COMPARING BUSINESS REGULATION ACROSS THE REGION AND WITH 183 ECONOMIES 74676 A COPUBLICATION OF THE WORLD BANK AND THE INTERNATIONAL FINANCE CORPORATION © 2011 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, DC 20433 Telephone 202-473-1000 Internet www.worldbank.org E-mail feedback@worldbank.org All rights reserved. A publication of the World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of the World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. 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Copies of the Doing Business global reports: Doing Business 2011: Making a Difference for Entrepreneurs; Doing Business 2010: Reforming through Difficult Times; Doing Business 2009; Doing Business 2008; Doing Business 2007: How to Reform; Doing Business in 2006: Creating Jobs; Doing Business in 2005: Removing Obstacles to Growth; and Doing Business in 2004: Understanding Regulations, may be obtained at www.doingbusiness.org. Contents Doing Business in South East Europe 2011 Doing Business investigates the reg- Executive summary 1 is the second subnational report of the ulations that enhance business activity Doing Business series in South East Eu- and those that constrain it. Regulations About Doing Business and Doing 9 rope. In 2008, quantitative indicators on affecting four stages of the life of a busi- Business in South East Europe 2011 business regulations were created for 22 ness are measured at the subnational Starting a business 14 cities in 7 economies: Albania, Bosnia level in South East Europe: starting a Dealing with construction permits 20 and Herzegovina, Croatia, Kosovo, FYR business, dealing with construction per- Macedonia, Montenegro, and Serbia. This mits, registering property and enforcing Registering property 27 year, Doing Business in South East Europe contracts. These indicators were selected Enforcing contracts 32 2011 documents progress in 18 of the 22 because they cover areas of local jurisdic- cities previously measured—4 cities from tion or practice. Data notes 38 Croatia are no longer included—and ex- The data in Doing Business in South City tables 45 pands the analysis to 4 new cities—Balti East Europe 2011 are current as of Janu- Doing Business indicators 51 (Moldova), Chisinau (Moldova), Durres ary 2011. The indicators are used to List of procedures (Albania), and Tetovo (FYR Macedonia). analyze economic outcomes and identify Starting a business 55 For a complete list of cities and economies what reforms have worked, where and measured in this report, please see City why. Dealing with construction permits 73 tables on page 45. This report is the result of collabo- Registering property 105 Comparisons with other economies ration between IFC Southern Europe Acknowledgments 118 are based on Doing Business 2011: Mak- Investment Climate Advisory Services ing a Difference for Entrepreneurs, the and the subnational Doing Business team eighth in a series of annual reports pub- of the Global Indicators and Analysis De- lished by the World Bank and the Inter- partment, World Bank Group. The report national Finance Corporation. The indi- was produced with the financial sup- cators in Doing Business in South East port of the Government of Switzerland Europe 2011 are also comparable with through the State Secretariat for Eco- more than 300 cities from 38 economies nomic Affairs (SECO), the Government benchmarked in other subnational Doing of Austria, and the United States Agency Business studies. All data and reports for International Development (USAID). are available at www.doingbusiness.org/ subnational and www.doingbusiness.org. STARTING A BUSINESS 1 Executive TABLE 1.1 Cities from FYR Macedonia, Montenegro, Moldova, and Serbia take the lead on the 4 Doing Business topics measured summary Ranking (1-22) Ease of dealing Ease of with Ease of Ease of starting a construction registering enforcing Economy City business permits property contracts Durres* 9 11 13 14 Shkodra 8 3 9 11 Albania Tirana 10 NO PRACTICE 16 18 Vlora 7 9 10 10 Banja Luka 18 3 21 15 Bosnia and Mostar 20 13 22 20 Herzegovina Sarajevo 19 9 19 19 Pristina 22 17 18 21 Kosovo Prizren 21 6 14 22 Bitola 2 12 3 5 It is a matter of conjecture whether the FYR Macedonia Skopje 1 2 15 9 economies of South East Europe consti- Tetovo* 3 3 6 3 tute a unique region. Certainly, it is a place Balti* 13 8 1 4 which has historically been shaped more Moldova Chisinau* 17 19 1 2 by politics and the interests of foreign Niksic 5 1 6 17 powers than economic forces. Yet it is Montenegro Pljevlja 4 6 4 7 economic forces, particularly those asso- Podgorica 6 18 20 16 ciated with transition and integration, and Belgrade 11 21 16 11 the deep reforms needed to move from a Krusevac 16 20 10 11 planned to a market economy, which have Serbia Uzice 12 16 10 6 imposed themselves as the most forma- Vranje 14 13 5 7 tive influences on the direction of the Zrenjanin 14 13 6 1 region’s public policies. While the region Note: The ranking on each topic is based on the simple average of the percentile rankings on its component indicators. See Data notes for details. was once the inspiration for the term *City not benchmarked in Doing Business in South East Europe 2008 report. “balkanization”—describing the disinte- Source: Doing Business database. gration of a state into smaller antagonistic parts—the recent past, global economic former, has been added. Some econo- complying with regulations brings more crisis notwithstanding, speaks of increas- mies face ongoing political conundrums benefits than costs. In an era of tight ing cooperation, economic growth, and which remain open challenges. Overall, budgets and high unemployment, re- foreign direct investment. Over the last however, the political legitimacy which forms making it easier to do business decade, the region has gradually become comes from economic progress has been make more sense than ever. They help a more settled and economically advanced a lesson learned by governments across create jobs and boost growth without area on the immediate periphery of the the region. There is an abiding drive for costing governments much. This report European Union (EU). competitiveness amongst and between shows that the economies of South East Despite perceptions, the region is all of them. Competitive economies can- Europe have continued to implement quite diverse and the changes since the not survive as islands of growth but micro-economic reforms in spite of chal- 2008 Doing Business in South East Eu- must build interdependency with their lenges presented by the global financial rope report reflect that fact. Some of neighbors and further afield. As a con- crisis. The report also shows that the the countries have progressed further sequence, economic forces are asserting results of recent reforms can be seen at in transition while others have a dis- their pre-eminence in the region. Where the municipal level across the region. tance to go. Some are on the cusp of there was once political disintegration, Coupled with other factors—such as the the European Union while others have markets are encouraging investment and availability of a skilled workforce—im- yet to attain “candidate” status. Croatia, trading linkages across state borders. proving the business environment in the in the final stages of accession discus- There is no blueprint for how to region’s secondary cities will continue to sions with the European Union, is no grow and prosper but one factor is creat- have a positive impact. longer included in this regional report. ing an investment climate conducive to Doing Business studies business reg- In turn, Moldova, a newly emerged re- starting and running a business, where ulations from the perspective of a small 2 DOING BUSINESS IN SOUTH EAST EUROPE 2011 FIGURE 1.1 be attributed to the addition of 4 new cit- The region's economies* made large strides in improving commercial regulations Improvement in the ranking on the ease of doing business, Doing Business 2008–2011 ies, some of which have competitive reg- 1 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 183 ulatory frameworks. For example, Balti (Moldova) ranks at the top on the ease Albania 136 TO 82 of property registration. Tetovo (FYR 9 REFORMS FYR Macedonia Macedonia) is one of the most efficient 75 TO 38 17 REFORMS cities for enforcing a contract. On the Montenegro other hand, the cities that improved their 81 TO 66 7 REFORMS business regulations the most during Moldova the past 3 years—such as Skopje (FYR 92 TO 90 6 REFORMS Macedonia) and Banja Luka (Bosnia and Herzegovina)—surpassed their peers. AVERAGE RANKING 37 87 96 117 137 ON THE EASE OF EUROPEAN EAST LATIN AMERICA SOUTH SUB- DOING BUSINESS, UNION ASIA & & CARIBBEAN, ASIA SAHARAN DB2011 PACIFIC MIDDLE EAST & AFRICA SOUTH EAST EUROPE SETTING A NORTH AFRICA * Represented by their respective capital cities. STRONG PACE OF REFORM Source: Doing Business database. Much has changed in recent years. The to medium-size domestic firm. Capital Dealing with construction permits is region has been very active in improv- cities represent the economies of South most burdensome in Belgrade (Serbia), ing business regulations, often in re- East Europe in the annual Doing Business while in Tirana (Albania) no permit has sponse to circumstances—such as the report, which compares regulatory prac- been issued since 2009. prospect of joining the EU or facing tices in 183 economies around the world. Two observations stand out. First, the global financial crisis. Some of the Yet, within each economy, entrepreneurs no single city does well in all 4 areas. regions’ economies, represented by their face local regulations and practices that For example, Chisinau (Moldova) ranks respective capital cities, have been recog- vary from city to city. Doing Business at or near the top on the ease of regis- nized as top 10 Doing Business reformers in South East Europe 2008 was the first tering property and enforcing contracts over the past 5 years: FYR Macedonia report to go beyond the capital cities but lags behind on the 2 other topics. in 2006/2007, Albania in 2007/2008, for 7 economies in the region to cap- And while Skopje (FYR Macedonia) is a and (again) FYR Macedonia as well as ture these differences in 15 other cities top performer on the ease of starting a Moldova in 2008/2009. Most notably, from Albania, Bosnia and Herzegovina, business and dealing with construction FYR Macedonia has implemented 17 Croatia, Kosovo, FYR Macedonia, Mon- permits, it can look to Bitola (FYR Mace- Doing Business reforms. In the most re- tenegro, and Serbia. This report updates donia) or to Moldova’s cities to improve cent Doing Business in 2011 report, FYR the information presented in 2008 for 6 its performance on property registration. Macedonia ranks 38th out of 183 econo- economies (all but Croatia) and tracks Second, there is a rich variation in per- mies—an improvement of 37 positions their progress in implementation of busi- formance by indicator even among cit- over 5 years (figure 1.1). ness reforms. It also expands the analysis ies within the same economy—with the Doing Business in South East Europe to 1 more country (Moldova) and 4 exception of starting a business, where 2008 identified good practices, pointed new cities: Balti (Moldova), Chisinau all 3 Macedonian cities take the lead. For out bottlenecks, and provided recom- (Moldova), Durres (Albania), and Tetovo example, within Montenegro, Podgorica mendations for business reforms beyond (FYR Macedonia). The results of this new and Pljevlja could look to Niksic to learn the region’s capital cities. Three years 22-city, 7-economy comparison for 4 to deal with construction permits more ef- later, this report tracks progress over Doing Business topics are presented here ficiently. In addition, Zrenjanin could pro- time. The results are impressive. All 19 (table 1.1). vide a positive example to other Serbian cities measured for the second time show Across the region, it is easiest to cities in the area of contract enforcement. improvements in at least 1 of the 4 areas start a business in Skopje (FYR Macedo- When comparing cities’ 2011 per- measured (table 1.2). Most cities ben- nia), deal with construction permits in formance with the results from 2008, efited from the roll-out of nation-wide Niksic (Montenegro), register property some trends emerge. First, consistent business reforms summarized below— in Balti and Chisinau (Moldova), and performers stay at the top. For example, although implementation results on the enforce a contract in Zrenjanin (Serbia). Bitola (FYR Macedonia) maintained its ground vary. It is most difficult to start a business in position among the best performers in Within the region’s economies, 2 Pristina (Kosovo), register property in most of the areas measured. Other cities, cities stand out: Skopje (FYR Macedonia) Mostar (Bosnia and Herzegovina), and like Krusevac (Serbia), dropped relative and Banja Luka (Bosnia and Herzegov- enforce a contract in Prizren (Kosovo). to their peers. Some ranking changes can ina) improved the most since 2008. Busi- EXECUTIVE SUMMARY 3 TABLE 1.2 construction permits decreased from 1 It is easier to do business now in all 19 cities benchmarked in 2008 year in 2008 to 8 months today. At the Dealing with same time, the time to register property Starting a construction Registering Enforcing dropped by 3 months because 4 proce- City, Economy business permits property contracts Skopje, FYR Macedonia     dures—including the requirement for Banja Luka, Bosnia and Herzegovina     signatory authorization, tax clearance, Vranje, Serbia     and the on-site evaluation of property— Niksic, Montenegro   were abolished. Finally, the Law on Podgorica, Montenegro   Changes of the Law on Courts, enacted Uzice, Serbia    in May 2010, gave a specialized court in Sarajevo, Bosnia and Herzegovina    Banja Luka jurisdiction over commercial Bitola, FYR Macedonia    claims, cutting the time required to file Vlora, Albania    a claim before the court from 6 months Mostar, Bosnia and Herzegovina    in 2008 to 46 days in 2011. At the same Pljevlja, Montenegro   time, the time to enforce the judicial de- Chisinau, Moldova    cision decreased by more than 200 days. Tirana, Albania    All 19 cities measured for the second Belgrade, Serbia    time made it easier to start a business. Shkodra, Albania   The most popular start-up reform since Zrenjanin, Serbia   2008 was the establishment or improve- Prizren, Kosovo  ment of one-stop shops—as seen in 10 Pristina, Kosovo  cities. For example, in Belgrade (Serbia), Krusevac, Serbia   the registration with various agencies has  Doing Business reform making it easier to do business been consolidated under one roof. Ob-  Doing Business reform making it more difficult to do business taining a business registration certificate, Note: The 19 cities measured in 2008 are ranked on the number and impact of reforms. At the top of the ranking are cities where most reforms making it easier to do business were implemented between January 2008 and January 2011 and which have achieved the biggest tax identification number, pension fund increases in their ranking on the 4 Doing Business topics measured from 2008. certificate, and health fund certificate Source: Doing Business database. are now all done with a single visit to the Business Registers Agency (SBRA). ness reforms were implemented in all 4 in Skopje, the time needed to register a Meanwhile, the other Serbian cities mea- areas measured, resulting in significant property title fell by over 1 month—from sured by this report are still working on benefits in terms of time and cost savings 98 days in 2008 to just 58 days in 2011. the full implementation of their one-stop for entrepreneurs. Finally, the commercial court in Skopje, shops—specifically, pension fund and The one-stop shop in Skopje (FYR equipped with an electronic case man- health fund registrations still have to Macedonia) decreased the time to start agement system, became operational in be obtained separately. Nevertheless, the a business from 12 days in 2008 to just 2008, facilitating contract enforcement time to start a business in all Serbian cit- 3 days now by eliminating 5 procedures. in commercial matters. ies has fallen significantly—most notably The one-stop shop offers entrepreneurs a In Banja Luka (Bosnia and Herze- in Zrenjanin, where the time was cut range of services—including registering govina), a utilization permit is no lon- from 37 days in 2008 to 17 days in 2011. a new business with tax and statistical ger necessary for all businesses and a In Chisinau and Balti (Moldova), unify- authorities, obtaining a trading license, specialized commercial court took over ing business registration with other pro- publishing an incorporation notice, and business registration in 2010. As a result, cedures is still underway. Nevertheless, registering employees for health and the time to start a business decreased by positive steps have been taken to reduce pension insurance.1 Meanwhile, FYR more than one month. Meanwhile, Re- the overall start-up time—including set- Macedonia’s new Law on Construction publika Srpska’s 2010 Law on Construc- ting statutory time limits and expedited shifted responsibility for building super- tion and Urban Planning allowed private options for business registration. As a vision and review from public enforce- companies to prepare certain construc- result, the time to obtain a registration ment agencies to licensed profession- tion documentation, rendering the pro- certificate was reduced from 15 days in als. As a result, the time to deal with cess of obtaining urban planning consent 2008 to just 1 day now. Other popular construction permits in Skopje dropped more efficient. Moreover, more than 80% start-up reforms were reductions in local by more than 2 months while 6 pro- of cadastre and 90% of land registry re- licensing requirements and fees. For ex- cedures were eliminated. Furthermore, cords are now available in digital form. ample, Albanian cities eliminated the after the cadastre staff was increased As a result, the total time to deal with requirement to register with the local 4 DOING BUSINESS IN SOUTH EAST EUROPE 2011 chambers of commerce. Cities in Monte- Property registration reforms re- Enforcing a contract became faster, negro did away with the municipal busi- sulted in time and cost savings for en- cheaper, and/or less cumbersome in 8 ness license. Both Pristina and Prizren in trepreneurs in 12 out of the 19 cities out of the 19 cities measured in both Kosovo cut their municipal permit fees measured in both 2008 and 2011. Gov- 2008 and 2011. Courts in these cities in half—from EUR 1,000 to EUR 525 and ernments across the region are digitiz- implemented administrative or legal re- to EUR 400, respectively. ing land books and making land regis- forms to reduce the time or cost to In the construction permits area, tries more efficient through legislative resolve a commercial dispute. In Vranje 9 out of the 19 cities measured in both and administrative reforms. As a result, (Serbia), manually-kept court records 2008 and 2011 have benefited from re- the average time to register property and paper files were replaced by elec- forms such as the digitization of cadastre across cities in South East Europe de- tronic files that can be accessed on- records, enactment of new construction creased by more than a month since line. Moreover, a computerized system laws, and streamlined inspections. For 2008. For example, in Sarajevo (Bos- randomly assigns court cases to judges, example, Montenegro introduced risk- nia and Herzegovina), where all land thereby eliminating opportunities for based construction approvals, where low registry and cadastre books are now neglect or corruption. As a result, the risk, small scale projects are reviewed available in digital format, the time to judgment period in Vranje fell from 495 and approved by municipalities rather register property is just a tenth of what days in 2008 to 135 days in 2011. In Al- than the central government. In Serbia, it used to be. Specifically, it fell from bania, a presidential decree added to the the 2009 Planning and Construction Law 331 days in 2008 to just 33 days in 2011. numbers of judges in courts. With more simplified procedures for the issuance In Mostar (Bosnia and Herzegovina), staff at work, filing and judgment times of construction permits and made them where 95% of cadastre records are now fell by 40 or more days in Shkodra and transferable