol and tobacco, construction, education, transport and several other sectors do. Licences and permits are issued through a unified electronic licensing system. Investors should map the licensing requirements of their business model early, as the licence holder must usually be the local operating entity and the application may require qualified staff, premises or equipment already in place.

Personal data localisation

The Law «On Personal Data» requires owners and operators that collect and process personal data of Uzbek citizens using information technologies to store that data in databases physically located in Uzbekistan and registered in the state register of personal data databases. This affects e-commerce, fintech, HR systems and any business using cloud services hosted abroad. Cross-border transfers remain possible, but local storage must be ensured first.

Contracts and dispute resolution

Parties to cross-border contracts are generally free to choose the governing law, while contracts between Uzbek residents are as a rule governed by Uzbek law. Commercial disputes before state courts are heard by the economic courts, with appeal and cassation review up to the Supreme Court. Proceedings are conducted in Uzbek (or Russian in practice where permitted), and foreign-language evidence must be translated.

Arbitration is a well-established alternative. Uzbekistan is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and the Law «On International Commercial Arbitration», based on the UNCITRAL Model Law, governs international arbitration seated in Uzbekistan. The Tashkent International Arbitration Centre (TIAC) administers international cases under modern rules and is increasingly used for contracts with an Uzbek counterparty. Parties may also choose established foreign institutions. Certain categories of disputes, including some disputes involving state bodies and real estate, are not arbitrable, so the dispute resolution clause should be drafted with care.

Before signing, it is good practice to verify the counterparty's registration details, authorised signatories and corporate approvals. Uzbek law imposes approval requirements for major and related-party transactions, and a contract signed in breach of them may later be challenged. Contracts are commonly executed with company seals where the charter provides for them, and electronic signatures are recognised for many transactions.

Practical tips

• Prepare apostilled and translated corporate documents of the parent company before starting registration.
• Choose the vehicle with the end-game in mind: an LLC is easier to run, a JSC is necessary for public capital raising.
• Check licensing, currency control and data localisation requirements before signing key contracts.
• Use a bilingual contract (English and Russian or Uzbek) and specify which language prevails.
• Draft a clear arbitration clause naming the institution, seat, language and number of arbitrators.
• Monitor legislative changes: a local adviser should review your structure at least annually.

LEXGLOBAL advises foreign investors on market entry, structuring, regulatory compliance and disputes in Uzbekistan. Contact our team to discuss your project.