Uzbekistan lifted remaining currency controls on Tuesday, August 20, 2019 allowing citizens to purchase foreign cash for the first time as the Central Asian country seeks to attract foreign investment.

The country of 32 million people has looked to diversify its economy since the death of its longtime leader Islam Karimov in 2016.

Central bank chairman Mamarizo Nurmuratov said at a press conference that the bank would be allowing the national som currency’s value to be determined “independently in the market,” state media reported.

“Now the Central Bank will not set prices for the sale and purchase of foreign currency,” Nurmuratov said during the press conference on state television.

In a press release the bank said it would “use market mechanisms to mitigate the effects of external shocks and ensure the balance of key macroeconomic indicators.”

The bank said that commercial banks would begin selling foreign currency in cash form, rather than transferring it onto specialized cards that were introduced in 2017. The central bank had previously retained some controls on the som despite allowing a sudden 50 percent drop in the currency in 2017 which brought it closer to its black-market value.

Before 2017 Uzbekistan’s currency was subject to strict capital controls, leading to a wide gap between its official exchange rate and the black-market rate. Exporting firms were forced to sell their foreign currencies at the artificially high official rate, discouraging foreign investment. After aligning the official rate with the black-market rate, the central bank used “half-market measures” to control the currency in the transition to a free float, economic analyst Navruz Melibayev said.

“This system was perhaps similar to China’s [control of] the yuan currency. Now we have a full free float like Russia or Kazakhstan,” Melibayev told AFP by telephone.

Last week President Shavkat Mirziyoyev hailed a surge in investments in the economy, which he said constituted over 38 percent of Gross Domestic Product, in the first half of this year.

The International Monetary Fund has welcomed economic reforms in Uzbekistan but warned last year that import and export data showed signs of an overheating economy.

The country was unattractive for investors under Karimov, who took a conservative approach to external debt and favored a strongly protectionist economic model that led to stagnation.

Uzbekistan depends on commodities such as gold and cotton for economic growth but has looked to diversify since Karimov’s death in 2016.

By AT CONTRIBUTOR, TASHKENT

August 20, 2019

A package of draft laws which improve the rules on Special investment contracts (hereinafter – “SPIC”) has been adopted. The amendments governing the rules for concluding SPIC came into force on August 13, 2019, and changes in the tax sphere start from September 2, 2019.

What is SPIC and who needs them?

The SPIC mechanism enables the investor to conclude an agreement with the government on the development or introduction of new technologies for the development of industrial production in Russia. At the same time, the government commits itself to maintaining the stability of the fiscal and regulatory framework and to granting tax benefits to the investor. Such an agreement also allows the investor to participate in public tenders without meeting localization requirements right away. This mechanism was introduced in Russia in 2015 and, according to the Industrial Development Fund, 33 contracts in diverse industrial fields with a total value of 434 billion roubles have been concluded since then (about 6 billion euros in various industries).

The new rules introduce significant changes to the current mechanism (SPIC 1.1).

Who can apply for a SPIC and what preferences will an investor get?

According to the new version of the law, SPIC conclusion will be held through an open or closed tender, and not in a simple application procedure. The subject of SPIC should be the development and implementation of modern technologies for mass production of goods competitive in the world market, and the Government of the Russian Federation will approve the list of such technologies.

In addition to receiving tax benefits at the federal and regional levels (e.g., setting the profit tax rate at the federal level to 0% and reducing the tax rate at the regional level) SPIC businesses can count on government support as a part of the implementation project. Investors are immediately granted “Made in Russia” status for products manufactured as a result of SPIC implementation and are also granted a delay in meeting localization requirements.

The adopted package of draft laws improves conditions for investors in many ways. The changes relate in particular to the following:

• The term of contracts has been extended to 15 years if the amount of investments is up to 50 billion roubles; and up to 20 years if the amount of investments exceeds 50 billion roubles
• SPIC can be concluded by investors with any capital investment (the minimum requirement for the amount of investment is cancelled)

1. zero income tax rate will be applied only if the revenue from the SPIC subject is at least 90% of all income;
2. in case of failure to fulfil the criterion “90-10”, there is the possibility of separate income (expenses) accounting within SPIC framework.

It should be noted that the application of profit tax benefits is not limited in time but possible until the reporting period in which the SPIC ceases to be effective. However, the benefits are related to the level of government expenditure: government investments in the project are stopped if they exceed 50% of the investor’s investment in SPIC.

What does this mean for business?

