Law 49/2012 “On the organisation and functioning of the administrative courts and the adjudication of administrative conflicts”
This law was published in accordance with articles 81(2)(a), 83(1) and 135(2) of the Constitution of the Republic of Albania, following a proposal of the Council of Ministers. Administrative courts are organised in three instances: (i) the administrative courts of first instance which shall equate in number and territorial division with the appellate civil courts, (ii) the appellate administrative court which shall be set up at least in Tirana, and (iii) the Administrative Collegiate High Court.
Additionally, this special law covers the entire organisational and operative profile of the conduction of administrative trials by establishing mandatory rules for all the three trial instances concerning (i) the legal status of judges serving in such courts and their professional selective criteria, (ii) courts of jurisdiction and competence, (iii) principles and procedures of administrative trials, litigants and third parties involved in the process and finally, (iv) the execution of administrative final judgments.
The Albanian High Council of Justice is empowered hereby to adopt detailed regulation on the selective criteria for judges serving in the first and second instance; whereas, the Ministry of Justice shall set up and organize administrative courts within three months as of the entering into force date of this law, namely, after 15 days as of the publication in the Official Gazette. Nonetheless, it is set forth herein that administrative courts activity will commence after the Council of Ministers adopts the necessary measures to amend Law No. 8588, dated 15.3.2000 “On the organisation and operation of the High Court”, so as to prepare the legal basis for setting up the Administrative Collegiate; as well as builds the adequate infrastructure for a normal conduction of the administrative courts activity.
The registration of immovable property
Decisions No. 375 and 376 of the Council of Ministers, dated 6.6.2012
Decision No. 375 of the Council of Ministers regulates the creation, registration, functioning, cooperation and safety of the registration system of immovable property (ALBSRP).
Decision No. 376 regulates the procedure of obtaining documents by the offices of registration of immovable property. In this regard, services are offered at the request of the relevant person or his representative, as well as the notary or the notary’s assistant while disclosing their respective identification data.
The return and compensation of properties
Law No. 55/2012, “On some changes and additions to Law No. 9235, date 29.7.2004 ‘On the return and compensation of property’, as amended.”
The law states that its “International standards of evaluation” shall be the standards approved by the International Organisation of the Evaluators of Immovable Properties. Regarding the evaluation of the property, the value of the property subject to compensation is determined based on the market price, type of property and the purpose of its usage, in accordance with international standards of the evaluation of immovable property.
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Lands and the buildings shall be submitted to the process of property evaluation. The category of ‘land’ includes agricultural land, forests, meadows and pastures, unfruitful lands and all terrains, despite their width and purpose of use, whether public or private; whereas, category of buildings shall include buildings and engineering structures. The methodology for the evaluation of the property shall be approved via a decision of the Council of Ministers.
The usage of the one-stop-shop system for notaries
Order No. 248 of the Minister of Justice, dated 7.6.2012 and order 248/4 of the Minister of Justice, dated 22.6.2012
The One Stop Shop-Notary System (OSS) offers an online interaction between notary offices and Immoveable Property Registration Office (IPRO) with the scope of securing updated information on the legal status of proprietary rights on immoveable properties, as well as submitting online requests for registering the notary act and obtaining the registration service online. Additionally, this regulation provides the modalities, procedures and conditions for using the One Stop Shop-Notary System electronic system by establishing the rights and obligations of its users, account operator, IPRO, system manager, reporters and employees of the IPRO. In particular, notary informs the IPRO on the value of the contract, with the purpose of calculating the income tax on ownership transfer payable by the individual who transfers the ownership title on the immovable property at notary’s account. This regulation is implemented on a limited territorial area, namely, Tirana and Durres and it is applied on notary offices and IPROs operating therein.
Money laundering and terrorism financing
Law No. 66/2012, dated 7.6.2012 “On some changes and additions to Law No. 9917, dated 19.5.2008 “On the prevention of money laundering and terrorism financing, as amended”
This amendment gives specific definitions to “negotiable instruments of the holder”, “politically exposed persons”, including their family members or persons connected due to personal, work or business relationships, except the low or mid – level employees as per the definitions of the civil service legislation, as well as individuals who held or actually holds important functions in a foreign government or state, “proper awareness” which means the measures that subjects must apply in order to fully identify and verify their clients, the final beneficiary owner, the ownership and control structures regarding legal persons and legal organisations, the nature and purpose of the relationship or the transaction, etc., “transit accounts”, “legal organisations” (etc.).
Such amendment introduces the concept of “additional awareness” which includes additional measures of those applied in “proper awareness” procedure and it is applied in high risk business relationships, clients or transactions.
Rules for the registration of sale contracts, the registration of immovable properties and the
registration of legal ownership changes
Guidance of the Council of Ministers “On the definition of the elements of acts which are verified by the Immovable Property Registration Office and the procedure regarding the publication of the Registrar Order”
The object of this Guidance is the definition of detailed rules for the registration of sale contracts regarding immovable properties, the registration of immovable properties obtained via an acquisitive prescription, and also the registration of the passing of ownership via law, court decision or an administrative act. The registration of the gaining or passing of the right of ownership regarding
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immovable properties which have been recognised or obtained via law, court decision or an administrative act shall be made by the immovable property registration offices after the full verification of the elements of the act, which recognises or contains the gaining of the right of ownership in order to fulfill the conditions of registration defined in Article 193 of the Civil Code (as defined in the Articles 44 and 45 of the Law No. 33/12, dated 21.3.2012 “On the registration of immovable properties”).
The organisation and functioning of the public administration
Law No. 90/2012, dated 27.9.2012 “On the organisation and functioning of the public administration”
This law defines that its purpose is the creation of a single legal body regarding the organisation and the functioning of public administration under the responsibility of the Council of Ministers via the definition of the criteria for the creation and functioning of the public institutions. The law excludes the public university institutions, the diplomatic representations abroad and the Armed Forces from its field of action. It also states that the Prime Minister and the Ministers are the high organs of the public administration. They lead and supervise the public administration regarding the respective areas of public activity. According to this law, the public administration includes these institutions: a) The Prime Ministry; b) the ministries; c) the institutions which depend on the Prime Minister or the Ministers; d) the units which directly offer services; e) the autonomous agencies; f) the prefect’s administration. The Ministries and the institutions which depend on them may have territorial branches, in accordance with this law, while the organisation and the functioning of the Prime Ministry shall be regulated via special legislation. This law also states that the public administration includes the organisational and professional apparatus which serves impartially to the public interest, while applying the legislation in force, conducting public services, and also creating and applying the general public policies. These functions are called “administrative functions”. According to this law, the public administration has public legal personality and is composed by hierarchically organised structures. The Administrative Procedures Code and the sector laws shall regulate the relationships between the private persons and the public administration regarding the conduct of administrative functions and the decision – making regarding the legitimate rights and interests of these persons.
The Court system of the Republic of Albania
Decree of the President of the Republic of Albania No. 7818, “On the definition of the number of judges regarding every First Level, Appeal and Administrative Court, the definition of territorial competences and the definition of the headquarters of the Administrative Courts”.
This Decree of the President of the Republic of Albania, Mr. Bujar Nishani defines the number of judges regarding every First Level Appeal and Administrative Court in the Republic of Albania, and also the territorial competences and the headquarters of the Administrative Courts. This Decree has brought the Decree of the President of the Republic of Albania No. 6265, dated 16.09.2009 out of force.
The registration of immovable property
Decision No. 745 of the Council of Ministers, dated 24.10.2012 “On the procedures of the registration of
immovable property, for which the legal ownership documents are possessed, but whose surface has not
been defined”
This Decision of the Council of Ministers has as its object the definition of the registration procedures
regarding immovable property, for which the legal ownership documents are possessed, but whose
surface has not been defined. It states among other things that the immovable properties whose surface
has not been defined, which are geographically located in cadastral areas for which procedure of the
initial registration of properties has not ended or is currently under way in the moment of this Decision’s
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coming into force, can not be registered in the Kartela and the cadastral map in the name of the owner,
without the procedure of their registration (defined in this Decision) being held first.
The immovable properties which in the moment of this Decision’s coming into force are geographically
located in those cadastral areas for which the initial registration has concluded, during which their
surface and geographical position have been defined from the field measurements and the properties
have been registered in the Kartela and the cadastral map in the name of the owner, shall be considered
as if their surface has been defined, without an initial procedure being necessary, in accordance with
Article 25 of the law 33/2012 “On immovable properties’ registration”, with the condition that no
unsolved claims exist regarding the positioning of the property, its borders and its surface during the
period of public presentation.
This Decision also states that the registration of the immovable properties defined by this Decision shall
be made via a request of the interested persons, who must prove their ownership rights within the
meaning of the Article 193 of the Civil Code of the Republic of Albania, presenting to the Notary Public
a number of documents which have been defined in paragraph 4 of the aforementioned Decision.
Public procurement and its procedures
Law 131/2012, dated 27.12.2012 “On some additions and amendments in the Law No. 9643, dated 20.11.2006 ‘On public procurement’, as amended”
This law has partially implemented Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts and Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts. The aforementioned law defines the concept of “request for proposal”, states the obligation of the contracting authority to keep full records and documentation regarding the procedures followed for the definition of the contract’s winner, and also defines the types of data that the records must contain in each procurement procedure, among other things.
Regarding the tender documents, the Law provides that the contracting authority shall use the standard documents during the preparation of the tender documents, following the definitions made in the procurement rules, and makes them available via electronic means. The contracting authority shall provide the tender documents to the interested parties against payment, when this is required by the economic operators. In any case, the names and the number of economic operators which have expressed an interest for the purchase or assessment of the tender documentation must be kept secret.
The aforementioned law also provides regarding the procedure of the presentation of the offers, and the elements that the notice regarding the tender’s winner must contain. Furthermore, this law contains provisions regarding the complaint procedure for the economic operators and the administrative inquiry procedure.The law also contains provisions regarding administrative offenses, which defines the respective punishment for each administrative offense provided in the law. It is also stated that the interested persons may file a complaint in the respective court, in accordance with the Civil Procedure Code.
