Decree of the President of Uzbekistan

In order to ensure the accelerated development of small business and private entrepreneurship, further strengthen the legal mechanisms for protection and guarantees of the inviolability of private property, elimination of bureaucratic obstacles to business development, improvement of investment climate and business environment in the country:

1. Identify provision of greater freedom for small business and private entrepreneurship, radical reduction of government intervention in their activities, provision of early warning, efficient prevention of violations as a top priority of the state policy and the primary task of public authorities, involved in the sphere of further development of entrepreneurship.

Public authorities, especially law enforcement and regulatory agencies must:

ensure unconditional implementation of the above requirements, as well as the principle of priority of the rights and lawful interests of business entities in their work;

within two months submit substantiated proposals based on critical analysis of their functions and authorities, aimed at improving and enhancing the effectiveness of measures on prevention of violations;

ensure strict compliance with the requirements of the legislation on liability of officials for unlawful interference and obstruction in conducting a business, the unjustified suspension of the activity, as well as compensation of damages to businesses by responsible officials who caused such damages.

2. Approve the Program of measures to ensure the rapid development of entrepreneurship, comprehensive protection of private property and substantial improvement of the business climate in the Republic of Uzbekistan according to the annex (hereinafter – Program).

Impose on the heads of ministries and public authorities, local governments a personal responsibility for timely and proper execution of activities in the Program.

3. Starting January 1, 2017:

to abolish all kinds of unscheduled inspections of business entities, other than inspections related to liquidation of the legal entity, as well as short-term inspections, carried out on the basis of appeals of individuals and legal entities on the facts of violations of the law, exclusively by decision of the National Council on Coordination of Supervisory Authorities.

to abolish all kinds of counter inspections of business entities, including inspections conducted as part of investigation under criminal cases;

to exempt business entities and their staff, first-time offenders of legislation when conducting financial and economic activities, from civil and criminal liability, fines and financial sanctions (other than penalty) in case of voluntary elimination of the violations and compensation of damage to property within the established timeframes, except for cases of harm to human life and health;

to exempt persons who committed an offense related to the implementation of illegal business activities, from civil and criminal liability, in case of voluntary compensation of the damage, registering as business entities and obtaining necessary permits within one month from the date of detection of the offense;

to criminal penalty in the form of deprivation of the right to carry out business activities is not applied to businesses;

to newly established manufacturing enterprises with foreign investments, have the right to pay taxes and other obligatory payments (except for the resource and customs duties) at the rates that were established on the date of their state registration, within the first five years of their operations;

to exempt business entities from paying the state fee when they apply for issuing a writ of execution to enforce the arbitral court decisions;

to abolish the requirement for registration of export contracts of business entities in the state customs service bodies, except for contracts for the export of goods specified in the appendices 1, 2 and 4 of the Decree of the President of the Republic of Uzbekistan dated October 10, 1997 № UP-1871 “On additional measures to stimulate the export of goods (works, services)”, maintaining control and monitoring of the foreign trade contracts by currency control authorities through the Unified electronic information system of foreign trade operations;

Certificate of origin of the exported goods from the Republic of Uzbekistan are issued within one day to exporters, who had previously received a similar certificate for identical goods.

4. Recommend the Chambers of the Oliy Majlis of the Republic of Uzbekistan to consider establishment of the Ombudsman institution to protect the rights and lawful interests of business entities under the Oliy Majlis of the Republic of Uzbekistan with the following key authorities:

participation in the formation and implementation of state policy in the field of business development, protection of the rights and lawful interests of business entities;

provision of legal support to businesses going through the inspections of their activities;

monitoring of the practical implementation of the norms and requirements of the legislation on guarantees of freedom of entrepreneurship;

assessment of the impact of the adopted legislation on implementation of business activity;

monitoring compliance of public, regulatory and law enforcement authorities, local governments with regulations protecting rights and lawful interests of entrepreneurs;

