Doing Business 2020 Uzbekistan Economy Profile Uzbekistan Page 1 Doing Business 2020 Uzbekistan Economy Profile of Uzbekistan Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Uzbekistan About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Uzbekistan Ease of Doing Business in DB RANK DB SCORE Region Europe & Central Asia Uzbekistan Income Category Lower middle income 69 Population 32,955,400 69.9 City Covered Tashkent Rankings on Doing Business topics - Uzbekistan 8 22 36 37 67 69 72 100 132 152 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 96.2 61.7 86.9 67.9 65.0 70.0 77.5 58.2 71.9 43.5 Starting a Business (rank) 8 Getting Credit (rank) 67 Trading across Borders (rank) 152 Score of starting a business (0-100) 96.2 Score of getting credit (0-100) 65.0 Score of trading across borders (0-100) 58.2 Procedures (number) 3 Strength of legal rights index (0-12) 6 Time to export Time (days) 3 Depth of credit information index (0-8) 7 Documentary compliance (hours) 96 Cost (number) 2.2 Credit registry coverage (% of adults) 0.0 Border compliance (hours) 32 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 47.8 Cost to export Documentary compliance (USD) 292 Dealing with Construction Permits (rank) 132 Protecting Minority Investors (rank) 37 Border compliance (USD) 278 Score of dealing with construction permits (0-100) 61.7 Score of protecting minority investors (0-100) 70.0 Time to export Procedures (number) 17 Extent of disclosure index (0-10) 8.0 Documentary compliance (hours) 150 Time (days) 246 Extent of director liability index (0-10) 3.0 Border compliance (hours) 111 Cost (% of warehouse value) 3.0 Ease of shareholder suits index (0-10) 7.0 Cost to export Building quality control index (0-15) 11.0 Extent of shareholder rights index (0-6) 4.0 Documentary compliance (USD) 242 Extent of ownership and control index (0-7) 7.0 Border compliance (USD) 278 Getting Electricity (rank) 36 Extent of corporate transparency index (0-7) 6.0 Score of getting electricity (0-100) 86.9 Enforcing Contracts (rank) 22 Procedures (number) 4 Paying Taxes (rank) 69 Score of enforcing contracts (0-100) 71.9 Time (days) 88 Score of paying taxes (0-100) 77.5 Time (days) 225 Cost (% of income per capita) 441.2 Payments (number per year) 9 Cost (% of claim value) 20.5 Reliability of supply and transparency of tariff index (0-8) 8 Time (hours per year) 181 Quality of judicial processes index (0-18) 8.5 Total tax and contribution rate (% of profit) 31.6 Registering Property (rank) 72 Postfiling index (0-100) 48.2 Resolving Insolvency (rank) 100 Score of registering property (0-100) 67.9 Score of resolving insolvency (0-100) 43.5 Procedures (number) 9 Recovery rate (cents on the dollar) 34.4 Time (days) 43 Time (years) 2.0 Cost (% of property value) 0.7 Cost (% of estate) 10.0 Quality of the land administration index (0-30) 19.0 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 8.0 Page 4 Doing Business 2020 Uzbekistan Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is -Has between 10 and 50 employees one month after the commencement of operations, all of them received domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Uzbekistan Starting a Business - Uzbekistan Standardized Company Legal form Limited Liability Company Paid-in minimum capital requirement No minimum City Covered Tashkent Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Procedure – Men (number) 3 5.2 4.9 1 (2 Economies) Time – Men (days) 3 11.9 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 2.2 4.0 3.0 0.0 (2 Economies) Procedure – Women (number) 3 5.2 4.9 1 (2 Economies) Time – Women (days) 3 11.9 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 2.2 4.0 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 0.7 7.6 0.0 (120 Economies) Figure – Starting a Business in Uzbekistan – Score 88.2 97.5 98.9 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Uzbekistan and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 96.2: Uzbekistan (Rank: 8) 95.7: Moldova (Rank: 13) 94.4: Kazakhstan (Rank: 22) 93.1: Russian Federation (Rank: 40) 93.0: Kyrgyz Republic (Rank: 42) 90.5: Regional Average (Europe & Central Asia) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Uzbekistan Figure – Starting a Business in Uzbekistan – Procedure, Time and Cost Time (days) Cost (% of income per capita) 3 1.8 1.6 Cost (% of income per capita) 2.5 1.4 2 1.2 Time (days) 1 1.5 0.8 1 0.6 0.4 0.5 0.2 0 0 1 2 3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Uzbekistan Details – Starting a Business in Uzbekistan – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Register at the Public Service Center and obtain the Certificate of State Registration 1 day UZS 202,730 (equal to Agency : Public Service Center under the Ministry of Justice one minimum monthly Starting from April 1, 2017, the new online platform for the companies registration was introduced: wage) for registration in- fo.birdarcha.uz person or UZS 101,365 (equal to half of one The company can be registered online or in-person by visiting the Public Service Center of the minimum monthly wage) relevant district. The following registration documents should be submitted: (1) application form; for online registration. (2) constitutive documents: shareholders agreement and charter (for LLC); (3) confirmation of registration fee payment (if not done at the moment of registration). In case of online registration, each founder should electronically confirm that (s)he is becoming the founder of the company. Within 30 minutes after the documents are submitted and payment is made, the company is registered. Registration certificate and constitutional documents are sent electronically to the applicant. In case of registration in person, the certificate of incorporation is printed out right after the registration process is over. The founders obtain the certificate of incorporation on the same day as they apply provided that the submitted documents are in full compliance with the statutory requirements. Registration fee is levied in the amount of 1 minimum wage in case of registration in person, or 0.5 minimum wage in case of registration online. After the LLC is registered, the local registering authority automatically provides the data on the registered LLC to the state statistics authorities, state tax authorities, and internal affairs agencies at place of location of the LLC. 2 Make a company seal 1 day UZS 50,000 - 100,000 Agency : Specialized seal-making company According to Article 5 of the Law "On limited liability company" (http://lex.uz/Pages/GetAct.aspx? lact_id=18793), small companies are not legally required to have a seal. However, most companies still prefer to do so in practice. Starting from April 1, 2017, small companies are no longer required to approve the seal design with the registration authorities. The company’s seal must be made by a specialized seal-making company. For ordering a seal, the company should provide the Registration Certificate. 3 Open a permanent bank account with a local bank 1 day no charge Agency : Commercial Bank Companies open bank accounts in order to conduct official business, and because in practice Tax Authorities expect a notification regarding company’s corporate account number. In addition corporate bank account is required for notification of Xalq bank. To open a permanent bank account, it is required to submit the Decision of the newly registered company on nomination of the director of the company and the accountant. Requirement to submit originals and copies of the certificate of registration and constituent documents was abolished. When opening a bank account, banks independently gain access to information about the business entity (registration certificates and constituent documents). After opening a permanent bank account for the company, the bank notifies Tax Authorities and Khalk bank (People's bank) regarding the company's bank account. Takes place simultaneously with previous procedure. Page 8 Doing Business 2020 Uzbekistan Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: - Will be used for general storage activities, such as storage of books or stationery. • Procedure is considered completed once final document is received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control after construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 9 Doing Business 2020 Uzbekistan Dealing with Construction Permits - Uzbekistan Standardized Warehouse Estimated value of warehouse UZS 637,478,151.30 City Covered Tashkent Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 17 16.2 12.7 None in 2018/19 Time (days) 246 170.1 152.3 None in 2018/19 Cost (% of warehouse value) 