THE INVESTORS INDENDING TO PURCHASE THE sTATE-OWNED PROPERTY
This information possesses the recommendation and explanatory character and does not present being the exhaustive one.
Phone Nos for receipt of Consultations: (+998 71) 259 21 79, 259 20 21
Privileges stipulated by the Legislation
In accordance with the various Legislative and Regulatory Acts
In accordance with the Tax code:
Property to be contributed in the capacity of the Investment Obligations in accordance with an Agreement, concluded between an Investor and the State Body Authorized for Management of the State-owned Property, shall not be considered in the capacity of a Profit gained by a Taxpayer (the Clauses 129 and 355).
The followings shall be exempted from the Value Added Tax:
- unless otherwise is stipulated by the Clause 212 of the present Code, the turnover of a sale of the Property to be handed-in in the capacity of the Investment Obligations in accordance with an Agreement, concluded between an Investor and the State Body Authorized for Management of the State-owned Property (the Clause 208);
- imports of the Property to be brought in импортимущества, in the capacity of the Investment Obligations in accordance with an Agreement, concluded between an Investor and the State Body Authorized for Management of the State-owned Property, as well as the raw-material and work pieces (half-finished product,s) for use at the own production process, to be brought-in by the Enterprises with presence the Foreign Investments specializing in manufacture of the Kids’ Footwear (the Clause 211);
- the Property to be brought into the Republic of Uzbekistan for their own Production Process Needs, by the Foreign Investors and the Enterprises with presence the Foreign Investments with a Share of the Foreign Investments in the Charter Fund at size of not less than thirty three percent;
- the Property to be brought-in for Personal Needs of the Foreign Investors and Citizens of the Foreign States, staying in the Republic of Uzbekistan in accordance with the Labor Agreements (Contracts) concluded with the Foreign Investors;
- Goods to be brought-in by the Foreign Legal Entities having performed the Direct Foreign Investments into the Economy of the Republic of Uzbekistan in the total amount of over fifty million US Dollars provided that the Goods to be brought-in present being the Goods of their own manufacture;
- newly created Enterprises with presence the Foreign Investments, in which the contribution of a Foreign Investor in a monetary form constitutes not less than 5 mln. US Dollars, in case of a change in the Tax Legislation, are entitled to apply, within a ten years’ period since a date of their State Registration, the Norms and Provisions on the Taxes’ Payment, Social Payments, as well as Compulsory Allocations, such as those meant for the Republican Highways’ Fund and the Fund of Reconstruction of Educational and Medical Institutions, which were in force by a date of their State Registration;
- within a framework if the Investment Project with the cost of over 5 mln. US Dollars and the Share of a Foreign Investor being at size of not less than 50 percent, construction of the needed External Engineering and Communication Networks shall be performed at the expense of the State Budget and other Internal Financing Sources;
- setting by the State Bodies and Commercial Banks of the additional Requirements and Limitations related to the Activity of the Foreign Investors is strictly prohibited;
- upon applications made by the Foreign Investors on creation of the Enterprises with presence the Foreign Investments, the Low-Liquid Facilities being on the balance sheets of the Local State Governance Bodies are to be sold at a “Zero” Purchase Price without conduct of a Competitive Bidding, in way of conclusion of the Direct Agreements with an Investor in return for the Investment Obligations;
- simplification of the entry visas regime for the workers of the Foreign companies participating in implementation of the Investment Projects (formalizing the entry visas and multiple entry visas for the 12 months’ period);
- simplification of the access to the Economical Information neededу for implementation of the Investment Activity, including data on the State Budget and its execution, money-and-credit policies, external trade indices and other kinds of Information.
In accordance with the Law of the Republic of Uzbekistan “On the Customs Tariffs”:
The followings shall be exempted from imposition of the Customs Duty:
At performance of the Republic of Uzbekistan’s External Trade Policies within the limits of its Customs’ Territory,
It is allowed to grant Tariff Privileges in form of return of a previously paid Customs’ Duty, reduction of a Duty’s Rate and exemption, in exclusive cases, from a Duty in respect of Goods to brought-in in the capacity of a contribution into the Charter Funds of the Enterprises with presence the Foreign Investments and the Foreign Enterprises as well as the separate kinds of Goods of their own manufacture to be exported by these Enterprises in cases stipulated by the Product Share Agreements, in accordance with the Legislation (Clause 35).
In accordance with the Decree by President of the Republic of Uzbekistan dated April 10, 2012 No 4434:
See at the text of the Decree, the List of Economic Branches and Territories related to which these privileges are applied.
In accordance with Provisionson Order of Sale on the Competitive Bidding basis to Investors of the State-owned Low-Profit, Unprofitable, Economically Unsustainable Facilities at a “Zero” Purchase Price with the Term of Undertaking of the Investment and Social Obligations by an Investor, approved by the Resolution of the Cabinet of Ministers dated August 26, 2003 No 368, after formalization of an Agreement on Sale to the Investors of the State-owned Facilities at a “Zero” Purchase Price in return for the Investment Obligations, the write-off of the bad debts of those Enterprises for the past years related to payments to be made into the State Budget and Off-Budget Funds including the fines and penalties accrued for them.