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Belarus
Amendments to Civil Code
Belarusian legislators have made extensive amendments into the Civil Code by the Law of the Republic of Belarus No. 388-3 dated 9 July 2012 “On making amendments into the Civil Code . . .” The amendments relate to a wide range of issues. In particular (and naming only the key ones): (i) the period of limitation in respect to claims relating to sale and delivery of low quality goods will be increased from six months to one year; (ii) market participants will be obliged to register some deals regarding trade marks (license agreements, agreements on cession of rights on trademarks, agreements of pledge of property rights, certified by a certificate on a trade mark, as well as changes into registered license agreements, agreements of pledge of property rights, certified by a certificate on a trademark) in the National Centre of Intellectual Property of the Republic of Belarus; and (iii) a Belarusian court will be given the right to decrease the amount of default interest contested by the debtor if the court determines that such amount is obviously disproportionate to consequences of default, provided that the decreased amount of default interest will not be less than the interest calculated in accordance with refinancing rate of the National Bank. The amendments will come into legal force in January 2013.
New Bankruptcy Law
New Law “On economic insolvency (bankruptcy)” (the “Law”) was adopted on 13 July 2012 to provide systematic (unified) regulation in the area of economic insolvency (bankruptcy). All the previously existing norms of legislative acts relating to insolvency have been unified under the Law. The main objectives of the Law are to ensure a fair settlement with creditors and preservation of companies as property complexes, reduction of terms for procedures of economic insolvency and related expenses; topromote transparency in judicial review of cases on economic insolvency (bankruptcy). Among other things, the Law establishes a Unified State Bankruptcy Data Register, as well as the grounds for recognition of an individual entrepreneur as a bankrupt. It is expected that the Law, that is to come into force on January 25, 2013, can simplify and otherwise improve the currently existing long procedures and better securing the rights and interests of parties involved.
Amendments to the Bank Code
On 13 July 2012, the Law “On making amendments and alterations to the Bank Code of theRepublic of Belarus” (the “Law”) was adopted to fill in some of the gaps in banking and currency regulation. In particular, the Law imposes on the National Bank of the Republic of Belarus a new responsibility to monitor the financial stability of financial intermediaries, financial markets and payment system as a whole. Earlier, only banks and non-bank financial institutions were subject to such monitoring. Also, in order to promote further liberalisation of economic relations, the Law has simplified state registration and licensing of banks. It is assumed that the banks can be created only in the form of joint stock companies, and also strict requirements for corporate governance, risk management, internal control and auditing of given entities were established. Furthermore, the Law defined the concepts of “electronic money” and “refinancing rate” which, particularly in respect of the latter, is very important as the refinancing rate is widely used in commercial activities of all economic entities, being in most cases the basis of calculation of various penalties and the like. The amendments are hoped to improve transparency and predictability of relations between banks and their clients.
New Procurement Law
On 21 July 2012, the President of the Republic of Belarus signed the Law “On government procurements of goods (activities, services)” (the “Law”), which defines a single procedure for government procurement of goods and services (hereinafter - the “public procurement” or
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“procurement”) in all industries. The Law brings Belarusian legislation in line with the Agreement on the government (municipal) procurement, signed on 9 December 2010 during the formation of the Common Economic Space of Belarus, Russia and Kazakhstan. The Law concerns businesses and organisations that use the funds of the state or municipal budgets, as well as the money of budgetary funds as a source of financing purchases. The list of government procurement procedures is determinedin the Law in accordance with the Agreement on the government (municipal) procurement, and includes tenders (open, closed), the procedure for inquiry of price offers, the procedure for single-source procurement, electronic auctions and stock trades. The Law excludes a procedure of application of competitive sheet, existing in Belarus, as well as procedures that are widely used in construction procurement - trades, simplified trades and negotiations. The Law prescribes a closed tender for government procurements involving state secrets, and an open tender – in all other cases. The criteria for determining the “most advantageous offer” have been modified. Notably, such a criterion as the “offer price” has been given a particular emphasis which, in practice, will mean that the proposal offering the lowest price for goods (activities, services) has the greatest competitive advantage and the other different criteria (time, money, experience) may not essentially influence the decision on selection of the best proposal. Electronic auctions and stock trades will be conducted on the relevant lists of goods (activities, services), approved by the government. Such lists remain to be adopted.
Agreement on Free Trade Zone came into force
The Agreement on free trade zone (the “Agreement”), signed by members of the Commonwealth of Independent States at the end of 2011, came into force on 20 September 2012 in relation to Belarus, Russia, and the Ukraine. The Agreement is aimed at limiting the exceptions from commodity classification of goods to which import duties are applied, as well as at fixing export duties at a certain level. It is believed that the Agreement has replaced more than one hundred of bilateral agreements that were in existence to regulate free trade in the Commonwealth of Independent States. The Agreement prescribes a national treatment for signatories to the Agreement in furtherance of article III of GATT 1994, sets out rules for determining a country of origin, regulates application of special protective, anti-dumping and compensatory measures within mutual trade. At present, the Agreement has been ratified only by parliaments of Belarus, Russia and the Ukraine. It is expected that other participating states –Armenia, Kazakhstan, Kyrgyzstan, Moldavia, Tajikistan – are going to ratify the Agreement within the next few months.
Changes in the Conditions for the Issuance of Foreign Currency Loans
On 18 November 2012, the National Bank of Belarus adopted Regulation No. 577 “On Granting Foreign Currency Loans”, according to which foreign currency loans could be obtained only for foreign trade aims. Belarusian banks have received an explanation letter from the National Bank which noted that for the business needs, not related to export, Belarusian subjects of business activity will still be able to use loans of non-resident bank. Such operations are not limited by the National Bank. There is also no ban on the related loans, issued by Belarusian banks at the expense of non-resident banks, as well as for payments to residents during foreign trade payments using the letter of credit.
The Bulgarian Competition Protection Commission (the “Commission”) continues in its investigation into anti-competitive practices of some of Bulgaria’s largest retail chains, including Metro Cash and Carry Bulgaria, Billa Bulgaria, Kaufland Bulgaria, Pikadili, Maxima Bulgaria and Hit Hypermarket –for suspected prohibited practices. This investigation has been on-going since 2009 when the
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Commission opened the investigation after the Bulgarian Confederation of Employers and Industrialists informed it that the retail chains treated Bulgarian manufacturers unfairly.
At the beginning of 2011 the commission issued a statement of objections, accusing the retail chains of agreeing on certain mechanisms to coordinate:
1. their trade policy in the market for the delivery of goods; and
2. their marketing policy by conducting promotional campaigns.
The alleged anti-competitive mechanisms involved the following:
1. the indirect exchange of sensitive information about supply prices agreed between each supplier and each of the chains;
2. a 'most-favoured nation' clause; and
3. an obligation for suppliers not to participate in promotions conducted by the different retail chains at the same time.
According to the Commission, the simultaneous implementation of these provisions could result in conscious coordination between the retail chains and in unified trade and marketing policies. The retail chains replied to the statement of objections and submitted proposals for commitments in order to preserve competition in the market. The Commission approved these proposals in a decision issued on July 19 2012. The Commission found that the proposals contained specific measures which may prevent the restriction of competition in the relevant markets. In general, the commitments would oblige the retail chains to abolish the problematic provisions in their supply agreements, which has resulted in these major retail chains being required to re-draft and present to the Commission the revised versions of their supply agreements addressing the concerns of the Commission.
Highly anticipated reform of the Bulgarian insolvency laws
Bulgarian insolvency law contains a complex set of “claw-back” or avoidance provisions, whereby certain transactions entered into by the debtor in the twilight period before insolvency may be set aside.
There are two main approaches to determining the avoidance period under insolvency law. In the first, the court is required to date the ‘initial insolvency’, with the assistance of an expert. The avoidance period then runs from the date of the initial insolvency up until commencement of insolvency proceedings. In the second, specific time periods are set in the legislation for the unwinding of certain transactions occurring prior to the commencement of the insolvency proceedings. France adopts the first ‘initial insolvency’ approach. England and Wales follows the ‘commencement of proceedings’ approach. Bulgarian insolvency law follows both approaches and hence has two separate avoidance periods for transactions entered into prior to commencement of the insolvency proceedings.
Avoidance provisions are generally limited in time to maintain legal certainty and protect the conduct of business. In jurisdictions, which follow the ‘initial insolvency’ approach, there is generally a long-stop date in the law, which limits how far back in time the court can go in making its determination of when the initial insolvency took place (and thus when certain transactions may be unwound). In France, the long-stop date is 18 months ending with commencement of insolvency proceedings. The court will set the initial insolvency date within the 18 month period. There is some uncertainty, however, as to whenthis will occur within the 18 months.
In England, the avoidance period is of fixed duration, ranging from six months to two years, dating back from the commencement of insolvency proceedings. The duration depends upon the nature of the transaction and the relationship between the contracting parties i.e. whether the parties were in some way
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connected to one another. In addition for many transactions there is a requirement that the debtor was insolvent at the time or became insolvent as a result, which requires the court to make a determination on the solvency of the debtor. The advantage of this approach is that the length of the avoidance period is known from the outset of the insolvency proceedings.
Unusually, there is no long-stop date on the court’s ability to set the initial insolvency date under Bulgarian insolvency law. The ‘initial insolvency’ avoidance period under Bulgarian insolvency law is open-ended in duration. This causes legal uncertainty for creditors. Moreover, the consequences prescribed by law for transactions that fall within this avoidance period are severe. During this period, from the date of the initial insolvency up to the date of the opening of proceedings, all security granted and all payments received by creditors from the debtor are deemed to be automatically null and void. Other European countries, which follow the ‘initial insolvency’ approach, do not generally prescribe automatic nullity for transactions falling within this period. Bulgarian insolvency law contains a separate avoidance period dating back from the commencement of proceedings, however this does not appear to be problematic.
