Since 2017, Uzbekistan has proclaimed significant economic reforms aimed at liberalization of the economy, increasing its attractiveness for investment, drafting and adopting legal acts that simplify doing business in Uzbekistan. All foregoing statements led to a significant increase of the foreign investors' interest in doing business in Uzbekistan.

The legislative system of the Republic of Uzbekistan is based on continental law. According to the World Bank report on Doing Business 2019, ease of starting a business in Uzbekistan is ranked in 12th place by the World Bank Group in the world across 190 economies [1]. Adoption of legislative acts in 2016–2017 reduced the time for registration of legal entities to several hours.

In accordance with the legislation of the Republic of Uzbekistan, in the territory of the Republic of Uzbekistan, citizens, including foreign citizens, can carry out business activities without forming a legal entity as an individual entrepreneur, as well as through the establishment of a legal entity. Business activity can be carried out after state registration.

Individual entrepreneur (Sole Trader) - is an individual engaged in entrepreneurial activity without forming a legal entity, independently, on the basis of property belonging to him by property rights, as well as on the basis of another real right allowing possession and (or) use of property.

The organizational-legal forms of business activity through the establishment of a legal entity are:

Joint-Stock Company (JSC), an economic entity whose authorized fund (authorized capital) is divided into a certain number of shares certifying the company's obligations to shareholders. It is a complex commercial organization in the structure and management, which legislation establishes requirements for the procedure of issuing shares, disclosing information, and etc. At the same time, some forms of commercial activity, such as banks, can carry out entrepreneurial activity only in the form of joint-stock companies.

Limited Liability Company (LLC), a business company established by one or more persons, the authorized fund (authorized capital) of which is divided into shares of the sizes determined by the constituent documents. Members of a limited liability company are not liable for its obligations and bear the risk of losses associated with the company's activities, within the value of their shares.

Company with Additional Liability (CAL) differs from the previous form in the responsibility of the founders for the obligations of the Company. The members of such a company jointly and severally bear subsidiary liability for its obligations with their property in the same for all amount to the value of the contributions made by them, determined by the constituent documents of the company.

Furthermore, the business activity can be carried on in the form of economic partnership – which is recognized by legislation as a commercial organization with a authorized fund (authorized capital) divided into shares (contributions) of the founders (members), in which the founders (members) or some of them personally participate in the conduct of business activities on behalf of such a partnership.

Private enterprise (PE) - is a commercial organization created and managed by the owner - one individual. From the point of view of tax planning, on the date of preparation of this review, the income of a private enterprise, after paying all taxes, is the property of the owner, in connection with which this income is not charged dividend tax, which reduces the cost of doing business.

            The table below shows the size of the state registration fee and the minimum size of the authorized fund, required for the legal type of legal entities.

In addition to abovementioned points, it is necessary to bear in mind that the law imposes a requirement on the minimum size of the share capital for certain types of business activities, such as banking, insurance and etc.    

For establishing a legal entity, along with the drafted and approved constituent documents (charter, if more than one founder, then a constituent agreement), you must provide a copy of the passport for individuals, and legal entities must submit a copy of the certificate of registration of the legal entity or a statement from the trade register (non-residents of Uzbekistan, legal entities).

In addition, it is necessary to draw the attention of entrepreneurs that on June 26, 2018, according to the Decree of the President of the Republic of Uzbekistan No. 5468 the Tax concept of the Republic of Uzbekistan was adopted. In accordance with this concept, new edition of the Tax code will be adopted.

Best regards, VIRTUS LEO team