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General legal newsletter for May 2021

In May 2021, the Uzbek government adopted legal acts in the spheres of the use of state assets, support of the service industry and young entrepreneurs; transformation of the civil aviation industry, digital labelling, and some others.In May 2021, the Uzbek government adopted legal acts in the spheres of the use of state assets, support of the service industry and young entrepreneurs; transformation of the civil aviation industry, digital labelling, and some others.

1. DEVELOPMENT OF THE SERVICE SECTOR

The President has signed a Resolution on measures to accelerate the development of the service industry. It is aimed to increase the range of services provided in Uzbekistan, to double the volume of provided services by 2023, to improve the quality of services, and to encourage initiative and innovations. For achieving these goals, the President has approved the following:

some target parameters for developing the service sector in 2021-2023;
a Road Map for developing the service sector in 2021;
the introduction of a service sector development index starting from 1 July 2021, which will allow to assess relevant efforts of responsible state authorities;
the opening of a USD 300 mln credit line to commercial banks by the Fund for Reconstruction and Development of Uzbekistan for developing the service sector;
provision of assistance to entrepreneurs for creating agricultural markets and trade centers in particular districts and towns of the country listed in the Resolution and the cancellation of the requirement for the mandatory participation of local municipalities in the charter capital of agricultural markets and trade centers;
the creation of shopping and entertainment streets in towns and cities of the country by 1 September 2021 with (a) provision of businesses located on such streets with the right to operate around the clock; (2) the sale of places on such streets (through a special online auction) for off-site trade;
the allocation of vacant land plots (at least for 3-years lease) on the territory of customs terminals and highway patrol stations to businesses for trading in goods and providing services.

The Resolution also cancels the requirement for non-governmental organizations providing online educational services to have educational premises.

Presidential Resolution No. PP-5113 of 11 May 2021

2. REFORMS IN THE CIVIL AVIATION SECTOR

The President has signed the Resolution on the Measures for Transforming the Civil Aviation Sector. According to the Resolution:

JSC “Uzbekistan Airports” will perform functions of a manager of all international airports in Uzbekistan, based on relevant management contracts; it will implement a single strategy for developing these airports;
land and property tax incentives are granted to JSC “Uzbekistan Airports”;
JSC “Uzbekistan Airports” is allowed to conclude (i) direct import contracts for purchasing special equipment and software after carrying out the procedure for selecting best offers, as established by the Law on Public Procurement; (ii) direct purchase contracts with local and foreign project design (engineering) organizations having experience in civil aviation;
it will be easier to get permits and to organize retail trade, provision of services, and catering in airports, railway stations, and bus stations;
a free customs zone will be established on the territory of LLC “Uzbekistan Airways Technic” in the Sergely district of Tashkent for repairing airplanes;
steps to optimize the size of the air fleet of JSC “Uzbekistan Airways” and JSC “Uzbekistan Helicopters” were set (a number of planes and helicopters will be sold/purchased);

Road Maps providing for measures for corporate transformation and modernization of JSC “Uzbekistan Airways” and JSC “Uzbekistan Airports” were approved

Presidential Resolution of the President No. 5100 of 30 April 2021

3. UNUSED ASSETS OF STATE-OWNED ENTERPRISES

The Cabinet of Ministers has adopted a Resolution on measures for ensuring effective use of assets of state-owned enterprises (“SOEs”). As provided in the Regulation, a comprehensive inventory of unused assets of SOEs has been conducted by the State Assets Management Agency in cooperation with regional municipalities, state-owned banks and enterprises. As a result of the inventory, the following lists have been made:

a list of objects of SOEs transferred to the State Assets Management Agency at book value for subsequent sale at public auctions;
a list of objects transferred to government bodies and local executive bodies for further effective use;
a list of organizations, shares in the charter capital of which are transferred to state agencies, local municipalities, and state holding companies at book value.

Resolution of the Cabinet of Ministers No. 266 of 4 May 2021

4. PUBLIC PROCUREMENT PROCEDURES

The Ministry of Finance has amended the Regulation on Organizing and Conducting Public Procurement Procedures. It has, among other things, been provided that where along with foreign participants, 2 or more Uzbek participants take part in a public procurement procedure in the form of a tender or a competitive bidding, a price preference of 15% for each lot is granted to the Uzbek participants.

Order of the Ministry of Finance No. 3016-4 of 4 May 2021

5. MANDATORY DIGITAL LABELLING

Based on the Resolution of the Cabinet of Ministers No. 737 of 20 November 2020, digital labelling has already become mandatory for tobacco, alcohol and brewage products. According to the Resolution No. 322 of the Cabinet of Ministers adopted in May 2021, pilot projects for digital labelling have now begun for medicaments and medical products (starting from 1 June 2021), water and soft drinks (15 June 2021), and home appliances (1 July 2021). Digital labeling will be mandatory for medical products starting from 1 February 2022, for water and soft drinks – from 1 March 2022, for home appliances – from 1 December 2021.