The negative effects of the existing Bulgarian insolvency law avoidance provisions have been felt acutely during the existing financial crisis, which has seen a rise in the number of insolvency cases. There have been instances of debtors representing a date of initial insolvency occurring years back in time, sometimes as far back as 10 years. Although the law states that debtors must file for insolvency with 30 days of becoming insolvent or over-indebted or face civil and criminal liability, this requirement is not enforced in practice. This means there is no deterrent for debtors alleging an earlier initial insolvency date. The uncertainty in the law has had serious implications for the investment climate and for the willingness of domestic banks, as well as foreign investors, to extend credit. It even affects non-banking creditors, such as utility companies, who have been forced to return payments made by debtors. In May earlier this year the President of the EBRD received a letter from the Bulgarian Banking Association expressing the concerns of its members on this subject.
There is wide-spread recognition by government, the opposition, creditors and the judiciary that this area of the law needs reform. Two draft proposals, one from the ruling party and one prepared by the opposition, are now before Parliament’s legislative committee.
Revised Foreign Exchange Rules
From 14 August 2012, currency exchange ratios are only permitted to deviate by 5% (rather than the previous 20%) from the daily rates announced by the Bulgarian National Bank. This change in the regulations is intended to prevent any incorrect and misleading practices affecting customers and is pursuant to recent amendments to the law (Amendments to Regulation No. 4 of 8 August 2008 on the terms and procedure for registration in the public register of currency exchange bureaus and the requirements to their activity, published in State Gazette, issue No. 74, dated 22 August 2003)
Other changes to the regulations, which were approved earlier in 2012, include the following:
• permitting the use of ATMs for cash foreign exchange transactions into Bulgarian leva of amounts up to 2,000 Bulgarian leva (c.€1,000). Customer safeguards include compulsory registration of the ATMs, issue of a receipt for each transaction, linking the ATMs to the National Revenue Agency (“NRA”) and providing a phone number on the ATM screen for claims about ATM transactions to be made.
• reducing the documentary requirements for registration as a foreign exchange bureau and permitting the use of electronic signatures to facilitate online applications. Successful registrants receive a registration certificate from the NRA with a schedule of each site or ATM where foreign exchange activity is carried out.
• there are explicit rules and procedures for registration by persons who are already registered as foreign
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exchange traders in another EU/EEA country (as required by the Currency Act and EU law).
• there are detailed rules about the content and form of information to be provided to customers undertaking foreign exchange transactions, to prevent misleading practices. The information includes: the currency code and rate (shown to three decimal points for the currency being traded); the NRA’s and trader’s phone numbers. There are also requirements as to the colour, font, size of the letters, etc. The information must be provided on the board of the foreign exchange bureaux (which can be also electronic) or on ATM screens.
• there is a ban on the trader advertising any transaction other than foreign exchange, using currency codes, graphic symbols or other representations of currency.
• all previously-issued issued certificates (and schedules of registered sites) for registration as a foreign exchange bureau remain valid until an event occurs requiring re-registration. The new procedure will then apply to all applications for registration or amendment of certificates/schedules.
Reduction in feed-in tariff (FIT) for photovoltaic (PV) installations
The feed-in tariff (FIT) for photovoltaic (PV) installations is to be further reduced, following the publication of a report showing that the investment cost of PV projects has decreased by more than 10%. This change follows just three weeks after the State Energy and Water Regulatory Commission announced a FIT decrease of more than 50% for PV installations, using new powers under renewable energy laws coming into force on 17 July 2012.
The SEWRC report contains an analysis of PV module prices and the cost of PV plants already in operation. It shows that the current price of PV modules varies between 0.5 and 0.7 EUR/W, depending on the capacity installed and volume of supply.
Most PV modules used in Bulgaria come from China. The SEWRC data has been compared with data on PV installations across Europe (held on Europe-Solar.de) and, on the assumption that PV modules represent 50-60% of the overall investment costs for each PV plant, indicate that the cost of building PV plants has dropped significantly.
Other factors determining the FIT have been left unchanged by SEWRC, namely:
- 2% inflation
- 7% average rate of return
- 14.84% annual utilisation factor 1300 hours)
- 20 year useful life of the assets
- c.1.3 EUR cents/kWh operation and maintenance costs
Based on this, SEWRC is planning to reduce the current FIT for PV plants, to the following levels based on installed capacity:
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- 381.18 BGN/MWh (up-to 5 kWp rooftop and façade)
- 289.96 BGN/MWh (5-30 kWp rooftop and façade)
- 226.87 BGN/MWh (30-200 kWp rooftop and façade)
- 206.34 BGN/MWh (200-1,000 kWp rooftop and façade)
- 193.42 BGN/MWh (PV plants up to 30 kWp)
- 188.10 BGN/MWh (PV plants from 30-200 kWp)
- 171.37 BGN/MWh (PV plants from 200-10,000 kWp)
- 169.85 BGN/MWh (PV plants above 10 kWp)
If these reduced FITs are introduced for PVs in Bulgaria, they are likely to stop any significant development in this sector in the foreseeable future.
Croatia
Concessions Act
In July 2012, the Croatian Government put in the parliamentary procedure the new Concessions Act, which should substitute the current model of concessions. In general, the new concessions regime aims at providing better control over the implementation of concession contracts and establishing a clear distinction between concession contracts and public procurement contracts.
EU publishes report on Accession
In October 2012, the European Commission said that Croatia needed to make improvements to its judicial system, competition and human-rights policies before its planned European Union entry in July 2013. “Further efforts” are necessary in judicial efficiency as well as justice, freedom and security, the Commission said in its report. Croatia, which is struggling to pull itself out of a recession, is expected to receive hundreds of millions of euros from EU funds for regional and infrastructure development. “It is essential that Croatia sharpens its focus to ensure that its preparations are completed on time,” the Commission said in the report, adding that a final assessment on the country will be presented in the spring of 2013.
Amendments to Companies Act
The amendments to the Companies Act of 18 October 2012 introduced into the Croatian legal system a new form of a company, the so-called simple limited liability company (SLtd.). SLtd. represents a sub-category of a limited liability company which may be incorporated with a share capital of HRK 10 (EUR
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1.4) payable in cash and with the lowest nominal value of a shareholding amounting HRK 1. The SLtd. represents an independent legal person separated from the shareholders which is fully entitled to assume obligations and acquire rights. The provisions governing classic limited liability companies also apply to Sltd.
Adoption of law on legalisation
On 6 August 2012, the Croatian Parliament adopted the Law on Legalisation, which states that owners of illegally constructed buildings may file a request for the legalisation of those buildings. Such request may be filed by 30 June 2013.
Egypt
New tax laws as per the 4.8 billion dollar loan deal with IMF:
Currently the government is holding negotiations with IMF in order to conclude the 4.8 billion loan deal. The Loan will be accompanied with an Egyptian economic reform to resolve problems that the economy suffers from like, budget deficit and petroleum subsidy. A part of the economic reform plan is a tax plan which President Morsi tried to implement in December 2012 but then it was postponed after immediate objections from the street as well as the different political parties including the ruling party. According to the new tax plan to be adopted, taxes will rise on cigarettes, beer, soft drinks, electricity, steel cement, on licenses, advertisements and real estate as well as new sales tax on a variety of services, including mobile-phone services, air-conditioned transportation, and cleaning and security services, among others. Stamp duties were also doubled on bank facilities and loans.. A tax of 10 percent on profits generated by individuals or companies from the stock market’s Initial Public Offering (IPO), to be applied to market members who are both residents and non-residents of Egypt. The top income tax bracket rate will be raised to 25%. Egyptians will also pay an additional LE0.006 on each cubic meter of natural gas, if used for non-industrial purposes, up until 20 cubic meters. After that, consumers will pay LE0.25 on each additional cubic meter. A tax of LE0.09 will be levied on each kilogram of butane gas used for non-industrial purposes, and a tax of LE3 per ton of gas and butane gas consumption for industrial purposes.As of 1 July 2013, there will be a new tax on rental properties, which will be calculated by taking 10 percent of the annual rental value of the property after deducting 30 percent of that value, or 32 percent in the case of properties used for non-housing purposes. housing properties with an annual rental value less than LE24,000 would be exempt from taxes, but the exemption is to be applied to only one property per owner.
The new tax laws will only come to effect once it is ratified by Egypt's lower house (Shura Council) which is expected in the very near future.
Islamic bonds (Sukuk):
The Cabinet approved the draft law on Islamic bonds to be presented to the Egyptian Shura Council for parliamentary discussion; after it was approved by the Finance Ministry, Investment Ministry, Financial Supervisory Authority and various political groups. The Cabinet’s trying to push the law authorising issues of sovereign sukuk has drawn criticism from religious figures and financial scholars alike as the law is perceived as facilitating the privatisation of some parts of the public sector in Egypt. However, state officials consider the bonds to be a solution of the nation’s financial crisis.Joint stock companies and companies limited by shares, governmental, municipalities, banks regulated by the Egyptian Central Bank and international and regional institutions will be able to issue sukuk subject to certain conditions. According to the new legislation, Sukuk shall be issued in one of many forms. There are five main forms of sukuk and each form contains different forms as follows:
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financing sukuk: includes murabaha sukuk, Istisna’a sukuk and Salam sukuk; ijara sukuk: includes ownership title sukuk, beneficial interest sukuk and services ijara sukuk; istithmar sukuk: includes mudarabah sukuk, investment wakala sukuk and musharaka sukuk,
which includes, profit musharaka sukuk, muzara’a sukuk, musakat sukuk and mogharasa sukuk; investment funds and portfolios sukuk; and Any other sukuk approved by a central Shari’ah committee to be established according to the
provisions of the sukuk legislation.
According to the Finance Minister, the Ministry will start the Sukuk issuance project for financing economic and social projects in the last quarter of the current Fiscal Year's budget.
Hungary
Changes to Act on Judicial Enforcement Disadvantage Larger Creditors Repossessing a Property
On 1 July 2012 amendments to the Act on Judicial Enforcement came into effect that altered the relative positions of creditors when a property is being repossessed. If more than one creditor is seeking enforcement against a debtor and a property remains unsold after the second auction, the creditors may seek to repossess the property through a tender process. The winning creditor, however, may only set off 50% of the repossession price against its outstanding claims, with the balance of the repossession price being allocated to the claims of the other creditor(s). The winning creditor who repossessed the property will only share in this balance after the claims of the other creditors have been satisfied. This may result in a situation in which the creditors who do not repossess the property may have their claims fully satisfied while the creditor who repossess has its claims only partially satisfied.