SPIC attracts investors and is one way to participate in government procurement without meeting localization requirements. The adoption of these amendments should have a positive impact on the Russian industrial sector and create more favourable conditions for foreign investors. SCHNEIDER GROUP is ready to offer you services supporting SPIC conclusions, and also provide related tax and legal advice.

(c) the Schneider Group 

August 22, 2019, Moscow – Raiffeisenbank has signed an agreement with the Etalon Group on the construction of an office center at Nagatino i-Land business park. Legal support for the transaction on behalf of Raiffeisenbank was provided by a team from the global law firm Dentons led by Partner Florian Schneider and Counsel Olga Popel. The transaction involves the construction of a 16-story office building with a total area of 34,000 m2 and is structured as a built-to-suit deal. Florian Schneider, Partner in Dentons’ Real Estate practice, talks about the deal’s outcome: “This was one of the many major real estate projects our practice has handled over the past year, one that encompassed numerous stages: from legal due diligence on the land plot where the construction will take place and making recommendations on the deal structuring and use of security instruments, to drafting the transaction documents. Thanks to the Dentons team’s concerted efforts, not only were we able to do a quality job on a major project for the client, we also managed to get the transaction signed within a short time frame.”

Link to the original article: https://www.dentons.com/en/whats-different-about-dentons/connecting-you-to-talented-lawyers-around-the-globe/news/2019/august/dentons-advises-raiffeisenbank

 By Ernst & Young Kazakhstan

During a meeting of the Government of the Republic of Kazakhstan (“RK”) on 15 July 2019, the President instructed the Government to resolve the issue of Kazakhstan and foreign employees' remuneration.

In this regard, the Vice-Minister of Labor and Social Protection of the population of the RK reported on planned inspections at entities which have foreigners among their staff. Moreover, the Government of the RK is developing an action plan to prevent violations of labor and migration legislation at entities hiring foreigners.

Among other plan components, we would like to highlight the following initiatives:

• By 15 August 2019 – to analyze the working conditions and wages of employees of foreign companies who are citizens of the RK and to introduce relevant proposals.
• By 1 September 2019 – to organize inspections at entities hiring foreigners to ensure the foreigners are hired legitimately and labor and migration legislation is complied with.
• By 1 October 2019 – to strengthen the work of the commission setting quotas for hiring foreigners, taking into account the situation on the domestic labor market.
• By 1 December 2019 – to tighten the issuance of work permits for foreigner employees of the third and fourth categories by introducing changes to the rules.
• By 1 December 2019 – to amend the Order on the approval of risk assessment criteria and checklists for compliance with labor legislation of the RK by including enterprises hiring over 30 foreigners among the subjective criteria when forming a preventive control list.
• On a semi-annual basis – to take measures to avoid discrepancies in remuneration and work conditions between foreign and local employees.

In addition to the above action plan, the draft Law on the introduction of amendments and additions to certain legislative acts of the RK on labor issues has been completed and is currently being considered by the Parliament of the RK.

Hiring foreigners in the RK involves fulfilling many legislative requirements, both at the foreign specialist work permit application stage, and during the period of his/her work in the RK (visa issues, registration with the migration authorities, etc.). Further, creating unequal working conditions for Kazakhstan and foreign employees and paying the unequal salaries is not allowed.

Non-compliance with the legislation leads to risks not only for the company and the foreign specialist, but also for his/her family, as well as executives of that company.

In light of this news, companies hiring foreign employees are highly recommended to make sure that all necessary documentation is executed in accordance with the requirements of the law and that the required minimum share of local personnel is met not only at the time the work permit application is submitted, but also during the entire period of its validity. It is also recommended to review the current remuneration system and reconcile the job responsibilities, qualifications and KPIs of local and foreign employees to ensure fairness in payment and working conditions.

EY professionals, having wide experience in the above issues, will be happy to assist in identifying the risk areas and drawing up an action plan.

Among others, EY Kazakhstan can provide professional support in the following issues:

• Expatriate remuneration surveys;
• Pay system design, grading;
• Workforce acquisition strategy;
• Immigration audit (health check) to evaluate the approaches applied within the company with respect to immigration documents/procedures aiming at reducing the risk of disputes and possible fines/sanctions arising from current practice;
• Review of employment documents and employment records for their compliance with labor legislation of the RK (HR audit);
• Legal advice and support with labor legislation of the RK.

For further information please contact:

Dinara Tanasheva
Partner, Tax & Law Services Leader for Kazakhstan and Central Asia
Tel.: +7 727 258 5960
Dinara.S.Tanasheva@kz.ey.com Maria Aronikova

Silk-manufacturing enterprises of Uzbekistan will receive subsidies from the state until August 1, 2022, Trend reports with reference to the Ministry of Justice of Uzbekistan.