3.0 4.0 1.5 None in 2018/19 Building quality control index (0-15) 11.0 12.1 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Uzbekistan – Score 52.0 36.6 84.8 73.3 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Uzbekistan and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 78.9: Russian Federation (Rank: 26) 76.5: Kazakhstan (Rank: 37) 69.0: Regional Average (Europe & Central Asia) 69.0: Kyrgyz Republic (Rank: 90) 61.7: Uzbekistan (Rank: 132) 56.2: Moldova (Rank: 156) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2020 Uzbekistan Figure – Dealing with Construction Permits in Uzbekistan – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 3 2.5 Cost (% of warehouse value) 200 2 Time (days) 150 1.5 100 1 50 0.5 0 0 1 2 *3 4 5 6 7 8 9 * 10 11 12 13 14 15 16 17 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2020 Uzbekistan Figure – Dealing with Construction Permits in Uzbekistan and comparator economies – Measure of Quality 16 14.0 14 13.0 12.0 12.1 11.0 11.0 Index score 12 10 8 6 4 2 0 Uzbekistan Kazakhstan Kyrgyz Moldova Russian Europe Republic Federation & Central Asia Details – Dealing with Construction Permits in Uzbekistan – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain land clearance from Tashkent City Hokimiyat (submission of an 38 days no charge application for a land plot and of approved materials) Agency : District Governor's Office Starting on January 1, 2016, the government changed the way land plots of up to 1 hectare are allocated to legal entities and individuals. Land plots are now assigned on the basis of a competitive selection process. Local authorities (municipalities) select land plots that are available for allocation. Then, each Municipality has the local Department of Architecture and Construction obtain all preliminary approvals of land allocation (previously separate procedures) from the relevant authorities, depending on the environmental, architectural and zoning requirements of the individual plots. Once all approvals are obtained internally by the Department of Architecture and Construction, a complete set of documents is prepared for each land plot and submitted to the contest organizer within the Municipality. The time is 38 days (30 days after announcement is made to apply + 3 days for the committee to evaluate the bids + 5 days to announce the decision). Per the new process, an announcement is made in the mass media that there are land plots allocated for a specific type of construction (e.g., kindergarten, produce store, a warehouse etc.). Subsequently, these land plots, with all the necessary characteristics, are made available on the website of the State Committee of Uzbekistan on Architecture and Construction: http://1kms.uz/kms/announcementnew/list/11. There is only one committee that organizes the bid. The announcement about the bid is made 1 month before the start of the bidding process, so bidders have 1 month to prepare the application and submit the bid. The committee takes 3 days to evaluate all the bids and then it has 5 days to announce the allotment decision. Once the decision is made, it is announced in mass media (in the same national and local newspapers where the bid was announced in the first place). The committee will inform the winners within 2 days after the official announcement. Those who were not selected will find out in the papers and on the website. The announcement is also sent by mail to all bidders. The announcement of the auction / competition is made only 2 times a year (May and November). This announcement is determined based on demand and supply of available land plots. The Hokimiyat signs a contract with the winner and the winner can go ahead and sign a contract with the project design company. 2 Obtain topographic survey of the land plot and the land plot's precise location (red lines) 21 days UZS 1,200,000 by "UzGAShKLITI” Agency : State Design Research Institute of Engineering Studies in Construction, Geoinformatics and Urban Cadastre - "UzGAShKLITI" A specialized agency draws the precise location of the land plot on a map (usually in red color, hence the name "red lines"). 3 Request and obtain technical conditions for the connection to water and sewerage 7 days no charge Agency : Water and Sewerage Authority BuildCo must obtain technical terms for the connection to the water and sewerage systems. The terms are necessary for preparing project documentation. BuildCo must submit the following information to the local water and sewerage authority: • For water: the load of water demand, the calculation of water height, and the expected date of commencement of water consumption • For sewerage: the calculation of sewage volume, qualitative composition of the sewage, specification of whether the any plans for internal treatment, and the expected date the sewerage system is to be put into operation By law, this procedure should be completed in 3 business days. However, in practice, it takes longer. Page 12 Doing Business 2020 Uzbekistan 4 Request and obtain architectural and technical objectives 30 days UZS 810,920 Agency : Main Department of Architecture and Construction Based on the terms for designing the building in accordance with engineering supply norms and regulations, the technical conditions, and the decision of the Hokimat on the land plot (all provided by the department on architecture and construction of the city), the Main Department of Architecture and Construction develops the architectural planning terms (APZ, parts I and II). The fee is established by Government Resolution No. 150 (dated May 30, 2013) was set at 4 MMW. 5 Request ecological examination 20 days UZS 725,000 Agency : Private Licensed Organization BuildCo should submit the project and pre-project documentation for ecological examination to a private expert firm. The expert firm will provide the examination and will also obtain the conclusion from The State Ecological Examination body of the Committee on the Protection of Nature of the city of Tashkent will issue the conclusion of the ecological examination. This document is necessary for subsequent submission to the territorial Inspection of State Architectural Building Supervision of the city of Tashkent and to the servicing bank (to allow financing). It is also necessary for obtaining the fire safety and earthquake stability compliance. 6 Request and obtain examination of project documents on their compliance with fire safety 14 days UZS 405,460 and seismic stability Agency : State Architectural and Construction Inspection (GASN) After obtaining an ecological evaluation, BuildCo can submit the construction plans for state examination on their compliance with fire safety and earthquake stability. 7 Request and obtain sanitation clearance for the project 14 days no charge Agency : State Sanitation and Epidemic Supervision Authority BuildCo must obtain project clearance from the state sanitation and epidemic supervision authority. This document can only be obtained after obtaining the fire safety and earthquake stability compliance. 8 Request and obtain project clearance from the local water and sewerage authority 7 days no charge Agency : Water and Sewerage Authority BuildCo must obtain project clearance from the local water and sewerage authority. This authority checks whether the project and other relevant documentation conform to construction rules and technical terms. BuildCo enters into a contract with the local water and sewerage authority on technical supervision of the construction. This document can only be obtained after obtaining a sanitation clearance. 9 Request and obtain construction permit from State Architectural and Construction 10 days UZS 191,243 Inspection (GASN) Agency : State Architectural and Construction Inspection (GASN) The permit for construction works is issued by the local branch of the architecture and construction authority. Although the permit should be issued within 5 days, in practice it takes longer. An inspector from the local branch of the architecture and construction authority undertakes oversight of the construction. There is no permit application fee. However, for the oversight/inspection phase, the company enters into a contract with the authority at a cost of 0.03% of the value of the warehouse. The company must submit the following documents: • Application form • Positive evaluation summary from the public examination bodies on the working project • Copy of the general plan and elevations of the building approved by the architectural bodies, or the protocol of the Town-Planning Council of the Main Department on Architecture and Construction of the city of Tashkent • Address list of construction sites The Inspectorate registers the construction project and issues the building permit. BuildCo starts construction of the warehouse and notifies the Inspectorate of the commencement of works within a month of receiving the building permit. Hire a technical supervision company for construction supervision 1 day UZS 15,936,954 10 Agency : Private construction supervision company There are three levels of construction supervision in Uzbekistan: (1) internal supervision or author's supervision, (2) technical supervision conducted by an external firm and (3) government supervision. The technical supervision companies usually charge around 2-3% of the construction costs. 