Uzbekistan continues reforms to create conditions for stable economic growth | Dentons

To enhance the enterprise setting and enhance the quantity of personal funding, on April 8 this yr, the president of Uzbekistan adopted Decree No. UP-101 (the Decree), which represents the following step towards creating the mandatory circumstances in Uzbekistan for secure financial development. 

The Decree units out the next precedence areas:

• Strengthening ensures on the inviolability of personal property
• Clear privatization of non-agricultural land plots with the creation of the mandatory infrastructure
•  Liberalization of the marketplace for items and companies with state participation
• Refusal of unique rights and advantages
• Accelerating the transformation and privatization of enterprises and industrial banks with the participation of the state
• Additional liberalization of the cash market and capital market
• Accelerating the attraction of international buyers into exploration, manufacturing and processing
• Improvement of the marketplace for power sources, transport and communications
• Rising public-private partnerships within the area of consuming water and sewerage, warmth provide, landscaping, highway building and aviation infrastructure
• Illiberal angle in direction of manifestations of corruption and the battle towards it
• Introduction of contemporary strategies of company governance, a system of compliance management, guaranteeing transparency of the procurement system at state-owned enterprises and industrial banks with the participation of the state.

Under yow will discover a abstract of the principle adjustments.

State asset acquisitions to be extra handy

• Acquisitions of nonagricultural land plots by means of an public sale will be capable of be paid in installments for as much as three years (like state belongings).
• After making a one-time down fee of not less than 35 % the customer can be entitled to pledge these state belongings and land plots. By the start of Might this yr, the federal government will develop a separate process for implementing such a pledge.

Overseas nationals will be capable of put money into actual property below building in Uzbekistan

• From Might 1, 2022, international residents will be capable of put money into actual property objects below building in Uzbekistan (the listing to be authorised by the federal government). The price of actual property objects for funding must be (in accordance with contracts concluded in the course of the building interval) in Tashkent, Samarkand and the Tashkent area not lower than the equal of US$150,000, and objects accepted for operation a minimum of US$180,000. For different areas, the price of actual property objects for funding must be (in accordance with contracts concluded in the course of the building interval) a minimum of US$70,000 and for the objects accepted for operation a minimum of US$85,000.
• In Tashkent and the Tashkent area, the minimal value of actual property acquired with a purpose to acquire an Uzbekistan residence allow has been lowered from US$400,000 to US$300,000 (for different areas, the quantity ranges from US$100,000 US$200,000). Residents of 111 international locations are eligible to acquire a residence allow on this approach.
• From Might 1, 2022, the private earnings tax price for international residents is about on the similar stage as for residents of Uzbekistan.

Monetary sanctions for corporations participating in anticompetitive conduct 

• Starting from September 1, 2022, corporations discovered culpable of anticompetitive actions will face monetary sanctions.
• A revised draft Legislation “On competitors,” which the Cupboard of Ministers was instructed to undergo the Legislative Chamber of Parliament inside a month, will set out the process for imposing monetary sanctions. 

Monetary sanctions can be imposed on enterprise entities which have dedicated the next anticompetitive actions:

• Agreements (concerted actions) and coordination of financial actions that led to the restriction of competitors within the commodity and monetary markets
• Abuse of a dominant (monopoly) place within the commodity and monetary markets and overwhelming negotiating energy, unreasonable overpricing of merchandise of social and strategic significance, in addition to unfair competitors
• Violations of competitors legislation within the occasion of a merger, acquisition or the conclusion of agreements for the acquisition of shares (stakes) in a certified fund (approved capital) of enterprise entities
• Fee of anticompetitive actions at public auctions and violation of antimonopoly necessities.

The above measures don’t apply to authorized entities, particular person entrepreneurs or a gaggle of people (apart from topics of pure monopolies, members in a public procurement and trade buying and selling, in addition to financial entities whose product worth is regulated by the state), if the proceeds from the sale of products (companies) for the earlier calendar yr doesn’t exceed by 10,000 instances the bottom calculated worth.

