UZBEKISTAN LEGAL NEWSLETTER FOR JUNE 2024

Some of the most important legal developments in June 2024 in Uzbekistan included a Presidential Decree on harmonizing national legislation with WTO rules, the adoption of the Law “On Conflict of Interest,” a new tariff policy for the energy markets, and Uzbekistan's accession to the Geneva Act of the Hague Convention of 1999 and the Rome Convention of 1961.

 1.  HARMONIZATION OF LEGISLATION WITH WTO RULES

• till 1 August 2024, the revision of the legislation on the application of customs duties to goods manufactured in countries not falling under the regime of most favoured nation treatment and goods a country of origin of which has not been determined;
• starting from 1 October 2024 and gradually till 1 April 2025, the cancellation of discounts on railway transportation of goods within Uzbekistan; till 2030, the unification of tariffs for railway export and import transportation services;
• the abolishment of the following exclusive rights of state-owned enterprises:
  (a) starting from 1 January 2025: (i) the right of Uzmetkombinat JSC to purchase ferrous scrap metals; (ii) the right of Uzvtortsvetmet JSC to purchase and export non-ferrous scrap metals; (iii) the right of Uzkimyoimpex LLC to export chemical products produced by enterprises within the structure of Uzkimyosanoat JSC and to import equipment, spare parts, and raw materials for their manufacturing needs;
  (b) (i) the right of UzGasTrade JSC to act as the only exporter of natural gas and the only importer of natural gas in a centralised manner from external sources; (ii) the right of Uzenergosotish JSC to carry out centralized export and import of electric energy;
• starting from 1 January 2025, the provision of telecom operators with mobile and/or wired telecom networks with the right to connect directly to international Internet networks for their commercial needs;
• starting from 1 January 2025, (i) the abolishment of subsidies and incentives for supporting export, including incentives envisaging partial reimbursement of corporate tax, turnover tax and transportation expenses, and the introduction of support measures compliant with WTO rules; (ii) the abolishment of ineffective tax and customs incentives;
• till 1 January 2026, the unification of excise tax rates for imported and locally produced tobacco products and, till 1 January 2027,  - for alcohol products;
• starting from 1 January 2026, the abolishment of restrictions on the export of copper cathode and copper wire rods purchased on commodity exchange trades;
• starting from 1 July 2026, the abolishment of benefits and preferences available to domestic manufacturers in public procurement procedures conducted by public corporate purchasers.

 2.  LAW ON CONFLICT OF INTEREST

On 5 June 2024, a Law “On Conflict of Interest” was adopted. It will come into force on 6 December 2024 and, among other things, provides the following:

• the Law applies to employees of state bodies, regional municipalities, state establishments, state unitary enterprises, state funds, and joint-stock companies wherein the state share is 50% of the charter capital or greater. The Law also applies to employees of legal entities wherein the share of state bodies or other state organisations is 50% or more and of legal entities wherein the share of the former is 50% or more, but only with respect to public procurement procedures;
• a conflict of interest occurs where an individual's personal direct or indirect interest affects or may affect the proper performance of his/her official duties and causes (a real conflict) or may cause (a potential conflict) a contradiction with the rights and legitimate interests of citizens, organizations, society, or the state;
• to prevent a conflict of interest, an employee of the above organizations shall, among other things, (i) in case there is a real conflict of interest, before making a relevant decision, notify his/her immediate supervisor or a dedicated unit within the organization; (ii) not force employees under his/her supervision to take actions in pursuance of his/her interests; (iii) report cases of conflict of interest in relation to other employees; (iv) not work for several organizations, one of which is subordinated to or controlled by another, except for cases provided for in law; (v) be a founder (shareholder, participant) of commercial organizations, except for cases of ownership of up to 10% of freely traded shares of joint-stock companies; (vi) not own shares in the charter capital of a business entity or be a member of the management body of a business entity under the control of a state body or another state organization where he/she is employed except for cases provided in law; (vii) not purchase or lease property of the organization where he/she is employed.
• the Anti-Corruption Agency of the Republic of Uzbekistan is designated as a regulator;
• individuals and legal entities may report cases of conflict of interest to the Agency and relevant state authorities;
• administrative fines may be applied to infringers of the Law. Moreover, transactions concluded in violation of the Law may be invalidated by a court.

Following the adoption of the Law, a Presidential Resolution has also been signed to facilitate its implementation. It envisages, among other things, the formation of a list of state bodies and organizations falling under the scope of the Law till 1 July 2024 and the launch of a dedicated electronic module on the electronic platform “E-anticor.uz” till the end of 2024 for online monitoring of conflict of interest cases.

Law No. ZRU-931 of 5 June 2024
Presidential Resolution No. PP-210 of 5 June 2024

 3.  TARIFF POLICY FOR ENERGY MARKETS

The Cabinet of Ministers has issued a Resolution on the improvement of the tariff policy for the energy markets. It enters in force on 1 April 2025 and, among other things, envisages the following:

• new rules and procedures for setting and calculating tariffs for the generation, transmission, distribution, and sale of power energy and for the extraction, transmission, distribution, and sale of natural gas. Among other things, it is established that tariffs shall be calculated based on costs of production, transmission, relevant system services, distribution, and sale, considering relevant operational and capital expenditures. The rules outlined in the Resolution do not apply to tariffs for the generation of power energy if law (including acts of the President) sets other rules for the determination of the tariff;
• all organisations participating in regulated activities shall submit their tariff revision proposals 15-18 months before the date designated by the Commission to the working body of the Commission  - the Ministry of Economy and Finance. Tariffs are approved after all relevant proposals are received and analysed;
• starting from 2026, tariffs for electricity and natural gas approved in accordance with the established procedure will remain relevant for at least 3 years;
• the Competition Promotion and Сonsumer Protection Committee will check and monitor compliance with the tariff legislation.

Resolution of the Cabinet of Ministers No. 337 of 15 June 2024

 4.  ACCESSION TO GENEVA ACT OF HAGUE AGREEMENT & ROME CONVENTION

In pursuit of joining the World Trade Organization, Uzbekistan has acceded to the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs of 2 July 1999 and the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations of  26 October 1961 (the Rome Convention). The accession to the Geneva Act, among other things, aims to simplify the procedure for making an international application for the registration of industrial designs developed locally, to strengthen their protection abroad, and to prevent the illegal use of patented objects in manufacturing locally. The Rome Convention, in turn, secures protection in performances for performers, in phonograms for producers of phonograms and in broadcasts for broadcasting organizations.

Law No. ZRU-929 of 5 June 2024
Law No. ZRU-930 of 5 June 2024 

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Kosta Legal Law Firm