between investors during in digital format, the time to register a Vlora. Courts here now issue a ruling in construction. The impact of the new property fell by 1 month—from 145 days a little over 4 months. Moreover, bailiff law varies across cities. In Vranje, the in 2008 to 117 days in 2011. Meanwhile, tariffs were reduced from 7% of claim building permit can now be obtained Moldova and FYR Macedonia are in the value to 2%. Meanwhile, FYR Macedonia in 6 months—3 months faster than in process of digitizing the land registry made enforcing contracts easier by set- 2008. On the other hand, in Belgrade, records and cadastre maps, respectively. ting deadlines for the payment of court the same process takes almost a year—5 Other business reform efforts under- fees, adjusting monetary thresholds for months longer than in 2008. The great- taken by governments in the past three assigning case jurisdiction, and intro- est challenge in the implementation of years include introducing statutory time ducing a small claims tribunal. this law is the application of provisions limits, eliminating pre-sale certificates regarding the conversion of “rights of and clearances, and cutting fees. For COMPARING BUSINESS use” to ownership rights. Meanwhile, example, Moldova no longer requires REGULATIONS ACROSS 22 CITIES in Albania, the parliament adopted the the submission of a cadastral sketch for IN SOUTH EAST EUROPE Law on Territorial Planning in 2009. properties already registered with the Once implemented, this new law is ex- cadastre—decreasing the total time to STARTING A BUSINESS pected to professionalize the structure register property from 48 days in 2008 Skopje (FYR Macedonia) is the world’s of the Territorial Adjustment Council to 5 days in 2011. In Albania, a newly in- 5th top performer in this area. All an (TAC)—the authority in charge of issu- troduced statutory time limit shortened entrepreneur needs to do to set up a ing building permits in Tirana. However, the delay to register with the Immovable business here is spend 3 days and a little as of January 2011, no construction per- Property Registration Office by 9 days over US$ 100. In cities like Skopje, where mit had been issued here since 2009, in Tirana and by 12 days in Vlora over one-stop shops have been set up and mainly because rivaling political parties the same period. In FYR Macedonia, the are fully operational, starting a busi- represented in the council make consen- information on land encumbrances was ness can be done quickly and efficiently. sus decision making unattainable. The transferred from first instance courts to However, the process is considerably new Law for Authorizing the Execution the cadastre, so now both the title deed slower in cities where the entrepreneur of Construction Works, adopted by the and non-encumbrance certificate can be needs to register separately for tax, so- Moldovan parliament in July 2010, sets obtained from the same institution. Sim- cial contributions, health insurance, and statutory time limits for project approv- ilar efforts are underway in Serbia. Along municipal permits. This is the case in als and consolidates project clearances. with digitization of cadastre maps, these Pristina (Kosovo), where it takes almost The subsequent implementation process reform efforts have cut the time to regis- 2 months to start a business. In Mostar is expected to make dealing with con- ter property by 30 days in Zrenjanin, 25 (Bosnia and Herzegovina), where the struction permits more efficient. days in Vranje, 20 days in Belgrade, and courts are in charge of business regis- 17 days in Uzice. tration and where 8 post-incorporation EXECUTIVE SUMMARY 5 requirements are necessary, it can take and Herzegovina)—a year and a half. (Serbia). The amount of property trans- as long as 50 days to set up a business. The cost varies from 110% of income fer taxes entrepreneurs have to pay varies The cost differences within the region per capita (US$ 1,752) in Balti (Mol- greatly among the 22 cities measured— are also significant. The cost to open a dova) to a prohibitive 2,132% of income from a fixed fee of EUR 150 (US$ 220) in business varies from 1.5% of income per per capita (US$ 139,650) in Podgorica Pristina (Kosovo) to 5% of the property capita in Niksic and Plevlja (Montene- (Montenegro). In most economies, the value in Mostar and Sarajevo (Bosnia gro)—similar to Finland—to 31.4% in largest portion of the overall cost is spent and Herzegovina). Tirana (Albania)—which is 5 times more on building permit fees and associated than the EU average. Variations stem costs. In the Serbian cities, obtaining a ENFORCING CONTRACTS from different fees levied by the munici- building permit constitutes, on average, The most efficient court to resolve a com- pal governments. Some, such as Pristina 76% of the overall cost (the equivalent of mercial dispute in the region is in Zren- and Prizren (Kosovo), charge EUR 525 US$ 83,278). The same permit costs sig- janin (Serbia). At just 10 months from and EUR 400, respectively, just for the nificantly less in Balti (Moldova), where filing through enforcement, the process municipal permit. In 12 out of the 22 it constitutes 28% of the overall cost (the is as fast as in the United States. In Zren- cities measured, entrepreneurs are also equivalent of US$ 439). In Podgorica janin, information technology is used to required to set aside a minimum amount (Montenegro), investors must pay an assist judges with case registration and of capital before they start operating. urban development fee, which accounts court management. Entrepreneurs can FYR Macedonia is the only economy for almost three quarters of the overall also choose to go through an alternative to have abolished the minimum capital cost (the equivalent of US$ 100,221). dispute resolution (ADR) system, which requirement all together, while Albania has lowered the number of pending cases and Montenegro charge only nominal REGISTERING PROPERTY in the commercial courts across Serbia. amounts (equivalent to US$ 1). Across the 22 cities, an entrepreneur Meanwhile, in Mostar (Bosnia and Her- would have to go, on average, through zegovina), an entrepreneur has to wait DEALING WITH CONSTRUCTION 6 procedures, wait 48 days, and pay more than 4 years to enforce a contract PERMITS 2.85% of the property value to transfer in court—similar to Kabul (Afghani- Dealing with construction permits can a property title. Within the region, the stan), one of the slowest courts in the be difficult and expensive in South East time, cost, and requirements vary sig- world. Delays are due to case backlog Europe. On average, a construction com- nificantly. Registering property is easiest and an insufficient number of judges. pany would spend 223 days and more in Balti and Chisinau (Moldova), where As for expenses, the average litigation than 1,100% of the income per capita to it takes 5 procedures, 5 days and 0.9% in South East Europe costs 32% of the comply with all requirements to build of the property value to transfer a title. claim value—one third more expensive a warehouse. Compare this to the EU, By contrast, the same process takes 8 than the EU average. Across the region, where a construction company spends procedures in Pristina (Kosovo) and al- most litigation costs are regulated by law one month less and only 77% of income most 4 months in Mostar (Bosnia and and fee schedules. The cost of enforcing a per capita. While the overall policy- Herzegovina). Differences appear mainly contract ranges from 21% of the value of setting authority lies with the national during the pre-registration phase. For the claim in Chisinau (Moldova)—simi- governments, implementation of regula- example, in Mostar and Sarajevo (Bosnia lar to Australia—to 61% in Pristina and tions at the local level varies significantly. and Herzegovina), both parties have to Prizren (Kosovo). Local governments have the authority to obtain a court extract authorizing the administer several procedures and levy signatory to act on behalf of the com- LEARNING FROM EACH OTHER the associated taxes and fees. The num- pany. In Pristina (Kosovo), in addition ber of procedures to deal with construc- to the title deed, parties have to obtain While cooperation and the sharing of tion permits varies from 15 in Skopje and submit certified copies of their com- reform experiences may not have been (FYR Macedonia) and Pljevlja (Mon- panies’ business registrations and letters a priority for the region’s economies a tenegro) to 30 in Chisinau (Moldova). from the tax authority certifying that all decade ago, now it is the norm. Undoubt- In Chisinau, an entrepreneur has to go property taxes have been paid before the edly, the initial driver was the prospect through no less than 18 pre-construction lawyer can draft the sale and purchase of accession to the EU. While this is still requirements—such as location clear- agreement. Variations in time among the case, market realities are increasingly ances and technical evaluations. As cities stem mainly from the efficiency of bringing cooperation to new levels. For also observed in the 2008 report, deal- the land registry in registering the new example, as data was being collected for ing with construction permits is fast- owner of the property. This ranges from this study in late 2010, the railway com- est in Bitola (FYR Macedonia)—just 3 1 day in the Moldovan cities, if using the panies of Croatia, Slovenia, and Serbia months. It is slowest in Mostar (Bosnia expedited option, to 85 days in Belgrade formed a new joint-stock company to 6 DOING BUSINESS IN SOUTH EAST EUROPE 2011 TABLE 1.3 Best practices in South East Europe, compared internationally Global rank (183 economies) Best-performing city in How SEE cities would South East Europe (SEE) Performance compare globally Days to start a business Skopje (FYR Macedonia) 3 days 3 Number of procedures to start a business Skopje (FYR Macedonia) 3 procedures 8 Days to register property Balti and Chisinau (Moldova) 5 days 10 Days to enforce a contract Tetovo (FYR Macedonia) 290 days 18 Cost to start a business Niksic, Pljevlja (Montenegro) 1.5% of income per capita 18 Cost to register property Prizren (Kosovo) 0.5% of the property value 19 Days to deal with construction permits Bitola (FYR Macedonia) 96 days 27 Cost to enforce a contract Chisinau (Moldova) 20.9% of the claim value 48 Number of procedures Balti and Chisinau (Moldova) to register property 5 procedures 50 Bitola, Skopje, and Tetovo (FYR Macedonia) Number of procedures Skopje (FYR Macedonia) to deal with construction permits 15 procedures 67 Pljevlja (Montenegro) 110.2% of income per Cost to deal with construction permits Balti (Moldova) 74 capita Best practices for the 4 indicators measured 6 Hypothetical city in South East Europe Source: Doing Business database. service the European Corridor 10 cargo implemented by local authorities. In a days, as seen in Moldova and Australia. route to Istanbul which, following the world where locations compete against Meanwhile, the region’s best practices opening of the Bosphorus tunnel, will each other to attract investment, sub- for dealing with construction permits link Europe across Asia to China. Oppor- national Doing Business data allow local would require only 96 days—as seen in tunities to strengthen the position of na- governments to review the conditions Bitola (FYR Macedonia) and the United tional economies by improved regional entrepreneurs face in their cities from Kingdom. Finally, resolving a commer- competitiveness lie in many other sectors a comparative perspective. Subnational cial dispute in this hypothetical “best as well. This type of economic coop- data are now available for more than 300 practice” city in South East Europe would eration may not attract the same level of cities in 38 economies around the world. cost the same as the EU average, while its media interest as the events of the 1990s Reform-minded governments can duration would be 100 days faster than it but it bodes well for a more prosperous use Doing Business indicators to moti- is in Germany. and stable future in South East Europe. vate and sustain business reform efforts. Payoffs from business reforms can An improving business environment is There is no need to reinvent the wheel: it be large. Saving time and money are central to this perspective. is sufficient to start by introducing busi- often the immediate benefits for firms. Benchmarking exercises like Doing ness reforms successfully implemented For example, in Georgia, a 2009 survey Business inspire governments to reform in other places. In fact, cities in South found that its new start-up service cen- commercial regulations. They point out East Europe have a lot to gain from ter helped businesses save an average potential challenges and identify where adopting the best regulations and prac- of 3.25% of profits—and this is just for policy makers can look for good prac- tices that are working elsewhere in the registration services. For all businesses tices. Comparisons between cities within region. A hypothetical city adopting all served, the direct and indirect savings a single economy or region are even the best practices identified in this report amounted to US$ 7.2 million.2 In Mexico, stronger drivers, as governments have would rank 6th among 183 economies local one stop shops (SARE) cut the time a hard time explaining why doing busi- globally—similar to Denmark or Canada to start a business from 58 to 13 days. ness in their city may be more burden- (table 1.3). A recent study reports the payoffs: the some than in neighboring locations. The If the region’s best practices were number of registered Mexican businesses good news is that sharing a similar legal adopted, starting a business would rose by 5%, employment increased by framework facilitates the implementa- take only 3 days, as it does in Sko- 2.8%, and prices fell by nearly 1% be- tion of existing good practices within pje (FYR Macedonia) and Sweden. cause of the competition from new en- a region. National governments can The region’s best practices would trants.3 also use Doing Business data to monitor mean that transferring a property title Consistent reformers follow a long- how changes in national regulations are would require just 5 procedures over 5 term agenda and continually push for- EXECUTIVE SUMMARY 7 ward. The top-ranked economy on the ease of doing business, Singapore, in- troduces business reforms every year. Cumulative business reforms across a range of topics produce the best results. Cooperation across different parts of the bureaucracy, at both local and national level, is necessary for wide-ranging re- forms. Political will and vision coming from a reform champion—whether the prime minister, minister, or mayor—is central to success. Moreover, consistent reformers are inclusive—involving all relevant actors and institutionalizing the reform effort. They also stay focused by setting specific goals and regularly moni- toring progress. 1. The one-stop shop project in FYR Mace- donia is going through a second stage that aims to unify business registration and employee registration for social con- tributions. The second phase is already being implemented through a pilot proj- ect in Skopje and is expected to cover the entire country by the end of 2011. 2. World Bank 2010. Doing Business 2011: Making a Difference for Entrepreneurs. Washington, D.C: World Bank Group. 3. Bruhn, Miriam. 2008. “License to Sell: The Effect of Business Registration Reform on Entrepreneurial Activity in Mexico.” Policy Research Working Paper 4538. Washington, D.C.: World Bank. 9 About Doing plying to them through their life cycle. formalities in a one-stop shop. Business Doing Business and the standard cost model initially developed and applied in Doing Business in South East Europe 2011 encompasses 2 types of data. The and Doing the Netherlands are, for the present, the only standard tools used across a broad first come from readings of laws and regulations. The second are time and Business in range of jurisdictions to measure the impact of government rule-making on motion indicators that measure the ef- ficiency in achieving a regulatory goal South East the cost of doing business.1 The first Doing Business report, pub- (such as granting the legal identity of a business). Within the time and motion Europe 2011 lished in 2003, covered 5 indicator sets and 133 economies. Doing Business 2011 indicators, cost estimates are recorded from official fee schedules where ap- covers 11 indicator sets and 183 econo- plicable. Here, Doing Business builds on mies. Nine topics are included in the Hernando de Soto’s pioneering work in aggregate ranking on the ease of doing applying the time and motion approach business. The project has benefited from first used by Frederick Taylor to revolu- feedback from governments, academics, tionize the production of the Model T Governments committed to the eco- practitioners and reviewers.2 The initial Ford. De Soto used the approach in the nomic health of their country and op- goal remains: to provide an objective 1980s to show the obstacles to setting portunities for its citizens focus on more basis for understanding and improving up a garment factory on the outskirts of than macroeconomic conditions. They the regulatory environment for business. Lima, Peru.3 also pay attention to the laws, regula- tions and institutional arrangements that WHAT DOING BUSINESS IN WHAT DOING BUSINESS IN shape daily economic activity. SOUTH EAST EUROPE 2011 SOUTH EAST EUROPE 2011 The global financial crisis has re- COVERS DOES NOT COVER newed interest in good rules and regu- lation. In times of recession, effective Doing Business in South East Europe 2011 Just as important as knowing what Doing business regulation and institutions can provides a quantitative measure of the Business in South East Europe 2011 does support economic adjustment. Easy national and local regulations for 4 Doing is to know what it does not do—to un- entry and exit of firms, and flexibility Business indicators: starting a business, derstand what limitations must be kept in redeploying resources, make it easier dealing with construction permits, reg- in mind in interpreting the data. to stop doing things for which demand istering property, and enforcing con- has weakened and to start doing new tracts—as they apply to domestic small LIMITED IN SCOPE things. Clarification of property rights and medium-size enterprises. Doing Business in South East Europe 2011 and strengthening of market infrastruc- A fundamental premise of Doing focuses on four topics, with the specific ture (such as credit information and Business is that economic activity re- aim of measuring the regulation and collateral systems) can contribute to con- quires good rules. These include rules red tape relevant to the life cycle of a fidence as investors and entrepreneurs that establish and clarify property rights domestic small to medium-size firm. look to rebuild. and reduce the costs of resolving dis- Accordingly: Until recently, however, there were putes, rules that increase the predictabil- • Doing Business in South East Europe no globally available indicator sets for ity of economic interactions and rules 2011 does not measure all 11 indica- monitoring such microeconomic factors that provide contractual partners with tors covered in the global Doing Busi- and analyzing their relevance. The first core protections against abuse. The ob- ness report. The report covers only efforts, in the 1980s, drew on percep- jective is: regulations designed to be those 4 areas of business regulation tions data from expert or business sur- efficient in their implementation, to be that are the provenance of state and veys. Such surveys are useful gauges accessible to all who need to use them municipal governments and where of economic and policy conditions. But and to be simple in their implementa- local differences exist—starting a their reliance on perceptions and their tion. Accordingly, some Doing Business business, dealing with construction incomplete coverage of poor countries indicators give a higher score for more permits, registering property and en- constrain their usefulness for analysis. regulation, such as stricter disclosure re- forcing contracts. The Doing Business project, initiated quirements in related-party transactions. • Doing Business in South East Europe 9 years ago, goes one step further. It looks Some give a higher score for a simplified 2011 does