IT-park residency and incentives for startups

The technological park of software products and information technologies of Uzbekistan (called in short as IT-park) was established in 2019. It was designed to be a hub for technology companies, startups, business process outsourcers and research organizations. It operates under the umbrella of the state information technology authorities.

The corporate website of the IT-park is it-park.uz.

The main objectives of the IT-park in Uzbekistan include:

• creating favorable conditions for the development of the IT sector, promoting information products and services in the domestic and foreign markets
• providing residents of the IT-park with infrastructure, financial, marketing, consulting assistance
• organizing training for young specialists in the field of information technology

Incentives and benefits

The following benefits and incentives are granted by the law to resident companies of the IT-park in Uzbekistan:

• tax and customs benefits (as mentioned below)
• a virtual office as a registration and postal address
• the right to attract foreign specialists to work on the territory of Uzbekistan without obtaining a work permit for them
• the right to pay wages in foreign currency (from export earnings) to foreign specialists by making money transfers to their international banking cards
• an IT-visa for foreign citizens and investors

Tax and customs benefits apply from the first day of the next month following the month in which a company obtained a residency status.

Virtual office

A resident company of the IT-park can submit an application at my.it-park.uz to rent a virtual office from the IT-park. Once provided, a resident company must indicate the address of the virtual office in its constituent documents (foundation documents).

A virtual office can be provided to a resident company of the IT-park, if the executive director of the company is a citizen of Uzbekistan.

Tax benefits

Until January 1, 2028:

• a resident company of the IT-park is exempt from paying all taxes and mandatory contributions to state trust funds, including turnover tax, corporate income tax (also called as profit tax), value added tax (VAT), and social tax
• salary paid to employees of a resident company under employment contracts is subject to personal income tax at the reduced rate of 7.5% (instead of regular 12%)
• value added tax (VAT) in Uzbekistan is exempted when digital services are purchased by a resident company from a foreign contractor

Until January 1, 2040, if exports of a resident company of the IT-park constitutes more than 50% of its total revenue, foreign shareholders of this resident company have the right to pay taxes on dividends at the reduced rates established for Uzbekistan tax residents (5%).

After January 1, 2028 and until January 1, 2040 a resident company of the IT-park is exempt from all taxes, except for value added tax (VAT), if exports of the resident company constitutes more than 50% of its total revenue.

Until January 1, 2030 foreign companies providing information technology services (including royalty-based services) to a resident company of the IT-park are exempt from corporate income tax in Uzbekistan, if:

• export revenue of the resident company of the IT-park exceeds USD 10 million during that calendar year
• there is no double tax treaty signed between Uzbekistan and the country of registration of the foreign company

A resident company of the IT-park will be exempt from taxes and mandatory contributions only for the business activities approved by the IT-park when obtaining a residency status.

Customs benefits

Resident companies of the IT-park are exempt until January 1, 2028 from paying customs duties (except for customs processing fees) for equipment, components, technological documentation, software imported for their own needs that are not produced in Uzbekistan as per approved lists.

In order to apply the exemption on customs duties, a positive conclusion from the Center for Comprehensive Expertise of Projects and Import Contracts under the Ministry of Economy and Industry of Uzbekistan is required.

If, within 3 years from the date of import, a resident company uses the goods, exempted from customs duties, in the ways other than for its own needs, the amount of unpaid customs duty will be subject to recovery with a penalty.

Activities permitted for IT-park residents

A company that has obtained IT-park residency status may only engage in permitted activities in the field of information services. The list of permitted activities is as follows:

