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General legal newsletter for June 2021

The most notable legal development of June 2021 is the adoption of a Presidential Decree announcing a large-scale land law reform: local municipalities have lost the authority to allocate land plots with electronic auctions becoming a universal allotment mechanism in almost all cases. Other notable developments of the month include improvement of the technical regulation regime, measures to reduce the number of enterprises with state participation, and measures to accelerate the development of the mining industry.

1. REFORM OF THE LAND LEGISLATION

On 8 June 2021, the President signed a Decree envisaging a significant reform of the land legislation. It, among others, provides for the following measures, entering in force on 1 August 2021:

land plots will be allocated to the private sector only for ownership or lease (previously, full ownership rights were not granted, but there were alternative types of land rights, such as permanent use, permanent possession, temporary use);
in PPP projects, a land plot must first be allocated to an engaged state body for permanent use and, then, leased to a private partner (previously, land plots were allocated directly to private partners for permanent use or lease by local municipalities).
it is no longer allowed that a single land plot allotment decision simultaneously provides for the seizure, reservation, and immediate allotment of a land plot. i.e. all procedural steps must be duly followed.
local municipalities have lost the powers to allocate land plots to the private sector. As a general rule, land plots may now be allocated to the private sector only through online auctions, except for a few specific purposes;
the Cabinet of Ministers’ right to lease land plots to the private sector directly will be limited to a number of specific cases, including the following:
a) for implementing major investment projects selected on a competitive basis and valued for no less than USD 10 mln, provided that an investor deposits an amount equal to 10% of the project value to a special account;
b) to companies having the status of an “enterprise with foreign investments”, international organizations, foreign legal entities and individuals provided they pay a market price for the lease rights (except for international organizations);
c) to agro-industrial clusters, based on suggestions of the Ministry of Agriculture and local municipalities.

The Cabinet of Ministers is instructed to propose changes to land laws for reflecting the measures envisaged by the Decree within 1 month from the date of the Decree. Until relevant changes are introduced into the Land Code, local municipalities must cease allocating lands in a way different from that provided in the Decree.

The Cadastral Agency under the State Tax Committee is instructed to tighten its oversight over compliance with the land legislation and targeted use of land plots. The Agency has got the right to apply to court with claims to revoke land use rights where it has been identified improper use of a land plot.

Presidential Decree No. UP-6243 of 8 June 2021

2. CHANGES IN THE SPHERE OF TECHNICAL REGULATION

The President has signed the Decree "On Fundamental Improvement of State Control in the Sphere of Technical Regulation". The following measures are, among others, provided by the Decree:

a new regulator, the Uzbek Agency for Technical Regulation (the “Agency”), was established under the Ministry of Investments and Foreign Trade, which became a legal successor of the State Agency "Uzstandard";
obtainment of a certificate of conformity for food and agricultural products became voluntary;
starting from 1 November 2021, the procedure for obtaining a certificate of conformity for the import of certain types of low-risk products will be simplified. Instead of obtaining a conformity certificate for each batch of imported products, it will be permitted to have one certificate issued by a conformity assessment organization resident in Uzbekistan, which will be valid for 24 months.
while liberalizing rules for ensuring conformity with technical standards, the government tightens up the liability for relevant violations. Starting from 1 September 2021, (i) legal entities producing or importing goods that do not comply with technical requirements will be subject to fines in the amount of up to 100% of the value of sold non-compliant goods; (ii) officials of such entities may subject to a fine of up to 80 times the baseline calculation value (UZS 19.6 mln or approx. USD 1,850).

Presidential Decree No. UP-6240 of 2 June 2021

3. LIQUIDATION AND REORGANIZATION OF ENTERPRISES WITH STATE PARTICIPATION

Following the Presidential Decree No. 6096 of 27 October 2020, the Cabinet of Ministers has adopted the Resolution on Measures for Reorganization and Liquidation of Enterprises with State Participation, in accordance with which 454 enterprises with state participation will be liquidated, 66 such enterprises will be reorganized into state establishments (‘gosudarstvennoe uchrejdeniye’), and 73 such enterprises will be reorganized into branches of other enterprises with state participation.

It is also provided in the Resolution that starting from 2022, the State Assets Management Agency, the Antimonopoly Committee, and other state agencies will regularly (by the 1^st of November each year) prepare a list of enterprises with state participation proposed to be liquidated and reorganized.

Resolution of the Cabinet of Ministers No. 350 of 3 June 2021

4. DEVELOPMENT OF THE MINING AND METALLURGICAL INDUSTRY

On 24 June 2021, the President signed the Resolution “On Measures for Developing the Mining and Metallurgical Industry and Related Industries”. The following measures are, among others, provided for in the Resolution:

the creation of a specialized scientific and technological cluster for the production of copper products and relevant products with a high added value;
expansion of the production of mining and metallurgical machinery and equipment and relevant chemical products generally and for the created copper cluster in particular; Association “Uzeltechsanoat” and state-owned JSC “Uzkimyosanoat” are instructed to develop relevant programs;
expansion of geological exploration works with regard to copper, non-ferrous, rare-earth, and rare metals; development of geological science and the geological services market;
the establishment of a specialized department under the Cabinet of Ministers for monitoring the implementation of relevant development programs.

Presidential Resolution No. PP-5159 of 24 June 2021

5. TAX EXEMPTIONS FOR IMPORTED EQUIPMENT

The Cabinet of Ministers has approved a list of equipment, not produced in Uzbekistan, which is exempted from VAT and customs duties on import. The list names 676 types of equipment, including equipment for milk processing; manufacturing bakery products; producing chocolate and confectionery; meat and poultry processing; sewing; etc.

Resolution of the Cabinet of Ministers No. 352 of 4 June 2021

6. NEW REGULATIONS ON MAINTAINING THE STATE CADASTER

The Cabinet of Ministers approved a number of regulations on maintaining state cadastral records. The regulations, among other things, define the main tasks of the Cadastral Agency and its regional departments and set rules and principles for keeping cadastral records.

Resolution of the Cabinet of Ministers No. 389 of 22 June 2021

7. CREATION OF GREENHOUSES

The President has signed a Decree facilitating the implementation of public-private partnership projects (PPP) for creating modern greenhouses on lands adjacent to individuals’ households. The Decree envisages that the state will allocate land and ensure the provision of utility services for relevant PPP projects, potential private partners – investors will facilitate the construction and equipping of greenhouses and will arrange necessary financing, while interested individuals will engage in working in greenhouses. Some customs and tax incentives will be available for investors interested in relevant projects.

Presidential Resolution No. PP-5138 of 7 June 2021

8. INVESTMENT PROJECT IN GOLD MINING

The Resolution of the Cabinet of Ministers of 19 June 2021 approved a feasibility study for a project for the development of the Turbay and Oltin madanly 2 gold deposits. The project will be implemented by the Navoi Mining and Metallurgical Combine. It is expected that, as a result of the implementation of the project, by 2024, the total mining capacity at the deposits will reach 2 mln tons of gold ore per year. The project value is approx. USD 132.4 mln, USD 14.7 mln of which are funds of the Navoi Combine itself and USD 117.7 mln are loans of foreign banks.

Resolution of the Cabinet of Ministers No. 384 of 19 June 2021

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Have a good day!

Sincerely,
Kosta Legal Law Firm

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