not measure all aspects of at domestic small and medium-size com- way of implementing existing regulation, the business environment that matter panies and measures the regulations ap- such as completing business start-up to firms or investors—or all factors 10 DOING BUSINESS IN SOUTH EAST EUROPE 2011 that affect competitiveness. It does assumes a limited liability company. This overall health. not, for example, measure security, choice is in part empirical: private, lim- One way to test whether Doing Busi- macroeconomic stability, corruption, ited liability companies are the most ness serves as a proxy for the broader the labor skills of the population, the prevalent business form in most econo- business environment and for competi- underlying strength of institutions or mies around the world. The choice also tiveness is to look at correlations be- the quality of infrastructure. Nor does reflects one focus of Doing Business: ex- tween the Doing Business rankings and it focus on regulations specific to for- panding opportunities for entrepreneur- other major economic benchmarks. The eign investment. ship. Investors are encouraged to venture indicator set closest to Doing Business • Doing Business in South East Europe into business when potential losses are in what it measures is the Organization 2011 does not assess the strength of limited to their capital participation. for Economic Co-operation and Devel- the financial system or market regula- opment’s indicators of product market tions, both important factors in un- FOCUSED ON THE FORMAL SECTOR regulation; the correlation here is 0.72. derstanding some of the underlying In constructing the indicators, Doing The World Economic Forum’s Global causes of the global financial crisis. Business in South East Europe 2011 as- Competitiveness Index and IMD’s World • Doing Business in South East Europe sumes that entrepreneurs are knowl- Competitiveness Yearbook are broader in 2011 does not cover all regulations, edgeable about all regulations in place scope, but these too are strongly corre- or all regulatory goals, in any city. As and comply with them. In practice, lated with Doing Business (0.79 and 0.64, economies and technology advance, entrepreneurs may spend considerable respectively).6 more areas of economic activity are time finding out where to go and what A bigger question is whether the being regulated. For example, the Eu- documents to submit. Or they may avoid issues on which Doing Business focuses ropean Union’s body of laws (acquis) legally required procedures altogeth- matter for development and poverty re- has now grown to more than 14,000 er—by not registering for social security, duction. The World Bank study Voices rule sets. Doing Business in South East for example. of the Poor asked 60,000 poor people Europe 2011 measures just 4 phases of a Where regulation is particularly around the world how they thought they company’s life cycle, through 4 specific onerous, levels of informality are higher. might escape poverty.7 The answers were indicators. The indicator sets also do Informality comes at a cost: firms in unequivocal: women and men alike pin not cover all aspects of regulation in the the informal sector typically grow more their hopes above all on income from particular area. For example, the indica- slowly, have poorer access to credit and their own business or wages earned in tors on starting a business do not cover employ fewer workers—and their work- employment. Enabling growth—and en- all aspects of commercial legislation. ers remain outside the protections of suring that poor people can participate labor law.4 Doing Business measures one in its benefits—requires an environment BASED ON STANDARDIZED CASE set of factors that help explain the oc- where new entrants with drive and good SCENARIOS currence of informality and give policy ideas, regardless of their gender or ethnic The indicators analyzed in Doing Busi- makers insights into potential areas of origin, can get started in business and ness in South East Europe 2011 are built reform. Gaining a fuller understanding where good firms can invest and grow, on the basis of standardized case sce- of the broader business environment, generating more jobs. narios with specific assumptions, such as and a broader perspective on policy chal- Small and medium-size enterprises that the business is located in one of the lenges, requires combining insights from are key drivers of competition, growth 22 cities in South East Europe measured Doing Business with data from other and job creation, particularly in develop- in the report. Economic indicators com- sources, such as the World Bank Enter- ing countries. But in these economies up monly make limiting assumptions of this prise Surveys.5 to 80% of economic activity takes place kind. Inflation statistics, for example, are in the informal sector. Firms may be pre- often based on prices of consumer goods WHY THIS FOCUS  vented from entering the formal sector in a few urban areas. Such assumptions by excessive bureaucracy and regulation. allow global coverage and enhance com- Doing Business functions as a kind of Where regulation is burdensome parability, but they inevitably come at the cholesterol test for the regulatory envi- and competition limited, success tends expense of generality. ronment for domestic businesses. A cho- to depend more on whom you know In areas where regulation is com- lesterol test does not tell us everything than on what you can do. But where plex and highly differentiated, the stan- about the state of our health. But it does regulation is transparent, efficient and dardized case used to construct each measure something important for our implemented in a simple way, it becomes Doing Business in South East Europe 2011 health. And it puts us on watch to change easier for any aspiring entrepreneurs, indicator needs to be carefully defined. behaviors in ways that will improve not regardless of their connections, to oper- Where relevant, the standardized case only our cholesterol rating but also our ate within the rule of law and to benefit ABOUT DOING BUSINESS AND DOING BUSINESS IN SOUTH EAST EUROPE 2011 11 from the opportunities and protections it helps sharpen judgment, less so if it ness indicators—and reforms relevant that the law provides. substitutes for judgment. to those indicators—relate to desired In this sense Doing Business values Doing Business in South East Europe social and economic outcomes. Some good rules as a key to social inclusion. It 2011 provides 2 takes on the data it col- 656 articles have been published in also provides a basis for studying effects lects: it presents “absolute” indicators peer-reviewed academic journals, and of regulations and their application. For for each city for each of the 4 regulatory about 2,060 working papers are available example, Doing Business 2004 found that topics it addresses, and it provides rank- through Google Scholar.9 Among the faster contract enforcement was associ- ings of cities by indicator. Judgment is findings: ated with perceptions of greater judicial required in interpreting these measures • Lower barriers to start-up are associ- fairness—suggesting that justice delayed for any city and in determining a sensible ated with a smaller informal sector.10 is justice denied.8 and politically feasible path for reform. • Lower costs of entry encourage entre- In the context of the global crisis Reviewing the Doing Business rank- preneurship, enhance firm productiv- policymakers continue to face particular ings in isolation may show unexpected ity and reduce corruption.11 challenges. Both developed and develop- results. Some cities may rank unexpect- • Simpler start-up translates into ing economies are seeing the impact of edly high on some indicators. And some greater employment opportunities.12 the financial crisis flowing through to the cities that have had rapid growth or The quality of a country’s contract- real economy, with rising unemployment attracted a great deal of investment may ing environment is a source of com- and income loss. The foremost chal- rank lower than others that appear to be parative advantage in trade patterns. lenge for many governments is to create less dynamic. Countries with good contract enforce- new jobs and economic opportunities. But for reform-minded govern- ment specialize in industries where re- But many have limited fiscal space for ments, how much the regulatory en- lationship-specific investments are most publicly funded activities such as infra- vironment for local entrepreneurs im- important.13 structure investment or for the provision proves matters more than their relative Greater information sharing of publicly funded safety nets and so- ranking. As economies develop, they through credit bureaus is associated with cial services. Reforms aimed at creating strengthen and add to regulations to higher bank profitability and lower bank a better investment climate, including protect investor and property rights. risk.14 reforms of business regulation, can be Meanwhile, they find more efficient ways beneficial for several reasons. Flexible to implement existing regulations and HOW DO GOVERNMENTS USE regulation and effective institutions, in- cut outdated ones. One finding of Doing DOING BUSINESS? cluding efficient processes for starting Business: dynamic and growing econo- a business and efficient insolvency or mies continually reform and update their A common first reaction is to question bankruptcy systems, can facilitate real- regulations and their way of implement- the quality and relevance of the Doing location of labor and capital. As busi- ing them, while many poor economies Business data and how the results are cal- nesses rebuild and start to create new still work with regulatory systems dating culated. Yet the debate typically proceeds jobs, this helps to lay the groundwork for to the late 1800s. to a deeper discussion exploring the countries’ economic recovery. And regu- relevance of the data to the economy and latory institutions and processes that are DOING BUSINESS— areas where reform might make sense. streamlined and accessible can help en- A USER’S GUIDE Most reformers start out by seeking sure that, as businesses rebuild, barriers examples, and Doing Business helps in between the informal and formal sectors Quantitative data and benchmarking can this (box 1.1). For example, Saudi Arabia are lowered, creating more opportunities be useful in stimulating debate about used the company law of France as a for the poor. policy, both by exposing potential chal- model for revising its own. Many coun- lenges and by identifying where pol- tries in Africa look to Mauritius—the DOING BUSINESS IN SOUTH EAST icy makers might look for lessons and region’s strongest performer on Doing EUROPE 2011 AS A good practices. These data also provide Business indicators—as a source of good BENCHMARKING EXERCISE a basis for analyzing how different policy practices for reform. In the words of Luis approaches—and different policy re- Guillermo Plata, the former minister of Doing Business in South East Europe forms—contribute to desired outcomes commerce, industry and tourism of Co- 2011, in capturing some key dimensions such as competitiveness, growth and lombia, of regulatory regimes, can be useful for greater employment and incomes. benchmarking. Any benchmarking—for Eight years of Doing Business data It’s not like baking a cake where you follow individuals, firms or economies—is nec- have enabled a growing body of research the recipe. No. We are all different. But we essarily  partial: it is valid and useful if on how performance on Doing Busi- can take certain things, certain key les- 12 DOING BUSINESS IN SOUTH EAST EUROPE 2011 sons, and apply those lessons and see how tions involved. Following the standard IMPROVEMENTS TO THE METHODOLOGY AND DATA they work in our environment. methodological approach for time and REVISIONS motion studies, Doing Business breaks Over the past 8 years there has been down each process or transaction, such The methodology has undergone contin- much activity by governments in re- as starting and legally operating a busi- ual improvement over the years. Changes forming the regulatory environment for ness, into separate steps to ensure a bet- have been made mainly in response to domestic businesses. Most reforms relat- ter estimate of time. The time estimate country suggestions. In accordance with ing to Doing Business topics were nested for each step is given by practitioners the Doing Business methodology, these in broader programs of reform aimed at with significant and routine experience changes have been incorporated into the enhancing economic competitiveness. In in the transaction. Doing Business in South East Europe 2011. structuring their reform programs for The Doing Business approach to For starting a business, for example, the business environment, governments data collection contrasts with that of the minimum capital requirement can be use multiple data sources and indicators. enterprise or firm surveys, which capture an obstacle for potential entrepreneurs. And reformers respond to many stake- often one-time perceptions and experi- Initially, Doing Business measured the holders and interest groups, all of whom ences of businesses. A corporate lawyer required minimum capital regardless of bring important issues and concerns into registering 100–150 businesses a year whether it had to be paid up front or the reform debate. World Bank Group will be more familiar with the process not. In many economies only part of the dialogue with governments on the in- than an entrepreneur, who will register minimum capital has to be paid up front. vestment climate is designed to encour- a business only once or maybe twice. A To reflect the actual potential barrier to age critical use of the data, sharpening bankruptcy judge deciding dozens of entry, the paid-in minimum capital has judgment, avoiding a narrow focus on cases a year will have more insight into been used since 2004. improving Doing Business rankings and bankruptcy than a company that may All changes in methodology are ex- encouraging broad-based reforms that undergo the process. plained in the Data notes section of this enhance the investment climate. report as well as on the Doing Business DEVELOPMENT OF THE website. In addition, data time series METHODOLOGY AND DATA METHODOLOGY for each indicator and city are available The methodology for calculating each on the website. The website also makes Doing Business in South East Europe 2011 indicator is transparent, objective and available all original data sets used for covers 22 cities. The data are based on easily replicable. Leading academics col- background papers. national and local laws and regulations laborate in the development of the indi- Information on data corrections is as well as administrative requirements. cators, ensuring academic rigor. Eight of provided in the Data notes and on the (For a detailed explanation of the Doing the background papers underlying the website. A transparent complaint proce- Business in South East Europe 2011 meth- indicators have been published in lead- dure allows anyone to challenge the data. odology, see Data notes). ing economic journals. If errors are confirmed after a data veri- Doing Business uses a simple averag- fication process, they are expeditiously INFORMATION SOURCES FOR THE DATA ing approach for weighting sub-indica- corrected. Most of the indicators are based on laws tors and calculating rankings. Other ap- and regulations. In addition, most of the proaches were explored, including using cost indicators are backed by official fee principal components and unobserved schedules. Doing Business respondents components. The principal components 1. The standard cost model is a quantitative methodology for determining the admin- both fill out written surveys and provide and unobserved components approaches istrative burdens that regulation imposes references to the relevant laws, regu- turn out to yield results nearly identical on businesses. The method can be used lations and fee schedules, aiding data to those of simple averaging. The tests to measure the effect of a single law or of checking and quality assurance. show that each set of indicators provide selected areas of legislation or to perform a baseline measurement of all legislation For some indicators part of the sufficiently broad coverage across topics. in a country. cost component (where fee schedules Therefore, the simple averaging approach 2. This has included a review by the World are lacking) and the time component is used. Bank Independent Evaluation Group are based on actual practice rather than (2008) as well as ongoing input from the the law on the books. This introduces a International Tax Dialogue. degree of subjectivity. The Doing Busi- 3. De Soto, Hernando. 2000. The Mystery ness approach has therefore been to work of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New with legal practitioners or professionals York: Basic Books. who regularly undertake the transac- ABOUT DOING BUSINESS AND DOING BUSINESS IN SOUTH EAST EUROPE 2011 13 4. Schneider, Friedrich. 2005. “The Infor- 12. For example, Freund, Caroline, and Bine- mal Sector in 145 Countries.” Depart- swaree Bolaky. 2008. “Trade, Regulations ment of Economics, University Linz. and Income.” Journal of Development 5. http://www.enterprisesurveys.org Economics 87: 309–21; Chang, Roberto, Linda Kaltani and Norman Loayza. 2009. 6. The World Economic Forum’s Global “Openness Can Be Good for Growth: Competitiveness Report uses part of the The Role of Policy Complementarities.” Doing Business data sets on starting a Journal of Development Economics 90: business, employing workers, protecting 33–49; Helpman, Elhanan, Marc Melitz investors and getting credit (legal rights). and Yona Rubinstein. 2008. “Estimat- 7. Narayan, Deepa, Robert Chambers, Meer ing Trade Flows: Trading Partners and Kaul Shah and Patti Petesh. 2000. Voices Trading Volumes.” Quarterly Journal of of the Poor: Crying Out for Change. Wash- Economics 123 (2): 441–87. ington, DC: World Bank. 13. Nunn, Nathan. 2007. “Relationship- 8. World Bank. 2003. Doing Business in Specificity, Incomplete Contracts, and the 2004: Understanding Regulation. Wash- Pattern of Trade.” Quarterly Journal of ington, DC: World Bank Group. Economics 122 (2): 569–600. 9. http://scholar.google.com 14. Houston, Joel, Chen Lin, Ping Lin and 10. For example, Masatlioglu, Yusufcan, Yue Ma. 2010. “Creditor Rights, Informa- and Jamele Rigolini. 2008. “Informality tion Sharing, and Bank Risk Taking.” Traps.” B.E. Journal of Economic Analysis Journal of Financial Economics 96 (3): & Policy 8 (1); Kaplan, David, Eduardo 485–512. Piedra and Enrique Seira. 2007. “Entry Regulation and Business Start-Ups: Evidence from Mexico.” Policy Research Working Paper 4322, World Bank, Wash- ington, DC.; Ardagna, Silvia, and Anna- maria Lusardi. 2008. “Explaining Inter- national Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints.” NBER Working Paper 14012, National Bureau of Economic Research, Cambridge, MA. 11. For example, Alesina, Alberto, Silvia Ardagna, Giuseppe Nicoletti and Fabio Schiantarelli. 2005. “Regulation and Investment.” Journal of the European Economic Association 3 (4): 791–825; Perotti, Enrico, and Paolo Volpin. 2004. “Lobbying on Entry.” CEPR Discussion Paper 4519, Centre for Economic Policy Research, London; Fisman, Raymond, and Virginia Sarria-Allende. 2004. “Regulation of Entry and the Distor- tion of Industrial Organization.” NBER Working Paper 10929, National Bureau of Economic Research, Cambridge, MA; Antunes, Antonio, and Tiago Cavalcanti. 