Subsidies will be issued to compensate up to 50 percent of the cost of transporting 8 types of products by air and rail to the United States, the European Union and Turkey at the expense of the State budget, in accordance with the presidential decree "On additional measures for the development of deep processing in the silk industry".

Moreover, the cost of grains of the silkworm and other material and technical resources necessary for the production of cocoons, which are delivered by the enterprises of "Uzpaksanoat", will not be considered a turnover of the sale of goods.

Silk enterprises are given preferential prices for the purchase of transport, the supply of fertilizers and seeds.

Since the beginning of 2020, 50 percent of the fines imposed for illegal cutting of plantings have been sent to plant new mulberry seedlings on the territory of the violation.

Tax privileges established by legislation for legal entities with an export share of more than 15 percent from the sale of goods also apply to products made from raw silk and silk wool until January 1, 2021.

by Trend News Agency

www.en.trend.az

Author:

Associate, Trade Mark & Design Attorney
Gowling WLG (International) Inc.

E-mail: ekaterina.fourmanova@gowlingwlg.com

Verifier:

Partner, Trade Mark Attorney
Motsnyi Legal Services

E-mail: motsnyi@motsnyi.com

On 27 July 2018, the Russian State Duma passed the first reading of the draft Bill ‘On Amendments to Part IV of the Civil Code of the Russian Federation’, which concerns geographical indications.

The Bill will introduce geographical indications as an independent form of intellectual property which will co-exist with appellations of origin, which are currently protected under Russian law.

Among the most famous Russian names registered as appellations of origin are KHOKHLOMA painting, GZHEL porcelain, ZHOSTOVO painting, ESSENTUKI mineral water, RUSSIAN VODKA and ABRAU-DURSO sparkling wine.

Such famous foreign names as ASTI and PROSECCO for Italian wines, TEQUILA for a Mexican national alcoholic spirit, HABANOS for Cuban cigars, PROSCUITTO DI PARMA for Italian dry-cured ham, GRANA PADANO, PARMIGIANO REGGIANO, GORGONZOLA for Italian cheeses and others are already protected as appellations of origin in Russia.

While appellations of origin are used by consumers as a way of ensuring the high quality and special features of a product, appellations of origin are still not widely used in practice. Currently, only about 170 appellations of origin are registered in Russia, 35 of which are owned by foreign manufacturers. In contrast, more than 3000 geographical indications and appellations of origin are protected in the European Union, underscoring the significant untapped opportunity for domestic and foreign applicants that have yet to explore these forms of protection in Russia.

Case law has revealed a number of problems in the law on appellations of origin, which has kept it from realising its full potential in Russia. Under the current law, an appellation of origin incorporating the name of a geographical place in a foreign country can be granted only if such name is protected in that foreign country as an appellation of origin as opposed to other means of protection. Rospatent (the Russian Federal Service for Intellectual Property) has continuously refused foreign applicants seeking protection for their geographical indications on these grounds in Russia.

According to the proposed definition, a geographical indication is a designation that identifies a product as originating from the territory of a geographical object, where the certain quality, reputation and other characteristics of the product are substantially determined by their geographical origin. At least one stage of the product manufacturing process must fall within the said geographical object.

This definition highlights an important difference between geographical indications and appellations of origin, since, as regards the latter, the complete manufacturing process, as well as the raw materials, must be localised within and originate from the geographical area concerned. 

Protection of a new geographical indication – or a registered one – may be obtained by one or several individuals or legal entities by way of filing an application with Rospatent. Notably, the draft Bill also proposes that a geographical indication may be registered by a group of producers (e.g., an association) organised and acting according to the legislation of the country of origin.

The application shall include information describing the connection between the essential features of the product – namely the quality, reputation and other characteristics – with the place of the product’s origin or manufacture, along with documents confirming the same. Unlike with appellations of origin, there will be no strict requirement to describe the unique qualities of the goods or provide evidence that all the goods produced under a certain geographical indication will be characterised by a single unique set of features.

State registration of a geographical indication can be granted to a designation, allowing identification of the product as originating from the geographical area located in a foreign country, provided that this designation enjoys protection as a geographical indication, or another form of exclusive IP right in the country of origin. Protection may be granted only to the right holder whose right is secured in the country of origin. Should the right holder lose its right in the country of origin, the geographical indication protection will terminate in Russia.

According to the Bill, earlier registered appellations of origin cannot be granted parallel protection as geographical indications for the same type of goods. At the same time, existing registered appellations of origin and those newly filed may be converted into geographical indications in relation to the same type of goods, assuming all the respective requirements be met.