1. Design, development, implementation (including granting permission to use software, assignment (transfer) of the exclusive right to software) software, including computer games, for any platforms
2. Provision of services for the implementation or implementation of individual stages of implementation, support, maintenance of software, including training in working (advanced training) with this software
3. Refinement, modification of software
4. Creation of databases in the process of developing information systems and software, preparing records for these databases in a given format, providing access to them, their support, maintenance
5. Data processing activities using software
6. Providing advertising space in your own software or otherwise profiting from additional features of the software
7. Development and implementation of automated control systems
8. Analysis of the information needs of legal entities (system analysis, business analysis), consulting on the use of information technologies for the purpose of innovation (reengineering) of business processes with the development of technical requirements for information systems and software
9. Audit of information systems and software during their development, implementation and operation for compliance with technical requirements and (or) information needs of users
10. Provision of automated services using software developed by a Technopark resident for searching, selecting, processing and sorting data at the request of third parties, as well as providing them with information
11. Provision of services to non-residents of the Republic of Uzbekistan for the development, management (implementation) of administrative and business processes (business process outsourcing) using software (hardware and software)
12. Implementation of materials, technologies, devices and systems of micro-, opto- and nanoelectronics, microelectromechanics and compatible embedded software developed by the Technopark resident himself
13. Development (research, design (construction), testing, technical tests) of equipment for data transmission systems, technologies, devices and systems of radar, radio navigation, radio communications, radio control, radio frequency identification and implementation of the results of such developments with the provision of services for their development in production or without providing these services
14. Development or individual stages of development (research, design, construction, prototyping, testing), production (non-industrial) of high-tech systems and devices, software and hardware and software compatible with them, as well as sales of manufactured products and (or) results developments with or without the provision of services for their development in production
15. Activities on technical and (or) cryptographic information protection, including the use of electronic digital signature
16. Activities related to the development, implementation, implementation of the concept of a computing and communication network of physical objects equipped with built-in technologies for interaction with each other and with the external environment (Internet of things)
17. Educational activities in the field of information technology, including through the worldwide information network Internet, according to programs approved by the Directorate of the Technopark, as well as activities for the provision of English language teaching services within the framework of education organized in the field of information technology, amounting to no more than 40% of the total annual income from education in the field of information technology
18. Export of information services via the World Wide Web
19. Provision of services in the field of multimedia and design (web design, graphic design, computer game design, vector graphics, 3D graphics, visual design, interface design, technical design, motion design)
20. Development of cartoon products using software
21. Activities for venture financing of projects in the field of information technology and implementation of acceleration programs
22. Provision of services in the field of e-sports
23. Provision of services by organizations with a higher share of exports of services in the volume of general services in relation to the volume of services provided for the domestic market, operating in at least two or more foreign countries

How to apply for IT-park residency

A new or existing company registered in Uzbekistan and operating in the field of information technology and business process outsourcing (BPO) can file an application to obtain IT-park residency status. A company located in any region of Uzbekistan may be the resident of the IT-park.

A company applies to the IT-park for residency status through the portal my.it-park.uz. An electronic digital key of a company is required to access the portal.

Together with an application, the company will submit a business plan for consideration. The application has to indicate the business of the applicant which must correspond to the permitted activities.

Review of an application to obtain residency status with the IT-park usually takes 15 business days.

Need assistance with applying for IT-park residency? Contact us

Obligations of IT-park residents

From the day of obtaining a residency status, a resident company is obliged to fulfill the following requirements:

• engage only in the types of business specified in the business plan approved by IT-park
• no later than the 7th day of the next month, report to the IT-park the total amount of revenue for a previous month
• no later than the 20th day of the next month, pay mandatory contributions to the IT-park in the amount of 1% of the amount of all revenue for a previous month
• no later than the 15th day of the next month after the end of a calendar quarter, submit special reports to the IT-park
• no later than July 1 of the next year, submit to the IT-park an audit report for the past calendar year

A resident company proviging education services related to information technology must ensure that the volume of English language teaching services does not exceed 40% of the total annual income.

Mandatory contributions to the IT-park

No later than the 20th day of the next month, a resident company pays mandatory contributions to IT-park in the amount of 1% of the total revenue (income) earned in the past month.

If export volumes exceed 10 million US dollars within 12 months, the monthly contribution will be 0.75%, and if export volumes exceed 20 million US dollars – 0.5%.

However, if the resident's annual income is 100 billion Uzbek soums or more, but income from exports is less than certain thresholds (10-35%), then the resident will be required to make contributions in the amount of 2%.

Losing IT-park residency status

The grounds for deprivation of IT-park residency status are as follows:

• non-compliance with the requirement to engage only in the permitted types of activities
• failure to provide information about company's activities, tax and statistical reporting, a business plan, an audit report within due deadlines, or providing false information in them
• non-payment of mandatory contributions to the IT-park
• reorganization of a resident company
• declaring a resident company bankrupt
• voluntary renunciation of residency status by a resident company
• failure to fulfill obligations of the residency agreement with the IT-park, as well as on other grounds

Failure of a resident company to fulfill its obligations to the IT-park entails deprivation of residency status with the restoration of obligations to pay unpaid taxes to the state budget.

