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Spotlight on Uzbekistan: Kinstellar's regular look at the Uzbek market, June 2019

July 2019 – Kinstellar's regular look at the Uzbek market

Statutory minimum wage index and basic rated value instead of minimum wage

In accordance with the Presidential Decree No. UP-5723, from 1 October 2019 the minimum wage will be replaced as follows:

  • Statutory minimum wage index ("SMWI") – UZS 577 170.

The SMWI is a monetary expression of the monthly wage rate. In the field of labor relations, the SMWI is used to determine the amount of basic salary, allowances, extra pay, fees, compensation payments for additional work and the amount of unemployment benefits.

The SMWI is compulsory for all employers as the base of the remuneration of workers who have fully complied with the established labor standards, regardless of the form of business and labor relations.

  • Basic rated value – UZS 202 730 (current minimum wage).

This value is used to determine the amount of taxes, fees, fines, state fees and other state service payments. The cost of a patent, license and the amount of the authorized capital of a legal entity, as well as other finance and economics indicators will be a calculated based on a multiple of the basic rated value.

  • Basic amount of the calculation of pension – UZS 202 730.

This amount is used to calculate pensions and other payments including compensation for harm caused to employees.

Presidential Decree “On the Improvement of the Procedure of Determining the Amount of Wages, Pensions and Other Payments” No. UP-5723 of 21 May 2019.

Adoption of the Law on the Use of Renewable Energy

The Law on the use of Renewable Energy ("the Law") has been adopted. The Law covers not only generation of electricity from renewable energy, but also the production of the equipment that generates such energy. According to the Law, renewable energy sources are the energy of the sun, wind, heat of the earth (geothermal), the natural movement of water flows, biomass, which are naturally restored in the environment.

The Ministry of Energy is designated as a specially authorized state body in the field of the use of renewable energy sources.

In addition, the Law provides the following tax incentives:

  • Producers of renewable energy installations are exempt from paying all types of taxes for a period of 5 years from the date of their state registration;
  • Energy producers from renewable sources are exempt from paying property tax for installing renewable energy sources and land tax on the areas occupied by these installations (with a nominal capacity of 0.1 MW or more) for a period of 10 years from the date of their commissioning.

Tax exemptions and customs duties can be provided to businesses and individuals to import renewable energy installations, the use of which significantly increases energy efficiency.

Law "On the Use of Renewable Energy" No. ZRU-539 of 21 May 2019.

Free economic zone for production of medicines created in Andijan Region

The Free Economic Zone "Andijan-Farm" ("Andijan-farm FEZ") was formed in the form of a state-unitary enterprise. The Andijan-farm FEZ is created in the Andijan district of the Andijan region for the production of pharmaceutical products, processing of medicinal raw materials, the production of ready drugs, medical products, medical equipment, auxiliary and packaging materials, etc.

The Resolution of the Cabinet of Ministers approved the territories included in the FEZ, the Directorate structure and the Charter of the Andijan-farm FEZ. The Resolution provides the possibility to transfer the management of the Andijan-farm FEZ to a foreign company. According to the Charter, the main goals of the Directorate are to implement the state programs for development of the Andijan-farm FEZ , as well as to make a profit from providing services to the participants of Andijan-farm FEZ and performing other activities stipulated by the Charter.

Moreover, the Presidential Decree "On creation of the Free Economic Zone "Andijan-farm" exempts the participants of Andijan-farm FEZ from land tax, profit tax, corporate and property tax, as well as social infrastructure development duty and mandatory contributions to the state funds. These exemptions are provided for various periods depending on the investment.

Resolution of the Cabinet of Ministers "On Measures to Organise the Activities of the Free Economic Zone "Andijan-farm"" No. 480 of 11 June 2019.

For further information, please contact Joel Benjamin, the Managing Partner of the Central Asia practice of Kinstellar at

e-mail

, or Muborak Kambarova, a Counsel in our Tashkent office at .