JordanDraft Investment Law
Certain revisions to the Investment Promotion Law No 16 of 1995 as amended on 2000 are currently being drafted, providing income tax exemptions, decreasing custom duties and allowing foreign investors to own 100% of shares in most Jordanian companies.
The revisions to the law are currently pending parliamentary review.
2012 Islamic Sukuk Law
The law allowing Jordan to issue sovereign sukuk (Islamic bonds) was cleared by the lower and upper houses of the parliament in September 2012. The law will expand the borrowing options of Jordan by allowing sukuk to be issued in the capital market for the financing of projects and investments.
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Kazakhstan
National Bank's Authorities Expanded
From July 2012, the authorities of the National Bank were broadened to include (i) functions of the financial supervision agency, (ii) macro prudential regulation and (iii) exercise of the state's pre-emptive right to acquire refined gold in order to replenish gold and currency reserves (Kazakhstan Law amending legislative acts in relation to National Bank and regulation of financial markets № 30-V dated 5 July 2012).
Financial Instruments Acquired by Qualified Investors Only
List of the financial instruments which can be acquired by qualified investors only was approved by the Resolution of the National Bank No. 228 dated 27 July 2012. List includes securities and/or other financial instruments of non-residents issued under the foreign law and not listed on local or foreign stock exchanges, shares and/or units in risk investment funds and derivative securities and/or other derivative financial instruments not traded on local or foreign stock or commodity exchanges. Qualified investors include financial organisations, professional securities market participants operating without a license, national holding, national management holding and international financial organisations.
Tax Havens List
Singapore was excluded from the list of tax havens by the Resolution of the Government of Kazakhstan No. 960 dated 23 July 2012.
Integrated Securities Registrar
In line with the amendments to a number of legislative acts aimed at minimisation of risks in the financial system all existing private securities registrars will be replaced by Integrated Securities Registrar (established and solely owned by the National Bank). Starting from 1 January 2013 Integrated Securities Registrar will be the only organisation responsible for maintenance of the registrars of the securities' holders. During 2012 existing private registrars will be obliged to return the licenses and transfer all documents and information comprising the system of securities' holders registers to Integrated Securities Registrar.
Financing of Entities Involved in Innovative Industrial Activities
Conditions and Mechanisms for Financing of Entities Involved in Innovative Industrial Activities through Financial Institutions were approved by the Resolution of the Government of the Republic of Kazakhstan No. 1012 dated 1 August 2012. This resolution was adopted in connection with the Law of the Republic of Kazakhstan "On State Support for Innovative Industrial Activities" dated 9 January 2012. The resolution provides for the procedure for financing of the entities involved in innovative industrial activities which are aimed at creation of new industrial innovative projects and modernisation and expansion of existing plants.
Municipal Governance Development
Concept of the Municipal Governance Development was approved by the Decree of the President of the Republic of Kazakhstan No.438 dated 28 November 2012 and is aimed, among others, at greater
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involvement of the pubic in local governance and monitoring of budget funds use as well as the increase of independence of the representatives at the lower municipal levels. The concept provides for two stages of further development:
2013 – 2014 – expansion of existing system's potential at the lower municipal levels by
amending relevant legislation, introduction of mandatory meetings and discussions with the local
public representatives, election of akims in towns of district importance, village districts and
villages and increase in the financial independence at the lower municipal levels.
2015 – 2020 – further development of municipalities. After 2014 the focus will be on further
division of functions of local government and municipalities, optimisation of administrative units
as well as budgeting and municipalities' property.
New Law on Microfinance Organisations No. 56-V dated 26 November 2012
The new law abolishes the previous Law on Microcredit Organisations No.392 dated 6 March 2003 and provides for a broader list of activities which microfinance organisations are allowed to undertake (such as attracting grants and loans, leasing, entering into insurance agreements as an insurance agent, providing consulting services) as well as made them subject to control and supervision by the National Bank.
Registration of Legal Entities is simplified
Amendments to a number of legislative acts aimed significantly simplifying registration (incorporation) and liquidation of legal entities were introduced by the Law of the Republic of Kazakhstan No. 60-V dated 24 December 2012.The major amendments include:
Time for registration (re-registration) and liquidation was reduced (registration/re-registration
should now be effected with one business day instead of seven and liquidation – within five
business days instead of ten).
Submission of the charter is no longer required for registration (except for joint-stock companies
and their branches and representative offices).
Submission of the documents confirming the address of the legal entity is no longer required.
Online registration will be introduced for small–business enterprises.
Paper registration certificates will be replaced by electronic certificates.
Permission-based registration system to be replaced by a notification system.
Kosovo
Consumer Protection
A new Law on Consumer Protection entered into force on 4 December 2012. The new law governs the respective rights and obligations of consumers, sellers, manufacturers and suppliers, generally extending the rights of consumers. More specifically, the law (i) governs goods labelling, sales at a discount, consumer credit, unfair practices, advertising and internet sales; (ii) requires publication of terms and conditions for public services and provides for compensation under certain conditions; and (iii) introduces a right for consumers to file complaints with the Ministry of Trade and Industry.
Pledge Registration
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Law No. 04/L-136 on the Registration of a Pledge in the Registry of Movable Property was adopted on 5 November 2012. The new law sets out procedures for the registration of pledges in the new computer-based pledge registry system. The registry is operated by the Kosovo Business Registration Agency and is accessible on line for registering (using a user account) and searching (using a user account or not, but with access to less detailed information in the latter case). The owner of a user account is deemed to have full authority to create, amend or cancel any registration made through their user account. Searches are available on line against the name of the debtor or the serial number of the pledged asset.
Trademark Registration
The Ministry of Trade and Industry adopted Administrative Instruction No. 13/2012 on Trademark Registration on 14 August 2012. The new instruction sets out procedures for the registration of all categories of trademarks with the Industrial Property Office of Kosovo (the “IPO”). It also provides for the publication of information on registered trademarks (including information on enforcement proceedings) in the official bulletin of the IPO.
Kyrgyz Republic
Taxation
A number of amendments were made to the tax legislation of the Kyrgyz Republic. Below are two noteworthy changes to the Tax Code of the Kyrgyz Republic:
According to the Law No. 158 dated 9 August 2012 “On Amendments and Addendums to the Tax Code of the Kyrgyz Republic” effective 1 January 2013, companies involved in gold mining are subject to income tax at the rate of 1 to 20% of their gross income depending on the world market prices for gold ore and gold concentrate instead of profit tax at the general rate of 10%. The tax base for this income tax shall be (i) ore mining; (ii) sales of gold ore; (iii) gold concentrate; (iv) gold alloy and fine gold. According to experts in mining, this approach may adversely affect the gold mining sector as the gold mining companies will have to pay income tax at a higher rate subject to the world prices for gold, irrespective of profits received. This may also prevent the gold mining companies from making capital expenditures as the substantial portion of income shall be subject to taxation. Representatives of the gold mining industry requested the Government to cancel the amendments introducing a new principle of taxation of the gold mining companies.
Another set of amendments were made pursuant to the Law No. 169 dated 6 October 2012 (Law No. 169) which introduced a definition of small and medium enterprises for tax purposes. The revenues of a company from sale of goods and services should not exceed 30 million soms per year to qualify to this new approach. Small and medium enterprises are entitled to a simplified tax calculation of the profit tax. This definition does not cover insurance companies, investment funds, companies rendering financial services and the professional participants of the securities market.
Licensing
According to Law No 169, a new definition of “leasing company” has been provided to the Tax Code. Pursuant to this definition 90 % of the revenues of the leasing company should be collected from its leasing activity. Certain amendments were made in terms of taxation of the leasing companies. Thus, effective 1 January 2017 the leasing companies will enjoy a more favorable profit tax at the rate of 5%. This rate will be effective until 31 December 2021. Also no license is needed in order to operate leasing activity, however banks involved in leasing should specifically indicate this activity in their banking licenses. In addition to leasing activity the lawmakers have also excluded the real estate activity from obtaining a license. In relation to real property new uniform registration system of rights to real property was implemented in Law on “State registration of rights to real estate”. It is a database on real property,
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registration of rights and restrictions imposed on real estate (liens etc), information about holders, included into the unified database. Database is being updated constantly; it also holds and distributes data. The main aim is to unify state registration system and to create a unified database.
Lithuania
Regulations of the Energy Resources Exchange approved
The Regulations of the Energy Resources Exchange were approved and came into effect on 30 September 2012. The Regulations consist of two parts: the general part and the special part. The general part establishes that BALTPOOL, UAB, a company organised and existing pursuant to laws of the Republic of Lithuania, is a licensed operator of the energy resources market of Lithuania. It is mandated to organise trade on the Lithuanian energy resources exchange by enabling the exchange participants to make use of the electronic trading system for trading in natural gas, bio-fuel and ancillary instruments of hedging against fluctuations in electricity prices. The special part of the Regulations on “Trade in Bio-fuel” applies to those participants that intend to trade in bio-fuel and sign the exchange participant agreement with the licensed operator.
