Uzbekistan bets on tax breaks and new rules to become Central Asia’s tech gateway

Uzbekistan is aiming to become the tech gateway of Central Asia by offering international technology companies tax breaks and special rules. The country introduced legislation in August to create Enterprise Uzbekistan, a special business regime for technology firms and investors. The regime is expected to become operational in early 2027.

Investors will be exempt from tax on dividends and income earned under the special regime, while companies will not have to pay corporate tax on profits from priority activities. Additionally, sales within the region and exports by participants will be subject to zero-rated VAT. Importantly, foreign companies, branches, and representative offices will be accommodated under the regime, and highly qualified foreign employees will be exempt from personal income tax on eligible salaries and dividends.

A regulatory sandbox will allow companies to test new technologies, with temporary exemptions and simplified licensing procedures. This could benefit developers of artificial intelligence applications and new financial services.

International venture capital firms, such as Golden Gate Ventures, have already invested in Uzbekistan's technology sector. The new regime is expected to attract more foreign investors and help establish cross-border deal flow. Bahodir Ayupov, Vice President of Global Business Development at Enterprise Uzbekistan, believes that companies should consider the special regime as an integral part of their expansion plans in Central Asia.

Regulatory stability is a key concern for international investors. The long-term framework for the new regime remains in force until 2100, providing a stable environment for investment decisions. However, maintaining investor confidence and staying competitive will be a significant challenge in the coming years. Mark Beer, Chairman of the Metis Institute, suggests that the center should regularly review its performance against other international business centers and adjust its rules if growth stalls.