Profit Repatriation & Currency Control in Uzbekistan

2017 currency liberalisation

Uzbekistan liberalised its currency regime in September 2017, unifying exchange rates and introducing current account convertibility for the Uzbek som (UZS). Since 2017, foreign investors may freely convert UZS into freely convertible currency and repatriate investment income through the banking system. Residual currency control obligations remain — Bond Stone advises on current compliance requirements.

Statutory repatriation right — Law No. ZRU-598

Investors have a statutory right under Article 17 of the Law on Investments and Investment Activity No. ZRU-598 to transfer abroad, after tax: income from investments; proceeds of sale of all or part of an investment; compensation for losses; contract payments; and payments under a court or arbitral decision. The State may suspend repatriation on a non-discriminatory basis in the cases listed, including insolvency of the EFI, breach of creditors' rights, or a court or arbitral decision. Bilateral investment treaties may add free transfer guarantees.

Dividend repatriation procedure

The dividend repatriation procedure in Uzbekistan requires: a participants' meeting resolution distributing profits; calculation and withholding of dividend withholding tax (10% standard rate under Uzbek domestic law — subject to DTT reduction); and transfer of the net dividend to the foreign shareholder's bank account abroad through an Uzbek bank. An LLC may decide to distribute profit quarterly, half-yearly or annually, and must pay within 60 days of the decision (Article 26 of Law No. ZRU-1137). It may not decide to distribute until the charter capital is fully paid, or while it is or would become insolvent, or if net assets are or would fall below the charter capital and reserve fund (Article 27). Bond Stone advises on the procedural requirements, tax optimisation, and documentation for compliant dividend repatriation.

Withholding tax and DTT relief

Dividend payments from an Uzbek entity to a foreign shareholder are subject to 10% withholding tax under Uzbek domestic law. Uzbekistan has concluded double taxation treaties with numerous states — including China, Germany, France, Russia, UAE, and UK — which reduce the applicable withholding tax rate on dividends for qualifying shareholders. Bond Stone advises on DTT eligibility analysis as part of every investment structuring mandate.

Intercompany transactions — transfer pricing

Intercompany transactions between an Uzbek subsidiary and its foreign parent — including service fees, management fees, royalties, and intercompany loans — are subject to Uzbek transfer pricing rules. The arm's length principle applies. Deductibility of related-party payments is limited where transactions are not at arm's length. Bond Stone advises on structuring intercompany transactions to comply with Uzbek transfer pricing requirements while achieving commercial objectives.