18:02 / 21.01.2022
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Textile Industry Support Fund being created in Uzbekistan 

The President signed a decree “On measures to stimulate deep processing, production and export of finished products with high added value by textile and clothing and knitwear enterprises”. 

Photo: Presidential press service

According to the document, it was instructed to create a Textile Industry Support Fund under the Export Promotion Agency without establishing a legal entity and determine the sources of its income:

- funds allocated from the Reconstruction and Development Fund;
- fees charged for the export of cotton yarn and knitted fabric across the customs border of the Republic of Uzbekistan, in the amount established by legislative acts;
- charitable funds of individuals and legal entities, grants from international financial institutions and foreign organizations;
- other sources not prohibited by legislative acts.

For the period from February 1, 2022 to January 1, 2025, a procedure will be established in accordance with which:

a) enterprises that have implemented projects for the production of dyed linen, mixed and dyed fabric products in the Republic of Karakalpakstan and regions will be allocated subsidies in the amount of 10% of the cost of equipment purchased under these projects, but not exceeding the equivalent of $500 thousand, at the expense of the fund. In this case, it is necessary:

- to purchase new equipment within the framework of the above projects;
- not to include in the cost of equipment the cost of delivery and other additional services;
- to have an act on putting the project into operation;

b) enterprises that purchase equipment for the production of dyed fabric, mixed and dyed fabric products, as well as yarn, in which artificial fibers account for more than 80%, JSC National Bank for Foreign Economic Affairs of the Republic of Uzbekistan will be provided with loans in foreign currency to pay a 15% initial payment for up to 7 years, including a grace period of 3 years, at the deposit rate established in accordance with paragraph four of clause 4 of this decree, with the addition of a bank margin of 1%;

c) enterprises exporting dyed fabric, finished garments and knitwear, JSC National Bank for Foreign Economic Affairs of the Republic of Uzbekistan will be allocated loans in foreign currency in an amount not exceeding $3 million for pre-export financing, including replenishment of working capital funds for a period of up to 1 year, including a grace period of up to 9 months, at the deposit rate established in accordance with paragraph four of clause 4 of this decree, with the addition of a bank margin of 1%;

d) enterprises in whose total revenue from the sale of dyed fabric finished garments and knitwear, including through a commission agent (attorney), the share of exports of these products is at least 80%, are granted the right to:

- payment of social tax at a tax rate of 1%;
- deferral of debt repayment on property tax of legal entities for up to 3 years with notification of the tax authorities without sending an application to local government authorities.

At the same time, after the expiration of the deferral period for this tax, the tax debt and accrued interest will be paid in installments within a period equal to the deferral period.

“Extend until January 1, 2024 the terms for the State Fund for Support of Entrepreneurship to provide compensation and guarantees for loans received by exporters in commercial banks for pre-export financing, extend this procedure also to all exporting enterprises,” the document says.

Funds received from the following sources in the period from February 1, 2022 to January 1, 2025 will be sent to the fund:

a) 25% of the tax on the export of cotton yarn and 100% of the tax on the export of knitted fabrics. At the same time, these funds are allocated to subsidize part of the cost of equipment purchased within the framework of projects for the production of mixed and dyed fabric products;

b) 70% of the fees charged for the export of cotton yarn. At the same time, these funds will be allocated to subsidize enterprises exporting finished garments and knitwear (TN VED code 61 – 63).

These subsidies are allocated to exporting enterprises on a monthly basis until the 20th day of the next month in equal shares in proportion to the amount of exports of finished garments and knitwear products at the expense of funds received in the reporting month.

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