2007. “Start Up Costs, Limited Enforce- ment, and the Hidden Economy.” Euro- pean Economic Review 51 (1): 203–24; Djankov, Simeon, Caroline Freund and Cong S. Pham. 2010. “Trading on Time.” Review of Economics and Statistics 92 (1): 166–73. Starting a TABLE 2.1 Where is it easy to start a business—and where not? business RANK City Economy RANK City Economy 1 Skopje 12 Uzice FYR Macedonia (easiest) Serbia 2 Bitola 13 Balti FYR Macedonia Moldova 3 Tetovo 14 Vranje FYR Macedonia Serbia 4 Pljevlja 14 Zrenjanin Montenegro Serbia 5 Niksic 16 Krusevac Montenegro Serbia 6 Podgorica 17 Chisinau Montenegro Moldova 7 Vlora 18 Banja Luka Albania Bosnia and Herzegovina 8 Shkodra 19 Sarajevo Albania Bosnia and Herzegovina Ilija from Skopje (FYR Macedonia) and 9 Durres 20 Mostar Agon from Pristina (Kosovo) are com- Albania Bosnia and Herzegovina puter science graduates who have been 10 Tirana 21 Prizren Albania Kosovo working together at a technology com- 11 Belgrade 22 Pristina pany in Germany for the past 5 years. Serbia Kosovo (most difficult) With their accumulated savings, busi- Note: Rankings are based on the average city percentile rankings on the procedures, time, cost, and paid-in minimum capital to start ness relationships, and roster of potential a business. See Data notes for details. Source: Doing Business database. clients, they are contemplating returning to their homelands to jointly start up eign markets. Eventually, more formally introduction of efficient, one-stop shops a consulting company. Their first step registered enterprises means more tax in 6 Colombian cities increased regis- is to decide where to locate their head- revenue in government accounts.1 trations by 5.2%.4 On the other hand, quarters and register their new business. Research shows that well-designed heavier regulation of business entry is In Skopje (FYR Macedonia), they can business regulations can reduce infor- associated with a proportionally larger start operating their company in just 3 mality and boost productivity. Simply informal sector.5 days—which is faster than all European put, when business entry is faster and Doing Business measures the num- Union member states—while in Pris- less costly, more firms enter the formal ber of procedures, time, and cost for a tina (Kosovo) they would need to wait market.2 In Mexico, for example, the small to medium-size firm to start up 2 months. Time being of essence, their number of new firms grew by 5% and and operate formally (figure 2.1). The choice is not hard to make. employment increased by 2.8% after a number of procedures shows how many Enabling easier, faster, and more one-stop shop was introduced to facili- separate interactions an entrepreneur affordable business entry is essential tate business registration.3 Similarly, the is required to have with third parties. for private sector development. In some FIGURE 2.1 economies, the process is straightfor- What is the time, cost, paid-in minimum capital and number of procedures ward and inexpensive, while in others it to get a local, limited liability company up and running? is so cumbersome and time-consuming COST that entrepreneurs either have to bribe (% of income per capita) Formal operation officials to speed up the process, oper- ate their businesses informally, or go somewhere else. Formal operations offer NUMBER OF several advantages. For entrepreneurs, PROCEDURES starting a limited liability company helps $ protect their personal assets—only their Paid-in minimum investments are at risk. And formal com- capital panies tend to have greater access to credit, which can be critical for growth. Entrepreneur TIME (days) Registered companies also have an easier Preincorporation Registration, Postincorporation incorporation time attracting trading partners in for- STARTING A BUSINESS 15 FIGURE 2.2 Herzegovina where registration requires Business entry reforms pay off—South East Europe averages improved significantly visits to the municipal court (as in Mo- star and Sarajevo) or the district com- mercial court (Banja Luka). Next come TIRANA 31.4 PRISTINA 58 the post-registration procedures, which vary greatly among the cities measured. 2008 22.3 For instance, in Skopje (FYR Macedo- MOSTAR SARAJEVO 12 nia), there is only 1 post-registration 10 step (making a company seal), while SOUTH EAST 2008 EUROPE 2008 26 2011 13.0 in Mostar and Sarajevo, 8 such steps AVERAGE 2011 8 2011 17 are required—including the buying of EU AVERAGE a company stamp, obtaining municipal NIKSIC, PLJEVLJA 1.5 approval on intended activities, notifying SKOPJE 3 SKOPJE 3 the cantonal inspection authorities on Procedures Time Cost the start of business operations, obtain- (days) (% of income Source: Doing Business database. per capita) ing a tax identification number, enroll- ing employees in pension insurance and Business-entry requirements go beyond while the average number of procedures health insurance, and adopting a rule simple incorporation to include the reg- dropped from 10 to 8 in the region. book on employee regulations (figure istration of a business name; registration Overall, the region still lags behind the 2.3). with tax authorities; registration with European Union (EU) average on the In cities where one-stop shops have statistical, social security, and pension ease of starting a business (figure 2.2), been set up and are fully operational, the administrations; and registration with but it is catching up fast. time spent is significantly lower (figure local authorities.6 Within the region, starting a busi- 2.4). The one-stop shop in Skopje (FYR Globally, New Zealand leads the ness is easiest in Skopje (FYR Macedo- Macedonia) decreased the time to start Doing Business ranking in starting a busi- nia)—which would rank 5th among the a business from 12 days in 2008 to just ness. An entrepreneur there simply goes 183 economies measured by Doing Busi- 3 days by eliminating 5 procedures.8 online, registers a new business, and uses ness—while it is most difficult in Pristina Now, entrepreneurs can register employ- a credit card to pay the equivalent of (Kosovo) (table 2.1). ees with the Employment Agency (EA), US$ 125—that is, 0.4% of New Zealand’s In the region, pre-registration steps the Health Insurance Fund (HIF), and income per capita. Other economies and the act of business registration gen- the Pension Insurance Fund (PIF) at are not far behind—including Georgia erally require dealings with central busi- the time of incorporation. In the other and FYR Macedonia in Eastern Europe, ness registries. This is not the case in 2 Macedonian cities, Bitola and Tetovo, where it takes only 3 procedures and 3 the 3 cities measured in Bosnia and registrations with the EA, HIF, and PIF days to start a business. FIGURE 2.3 Within South East Europe, there is Time to start a business—3 days in Skopje, 50 days in Sarajevo a great deal of variation regarding the Time (days) Post registration steps ease of starting a business—especially 50 at the economy level. Differences in na- Sarajevo tional regulation are noticeable. Within Bosnia and Herzegovina 40 economies, variations stem mainly from municipal fee schedules and administra- Skopje Obtaining company tax FYR Macedonia identification number (15 days) tive efficiency levels. Recently, the gap 30 among economies has widened due to the fast pace of business reforms that 20 some governments have implemented during the past 3 years. The net result of Registration with Sarajevo municipal court (10 days) these reforms has made starting a busi- 10 ness easier in the region. Specifically, Registration with Central since January 2008,7 the average time 0 Registry in Skopje (1 day) to start a business decreased from 26 to 1 2 3 4 5 6 7 8 9 10 11 12 17 days, the average cost was reduced Procedures from 22% to 13% of income per capita, Source: Doing Business database. 16 DOING BUSINESS IN SOUTH EAST EUROPE 2011 FIGURE 2.4 Zrenjanin, where it fell from 37 days in National laws drive variations in time, while local regulations determine costs 2008 to just 17 days in 2011. to start a business among economies in South East Europe In Pristina and Prizren (Kosovo), 0 10 20 30 40 50 60 the Business Registration Agency is func- 2.5 Skopje 3 tional, but entrepreneurs have to obtain FYR Macedonia Tetovo Cost a separate business permit from the mu- FYR Macedonia 2.5 5 (% of income per capita) nicipality, a fiscal number from the Tax Bitola FYR Macedonia 2.4 5 Administration, Value Added Tax (VAT) Vlora registration, and sign employees up for Albania 5 22.1 Tirana Time the pension scheme. In Bosnia and Her- Albania 5 31.4 (days) Shkodra zegovina, company registrations are com- 5 22.9 Albania pleted through the courts and there are Durres Albania 5 30.0 several post-registration procedures that Pljevlja 1.5 8 are not required elsewhere (see the ex- Montenegro Niksic ample of Sarajevo in figure 2.3). In Mo- Montenegro 1.5 8 star, the process takes 47 days, while in Balti Moldova 8 10.9 Sarajevo, it takes 50 days—one of the lon- Podgorica Montenegro 1.8 10 gest delays in the region. Yet there’s good Chisinau 10 10.9 news within Bosnia and Herzegovina: the Moldova Belgrade time to open a business in Banja Luka Serbia 8.1 13 decreased by 33 days since 2008. A utiliza- Uzice Serbia 7.9 16 tion permit from the Ministry of Trade is Zrenjanin no longer required, a step that previously Serbia 7.9 17 Vranje took 2 weeks. In addition, Banja Luka’s Serbia 7.9 17 Banja Luka business registration was moved to be Bosnia and Herzegovina 16.0 21 under the auspices of the newly estab- Krusevac Serbia 7.8 22 lished District Commercial Court. As a Prizren 23.9 36 result, business registration now takes Kosovo Mostar only 7 days—compared to the 20 days it Bosnia and Herzegovina 22.1 47 took previously. Finally, employee enroll- Sarajevo Bosnia and Herzegovina 15.4 50 ment with the health insurance fund and Pristina the pension fund was unified. Kosovo 28.7 58 In Chisinau and Balti (Moldova), Source: Doing Business database. unifying business registration with other have been merged, but cannot yet be registration has been introduced. This procedures is still underway, but posi- done at the time of registration. In 2007, eliminates the need to register sepa- tive steps have been taken to reduce the Albania was one of the first economies in rately for personal income tax, social overall start-up time. The 2007 Law on the region to introduce one-stop shops contributions, and health insurance. The Limited Liability Companies set statu- throughout the country. As a result, results are evident: business start-up now tory time limits for business registra- start-up times have decreased signifi- averages 9 days—twice as fast as be- tion. As a result, the time to obtain a cantly since then. More recently, Albania fore the reforms. In Belgrade (Serbia), registration certificate was reduced from removed the requirement to register with registration with various agencies has 15 to 5 days. Subsequently, in 2009, an local chambers of commerce. Yet compa- been consolidated under one roof. The expedited company registration service nies still have to register with municipal registration certificate, tax identification was introduced. For an additional fee, an tax bureaus. number, pension fund certificate, and entrepreneur can now obtain a company Montenegro and Serbia have re- health fund certificate are all obtained registration certificate within 24 hours. formed by merging procedures. In all at the Business Registers Agency (SBRA) Furthermore, a notary no longer needs Montenegrin cities, a statistical number in Belgrade. Other Serbian cities mea- to certify the bank account signature is now obtained from the Company Reg- sured by this report still require pension cards—a procedure that was still re- istry at the time of registration. Before, fund and health fund confirmations to quired back in 2008. the entrepreneurs had to visit the Sta- be obtained separately. Nevertheless, the The cost to start a business is an- tistical Office of Montenegro to get the time to start a business in Serbia has other significant variable among the cit- number. In addition, a unified taxpayer decreased in all cities—most notably in ies measured. The regional average of STARTING A BUSINESS 17 13% of income per capita is equivalent TABLE 2.2 Who made it easier to start a business since 2008? to US$ 536. Costs vary from just 1.5% Made of income per capita in Plevlja (Mon- registration tenegro)—similar to the costs seen in Created or Eliminated Merged or with Eliminated improved municipal simplified chambers of permits or Luxembourg or Romania—to a more one-stop or entity post-registration commerce decreased prohibitive 31.4% of income per capita Economy City shops permits procedures* optional their fees in Tirana (Albania) (figure 2.4). Pristina Shkodra   and Prizren (Kosovo), which were the Albania Tirana   most expensive cities for start-ups back Vlora   Banja Luka   in 2008, helped entrepreneurs by cutting Bosnia and Mostar   municipal permit fees from EUR 1,000 to Herzegovina Sarajevo   EUR 525 in Pristina and from EUR 1,000 Pristina   to EUR 400 in Prizren. The Montenegrin Kosovo Prizren   cities went one step further and elimi- Bitola    nated the requirement to obtain a mu- FYR Macedonia Skopje    nicipal license altogether—significantly Chisinau  Moldova lowering start-up costs. Now, companies Niksic    simply need to report their activities to Montenegro Pljevlja    the municipality. In some cities, the pro- Podgorica    cess has become slightly more expensive Belgrade   since 2008. In Serbia, a new law on court Krusevac   fees, introduced in May 2009, increased Serbia Uzice   the fee for notarizing the memorandum Vranje   of association and the lease contract Zrenjanin   in all cities. Companies with a start-up  Doing Business reform making it easier to start a business capital of more than RSD 1 million (US$  Doing Business reform making it more difficult to start a business 15,500) now have to pay 30% more than * registration for tax, social security, pension fund, and health fund. they did back in 2008. Note: This table records all Doing Business reforms that occurred between January 2008 and January 2011. Source: Doing Business database. The minimum capital requirement is another burden for companies—4 out minimum capital requirement. While a city were to adopt the best practices of the 7 economies in South East Eu- some say it is the Law on Business Or- already in place elsewhere in South East rope require companies to set aside a ganization, adopted by Kosovo’s parlia- Europe, it would rank 5th on the ease of significant amount of capital before they ment, others believe it is still the provi- starting a business globally—ahead of can start operating. In Kosovo, this is a sions in UNMIK Regulation 2001/6.10 the United States and all European Union prohibitive 112% of income per capita. It Starting a business has become eas- member states. is 30% in Bosnia and Herzegovina, 12% ier globally. In the past 7 years, Doing in Moldova, and 6% in Serbia. FYR Mace- Business recorded 296 business registra- WHAT TO REFORM donia is the only economy to have abol- tion reforms in 140 economies. Eastern ished the minimum capital requirement, Europe and Central Asia and Sub-Sa- Doing Business in South East Europe 2008 while Albania and Montenegro impose haran Africa have been the most active recommended the elimination of the nominal amounts (approximately US$ 1). regions in start-up reforms.11 In South minimum capital requirement and oper- Some governments, such as Koso- East Europe, between January 2008 (the ating permits. It also recommended the vo’s, have tried to reduce the minimum time of the first Doing Business in South introduction of one-stop shops. These capital requirement in recent years. In East Europe report) and January 2011, reform recommendations remain valid 2008, Kosovo’s parliament adopted the all 19 cities measured for the second for a number of cities. Law on Business Organization. The law time made the business start-up process was enacted by UNMIK9 Regulation No. easier (table 2.2). The most popular busi- CONSOLIDATE GOVERNMENT APPROVALS AT A SINGLE ACCESS POINT 2008/26 which introduced references ness reforms among central governments to the previous UNMIK Regulation No. remain the establishment of one-stop Having to deal with multiple government 2001/6. On paper, the law decreased the shops and unifying social security, health agencies slows down business registra- minimum capital requirement from EUR fund, and pension fund registrations. In tions significantly. Merging company 2,500 to EUR 1,000. However, there is addition, several local governments have registration with tax registration is a confusion regarding which law sets the reduced fees. The results are striking. If good starting point since both processes 18 DOING BUSINESS IN SOUTH EAST EUROPE 2011 typically require similar information. Al- lic health, safety, and the environment. courts. The requirements are similar in most half of the cities measured in South Local governments that require operating cities in Montenegro and Moldova. East Europe have already taken such permits indiscriminately are not meeting Switching to a single identification a step. Cities in Montenegro are in the this objective. Such permits should be number to be used for all government process of merging business registration eliminated for companies that do not interactions—including interactions with tax registration. Others should fol- pose a direct threat to public health, with all tax authorities—would expedite low suit. safety, or the environment. Alternatively, business registration and facilitate tax Integrating all procedures within a operating permits could be replaced with administration. Entrepreneurs and gov- one-stop shop would be the next big step. a system based on self-regulation: after a ernments would save valuable time. Sev- Some cities—like those in Albania— business starts up, government inspec- eral cities in the region— including those have already done so. The “single win- tions could verify that the business is in in Albania and FYR Macedonia—have dow” one-stop shops established in all compliance with operating norms. To already consolidated the various identi- Albanian cities enable entrepreneurs to avoid possible abuses, clear guidelines fication numbers into one. Other cities complete company, tax, social insurance, and requirements for such inspections should look to their positive examples. health insurance, and labor directorate should be made publicly available. registrations using a single application ABOLISH THE COMPANY SEAL procedure. In Skopje (FYR Macedonia), PROMOTE THE USE OF ELECTRONIC In 20 out of the 22 cities measured in SERVICES the Central Registry (established in South East Europe, having a company 2006) allows entrepreneurs to complete Technology can improve the efficiency of seal is either legally required or still a company, tax, statistics, and social fund services and the accountability of public common practice. In the past, official registrations and then publish the notice officials. In the past 7 years, 54 econo- seals may have been the only means to of the company’s establishment on the mies have introduced information and authenticate legal documents, but they registry’s website. Neighbors should take communication technology in their busi- are increasingly irrelevant in modern note of this streamlined process. ness start-up process. And the results are times. For one thing, seals may be easily promising. When Mauritius introduced forged. Furthermore, most documents SIMPLIFY REGISTRATIONS WITH a computerized system for business reg- are sent electronically. Around the globe, MUNICIPAL AUTHORITIES istration in 2006, the time required for more than 100 economies have regu- Currently, 19 of the 22 cities measured registration fell by 80%. Singapore’s on- lations allowing electronic signatures. in South East Europe require interac- line registration system saves businesses Such signatures eliminate the cost of tions with municipal authorities to start an estimated US$ 42 million annually.12 getting a seal, make it more difficult to a business. In fact, all cities in Albania, Most of the central registries in the forge signatures, and expedite transfer Moldova, and Serbia require entrepre- South East Europe region already have of documents. Economies in South East neurs to register for local taxes before websites in place and offer application Europe should also eliminate seal re- they can start operating their businesses. forms online. Some of them, such as FYR quirements, if they have not already done In Pristina and Prizren (Kosovo), mu- Macedonia and Moldova, offer online so. Those economies where the seal is not nicipal work permits are mandatory. In name reservations for companies as well. required by law but remains a common Mostar and Sarajevo (Bosnia and Her- The efforts should continue—with on-line practice should launch communication zegovina), entrepreneurs have to deal business registration as the ultimate goal. campaigns to inform the private sector with the municipal authorities on 2 oc- of more modern practices. casions—first to obtain a resolution on INTRODUCE A SINGLE TAX AND BUSINESS IDENTIFICATION NUMBER their intended activities and then again at the start of operations. Municipal reg- Having separate identification numbers istrations are associated with heavier for different governmental agencies in- 1. Djankov, Simeon; La Porta, Rafael; López-de Silanes, Florencio; and Shleifer, administrative burdens on companies creases the administrative burden. In Andrei. 