5. The Ministry of Finance, Central Bank, State Tax Committee of the Republic of Uzbekistan, jointly with the relevant ministries and public authorities, submit within three months to the Cabinet of Ministers substantiated proposals aimed at:

further improving the quality and efficiency of tax administration, ensuring minimization of costs for collection of taxes and other mandatory payments, the widespread introduction of remote monitoring and improving the legal literacy of taxpayers;

the introduction of advanced market-based mechanisms of currency regulation and exchange rate policy to stimulate the growth of the export potential of the republic, attraction of foreign direct investments and improvement of competitiveness of domestic producers on foreign markets;

further improvement of the legislation, providing comprehensive legal grounds and criteria for the appointment and conduct of the short-term inspections of business entities;

reduction of the number and timeframes of conducting inspections by improving the efficiency of off-site control of activities of entrepreneurs and business entities;

enhancing the legal framework on provision by audit firms and tax consultants of their services, to strengthen their accountability for the quality of services and the reliability of their reports as one of the main mechanisms for the prevention of offenses and guarantying uninterrupted operation of law-abiding businesses;

introduction of modern principles and mechanisms of regulating the banking sector, the eradication and prevention of administrative interference into the activities of commercial banks by the public authorities, primarily the credit policy;

abolition of barriers to implementation of effective banking operations, as well as ensuring the rights of banks’ clients on the free disposal of their own cash.

6. The State Committee for Architecture and Construction, the State Committee for Nature Protection, the Ministry of Health, Ministry of Internal Affairs of the Republic of Uzbekistan, the Agency “Uzstandard” jointly with relevant ministries and public authorities, within three months:

conduct and audit of all the technical requirements (sanitary, environmental, urban planning and construction regulations, fire safety regulations, normative documents on standardization and technical regulations), and based on the best international practice, develop and adopt appropriate regulations, aimed at eliminating inefficient, outdated rules and practices contradicting with market mechanisms;

ensure posting and regular updating of existing regulations in the field of technical regulation on their official websites in order to provide unhindered and free access to them.

7. The Supreme Court, Supreme Economic Court, the General Prosecutor’s Office, the Ministry of Finance and the Ministry of Justice of the Republic of Uzbekistan jointly with relevant ministries and public authorities within three months:

submit proposals for the phased transfer to the jurisdiction of courts of functions and powers of supervisory bodies on imposing administrative penalties on businesses and their staff;

develop common grounds and substantiated criteria for determining the damages, caused as a result of economic crime and illegal interference into the activities of business entities.

8. The General Prosecutor’s Office in cooperation with the Supreme Court, the Ministry of Justice, Ministry of Internal Affairs, National Security Service of the Republic of Uzbekistan and other relevant ministries and public authorities within two months submit in the established manner:

draft Law of the Republic of Uzbekistan “On Countering Corruption”, aimed primarily at further strengthening the trust of citizens and businesses towards public authorities, to improve investment attractiveness of the country, as well as prevention of corruption offenses;

proposals for further liberalization of criminal legislation related to business activities;

proposals for amending legislation, providing for the establishment of a clear procedural regulation of initiating, conducting and extension of inspections of financial and economic activities within investigation of criminal cases, aimed primarily at ensuring the inviolability of private property, the prevention of undue interference into the activities of entrepreneurs and suspension of their operation.

9. The Supreme Economic Court of the Republic of Uzbekistan within three months ensure development of the program, providing for a phased introduction of mechanisms of audio and video recording of hearings, publication on the web-sites of courts of the court decisions, in order to ensure transparency and objectivity, reliable legal protection of entrepreneurs’ rights.

10. The Ministry of Development of Information Technology and Communications jointly with the Ministry of Justice, Ministry of Economy, Ministry of Finance, Central Bank, the Chamber of Commerce of the Republic of Uzbekistan and other relevant ministries and public authorities, within one month submit to the Cabinet of Ministers proposals on extension of the list of public services, provided exclusively through “single window” centers for provision of public services to businesses.

11. The Ministry of Justice, Ministry of Economy, the Ministry for the development of information technologies and telecommunications, the Chamber of Commerce of the Republic of Uzbekistan jointly with other relevant ministries and public authorities, within the three-month period conduct a critical review of regulations for compliance with the legislation on permit procedures, licensing and guarantees of the freedom of entrepreneurship and submit to the Cabinet of Ministers proposals on eliminating obsolete permit procedures and reduction of time related to licensing procedures.

