Uzbekistan is tightening its dialogue with German business as the country retools its tax administration and digital systems, positioning itself as a more predictable and transparent destination for cross border investment in manufacturing, construction and related industries.
German investors expand their footprint in Uzbekistan
A recent meeting between the State Tax Committee of Uzbekistan and the Union of German Economy in Uzbekistan (VDWU) brought together heads of key departments to review how the tax system is working for foreign investors and what needs to change to support future projects. The initiative came from the German side, which outlined a number of pressing issues around tax administration and overall business conditions.
German affiliated enterprises now employ 46.6 thousand workers in Uzbekistan, showing solid growth compared with the same period last year. The total wage fund at these companies has increased by around 7%, reflecting gradual expansion of operations and payroll.
Tax contributions are also on the rise. Over the first eight months of the current year, enterprises with German participation paid more than 5.1 trillion Uzbek soums in taxes, roughly 8% higher than last year’s figure. At the same time, the amount of refunded value added tax reached about 219 billion soums, which is more than two thirds above the previous year’s level. Companies benefited from tax incentives totaling over 1.3 trillion soums, underscoring the scale of state support available to investors that comply with legislative requirements.
For German manufacturers, construction groups, engineering firms and service providers, these numbers signal that Uzbekistan is not only attracting foreign enterprises but also actively adjusting its fiscal tools to keep longer term industrial projects viable.
Competitive tax regime backed by international safeguards
Uzbekistan continues to maintain tax rates that are considered competitive in the broader Central Asian region. Corporate profit tax stands at 15%, while VAT is set at 12%. For foreign investors building factories, logistics hubs, hotels or large retail and showroom spaces, these rates are an important part of the financial modelling for new projects.
An additional comfort factor for German capital is the double taxation avoidance agreement between Uzbekistan and Germany, which has been in force since 1999. This treaty helps ensure that income generated in Uzbekistan is not taxed twice, reducing uncertainty for multinational groups and simplifying cross border cash flows between local subsidiaries and headquarters.
Together, the combination of moderate tax rates, sizable incentives and treaty protection is gradually forming a more predictable environment for complex, capital intensive ventures — from production of building materials and interior components to development of large mixed use real estate and commercial spaces.
Digital tax administration and automated VAT refunds
One of the key agenda points discussed with German investors was the future of VAT administration. From 1 January 2027, Uzbekistan plans to introduce an automated procedure for VAT refunds for taxpayers with a low risk profile. This reform aims to make the refund process faster and more convenient, reducing the human factor in routine decisions and improving cash flow stability for compliant businesses.
German companies were also briefed on the specifics of simplified VAT payment procedures. For enterprises importing equipment, construction materials, interior products or finished goods for retail chains and hotel projects, more predictable and timely VAT refunds can substantially reduce financing costs and improve project economics.
The planned automation is particularly relevant for investors running multiple entities or large supply chains in Uzbekistan. A streamlined VAT system — aligned with clear risk criteria — reduces administrative bottlenecks and makes it easier to scale manufacturing and distribution operations across different regions of the country.
Removing data friction in state information systems
While the overall direction of reform is positive, German business representatives also pointed to specific operational challenges. Papenburg Uzbekistan, a company active on the local market, highlighted difficulties that arise due to differences in the timing of data updates and synchronization across various state information systems.
These technical gaps can lead to discrepancies between the records of different government bodies and, as a result, to additional administrative expenses and delays for businesses. In sectors like construction, infrastructure, logistics and industrial manufacturing — where projects are complex and documentation is voluminous — such inconsistencies can translate into real costs and schedule risks.
In response, both sides discussed ways to improve interagency information exchanges and enhance the quality and speed of data sharing. Better alignment of databases and reporting tools should reduce duplicative requests for documentation and decrease the frequency of manual clarifications, freeing management and finance teams to focus more on operations and investment planning.
Preserving direct dialogue alongside digital tools
The Uzbek authorities stressed that, despite rapid digitalization of tax administration, it remains important to preserve channels for direct communication between taxpayers and specialists at the Tax Committee for issues requiring individual review. German companies confirmed that personal, accountable contact points are critical when dealing with complex or unusual cases.
Representatives of German business proposed creating a dedicated rapid response communication channel through which designated experts from the Tax Committee could provide direct consultation on practical questions. The parties are also considering appointing a specific contact person for German investors, tasked with handling emerging issues promptly and ensuring they are not lost in a general flow of inquiries.
The meeting concluded with an agreement to continue this format of dialogue on a regular basis. Such recurring sessions provide a mechanism for identifying and resolving problems early, before they escalate into systemic barriers, and help the authorities adjust regulatory practice to the real needs of active investors.
Why this matters for international furniture and construction companies
For global players in furniture and interior manufacturing, building materials, construction contracting, retail, hospitality design and architecture, the evolving tax landscape in Uzbekistan is more than a technical story. Competitive profit and VAT rates, growing experience with foreign investors, deepening ties with German business, and the shift toward automated VAT refunds together signal a market that is working to reduce friction and support long term industrial and real estate projects. Clearer rules, faster refunds and direct communication channels can significantly improve cash flow predictability for companies importing equipment and components, establishing local production sites, or fitting out hotels, offices and residential complexes — making Uzbekistan a more attractive platform for regional expansion across Central Asia.