2002. “The Regulation of Entry.” and additional costs—in many cities, Pristina and Prizren (Kosovo), entrepre- The Quarterly Journal of Economics 117 municipal fees constitute the largest por- neurs have to obtain a business registra- (1): 1–37. Cambridge, MA: MIT Press. tion of total costs to start a business. Cit- tion number separate from the tax num- 2. Marialisa Motta, Ana Maria Oviedo and ies in FYR Macedonia are the only ones bers (fiscal tax number, VAT number, Massimiliano Santini. 2010. “An Open to have completely eliminated registra- and pension scheme number). In Banja Door for Firms: The Impact of Business Entry Reforms.” Washington, DC: World tion with municipal authorities. Others Luka (Bosnia and Herzegovina), a statis- Bank Group. should consider the same path. tical number has to be obtained from the 3. Bruhn, Miriam. 2008. “License to Sell: In principle, the purpose of licenses Institute of Statistics in addition to the The Effect of Business Registration and permits should be to protect pub- registration number obtained from the Reform on Entrepreneurial Activity in STARTING A BUSINESS 19 Mexico.” Policy Research Working Paper 4538. Washington, DC: World Bank. 4. Cardenas, Mauricio, and Sandra Rozo. 2007. “La informalidad empresarial y sus consecuencias: ¿Son los CAE una solucion?” Documento de Trabajo 38, Fedesarrollo. Bogotá, Colombia. 5. Djankov, Simeon; La Porta, Rafael; López-de Silanes, Florencio; and Shleifer, Andrei. 2002. “The Regulation of Entry.” The Quarterly Journal of Economics 117 (1): 1–37. Cambridge, MA: MIT Press. 6. The World Bank Group, Investment Cli- mate Advisory Services, “Business Entry,” accessed March 15, 2011, http://www. wbginvestmentclimate.org. 7. This is when data were collected for Doing Business in South East Europe 2008. 8. The one-stop shop project in FYR Mace- donia is going through a second stage that aims to unify business registration and employee registration for social con- tributions. The second phase is already being implemented through a pilot proj- ect in Skopje and is expected to cover the entire country by the end of 2011. 9. UNMIK refers to the United Nations Mis- sion in Kosovo. 10. UNMIK Regulation No. 2008/26 promul- gated Law on Business Organizations in May 27, 2008, at a time when the Special Representative of the Secretary-General still had the authority to promulgate the law effective. However, UNMIK Regulation No. 2008/26 also changed the final text of the law, namely Article 236.2. According to the change: “Any of the provisions in Regulation 2001/6 and Administrative Direction 2002/22 so referred to shall remain in force and supersede any provision of the present Law inconsistent with Regulation 2001/6 and Administrative Direction 2002/22.” Please see Regulation No. 2008/26 at: http://www.unmikonline.org/regulations/ unmikgazette/02english/E2008regs/ RE2008_26.pdf. 11. World Bank. 2010. Doing Business in 2011: Making a Difference for Entrepre- neurs. Washington, D.C.: World Bank Group. 12. World Bank conference, “The Singapore Experience: Ingredients for Successful Nation-Wide eTransformation.” Singa- pore. September 30, 2009. Dealing with TABLE 3.1 Where is it easy to deal with construction permits—and where not? construction City Economy City Economy permits RANK 1 Niksic Montenegro (easiest) RANK 12 Bitola FYR Macedonia 2 Skopje 13 Mostar FYR Macedonia Bosnia and Herzegovina 3 Banja Luka 13 Vranje Bosnia and Herzegovina Serbia 3 Shkodra 13 Zrenjanin Albania Serbia 3 Tetovo 16 Uzice FYR Macedonia Serbia 6 Pljevlja 17 Pristina Montenegro Kosovo 6 Prizren 18 Podgorica Kosovo Montenegro 8 Balti 19 Chisinau Moldova Moldova Maja owns several clothing stores in 9 Sarajevo 20 Krusevac Uzice (Serbia). She is looking to expand Bosnia and Herzegovina Serbia her clothing line to Krusevac. In order to 9 Vlora 21 Belgrade Albania Serbia (most difficult) do so, she will need to build a warehouse 11 Durres 22 Tirana in Krusevac to store her merchandise. Albania Albania (no practice) After gathering information on the re- Note: Rankings are based on the average city percentile rankings on the procedures, time, and cost to deal with construction permits. quirements to deal with construction See Data notes for details. Source: Doing Business database. permits, she has second thoughts. The hassle and expense to obtain the approv- (figure 3.1). Such indicators can be tell- Europe comes close to the EU average of als, clearances, and permits in Krusevac ing. A recent competitiveness report by 17 procedures and 200 days. However, are making her explore alternate loca- the consulting firm KPMG indicated that in terms of costs, the region is almost tions within Serbia. construction costs and permitting pro- 15 times as expensive as the average EU Regulation of construction is criti- cesses were among the top 20 factors country, relative to average incomes per cal in ensuring public protection and determining the location of start-ups in capita. safety. However, it is important to find the United States.2 Across the region, dealing with con- the right balance between safety and Dealing with construction permits struction permits is easiest in Niksic efficiency. Smart regulations ensure can be difficult and expensive in South (Montenegro) and most difficult in Bel- both public safety and revenue for the East Europe. On average, a construction grade (Serbia). Meanwhile, in Tirana government, while making the process company would spend 223 days and (Albania), no permit has been issued easier for entrepreneurs. A complex and more than 1,100% of income per capita since 2009 (table 3.1).3 Globally, Niksic confusing regulatory framework hurts to complete the 20 requirements to build would rank 105th—same as the Nether- business and can be a seedbed for cor- a warehouse in the region. South East lands—while Belgrade would take 179th ruption. Instead of promoting public FIGURE 3.1 safety, overly rigid rules and regulations What is the time, cost and number of procedures to comply with formalities may push construction into the informal to build a warehouse? economy, undermining the intent. An estimated 60 to 80% of construction COST (% of income per capita) projects in developing economies are Completed warehouse undertaken without permits because the permit approval process is too complex NUMBER OF or its oversight is too lax.1 PROCEDURES Doing Business measures the num- A business in the construction ber of procedures, time, and cost for a industry small to medium-size construction busi- ness to obtain all necessary approvals to build a simple commercial warehouse TIME (days) and connect it to basic utility services Pre-construction Construction Post-construction and utilities DEALING WITH CONSTRUC TION PERMITS 21 place—between Ukraine and the Russian FIGURE 3.2 Federation—out of the 183 economies Many pre-construction requirements across South East Europe Number of procedures measured by Doing Business. In Hong 0 5 10 15 20 25 30 Kong SAR (China), the global best per- Pljevlja former for this indicator, a construction Montenegro 15 company spends only 67 days and 19.4% Skopje FYR Macedonia 15 of income per capita on 7 procedures. Niksic Montenegro 16 The number of steps required to deal Podgorica with construction permits ranges from Montenegro 18 Uzice 15 in both Plevlja (Montenegro) and Sko- Serbia 18 pje (FYR Macedonia) to 30 in Chisinau Banja Luka 18 Bosnia and Herzegovina (Moldova). On average, a construction Sarajevo Bosnia and Herzegovina 19 company must complete 12 pre-con- Mostar struction procedures, 1 procedure during Bosnia and Herzegovina 19 Tetovo the construction phase, 3 procedures to FYR Macedonia 20 obtain utility connections, and 4 post- Zrenjanin 20 Serbia construction procedures (figure 3.2). Vranje Serbia 20 Across the region, at least 9 or more Vlora approvals are required before construc- Albania 21 tion can even commence. In Chisinau Shkodra Albania 21 (Moldova), a building company must go Durres 21 Albania through 18 pre-construction steps—the Prizren 21 highest in the region—visiting 14 differ- Kosovo Krusevac ent agencies and public utility provid- Serbia 21 ers. These include multiple visits to the Belgrade Serbia 21 Fire Department, the Health Depart- Pristina Kosovo 21 ment, and the Environmental Protection Bitola Agency; separate visits to 6 utility com- FYR Macedonia 23 Balti panies; and visits to the Municipality, Moldova 28 City Planning Services Agency, Road Chisinau 30 Moldova Inspectorate, and the State Service for Tirana Albania NO PRACTICE Pre During Utilities Post Verification and Expertise of Projects construction construction construction in Construction. Meanwhile, in Banja Source: Doing Business database. Luka (Bosnia and Herzegovina), only 9 pre-construction steps are required. ity for building supervision from public mercial buildings is no longer required. Since the enactment of the Law on Con- enforcement agencies to certified engi- Instead, certified supervisory engineers struction and Urban Planning in May neers.5 This resulted in the elimination prepare technical reports in which they 2010, building companies in the Repub- of 5 on-site inspections in Skopje previ- determine if buildings are in compliance lika Srpska entity are no longer required ously performed by the State Inspector- with construction permits. to obtain preliminary consents from ate for Construction and Urban Works. The time needed to deal with con- utility providers. Today, a construction company must hire struction permits in South East Europe The number of procedures required a private certified engineer who over- varies from 3 months in Bitola (FYR during the construction phase also varies sees the construction from beginning to Macedonia) to a year and a half in Mo- within the region. In Albania’s cities, 4 end, performs the technical inspection star (Bosnia and Herzegovina) (figure on-site inspections are conducted by the after construction, and prepares the final 3.3). Most variations stem from dif- municipal Construction Inspectorate. compliance report. ferences in the pre-construction and Similarly in Balti and Chisinau (Mol- In the majority of cities, in addi- post-construction phases. On average, dova), 3 such inspections are required tion to getting utility connections and it takes 119 days before the construc- by the State Construction Inspector- registering the building with cadastre, tion can start in the region. However, ate. Meanwhile, in FYR Macedonia, the the post-construction phase includes a construction company in Skopje (FYR 2009 Law on Construction—amended obtaining an occupancy permit. FYR Macedonia) may obtain a building per- in 20104—reduced construction-phase Macedonia is the exception because the mit in 72 days while one in Belgrade requirements by shifting the responsibil- occupancy permit requirement for com- (Serbia) may spend 248 days on the same 22 DOING BUSINESS IN SOUTH EAST EUROPE 2011 FIGURE 3.3 tion of the overall cost is spent on build- Big range in the time spent on dealing with construction permits ing permit fees and associated taxes. In (days) the Serbian cities, obtaining a building Bitola 96 Average city of South East Europe permit amounts to, on average, 76% of FYR Macedonia 223 days Tetovo the overall cost (the equivalent of US$ 114 FYR Macedonia 83,278). In FYR Macedonia and Monte- Skopje FYR Macedonia 129 negro, construction companies also must Balti pay an urban development tax before Moldova 152 Prizren obtaining a building permit. In Pod- Kosovo 160 Niksic gorica (Montenegro), this tax accounts Montenegro 163 for almost 75% of the overall cost (the Vranje Serbia 168 equivalent of US$ 100,221). Shkodra 176 Inspection costs vary. Across all cit- Albania Sarajevo ies in Serbia, the cost of hiring a licensed Bosnia and Herzegovina 182 expert to oversee construction is 111% of Pljevlja Montenegro 182 income per capita (US$ 6,625). In addi- Vlora Albania 184 tion, receiving a final inspection before Zrenjanin 186 obtaining a usage permit varies from Serbia Durres US$ 2 in Belgrade to US$ 3,096 in Vranje. Albania 208 In Pristina and Prizren (Kosovo), inspec- Banja Luka Bosnia and Herzegovina 228 tions costs are significantly less—US$ Uzice 15 and US$ 22, respectively. In Moldova Serbia 261 Podgorica 287 inspections are free of charge. Montenegro Krusevac In 2009/2010, 19 economies around 291 Serbia the world made it easier to deal with Chisinau Moldova 294 construction permits, according to Doing Pristina Business 2011. Eastern Europe and Cen- Kosovo 320 Belgrade tral Asia, as well as Sub-Saharan Africa Serbia 349 Mostar have been the most active regions in Bosnia and Herzegovina 554 reforming construction permitting in the Tirana Albania NO PRACTICE past 6 years. Specifically, 20 economies in Eastern Europe and Central Asia imple- Source: Doing Business database. mented 33 new regulations—mainly to step. Similarly, in the post-construction and technical requirements of a building revamp outdated construction formali- phase, receiving the final inspection of area may take 30 days while the same ties, such as those from the Soviet Union the warehouse, obtaining an occupancy process may take 60 days in Podgorica era. These changes reduced the average report, and registering the property in (also Montenegro) because it has not time for dealing with construction for- the cadastre can take as little as 33 days completed an update of its spatial maps malities by 30 days—from 280 to 250 in Balti (Moldova) and as long as 205 and plans. days.6 Georgia accomplished the most days in Pristina (Kosovo). South East Europe is one of the remarkable set of construction reforms Although construction regulations most expensive regions in the world in recent years. Georgia’s government are national in most economies in the for construction permits—the average overhauled its construction permitting region, differences in implementation cost runs 1,134% of income per capita. system from 2005 to 2009 by creating a at the local level exist. For instance, in Balti and Chisinau (Moldova) stand out one-stop shop and gradually consolidat- Vranje (Serbia), once all necessary clear- as the least expensive; they cost 110% ing 25 procedures into just 10. This re- ances are obtained, it takes the municipal and 121% of income per capita, respec- duced the time to deal with construction authorities 8 days to issue the permit, tively. Vranje (Serbia) and Podgorica permits from 195 days to 98 days. After while in Belgrade, the local Secretariat (Montenegro) are the most expensive at 6 years of steady improvements, Georgia for Urban Planning and Construction 2,099% and 2,132% of income per capita, has one of the world’s most efficient per- may take 15 times longer due to a signifi- respectively. They would rank among the mitting systems for new construction. cant administrative backlog. Similarly in 11 most expensive locations globally— In South East Europe, 9 out of the 19 Niksic (Montenegro), obtaining the mu- comparable to India (figure 3.4). cities measured in 2008 have benefited nicipal consent on urban development In most economies, the largest por- from reforms—including the digitiza- DEALING WITH CONSTRUC TION PERMITS 23 FIGURE 3.4 TABLE 3.2 Expensive construction formalities Who made it easier to deal with construction permits since 2008? in South East Europe Shifted responsibility for LIBERIA Adopted and quality control to Digitized Cadastre implemented private Economy City and Land Registry new construction law professionals INDIA Banja Luka   PODGORICA 2,132.1 Montenegro Bosnia and Mostar  2,000 Herzegovina Sarajevo  FYR Macedonia Skopje   Niksic  Montenegro Pljevlja  Podgorica  South East Europe Belgrade  Serbia Uzice  1,000 Vranje   Doing Business reform making it easier to deal with construction permits  Doing Business reform making it more difficult to deal with construction permits Note: This table records all Doing Business reforms that occurred between January 2008 and January 2011. Source: Doing Business database. BULGARIA condition for entering the design phase. ance of construction permits and made TURKEY BALTI This process is done at the stage of is- them transferable. The impact of the Moldova 110.2 EU AVERAGE suance of building permit while at the new law varies across cities. In Uzice and SLOVAK REPUBLIC pre-design stage it is sufficient to fol- Vranje, the reform decreased the time HUNGARY Cost to deal with construction permits low the urban-technical conditions for to obtain a building permit by 5 months (% of income per capita) that particular area contained in the and 3 months, respectively. On the other Source: Doing Business database. general spatial plan. Also, Montenegro’s hand, in Belgrade, the time required has new law no longer requires obtaining increased by 5 months since 2008. The tion of cadastre records, enactment of an official consent from the Ministry greatest challenge in the implementation new construction laws, and streamlining of Economic Development—saving con- of the 2009 law is applying its provisions of inspection processes (table 3.2). For struction companies 30 days and EUR regarding the conversion of “rights of example, in Bosnia and Herzegovina, 240 (US$ 330), on average. In Banja Luka use” into ownership rights. The new law the digitalization of the cadastre and (Bosnia and Herzegovina), a new Law on mandates that conversions are executed land registry in Banja Luka decreased Construction and Urban Planning was after following a procedure involving the the time to register a completed build- adopted by the Republika Srpska parlia- public real estate registry. However, the ing with these agencies from 120 days ment in June 2010. As a result, obtaining public real estate registries have been in 2008 to 70 days in 2011. Similarly, a pre-construction clearances from utility reluctant to interpret the legal provisions construction company in Sarajevo now providers is no longer required if con- governing rights’ conversions8. spends only 16 days to register a build- struction already has an approved urban Additional reforms are under way ing in the land registry and cadastre—10 plan. In accordance with the EU-wide throughout the region. In Moldova, the months less than in 2008.7 trend to shift, where appropriate, control Law for Authorizing the Execution of Economies that reformed their con- and inspection activities from govern- Construction Works, adopted in July struction laws streamlined procedures in ment authorities to licensed profession- 2010, introduces statutory time limits the pre- and post-construction phases. als, the new construction law in FYR for project approvals and consolidates In Montenegro, the new Law on Urban Macedonia simplified the review and project clearances. The subsequent Development and Construction, enacted approval process for low-risk buildings. implementation process is expected to in August 2008, requires construction As a result, the time to deal with con- make dealing with construction permits companies to obtain urban development struction permits in Skopje decreased by less burdensome and more efficient. In and technical requirements from the more than two months as 6 procedures FYR Macedonia, where 98% of territory municipality. This replaced the need to were eliminated. Meanwhile, in Serbia, is now covered by the new Real Estate enter into time-consuming procedure the 2009 Law on Planning and Construc- Cadastre,9 the digitalization of cadastre for obtaining a land use permit as a pre- tion simplified procedures for the issu- maps is under way. In Serbia, a pilot 24 DOING BUSINESS IN SOUTH EAST EUROPE 2011 project for 14 cities—including Uzice as an important source of revenue, commercial warehouse required 5 such and Zrenjanin—will build the technical excessively high costs can discourage certificates from different utility provid- capacity to estimate the market value of constructors from following the formal ers. Nowadays, contractors file for the "No land and upgrade the local Geographic procedures and can lead to illegal con- Objection Certificates" online and receive Information System (GIS), which cap- structions. For this reason, building