Draft law on amending the Enterprise Bankruptcy Law considered
By resolution of the Government of the Republic of Lithuania of 16 October 2012 the Seimas of the Republic of Lithuania was presented with a draft Law on Amending the Enterprise Bankruptcy Law. The main changes provided for in the draft Law relate to the introduction of a concept of a fraudulent bankruptcy. It is proposed in the draft Law that a fraudulent bankruptcy would be presumed in the presence of at least one of the following features:
(i) the management body (bodies) of the company failed to fulfil corporate management related duties imposed on it (them) by laws or the charter of the company (as such duties are defined in Article 2.47 of the Civil Code of the Republic of Lithuania);
(ii) existence of transactions detrimental or economically not useful for the company, including transactions in connection with sale-purchase and/or transfer of shares or other financial assets, or decisions detrimental or economically not useful for the company;
(iii) property was sold at lower than market prices to related parties or property was transferred gratuitously or the payment for the property was postponed for an economically non-useful period or payment to the company was made with shares of non-operating companies and/or companies that have not filed their financial statements with the Register of Legal Entities;
(iv) activities and assets were transferred to another company, after reorganisation of the company or spin-off of a part of the company, where activities are performed and financial liabilities are assumed by the company that does not hold assets; another operating or newly established company took over contracts in progress and/or rights of claim of the company experiencing financial difficulties, and employees and/or heads and/or persons related to them left the company and started employment with the new company;
(v) the activities of the company were organised in a way to restrict the creditors’ abilities to levy enforcement on the assets of the company or to avoid enforcement, or priority in enforcement was consciously given to creditors within the same rank obligations to whom arose later and/or were not overdue or were overdue in smaller amounts, being aware that the creditors, obligations to whom were
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overdue or were overdue in larger amounts, would have nothing to levy enforcement on, as the company does not have enough assets;
(vi) before the institution of the bankruptcy proceedings payments were made in violation of the sequence of payments in cash and in kind, as set in Article 6.9301 of the Civil Code, and the legal requirements regarding mandatory institution of the bankruptcy proceedings of the company, where an employee(s) of the company is (are) not paid the salary and other employment related amounts for more than 3 consecutive months, was not fulfilled;
(vii) fraudulent book-keeping and/or missing of the company’s documents and/or the evasion of payment of the value added tax or other taxes as stated in the inspection statement by the tax administrator.It is suggested that in case a bankruptcy is recognised to be fraudulent, the administrator would have, no later than within 6 months as of the effective date of the relevant ruling or the date of receipt of documents on transactions conducted by the company, if such documents were transferred after the effective date of the ruling, to recognise the bankruptcy as fraudulent, to inspect transactions of the company conducted within the period of 5 years before the institution of the bankruptcy proceedings, and file statements of claim in court for invalidation of transactions contrary to the purposes of the activities of the company and/or transactions that could have had an effect on the company’s inability to settle accounts with its creditors. It is suggested that upon liquidation of the company due to bankruptcy, which was recognised to be fraudulent, the obligations of the company would fall on a person(s), due to whose actions or omissions the fraudulent bankruptcy occurred, subject to a relevant court decision.
Moldova
New Competition Law
On 14 September 2012 a new Competition Law has been enacted in Moldova, replacing the former 2000 Law on Protection of Competition and the 1994 Law on Limiting the Anti-Monopolistic Activities and Competition Development. The new law fundamentally changes the core provisions of the national system on protection of competition. It appeared in the course of a legislative reform which brought competition regulation in Moldova in conformity with the principles of EU law.
Moldovan Competition Law is concerned with practices that are harmful to the competition on Moldovan market. In particular, the Competition Law is concerned with:
anti-competitive agreements; abusive behaviour; unfair competition; public restrictions to competition; economic concentrations.
In addition the Competition Law dedicates an important part to remedies that may be imposed when competition rules are infringed by different actors of the market. The Law is remarkable by the severe fines to be imposed by the Competition Council, amounting up to 10% of the offender’s total turnover in the preceding business year.
Rules on granting State Aid
As of 16 August 2012 the Law No 231 dated 10 August 2012 on state aid has entered into force. This Law regulates the way of authorisation, supervision and reporting of state aid granted to beneficiaries of all economic fields, except for agriculture, in order to maintain a normal competitive environment.
Four conditions cumulatively to be met define the notion of state aid. State aid is any means of support that is (i) granted by the public central administration authority or local administrative authorities, legal
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entities managing state resources or resources of territorial administrative units, from state resources’ or means of territorial administrative units, of any kind, (ii) which offers an economic advantage that would not have been normally obtained in the ordinary course of business, (iii) granted selectively, and(iv) which distorts or might distort the competition.
Any intention to grant state aid or amend the conditions of existent state aid shall be notified to the National Agency of Protection of Competition (”NAPC”) by submitting a corresponding draft of the legal act. NAPC is the empowered authority to authorise, supervise and report state aid. Such notification shall be filed by the supplier and/or initiator of state aid.
Bankruptcy Law
A new bankruptcy law has been approved on 29 June 2012 (published on 14 September 2012) and effective on 13 March 2013.
The Law regulates all aspects of insolvency of any type of business entity, including state owned enterprises, insurance companies, investment funds and non-profit organisations. The Law also applies to individual entrepreneurs, i.e. sole traders (individual enterprises) and patent holders. The Law does not apply to banks.
The Law has significantly eased creditors' access to commencing insolvency proceedings against the debtor. A creditor can file an application for debtor's insolvency if it is able to show that:
it has a legitimate claim against the debtor; the debtor has failed to pay the debt by due date; the creditor has notified the debtor that the debt is overdue.
A debtor may file for insolvency based on any of the grounds: incapacity to pay or over-indebtedness. The debtor also can file for insolvency in a pre-emptive action when it is still solvent but fears that it may soon become incapable to pay its debts. At the same time the debtor is obliged to file for insolvency if it is already incapable to pay all its debts (or will become so if pays a creditor). The debtor must do so within 30 days from the day the incapability occurred.
Insolvency applications are to be submitted to the Court of Appeal, which must within 3 days decide whether to admit the insolvency application or not. After the court admits the application it puts the debtor under observation, appoints a provisional insolvency administrator to supervise the debtor and applies any other preventive measure that may be necessary to preserve debtor's assets for the benefit of creditors. The observation period may last up to 2 months, during which all court claims and enforcement proceedings against the debtor shall be suspended (moratorium). Once the observation period is applied, the law prevents all creditors from individually pursuing their claims in court or enforcing their claims.
If, after the observation period, the court establishes that the debtor is insolvent, or if the debtor requested restructuring or liquidation from the outset, the court opens the insolvency proceedings and transfers the management of the debtor to the insolvency administrator. Any transaction by the debtor representatives other than the insolvency administrator is void. The moratorium on enforcement of unsecured claims continues throughout the insolvency process, whereas for the secured claims the moratorium is lifted after 180 days.
After opening the insolvency proceedings the court will decide which of the following insolvency proceedings should be applied to the debtor: the expedited restructuring procedure that is meant to restore the debtor's business, may start
immediately after application or after observation and should be completed within a short timeframe; the simplified liquidation procedure meant to liquidate the debtor('s assets) within a short timeframe
due to certain circumstances.
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restructuring, which assumes repayment of debts in accordance with a restructuring plan; liquidation (bankruptcy), where all debtor's assets are sold in order to repay its debts and the debtor is
liquidated, and Settlement, where the debtor and its creditors agree on certain way to settle the debts and terminate
the insolvency proceedings. The settlement agreement is approved by the court
Poland
New draft of Act on renewable energy
Poland’s renewable energy industry is closely watching the Polish government’s work on an amendedrenewable energy law. On 16 October 2012, the most recent (fourth) version of the draft of the act on renewable energy sources was published by the Ministry of Economy. The draft act is part of a package of new energy legislation comprising a new gas law, a new energy law and the act containing implementing provisions regarding all those energy acts. After the final versions of all acts from this legislation package are prepared and approved by the Polish government, the draft laws shall be forwarded to the Polish parliament. In addition, the draft shall be reviewed by the European Commission in the context of state aid to private entities. It is expected that the act on renewable energy sources a will come into force in the 2nd or 3rd quarter of 2013.
The act on renewable energy sources is meant to transpose into the Polish legislation the provisions of the Directive 2009/28/EC on renewable energy. The proposed amendments would implement certain changes to the support scheme for renewable energy sources. The new law would introduce a concept of “obliged supplier” that would be obliged to purchase energy generated from renewable sources for a fixed price set by law. The new law would prolong the use of green certificates issued by the Polish energy regulator to generators of renewable energy. Based on the mechanism of issuance of the green certificates, it seems that the Polish legislator favours hydro and solar technologies over other sources of renewable energies. Certain controversial provisions of the act would specify a cap on the price at which renewable energy can be sold (currently set at 105% of the fixed price calculated pursuant to the act). Green certificates would not be issued for renewable energy sold above the specified cap. As a general rule, the support scheme in the form of green certificates introduced by the Bill shall be in force until 31 December 2035.
The draft law also contains provisions aiming to support small scale generation capacities and limits the support schemes available for multi-fuel installations (defined as renewable energy sources installations in which biomass or biogas are used together with fossil fuels).
Extensive changes to Polish competition law
The Polish legislator has proposed amendments to the competition law which aim to improve and strengthen the position of enterprises and enhance legal certainty.
The amendments to the 16 February 2007 Act on competition and consumer protection (the Competition Act) would increase the effectiveness of the current legal framework, simplify and shorten the underlying processes and reduce the existing procedural uncertainties. Specifically, the proposed amendments are expected to strengthen the position of the Polish Competition Authority (PCA) vis-à-vis undertakings that violate antitrust laws, thereby providing further protection to consumers and small and medium enterprises, both of which are susceptible to harm as a result of competition law infringements. On 20 November 2012, the Polish Council of Ministers gave its approval to the draft proposal to amend the Competition Act. Amending the Act is a fundamental goal of the Polish Competition Policy for 2011-2013, which is designed to identify and tackle the most important issues surrounding competition in the economy. Despite still being at an early stage in the legislative process, the endorsement of the project by the Council of Ministers means the PCA will be able to initiate the drafting process. The amended Act will then be subject to a consultation procedure.
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The most significant proposed amendments include the following: the introduction of a two stage merger review procedure; a communication of competition concerns in relation to the notified merger; the confidentiality of merger decisions with respect to the proposed commitments that have to be complied with (i.e., conditions for clearance, such as the sale of a subsidiary); an expansion of the leniency programme to encourage applicants to inform the regulatory authorities of anti-competitive practices; the imposition of financial penalties of up to €500,000 on the key managers and/or directors of companies that participated in a cartel; a possibility for companies charged under the Competition Act to settle with the Polish Competitive Authority resulting in a possible reduction of the fine; the identification of remedies in the Polish Competitive Authority’s decisions.
Romania
Dispute Resolution
There are new rules in Romania for the mandatory consideration of mediation prior to the commencement of litigation in Romania. As of 1 October 2012 all parties to current or pending litigation must attend, or have attended, a meeting before an authorised mediator to be informed about the advantages of settling the dispute via mediation.