For now, business entities may carry out digital labeling on a voluntary basis by participating in above the pilot projects. The participation in the projects does not, however, release businesses from the responsibility to carry out labelling based on the current labeling requirements.
Information on mandatory digital labeling is accumulated and processed through the specialized national information system “Asl belgisi”. “CRPT Turon” LLC (a company affiliated with Russian “UMS Holding” and Rostec) is the operator of the system.

Resolution of the Cabinet of Minister No. 322 of 20 May 2021

6. PROCESSING OF CUSTOMS DECLARATIONS

The State Tax Committee has issued 2 resolutions on customs declarations. The first of these regulations, approved on 4 May 2021, relates to processing preliminary, periodic, and incomplete customs declarations. The regulation defines what the relevant types of declarations represent and describe the order of their processing. The processing is generally implemented in two stages: (1) online or in person registration of a declaration with the customs authorities; (2) submission of a complete declaration and its formalization with the customs authorities. No fees are charged at the second stage.

The second resolution has amended the Regulation on the Procedure for Changing, Supplementing, Filling Out, Revoking, and Annulling Customs Declarations. The following amendments have, among other things, been introduced:

it has been clarified that a customs declaration on goods under the customs regime “release into free circulation” must be amended when a supplemental agreement is concluded to change parties or their details in a relevant contract;
the resolution provides for a revised list of cases when a customs declaration may be annulled by the customs authorities.

Resolution of the State Customs CommitteeNo. 3296 of 04 May 2021
Resolution of the State Customs Committee No. 3220-1 of 06 May 2021

7. SUPPORT FOR YOUNG ENTREPRENEURS

Following the Presidential Resolution No. PP-5088 of 21 April 2021, the Cabinet of Ministers has adopted a Resolution on supporting young entrepreneurs (from 18 to 30 years old). The Resolution establishes the order of creation of industrial and entrepreneurship zones for young entrepreneurs and approves a regulation on the Fund for Supporting Young Entrepreneurs under the Ministry of Investments and Foreign Trade (the “Fund”).

Industrial and entrepreneurship zones for young entrepreneurs are established on unused industrial lands (with existing or suitable for the construction of utility facilities) and non-agricultural lands by a decision of a regional or city municipality, agreed with the Ministry of Investments and Foreign Trade and the Cabinet of Ministers. It is planned that 77 such zones will be created by 1 September 2021 and 142 more zones by 1 January 2022. Expert assistance and soft loans will, among other things, be available for young businessmen implementing projects within the zones. Young entrepreneurs wishing to implement a relevant project will have to apply to a regional Department for Investments and Foreign Trade.

The Fund will get USD 100 mln from the State Fund for Reconstruction and Development and will channel these funds to commercial banks for providing soft loans to young entrepreneurs and creating facilities within the zones.

Resolution of the Cabinet of Ministers No. 294 of 10 May 2021

8. BUDGET TRANSPARENCY

The Ministry of Finance adopted the Regulation on Making Publications on Websites for Ensuring the Budget Transparency. In accordance with it, among other things:

all entities using state budget funds as well as the State Fund for Reconstruction and Development are obliged to quarterly publish reports on the distribution of state funds, financial reports, and reports on capital investment projects on their websites (by the 25 day of the first month of each quarter);
The State Tax Committee and the State Customs Committee will publish detailed information on customs and tax incentives provided to business entities;
The Ministry of Finance will regularly update information on the execution of the state budget on the online portal “Open Budget”.

Order of the Ministry of Finance No. 3299 of 7 May 2021

9. SPECIAL INDUSTRIAL HUB IN ANDIJAN REGION

The President has signed a Resolution on the creation of a special industrial zone “Industrial Hub for Mechanical and Electric Engineering” of 105 ha in the Andijan region of Uzbekistan. The hub is created for 30 years, but this term may potentially be extended. During the term, the following incentives will be available for businesses implementing relevant projects within the zone: (i) a special customs, tax, and forex regime, as generally created in free economic zones; (ii) they may rent out buildings located within the zone and get land within the zone for permanent use.

The Ministry for Economic Development and the Ministry of Finance are instructed to develop a program for constructing utility facilities within the zone. The Ministry of Investments and Foreign Trade and the municipality of the Andijan region are responsible for establishing a company managing the zone and choosing projects to be implemented.

Presidential Resolution No. PP-5128 of 27 May 2021

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Kosta Legal Law Firm

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