Laws of the Republic of Uzbekistan
Law on modifications and amendments to be made to the Law “On Joint Stock Companies and Protection of Stockholders' Rights” was adopted on December 21, 2007  (# 3 RU-135).

The Law inserts a number of modifications and amendments into the previously adopted Law of the Republic of Uzbekistan “On Joint Stock Companies and Protection of Stockholders' Rights” (April 26, 1996, #223-1).

For example, Article 24 is supplemented with Article 24.1 Golden Share, which should be read as follows:
“Golden Share” means a special right of the State to participate in management of certain joint stock companies; such right shall be introduced by the decision of the government of the Republic of Uzbekistan in order to protect economic interests of the country when the state-owned enterprises are privatized or when the state-owned shares of the strategically important joint stock companies are sold to private owners.
“Golden Share” has no value, it is not subject to alienation and pledging, and it is not accounted when the charter capital size is defined and dividends are calculated.
“Golden Share” may be introduced at the joint stock companies where the state- owned share does not exist at all or does not exceed twenty five per cent of the amount of charter capital. The Cabinet of Ministers of the Republic of Uzbekistan shall establish a procedure by which the State will use the “Golden Share.
“Golden Share” shall be realized by appointment of the State representative to the supervisory council of a joint stock company (hereinafter referred to as the State representative). The State representative shall participate, without fail,  in the shareholders' general assemblies and supervisory council meetings and be entitled to veto decisions on the issues specified in paragraphs two-four, seven, eight, eighteen of Part One, Article 65 and in paragraph seven, twenty four of Part One, Article 82 of the Law. Veto rule shall be executed in writing, on the date when such decisions are taken”.

Editorial Board Note: Complete text of this Law of the Republic of Uzbekistan (December 21, 2007) will be available at www.norma.uz  site, section “What is New in Legislation”
               
Law of the Republic of Uzbekistan
“On Approval of Tax Code of the Republic of Uzbekistan”
(December 25, 2007, #3-RU-136)
                                              
The Law approves the Tax Code of the Republic of Uzbekistan. At the same time, the Law commits the Cabinet of Ministers in 2008-2009:
- To ensure constant and comprehensive monitoring and analysis of practical effect and efficiency of the norms of the Tax Code of the Republic of Uzbekistan;
- If required, to submit proposals aimed at further improvement of certain norms of the Tax Code of the Republic of Uzbekistan.
The Law becomes effective from January 1, 2008.
          
     
 Editorial Board Notes:
1. E- version of the Tax Code of the Republic of Uzbekistan is available at the Ministry of Finance sites (www.soliq.uz) and www.norma.uz  free access site, section “What is New in Legislation”.
2. Due to the new Tax Code adoption, a new format of tax reports is introduced for all the taxes and compulsory payments.  Detailed comment on the Tax Code of Uzbekistan is presented in the “Tax Alert” section. www.norma.uz

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Resolutions of the President

Cotton Sales According to the World Standards

Resolution of the President of the Republic of Uzbekistan “On Measures for Improvement of Cotton-Fiber Sales to National Users and Development of Textile Industry” was issued on November 21, 2007 (#PP-733). In compliance with the Resolution, from January 1, 2008 all the Republic cotton-fiber processing enterprises, regardless their form of property, shall follow a unified procedure established for the hard currency cotton-fiber purchases through the foreign trade companies of the Ministry for Foreign Economic Relations, Investment and Trade and Uzbek Commodity Exchange; terms and conditions stipulated for such operations are given below: 
- Storage and sales of cotton-fiber for the export purposes and to local users, including enterprises with foreign investment, shall be carried out exclusively from the zonal specialized cotton terminals;
- Final qualitative and quantitative acceptance of cotton-fiber shall be accomplished by foreign and national users, including enterprises, at the zonal specialized cotton terminals;
- Cotton-fiber acquired by the national users, including enterprises with foreign investment, shall be used solely for industrial purposes without any resale right.
Incentives envisaged by item 5 of the Resolution of the Cabinet of Ministers (March 25, 2004, #141) shall be extended until January 1, 2011;  these incentives specify acquisition of textile semis (yarn, fabrics, stockinet and cotton-spinning wastes) by the enterprises at the internal market, at the prices no lower than the world ones which are  valid at the moment of conclusion of a contract; such acquisition shall be executed in hard currency (with the VAT zero rate), by a permit to be issued by “Uzbekyengilsanoat” SJSC, and 80 per cent of products to be manufactured from the said semis shall be used for export.
It is stated that the Republic textile industry enterprises shall be exempted from the property tax until January 1, 2011 in the case they sell 80 per cent or more of their production volume, including semis, on the hard currency basis.