The Announcement on Conduct of a Competitive Bidding for Sale of a State-owned Facility to be sold at a “Zero” Purchase Price (further referred to as “the Facility”) shall be published at mass media not less than two months prior to conduct of a Competitive Bidding.
Sales of the Facilities shall be performed on basis of the decisions adopted by the Territorial Competitive Bidding Commissions (with exclusion of the Facilities subject to Sale by the State Commission on Conduct of the Tender Sales at Sale of the State-owned Property to Foreign Investors) in accordance with the Provisions approved by the Resolution of the Cabinet of Ministers dated August 26, 2003 No 368.
All Legal Entities and Natural Persons, including non-residents of the Republic Uzbekistan having expressed their wish, shall be allowed to participate in a Competitive Bidding.
For participation in a Competitive Bidding an Investor, not later than three days prior to a date of conduct of a Competitive Bidding, announced in advance at the mass media, presents its / his / her Competitive Bidding Proposal sealed at an envelope for consideration by a Territorial Competitive Bidding Commission.
A Competitive Bidding Proposal shall contain a Business Plan, an Investment Program (a draft) with indication of periods of its fulfillment, deliveries of the machinery / equipment (if such is stipulated), its technological [parameters], planned assortment of the product to be manufactured and their competitiveness, raw-material, measures aimed at rise of effectiveness of a production process, use of existent equipment and production areas, expected economic effect as well as other obligations and plans of an Investor for financial and economical rehabilitation of a Facility subject to a Sale and restoration of economical use of its territory.
Upon Applications presented by Foreign Investors on creation of Enterprises with the Foreign Investments, the Low-Liquid Facilities, being on a balance sheet of the Local Governance Bodies, shall be sold at a “Zero” Purchase Price without conduct of a Competitive Bidding in way of conclusion of a direct Agreement with an Investor under the condition of its / his / her undertaking the Investment Obligations.
In accordance with the Resolutions of the Cabinet of Ministers of the Republic of Uzbekistan dated August 26, 2003 No 368 an dated January 27, 2009 No 27 and Terms of an Agreement, an Investor shall quarterly present to the Seller the Information on the course of Fulfillment of the Investment Obligations.
The written Information on Fulfillment of the Investment Obligations shall be presented by a Buyer to the Seller within the periods (at the dates) set by an Agreement.
An Investor opens, in the established order a Special Bank Account for Accumulation of the Cash Means to be used for Fulfillment of the Investment Obligations.
An Investor is entitled, with the aim to provide fulfillment of the Investment Obligations, to create a Legal Entity to whom the Rights for a Facility are to be transferred and on the balance sheet of which the fulfillment of the Investment Obligations shall be recorded.
Fulfillment of the Investment Obligations shall be recorded upon a date of arrival of the Investments into a Facility Intended for Investments, their acceptance (taking into account) onto the balance sheet of an Investor (Issuer). In case if an Investor has created a Legal Entity, then a date of fulfillment of the Investment Obligations shall be recognized being a date of their arrival (taking into account) onto the balance sheet of that created Legal Entity.
Prior to a moment of the complete fulfillment of the Investment Obligations, an Investor is obliged to get agreed the following issues with the Seller:
- conclusion of deals related to Sales of Property, the cost of which exceeds 25 percent of the book value of a Facility sold to it / him / her;
- entry of amendments into the Foundation Documents of an Enterprise related to the change of the Founders’ composition.
- copies of the Payment Orders, Customs Cargo Declarations, Statements on Collations Performed, Statements on the Works Performed, Acceptance Reports, Equipment Installation Reports, Statements on the Launch into Operation of the Equipment with indication of its technical status, Information on Status of Implementation of the Investment Program (Project), including the financial and economical data forecasted by it for a date of presentation of the Report;
- data on financial and economical status of a Facility prior to its Sale and by a moment of presentation of the Report.
The Ownership Right for a Facility shall be transferred to an Investor after the complete fulfillment of the Investment Obligations in accordance with the Terms of an Agreement and presentation to the Seller of a Report on Fulfillment of the Investment Obligations as well as issue of the State Order or a Certificate (or entry of the appropriate note into it).
A Report on Fulfillment of the Investment Obligations shall contain:
At handing-in of the Fulfilled Investment Obligations, an Investor also presents the Reports of independent Auditing and Appraisal Organizations.
An auditing Organization, at preparation of a Report on the Fulfilled Investment Obligations shall follow the requirements of National Standard of the Auditing Activity No 80 “The Auditor’s Report upon the results of an Inspection performed on a Specific Issue”.
The Auditor’s Report on a Specific Issue shall contain, in addition, the Analytical Part with the List of Procedures performed by an Auditor in course of an Inspection done on a Specific Issue and the Opinion of an Auditing Organization on the results of that Inspection.
