Uzbekistan’s President Shavkat Mirziyoyev signed a decree aimed at enhancing the protection of entrepreneurs' rights and safeguarding their legitimate interests, on November 14. The decree, which is set to take effect on January 1, 2025, outlines important changes to the country’s regulatory landscape, including the cancellation of fines for unregistered business activities and the implementation of new inspection protocols. The decree, published in the official Lex.uz database, introduces reforms designed to streamline business operations and reduce bureaucratic burdens on entrepreneurs while ensuring compliance with national laws.
Key Provisions of the Decree
One of the major elements of the decree is the cancellation of fines for individuals engaging in business without registering as individual entrepreneurs. This marks a pivotal shift in the country's approach to regulating business activities, as it aims to encourage formal registration and reduce unnecessary penalties for small-scale operators who may have previously faced disproportionate fines.
In addition, the decree eliminates administrative liability for several specific infractions, such as:
- Violations in displaying fiscal marks,
- Non-compliance with the rules for the digital marking of goods, and
- Concealment of the number of employees.
These changes aim to ease the regulatory burden on businesses and provide a clearer framework for compliance, especially for small and medium enterprises that might struggle with complex regulatory requirements.
Overhaul of Inspection Processes
The decree also introduces reforms to the process of business inspections, with the overarching goal of reducing unnecessary inspections and focusing regulatory efforts on higher-risk enterprises. As part of these reforms, a list of 41 government agencies has been approved, outlining which entities have the authority to conduct inspections on businesses. This change limits the scope of inspection powers and ensures that only those agencies directly involved in oversight can engage in regulatory measures. It also prohibits organizations not on the list from carrying out control measures, reinforcing the idea that inspections should be focused and relevant to the business operations in question.
To further improve transparency and fairness, all business inspections will now be conducted with prior notification to the Business Ombudsman and registration in the Unified State Control system. This system aims to provide greater oversight of inspections and ensure that regulatory measures are carried out according to established guidelines. However, exceptions will be made for desk tax audits, which will not require prior notification.
Risk Analysis System and Targeted Inspections
A central feature of the new decree is the introduction of the Risk Analysis system, a regulatory framework that categorizes businesses into three risk levels: low, medium, and high. This system will automatically assess businesses based on their level of compliance and risk for violations. Inspections will not be conducted for businesses categorized as low-risk, which will be subject to fewer interventions by regulatory authorities.
However, inspections for medium and high-risk businesses will continue, with the added provision of preventive measures. This system is designed not only to detect potential violations but also to offer businesses assistance in resolving any deficiencies identified, reducing the likelihood of future non-compliance. The goal is to provide entrepreneurs with the tools and knowledge they need to address issues before they escalate into more significant problems.
Importantly, inspections may still be conducted in cases that involve risks to public health, safety, environmental protection, or the interests of individuals, legal entities, and the state. These inspections can be carried out irrespective of a business’s risk level, ensuring that critical areas of concern are adequately addressed.
To ensure that regulatory authorities are fully equipped to carry out inspections efficiently and effectively, the decree mandates the establishment of refresher courses for employees of regulatory bodies authorized to conduct inspections. These courses will be held by the Office of the Business Ombudsman and will be mandatory for all controllers. Each employee will be required to complete the training at least once every two years, ensuring that those overseeing business compliance are up-to-date with the latest regulatory developments and best practices.
Financial Relief for Entrepreneurs in Legal Disputes
The decree also provides financial relief for entrepreneurs involved in legal disputes. Starting March 1, 2025, citizens and entrepreneurs who reach a settlement agreement in court will be reimbursed a portion of the state fee paid for the consideration of their case. Specifically, 70% of the state fee will be refunded for first-instance court cases, and 30% will be refunded for cases in appeals or cassation. This provision aims to reduce the financial burden on entrepreneurs engaged in the legal process and encourage the use of settlement agreements as an alternative to lengthy court proceedings.
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