IT Park in Uzbekistan: A strategic location for digital development

In recent years, the Republic of Uzbekistan has undergone significant transformations in the IT and innovation sector, making it a prospective center for IT development.

Under the Digital Uzbekistan program, several initiatives have been implemented to facilitate this development, and here are the key points:

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• Technoparks are at the epicenter of innovation: Technoparks, such as the outstanding IT Park and the innovation center Mirzo Ulugbek, are of key importance. They provide IT companies not only with modern infrastructure, but also with tax incentives and support during registration.
• Evolution of education: The government of Uzbekistan is actively investing in IT education and the result of this strategy is the opening of universities and courses that provide IT and programming training.
• Financial support: The government is ready to provide financial assistance and tax advantages for IT companies, which creates a favorable climate for investors and businesses.
• Prospective and talented specialists: Uzbekistan can be proud of the presence of young and talented IT specialists who can boost the development of the industry.
• Support for startups: The development of startups in the country is actively supported through incubation centers and startup accelerators.

The meaning of IT Park in Uzbekistan

In July 2019, the first IT Park was opened in Tashkent, Uzbekistan.

IT Park is a complex of facilities, buildings and structures designed to launch and bring to market prospective startup projects, an extraterritorial free economic zone for IT companies, including integration with research and educational institutions.

According to clause 2 of the Resolution of the Cabinet of Ministers of 15.07.2019 №589 “On the procedure for organizing the activities of the Technology Park of software products and information technologies” (Resolution №589), the Technology Park of software products and information technologies (Technopark) is an organizational and legal entity operating on the principles of extraterritoriality within the territory of the Republic of Uzbekistan, with the location of Technopark residents throughout the territory of the Republic to create the most favorable conditions for the development of production of information.

Startups in IT Park

Creating a startup in the IT Park of Uzbekistan is growing quickly, representing a true embodiment of the company’s opportunities. To realize such an initiative, a number of actions must be taken:

1. A detailed examination of the IT Park’s requirements for participation in the startup support program and a clear confidence that the company’s project meets all the stated criteria.
2. Creating a detailed business plan that will help define the goals and development strategies of the startup. The business plan should also contain information about the products/services that the company will provide and potential sources of income.
3. Registration of the company in the IT Park of Uzbekistan.
4. Creation of a team of professionals.
5. Obtaining financial support.

Directions of startups:

• Fintech
• Medtech
• Agrotech
• E-government
• E-commerce
• Internet of things
• Autotech
• Online education
• Game development

There are several programs for creating startups:

1. Incubation Program is an educational and practical program that forms and develops the idea of a startup project. The program is designed for 3 months and provides the startup project with the following bonuses

• a comfortable office;
• work with professional mentors;
• legal consultation;
• accounting support;
• active networking with successful entrepreneurs;
• unlimited access to business events.

1. Acceleration Program is an educational and practical program aimed at developing startup projects by testing and developing a business model with the organizational and advisory support of mentors and market experts.

IT Park resident status in Uzbekistan

According to clause 2 of Resolution №589, a “Technopark resident” is a legal entity registered in the Technopark under the established procedure and included in the Register of Residents.

To obtain the status of Technopark’s resident, legal entities must meet the following criteria:

1. to be registered in the territory of the Republic of Uzbekistan as a legal entity;
2. to carry out a type (types) of activity in accordance with Appendix №2 to Resolution №589;
3. to have economically grounded business plans in accordance with the above activities.

Tax benefits for Technopark residents:

• until January 1, 2028, residents are exempt from paying all types of taxes and mandatory contributions to state trust funds, as well as social tax; from paying customs duties (except for customs duties) for equipment, components, parts, assemblies, technological documentation, software imported for their own needs that are not produced in the Republic of Uzbekistan;
• personal income tax — a fixed rate of 7.5% on income in the form of salary received before January 1, 2028 by employees under labor contracts with Technopark residents;
• corporate tax — 0%;
• real estate tax — 0%;
• until January 1, 2025, the income tax rate on dividends of the founders of Technopark residents who are non-residents of the Republic of Uzbekistan — 5%;
• residents are obliged to transfer to the deposit account on demand of the Directorate of the Technopark a 1% deduction from the total income.

Preferences for Technopark residents:

• payment of dividends and salaries to its foreign founders (participants) and foreign specialists in foreign currency as part of the proceeds from the export of goods (works, services) by crediting to international payment cards;
• simple and fast company registration procedure;
• conducting business by using a virtual office service;
• engagement of foreign specialists to work without obtaining confirmation of the right to work in the territory of the Republic of Uzbekistan;
• use of convenient conditions and forms of payment and settlements for exported services;
• residents of IT Park can receive support from the government in the form of financial assistance, quality trainings and interesting events;
• due to the favorable geographical location in Central Asia, registration of a company in the IT Park of Uzbekistan provides access to the global arena and allows to expand the client base.

IT-Visa in Uzbekistan

IT-Visa is a multiple-entry visa issued for a validity period of up to three years. Its validity is extended at the request of the applicant without the need to leave the territory of the Republic of Uzbekistan.

Advantages of IT-Visa:

• Obtaining education and medical services on the conditions provided for citizens of the Republic of Uzbekistan;
• Residing in any region of Uzbekistan without the obligation to re-register at the place of residence;
• Purchasing real estate of any value.

These conditions also apply to family members of people who hold IT-Visa.

Who can get an IT-Visa?

1. IT-specialist — a specialist with qualification/specialization in the IT field, employed in a legal entity of a resident of the Republic of Uzbekistan in the IT specialty and confirming his/her income from IT activities not less than the equivalent of USD 30,000 for the last 12 months at the time of application.
2. Founder of an IT Park resident — an individual who is the founder of a legal entity of a Technopark resident registered in accordance with the established procedure and included in the Register of Residents.
3. Investor — an individual or a representative of a foreign investment company that provides financing to a legal entity operating in the IT field through a transaction in the amount of not less than the equivalent of USD 10,000.

Conclusions

The establishment of the IT Park in Uzbekistan has opened new perspectives for the country’s development. The startup support program provides residents with significant tax benefits, creating a favorable environment for their development.

It should be noted the favorable status of the IT Park resident with its tax advantages, including exemption from a number of taxes and mandatory deductions.

The introduction of IT-Visa, aimed at attracting and retaining qualified specialists in the IT sector, underlines the importance of international cooperation and the country’s attractiveness to foreign investors.

Thus, the IT Park in Uzbekistan is a favorable location for digital development, thanks to an effective support system, promotion of innovation, talented workforce and an attractive financial environment. This creates perspectives for stable and sustainable growth of the IT industry in the country.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.