11 Receive inspection from the State Architectural and Construction Inspection (GASN) 1 day no charge Agency : State Architectural and Construction Inspection (GASN) Inspection is carried out by State Architectural and Construction Inspection (GASN). GASN will assign one inspector for the specific construction who will be responsible for conducting the inspections throughout the construction period. 12 Connect to water and sewerage services 5 days no charge Agency : Water and Sewerage Authority Page 13 Doing Business 2020 Uzbekistan 13 Obtain updated topographic map 7 days no charge Agency : State Design Research Institute of Engineering Studies in Construction, Geoinformatics and Urban Cadastre - "UzGAShKLITI" Once the construction works and complete and the water and sewage connection is obtained, the State Design Research Institute "UzGAShKLITI" conducts a survey of the land plot and of the building to develop a new topographic map of the area with the new construction on it. This is called executive mapping. 14 Call and establish Working Commission and submit documents to the Commission 14 days no charge Agency : Working Commission After completion of the construction works, BuildCo requests the creation of a Working Commission composed of the representatives of district architects, the sanitation supervision authority, the state fire supervision authority, the ministry on emergency situations, the city committee on nature protection, and others. The timeframe under the Construction rules, registered by Ministry of Justice No.545, for establishing Working Commission is 5 working days. However, in practice it takes 14 days, as the Commission only meets once every two weeks and in case the file doesn’t make it to the first meeting, it would almost certainly be reviewed at the second one. BuildCo must submit the following documents to the Working Commission: • The list of organizations that participated in the building and construction works, along with the type of work done by these organizations, the family names of the responsible engineers and technical employees • The full set of design drawings of the property developed by the project organizations • Certificates, technical passports, and other documents certifying the quality and safety of the materials, constructions, and details used in the building and construction works • Other relevant documents 15 Receive inspection and obtain certificate of completion from Working Commission 21 days no charge Agency : Working Commission After the inspection, an act of acceptance is drafted and endorsed by all members in no more than 5 working days. The Working Commission will inspect, among other things: • The compliance of the building and construction works with the requirements on labor protection, fire safety, environment protection, and its prevention of human-caused emergency situations, and so forth • The separate constructions and units of the warehouse If its findings are favorable, the commission then accepts the construction for subsequent presentation to the State Acceptance Board. The Working Commission issues the following: • The certificate of allowable concentration of radon in the completed constructions • The certificate of acceptance of the temporary buildings and constructions • The certificate of readiness of the construction for presentation to the State Acceptance Board 16 Request and obtain certificate of acceptance from the Tashkent City Hokimat 14 days no charge Agency : Hokimat The Hokim (the head of the city government) decides whether to approve the Working Commission’s act of acceptance within 2 days. However, in practice, this takes longer. There is no fee involved. The decision of Hokim is further needed for registering the building with the cadastre authorities. BuildCo should submit to the State Acceptance Board, among other documents, the following documents: • The certificate on elimination of defects brought to light by the Working Commission • The approved project and estimate documentation • The list of project and research organizations that participated in construction • Other relevant documents 17 Register the new construction with the cadastre 30 days UZS 101,365 Agency : Cadastre BuildCo must register the new construction with the real estate cadastre of the relevant district of the city of Tashkent. The registration takes around 2 weeks in Tashkent and costs 50% of MMW for legal entities. Takes place simultaneously with previous procedure. Page 14 Doing Business 2020 Uzbekistan Details – Dealing with Construction Permits in Uzbekistan – Measure of Quality Answer Score Building quality control index (0-15) 11.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 1.0 house engineer; Inspections by external engineer or firm; Unscheduled inspections; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency; Yes, in-house engineer submits report for final inspection; Yes, external engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans Minimum number of 1.0 or drawings are in compliance with existing building regulations? (0-2) years of experience; University degree in architecture or engineering. Page 15 Doing Business 2020 Uzbekistan What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 1.0 2) years of experience; University degree in engineering, construction or construction management. Page 16 Doing Business 2020 Uzbekistan Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours • Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. - Tariffs effective in January of the current year are used for calculation of the price of electricity for • Regulatory monitoring of utilities’ performance (0–1) the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 17 Doing Business 2020 Uzbekistan Getting Electricity - Uzbekistan Standardized Connection Name of utility Uzbekenergo Price of electricity (US cents per kWh) 5.2 City Covered Tashkent Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 4 5.1 4.4 3 (28 Economies) Time (days) 88 99.6 74.8 18 (3 Economies) Cost (% of income per capita) 441.2 271.9 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 8 6.2 7.4 8 (26 Economies) Figure – Getting Electricity in Uzbekistan – Score 83.3 69.6 94.6 100.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Uzbekistan and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 97.5: Russian Federation (Rank: 7) 86.9: Uzbekistan (Rank: 36) 81.6: Kazakhstan (Rank: 67) 75.6: Regional Average (Europe & Central Asia) 75.3: Moldova (Rank: 84) 58.6: Kyrgyz Republic (Rank: 143) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Uzbekistan – Procedure, Time and Cost Time (days) Cost (% of income per capita) 500 80 Cost (% of income per capita) 70 400 60 Time (days) 300 50 40 200 30 20 100 10 0 0 1 2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 18 Doing Business 2020 Uzbekistan reflected here, see the summary below. Figure – Getting Electricity in Uzbekistan and comparator economies – Measure of Quality 9 8 8 8 8 7 7 6.2 Index score 6 5 4 4 3 2 1 0 Uzbekistan Kazakhstan Kyrgyz Moldova Russian Europe Republic Federation & Central Asia Page 19 Doing Business 2020 Uzbekistan Details – Getting Electricity in Uzbekistan – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application and await technical conditions and connection contract with estimate 14 calendar days UZS 0 Agency : Tashkent City Electric Network Enterprise OJSC The customer submits an application for the electrical connection to the Tashkent City Electric Network Enterprise and waits for them to issue technical conditions along with the connection contract that contains the time required for the connection works as well as the connection cost estimate. 2 Signing connection contract and make payment 3 calendar days UZS 56,250,000 Agency : Tashkent City Electric Network Enterprise OJSC Upon receiving the connection contract from the utility, customer has 3 business days to sign the contract and make the 100% prepayment for connection. 