Since April 1, 2017, Uzbekistan has launched a unique national automated system of state registration of business which enable applicants to obtain a certificate of state registration within 30 minutes. Within one month from the launch of the new system, over 21,000 business entities were registered through this system, 7.6% of them registered online.
International studies reveal that simplifying business registration process increases economic growth and employment. This is due to the fact that more firms enter the market, when registration fees are reduced, a large percentage of new firms remain and grow, new firms create competition in the market, and motivate existing players to increase productivity and investment.
The introduction of a real-time business registration mechanism was an important step towards ensuring the availability, transparency and quality of the provision of public services. It should be noted that with the assistance of UNDP's ‘Business Forum of Uzbekistan (Phase III)’ project, a first-ever fully transactional public service has been introduced in the country. The new mechanism has significantly reduced the number of procedures, time and financial costs.
To date, the number of documents required for registering a legal entity (business) has reduced from six to one, i.e. only application form and company’s constituent documents are required (except for merger, spin-off and splitting the company, where applicants are required to submit scans of transfer of assets or split balance sheet). To register as an individual entrepreneur, an applicant needs to submit only an application form, instead of a set of seven documents, which was the case before.
In addition, the registration process via the Internet has several advantages compared to registering in person.
- Firstly, there is no need to submit originals of documents in paper form to registration authority of, so applicants do not have to visit the registering authority in person, as well as a cash office of a bank to pay the state fee for registration, which also reduces the indirect costs of the applicants;
- Secondly, the state fee schedule for registration, including business re-registration when applied via the Internet, is set at 50% of the state fee, which is due when registering in person;
- Third, an applicant can complete the online registration process, or pause and continue at any time convenient for the applicant.
During the first month, more than 1,000 legal entities and more than 1,200 individual entrepreneurs were registered through this system online. The online registration service for a legal entity was more in demand among applicants in the city of Tashkent, in the Tashkent and Jizzakh regions. To register as an individual entrepreneur more online applications were submitted by entrepreneurs from the Tashkent region, the city of Tashkent and the Namangan region. At the same time, 92.4% of the applicants preferred online registration to registering via “single window” centers in person.
However, ‘Business Forum of Uzbekistan (Phase III)’ project’s experts believe there is room for further improvement of this service. Based on the international experience (Slovenia, Macedonia, Kazakhstan), they propose exploring options for cancellation of the state duty payment for state registration of LLCs through the Internet, regardless of the ownership form and type of activity. This organizational and legal form is the most popular among business entities due to low legal requirements. From January 1 to May 1, 2017, more than 11 thousand LLCs were registered in Uzbekistan.
Secondly, it is time to start discussing issues on creation opportunities for remote opening of bank accounts by citizens of Uzbekistan.
At the same time, one of the reasons of the relatively low use of the online business registration system is the need for one-time identification and authentication on the Single Portal of Interactive Public Services using electronic digital signature (EDS). This authentication allows applicant to gain access to other services, but requires to contact the tax inspectorate to receive the EDS. In this regard, according to the project experts, it is necessary to put in use ID-cards, which are offered to be issued simultaneously with a passport of a citizen of Uzbekistan. ID-cards will allow to use any public service via the Internet remotely, including signing applications, documents in real time.
In general, to promote the online business registration services among public, it is important to improve computer literacy of applicants, since ignorance of the computer can restrain their capabilities. It should also be noted that entrepreneurs do not use their right for the non-use of seals and stamps in their activities. The law from August 20, 2015, ZRU-391 cancelled the requirement to prepare seals and stamps for small businesses compulsorily.
In addition, it is necessary to raise public awareness of the opportunities of the introduced mechanism, particularly in the regions, and to increase legal literacy in this sphere. The project experts prepared a commentary that will further improve the law enforcement practice of the provisions of the legislation on state business registration.
The ‘Business Forum of Uzbekistan (Phase-III)’ project is a joint initiative of UNDP and Chamber of Commerce and Industry, aiming to improve the business environment by introducing online services, improving regulatory frameworks, and developing and promoting inclusive business models.