The law requires attending the meeting, even if no actual mediation commences and no agreement is reached. Once the parties have attended the information meeting, they may (i) continue with the current case, or (ii) if the case has not started yet, continue submitting their claim to court.From 10 January 2013 all Romanian courts will check whether registered parties have attended an information meeting. Proof of attendance should be confirmed by minutes issued by the mediator who held the meeting. Claimants who fail to attend this information meeting risk a judge ordering a stay of proceedings until a meeting is attended. To resume proceedings, claimants must pay 50% of the court duties due by them.
As well as attending the information meeting, before registering a commercial claim, a claimant must try to meet the defendant to attempt settlement of its claim out of court. Such an attempt may be made either by calling the defendant to a face-to-face meeting, or to an actual mediation.
Financial Services
A Government Emergency Ordinance no. 93/2012 has been published with regard to the establishment, organisation and function of a new supervisory body, namely the Financial Supervisory Authority (“FSA”). The FSA will take over the supervision and regulation of the securities, insurance and private pensions sectors from the Insurance Supervisory Commission, National Securities Commission, and National Private Pensions System Supervisory Commission. The aim behind this new autonomous administrative body is to provide better financial supervision of the regulated sectors outside the regulatory competence of the National Bank of Romania (i.e. private pensions, insurance and securities).
Company Law
On September 6, 2012 the Government Emergency Ordinance no. 47/2012 (the "Ordinance") was published in the Romanian Official Gazette no. 635 and entered into force. Among amendments to the Romanian Fiscal Code and to the Fiscal Proceedings Code, the Ordinance amended the Companies Law no. 31/1990 to increase the amount of the delay penalties to be paid by a company for failure to pay dividends to its shareholders on time.
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Serbia
The Financial Institutions Supervisory Authority
Serbia's National Bank (Amendment) Act (Official Gazette of the Republic of Serbia, no. 76/12) established the Financial Institutions Supervisory Authority [Uprava za nadzor nad finansijskim institucijama] (“FISA”). The FISA is designated as a specialised regulatory unit within the National Bank (i.e. Serbia's central bank) with responsibility for and corresponding powers to supervise certain financial services and their providers in Serbia. FISA's Role Financial institutions which will be supervised by the FISA are banks, insurance companies, financial leasing companies and voluntary pension funds (“regulated financial institutions”). The supervision of other participants in Serbian financial and capital markets, such as broker-dealers, investment funds, stock exchanges and securities clearing house will remain under the remit of the Securities Exchange Commission. According to the amended National Bank Act, the FISA will have the following broadly defined statutory powers (while its organisation, activities and regulatory approach are yet to be specified by the Statute of the National Bank): - Supervision of regulated financial institutions. In carrying out this supervisory role, the FISA will have a wide range of investigatory powers e.g. the power to inspect the books of regulated financialinstitutions and related entities; - Issuing individual decisions, orders, and measures concerning regulated financial institutions; - Proposing new rules and regulations for regulated financial institutions to the Executive Board of the National Bank; - Proposing decisions on the issuance and revocation of regulated financial institutions' licences to the Executive Board and the Governor of the National Bank; and - Cooperating with foreign and local institutions and financial services regulatory and supervisory authorities. The FISA will be headed by a director to be appointed by 2 November by the Serbian Parliament for a six-year term of office (may be re-elected).
Internet Cadastre Service Application – “KnWeb”
The Republic Geodetic Authority (“RGA”) has commenced a new internet service which allows all persons to have online access to the electronic database of the real estate cadastre.Depending on the amount of data that can be seen, there are two types of users of KnWeb: � common users – those able to see information concerning the cadastral lot, the owners and other rights existing on land, and the buildings on it, including information on the existence of encumbrances;� privileged users – those able to see all that common users can plus all information regarding existing encumbrances (date of registration of mortgage, its amount, due date, etc.)Only a legal entity can become a privileged user, by signing an agreement with the RGA.The electronic database is updated twice a week for the largest cities (Belgrade, Novi Sad, Nis, Kragujevac etc.), once a week for smaller cities and once a month (or at the latest once every 45 days) for the rest of the locations in Serbia.There are two possibilities for searching the KnWeb:� by number of the cadastral lot;� by the address where the property is located.
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2012 Developments in Taxation
On 25 September 2012, the Serbian Parliament enacted a set of tax laws which introduced numerous changes into the Serbian tax system, including amendments to the Law on Value Added Tax (“VAT Law”), Law on Personal Income Tax Law (“PIT Law”), Law on Tax Procedure and Tax Administration (“Tax Procedure Law”), and the Law on Excise Taxes (“Excise Law”). In addition, on the same day the Parliament adopted amendments to a dozen of laws with aim to abolish or limit a number of para-fiscal levies, the most important of which are the amendments to the Law on Financing of Local Self-government and to the Law on Republic Administrative Fees. The laws which were adopted on 25 September 2012 were published in the Official Gazette of the Republic of Serbia no. 93/12 dated 28 September 2012.In addition, the Ministry of Finance and Commerce (“Ministry”) released its draft proposal of the amendments to the Law on Corporate Income Tax (the “Draft”). The Draft will undergo at least one public debate before the Government makes it final proposal of the amendments and sends it to the Parliament for adoption.
Amendments to the VAT Law
By the amendments to the VAT Law, the Serbian VAT system underwent numerous and significant changes.General VAT rate is increased from 18% to the 20%, starting from 1 October 2012. All other changes presented in this newsletter will be applicable starting from 1 January 2013. The most important of them include the following: � Introduction of “cash accounting”: Small and medium-sized companies and entrepreneurs may opt to pay VAT only after they receive payments from their customers. This possibility is granted to companies and entrepreneurs whose turnover in a 12-months period does not exceed RSD 50 million (app. EUR 44,000).
� Threshold for mandatory VAT registration increased: Threshold (value of turnover within 12 months) for mandatory VAT registration is increased from current RSD 4 million to RSD 8 million.
� Threshold for voluntary VAT registration abolished: The minimal threshold for voluntary entry into VAT system - RSD 2 million will be abolished, so as that starting 1 January 2013 all companies engaged in the supply of goods/services may register for VAT if they want to.
� Possibility to deduct VAT paid before the VAT registration introduced: Serbian registered VAT payers are now given the possibility to deduct VAT paid before they registered for VAT. This possibility exists only for goods and services paid within the 12 months period before the VAT registration. For fixed assets the deadline is longer: 5 years for equipment and 10 years for immoveable assets. VAT paid on supply of fixed assets cannot be deducted in full, but only proportionally to the time the taxpayer used such assets before VAT registration.
� Deadlines for submission of VAT returns extended: The deadlines for the submission of VAT returns and payment of VAT are extended: to the 15th of the month for the previous month, for monthly VAT returns, and the 20th of the month for the preceding quarter. Additionally, the threshold for quarterly submission of VAT returns is increased form RSD 20 million to RSD 50 million.
� Tax treatment of transfer of real estate changed: Currently, only first transfer of newly constructed facility is subject to VAT, while subsequent transfers and transfers of old facilities are subject to property transfer tax at a 2.5% rate. The amendments introduced the possibility that the buyer and seller, registered VAT taxpayers, can opt to treat the transfer of immoveable property which is not transferred for the first time, as a VAT-able supply. The VAT on such a supply will be settled through a reverse charge mechanism: they will have the obligation to calculate output VAT but will also be allowed to deduct this VAT as input VAT, so as that the net VAT effect of the transaction will be zero. More importantly, since this transaction is subject to VAT, it will not be subject to property transfer tax.
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In this respect the real effect of this change is to exempt companies in Serbia from property transfer tax, rather than VAT.
� Special scheme of taxation of construction services introduced: The special scheme for construction services is structured as a reverse charge and applies only between the investor and the contractor The VAT due on the supply of construction services by the contractor to the investor will be settled by the investor. At the same time the investor will have the right to deduct such VAT as its input VAT, subject to the general rules governing deductibility of VAT.
VAT treatment of operational leasing changed: Starting 1 January 2013, operational leasing will constitute a supply of goods and not a supply of services, if the lease agreement is concluded for a definite period of time and if the parties cannot terminate the lease agreement, save in the case of a breach. Changes of VAT treatment are introduced in order to prevent avoidance of VAT through artificial structuring of financial lease as the operational lease to use beneficial VAT treatment of operational leasing.
Amendments to the PIT Law
The most important changes introduced by the PIT Law include the following:� Increase taxes on dividend, interest, capital gains and insurance of individuals increased from 10% to 15%.Tax treatment of share in profits paid to employees and management changed: share in profits paid to persons who are not shareholders of a company, including employees and members of management will no longer have the treatment of income from capital (subject to lower 10% tax rate), but of “other income”. Accordingly, share in profits paid to employees and management will be subject to 20% tax.
� Changes in conditions for exemption from taxation of capital gains: Capital gains from the sale of assets which taxpayer held in its portfolio continually for period of 10 years will be exempt from taxation.
� Additional condition for set-off of capital loses: capital gains may now be set-off against capital gains only if capital losses were generated before capital gains. All changes of PIT Law became effective on 6 October 2012.Amendments to the Tax Procedure LawThe amendments to the Tax Procedure Law naturally introduced primarily procedural changes in the Serbian tax system. The most important changes include the following: � Status of fiscal representatives clarified: The Tax Procedure Law now explicitly allows legal persons to act as fiscal representatives of local and foreign entities. With this the Tax Procedure Law has finally resolved a dilemma as to whether legal persons may act as fiscal representatives which was a source of numerous problems in the practice.
� Relaxed conditions for postponement of payment of tax: taxpayers may now be allowed to postpone the payment of tax for the period of up to 24 months, instead of 12 months before the amendments. Additionally, the law now provides that the taxpayer may file a request for postponement even before the tax become due.
� Change of jurisdiction of tax misdemeanors: First instance procedures for tax misdemeanors will be held before the Tax Administration, instead of the Misdemeanor Court.
� Assumption of competencies: Tax Administration will assume competence for the Foreign Exchange Inspectorate and the Administration of Games of Chance in their respective administrative fields. At the same time, these bodies will be terminated.
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� Manner for submission of tax returns: Starting from 1 July 2014, all legal entities and entrepreneurs will be required to submit tax returns electronically (currently only legal entities classified as large entities are required to submit tax returns electronically).