3 Implementation of connection works by utility and inspection 70 calendar days UZS 0 Agency : Tashkent City Electric Network Enterprise OJSC During this procedure the Utility implements following works: - prepares the connection design, after the receipt of the advance payment under the contract on connection to electric networks "on a turn-key basis"(15-20 business days), - receives preliminary approval by all stakeholder organizations (5 business days) - finalizes design based on received comments and gets final approval (3 business days) - upon having the design approved, utility conducts the external connection works, carries out meter installation (15-30 business days) - after completion of external works, inspection by the State Energy Inspectorate "Uzgosenergonadzor" takes place (3 business days), wherein "Uzgosenergonadzor" inspects an external power supply system and issues: 1) Certificate of technical inspection of electrical installations of consumers 2) Permit for the commissioning of electrical installations 4 Sign supply contract and obtain final connection 1 calendar day UZS 0 Agency : Tashkent City Electric Network Enterprise OJSC The customer concludes a supply contract and obtains final electricity connection. Takes place simultaneously with previous procedure. Page 20 Doing Business 2020 Uzbekistan Details – Getting Electricity in Uzbekistan – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.2 System average interruption frequency index (SAIFI) 0.1 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 0.5 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://uzbekenergo.uz./ru/ activities/tariffs-electric- power/ Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 21 Doing Business 2020 Uzbekistan Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. - Has no occupants, and no other party holds a legal interest in it. • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 22 Doing Business 2020 Uzbekistan Registering Property - Uzbekistan Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Procedures (number) 9 5.5 4.7 1 (5 Economies) Time (days) 43 20.8 23.6 1 (2 Economies) Cost (% of property value) 0.7 2.7 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 19.0 20.4 23.2 None in 2018/19 Figure – Registering Property in Uzbekistan – Score 33.3 79.9 95.1 63.3 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Uzbekistan and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 90.3: Kyrgyz Republic (Rank: 7) 88.6: Russian Federation (Rank: 12) 82.8: Moldova (Rank: 22) 82.4: Kazakhstan (Rank: 24) 75.8: Regional Average (Europe & Central Asia) 67.9: Uzbekistan (Rank: 72) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 23 Doing Business 2020 Uzbekistan Figure – Registering Property in Uzbekistan – Procedure, Time and Cost Time (days) Cost (% of property value) 0.35 40 0.3 35 Cost (% of property value) 30 0.25 Time (days) 25 0.2 20 0.15 15 0.1 10 0.05 5 0 0 1 2 *3 *4 *5 *6 7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 24 Doing Business 2020 Uzbekistan Figure – Registering Property in Uzbekistan and comparator economies – Measure of Quality 30 26.0 25 24.0 22.0 20.4 Index score 20 19.0 17.0 15 10 5 0 Uzbekistan Kazakhstan Kyrgyz Moldova Russian Europe Republic Federation & Central Asia Details – Registering Property in Uzbekistan – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain the evaluation of the market value for the property 7 days UZS 1,500,000; (1 to 2 Agency : Private evaluator million UZS) Although not required by law, since it is a transaction between two companies, it is common practice to hire a private company to conduct an appraisal of the property to determine its real market value. 2 Request and obtain Cadastral Certificate 10 days no charge Agency : Department for land resources and state cadastre of the city of Tashkent The seller obtains the Cadastral Certificate, a document issued to the seller of the property, containing general information about he property (name of owner, rights to the property, valuation and property cadastral number). This is not required by law, but is commonly done in practice by agreement of the parties. 3 Inspection of a property to determine its status 1 day UZS 1,130,017.02; (1% of Agency : Department for land resources and state cadastre of the city of Tashkent the minimum monthly An inspection is conducted to establish cadastral value of the property and to evaluate all possible wage per square meter of changes in technical parameters, record new construction and reconstruction etc. land plot area As of November 1, 2018, Pursuant to the Order No. 186 from July 10, 2014 the fee for an inspection of the property by experts from the State Committee on Land Resources, Geodesy, Cartography and State Cadastre the minimum wage is UZS is set as follow: 202,730) 1. Property with total size up to 100 sqr. m - 1 MMW (monthly minimum wage) 2. Property with total size from 100 sqr. m to 1000 sqr. m - 1% MMW per square meter of the property size 3. Property with total size from 1000 sqr. m to 5000 sqr. m - 15 MMW 4. Property with total size from 5000 sqr. m to 15000 sqr. m - 30 MMW 5. Property with total size from 15000 sqr. m to 50000 sqr. m - 50 MMW 6. Property with total size more than 50000 sqr. m - 70 MMW 4 Seller obtains the certificate stating that there are no outstanding payments due to the 1 day no charge water and sewage service provider Agency : Water service provider Parties have to submit to the notary the certificates stating that there are no outstanding payments due to the trash collection service use from trash collection service provider. Parties have to request these certificates specifically for the property transaction to demonstrate that there are no outstanding fees that have to be paid before transfer of property takes place. This is not required by law, but is commonly done in practice by agreement of the parties. As of January 2019, a new electronic system is available to notaries, which allows them to request certification of the absence of debts to utility companies. Such requests are made directly through such electronic system to the applicable utility company. However, in practice this system is not yet widely used. 5 Seller obtains the certificate stating that there are no outstanding electricity bills 1 day no charge Agency : Electricity service provider If the system is not used, then parties have to submit to the notary the certificates stating that there are no outstanding payments due to the electricity service use from electricity service provider. Parties have to request these certificates specifically for the property transaction to demonstrate that there are no outstanding fees that have to be paid before transfer of property takes place. This is not required by law, but is commonly done in practice by agreement of the parties. As of January 2019, a new electronic system is available to notaries, which allows them to request certification of the absence of debts to utility companies. Such requests are made directly through such electronic system to the applicable utility company. However, in practice this system is not yet widely used. Page 25 Doing Business 2020 Uzbekistan 6 Seller obtains the certificate stating that there are no outstanding trash collection bills 1 day no charge Agency : Trash collection service provider Parties have to submit to the notary the certificates stating that there are no outstanding payments due to the trash collection service use from trash collection service provider. Parties have to request these certificates specifically for the property transaction to demonstrate that there are no outstanding fees that have to be paid before transfer of property takes place. This is not required by law, but is commonly done in practice by agreement of the parties. As of January 2019, a new electronic system is available to notaries, which allows them to request certification of the absence of debts to utility companies. Such requests are made directly through such electronic system to the applicable utility company. However, in practice this system is not yet widely used. 7 Notarize the sale agreement between the seller and buyer 1 day UZS 2,086,091.7; (1% of Agency : Public Notaries the minimum monthly According to Article 480 of the Civil Code of Uzbekistan a contract for sale of an immovable wage per square meter of property shall be concluded in a written form by formation of one document signed by the parties. building area + fees Accordingly, the obligation to notarize the sale of a real estate between legal persons is not charged by notaries for required by