per- notification that their designs have been tures and stores land information in a mit fees should be based on cost recovery approved electronically. The introduction digital format. In Albania, the new Law for the service provided, rather than be of online clearances reduced the time on Territorial Planning was adopted by treated as a source of revenue generation. to deal with construction permits by 2 the parliament in 2009. Once it enters Among the regions’ economies, Moldova weeks. Cities in South East Europe could into force in September 2011, it is ex- provides a good example by offering an learn from these positive examples. pected to professionalize the structure affordable building permit. Neighboring of the Territorial Adjustment Council economies should learn from Moldova’s ENFORCE STATUTORY TIME LIMITS (TAC)—the main authority in charge of good practice. FOR PERMIT APPROVALS issuing building permits in Tirana. Due A study in the United States estimates to the current political composition of CONTINUE CONSOLIDATING PRE-CON- that accelerating permit approvals by the TAC, no construction permits have STRUCTION CLEARANCES 3 months in a 22-month project cycle been issued since April 2009. As a result, Before applying for a building permit, could increase construction spending by Tirana appears as ‘no practice’ for deal- construction companies in Chisinau 5.7% and property-tax revenue for local ing with construction permits according (Moldova) need to obtain multiple clear- governments by 16%.11 As such, gov- to Doing Business methodology.10 ances from the Fire Department, Sanitary ernments should have a strong interest Cities in South East Europe can Authorities, and Environmental Protec- in accelerating permit approvals. Some gain from adopting the best regulations tion Agencies. First, before finalizing the economies in the region have tried to and practices that already exist within construction-design documentation for make the process faster by introducing the region. If a hypothetical city were even simple projects, construction com- statutory time limits. In Montenegro, to adopt all the region’s best practices to panies have to obtain location approvals the 2008 Law on Urban Development deal with construction permits, it would from each of the agencies. After the final and Construction mandates a 15-day rank 40th globally—ahead of Belgium, designs are in place, these agencies must statutory limit for building permit is- 124 places higher than the average city issue a second approval. The situation suance. In Niksic, the statutory time in the region. is not much different in other cities. In limit is strictly enforced and is working Belgrade (Serbia) and Pristina (Kosovo), well. This is not the case in Pljevlja and WHAT TO REFORM 6 and 5 initial approvals are required, Podgorica, where it takes twice as long to respectively. Having all agencies issue issue the building permit today. Changes Doing Business in South East Europe 2008 a single clearance from a centralized in national law alone are not sufficient. recommended: (a) consolidating project location—a one-stop shop—could be a They must be followed by effective imple- clearances; (b) making the permitting good solution moving forward. How- mentation at the local level. South East process transparent; (c) providing on- ever, convincing each agency to send a Europe should work on enforcing statu- the-job training to spatial planning office permanent representative with decision- tory time limits for approvals. staff; (d) streamlining licensing applica- making authority to a one-stop shop is tions via technology; and (e) creating, challenging. Alternatively, agency rep- INTRODUCE RISK-BASED APPROVALS regularly updating, and digitizing zoning resentatives could work at the one-stop Smart regulations should ensure safety maps. These recommendations are still shop on certain days of the week. while encouraging efficiency. Many in- valid for most cities. Additional recom- In 2005, Georgia established a one- spections, clearances, and consultations mendations also apply. stop shop that successfully consolidated should be in place to guarantee pub- clearances by several agencies—such as lic safety. At the same time, authori- CONSIDER REDUCTION IN COST OF the Ministry of Culture, the Ministry ties should take the time to assess the BUILDING PERMITS of Environmental Protection, and utility risk of different projects and come up The cost of dealing with construction providers—into 1 approval. In 2009, the with risk-based rules to deal with clear- permits in some of the region’s econo- United Arab Emirates introduced online ances and approvals. In other words, all mies is highly prohibitive. Building per- clearances from utility providers. In the building projects should not be treated mit fees represent, on average, 72% of the past, builders in Dubai were required to equally: it is not efficient. Complex and total cost of dealing with construction obtain "No Objection Certificates" (simi- risky structures must have stricter stan- permits in South East Europe. While lar to technical conditions) from vari- dards than 2-story commercial ware- building permit fees may be regarded ous agencies based on their designs. A houses. Requiring less documentation DEALING WITH CONSTRUC TION PERMITS 25 for low-risk buildings can speed up the INTRODUCE MODERN BUILDING ropean standards providing a common CODES approval process. This saves time for approach for the design of buildings and both entrepreneurs and authorities and Building codes establish common stan- other construction products.15 This could allows them to use their resources more dards for public health and safety, fire help South East Europe’s economies (a) efficiently.12 protection, structural efficiency, and improve the transparency and predict- Worldwide, 84 economies—in- environmental integrity. Building codes ability of their construction permitting cluding Belarus, Canada, Colombia, are important for ensuring a level play- processes, (b) establish responsibility and and Germany—provide fast-track ap- ing field and legal certainty for building liability of construction practitioners, plication processes for small commercial practitioners and developers. Globally, and (c) comply with EU standards and buildings. For example, Kazakhstan of- 43 economies have adopted uniform con- (d) help their EU-integration agendas. fers fast-track approval procedures for struction rules.13 The best-practice codes smaller projects (under 1,000 square encourage innovation and speed up the meters). Similar initiatives are appear- process of design reviews by the relevant ing in South East Europe. For example, authorities. These were important drivers 1. Moullier, Thomas. 2009. “Reforming Building Permits; Why Is It Important in Montenegro, a 2008 construction law in Australia’s and New Zealand’s building and What Can IFC Really Do?” Interna- shifted smaller projects (under 3,000 permit reforms which developed “perfor- tional Finance Corporation. Washington, square meters) to be overseen by munici- mance” and “objective based” codes. In DC. World Bank Group. pal governments. Meanwhile, Montene- other words, the new codes’ requirements 2. KPMG. 2009. “Competitive Alternatives: gro’s medium- to large-scale projects are specify the desired technical outcome KPMG’s Guide to International Business Location.” http://www.competitivealter- still reviewed by the central government rather than the specific way this outcome natives.com. (through the Ministry of Economic De- should be achieved. 3. According to the Doing Business meth- velopment). More economies should in- When regulations are not organized odology, Tirana (Albania) is classified as troduce risk-based approvals to improve and applied coherently, builders and au- “NO PRACTICE” since no construction efficiency while preserving public safety. thorities may become confused about permit has been issued since 2009. how to proceed. This often leads to delays, 4. The 2009 Law on Construction in FYR uncertainty, and disputes. However, if Macedonia was last amended in Febru- SHIFT RESPONSIBILITY FOR QUALITY CONTROL TO PRIVATE PROFESSIONALS ary 2011. The results of the February provisions are too precise, it is more dif- 2011 amendment are not captured in In all cities in Albania, 4 inspections are ficult to keep regulations up-to-date. In Doing Business in South East Europe 2011 mandatory during the construction of all transitional economies, updates may be because it uses data current as of January projects. A final inspection is performed a particular challenge. For example, con- 2011. once the buildings are complete. Simi- struction standards in Ukraine still refer 5. Municipal construction inspectors can exercise supervision in any phase of con- larly, in Chisinau (Moldova), construction to outdated "SNIP" building code, which struction, but there is no legal obligation companies must receive 3 on-site inspec- tends to be overly prescriptive and not to perform inspections. tions during construction and 2 more be- up-to-date with new building technolo- 6. World Bank. 2010. Doing Business in fore obtaining the occupancy permit. This gies and techniques. As such, regulations 2011: Making a Difference for Entrepre- can produce large backlogs in municipal and technical standards are hard to com- neurs. Washington, D.C.: World Bank Group. inspectorates. As a result, some inspec- ply with in a consistent way. The same is 7. In Sarajevo, both the land registry and tions may be delayed or skipped. true for several economies in South East cadastre are available in digital format. Shifting responsibility for inspec- Europe. For example, technical require- In Mostar, 95% of all books in cadastre tion to private professionals is an alterna- ments that apply to buildings and other are in digital form, while the land regis- tive. The Czech Republic has adopted this construction works are currently stated try still deals with requests from 2008. In Banja Luka, close to 80% of the cadastre method by creating a new and indepen- in the so-called “Rulebooks”14 that refer and 90% of the land registry books are in dent profession: authorized inspectors. to the obsolete Yugoslavian standards. digital form. This has sped up the process by 5 weeks. The experience of best-practice 8. “Right of use” is the relict of Yugoslavian FYR Macedonia is following interna- countries—such as the United Kingdom, legal infrastructure in Serbia. It was the tional best practices by shifting responsi- Canada, New Zealand and Colombia— only legal title over construction land. bilities from public enforcement agencies suggest that it takes 10 to 15 years to carry At the time of the enactment of the new Law on Planning and Construction, the to certified engineers. Other economies out a significant overhaul of construc- majority of the construction land in Ser- should follow suit. tion-permitting systems and develop new bia was owned by the Republic of Serbia, building codes. Countries in South East while the “right of use” was registered Europe can avoid drafting new build- in favor of various entities. The “right of use” types vary depending on many ing codes and leverage the experience factors—such as if the land is developed of the EN Eurocodes—a series of Eu- 26 DOING BUSINESS IN SOUTH EAST EUROPE 2011 or not, if it has been nationalized or assigned, or if the owners were compen- sated or not. Variations in the “right of use” imply that a variety of situations arise in the conversion process. 9. World Bank, Real Estate Cadastre & Reg- istration project, FYR Macedonia. http:// go.worldbank.org/BE17FKNCE0  10. Tirana’s Territorial Adjustment Council by law consists of the following 9 mem- bers: the mayor, 3 members proposed by the majority party of the municipal council, 3 members proposed by the minority party of the municipal council, 1 representative from the Ministry of Urban Planning, and 1 representative chosen by 3/5 of the votes of the munici- pal council. 11. PricewaterhouseCoopers. 2005. “The Economic Impact of Accelerating Permit Processes on Local Development and Government Revenues.” Report prepared for the American Institute of Architects, Washington, D.C. 12. World Bank. 2010. Doing Business in 2011: Making a Difference for Entrepre- neurs. Washington, D.C.: World Bank Group. 13. Ibid. 14. Bylaws of the Construction Law and the Law on Spatial and Urban Planning. 15. Eurocodes EN 1990 to EN 1998. 27 Registering TABLE 4.1 Where is it easy to register property—and where not? property RANK City Economy RANK City Economy 1 Balti 10 Vlora Moldova (easiest) Albania 1 Chisinau 13 Durres Moldova (easiest) Albania 3 Bitola 14 Prizren FYR Macedonia Kosovo 4 Pljevlja 15 Skopje Montenegro FYR Macedonia 5 Vranje 16 Belgrade Serbia Serbia 6 Niksic 16 Tirana Montenegro Albania 6 Tetovo 18 Pristina FYR Macedonia Kosovo 6 Zrenjanin 19 Sarajevo Serbia Bosnia and Herzegovina Alma from Mostar (Bosnia and Her- 9 Shkodra 20 Podgorica zegovina) is a postal worker, but her Albania Montenegro passion has always been cooking—the 10 Krusevac 21 Banja Luka Serbia Bosnia and Herzegovina love and skill for which she inherited 10 Uzice 22 Mostar from her grandmother. For years Alma Serbia Bosnia and Herzegovina (most difficult) dreamed of opening a small restaurant Note: Rankings are based on the average city percentile rankings on the procedures, time and cost to register property. See Data Notes and being “her own boss.” When she for details. Source: Doing Business database. heard that the owner of a neighborhood restaurant passed away and his children into greater tax revenues. and generates revenues. In fact, over the wanted to sell the premises, Alma saw Doing Business records the full se- past 6 years, Doing Business has recorded this as her opportunity to make a dream quence of procedures necessary for a 146 property-registration reforms across come true. She had savings that could business to purchase a property from 104 economies. Over this 6-year period, just about cover the asking price for the another business and transfer the title the average time to transfer property fell property she wanted to purchase. How- to the buyer’s name. The transaction is by 38% and the cost fell by 10% around ever, when she found out that she would considered complete when the purchas- the world.2 have to pay an additional 5% of its value ing company can use the property as col- The economies of South East Eu- in order to formally register the property lateral for new loans or, if necessary, sell rope have also made recent registration under her name, Alma’s resolve van- it to another business (figure 4.1). reforms—perhaps fuelled by their efforts ished. If Alma lived in Pristina (Kosovo), Governments around the world to join the European Union (EU). Since her dream could have come with a lower have realized that facilitating property 2008 the average time to register prop- price tag attached to it. Property-title transfers contributes to economic growth erty in South East Europe fell by more transfers in Pristina cost just 0.6% of the FIGURE 4.1 property value—a tenth of the cost found What is the time, cost and number of procedures required to transfer a property in Mostar. between 2 local companies? Easy and affordable property trans- fers can help a local economy develop COST (% of property value) Buyer can use and grow. Possessing formal land ti- the property, tles allows entrepreneurs to use land as resell it or use collateral, thus increasing credit sup- it as collateral ply—which can lead to more investment and economic growth. Recent studies PROCEDURES by the World Bank show that 95% of Land & 2-story warehouse commercial bank loans to businesses in Seller with property Zambia, 80% in Indonesia, and 75% in registered and no Uganda are secured by land.1 Property title disputes registration also benefits governments, TIME Post-registration (days) as more registered properties translates Pre-registration Registration 28 DOING BUSINESS IN SOUTH EAST EUROPE 2011 FIGURE 4.2 ing the signatory to act on behalf of Time to register property varies greatly across the region the company. In Pristina (Kosovo), in (days) 91 addition to the title deed, parties have 6 to obtain certified copies of their com- panies’ business registration and a letter from the tax authority certifying that all property taxes have been paid before the lawyer can draft the sale and purchase 48 Total agreement. 85 Efforts are underway to cut down 19 Pre-registration the number of procedures. For example, in Banja Luka (Bosnia and Herzegovina), authorities eliminated the need for signa- Fastest 29 Register the new owner tory authorizations, tax clearances, on- in the region at cadastre or land registry 5 site evaluation of properties, and checks 4 1 with the municipality to see whether the Chisinau Belgrade South East property is part of any municipal con- Moldova Serbia Europe average struction plan. That reduced the number Source: Doing Business database. of procedures required in Banja Luka from 11 in 2008 to 7 today—while the than a month, while the average cost fell tions involve 5 procedures over 5 days total time fell from 190 to 103 days over by 0.3% of the property value. at a cost of 0.9% of the property value. the same period. Similarly, Moldova no Registering property in the region Meanwhile, in the city of Mostar (Bosnia longer requires the submission of a ca- now requires an average of 6 procedures, and Herzegovina), the process involves dastral sketch for all properties already 48 days, and a cost equivalent to 2.9% of 7 procedures over 117 days at a cost of registered with the cadastre—decreasing the value of the property. Yet the region 5.5% of the property value (table 4.1). the total time to register property from still needs to reform more to catch up The process of registering property 48 days in 2008 to just 5 days today. In with EU member states—such as Lithu- in the region generally follows 4 distinct FYR Macedonia, information on land ania, where property registration requires phases: (1) obtaining the documents encumbrances was transferred from the just 3 procedures, 3 days, and a cost necessary to draft the sale and purchase first instance courts to the cadastre reg- equivalent to 0.8% of the property value. agreement (including title deed and land istry. Now both the title deed and non- To facilitate property registration map, certification of business registra- encumbrance certificate can be obtained across South East Europe, local poli- tion and authorized signatories, and a at the same time from the same institu- cymakers need not look far. If a city in confirmation that property taxes have tion—eliminating 1 procedure from the South East Europe were to adopt the been paid), (2) signing and notarizing process. good practices already in place in Mol- the sale and purchase agreement, (3) as- The largest regional variation is dova (where property registration takes 5 sessing and paying the property transfer seen in the total time needed to register days), in FYR Macedonia (where it takes tax, and (4) registering the new owner property. It ranges from just 5 days in 5 procedures) and in Prizren, Kosovo at the lands registry authority. Despite Chisinau and Balti (Moldova) to almost (where it costs 0.5% of the property following these same general processes, 4 months in Mostar (Bosnia and Herze- value), this hypothetical city would rank the number of procedures in the region govina). The efficiency of the land regis- 17th out of the 183 economies measured ranges from 5—in Moldova and FYR try in registering the new owner of the by Doing Business—ahead of all but 3 of Macedonia—to 8—in Pristina (Kosovo). property explains most of the variation. the 26 EU member states. The differences appear mainly in the While this procedure takes just 1 day in Although South East Europe’s econ- first phase, obtaining the certificates and the Moldovan cities, it takes 85 days in omies share a similar regulatory frame- clearances necessary to draft the sale and Belgrade (Serbia) (figure 4.2). work for property registrations (note that purchase agreements. In Albania, for ex- Digitizing land registry and cadas- 5 out of the 7 economies measured were ample, entrepreneurs have to go through tre records has sped up property reg- part of former Yugoslavia), the time, 3 procedures in order to ensure that the istrations in recent years. Bosnia and cost, and number of procedures vary property is free from any disputes and Herzegovina has benefited from the widely due to different local administra- encumbrances. In Mostar and Sarajevo introduction of the Land Administra- tive practices and taxes. For example, in (Bosnia and Herzegovina), both parties tion Project in 2006 which, among other the Moldovan cities, property registra- have to obtain a court extract authoriz- things, aims to fully digitize land registry REGISTERING PROPERT Y 29 FIGURE 4.3 drooped accordingly. In Sarajevo, 90% of fice decreased the time to register prop- Fixed property transfer fees in Kosovo the delay to register property was elimi- erty by 9 days in Tirana and by 12 days in make registering property affordable nated—compare the 331 days required Vlora. Hiring additional staff can have a Property transfer tax to register property in 2008 to 33 days similar effect: when the cadastre staff was (% of property value) today. In Banja Luka, the time to register increased in Skopje, the time to register 5 Mostar, Sarajevo the new owner at both the land registry the new owner fell by over a month (from Bosnia and Herzegovina and cadastre fell from 145 days in 2008 98 days in 2008 to 58 days today). to 95 days today. Meanwhile, in Mostar, Cost is another important variable. 