12. Assign a control over execution of this Decree to the first deputy Prime minister of Uzbekistan, Minister of Finance of the Republic of Uzbekistan R. Azimov and the Prosecutor General of the Republic of Uzbekistan I. Abdullaev.

Acting President
of the Republic of Uzbekistan                                                                      Sh. Mirziyoyev

October 5, 2016 Tashkent City

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Commentary to the Decree of the President of Uzbekistan
«On additional measures to ensure the accelerated development of entrepreneurial activity, comprehensive protection of private property and substantial improvement of business climate»

This approved decree is aimed primarily at further strengthening the legal protection of private property, creation of favorable conditions and comprehensive support for small business and private entrepreneurship, increasing the investment attractiveness of the Republic and is a clear evidence of the transition of state policy in this sphere to a qualitatively new level.

In particular, the decree establishes “providing greater freedom to small business and private entrepreneurship, a radical reduction of interference in their activities with a focus on early warning, improving the efficiency of prevention of violations” as a critical priority and of paramount tasks of the state authorities. For these purposes, the state bodies, especially law enforcement and regulatory agencies are instructed to:

– provide the unconditional implementation of the established requirements and the principle of priority of the rights and legitimate interests of business entities, and in connection with the above, to critically review own functions and powers;

– ensure strict compliance with the requirements of the legislation on the responsibility of officials for illegal interference and obstruction of business activities, its unjustified suspension and compensation of the damage caused to business entities directly from the guilty.

This provision obliges the public authorities to apply not only the most stringent disciplinary, administrative or criminal liability, but also to ensure the recovery of the damage caused to business entities directly from the perpetrators.

The implementation of these measures is aimed at preventing the initiation and conduct of illegal inspections, particularly cases of unjustified suspension of the activity of businesses and causing losses due to illegal actions by workers of state organs.

The decree establishes a number of fundamentally new mechanisms of state control, aimed at providing reliable legal guarantees against unjustified interference in the activities of business entities.

In particular, starting from 1 January 2017, following unprecedented measures are to be applied, including the abolition of all kinds of:

– unscheduled inspections over activities of business entities, excluding the inspections in connection with the liquidation of a legal entity, as well as conducted exceptionally by the decision of Republican Council on the coordination of regulatory authorities of short-term inspections based on appeals of individuals and legal entities about the facts of violations of the law;

– counter checks of activities of business entities, including in criminal cases.

Thus, from now on, regulatory authorities may not initiate unscheduled inspections. In order to ensure legal mechanisms for the protection of the rights and interests of citizens, short-term inspections remain limited only on the basis of appeals of individuals and legal entities on violations of the law. Such inspections can be carried out exclusively by the decision of the national Council, and its duration is limited to one working day.

Along with this, continuing the policy towards liberalizing administrative and criminal law, the decree provides for such drastic new measures as the exemption of businesses and their employees, who made financial and economic violations for the first time from all kind of liabilities. Entities carrying out an entrepreneurial activity without state registration are also exempt from liability, in the case of compensation for their damages and of the voluntary elimination of the consequences of violations within the established deadlines.

In addition, a criminal penalty of deprivation of the right to engage in entrepreneurial activities in respect of businesses is prohibited from now on.

These standards not only preclude double punishment of businesses, but also provide an opportunity for citizens, first-time offenders, who compensated their guilt, to continue their business activities without negative consequences, which also intends to stimulate their business activity.

In this regard, appropriate amendments will be made to the Penal code, the Code of Uzbekistan on administrative responsibility, the Tax code and other laws.

To improve the investment attractiveness of the Republic, the newly established industrial enterprises with foreign investments can enjoy tax rates and other mandatory payments in effect on the date of their registration during 5 years of their subsequent activity.

This exemption applies to all enterprises with foreign investment irrespective of the amount invested.

The implementation of the Decree will allow providing continuity and sequence of the course defined by the First President of the Republic of Uzbekistan on the drastic elimination of administrative barriers and artificial obstacles to the development of entrepreneurship as a key factor of sustainable development of the economy.