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UZBEKISTAN LEGAL NEWSLETTER FOR JULY 2023

Some of the most notable legal developments in Uzbekistan in July 2023 were the adoption of a new Law “On Competition” and the issuance of a corresponding Presidential Decree, enhancing the operation of the Committee for the Development of Competition and Consumer Protection; measures to enhance the public administration in the sphere of investments and to improve the functioning of the Ministry of Investments, Industry, and Trade; new incentives for businesses creating jobs; and the approval of a plan for the social and economic development of the city of Tashkent till 2030.

1. NEW LAW ON COMPETITION

On 3 July 2023, a new Law “On Competition” was adopted. It will come into force on 4 October 2023 and will replace the existing Laws “On Competition” No. ZRU-850 of 6 January 2012 and “On Natural Monopolies” No. 398-I of 24 April 1997 (in the new edition). The following novelties are, among other things, brought in by the new Law:

new merger filling thresholds;
new thresholds for determining whether a business entity or a group of entities holds a dominant position and the abolishment of the register of dominant undertakings;
the introduction of a concept of superior bargaining power; abuse of such power is penalized in the same way as abuse of dominance;
changes in exemptions related to anti-competitive agreements and coordinated actions;
special rules for digital platforms;
rules for the provision of state aid and rules for the creation and operation of enterprises with state participation;
rules related to antimonopoly compliance;
the right of the Committee for the Development of Competition and Consumer Protection to impose fines on business entities (rather than just on their managers).

A detailed overview of the above changes is provided in our dedicated legal alert accessible at the links provided below.

Law No. ZRU-850 of 3 July 2023

2. OPERATION OF THE COMPETITION COMMITTEE

Following the adoption of the new Law “On Competition”, the President has signed a Decree aimed at enhancing the operation of the Committee for the Development of Competition and Consumer Protection (the "Committee"). It, among other things, provides for the following:

starting from 1 October 2023, (i) the Committee will start to maintain a register of business entities that have been granted exclusive rights for ensuring that such entities do not discriminate particular market players; (ii) the Committee will have to identify entities that have superior bargaining power and to ensure that they do not abuse such power (it is unclear whether this implies the creation of a separate register/list of such entities by the Committee); (iii) business entities that hold a dominant position in a commodity, financial, or digital market will have to post their standard contracts (commercial offers) in respect of relevant goods (services) on their official websites; (iv) a legal entity or an individual who has entered into an anti-competitive agreement or committed a coordinated action but has been the first to voluntarily report this to the Committee will be released from liability established by the competition legislation;
till 1 January 2025, the functions of the Committee for the regulation and control of tariffs of natural monopolies will be gradually transferred to specially created independent regulators.

Presidential Decree No. UP-108 of 6 July 2023

3. PUBLIC ADMINISTRATION IN THE SPHERE OF INVESTMENTS

The President has signed a Decree aimed at improvement of the public administration in the area of investments and trade. The Decree, among other things, provides for the following:

the Ministry of Investment, Industry, and Trade (MIIT) will assign an investment manager to each investor to accompany him at all stages of developing investment projects up to their launch, including the land allotment; the connection to infrastructure, and the issuance of permits;
MIIT is given the authority to submit binding prescriptions to state bodies to eliminate identified shortcomings in the area of investments;
the Center of Investors is created under the Investment Promotion Agency of MIIT. The Center is, among other things, responsible for assisting investors in obtaining visas, meeting investors upon their arrival to Uzbekistan, and facilitating negotiations;
the Center for the Comprehensive Expertise of Projects and Import Contracts under the Ministry of Economy and Finance, responsible for, among other things, examining feasibility studies for investment projects, tender documents for some categories of public procurement procedures, and some categories of import contracts, is transferred to MIIT;
a set of measures to promote the application of international standards by industrial enterprises across the country for increasing the export of goods to the EU under the program GSP+;
a road map of further reforms, which, among other things, envisages the following:

the development of a strategy for the attraction of local and foreign investments (till 1 September 2023); a strategy for industrial development till 2030 (till 25 December 2023); and a Law “On Industry” (till 25 March 2024);
gradual outsourcing or transfer based on public-private partnership of functions of MIIT (the development and analysis of business plans and feasibility studies, the studying of world markets, the organization of public events, etc.) to private entities;
till 1 September 2023, the streamlining and the simplification of the procedure for the accreditation of representative offices of foreign commercial organizations;
till 1 December 2023, the introduction of the electronic system “E-Certificate”, integrated with the electronic systems of the Uzbek Agency for Technical Regulation, the Committee for Veterinary and Animal Husbandry, and some other state agencies, which will facilitate the receipt of certification services.

Presidential Decree No. UP-111 of 21 July 2023

4. INCENTIVES FOR BUSINESSES CREATING JOBS

Based on Presidential Decree No. UP-93 of 12 June 2023, the Cabinet of Ministers has adopted a Resolution introducing a state program “20,000 Entrepreneurs – 500,000 Qualified Specialists”, in which legal entities intending to create new jobs may participate in exchange for a number of incentives. To qualify for the program, a legal entity must be active for at least 2 years and not be fully or partially owned by the state. A cooperation agreement is concluded between participants and specific state authorities (depending on the number of created jobs) for a term not exceeding 3 years. The following incentives are, among others, provided to business entities participating in the program:

business entities meeting all the following criteria: (i) registered and operating outside Tashkent; (ii) continuously for at least one year employing individuals included in the Unified Register for Social Protection; and (iii) wherein the share of such employees exceeds 20% of the total number of employees are provided with the following tax incentives until 1 January 2025: (a) the property and land tax rates are reduced by 50% for business entities creating from 51 to 100 jobs; (b) by 75% for business entities creating from 101 to 200 jobs; and (c) business entities creating over 200 jobs are fully exempted from the property and land tax;
relevant business entities are given the right to pay all taxes (except for VAT and taxes paid by them as tax agents) and customs payments in installments and without providing security during 3, 6, or 12 months (depending on the number of created jobs);
business entities creating from 51 to 200 new jobs are exempted from a tax audit (a specific type of tax inspections). Where over 200 jobs are created, business entities are exempted from any tax inspections (except for those conducted as a part of criminal investigations);
a larger amount of prepayment is paid by budget purchasers to relevant business entities under public procurement contracts;
for projects over UZS 50 bln., external engineering and communication networks are constructed at the expense of the state budget;
business entities will enjoy a simplified customs clearance procedure “green corridor”.

Resolution of the Cabinet of Ministers No. 279 of 7 July 2023

5. SOCIAL AND ECONOMIC DEVELOPMENT OF TASHKENT CITY UNTIL 2030

The President has signed a Decree on measures to facilitate the social and economic development of the city of Tashkent by 2030. The following development targets are, among others, intended to be reached by 2030:

the implementation of projects in the spheres of industry and services for the amount of USD 40 bln;
increase in the volume of exports of industry, services, and tourism up to USD 7.5 bln;
the expansion and complete modernization of the engineering and communication networks of the city;
the creation of additional 4,000 hectares of green areas.

The following is further envisaged:

till 1 January 2027, the introduction of a new procedure for the implementation of investment projects and improvement of urban infrastructure in the city based on mutually beneficial cooperation between the state and business entities;
the creation of JSC “Company Tashkent Invest”, which will facilitate cooperation between the city authorities and private businesses, manage the municipal property of Tashkent, implement investment and public-private partnership projects using such property, finance infrastructure projects of business entities, prepare plans for the development and renovation of particular parts of the city.

Presidential Decree No. UP-112 of 26 July 2023

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Have a good day!

Sincerely,
Kosta Legal Law Firm