The new AI tax-free zone demonstrates Uzbekistan’s intention to lead the digital technology and innovation sector within the region. The digital technology ministries provided an extensive range of advantages geared towards attracting the world’s top technological companies and assisting emerging domestic businesses in one of the most rapidly growing economies in Central Asia. Located in the new Karakalpkstan, all corporations will be exempt from corporate income taxes, property taxes, and customs duties, should they engage in particular AI and data infrastructure projects.
New corporate tax laws distance other businesses
The new tax laws make things harder for other businesses as they require a minimum of $100 million to be invested, specifically geared toward attracting the largest and most impactful players to Uzbekistan’s digital ecosystem.
Officials state the tax-free economic zone will be in place for a decade, which is an attractive offer for new investors. In addition to the tax-free economic zone, new businesses will benefit from improvements to bureaucratic legislation, such as streamlined laws, quicker laws to receive licenses, and state-provided infrastructure. Companies will receive high-speed broadband and energy from renewable sources for their data centers.
The government is trying to make new opportunities available to Uzbekistan’s economy rather than focusing on just widely used sectors like mining and agriculture. Tashkent is trying to make itself a competitive player in AI development and cloud computing to help enter the global economy and decrease dependency on imported digital services.
“AI is an economic driver, not simply a technology.”
The Ministry of Digital Technologies in Uzbekistan states:
“We want to foster a culture of innovation and have the leaders of the world want to partner with Uzbekistan.”
With tech investments being in demand in emerging markets, Uzbekistan is a step ahead of the rest. Initiatives with tax incentives and regulation-free zones have been implemented by countries like Kazakhstan and the United Arab Emirates.
Unlike Uzbekistan, however, these countries are not placing a dedicated focus on a primary zone. This gives Uzbekistan the most dominant position in the region.
The demand for AI, machine learning, and cloud computing is increasing. This makes the timing even more critical. Uzbekistan stands to gain more than the rest of the countries with the implementation of a tax-free zone. Plus, countries in Europe and North America face high compliance costs and energy prices. Balancing this with the affordable hosting of a data center makes any firms in Europe and North America ideal Uzbekistan clients.
Experts caution that success will depend on much more
Uzbekistan needs to address the challenges of ascertaining adequate available resources for potential workers, cybersecurity, and a reliable energy supply. Uzbekistan is still developing the capacity its of vital large-scale infrastructure of primary data centers and sophisticated employees.
In addition, potential geopolitical factors could influence investor confidence. Improving on the strides Uzbekistan has made, foreign investors could gain new confidence, but will look for transparency in regulations and policies.
The government has said that, in the case of data centers and the development of artificial intelligence, incentives will be given not only to provide education and training but also to partner with the government with foreign institutions to stimulate the migration of talent in data science. Future energy sources integrated into the ground will not only construct the data centers but will also provide the international community with the infrastructure to support the operational demand for fuel energy data centers.
The result will be job creation and the development of a new digital economy from the IT services sold worldwide with the centers. The centers will bring Uzbekistan into a new age digitally, and all will be from Karakalpakstan. The future of Uzbekistan in IT services and digital engineering is all in the core of Karakalpakstan.
