On April 27, 2022, the President of the Republic of Uzbekistan issued a special Decree No.PD-121.

According to this document, a number of amendments and additions have been made to some acts of the President of the Republic of Uzbekistan.

In particular, the National Agency for Project Management under the President of the Republic of Uzbekistan has been transformed into the National Agency for Advanced Projects of the Republic of Uzbekistan (hereinafter the Agency).

The priority tasks and activities of the Agency are defined:

• development and implementation of a unified state policy in the sphere of turnover of crypto-assets;
• ensuring compliance with the rights and legitimate interests of investors in the sphere of crypto-assets turnover;
• participation in the development and implementation of measures to counteract the legalization of proceeds from criminal activities, the financing of terrorism and the financing of the proliferation of weapons of mass destruction in the sphere of turnover of crypto-assets;
• initiation and assistance in the promotion of projects on the introduction of distributed data registry technology and other new technologies in public administration and various socio-economic spheres.

The Decree also establishes that the Agency is the authorized body for the development of the sphere of turnover of crypto-assets, licensing and licensing procedures in this area. The Agency’s structure will include a Specialized laboratory for testing and studying innovative technologies in the field of crypto asset turnover.

The decree approved the Regulation on a special regulatory regime in the sphere of turnover of crypto-assets. At the same time, the Agency establishes a special regulatory regime in the field of turnover of crypto-assets (a special regime of “regulatory sandboxes”), which provides for the creation of special organizational and legal conditions for legal entities implementing technologies in the field of turnover of crypto-assets.

As part of the implementation of pilot projects in a special “regulatory sandbox” mode:

• exempt from payment of all types of taxes and mandatory contributions to state trust funds, as well as customs duties (except for customs duties) for imported equipment, components, parts, assemblies, technological documentation, software not produced in the Republic of Uzbekistan, according to the lists approved in accordance with the established procedure;
• income in the form of wages received by employees under employment contracts with participants in the Special regime of “regulatory sandbox” is taxed on personal income at a fixed rate of 7.5 percent and is not included in the total annual income of individuals determined for tax purposes.

The decree defines the most important tasks for the further development of the digital economy and the sphere of turnover of crypto-assets, such as the introduction and development of activities in the sphere of turnover of crypto-assets, including mining (activities to maintain a distribution platform and create new blocks with the ability to receive remuneration in the format of new units and commission fees in various crypto-assets), smart contracts (an agreement in electronic form, the fulfillment of rights and obligations under which is carried out by performing digital transactions in an automatic manner), consulting, issue, exchange, storage, distribution, management, insurance, as well as distributed data registry technologies for the diversification of various forms of investment and entrepreneurial activity.

The decree established that:

• transactions of legal entities and individuals related to the turnover of crypto-assets, including those carried out by non-residents, are not subject to taxation, and the income received from these transactions is not included in the tax base for taxes and other mandatory payments;
• currency transactions related to the turnover of crypto-assets carried out by persons who have received a license to carry out activities in the sphere of turnover of crypto-assets in accordance with the established procedure are not subject to the norms of legislation on currency regulation.

The decree defines that mining is carried out exclusively by a legal entity using electricity produced by a solar photovoltaic plant. In the case of using electricity with connection to the unified electric power system, the payment for the consumed electricity is carried out using an increasing coefficient in the amount of 2 to the established tariff.

Mining is subject to mandatory registration by the Agency and is not a licensed activity.

Service providers may be exclusively legal entities – residents of the Republic of Uzbekistan.

The decree also establishes that from January 1, 2023, citizens and legal entities of the Republic of Uzbekistan can carry out transactions for the purchase, sale and (or) exchange of crypto-assets exclusively through national service providers in accordance with the procedure established by legislative acts.

Miners operating with the use of equipment and installations of solar photovoltaic stations have the right to enjoy tax, customs and other benefits and preferences in the field of renewable energy sources in accordance with the procedure established by legislative acts.