Systematic problems with respect to foreign exchange and
repatriation of profits may still be observed in Uzbekistan.
Despite legislative guarantees, it may be difficult for a foreign
investor to convert profits generated in Uzbekistan to a freely
convertible currency in practice.
Realising that this problem has a significant negative impact on
the country's economic performance, in November 2016, the Uzbek
government released the draft Presidential Resolution "On
Priorities of the Foreign Exchange Policy", heralding the
large-scale liberalization. Apart from mentioning the intention to
abandon the practice of setting official foreign exchange rates
(rejection from 'state-controlled' rates in favour of
market rates), the draft Decree outlines some changes as
Residents of Uzbekistan are not entitled to payout dividends and
likewise payments to residents of Uzbekistan in foreign
Residents of Uzbekistan receiving income in foreign currency and
having foreign currency funds on their accounts are allowed to
pay-out dividends and likewise payments in foreign currency based
on the relevant decision of shareholders;
Non-residents of Uzbekistan (commercial entities) are entitled
to open foreign currency accounts in local banks only if their
representative office or permanent establishment is duly opened and
Non-residents of Uzbekistan (commercial entities and
individuals) may open foreign currency accounts in local banks and
freely use the funds.
Resident exporters of goods and services are obliged to exchange
(convert) a certain amount of foreign currency export profits (25%
since January 2017).
Resident exporters of goods and services are not obliged to
exchange (convert) incoming foreign currency, except for companies
exporting specific goods and services, the list of which will be
set by the Cabinet of Ministers.
Based on some dates specified in the draft Resolution, the
majority of changes are expected to come into force by the third
quarter of 2017, though the Resolution itself has not still entered
into force and one cannot be sure that all the changes will
eventually be introduced.
It should, however, be noted that certain liberalization steps
have already been taken. For example, since January 2017 resident
exporters are obliged to convert only 25% of their foreign currency
profits instead of 50%. It is also noticeable that since mid
February the foreign exchange rates set by the Central Bank started
to rise notably as compared with their usual pace.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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