Getting hard currency in and out of Uzbekistan, with its notoriously tight controls over cash flows, is about to become even harder as Tashkent brings into force draconian new checks over bank transfers that will hit investors and individuals, foreign and local alike.
The new rules, announced by the UzDaily.uz website on June 17, launch a new monitoring system that forces banks to report a wide range of bank transfers into and out of Uzbekistan to the tax authorities. The report said the rules were approved on June 12, but did not specify when they will come into force.
For foreign companies, these include fines received from local partners via transfer for breaching agreements. Dividends or profits repatriated abroad to foreigners who have founded companies in Uzbekistan also come under the rules. (The right to repatriate profits is theoretically assured to foreign investors under Uzbek legislation, but frequently breached due to the Byzantine hoops through which they must jump to repatriate their money.)
The rules also cover payments to non-residents for sales of shares in Uzbekistan-based businesses and of property in Uzbekistan, which will hit both foreign companies and foreign individuals.
The rules aren’t just targeted at foreigners: Uzbek citizens will also be hit as the transfers they receive and make come under scrutiny. Any transfers abroad from Uzbek banks by individual account holders above the equivalent of $10,000 per calendar year will come under the microscope, as will all transfers from abroad to their accounts from foreign companies.
Transfers of funds via international services such as Western Union and MoneyGram – used by many labor migrants abroad to send remittances home – are not covered by the rules.
The news comes in the wake of unconfirmed reports that Uzbekistan Airways, the state-run flag carrier, plans to limit the number of tickets it sells in exchange for Uzbekistan’s national currency, the sum.
In February, new rules banning access to cash dollars for residents of Uzbekistan imposed further restrictions on an already tightly controlled market. One thing they did not do, however, was smash the thriving black currency market, where the sum is still changing hands at around 2,750 to the dollar against an official rate of 2,090.70 on June 18.
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Joanna Lillis is a journalist based in Almaty and author of Dark Shadows: Inside the Secret World of Kazakhstan.
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