Amendments to the Excise Law
The vast majority of amendments to the Tax Procedure Law came into effect on 6 October 2012, and only some of them will be effective starting 1 January 2013.The amendments to the Excise Law introduced changes in the system of taxation of oil derivatives, coffee and tobacco products. All amendments became effective from 1 October 2012:� Changes in taxation of oil derivatives: In line with the EU Directive 2003/96/EC, the Excise Law now prescribes different excises on motor fuel, depending on the quality: for leaded fuel - RSD 55/l and for unleaded fuel - RSD 49.6/l (previously, all motor fuels were subject to the same RSD 49.6/l excise tax). New amounts of excise duties are prescribed also for diesel fuels, oils, kerosene, LPG and other oil derivatives.
� Sale of LPG now subject to excise duties: Until the latest amendments only LPG used for motor vehicles was subject to excise duties. Now LPG will be subject to excise regardless of its intended use. As a consequence producers and importers of LPG will be required to pay excise duties instead of sellers (retailers and wholesalers) of LPG.� Changes in taxation of coffee: Excise duties on imported coffee will no longer be levied as a percentage of the value of the imported coffee, but in nominal fixed amounts. The amount of excise duties on imported coffee range from RSD 80 (app. EUR 0.6) to RSD 300 (app. EUR 2.5) per kg, depending on the type of coffee.
� Changes in the taxation of cigarettes: The fixed RSD element of the excise on cigarettes is now increased from the initial RSD 33 per pack to RSD 43 per. The new amount will be applicable in the period 1 October 2012 – 30 June 2013. Starting from 1 July 2013 the fixed RSD element will amount RSD 45. The variable element of the excise is also changed to 33% of the retail price starting from 1 October 2012 (from 34% under the old law).
Para-fiscal Levies Abolished or Limited
Starting 1 October 2012, the following levies imposed under the Law on Financing of Local-self Government are terminated or decreased:� Fee for the protection and improvement of the environment is abolished. This fee was payable to municipalities by entities engaged in certain activities (established by the Government’s decree) regardless of whether they are polluters or not. This should not be confused with the fee for pollution of the environment payable under the Environmental Protection Law which remained in force.
� A number of local communal fees, including the fee for the display of show cases, for facilities on the coast, music programs in restaurants and cafes are now abolished.
� Fee for display of company’s name: The amendments to the Law on Financing of Local-self Government introduced significant changes in the system of fees for the display of a company name, so as to either abolish it or limit its amount:
� entrepreneurs and legal entities classified as small legal entities will be relieved from fee for display of company’s name, provided that their income does not exceed RSD 510 million annually and that they are not engaged in activities which generate significant income, e.g.: banking, insurance, production and trade in oil and derivatives, production of tobacco products, postal and telephony services, electric power companies, casinos and night clubs (“Special Activities”),
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� legal entities classified as medium legal entities may pay fee for display of company’s name in the amount of up to 2 average salaries, provided that their income does not exceed RSD 50 million and that they are not engaged in Special Activates,
� amount of fee for display of company’s name payable by legal entities classified as large legal entities which are not engaged in the Special Activities cannot exceed the amount of 3 average salaries annually,
� the amount of fee for display of company’s name engaged in the Special Activities cannot exceed the amount of 10 average salaries annually.
� Fee for the display of advertising boards is limited to 20% of the fee for display of company’s name. Entrepreneurs and small legal entities are exempt for obligation to pay this fee, provided that their annual income does not exceed RSD 50 million and that they are not engaged in the Special Activities.
In addition to local fees (payable to the municipalities and cities), the following fees payable to the central government are also bow abolished, from 1 October 2012:� fees for services related to the registration of endowments, foundations, funds, associations, sports organisations or associations,� fees for the confirmation of the registration of vehicles,� administrative fee payable for the filing of the request for the issuance of quality control licenses,� administrative fee for the issuance of water conditions,� fees payable in relation to the approval of new/foreign cultivars, � fee for the issuance of a corporate ID number, � fee for the notificationon the change of the business activity of a legal entity,� fee for the protection, utilisation and improvement of forests,� catchment water fee (“slivnavodnanaknada”) payable by the users of agricultural and forest land.
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Slovak Republic
Special Levy on Business Activities in Regulated Industries
A new law became effective on 1 September 2012 imposing an additional duty to be paid on income obtained from business activities in regulated sectors. It applies to the following sectors: ∙ Energy Industry;∙ Insurance and Reinsurance Industry;∙ Public Health Insurance;∙ Electronic Communications;∙ Pharmaceutics;∙ Postal Services;∙ Rail Traffic;∙ Public Water and Sewer Systems;∙ Air Transport; and ∙ Health Care Services
The levy applies if the licenced entity generates over 50% of its total revenues from regulated activities and provided the projected revenues are at least EUR 3 million.
Slovenia
Adoption of “Bad Bank” Legislation
In October 2012, the Slovenian Parliament adopted legislation authorising the creation of a so-called “bad bank”, the Bank Asset Management Company (the “BAMC”), to which Slovenian banks will be able to transfer non-performing loans. It is expected that the BAMC could acquire up to €4 billion of non-performing loans in exchange for government-guaranteed bonds. The creation of the bad bank, together with other measures, including a possible €1 billion in fresh capital injections from the government, could pave the way for further privatisation of state-owned banks NLB and NKBM.
Management of State-Owned Assets
In October 2012, the Slovenian Parliament overrode a veto from the State Council and adopted the Slovenian Sovereign Holding Act. The act eliminates certain anomalies that arose from prior legislation, and establishes the Slovenian Sovereign Holding to manage all state-owned assets. Commentators have speculated that the establishment of the Slovenian Sovereign Holding may enable the transparent withdrawal of the state from certain state-owned enterprises.
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Pension Reform
On 4 December 2012, the Slovenian Parliament unanimously adopted pension reform legislation that, over the next seven years, will increase the retirement age in Slovenia to 65 from the current 57 for women and 58 for men. Despite this increase, those who have worked for at least 40 years would be able to retire at 60. The same legislation will reduce unemployment benefits and the severance that employers are required to pay when they make staff redundant. Adoption of this legislation was viewed as an important step in stabilising Slovenia’s efforts at fiscal consolidation, and is expected to result in savings of €150 million in 2013.
Tajikistan
Adoption of the New Tax Code
On 5 September 2012, the Majlisi Namoyandagon of the Republic of Tajikistan adopted a new Tax Code (the "New Tax Code"), which is expected to be gradually introduced from 2013 to 2017. The number of articles in the New Tax Code was reduced from 271 to 229 and the New Tax Code offers the considerable reduction in the number of types of taxes by half -- from 21 to 10. Retail sales tax and highway use tax were abolished, while some types of taxes were unified. As announced, the New Tax Code aims to support domestic producers by exempting all imported state-of-the-art equipment and technologies for the production of commodities and services from value added tax (VAT) and customs duties. Additionally, domestic enterprises dealing with the processing of wool, leather and farm produce will be exempted from paying all types of taxes during the first five years from their establishment, irrespective of the form of property.
Tajikistan Tax Administration Reform Project
On 1 November 2012 the World Bank's Board of Executive Directors has approved to provide a USD 18 million grant to finance a new project aimed at reforming Tajikistan's tax administration. The goal of the project is to support reforms aimed at improving the efficiency, transparency and effectiveness of the tax system that would reduce administrative costs of tax collection, improve quality of taxpayer services, enhance the level of voluntary compliance, and reduce the size of the shadow economy. By promoting an effective tax administration, the project contributes to improved public finance management and better business environment – two key reforms also supported by other Word Bank financed activities in Tajikistan. Various components of the project will improve institutional and operational capacity of Tajikistan's Tax Committee and its field offices to streamline business processes and operate effectively in a new automated environment.
Foreign Trade Activity: Accession to the WTO
On 10 December 2012, the World Trade Organisation approved Tajikistan's accession package to its membership. As stipulated by the WTO, the accession package needs to be ratified before 7 June 2013, and Tajikistan would become an official member 30 days after such ratification is notified to the WTO. As part of its efforts to secure approval to its accession, Tajikistan had earlier in the year on 3 July 2012 proclaimed the Law on Foreign Trade and Activity, which determines the legal organisational and economic principles of external commercial activity and the rights and obligation of subjects of foreign trade activity. Under the accession package, Tajikistan agrees to undertake a series of commitments to open up its trade practices and to further integrate into the global economy through measures such as removing limitations on the right to import goods and applying WTO commitments uniformly across the whole country (including in regions engaging in border trade, special economic zones and areas where special regimes for tariffs, taxes and regulations were established). Tajikistan is committed to apply import tariffs at a maximum average of 8% for all products: 10.4% for agricultural products and an average of 7.6% on non-agricultural products. Tajikistan has further committed itself to fully apply all WTO provisions without any recourse to transitional periods and to join the Information Technology
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Agreement upon accession. In addition, Tajikistan undertakes to submit an application for membership of the Government Procurement Agreement within one year of its accession.
World Bank Grants and Budgetary Support
On 9 November 2012, the World Bank’s Board of Executive Directors approved a USD 20 million grant for the budgetary support to the Government of Tajikistan. According to the press-centre of the World Bank, the sixth Programmatic Development Policy Grant (PDPG6) is part of a series of grants provided since 2009, which support the Government of Tajikistan's efforts to mitigate the impacts of the global economic crisis, promote sustained growth and reduce poverty.
Amendments to the Law on Banking Activities
According to Presidential Decree No.782 dated 26 December 2012 on Amendments to the Law on Banking Activities, a credit institution is now obliged to file with the Financial Intelligence Unit reports on shady transactions or deals of its customers and attempted transactions. AS per the amendment, such reporting does not constitute an infringement of the banking secrecy legislation and does not impose any liability upon a credit institution.
Tunisia
Finance Law 2013
Tunisia adopted the new 2013 financial law after the approval of 7 new articles added to the law. The most important changes, which apply as of 1 January 2013 are the following:
Direct Taxes:1. General provisions created by banks to cover risks related to current liabilities may be
deducted for corporate income tax purposes up to 1% of the overall amount of such liabilities. The amount of the current liabilities must be posted at the balance sheet of the year in respect of which the deduction is claimed.