The exclusive right for a geographical indication will be valid for ten years after the application filing date and may be renewed for an unlimited number of subsequent ten-year periods, provided that the right holder maintains the possibility of manufacturing the product with the same characteristics and level of quality.

The right holder will be entitled to use the geographical indication in relation to the product it is registered for by all means provided by the law, as well as prohibit third parties from using the geographical indication – even as a translation from another language or with a disclaimer ‘sort’, ‘type’ or ‘imitation’, as well as other confusingly similar designations likely to mislead consumers.    

Right holders will be entitled to use the warning sign ‘registered appellation of origin of goods’ or ‘registered geographical indication’, as well as respective symbols – by analogy with the ® symbol used for registered trade marks – in order to show the status of their rights.

Just like with the appellation of origin, the disposal of exclusive rights in a geographical indication, such as the transfer of rights to a third party or granting a licence, will be prohibited.

The Bill on GIs is a welcome innovation. It aims to fulfil Russia's World Trade Organization (WTO) obligations under Articles 22 and 23 of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, which requires protection of geographical indications and is in line with the Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications.

Introducing geographical indications as a separate form of intellectual property is likely to promote regional Russian brands and raise awareness among consumers, attract investment, support rural settlements, generate employment and contribute to the development of tourism.

Foreign producers will enjoy enhanced protection of their products in Russia by securing the rights to a more accessible means of intellectual property protection offered by a geographical indication.

The new legislation is aimed at preventing products from being misleading in terms of their place of origin on the market and combating the import and sale of counterfeit products in Russia.

On July 26 the Bill has passed all readings and became the Law № 230-FZ becoming effective as of July 26, 2020.

Article can also be found at: ECTA Bulletin June 2019

Source: European Communities Trademark Association (ECTA) https://ecta.org/cgi?lg=en&pag=4243&tab=87&rec=25&frm=0

CERBA Canadian business mission to Zabaikalye, led by Tom Nevakshonoff, a former member of Legislature and Cabinet Minister of Manitoba Government; met with Acting First Deputy Chairman of the Government of Zabaykalye, Marat Mirhaidarov and the ministry of Investment Development of Zabaikalsky Krai, to discuss the cooperation opportunities in Chita on July 30, 2019.

The meeting was followed by the Roundtable and Canadian companies' presentations at the Pushkin Library. Among the Canadian delegation were:
▪️CERBA Manitoba Board Chair, Mr. Tom Nevakshonoff; 
▪️CERBA Moscow Regional Director, Mr. Alex Grichine; 
▪️Bühler Industries Chief Operation Officer - Mr.Grant Adolph; 

The mission is also supported by the Canadian Embassy in the Russian Federation.

Both foreign firms and organizations, as well as domestic producers (suppliers), including small businesses that have fulfilled the conditions for participation in them, as well as those who have experience in supplying the corresponding volumes of products purchased on a tender basis can take part in the next tenders.

• purchase of medical equipment, components, spare parts and consumables;
• purchase of cochlear implants;
• purchase of contraceptives.

For more information on each tender, application deadlines and turms - click on the link.

Within a joint project to promote sustainable management of water resources in rural areas of Uzbekistan, EU and the German Society for International Cooperation (GIZ- Deutsche Gesellschaft für Internationale Zusammenarbeit) announce Prosoft Tender No. 91129581 for the supply and installation of solarphotovoltaic stations in the regions of Uzbekistan: Surkhandarya, Kashkadarya and Fergana on three lots:

Lot No 1 -- 22 kW photovoltaic station, autonomy 14 hours, output voltage 380V (three-phase) in the Fergana region.

Lot No 2 -- 22 kW photovoltaic station, autonomy 14 hours, output voltage 380V (three-phase) in Kashkadarya region.

Lot No 3 -- 18 kW photovoltaic station, autonomy 14 hours, output voltage 380V (three phase) in the Surkhandarya region.

Bids are accepted until July 15,2019.

All interested companies in Uzbekistan are invited to participate in the tender.

Terms of payment (by bank transfer only): 15 percent advance payment, 85 percent after delivery and commissioning. To register in the upcoming tender, participants must send confirmation in the form of an interest letter to the e-mail: oleg.gasanov@giz.de and rustam.tashkariev@giz.de

Alterntatively, they can send a confirmation letter (with the full name of the company / organization, a short summary is welcome, postal code, address in Uzbekistan, e-mail, phone number / cell. Number) at the address: 100029 Tashkent, Uzbekistan, Mirabad district, st. Chimkentskaya 7 A., Purchasing Department.