By Ruslan Kholmatov, LL.M. (Pennsylvania), Senior Associate – Lexminster LLC
Published on 16 December 2025
1. Strategic role of Special Economic Zones (SEZs) in Uzbekistan’s reform agenda
Over the last decade Uzbekistan has turned Special Economic Zones (SEZs) into one of its main tools to attract foreign direct investments (FDI), diversify industry and promote exports.
By the end of 2024, the country had around 25 SEZs and industrial zones, covering manufacturing, pharmaceuticals, agriculture, logistics, tourism and IT services.
For foreign investors, SEZs offer a combination of:
• Corporate income tax (CIT), property and land tax exemptions
• Customs duty relief on equipment and raw materials
• Simplified administration and one-stop-shop services
• In some cases, long-term tax stability and guaranteed access to infrastructure
2. Legal framework: the key laws and decrees
The SEZ regime is built on several core instruments:
• Law “On Special Economic Zones” No. LRU-604 of 17 February 2020 – governs the creation, operation and liquidation of SEZs, sets the roles of state bodies, defines the rights and obligations of SEZ participants, and classifies different types of zones (free economic, special industrial, scientific/technological, tourist/recreational, free trade zones, etc.).
• Tax Code of the Republic of Uzbekistan – regulates how tax incentives are granted and applied. It sets general rules on tax incentives and links many SEZ benefits directly to the Tax Code.
• Law “On Investments and Investment Activities” (LRU-598, 2019) – provides general guarantees to investors, including protection against unlawful interference, free repatriation of profits, and safeguards against adverse changes in legislation within certain timeframes for priority projects.
• Presidential Decree N: 4853 of 26 October 2016 – unified and strengthened the tax and customs regime for SEZs and remains an important basis for many of today’s incentives, especially the 3- to 10-year tax holiday structure based on investment size.
Together, these instruments create a predictable and codified special regime for SEZ investors.
3. Types and geography of SEZs
Under the SEZ Law, zones can be created in several formats, including:
• Free economic zones (FEZs) – large multi-sector platforms (e.g., Navoi, Angren, Jizzakh);
• Special industrial zones – focused on industrial clusters (machinery, building materials, automotive, etc.);
• Pharmaceutical zones – such as “Nukus-pharm”, “Zomin-pharm”, “Kosonsoy-pharm”.
• Agro-industrial and logistics zones – aimed at processing agricultural products and export logistics;
• IT and technology-oriented zones – including IT Park and newly announced digital/AI zones.
Most SEZs are located near major transport corridors, regional centers and border crossings, to facilitate export-oriented manufacturing.
4. Core tax incentives in SEZs
4.1. Corporate income tax and other tax exemptions
SEZ participants (resident companies) may benefit from full exemptions from several key taxes for a fixed period, depending on the amount of capital invested. Typical incentives include:
• Corporate income tax (CIT) – 0% rate for the incentive period;
• Property tax of legal entities – exemption;
• Land tax – exemption;
• Exemption from certain local and extra-budgetary fund contributions (e.g., road fund and social infrastructure contributions in earlier regimes).
The duration of these exemptions is usually linked to the size of the investment. Publicly available guidance and SEZ materials often describe a tiered system such as:
• From around USD 300,000 to USD 3 million – 3 years of tax exemptions;
• USD 3–5 million – 5 years;
• USD 5–10 million – 7 years;
• Above USD 10 million – up to 10 years.
The exact thresholds and duration can vary by SEZ and by the specific presidential resolution establishing that zone.
4.2. Customs duty and VAT relief
SEZ participants may also benefit from a preferential customs regime. Typically, this includes:
• Exemption from customs duties (and in many cases VAT) on imported technological equipment;
• Exemption on construction materials used for SEZ projects;
• Exemption on certain raw materials and components used in goods produced within the zone.
Goods imported into SEZs for own production and later exported outside Uzbekistan can often enjoy full customs and tax relief, while goods supplied to the domestic market may be taxed as if imported into the rest of Uzbekistan, depending on the regime and product.
5. Non-tax benefits and investment guarantees
Beyond tax relief, SEZ legislation provides several administrative and legal advantages:
• Land and infrastructure support – for large projects (for example, investment above USD 50 million with at least 50% foreign share), the state may commit to building necessary engineering and communication infrastructure at public expense;
• One-stop-shop and streamlined procedures – SEZ directorates support residents on registration, permits, customs procedures and utility connections, aiming to reduce bureaucratic friction.
• Currency convertibility and profit repatriation – under the Investment Law and currency regulation reforms, investors can generally convert and repatriate profits freely, subject to tax payment and AML rules;
• Stability of conditions – SEZ and Tax Code provisions often allow investors to retain the tax regime effective at the date of their registration in the zone for the duration of the incentive period, even if the general tax rules worsen later;
• Local employment rules – the SEZ Law includes requirements that a high share (commonly around 90%) of employees in SEZ enterprises be Uzbek citizens, which investors should factor into their HR planning.
6. Becoming an SEZ resident: typical steps
The detailed procedure is set out in the SEZ Law and implementing regulations and may differ somewhat from one zone to another. In practice, a foreign investor can expect roughly the following stages:
1. Choosing the zone and project format – identify a suitable SEZ (sector focus, location, available land or ready-made facilities) and align the planned activity with the priority sectors of that SEZ;
2. Submitting an investment proposal – prepare a business plan or feasibility study, including investment amount, job creation, technology, and export volumes, and file the application with the SEZ directorate and/or the authorized state body;
3. Project evaluation and approval – the project is reviewed against criteria such as minimum investment, localization level, technology and environmental impact. Upon approval, the investor signs an agreement on SEZ participation and is registered as an SEZ resident;
4. Implementation and ongoing compliance – the investor must implement the project within agreed deadlines, maintain job creation targets, and comply with SEZ regulations, tax rules and local labor requirements. Non-compliance can lead to revocation of SEZ status and loss of incentives.
7. New developments: digital and AI-focused zones
Uzbekistan is now expanding the SEZ concept into new economy sectors:
• IT Park Uzbekistan – IT Park functions as a specialized technology SEZ, offering residents exemptions from corporate and personal income tax, VAT and customs duties, in some cases until 2040, aimed at export-oriented IT services and outsourcing;
• Tax-free AI and data center zone in Karakalpakstan – in 2025, Uzbekistan announced a tax-free zone dedicated to AI and data center projects in Karakalpakstan. Foreign companies investing USD 100 million or more are promised full exemptions from taxes and duties until 2040, plus discounted electricity and state-funded infrastructure;
These initiatives show that SEZ policy is not static: the government is actively experimenting with sector-specific zones and long-term, ultra-preferential regimes to attract large strategic investors in digital infrastructure.
8. Practical takeaways for foreign investors
For foreign investors considering Uzbekistan, SEZs can be attractive where:
• The project is capital-intensive and qualifies for long-term tax holidays;
• Production is export-oriented and benefits from customs relief;
• The investor values predictable tax treatment and a dedicated administrative counterpart (SEZ directorate);
• Sector-specific zones (IT, pharma, agro, AI) match the investor’s business model.
However, before committing, investors should:
• Verify which exact incentives apply in the chosen SEZ, as they may differ from zone to zone and may have changed with recent reforms;
• Pay attention to local HR requirements, reporting obligations and performance milestones;
• Obtain tailored Uzbek legal advice to structure the investment (for example, whether to use a joint venture with a local partner, a wholly foreign-owned enterprise, or an IT Park / digital-zone residency model).
Author:
Ruslan Kholmatov, LL.M. (Pennsylvania) – Senior Associate
Email: info@lexminster.com
Website: lexminster.com