The Investment Obligations shall be undertaken by a Buyer in accordance with an Agreement on Sale-Purchase of the Sate-owned Property and performed in ways of:
- contribution of the Cash Means, as well as Re-Investment of the Profit Gained as a Result of an Investor’s Activity, including Dividends accrued onto its / his / her Share;
- supplies of the Raw-Materials and Materials, Equipment, Spare Parts and Components for Modernization, Technical and Technological Re-Equipment of the Production Processes;
- performance of the Construction and Installation Works;
- performance of Reconstruction of the Production Processes;
- complete or partial Repayment of an Enterprise’s Debts against the State Budget, State Targeted Funds, Loans and other Liabilities;
- adoption of manufacture of a certain type of a Product, Work and Service;
- introduction of a “Know-How”, other kinds of the Intellectual Property;
- expenses related to the Personnel’s Training and Re-Training;
- in other forms not contradicting the legislation.
The Investment and other Obligations of a Buyer related to a State-owned Asset being purchased, shall possess the their Implementation Dates, and the Investment Obligations – also the Cost Value, which shall be defined in accordance with the legislation.
The Implemented Investment Obligations are recommended to be reflected at a Buyer’s Balance Sheet at the Accounts of the Long-Term Assets (Account of Record of the Main Assets No 0100), the Accounts of Record of the Intangible Assets (No 0400), the Accounts of Record of the Equipment Subject to Installation (No 0700), the Account of Record of the Capital Contributions (No 0800).
After acceptance of the Fulfilled Investment Obligations and receipt of the Documents confirming the Ownership Rights, the Investments performed by a Buyer shall be transferred into the Main Assets and further be accounted as a Property Complex.
Acceptance of the Investment Obligations Fulfilled by a Buyer shall be performed in accordance with a periodicity stipulated at an Agreement, but not less than once in a year.
Acceptance of the Investment Obligations Fulfilled by a Buyer shall be performed by the Seller based on a written information of a Buyer on Fulfillment of the Investment Obligations. At that the Acceptance of the Ful filled Investment Obligations in their Complete Volume, shall be performed within a period not exceeding the two months since a date of receipt of a Buyer’s written information on Completion of Fulfillment of the said Investment Obligations.
With the aim to perform Acceptance of the Fulfilled Investment Obligations, the Seller creates a Commission on Acceptance of the Fulfilled Investment Obligations (further referred to as “the Commission”).
The Commission, within a period of the two weeks studies the documents confirming the Fulfillment of the Investment Obligations, presented by a Buyer and a Facility Intended for Investments, with taking into account of a Expert Conclusion on Conformity of the Contributed Investments to the Terms of an Agreement. In case of a need, the Commission visits a Facility Intended for Investments.
Upon the results of its work, the Commission adopts a motivated decision on recognition of the Investment Obligations as Fulfilled or Not Fulfilled.
In case if the Commission of recognizes the Investment Obligations as Fulfilled in their Complete Volume, the Seller adopts a decision on handing-in to a Buyer the Right of Disposal in respect of the State-owned Assets purchased by it / him / her.
In case if the Commission of recognizes the Investment Obligations as Non-Fulfilled, the Seller adopts a decision in accordance with the Agreement.
The Seller within a period of five working days informs a Buyer and a Facility Intended for Investments on its decision.
Entry into the Ownership Rights related to a Divested (Privatized) Government Property shall be effected since a moment of receipt by a new Owner (Owners) of a Certificate on the Ownership Right issued by the State Competition Committee.
A Certificate on the Ownership Right shall be issued within a period of not more than five days to an Investor having acquired a Facility at a “Zero” Purchase Price – after Fulfillment of the Undertaken Investment Obligations stipulating Modernization, Technical and Technological Re-Equipment fo an Enterprise and start-up of Manufacture of a Competitive Product and (or) Render of a Services.
Transfer of the Right for Ownership and Disposal of a Facility to a new Owner shall be performed by its Book (Residual) Value.
The Ownership Right of an Investor for a Land-Lot occupied by a Facility, shall be regulated by the Land Code of the Republic of Uzbekistan and other Legal Acts. Formalization of the Right for Ownership and Disposal of a Facility and a Land-Lot attached to it shall be performed at the Bodies of the State Committee for the Land, Geo and Cadastre.
In case of presence within a Facility of the Material Resources of the State Strategic Reserve and the Civil Defense Facilities, an Investor shall provide execution of the requirements of the Instruction “On the Order of Settlement of Accounts for Products and Goods of the State Reserve” registered by the Ministry of Justice of the Republic of Uzbekistan at a date of April 2, 1997 under the No 319.
A Sale-Prchase Agreement may stipulate preservation for a certain period of the Main Activity Profile of a Facility.
- At Non-Fulfillment or Undue Fulfillment of the Contractual and the Investment Obligations, the Seller sends to an Investor an Official Statement on the Non-Fulfillment of the Terms of an Agreement.
- For the Untimely (Belated) Fulfillment of the Investment Obligations, the Seller retains from an Investor a Fine in accordance with the Terms of an Agreement .
- If a Buyer, within a period of three months after expiry of a period stipulated by the Agreement, has not provided the contribution of the regular portion of the Investment Obligations stipulated by the Agreement, the Seller initiates Termination of the Agreement in the established order.
- A Size and the Order of a Forfeit, as well as the Terms of Termination of the Agreement and Responsibilities of the Parties, shall be indicated at the Agreement.