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Reforms in Banking System

Resolution of the President “On Measure for Further Development of Banking System and Attraction of Disposable Cash Assets for Bank Transactions” (November 7, 2007, #PP-726) approves the Program for Intensified Reforming and Development of the Banking System of the Republic of Uzbekistan in 2007-2010. Also, a package of measures is approved in order to attract disposable cash assets for the bank transactions and provide the cashless settlements' growth.
The minimum size of the charter capital is defined for the newly established banks (January 1, 2008). Thus, it will make € 5 mln in its soum equivalent for commercial banks and € 2,5 mln in its soum equivalent  for private banks.
Commercial banks licensed for the banking activity shall be in power to conduct their professional activity at the equity market as investment mediators, investment assets managers and investment consultants.   At the same time, it is not required for the banks to obtain a separate license for conducting the mentioned types of activity.    

By the Resolution as of January 1, 2008, interest yields, obtained by legal entities from placement of such yields in deposits or bonds (promissory notes) of commercial banks, shall be tax exempted for 3 years, if such placement exceeds a one year term; the Republic encashment association shall be exempted from VAT and property tax for 3 years, and the released funds should be directed for strengthening of material and technical basis of the encashment service.             

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Forecast for Basic Macroeconomic Indexes

Resolution of the President of the Republic of Uzbekistan “On Forecast for Basic Macroeconomic Indexes and Parameters of the State Budget of the Republic of Uzbekistan” (December 12, 2007, #PP-744) approves the 2008 tax rates for:

- Profit of legal entities;
- Income of natural persons;
- Single tax payment;
- Fixed tax for legal entities and natural persons, by particular types of entrepreneurship;
- Fixed tax for natural persons engaged in entrepreneurship operations without formation of a legal entity (individual entrepreneurs);
- Tax on income being paid to the residents of the Republic of Uzbekistan in the form of a dividend and interest, at the rate of 10 per cent; 
- Value added tax, at the rate of 20 per cent;
- Excise tax on goods being manufactured in the Republic and imported from the outside;
- Water tax;
- Natural resources tax;
- Surplus profit tax, by particular types of products;
- Property tax for legal entities and natural persons;
- Land tax for legal entities and natural persons;
- Single land tax;
- Local taxes and dues;
- Compulsory contributions and dues to the Republic Road Fund;
- Compulsory contributions to the non-budget Pension Fund and non-budget School Education Fund, at the rate of one per cent for the established subjects of taxation;
- Single social payment, at the rate of 24 per cent; funds should be distributed between the non- budget Pension Fund, State Employment Fund and Trade Union Federation Council;

 
The Resolution establishes that:
- From January 1, 2008, the procedure for payment of customs dues envisaged for the legal entities shall be applicable to the natural persons participating in foreign economic activity;
- Amount of foreign credits to be attracted on behalf or under guarantee of the Government of the Republic of Uzbekistan in 2008 shall not exceed the amount of the credit-related principal debt redemption to be paid in 2007.
The Resolution formulates particular tasks for ministries and agencies of the Republic aimed at implementation of the related items specified by the Resolution.

Editorial Board Note: Detailed continent on the Resolution is presented in the “Tax Alert” section. www.norina.ru

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Customs Preferences

The Cabinet of Ministers of the Republic of Uzbekistan adopted the Resolution “On Application of Customs Preferences to Property Imported by Foreign Investors to the Republic of Uzbekistan for Their Production Needs” (December 6, 2007, #249). In order to regulate application of preferences envisaged by the law for foreign investors when they deliver modem technologies and equipment, raw materials and components to the Republic of Uzbekistan and use them for their own production needs, the Cabinet of Ministers takes into consideration that, in compliance with the Law of the Republic of Uzbekistan “On Customs Tariff’ and Law of the Republic of Uzbekistan “On Foreign Investment”, property being imported by foreign investors to the Republic of Uzbekistan for their own production needs shall not be subjected to the customs duty, and foreign investors, as a rule, operate in the Republic of Uzbekistan by means of the enterprises with foreign investment.
The Resolution envisages that the customs duty exemption preferences shall be applicable not only to the property being imported by foreign investors for their own needs but to the enterprises with foreign investment respectively.
It is stated that from January 1, 2008 the customs duty exemption preferences shall be applicable not only to the foreign investors’ property being brought in the Republic for their own production needs but also to the enterprises with foreign investments where the foreign investor’s share is no less than 33 per cent.

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(Materialfrom published articles compiled by Uzbek A. Rustamov, General Representative, lnterconcepts Inc. Translation to English: Lyubov Belokon)