2. Tax rates on the transfer of immovable properties derived by resident individuals are set to be 15%, if the properties were held for less than five years and 10% if properties are inherited or held for more than five years.
3. Small and medium-size enterprises (businesses with an annual revenue not exceeding TND 300, 000 for services and non-commercial activities and TND 600, 000 for manufacturing and commercial activities) created in 2013 are exempt from income tax for a three-year period.
Indirect taxes:1. Local authorities and state-owned entities are required to withhold 50% of the VAT due
on their acquisitions of immovable when the value of the transaction exceeds TND 1, 000.
2. VAT is suspended on training services for pilots who are not working for airline companies
Other taxes:1. The rate of the tax on industrial, commercial and professional establishments is reduced
from 0.2% to 0.1% for goods, the pricing of which is subject to administrative pre-approval on the condition that the profits margin for such goods is capped at 6% under the applicable laws or regulations.
2. Procurement and concession contracts are subject to registration duly at the rate of 0.5%. Previously, a fixed rate of TND20 applied (per page and per copy) and the overall duties were capped at 2% of the contract value.
3. Taxpayers carrying on specific activities listed in a yet to be released decree are required to file their tax returns electronically, irrespective of the amount of their revenue.
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Previously, only taxpayers realising minimum yearly revenue of TND1 million were required to comply with the e-filing system.
4. The registration duties on the incorporation of companies are increased from TND100 to TND150.
Compensation contribution for individuals with a net annual income exceeding TND 20, 000 (including exempt income). The contribution is levied at the rate of 1% and is capped at TND 2, 000. The compensation contribution cannot be deducted for income tax purposes.
The implementation of the following taxes is postponed: The 10% income tax rate on enterprises producing goods or rendering services wholly for export
is postponed for one additional year.
Tunisia Signs OECD Tax Agreement:
Tunisia has signed a tax agreement with the OECD in the hopes of developing more economic transparency and curbing tax evasion in the country. The Convention on Mutual Administrative Assistance in Tax Matters is a multilateral agreement that was co-developed by the OECD and the Council of Europe; it helps to solve cooperation disputes in cases of cross-border tax evasion and ensures compliance with national tax laws. As a signatory on the agreement, Tunisia is now permitted to attend OECD meetings.
Turkey
New Capital Markets Code
Turkey’s new Capital Markets Code entered into force in December 2012, bringing significant changes to the
capital markets, including relocation of the Capital Markets Board to Istanbul and the transformation of the
Istanbul Stock Exchange into a joint stock company, as well as changes to disclosure requirements and certain
definitions to ensure conformity with European Union Directives.
Change to Resource Utilisation Support Fund withholding rates
The cost of funding for foreign currency-denominated cross-border borrowings with a tenor of one (1) to three (3)
years has increased. Previously, average maturities of, at least, one year or longer were exempt from Resource
Utilisation Support Fund. The new regime is set out below:
TL currency loan – 3%
Foreign currency loan with a term of
o 1 year – 3%
o Between 1 year (including 1 year) and 2 years – 1%
o Between 2 years (including 2 years) and 3 years – 0,5%
o 3 years (including 3 years) or more – 0%
The new rates will be applicable to loan disbursements made from 2 January 2013 onwards.
Financial Leasing law
The long awaited new Financial Leasing Law (“Law”) numbered 6361 has been enacted and published in the
Official Gazette dated 13 December 2012 in Turkey which replaces the old Financial Leasing Law numbered
3226. The new Law provides more clarity for cross-border aircraft leasing transactions through an exemption
directly inserted into the Law (which was to some extent subject to Banking Regulation and Supervision Agency
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review and approval in the practice of the old Law) and the stamp tax exemption which was subject to dispute in
earlier cases is now clearly stated in the Law to avoid further disputes while executing such contracts.
Draft Healthcare PPP law
A draft law regulating public private partnerships in the healthcare sector (the “Draft Healthcare PPP Law”) has
been submitted to the parliamentary commission for consideration. The Draft Healthcare PPP Law covers the
projects involving (i) construction of health facilities on the properties owned by the Turkish Treasury, (ii)
renewal of existing facilities in return of obtaining the ability to provide services at such facility; and (iii)
provision of selective services at the existing facilities.
Once enacted, it will allow projects to be carried out based on the build-lease-transfer model and upon execution
of private law contracts. The projects involving the element of construction will require establishment of servitude
right in favor of the investor on the project land for a term of maximum 49 years and such servitude right will be
in the form of independent and continuous right.
Draft Electricity Market Law
The Ministry of Energy and Natural Resources has prepared a new electricity market law draft (the "Draft EML")
which, if adopted, would revoke the current Electricity Market Law. The Draft EML aims to address issues such
as reducing market risks, completing the privatisation process, and having a fully competitive market
interconnected to Europe and the Middle East, taking into consideration the current market dynamics and needs.
However, there is no official information as to when it will be placed on Parliament's agenda.
Ukraine
National Bank of Ukraine tightens exchange controls
On 16 November 2012 the National Bank of Ukraine introduced mandatory conversion into Hryvnia of 50% of Ukrainian companies’ export revenues in foreign currency, including USD, EUR and RUR. This requirement has been introduced as a temporary measure for a period of six months; however, it is expected that it will be extended once the initial six-month period expires. In addition, the National Bank of Ukraine has shortened the time period within which Ukrainian exporters have to be paid and Ukrainian importers have to complete any imports for which they have paid from 180 days to 90 days. A failure to meet this deadline will result in financial sanctions being applied to a defaulting exporter/importer.
The procedure for registering cross-border loans in foreign currency has been changed
On 10 November 2012 the procedure for registering cross-border loans in foreign currency with the National Bank of Ukraine was changed. Under the new rules, Ukrainian borrowers will apply for registration of their loan agreements with foreign lenders through their servicing banks rather than directly. The new rules have also shortened the time period during which a decision on whether to allow or refuse registration of a loan agreement must be taken from seven to five business days. The form of an application for registration was also changed to the effect that it now contains a reference to the provision of the Civil Code of Ukraine requiring that parties to a loan agreement specify the maximum amount of the increase of a floating interest rate if it is used in the loan agreement. It is yet to be clarified if this provision of the Civil Code is viewed by the NBU as applicable to loan agreements governed by foreign laws.
On 20 November 2013 the Ukrainian parliament passed a law introducing significant changes into the legislative framework underpinning the development of the Ukrainian renewable energy industry. Among other things, the feed-in tariffs applicable to solar power generating facilities that many experts considered unsustainably high have been lowered. On balance, the local content requirement has become more difficult to satisfy which may hinder further development of renewable energy projects in Ukraine.
A new Ministry of Revenue and Duties was created
On 24 December 2012 the President of Ukraine issued a decree establishing a new ministry, the Ministry of Revenue and Duties. The new ministry will supersede the State Customs Service and the State Tax Service, both previously under control of the Ministry of Finance. In addition, the newly created ministry will be entrusted with administering the mandatory social security contributions. There is a concern
that the reform may create an additional administrative burden for the taxpayer due to new rules and procedures that are inevitably going to be introduced by the new ministry.
Uzbekistan
Private property ensured
A new law "On protection of private property and guarantees of the rights of property owners" was enacted on 25 September 2012. The law aims to strengthen protection of private property, as well as to provide enhanced guarantees for the rights of property owners. The law creates favourable conditions for the efficient functioning of the economy and bolsters business activity.
The law established once again the principle of inviolability of private property rights acquired upon the privatization of state property as well as principle inadmissibility of revisiting of the privatisation results.
The law further prohibits imposition of unfavourable conditions on private property owners, including unreasonable demands from the government authorities including the illegal interventions in the property owners' economic activity.
Finally, foreign citizens and stateless persons have been confirmed to be equally treated with respect to the property rights as the residents of the state, subject to certain restrictions provided by the law or by international treaties of the Republic of Uzbekistan.
Private banking and financial institutions established
A new law “On private banking and financial institutions and guarantees of their activity” was adopted on 18 December 2012 to protect the rights and legitimate interests of private banking and financial institutions, create more attractive environment for private sector investment to the financial sector, as well as increase in competition and quality of customer services in banking sector.
The law incorporates, inter alia, the procedure of formation of private banking and financial institutions, as well as certain guarantees of their rights and activities.
According to the law, banks and other credit institutions, insurance companies, as well as companies that exclusively provide financial services are considered private banking and financial institutions if no less than 50% of participating interest in their capital belongs to individuals.
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The law further states that government agencies, political parties, trade unions, public foundations, religious organisations, as well as companies with state participation are prohibited from becoming founders / participants of private banking and financial institutions.
Under the law, private banking and financial institutions are guaranteed equal rights and opportunities to access material and technical resources. In addition, such institutions are allowed to determine the price for their services unless otherwise provided by law.
Finally, the law provides for inviolability of ownership rights of private banking and financial institutions, as well as of their founders /participants. In particular, the property of such institutions may not become subject to nationalisation, requisition and confiscation, unless otherwise provided by law.
‘One window’ approach incorporated
A new law “On licensing procedures in entrepreneurial activity” was enacted on 20 December 2012. The law provides the basic principles of the licensing system in Uzbekistan.
The main objective of the law is to remove unnecessary bureaucratic barriers for the businesses, create a uniform legal framework and increase transparency of licencing activity. In particular, the law envisages basic elements of interaction between businesses and government officials, procedure for obtaining relevant permits, requirements to application documents, order for suspension and termination of licenses, as well as grounds for refusal to issue.
Among other things, the law introduces the ‘one window’ or ‘one-stop’ principle. In accordance with which, in cases where one competent authority requires permits issued by other competent authorities, the former may collect and request such permit documents independently, without involvement of a business.
In addition, the law establishes the priority principle requiring all inherent contradictions and ambiguities of law be interpreted in favour of businesses.
The law is expected to come into force on 21 June 2013
[Note: If you have any questions regarding this publication please send an email to the Legal Transition Team at the EBRD - [email protected]]. To read about the EBRD’s legal reform programme go to www.ebrd.com/law