law. consultations and drafting However, upon agreement of the parties, the contract can be notarized. In accordance with sale-purchase agreement paragraph 51 of Instructions on notarial acts of notaries, in case of notarization of the sale contract of a real estate such transactions shall be certified in a notary's office located at the place where As of November 1, 2018, the location of the real state is. the minimum wage is UZS For certification of transactions on alienation of a real estate owned by legal entities, notary 202,730) requires the following documents: • Proof of ownership of the property (cadastral certificate); • Certificate of state registration of the legal entity; • Certificate on the net book value of the property, signed by the director and the chief accountant of the legal entity; • Certificate of net assets of the legal entity; • Power of attorney for a representative of the legal entity, issued in the prescribed manner (if there is no an employment contract between the representative and the legal entity, a power of attorney shall be issued by a notary); • Act of acceptance of the property; • Document verifying the payment between the parties (the receipt, payment order)*; *In case the sale contract is notarized, a written basis for the settlement between the parties, namely the conclusion of the preliminary agreement between the parties on the basis of which the payment for the transferred property was made, will be needed in order to provide the notary with a document confirming settlement between the parties. 8 Buyer applies for the registration at the Registration Office 22 days Agency : Public Services Center According to Article 481 of the Civil Code of the Republic of Uzbekistan, the transfer of property rights to immovable property from the seller to the buyer is subject to the state registration. In accordance with Resolution of the Cabinet of Ministers No. 1060 “On measures for further improvement of the order of state registration of rights to immovable property” dated 29 December 2018, the state registration is performed by the local cadastral service offices based on the applications of legal entities and individuals forwarded to such offices by the Public Services Centers under the Ministry of Justice of the Republic of Uzbekistan. Upon completing the state registration, a local cadastral service office issues an extract from the State Register of Rights to Immovable Property that is sent to the applicant via the Public Services Centers. 9 Buyer submits the cadastral package to the local tax authorities 3 days no charge Agency : Local Tax Authorities The buyer submits a copy of Cadastral package to the local tax authority in order to update the land and property taxation records to the new owner's name. In addition, according to the Tax Code of the Republic of Uzbekistan, authorities involved with the registration of the title must report information on new owners to the tax authorities within 10 days after registration of the title has taken place. Takes place simultaneously with previous procedure. Page 26 Doing Business 2020 Uzbekistan Details – Registering Property in Uzbekistan – Measure of Quality Answer Score Quality of the land administration index (0-30) 19.0 Reliability of infrastructure index (0-8) 5.0 Type of land registration system in the economy: Title Registration System What is the institution in charge of immovable property registration? Tashkent city Department of Land Resources and State Cadastre In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Scanned 1.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Cadastre Service office under the State Committee on land resources, cartography and State Cadastre In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Scanned 1.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information No 0.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Single database 1.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 3.0 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Only intermediaries 0.0 in the largest business city? and interested parties Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://www.kadastr.uz/ ru/individual/services/ perechen- dokumentov-dlya- registratsii- prava/2933/ Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable Yes, online 0.5 property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.kadastr.uz/ ru/corporate/services/ stoimost-uslug/3364/ Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: http://www.kadastr.uz/ ru/corporate/services/ sroki-okazaniya- uslug/3352/ Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5 registration agency? Page 27 Doing Business 2020 Uzbekistan Number of property transfers in the largest business city in 2018: 25165.0 Who is able to consult maps of land plots in the largest business city? Only intermediaries 0.0 and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, online 0.5 Link for online access: http://www.kadastr.uz/ ru/corporate/services/ stoimost-uslug/3364/ Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, online 0.5 if so, how does it communicate the service standard? Link for online access: http://odnookno.uz/ru/ e-services/order/? SERVICE_ID=780 Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 4.0 Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 7.0 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: According to the Article of the Civil Code of Uzbekistan, transfer of the right of ownership to an immovable property to a buyer under a contract for sale of the immovable property is subject to a state registration (Articles 84, 111, 481 of the Civil Code of Uzbekistan) Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Legal basis: Land Code of Uzbekistan, the law "On state cadasters" No.171-II dated December 15, 2000 Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Lawyer; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Page 28 Doing Business 2020 Uzbekistan Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local Arbitration Court or businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located The economic Court in the largest business city? of Tashkent city How long does it take on average to obtain a decision from the first-instance court for such a case (without Less than a year 3.0 appeal)? Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 29 Doing Business 2020 Uzbekistan Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 30 Doing Business 2020 Uzbekistan Getting Credit - Uzbekistan Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Strength of legal rights index (0-12) 6 7.8 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.7 6.8 8 (53 Economies) Credit registry coverage (% of adults) 0.0 24.0 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 47.8 41.7 66.7 100.0 (14 Economies) Figure – Getting Credit in Uzbekistan – Score 65.0 Score - Getting Credit Figure – Getting Credit in Uzbekistan and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 85.0: Kyrgyz Republic (Rank: 15) 80.0: Kazakhstan (Rank: 25) 80.0: Russian Federation (Rank: 25) 72.2: Regional Average (Europe & Central Asia) 70.0: Moldova (Rank: 48) 65.0: Uzbekistan (Rank: 67) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 31 Doing Business 2020 Uzbekistan Figure – Legal Rights in Uzbekistan and comparator economies 10 9 9 9 8 8 7.8 8 Index Score 7 6 6 5 4 3 2 1 0 Uzbekistan Kazakhstan Kyrgyz Moldova Russian Europe Republic Federation & Central Asia Page 32 Doing Business 2020 Uzbekistan Details – Legal Rights in Uzbekistan Strength of legal rights index (0-12) 6 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents Yes to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description No of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; No and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third Yes party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Uzbekistan and comparator economies 9 8 8 8 7 7 7 6.7 Index Score 6 6 5 4 3 2 1 0 Uzbekistan Kazakhstan Kyrgyz Moldova Russian Europe Republic Federation & Central Asia Page 33 Doing Business 2020 Uzbekistan Details – Credit Information in Uzbekistan Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 9,880,022 0 Number of firms 726,725 0 Total 10,606,747 0 Percentage of adult population 47.8 0.0 Page 34 Doing Business 2020 Uzbekistan Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members. • Ease of shareholder suits index (0–10): Access to internal - Has not adopted bylaws or articles of association that go beyond the minimum requirements. corporate documents; Evidence obtainable during trial and allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0–20): Sum of the - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and extent of shareholders rights, extent of ownership and control directors that approved the transaction. and extent of corporate transparency indices • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 35 Doing Business 2020 Uzbekistan Protecting Minority Investors - Uzbekistan Stock exchange information Stock exchange Republican Stock Exchange Tashkent Stock exchange URL http://www.uzse.uz Listed firms with equity securities 104 City Covered Tashkent Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Extent of disclosure index (0-10) 8.0 7.5 6.5 10 (13 Economies) Extent of director liability index (0-10) 3.0 5.0 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 7.0 6.8 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 4.0 3.4 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 7.0 3.7 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 6.0 4.1 5.7 7 (13 Economies) Figure – Protecting Minority in Uzbekistan – Score 70.