Doing Business in Uzbekistan
Do you want to expand your business into Uzbekistan or hire employees there? Here are some key things you need to know about a Uzbekistan expansion.
Uzbekistan Economy Overview
Currency
Uzbekistani Som (UZS)
Working hours
40 hours/week
Public/bank holidays
7 public holidays
Capital
Tashkent
Languages
Uzbek
Population
approximately 36.8 million
Minimum hourly salary
6,125 UZS
Tax year
1st Jan – 31st Dec
Date format
YYYY/MM/DD
Misclassification Penalties
Companies found guilty of misclassification may face substantial fines imposed by Uzbekistani labor authorities. These fines are designed to enforce compliance with labor laws and deter future violations.
Fun fact
Uzbekistan enjoys over 300 sunny days per year, making it one of the sunniest countries in the world!
Uzbekistan is a double-landlocked country with a population of around 36.8 million as of 2024. The country is known for its historical art and culture but recently has gained attention for its investment opportunities and growing economy. Uzbekistan is in Central Asia, where Kyrgyzstan, Afghanistan, Tajikistan, Kazakhstan, and Turkmenistan border it. Its strategic location connects Europe to Asia, making for ease of trade and access to large consumer markets.
The Central Asian country is favored for its GDP growth of 5.3% since 2017 and has surpassed the economic performance of a large number of lower-middle-income countries. If you are considering doing business in Central Asia, Uzbekistan offers exceptional investment opportunities. The country offers professional opportunities in renewable energy, manufacturing, agriculture, and real estate.
This guide explores your options to expand in Uzbekistan in compliance with local labor laws and access to the country’s top talent. Foreign businesses can hire a professional recruitment agency or Employer of Record or establish a subsidiary to take advantage of Uzbekistan’s economic growth and affordable workforce.
Overview of Uzbekistan's Economy
Uzbekistan’s economy has proven resilient against international challenges and has shown consistent growth in only the last few years. In 2023, Uzbekistan’s GDP reached $90.8 billion, having increased by 6% from 2022.
Factors such as the privatization of state-owned enterprises and the development of the tourism sector have attracted foreign investment. In fact, Russia and Uzbekistan developed a plan to increase the number of tour-goers to nine million by 2026. The plan involved providing investors with incentives for the construction of hotels and modern infrastructure.
| Sector | Contribution to Uzbekistan’s Economy |
|---|---|
| Energy | Contributes 7% of GDP and up to 50% of capital investments. |
| Mining | A key sector attracting foreign investment, supporting infrastructure and exports. |
| Agriculture | Vital to Uzbekistan’s economy, providing employment and supporting food security. |
| Manufacturing | Accounts for ~19.14% of GDP, including textiles, food processing, and machinery production. |
| Tourism | Growing industry with a goal to attract 9 million tourists by 2026, with investment incentives for hotels and infrastructure. |
The Central Asian country is recognized for its success in the energy, mining, agricultural, and manufacturing sectors. Uzbekistan’s energy sector contributes to 7% of its GDP and up to 50% of the country’s capital investments. The manufacturing industry, consisting of textiles, food processing, and machine production, contributes approximately 19.14% to Uzbekistan’s economy.
Taxes
Employer tax: 12%
Social Security
12% of gross payroll
Employee tax: 6%
Social Security Contribution
4% of gross salary
Unemployment Insurance
0.5%
Housing Loan Regime
1%
Employee Training Contribution
0.5%
Business Regulation in Uzbekistan
Hiring a workforce and expanding your business in Uzbekistan must adhere to the Labor Code of the Republic of Uzbekistan. Some of the regulations that affect businesses are explored in more detail below:
Business Registration Procedures
When registering a business in Uzbekistan, you must select a company name and reserve it with the Public Services Agency. Incorporation documents and proof of address must be submitted to the State Registration Service (SRS). A corporate bank account must be opened, and the business must be registered for tax.
Tax Policies
All non-residents pay 20% income tax, while the corporate tax rate is 15%. Businesses in electronics pay a 7.5% tax, while a 20% tax applies to banks, stores, and mobile operators. All foreign legal entities in Uzbekistan pay withholding tax, while employers must pay social tax at a base rate of 12%.
Investment Incentives
To attract foreign direct investment, Uzbekistan offers tax exemptions for legal entities in the services sector for water use tax, property tax, and land tax. For companies in production and services industries, tax exemptions are based on a tiered system.
Entities investing more than $300,000 and less than $3 million are granted tax exemptions for three years, and those above $3 million for five years. Tax incentives have also been introduced for the renewable energy sector as per Presidential Decree No. UP-220, reducing corporate tax by 50%.
Lastly, Uzbekistan has introduced the Investments and Investment Activity Act to provide guarantees to foreign and local investors, including protection against nationalization and government interference in their business activities.
What Are the Benefits of Doing Business in Uzbekistan?
In addition to a steadily growing economy and a fairly cost-effective labor force, Uzbekistan offers a multitude of benefits for businesses looking to invest in Central Asia:
- Abundant natural resources: Uzbekistan is abundant in gold, copper, cotton, and natural gas. Its rising exports continue to attract foreign investment in mining and renewable energy. Businesses can take advantage of access to raw materials for cost-effective production and industrial development.
- Government reforms: Government reforms aimed at improving the economy include the privatization of state-owned enterprises and a revised tax system offering exemptions for foreign direct investment.
