Uzbekistan has approved new investment incentives for foreign companies building artificial intelligence (AI) and data infrastructure projects worth more than $100 million in the country’s north-western Republic of Karakalpakstan, the government said.
The incentives are part of a presidential decree signed on October 22, 2025 (Decree No. PF-189), aimed at expanding the country’s AI and digital infrastructure by 2030.
Investors in projects exceeding $100 million will be exempt from customs duties and value-added tax (VAT) on imported servers, GPUs and cooling systems that are not produced in Uzbekistan.
Companies registered as residents of the national IT Park — including those exporting cloud or AI-computing services — will also receive profit, property and land-tax exemptions until 2040, along with a 0% tax on dividends for foreign shareholders.
The government will set a fixed electricity tariff of $0.05 per kilowatt-hour (excluding VAT) for qualifying facilities. Operators must reduce power consumption by 20% during peak hours and install battery-energy-storage systems (BESS) covering 30–35% of total load to support grid stability.
Projects meeting the criteria will have external infrastructure — including power, water, gas, roads and fibre-optic connections — funded by the government, provided that investors contribute at least 25% of their own capital. Investors will be allowed to make direct international payments to foreign contractors and suppliers without routing funds through local bank accounts, removing currency-transfer restrictions and reducing administrative delays.
A “Design–Procure–Build” model will allow construction phases to run in parallel, cutting delivery time by up to nine months. Land allocation for approved projects will be handled directly by the Cabinet of Ministers of Karakalpakstan.
Digital Technologies Minister Sherzod Shermatov said the presidential initiative links the second stage of IT Park Uzbekistan’s development to the introduction of AI technologies. He said the new facilities would become “a major centre for artificial-intelligence development, bringing together AI-focused startups and data-centres equipped with graphic-processing infrastructure.”
Minister Sherzod Shermatov added that the president had proposed turning Karakalpakstan into a dedicated data-centre region and promised preferential treatment for investors spending more than $100 million. “This will drive regional growth and attract companies interested in large-scale digital infrastructure,” he said.
Officials said the programme is designed to make Karakalpakstan more competitive for energy-intensive AI and data projects, leveraging the region’s wind-energy potential and available land resources. Priority placement of such facilities is tied to upcoming renewable-energy projects, including a 5-gigawatt wind farm in the Kungrad district being developed by Saudi company ACWA Power under a $6.2-billion agreement signed with the Ministry of Energy in May 2024.
UzA