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Uzbekistan and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 84.0: Kazakhstan (Rank: 7) 70.0: Uzbekistan (Rank: 37) 68.0: Moldova (Rank: 45) 61.0: Regional Average (Europe & Central Asia) 60.0: Russian Federation (Rank: 72) 40.0: Kyrgyz Republic (Rank: 128) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 36 Doing Business 2020 Uzbekistan Figure – Protecting Minority Investors in Uzbekistan and comparator economies – Measure of Quality Uzbekistan 6 3 8 7 4 7 Kazakhstan 6 6 9 6 6 9 Kyrgyz Republic 0 5 7 0 8 Moldova 6 4 7 4 5 8 Russian Federation 6 2 6 4 5 7 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 Europe & Central Asia 4.1 4.8 7.2 3.6 3.4 6.8 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 37 Doing Business 2020 Uzbekistan Details – Protecting Minority Investors in Uzbekistan – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 8.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 1.0 transaction only Extent of director liability index (0-10) 3.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Not liable 0.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) No 0.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair or 2.0 prejudicial Ease of shareholder suits index (0-10) 7.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Documents that 2.0 directly prove specific facts in the plaintiff’s claim Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 4.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? No 0.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? No 0.0 Extent of ownership and control index (0-7) 7.0 Page 38 Doing Business 2020 Uzbekistan Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? Yes 1.0 Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? Yes 1.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 6.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 39 Doing Business 2020 Uzbekistan Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured • Collecting information, computing tax payable at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 40 Doing Business 2020 Uzbekistan Paying Taxes - Uzbekistan Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Payments (number per year) 9 14.4 10.3 3 (2 Economies) Time (hours per year) 181 213.1 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 31.6 31.7 39.9 26.1 (33 Economies) Postfiling index (0-100) 48.2 68.2 86.7 None in 2018/19 Figure – Paying Taxes in Uzbekistan – Score 90.0 79.6 92.3 48.2 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Uzbekistan and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 85.2: Moldova (Rank: 33) 80.5: Russian Federation (Rank: 58) 78.2: Kazakhstan (Rank: 64) 77.9: Regional Average (Europe & Central Asia) 77.5: Uzbekistan (Rank: 69) 67.2: Kyrgyz Republic (Rank: 117) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 41 Doing Business 2020 Uzbekistan Figure – Paying Taxes in Uzbekistan and comparator economies – Measure of Quality 100 90.8 90 77.8 80 68.2 Index score 70 60 48.2 48.9 50 37.4 40 30 20 10 0 Uzbekistan Kazakhstan Kyrgyz Moldova Russian Europe Republic Federation & Central Asia Page 42 Doing Business 2020 Uzbekistan Details – Paying Taxes in Uzbekistan Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Unified social 1.0 66.0 15% gross salaries 17.38 payment Corporate 1.0 64.0 14.0% taxable profit 11.76 income tax Land tax 1.0 various rates land area 2.19 Tax on interest 1.0 withheld 10% interest income 0.26 Environmental 1.0 various rates tons of waste 0.02 tax Value added tax 1.0 51.0 20% value added 0.00 not included (VAT) Water tax 1.0 withheld various rates water 0.00 small amount consumption Employee paid - 1.0 1% gross salaries 0.00 withheld Cumulative Pension Fund contribution Employee paid - 1.0 filed jointly with 8.0% gross salaries 0.00 withheld Personal Pension USP, but paid Fund contribution separately Totals 9 181 31.6 Page 43 Doing Business 2020 Uzbekistan Details – Paying Taxes in Uzbekistan – Tax by Type Taxes by type Answer Profit tax (% of profit) 11.8 Labor tax and contributions (% of profit) 17.4 Other taxes (% of profit) 2.5 Page 44 Doing Business 2020 Uzbekistan Details – Paying Taxes in Uzbekistan – Measure of Quality Answer Score Postfiling index (0-100) 48.2 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process VAT refund restricted to Zero-rated turnover, which is generated from: 1. export sales for hard currency; 2. sales of diplomatic / equivalent representative offices; 3. works (services) for processing of goods placed under the customs regime; 4. international transportation services; 5. utility services provided to population. Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? Yes Time to comply with VAT refund (hours) No VAT refund per 0.0 case study scenario Time to obtain VAT refund (weeks) No VAT refund per 0.0 case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 5.5 92.7 Time to complete a corporate income tax correction (weeks) No tax audit per case 100 study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 45 Doing Business 2020 Uzbekistan Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 46 Doing Business 2020 Uzbekistan Trading across Borders - Uzbekistan Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Time to export: Border compliance (hours) 32 16.1 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 278 150.0 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 96 25.1 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 292 87.6 33.4 0 (20 Economies) Time to import: Border compliance (hours) 111 20.4 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 278 158.8 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 150 23.4 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 242 85.9 23.5 0 (30 Economies) Figure – Trading across Borders in Uzbekistan – Score 80.6 73.8 43.8 27.0 60.7 76.8 37.7 65.4 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Uzbekistan and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 92.3: Moldova (Rank: 38) 87.3: Regional Average (Europe & Central Asia) 74.7: Kyrgyz Republic (Rank: 89) 71.8: Russian Federation (Rank: 99) 70.4: Kazakhstan (Rank: 105) 58.2: Uzbekistan (Rank: 152) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 47 Doing Business 2020 Uzbekistan Figure – Trading across Borders in Uzbekistan – Time and Cost Time (hours) Cost (USD) 292 150 160 278 278 300 140 242 250 111 Time (hours) 120 Cost (USD) 96 200 100 80 150 60 100 40 32 50 20 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 48 Doing Business 2020 Uzbekistan Details – Trading across Borders in Uzbekistan Characteristics Export Import Product HS 52 : Cotton HS 8708: Parts and accessories of motor vehicles Trade partner Russian Federation Russian Federation Border Beyneu border crossing Yallama border crossing Distance (km) 1515 60 Domestic transport time (hours) 52 2 Domestic transport cost (USD) 1065 58 Details – Trading across Borders in Uzbekistan – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 6.0 277.9 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 25.8 0.0 Import: Clearance and inspections required by 85.9 277.9 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 24.7 0.0 Page 49 Doing Business 2020 Uzbekistan Details – Trading across Borders in Uzbekistan – Trade Documents Export Import Export declaration Customs Import Declaration Export contract Certificate of origin Certificate of conformity Commercial invoice Invoice Packing list Packing list Serial/code numbers CMR CMR waybill Certificate of origin Certificate of conformity Certificate of fumigation Phytosanitary certificate Page 50 Doing Business 