Uzbekistan Creates Tax-Free AI Zone in Karakalpakstan

In a bid to attract substantial foreign investment, Uzbekistan has established a tax-free zone in the western region of Karakalpakstan for artificial intelligence and data center projects, the government announced on Friday. Firms investing $100 million or more will enjoy full tax exemptions until 2040.

Karakalpakstan, an autonomous republic within Uzbekistan, has been significantly impacted by the drying of the Aral Sea, previously sustaining much of the region. The move is part of Uzbekistan's broader economic reform strategy, positioning itself as a prime investment destination.

The government has yet to disclose infrastructure timelines or participating companies, but aims to attract over $1 billion in AI and digital infrastructure investments by 2030.