From September 1, 2022, administrative legal responsibility is strengthened for:

• Unlawful restriction by public authorities and administration of free motion and for the sale of uncooked supplies, items and companies
• Adoption of selections limiting competitors by state unitary enterprises or establishments, associations of authorized entities empowered to license, register, accredit and challenge permits
• Failure to submit the mandatory paperwork and knowledge on the request of the antimonopoly authority, in addition to for the submission of false or inaccurate info.

Additionally, from Might 1, 2022, the next is offered:

• Private earnings tax charges on earnings obtained by nonresident people from sources within the Republic of Uzbekistan (aside from dividends, curiosity and freight earnings) is about at 12 %.
• Tax and customs advantages relevant to a restricted variety of entities is prolonged to all entities in a lot of industries (an inventory of industries could be present in Appendix No. 2 to the Decree).
• Tax and customs advantages are cancelled for items (companies) bought on the expense of funds (loans, credit) of worldwide monetary establishments and international authorities monetary organizations below worldwide agreements of the Republic of Uzbekistan, offered that the acquisition was authorised earlier than July 1, 2020 and refinanced by means of the nation’s industrial banks. This is applicable to items (companies) bought on the premise of newly concluded agreements (whatever the type and technique of registration) between industrial banks and enterprise entities.

From July 1, 2022, customs obligation exemptions are offered solely based mostly on legal guidelines.

Privatization of Uzbekneftegaz JSC and Uzbekistan Airways JSC, switch of airports below private-sector management

• The next joint-stock corporations can be put up for privatization: Uzbekneftegaz, Thermal Energy Crops and Uzbekistan Airways. It’s also deliberate to promote a portion of the shares of UzAuto Motors JSC. 
• With the involvement of an skilled funding financial institution, work is predicted to start on the privatization of Uzbekneftegaz JSC by the top of the yr, together with by means of a public providing of not less than 49 % of shares (by means of an IPO). Related work is deliberate for the state share of 51 % or extra in Thermal Energy Crops JSC.
• Based mostly on the conclusions of a global consulting firm, a technique for reforming Uzbekhydroenergo JSC is to be submitted for approval to the Cupboard of Ministers by September 1, 2022.
• Work is deliberate to start towards placing a state share of 51 % or extra in Uzbekistan Airways JSC up for public sale, in addition to by means of an IPO, by September 1, 2022.
• The Decree requires holding an IPO on the native inventory market by August 1, 2022—with the involvement of a global funding financial institution and consultants—for as much as 10 % of the state’s share in UzAuto Motors JSC in addition to for submission to the federal government of a technique for promoting the remainder of the corporate’s shares to strategic buyers, in addition to shares in UzAuto Motors Powertrain JSC and Samarqand Avtomobil Zavodi LLC (Samarkand Vehicle Plant).
• A draft decision is to be ready inside two months on the switch of regional worldwide airports and the Tashkent Worldwide Airport subordinate to the Uzbekistan Airports JSC, below the management of the personal sector on the premise of PPP circumstances to modernize and enhance their operational effectivity. On the similar time, measures must be offered for “efficient operation of airports within the Ferghana Valley by optimizing them”.

Transformation of Uzbekistan Temir Yollari JSC

The Decree requires the event of a technique, with involvement from the World Financial institution, by June 1, 2022, for the transformation, growth and privatization of the railway firm, Uzbekistan Temir Yollari JSC.

As well as, by August 1, 2022, a draft decision on the transformation of the railway firm have to be developed, with the next provisions:

• An improved tariff coverage, by making a clear and versatile tariff system aimed toward creating the actions of personal operators with their very own passenger and freight vehicles, in addition to creating competitors within the rail transport companies market;
• Improved effectivity of operational and enterprise processes in railway transport enterprises, together with the combination of relationships between service organizations and customers by means of digital transformation;
• The switch to the personal sector of home and worldwide rail freight and passenger visitors based mostly on public-private partnerships or franchises.