2020 Uzbekistan Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local currency of • Court costs USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. • Alternative dispute resolution (0-3) Page 51 Doing Business 2020 Uzbekistan Enforcing Contracts - Uzbekistan Standardized Case Claim value UZS 20,143,353 Court name Tashkent Interdistrict Commercial Court City Covered Tashkent Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Time (days) 225 496.4 589.6 120 (Singapore) Cost (% of claim value) 20.5 26.6 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 8.5 10.3 11.7 None in 2018/19 Figure – Enforcing Contracts in Uzbekistan – Score 91.4 77.1 47.2 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Uzbekistan and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 81.3: Kazakhstan (Rank: 4) 72.2: Russian Federation (Rank: 21) 71.9: Uzbekistan (Rank: 22) 65.5: Regional Average (Europe & Central Asia) 63.6: Moldova (Rank: 62) 50.4: Kyrgyz Republic (Rank: 134) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 52 Doing Business 2020 Uzbekistan Figure – Enforcing Contracts in Uzbekistan – Time and Cost Time (days) Cost (% of claim value) 700 47.0 50 Cost (% of claim value) 585 589.6 600 496.4 40 Time (days) 500 410 28.6 400 26.6 370 30 337 22.0 21.5 20.5 300 16.5 20 225 200 10 100 0 0 Europe Kazakhstan Kyrgyz Moldova OECD Russian Uzbekistan & Republic high Federation Central income Asia Page 53 Doing Business 2020 Uzbekistan Figure – Enforcing Contracts in Uzbekistan and comparator economies – Measure of Quality Uzbekistan 3 1 2 2.5 Kazakhstan 3 5 3 5 Kyrgyz Republic 1.5 1 0 2.5 Moldova 2.5 3 2 3.5 Russian Federation 2.5 4 0 3 OECD high income 2.5 3.2 2.4 3.6 Europe & Central Asia 2.3 2.8 1.3 3.6 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Uzbekistan Indicator Time (days) 225 Filing and service 30 Trial and judgment 90 Enforcement of judgment 105 Cost (% of claim value) 20.5 Attorney fees 15 Court fees 3.5 Enforcement fees 2 Quality of judicial processes index (0-18) 8.5 Court structure and proceedings (-1-5) 2.5 Case management (0-6) 1.0 Court automation (0-4) 2.0 Alternative dispute resolution (0-3) 3.0 Page 54 Doing Business 2020 Uzbekistan Details – Enforcing Contracts in Uzbekistan – Measure of Quality Answer Score Quality of judicial processes index (0-18) 8.5 Court structure and proceedings (-1-5) 2.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 0.0 2.a. Is there a small claims court or a fast-track procedure for small claims? No 2.b. If yes, is self-representation allowed? n.a. 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? No 0.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 1.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) Yes 1.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? No 0.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 2.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? Yes 1.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public No through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made No available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 55 Doing Business 2020 Uzbekistan 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or Yes conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 56 Doing Business 2020 Uzbekistan Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 57 Doing Business 2020 Uzbekistan Resolving Insolvency - Uzbekistan Indicator Uzbekistan Europe & Central OECD high Best Regulatory Asia income Performance Recovery rate (cents on the dollar) 34.4 38.5 70.2 92.9 (Norway) Time (years) 2.0 2.3 1.7 0.4 (Ireland) Cost (% of estate) 10.0 13.3 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. .. Strength of insolvency framework index (0-16) 8.0 11.2 11.9 None in 2018/19 Figure – Resolving Insolvency in Uzbekistan – Score 37.1 50.0 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Uzbekistan and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 66.7: Kazakhstan (Rank: 42) 59.1: Russian Federation (Rank: 57) 55.7: Regional Average (Europe & Central Asia) 54.8: Moldova (Rank: 67) 50.0: Kyrgyz Republic (Rank: 78) 43.5: Uzbekistan (Rank: 100) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 58 Doing Business 2020 Uzbekistan Figure – Resolving Insolvency in Uzbekistan – Time and Cost Time (years) Cost (% of estate) 3 15.0 2.8 15.0 16 13.3 14 Cost (% of estate) 2.5 2.3 12 Time (years) 2.0 2.0 2 9.5 10.0 1.7 9.3 9.0 10 1.5 1.5 1.5 8 6 1 4 0.5 2 0 0 Europe Kazakhstan Kyrgyz Moldova OECD Russian Uzbekistan & Republic high Federation Central income Asia Page 59 Doing Business 2020 Uzbekistan Figure – Resolving Insolvency in Uzbekistan and comparator economies – Measure of Quality Uzbekistan 3 2.5 2 0.5 Kazakhstan 6 3 4 1.5 Kyrgyz Republic 3 3 1 2 Moldova 4 2.5 3 2.5 Russian Federation 5 2.5 3 1 OECD high income 5.3 2.8 2.1 1.9 Europe & Central Asia 4.5 2.5 2.3 1.7 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Uzbekistan and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 45 43.0 39.8 40.6 40 38.5 34.4 35 32.1 30 25 20 15 10 5 0 Uzbekistan Kazakhstan Kyrgyz Republic Moldova Russian Federation Europe & Central Asia Page 60 Doing Business 2020 Uzbekistan Details – Resolving Insolvency in Uzbekistan Indicator Answer Score Proceeding liquidation Liquidation is the most likely procedure because there are several creditors involved and the debts of the hotel significantly exceed the permissible limits under Uzbekistan law. Reorganization is not often achieved in Uzbekistan for private companies. Outcome piecemeal sale Hotel's assets are likely to be sold piecemeal because currently it would be very difficult to find a buyer willing to purchase the entire hotel and continue operating it. Time (in years) 2.0 The petition to initiate liquidation of the debtor will be lodged with the court within 1 month from the moment when monetary obligations became due. The court will take up the case within 5 days and will complete its consideration within 2 months. Then the Court will commence supervisory proceedings (from 6 to 12 months). The court will also appoint an administrator, who will take over the company's financials, publish notice of bankruptcy, receive claims from creditors and try to reach settlements between them, whenever possible, and prepare a register of creditors' claims. The administrator also must prepare an interim balance sheet of the debtor and present it to the creditors, who will have to approve it. The hotel will then go into liquidation. A public auction will be held to sell the assets, after which the creditors will be paid and the company will be liquidated. Liquidation generally lasts between 6 and 12 months. Cost (% of estate) 10.0 The total cost of the proceedings will amount to around 10% of the value of the estate. Main expenses will include attorneys' fees (up to 3%), remuneration and fees of the administrator (up to 4%), fees of other professionals involved in the insolvency proceedings, such as accountants and assessors (2%), and auctioneer’s fees (up to 2%). Recovery rate 34.4 (cents on the dollar) Page 61 Doing Business 2020 Uzbekistan Details – Resolving Insolvency in Uzbekistan – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 8.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (a) Debtor is 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value generally unable to of its assets pay its debts as they mature Management of debtor's assets index (0-6) 3.0 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the No 0.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? No 0.0 Does the insolvency framework allow avoidance of undervalued transactions? No 0.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (b) Yes over ordinary 1.0 unsecured creditors but not over secured creditors Reorganization proceedings index (0-3) 0.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote No 0.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 2.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency Yes 1.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? Yes 1.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting No 0.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 62 Doing Business 2020 Uzbekistan Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 63 Doing Business 2020 Uzbekistan Employing Workers - Uzbekistan Details – Employing Workers in Uzbekistan Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 60.0 Maximum length of fixed-term contracts, including renewals (months) 60.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 91.4 Ratio of minimum wage to value added per worker 0.4 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 50.