IT-visa for foreign citizens

An IT-visa will be issued based on the recommendation of the IT-park of Uzbekistan to the following categories of foreign citizens:

• investors in the field of information technology
• founders of the resident company of the IT-park
• IT specialists hired by the resident company of the IT-park

A recommendation of the IT-park for an IT-visa to foreign citizens will be issued in the form of an IT-card.

How to obtain an IT-visa

To obtain an IT-visa, a foreign person submits an application at itvisa.uz. The application has to be accompanied by a copy of a national passport and other documents depending on the category of the foreign person:

• an IT specialist needs to submit a document confirming annual income for the last 12 months in the amount of at least 30 thousand US dollars
• a foreign investor must provide information about an investment project valued for at least 10 thousand US dollars in Uzbekistan and a bank statement confirming the availability of the required funds for investment
• the foreign founder of an IT-park resident company needs to submit a copy of the residency certificate of the company

The consideration time for an IT-visa recommendation is about 20 business days.

Based on the recommendation from the IT-park, an IT-visa will be issued by consulates of Uzbekistan abroad or by territorial internal affairs offices in Uzbekistan at the place of temporary residence of a foreign person. Family members (spouse, parents, children) will be issued a guest visa. A multiple-entry IT-visa will be issued for a period of up to 3 years, with the possibility of extending it without the need to leave the territory of Uzbekistan.

A foreign citizen visiting Uzbekistan has to ensure temporary registration at the place of stay within a period not exceeding 3 days. The violation of the requirement on temporary registration entails a fine or deportation from Uzbekistan. See our article on visas for foreign citizens.

Additional benefits of IT-visa

A foreign citizen with an IT-visa, as well as members of the family, are entitled to receive education and medical services on the same conditions as for citizens of Uzbekistan.

A foreign person who has an IT-visa has the right to purchase real estate of any value on the territory of Uzbekistan without the need to obtain a residence permit. A real estate purchase transaction is subject to notarization.

Zero Risk program

the Zero Risk program from the IT-park is designed to promote setting up startup companies in the field of IT and business process outsourcing (BPO) by minimizing risks and costs.

the Zero Risk program operates in all regions of Uzbekistan except in Tashkent city.

In order to participate in the Zero Risk program, an applicant company must be the resident of IT-park and meet one of the following criteria:

• the share of service exports outside of Uzbekistan exceeds the volume of services provided in the domestic market
• the company has an export contract with a total contract price of at least 500 thousand US dollars
• the annual turnover of the foreign parent company is at least 1 million US dollars

Application for participation in the Zero Risk program can be submitted at zerorisk.outsource.gov.uz.

Benefits of Zero Risk program

A participant in the Zero Risk program will have the following benefits:

• free use of empty buildings and premises of state property for a period of up to 12 months
• free use of new computers and technical equipment purchased by IT-park for a period of up to 12 months with the right to subsequent purchase with installment payments
• compensation of up to 15% of salary expenses for citizens of Uzbekistan employed by the company in one year
• reimbursement of expenses for personnel hiring in the amount of up to 50% of such expenses, but not more than 7.500.000 Uzbek soums
• reimbursement of expenses for requalification and training of employees in the amount of up to 50% of such expenses, but not more than 75.000.000 Uzbek soums

Project Local to Global

Local to Global project is aimed at bringing companies in the field of IT services to the international IT market and supporting their export activities.

Local to Global project is available to companies having IT-park residency status. To participate in Local to Global project, a resident company may submit an application to IT-park.

Under Local to Global project a resident company of the IT-park is provided with the following opportunities:

• IT-park provides free consulting services in developing an export plan, identifying promising foreign markets, searching for clients and conducting negotiations with them, preparing export documentation
• reimbursement of expenses for consulting services of foreign experts in the equivalent of up to 10 thousand US dollars
• reimbursement of expenses for participation in international exhibitions and conferences in the equivalent of up to 5 thousand US dollars
• reimbursement of expenses for the visit of foreign partners to Uzbekistan for business negotiations in the amount depending on the volume of exports of an IT-park resident, but not more than 20 thousand US dollars
• reimbursement of expenses on business trips to foreign countries (transportation and hotel costs) in the equivalent of up to 5 thousand US dollars
• reimbursement of half of the costs of training on prestigious international platforms and areas of education (as per the list approved by the Ministry of Digital Technologies of Uzbekistan) for no more than 50% of all employees, but only once per calendar year for each employee

Expenses for each category of support to companies operating in the field of IT will be reimbursed only once in one calendar year.