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Benefits of Making Business in Uzbekistan | Buy & Sell Business

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Benefits of Making Business in Uzbekistan | Buy & Sell Business

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  1. BENEFITS OF MAKING BUSINESS IN UZBEKISTAN WWW.MERGERSCORP.COM

  2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

  3. BENEFITS OF MAKING BUSINESS IN UZBEKISTAN WWW.MERGERSCORP.COM

  4. Country Overview Uzbekistan, a landlocked country in Central Asia south and southeast of the Aral Sea, bordered by Kazakhstan in west and north east, by Turkmenistan in south west, it has a short border with Afghanistan in south (145 km), Tajikistan and Kyrgyzstan in east. The country occupies an area of 447,400 km², Uzbekistan is about the size of Sweden, or slightly larger than the U.S. state of California. The landscape of Uzbekistan is dry with mostly flat-to- rolling sandy desert, inclusive sand dunes. Only about 10% of the country's area is intensively cultivated with irrigated land in river valleys and oases. Uzbekistan has a population of 31 million people (in 2015). Capital and largest city is Tashkent (Тошкент). Spoken languages are Uzbek and Russian.

  5. Executive Summary Uzbekistan is the geographic and population center of Central Asia. The country has a diverse economy and a relatively young population. Russia conquered and united the disparate territories of present-day Uzbekistan in the late 19th century. Stiff resistance to the Red Army after the Bolshevik Revolution was eventually suppressed and a socialist republic established in 1924. During the Soviet era, intensive production of "white gold" (cotton) and grain led to the overuse of agrochemicals and the depletion of water supplies, leaving the land degraded and the Aral Sea and certain rivers half-dry. Independent since the dissolution of the USSR in 1991, the country has diversified agricultural production while developing its mineral and petroleum export capacity and increasing its manufacturing base, although cotton remains a major part of its economy. Uzbekistan’s first president, Islam KARIMOV, led Uzbekistan for 25 years until his death in September 2016. His successor, former Prime Minister Shavkat MIRZIYOYEV, has improved relations with Uzbekistan’s neighbors and introduced wide- ranging economic, judicial, and social reforms.

  6. Introduction – Doing business in Uzbekistan Uzbekistan is ranked 69 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Uzbekistan improved to 69 in 2019 from 76 in 2018. Large-scale fundamental reforms initiated by Uzbek government provide unique opportunities for foreign investors to establish their operations in Uzbekistan. Being one of the top fastest- growing economies in the world according to the World Bank, Uzbekistan proves the right direction of the global economic shift towards Asia. The ten economies scoring the highest on the ease of doing business rankings were New Zealand, Singapore, Hong Kong SAR China, Denmark, Republic of Korea, United States, Georgia, United Kingdom, Norway, and Sweden. Top performers typically had online business incorporation processes, electronic tax filing platforms, and online procedures for property transfers.

  7. Conducting business in Uzbekistan Private Limited Company - Number of partners: Min 1 shareholder with a max of 50. Capital (max/min): Minimum share capital of 150 000 USD if the company benefits from foreign investments . Each partner has to release 30% of the statutory share capital on the day of the registration of the company and the remaining within a period of one calendar year. Shareholders and liability: Liability is limited to the value of the capital contributed. Close Public Limited Company - Number of partners: Minimum 3 shareholders. Capital (max/min): The minimum share capital is 50 000 USD if the company benefits from foreign investments. Shareholders and liability: Liability is limited to the amount contributed. Open Public Limited Company - Number of partners: Minimum 1 shareholder. Capital (max/min): The minimum share capital is 50 000 USD if the company benefits from foreign investments. Shareholders and liability: Liability is limited to the amount of secured contribution.

  8. Taxation in Uzbekistan The standard income tax rate is 12% as from 1 January 2019 (reduced from 14%). A 20% rate (reduced from 22%) applies to banks and mobile operator companies. The standard unified tax rate is 4%, although the rate is different for certain industries and is lower for companies established in remote regions. The Personal Income Tax Rate in Uzbekistan stands at 23 percent. Uzbekistan Personal Income Tax Rate - data, historical chart, and calendar of releases - was last updated on February of 2020 from its official source. In Uzbekistan, the Personal Income Tax Rate is a tax collected from individuals and is imposed on different sources of income like labor, pensions, interest and dividends.

  9. Trade Uzbekistan is the 89th largest export economy in the world and the 96th most complex economy according to the Economic Complexity Index (ECI). In 2017, Uzbekistan exported $8.38B and imported $11.2B, resulting in a negative trade balance of $2.84B. In 2017 the GDP of Uzbekistan was $49.7B and its GDP per capita was $6.87k. The top exports of Uzbekistan are Gold ($3.67B), Petroleum Gas ($692M), Non-Retail Pure Cotton Yarn ($594M), Ethylene Polymers ($370M) and Refined Copper ($309M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Vehicle Parts ($574M), Packaged Medicaments ($468M), Refined Petroleum($419M), Coated Flat-Rolled Iron ($310M) and Sawn Wood ($226M). The top export destinations of Uzbekistan are Switzerland ($3.68B), China ($1.4B), Russia($1.01B), Turkey ($815M) and Kazakhstan($714M). The top import origins are China ($2.72B), Russia ($2.62B), Kazakhstan ($1.25B), South Korea ($1.18B) and Turkey ($677M).

  10. Banking in Uzbekistan The banking system of Uzbekistan includes the Central Bank and 30 commercial banks (3 state-owned banks, 13 joint stock banks, 5 banks with foreign capital and 9 private banks), which have extensive network of branches and mini- banks nationwide (over 4600 branches and retail offices). Closed on weekends and holidays. Main objectives of the Association of banks of Uzbekistan are: • Expansion of the role of commercial banks in the realization of market oriented reforms • Creation of integrated banking infrastructure as a solid basis of development of the banking system of Uzbekistan to the level of international standards • promote self-reliance of commercial banks in the presence of economic levers of centralized control of the banking system • Protecting the rights and legal interests of member banks and providing overall support Overall goals of Uzbekistan Banking Association are maintenance of achievement by commercial banks of the country to the level of the international standards with the subsequent integration of banking sector into the international banking system.

  11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

  12. Looking to Buy or Sell a Business? CONTACT US NOW FOR A FREE BUSINESS VALUATION WWW.MERGERSCORP.COM

  13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com

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