Uzbekistan Sets Up Tax‑Free Zone for AI in Karakalpakstan

The Uzbek government has established a tax‑free zone in Karakalpakstan, its western autonomous region, for artificial intelligence (AI) projects and data centers. The measure, outlined in Presidential Decree No. PF‑189 signed on 22 October 2025, was announced on 10 November 2025.

The package offers exemption from corporate, property and land taxes, as well as import duties and VAT on servers, graphics processing units and cooling systems for investments of at least US$100 million. Investors also receive a fixed electricity price of US$0.05 per kWh, must cut peak‑hour consumption by 20 % and install battery storage covering 30‑35 % of total load.

The initiative aims to draw global AI firms, accelerate digital infrastructure development and boost the technology sector’s contribution to Uzbekistan’s economy. Direct international payments without local bank routing are expected to shorten construction timelines to as little as nine months.