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 100.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 15.0 Paid annual leave for a worker with 5 years of tenure (working days) 15.0 Paid annual leave for a worker with 10 years of tenure (working days) 15.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? Yes Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 8.7 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.7 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 8.7 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 8.7 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 8.7 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.7 Page 64 Doing Business 2020 Uzbekistan Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 8.7 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 8.7 Unemployment protection after one year of employment? Yes Page 65 Doing Business 2020 Uzbekistan Business Reforms in Uzbekistan From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Protecting Minority Investors: Uzbekistan strengthened minority investor protections by increasing shareholders’ rights and role in major corporate decisions, clarifying ownership and control structures and requiring greater corporate transparency. Paying Taxes: Uzbekistan made paying taxes easier by merging the infrastructure tax with the corporate income tax. Trading across Borders: Uzbekistan made trading across borders easier by introducing risk-based inspections and simplifying import documentary compliance. Enforcing Contracts: Uzbekistan made enforcing contracts easier by introducing a consolidated law on voluntary mediation, establishing financial incentives for the parties to attempt mediation and publishing performance measurement reports on local commercial courts. DB2019 Protecting Minority Investors: Uzbekistan strengthened minority investor protections by clarifying the ownership and control structures of listed companies. Paying Taxes: Uzbekistan made paying taxes less costly by introducing new classification criteria for enterprises. The new classification allows small enterprises to pay a single social contribution at a fixed rate, but not less than 65% of the minimum wage for each employee. Trading across Borders: Uzbekistan made trading across borders faster by introducing an electronic application and payment system for several export certificates, reducing the time for export documentary compliance. DB2018 Starting a Business: Uzbekistan made starting a business easier by rolling out a new platform for business registration, starting with name verification as the first step. Dealing with Construction Permits: Uzbekistan made dealing with construction permits easier by streamlining the process of obtaining approvals of land plot allocations from various agencies. Getting Electricity: Uzbekistan streamlined the process of obtaining an electricity connection by introducing a turnkey service at the utility that fulfills all connection- related services, including the design and completion of the external connection. Protecting Minority Investors: Uzbekistan strengthened minority investor protections by increasing corporate transparency requirements. Paying Taxes: Uzbekistan made paying taxes easier and less costly by introducing an electronic system for filing and paying VAT, land tax, unified social payments, CIT, infrastructure development tax, environmental tax, personal pension fund contributions and cumulative pension contributions. On the other hand, land tax rates were increased. DB2017 Registering Property: Uzbekistan made transferring a property easier by increasing transparency of information. Protecting Minority Investors: Uzbekistan strengthened minority investor protections by clarifying ownership and control structures. Paying Taxes: Uzbekistan made paying taxes less costly by reducing the unified social payment rate paid by employers and the corporate income tax rate. However, the land tax rates in city of Tashkent increased. DB2016 Starting a Business: Uzbekistan made starting a business easier by introducing an online one-stop shop and streamlining registration procedures. Registering Property: Uzbekistan made transferring property easier by eliminating the requirement to provide several different nonencumbrance certificates, though it also increased the costs associated with property transfers. Getting Credit: Uzbekistan improved access to credit by adopting new laws on secured transactions that allow a general description of assets granted as collateral and establish a modern, unified, notice-based collateral registry. DB2015 Protecting Minority Investors: Uzbekistan strengthened minority investor protections by introducing a requirement for public joint stock companies to disclose information about related-party transactions in their annual report; setting higher standards for disclosure of such transactions to the board of directors; and establishing the right of shareholders to receive all documents related to such transactions. Trading across Borders: Uzbekistan made trading across borders easier by reducing the number of documents to export and import and by making it possible to submit documents electronically. Page 66 Doing Business 2020 Uzbekistan DB2014 Starting a Business: Uzbekistan made starting a business easier by abolishing the paid-in minimum capital requirement and by eliminating the requirement to have signature samples notarized before opening a bank account. Registering Property: Uzbekistan made transferring property easier by reducing the notary fees. Getting Credit: Uzbekistan improved access to credit information by expanding the scope of credit information and requiring that more than 2 years of historical data be collected and distributed. Paying Taxes: Uzbekistan made paying taxes easier for companies by eliminating some small taxes. Trading across Borders: Uzbekistan made trading across borders easier by eliminating the need to register import contracts with customs, tightening the time limits for banks to register export or import contracts and reducing the number of export documents required. Enforcing Contracts: Uzbekistan made enforcing contracts easier by introducing an electronic filing system for court users. DB2013 Starting a Business: Uzbekistan made starting a business easier by introducing an online facility for name reservation and eliminating the fee to open a bank account for small businesses. Getting Credit: Uzbekistan improved access to credit information by guaranteeing borrowers’ right to inspect their personal data. Trading across Borders: Uzbekistan reduced the time to export by introducing a single window for customs clearance and reduced the number of documents needed for each import transaction. Resolving Insolvency: Uzbekistan strengthened its insolvency process by introducing new time limits for insolvency proceedings and new time limits and procedures for the second auction and by making it possible for businesses to continue operating throughout the liquidation proceeding. DB2012 Starting a Business: Uzbekistan made starting a business easier by reducing the minimum capital requirement, eliminating 1 procedure and reducing the cost of registration. DB2011 Dealing with Construction Permits: Uzbekistan increased all fees for procedures relating to construction permits. DB2010 Dealing with Construction Permits: Uzbekistan made dealing with construction permits less costly by reducing the building permit fees. Paying Taxes: Uzbekistan made paying taxes easier for companies through a new tax code combining corporate income tax provisions. DB2009 Getting Credit: In Uzbekistan a private credit bureau (Inter Bank Kredit Bureau) started collecting information on the repayment patterns of individual borrowers as well as firms. DB2008 Starting a Business: Uzbekistan made starting a business easier by eliminating the requirement for substantive review at the registry, simplifying internal procedures and clarifying rules for refusal of registration. Registering Property: Uzbekistan made registering property easier and less costly by introducing a formula for calculating the fee to notarize a property sale agreement that takes into account the minimum wage. Paying Taxes: Uzbekistan made paying taxes easier and less costly for companies by abolishing the ecology tax, reducing the number of payments required for the corporate income tax and reducing the corporate income tax rate and the unified social payment rate. Resolving Insolvency: Uzbekistan made resolving insolvency easier by adopting legislation on the voluntary liquidation of private companies. Page 67 Doing Business 2020 Uzbekistan Page 68