The Uzbekistan government has ended majority state-owned agriculture and invested in the development of universities to encourage education in the technical sector. Furthermore, the foreign exchange rate has been liberalized and price controls removed. The country has introduced legislation tackling issues of climate change by focusing on improving energy efficiency. - Regional trade opportunities: In Uzbekistan, trade is facilitated with its closest neighbors, including China. Regional trade opportunities include exporting raw cotton, gold, and copper, among other metals. Food, including fruits and vegetables, are additional trade opportunities.
Uzbekistan has signed a free trade agreement with Russia for investment concessions and ongoing free trade solutions.
What Are the Downsides of Doing Business in Uzbekistan?
Overcoming potential expansion challenges in Uzbekistan can help you protect your business:
- Bureaucracy: Foreign businesses often find a lack of IPR rights challenging in the Central Asian country; however, in 2018 the Uzbekistan government introduced IP protection in the form of the WIPO Internet Treaties.
- Regulatory challenges: Despite Uzbekistan’s reforms, many businesses continue to experience processing delays, difficulty obtaining licensing, and restrictions on entrepreneurship.
- Currency control issues: Uzbekistan places limitations on foreign payment methods. Businesses must complete an application form to sell and purchase foreign currency; however, foreign exchange laws aim to ease the conversion of international funds.
International Expansion into Uzbekistan
For international expansion into Uzbekistan, you can set up legal entities, hire a recruitment or staffing agency, or partner with a Uzbekistani PEO or EOR:
Uzbekistan Employer of Record (EOR)
An EOR in Uzbekistan can help you expand in the country without setting up a legal entity. An EOR is the legal employer in Uzbekistan, as they assume liability for the workforce by handling matters such as onboarding, contract termination, payroll, and benefits administration. With an EOR, you can benefit from quick and compliant hiring solutions.
Recruitment Agencies
A recruitment agency in Uzbekistan provides the benefits of sourcing skilled labor and a professional workforce. Recruiters connect you to the country’s best talent and perform services such as screening, shortlisting, and interviewing candidates. The recruitment agency can save time and costs in hiring global employees.
Uzbekistan Professional Employer Organization (PEO)
A PEO in Uzbekistan is an HR service provider that helps businesses manage their workforce payroll and HR needs. A PEO is relied upon when you already have an entity in Uzbekistan and require expertise with payroll, benefits administration, onboarding, and maintaining compliance.
Staffing Agency
A staffing agency offers flexible workforce solutions for temporary projects. If you need a seasonal or contract worker, an experienced staffing agency in Uzbekistan can help you source the right employees in compliance with labor laws.
Subsidiary Incorporation
To do business in Uzbekistan, you can set up a company with the following steps:
- Choose a company structure such as an LLC or Joint Stock Company.
- Reserve a unique name with the Public Services Agency.
- Prepare and submit documents such as Articles of Association and proof of address (directors) to the Public Services Agency.
- Open a bank account and register for tax.
- Pay the registration fees based on the type of entity being registered.
Branch Registration
Registering a branch in Uzbekistan provides the benefits of ease of market access and tax exemptions. You can register a branch in the country by submitting the registration details of the parent company to the Public Services Agency. Prepare documents such as the branch manager’s details and the branch charter. Lastly, open a corporate bank account and register for tax.
Business Opportunities in Uzbekistan
Uzbekistan is quickly emerging as a strategic destination for foreign investment, thanks to its ongoing economic reforms, competitive labor costs, and access to Central Asian markets. With a government focused on modernization and regional integration, businesses in sectors like manufacturing, agriculture, energy, and IT are finding strong growth potential and support.
| Business Opportunity | Reason |
|---|---|
| Government Incentives | Uzbekistan offers tax breaks and investment incentives to attract foreign businesses and boost economic growth. |
| Trade & Market Access | Strategic location in Central Asia with trade agreements, including a free trade deal with Russia and strong ties with China. |
| Energy & Mining Sector | Strong oil, gas, and mining industries make Uzbekistan a key player in the resource market with investment opportunities. |
| Low-Cost Workforce | Affordable labor market provides cost-effective hiring solutions for businesses looking to expand operations. |
| Foreign Investment Growth | Economic reforms and business-friendly policies continue to drive foreign investment into various sectors. |
As Uzbekistan continues to open its economy and streamline regulations, the country presents a compelling opportunity for investors looking to establish a foothold in Central Asia. With the right local partnerships and compliance strategy, doing business in Uzbekistan can offer long-term, sustainable rewards.
Expand into Uzbekistan, with Remote People
Uzbekistan presents an emerging business landscape with government-backed incentives. The country’s evolving economic sectors, along with local business reforms, contribute to an attractive investment destination.
As it is located in Central Asia, Uzbekistan provides ease of trade with its neighboring countries, including China. Uzbekistan also has a free trade agreement with Russia for continued economic advancement. The country has continued to attract foreign investment due to its robust economy, low-cost workforce, and strong oil, gas, and mining sectors.
So, if you’re looking for seamless entry and workforce expansion into Uzbekistan, partner with Remote People. Remote People is a leading and trusted global recruitment agency that can connect you to Uzbekistan’s top talent or professional EOR services.
To learn more about expansion into Uzbekistan, get in touch with Remote People’s local business expansion experts.
Our Solutions
- EOR from $199
- Employee Benefits
- Global Payroll
- International Recruitment
- Contractor Management
- Company Incorporation