4 the time to register property at these two In the region, the cost to register prop- institutions fell from 105 days in 2008 erty ranges from 0.5% of the property Banja Luka, Bosnia and Herzegovina Albania, FYR Macedonia to 71 days today. Meanwhile, Moldova value in Prizren to 5.5% of the property 3 & Montenegro (all cities) is also in the process of digitizing the value in Mostar. The bulk of the cost Serbia (all cities) land registry records. In Serbia, efforts across the region is the property transfer are underway to transfer land records tax. The property transfer taxes seen in 2 from the court-based land registries to the 22 cities of South East Europe range the cadastre. At the same time, cadastre from a flat rate of EUR 150 (0.1% of the 1 maps are being digitized. As a result, the property value)—in Pristina (Kosovo)— time to register property decreased by 30 to 5% of the property value—in Mostar Moldova (all cities) days in Zrenjanin, 25 days in Vranje, 20 and Sarajevo (Bosnia and Herzegovina) 0 Kosovo (all cities) days in Belgrade, and 17 days in Uzice (figure 4.3). The remaining costs are no- Source: Doing Business database. since 2008. In FYR Macedonia, over 98% tary fees, court fees, and administrative of the territory is covered by the land ca- taxes at the land registry and cadastre. and cadastre books. Within Bosnia and dastre3 and digitization of cadastre maps In Bosnia and Herzegovina, notary Herzegovina, the project is in various is expected to be completed in the next fees have increased in recent years, but stages of implementation: Sarajevo has couple of years. court taxes and some administrative fees digitized all land registry and cadastre Introducing statutory time limits decreased, so there were no significant books, while Banja Luka and Mostar for the issuance of title deeds and the changes in the total cost of registering have digitized 80% and 95% of their ca- registration of changes in ownership is property. Similarly, court taxes in Ser- dastre content, respectively. This reform another important reform. In Albania, a bia decreased, but cadastre fees were eliminated delays and the total num- newly introduced statutory time limit for increased for almost the same amount. ber of days it takes to register property the Immovable Property Registration Of- With Montenegro’s 2010 Law on Busi- ness Environment Improvement, fees TABLE 4.2 for notarizing agreements were lowered Who made it easier to register property since 2008? from EUR 300 (US$ 416) in 2008 to EUR Eliminated Improved efficiency of requirements Cadastre through 10 (US$ 14) today, regardless of the value for pre-sale regulatory and of the contract. certificates and Digitized Land administrative Overall, reforms aimed at facilitat- Economy City clearances Registry/Cadastre changes ing property registration resulted in both Albania Tirana  time and cost savings for entrepreneurs Vlora  in 12 out of the 19 cities measured in Banja Luka   2008 and again in 2011. As discussed Bosnia and Mostar  Herzegovina above, reforms included: eliminating pre- Sarajevo  sale certificates and clearances, digitizing FYR Macedonia Bitola  land records, introducing statutory time Skopje   limits, decreasing fees, and increasing Moldova Chisinau  the capacity of land registry and cadastre offices (table 4.2). Additional reforms are Serbia Uzice  ongoing throughout the region. However, Zrenjanin  governments can do more to make prop- Belgrade  erty transfers easier—and thus boost the Vranje  formalization and security of property  Doing Business reform making it easier to register property titles and help increase the availability Note: This table records all Doing Business reforms that occurred between January 2008 and January 2011. of credit. Source: Doing Business database. 30 DOING BUSINESS IN SOUTH EAST EUROPE 2011 WHAT TO REFORM? Moreover, a fixed fee would discourage PUBLICIZE AND COMMUNICATE THE BENEFITS OF BUSINESS REFORMS entrepreneurs from reporting an under- Doing Business in South East Europe 2008 valued price of the property transaction. As the above example from Montenegro recommended (a) eliminating pre-sale Flat rates can translate into more shows, a good communication strategy is certificates and clearances, (b) reducing revenue for the government. For exam- an essential part of any successful reform the property transfer tax and introducing ple, in 2007, the Arab Republic of Egypt process. It helps raise awareness about fixed fees, (c) taking property registra- introduced a low, fixed, stamp-duty— regulatory improvements, inform the tion out of the courts, (d) introducing replacing the 3% registration fee. This led public about reform benefits, and reduce expedited procedures, and (e) making the to a boom of property registrations that legal uncertainty. Many reformers are bad use of notaries optional. While a number increased government revenues by 39% marketers. For example, El Salvador first of cities have made positive strides by in the 6 months after the reform.5 The established a one-stop shop in 1999, but introducing and implementing some of region’s economies could benefit from a local entrepreneurs thought it was only these reforms, the recommendations re- similar reform. for foreigners. A lesson was learned. The main valid for many others. Additionally, second time around, the president himself economies in the region could benefit PROVIDE STANDARDIZED SALE AND inaugurated the improved one-stop shop from the following business reforms. PURCHASE AGREEMENTS and widespread media coverage ensured Entrepreneurs in all 7 South East Europe that everyone knew about the new system. LINK GOVERNMENT AGENCIES AND economies still seem to prefer having South East Europe would benefit from MAKE DOCUMENTS AVAILABLE a lawyer draft sale and purchase agree- more public service campaigns as reforms ONLINE ments for properties, while governments are implemented. The real estate management authority still require that such contracts are au- (e.g., the cadastre or land registry) could thenticated by notaries. It could be more REPLACE ON-SITE PROPERTY INSPEC- act as a hub for all property-related infor- convenient for parties to use standardized TIONS WITH ASSESSMENTS BASED ON A STANDARDIZED SCHEDULE OF mation. For example, it could be linked contracts downloaded from the internet PROPERTY VALUES with the tax authority, the company regis- or obtained at the registry. Standardized try, and the courts. This could allow buy- contracts reduce the potential for mis- Out of the 22 cities measured in this ers and sellers to easily check if property takes and irregularities while eliminat- year’s Doing Business in South East Eu- taxes have been paid, if the companies ing back-and-forth between the property rope report, Mostar and Sarajevo (Bosnia involved are properly registered, who the registrar and entrepreneur. As a result, and Herzegovina) are the only 2 that still authorized signatory is, and if the land property transfers are faster. Also, filling require on-site inspections for assess- is encumbered by any disputes. It could out a standardized sale and purchase ing the value of the property. Instead eliminate the need to obtain these same agreement and signing it on the spot—at of time-consuming and costly physical documents by visiting separate govern- the registry—would eliminate the need inspections, these 2 cities could intro- ment agencies and, thus, reduce the num- for notarization. Eliminating the need duce standardized schedules of property ber of procedures to register property. for notarization would reduce both the values based on the location, size, and/ Additionally, this information could be cost and time to register property. or level of development of properties. In available online for more convenient ac- Georgia successfully made notary in- Banja Luka (Bosnia and Herzegovina), cess. Over 25 economies around the volvement optional; parties only need to for example, such inspections were elim- world—including Australia, Canada, and sign the agreement in person at the regis- inated and property values are calculated Latvia—make this information available try.6 Similarly, Thailand provides standard- based on the municipal assessment of on the internet for everyone.4 The region’s ized contracts at the registry, where parties the average price per square meter in a economies could follow suit. simply fill them out and submit them on the particular zone. This saves entrepreneurs spot.7 Montenegro introduced standard- time transferring property, while freeing INTRODUCE FIXED PROPERTY ized sale and purchase agreements, which up the staff of the revenue authority for TRANSFER FEES can be downloaded from the website of its other important work. The property transfer tax represents the Real Estate Administration Agency. Un- bulk of the total cost of property regis- fortunately, entrepreneurs in Montenegro tration in South East Europe. As such, are still not comfortable using them. This replacing the percentage-based transfer indicates that such reform efforts should be tax (currently applied in most of the cit- supported by awareness-raising campaigns ies measured) with a flat rate could make to publicize the availability of the service property transfer more affordable and as a legitimate and secure alternative for encourage formal changes of ownership. property transactions. REGISTERING PROPERT Y 31 1. Data are from World Bank Enterprise Surveys conducted in 2006/07. http:// www.enterprisesurveys.org. 2. World Bank. 2010. Doing Business 2011: Making a Difference for Entrepreneurs. Washington, D.C.: World Bank Group. 3. World Bank, Real Estate Cadastre & Reg- istration project, FYR Macedonia. http:// go.worldbank.org/BE17FKNCE0. 4. World Bank. 2009. Doing Business 2010: Reforming through Difficult Times. Wash- ington, D.C.: World Bank Group. 5. World Bank. 2007. Doing Business in Egypt 2008. Washington, D.C.: World Bank Group. 6. World Bank. 2007. Doing Business 2008. Washington, D.C.: World Bank Group. 7. World Bank. 2006. Doing Business in 2006: Creating Jobs. Washington, D.C.: World Bank Group. Enforcing TABLE 5.1 Where is it easy to enforce a contract—and where not? contracts RANK City Economy RANK City Economy 1 Zrenjanin 11 Belgrade Serbia (easiest) Serbia 2 Chisinau 11 Krusevac Moldova Serbia 3 Tetovo 14 Durres FYR Macedonia Albania 4 Balti 15 Banja Luka Moldova Bosnia and Herzegovina 5 Bitola 16 Podgorica FYR Macedonia Montenegro 6 Uzice 17 Niksic Serbia Montenegro 7 Vranje 18 Tirana Serbia Albania 7 Pljevlja 19 Sarajevo Montenegro Bosnia and Herzegovina Businesses worldwide continue to face 9 Skopje 20 Mostar challenges as a result of the global fi- FYR Macedonia Bosnia and Herzegovina nancial crisis—and are more concerned 10 Vlora 21 Pristina than ever about recovering losses fast. In Albania Kosovo 11 Shkodra 22 Prizren the past 2 years, more disputes involv- Albania Kosovo (most difficult) ing property rights, supply contracts, Note: Rankings are based on the average city percentile rankings on the procedures, time, and cost to resolve a commercial dispute and banking transactions ended up in through the courts. See Data notes for details. Source: Doing Business database. court—increasing caseloads and back- logs. In Montenegro, the commercial cost, and number of procedures to re- 2011 updates the benchmark for 18 of court of Podgorica saw a nearly 300% solve a commercial lawsuit between 2 those 22 cities and adds 4 new locations.5 jump in its caseload in 2009.1 In Serbia, domestic businesses. Measurements are Across the 22 cities, enforcing a 17 commercial courts together saw in- based on a dispute involving the breach contract takes, on average, 521 days—al- coming cases grow 22% in 2009—more of a sales contract worth twice the aver- most a year and a half—and costs 31.8% than 3 times the 7% annual increase age income per capita of the economy. of the claim value. This is faster than the seen in 2007 and 2008.2 The Belgrade The case is disputed on the merits and European Union (EU) average time of commercial court outpaced other courts the court hears an expert on the quality 549 days, but more expensive than the in Serbia with incoming cases increasing of the goods sold. This distinguishes the EU average cost of 20.7% of the claim 40% in 2009 compared to the year before. case from simple debt collection (figure value. Commercial justice matters to busi- 5.1). Three years ago, Doing Business in Within the region, the amount nesses. Efficient courts provide mecha- South East Europe 2008 assessed the ease of time and money spent to enforce a nisms to enforce contractual obligations. of enforcing contracts in 22 cities. This contract varies widely (table 5.1). In As a result, efficient courts encourage year, Doing Business in South East Europe Zrenjanin (Serbia), the top-ranked city, commercial trust and help boost eco- FIGURE 5.1 nomic activity. “[The courts] define the What is the time, cost, and number of procedures to resolve a commercial dispute rules by which markets function, and through the courts they provide a means to resolve disputes, protect economic and social rights, and Court hold governments accountable for their actions,” summarizes a study of judicial Time systems in transition economies.3 An- Cost other recent study finds that efficient Number of procedures contract enforcement is associated with Company A Company B greater access to credit for firms.4 In (seller & plaintiff) COMMERCIAL DISPUTE (buyer & defendant) sum, improving court functions is vital to sustaining a healthy, stable economy— Filing of Trial & court case judgment Enforcement especially during a credit crunch. Doing Business measures the time, ENFORCING CONTRAC TS 33 FIGURE 5.2 FIGURE 5.3 Courts in Tetovo and Zrenjanin are the fastest in the region to enforce a contract Time spent on trial and judgment accounts for the bulk of delays Time (days) 0 200 400 600 800 1000 1200 1400 1600 Share of total time to enforce a contract (%) Tetovo Filing and service FYR Macedonia 290 Regional average Enforcement Zrenjanin 10% Serbia 300 521 days to enforce a contract of judgment Vlora Albania 328 36% Shkodra Albania 331 54% Durres Albania 340 Pljevlja Montenegro 345 Trial and judgment Bitola FYR Macedonia 345 South East Europe Chisinau regional average Moldova 365 Balti Moldova 365 Source: Doing Business database. Skopje 370 FYR Macedonia Uzice 390 form reorganized courts and reduced the Serbia number of judges in 2009.6 As a result, Tirana 390 Albania cases take much longer to get assigned. Prizren 420 Insufficient judicial personnel has had Kosovo Pristina 420 even greater consequences in other cit- Kosovo Vranje ies. For instance, filing a claim in Mo- 540 Serbia star (Bosnia and Herzegovina) takes 375 Podgorica Montenegro 545 days—over a year. There are only 2 mem- Niksic 545 bers of the court staff to complete the Montenegro Sarajevo process of attaching defendants’ goods in 595 Bosnia and Herzegovina the municipal court. As a consequence, Belgrade 635 Serbia the backlog of unresolved cases has in- Krusevac 720 creased significantly since 2008. Serbia Banja Luka Once a defendant is served with 1,220 Bosnia and Herzegovina process, the trial and judgment phase Mostar 1,653 begins. This second phase accounts, on Bosnia and Herzegovina Filing and service Trial and judgment Enforcement average, for 54% of the total time to of judgment enforce a contract. It is the main causes Source: Doing Business database. of delays and differences among cities in enforcing contracts takes 300 days— 1,653 days in Mostar (Bosnia and Herze- the region (figure 5.3). It is also where less than a year—and costs 25.2% of govina)—one of the longest times among we observe some successful reforms. For the claim value. To compare, in Banja the 183 economies measured by Doing example, back in 2008, the courts in Luka (Bosnia and Herzegovina), it takes Business (figure 5.2). Vlora and Shkodra (Albania) were is- 4 times longer—almost 3 and a half The first phase, the filing and ser- suing judgments in 165 and 180 days, years—whereas in Pristina and Prizren vice period, spans from the plaintiff ’s respectively. Thanks to an administrative (Kosovo) it is twice as expensive at 61.2% decision to file a claim to the defendant’s reform that brought in more judges start- of the claim value. official notification—and it includes the ing in 2008, the court of Vlora reduced The enforcing contracts indicator time it takes for a court order to attach its judgment period by 40 days and the tracks the time needed to resolve a com- defendant’s movable assets. In most of court of Shkodra by 50 days in 2011.7 mercial dispute through 3 stages of litiga- the regions’ economies, the process of Meanwhile, entrepreneurs in Banja Luka tion: filing and service, trial and judg- filing a claim before the courts is around and Mostar (Bosnia and Herzegovina) ment, and enforcement. The time needed a month. But in Kosovo and Montene- have to wait more than 2 years for a judi- to enforce a contract among the 22 cities gro the average time is 60 days and in cial decision (776 and 813 days, respec- measured varies from just 290 days in Krusevac (Serbia) it is 90 days. Back in tively). “The Commercial Department Tetovo (FYR Macedonia)—where it is 10 2008, the time for filing and service was of Mostar’s Municipal Court has only days faster than in the United States—to 30 days in Krusevac, but a judicial re- 3 judges,” explains Marin Zadric, the g 34 DOING BUSINESS IN SOUTH EAST EUROPE 2011 president of Mostar’s Municipal Court. FIGURE 5.4 “In 2010, the Commercial Department Attorney fees account for the biggest share of costs received 1,263 claims. Although the re- Cost (% of claim) quired norm per judge is 240 cases per 0 10 20 30 40 50 60 year, they disposed of more than 400 Chisinau Moldova 20.9 cases each, with 93% of all final deci- Bitola Regional average 21.3 32% of claim sions successful. In order for the court FYR Macedonia Tetovo to be more effective, 2 additional judges FYR Macedonia 22.3 should be hired,” Zadric concludes. Balti 22.7 Moldova The third and final phase is the en- Zrenjanin 25.2 forcement of the judgement—including Serbia Podgorica the sale of the attached goods through Montenegro 25.7 public auction. The average time to en- Pljevlja 25.7 Montenegro force a judicial decision in the region is Niksic Montenegro 26.4 6 months. But in some cities, it can be Uzice much faster. Most notably, within FYR Serbia 27.0 Macedonia—where private bailiffs are Banja Luka 27.7 Bosnia and Herzegovina responsible for enforcement—the final Krusevac Serbia 28.7 phase takes only 45 days in Bitola and 2 Belgrade months in Tetovo and Skopje. In places Serbia 28.9 where enforcement is carried out by pub- Mostar Bosnia and Herzegovina 31.5 lic officials, delays are often due to the Vranje Serbia 32.5 lack of judges available. For example, in Skopje Krusevac and Vranje (Serbia), enforce- FYR Macedonia 33.1 ment now takes 1 year—compared to 2 Vlora Albania 33.5 to 3 months back in 2008. As mentioned Shkodra 33.5 Albania above, the judicial reform that reorga- Durres nized the courts in these Serbian cities Albania 35.0 Tirana reduced the number of judges. This led Albania 35.7 to backlogs in not just the first phase Sarajevo 40.4 Bosnia and Herzegovina (filing and service) but the final phase Prizren 61.2 (enforcement of judgment) as well. “One Kosovo Pristina enforcement judge might have 30,000 Kosovo 61.2 cases assigned to him for enforcement Attorney Court Enforcement because he is covering a whole region, fees costs costs Source: Doing Business database. not just the city,” explains Goran, a law- yer from Krusevac. “Before, there were at disputes in the world, similar to Ban- tracts. They vary among cities due to least 2 enforcement judges and now en- gladesh (figure 5.4). There are 3 main different fee schedules and experts’ fees. forcement is the biggest problem,” Goran cost components: attorney fees, court Court fees account for just 5% of the says. Still there is hope. A future judi- fees, and enforcement costs. claim value in Bitola (FYR Macedonia) cial reform introducing private bailiffs is In most cities in the region, litigants but they cost 18% of the claim value in planned in Serbia, but no law has been have to spend the most on attorney fees. Pristina and Prizren (Kosovo). Court fees passed yet.8 On average, attorney fees in the region in Bitola have fallen from 6.9% to 5% of Litigation costs, which tend to be constitute almost half of the total cost the claim value since 2008. regulated by laws or court rules, also and vary considerably. At the lower end, Finally, enforcement costs are also vary considerably across the region. attorney fees in Bosnia and Herzegovina, important. They vary from just 3.4% of The expense required to enforce a con- FYR Macedonia, Moldova, Montenegro, the claim value in Banja Luka (Bosnia tract ranges from 20.9% of the value and Serbia vary from 7.7% to 18.6% of and Herzegovina) to 18% in Pristina of the claim value in Chisinau (Mol- claim value. Meanwhile, in Albania and and Prizren (Kosovo). In Banja Luka, dova)—similar to Australia—to 61.2% Kosovo, attorney fees range from 18.5% enforcement costs for commercial dis- of the claim value in both Pristina and to 25.2% of the claim value. putes were decreased by 7% in 2009.9 In Prizren (Kosovo)—which are among Court fees are also significant con- Albania, the official state bailiff tariffs, the most expensive locations for court tributors to the cost of enforcing con- which constitute a portion of enforce- ENFORCING CONTRAC TS 35 TABLE 5.2 tract. This year, Banja Luka ranked 15th Who made it easier to enforce a contract since 2008? out of 22 cities. The Law on Changes of Law on courts Code of the Law on Courts gives jurisdiction reform/ Civil Court over commercial claims to the city’s More Reduced court Procedure computeriza- Court judges fees efficiency reform tion reorganization district commercial court—decreasing Banja Luka the filing period from 6 months to just a Bosnia and   Herzegovina month and a half.14 Moreover, positive Vlora administrative changes have reduced Albania   the enforcement period from 600 days Shkodra to less than 400 days.15 At the same   Albania time, due to changes in the Law on Tirana Court Fees in 2009, court and enforce- Albania   ment fees were decreased by 6% and 7% Skopje of the claim value, respectively—reduc- FYR Macedonia   ing the total cost to enforce a contract Bitola from 41% of the claim value in 2008 to  FYR Macedonia 28% today. Vranje Elsewhere, reforms also yielded Serbia   positive results. For example, increasing Chisinau the number of judges sped up judg-  Moldova ments in the Albanian cities of Shkodra Krusevac and Vlora. Specifically, comparing 2008 Serbia  to 2011, the length of the judgment  Doing Business reform making it easier to enforce a contract period fell from 180 to 130 days in  Doing Business reform making it more difficult to enforce a contract Shkodra and from 165 to 125 days in Note: This table records all Doing Business reforms that occurred between January 2008 and January 2011. Vlora. Meanwhile, bailiff tariffs were Source: Doing Business database. reduced from 7% to 2% of the claim value throughout Albania. In Vranje ment costs, fell from 7% to just 2% of the registration and court management. Also, (Serbia), electronic files (accessible claim value in 2009.10 entrepreneurs can go through an alter- on-line) effectively replaced manually- In South East Europe, the num- native dispute resolution system, where kept registry books and paper files in ber of procedural steps required to voluntary mediation and arbitration are 2008. Moreover, a computerized system enforce a contract varies from 31 in allowed.12 The use of alternative dispute randomly assigns court cases among Chisinau (Moldova)—similar to the Eu- resolution systems in Zrenjanin and other judges, thereby eliminating opportuni- ropean Union average—to 54 in Prizren Serbian cities has lowered the number ties for neglect or corruption. As a re- (Kosovo). Some might argue that more of pending claims in the commercial sult, the judgment period was reduced formal procedures in dispute resolution courts.13 Alternative dispute resolution by one year, from 495 to 135 days.16 ensure that due process is followed in systems have also been adopted in Alba- FYR Macedonia eased the process of the pursuit of justice. Yet the evidence nia, Bosnia and Herzegovina, FYR Mace- enforcing contracts by setting deadlines shows the contrary. The more complex donia, and Montenegro, but local law- for the payment of court fees, adjusting the procedures to resolve disputes, the yers concur that in practice, out-of-court monetary thresholds for assigning case less likely firms are to report that judges mechanisms are not used very often. jurisdiction, and introducing a small are impartial and court decisions fair.11 All told, 8 of the 19 cities measured claims tribunal. Running an efficient court system 3 years ago have implemented positive is not an easy task; it poses a continuous administrative or legal reforms to reduce WHAT TO REFORM? challenge to even the most industrialized the time or cost to solve a commercial countries. Many cities in South East Eu- dispute (table 5.2). Doing Business in South East Europe 2008 rope have benefited from reform efforts Banja Luka (Bosnia and Herzegov- recommended the introduction of case aimed at increasing court efficiency. For ina) deserves special mention for recent management systems, the improvement example, the 7 top-ranked cities have spe- improvements in contract enforcement. of enforcement laws and introducing cialized commercial courts. In addition, In Doing Business in South East Europe court administrative reforms. While in Zrenjanin (Serbia), information tech- 2008, Banja Luka was ranked last in the cities such as Banja Luka (Bosnia and nology is used to assist judges with case region on the ease of enforcing a con- Herzegovina) and Vranje (Serbia) have 36 DOING BUSINESS IN SOUTH EAST EUROPE 2011 implemented some of these recommen- supreme courts computerized their court nia, and Montenegro—have introduced dations, there is still room for improve- records system in 2006, enabling litigants mediation, but they should do more to ment. In addition, South East Europe to access court documents and track promote its use since entrepreneurs from can benefit from additional reforms, dis- a case to completion.19 All Bulgaria’s these economies do not often use this cussed below. supreme court judgments have been mechanism. accessible online since October 2008. SET UP SPECIALIZED COMMERCIAL Allowing litigants to file commercial MEASURE COURT PERFORMANCE COURTS OR COMMERCIAL SECTIONS WITHIN GENERAL JURISDICTION complaints electronically, as seen in the Measuring the performance of courts COURTS IN CITIES BEYOND THE United Kingdom, can also save time. But and individual judges can increase effi- CAPITALS note that simply introducing information ciency. Assessments of performance can Specialized commercial courts already technology may not be enough to solve help personnel set concrete targets and exist in most economies in South East underlying procedural inefficiencies. A evaluate a court’s progress toward its Europe—except Montenegro and Alba- thorough overhaul of court processes goals. Assessments also help set budgets nia. Nevertheless, litigants from Prizren may be necessary. and motivate staff to improve.20 What (Kosovo) have to travel to the commer- gets measured can include user satis- cial court in Pristina and litigants from INCREASE THE CAPACITY OF COURTS faction, costs, timeliness, and clearance AND PROMOTE ALTERNATIVE DIS- Balti (Moldova) have to travel to the spe- PUTE RESOLUTION MECHANISMS rates.21 Economies such as Australia, cialized court in Chisinau. Meanwhile, Singapore and the United States have in Montenegro, lawyers from Pljevlja Courts in Banja Luka and Mostar (Bos- been effectively measuring judicial per- have to travel to the court of Bijelo Polje nia and Herzegovina) as well as Pristina formance since the late 1990s.22 Other while laywers from Niksic must travel to and Prizren (Kosovo) are experiencing countries started more recently. Podgorica. This is inefficient. a significant backlog of cases, a con- Positive examples abound. In 2005, Specialized commercial courts or tinuous flow of new claims, and an in- for example, the Netherlands introduced sections within courts allow for special- adequate number of judges compared to an innovative system to tie court perfor- ized resources—i.e., well trained person- the number of claims filed. Also, due to mance to budget allocation. The new sys- nel and targeted infrastructure. Allowing court reorganization, in Krusevac (Ser- tem measures the output of the courts— judges to become experts on commercial bia), judgment and enforcement times i.e., the number of cases resolved in matters tends to speed up commercial increased significantly in recent years. each case category—and the Ministry contract enforcement as they grow ac- There are simply not enough judges on of Justice then allocates a budget to each customed to the specific issues and ter- hand. On the other hand, in Albania, a court based on output. Any operating minology of commercial cases. presidential decree increased the num- surplus can be added to a court’s fu- bers of judges—thus speeding up filings ture budget, providing the court with EXTEND THE USE OF TECHNOLOGY and judgments in Durres, Shkodra, and financial incentives to improve efficiency. Using technology to track court pro- Vlora. Other cities should follow suit by Besides output, the Dutch system also cesses makes managing cases easier and increasing their courts’ capacity. evaluates judicial quality (which includes faster. Technology also increases trans- Another mechanism to have faster the quality of judicial decisions), the parency and limits the opportunities for access to justice is to promote alternative timeliness of proceedings, the degree corruption. Automating court processes dispute resolution mechanisms—such as to which court officials treat the parties can also prevent the loss, destruction, or court-annexed or court-referred media- with due respect, and the expertise, in- concealing of court records.17 tion. These alternatives are considered dependence and impartiality of judges.23 Electronic systems have already im- successful in bringing parties to the table South East Europe could benefit from a proved the efficiency of some of the re- and resolving many cases amicably, in similar measure. gion’s courts, making the work of judges less time, and for less money. For exam- and staff easier. For example, in Vranje ple, Serbia implemented court-annexed (Serbia) computerizing the court led to mediation with positive results. In Sep- a significant drop in judgment time, as tember 2010, mediation centers were set 1. Data source: Commercial Court of Pod- gorica (2009). noted above. In Moldova, courts were up in Bosnia and Herzegovina within computerized while websites and audio both the Sarajevo Municipal Court and 2. Data source: Commercial Courts of Ser- bia. http://www.portal.sud.rs. recording equipment were introduced in the Banja Luka Basic Court. Other econ- 3. Anderson James H., David S. Bernstein, 2008. Court administrators themselves omies—such as Albania, FYR Macedo- and Cheryl W. Gray. 2005. Judicial reported that the changes made Mol- Systems in Transition Economies: As- dova’s courts’ work faster, easier, and sessing the Past, Looking to the Future. more efficient.18 Meanwhile, Bulgaria’s Washington, DC. World Bank. Available ENFORCING CONTRAC TS 37 at http://siteresources.worldbank.org/ and Serbia with a quicker and cheaper INTECA/Resources/complete.pdf. option for resolving commercial dis- 4. Bae, Kee-Hong, and Vidhan K. Goyal. putes: mediation. 2009. “Creditor Rights, Enforcement, 14. Law on Changes of the Law on Courts and Bank Loans.” Journal of Finance 64 (Official Gazette of Republika Srpska, (2): 823–60. Bae and Goyal show that No. 116/09) delayed the start of work “banks respond to poor enforceability of the District Commercial Courts from of contracts by reducing loan amounts, January 1st, 2010 to May 1st, 2010, shortening loan maturities, and increas- which is also the date when District ing loan spreads.” Commercial Courts took over jurisdic- 5. Osijek, Sibenik, Varazdin, and Zagreb tion over commercial claims from the (Croatia) are not included in this report. Basic Court of Banja Luka. Durres (Albania), Tetovo (FYR Macedo- 15. With the new law, enforcement of nia), and Balti and Chisinau (Moldova) judgment is faster if the defendant has were added. property which can be confiscated and 6. Law on Court Organization (Official Ga- against which the plaintiff can charge zette of Republika Srpska, No. 104/2009, his claim. Article 182 of the Law allows 14/12/2009, 22/12/2009). a court to make a final judgment even without the defendant’s presence. The 7. Presidential Decree No. 6265 issued on defendant has 30 days to appeal the September 16, 2009. This decree assigns court’s decision. 19 judges to Shkodra district court and 18 judges to Vlora district court. The 16. As part of its court reform project, U.S. decree can be found at http://www. Agency for International Development president.al/shqip/info.asp?id=5315. provided Serbian Commercial Courts with modern computer equipment and 8. More information about this judicial software—including over 500 worksta- reform can be found at http://serbi- tions, 300 printers, and 39 servers. More amdtf.org/Lists/Justice%20Sector%20 information regarding this reform at: Reforms%20in%20Serbia/AllItems.aspx. http://serbia.usaid.gov/code/navigate. 9. In 2009, Law on Changes of Court Fees php?Id=538. in Republika Srpska (Official Gazette of 17. Mary Noel Pepys. 2003. “Corruption and Republika Srpska, No. 49/2009). the Justice Sector.” U.S. Agency for Inter- 10. The 7% tariff was decreased to 2% by national Development and Management the new ministerial order No, 1240/4 Systems International. Washington, D.C. dated September 15, 2009. The order http://www.usaid.gov/. can be found at: http://www.qpz.gov.al/ 18. Millennium Partners, “The Moldova doc.jsp?doc=docs/Udhezim%20Nr%20 Governance Threshold Country Pro- 1240-4%20Dat%C3%AB%2015-09-2009. gram (MCC)/ U.S. Agency for Interna- htm. tional Development (USAID),” http:// 11. Based on the analysis of the Doing www.millenniumpartners.org. See also Business 2005 indicators, with indica- USAID (2010). tors of judicial impartiality from the 19. See Pepys (2003) and Supreme Adminis- Economic Freedom of the World; Geeta trative Court of the Republic of Bulgaria, Batra; Daniel Kaufmann; and Andrew http://www.sac.government.bg/. Stone. 2003. Investment Climate around the World: Voices of the Firms from the 20. National Center for State Courts. 2005a. World Business Environment Survey. “CourTools: Giving Courts the Tools to Washington, D.C.: World Bank Group. Measure Success.” Williamsburg, VA. http://www.ncsconline.org/. 12. The Arbitration Center within the Ser- bian Chamber of Commerce is an insti- 21. National Center for State Courts. 2005b. tution which offers arbitraton services. “CourTools: Trial Court Performance Measures.” Williamsburg, VA. http:// 13. International Finance Corporation. www.ncsconline.org/. 2010. Alternative Dispute Resolution Program (ADR) in The Western Balkans: 22. For the United States, see website of the Giving Mediation a Chance. Belgrade, National Center for State Courts (http:// Serbia. The Alternative Dispute Resolu- www.ncsconline.org/) and North Caro- tion program was started by the Inter- lina Court System, “Court Performance national Finance Corporation (IFC) Management System,” http://www.nc- in 2003 with the goal of providing courts.org/. companies in Albania, Bosnia and Her- 23. Albers, Pim. 2009. “Justice Sector Per- zegovina, FYR Macedonia, Montenegro, formance Measurement: Experiences from the Netherlands.” Available at http://serbiamdtf.org/. Data notes ECONOMY CHARACTERISTICS GROSS NATIONAL INCOME GNI per capita, Exchange (GNI) PER CAPITA 2009 rate Doing Business in South East Europe 2011 re- (US$) (per US$) ports 2009 income per capita as published in Albania 3,950 89.42 ALL the World Bank’s World Development Indica- Bosnia and Herzegovina 4,700 1.39 BAM tors 2009. Income is calculated using the Atlas Kosovo 3,240 0.69 EUR method (current US$). For cost indicators ex- FYR Macedonia 4,400 44.14 MKD pressed as a percentage of income per capita, Moldova 1,590 11.39 MDL 2009 GNI in local currency units is used as the Montenegro 6,550 0.72 EUR denominator. Serbia 5,990 64.59 RSD REGION AND INCOME GROUP Doing Business uses the World Bank regional and income group classifications available at http://www.worldbank.org/data/countryclass. LIMITS TO WHAT IS MEASURED The indicators presented and analyzed particular case of each economy in South in Doing Business in South East Europe East Europe. Surveys are administered The Doing Business methodology applied 2011 measure business regulation and through more than 200 local experts, to Doing Business in South East Europe the protection of property rights—and including lawyers, business consultants, 2011 has 4 limitations that should be their effect on businesses, especially architects, engineers, government offi- considered when interpreting the data. small and medium-size domestic firms. cials and other professionals routinely First, the data often focus on a specific First, the indicators document the degree administering or advising on legal and business form—generally a limited li- of regulation, such as the number of pro- regulatory requirements. These experts ability company of a specified size—and cedures to start a business, to construct have several rounds of interaction with may not be representative of the regula- a warehouse or to register and transfer the Doing Business in South East Europe tion on other businesses, for example, commercial property. Second, they gauge 2011 team, through face-to-face inter- sole proprietorships. Second, transac- regulatory outcomes, such as the time views, conference calls and written cor- tions described in a standardized case and cost to enforce a contract. For details respondence. The data from surveys are scenario refer to a specific set of issues on how the rankings on these indicators subjected to numerous tests for robust- and may not represent the full set of are constructed, see Rankings at the end ness, which lead to revisions or expan- issues a business encounters. Third, the of this section. sions of the information collected. measures of time involve an element of In this project, Doing Business in- The Doing Business methodology of- judgment by the expert respondents. dicators have been created for 22 South fers several advantages. It is transparent, When sources indicate different esti- East European cities—the complete list is using factual information about what mates, the time indicators reported in available on page 52. The data for all sets laws and regulations say and allowing Doing Business represent the median val- of indicators in Doing Business in South multiple interactions with local respon- ues of several responses given under the East Europe 2011 are as of January 2011. dents to clarify potential misinterpreta- assumptions of the standardized case. tions of questions. Having representative Finally, the methodology assumes METHODOLOGY samples of respondents is not an issue, that a business has full information on as the texts of the relevant laws and what is required and does not waste The Doing Business in South East Europe regulations are collected and answers time when completing procedures. In 2011 data are collected in a standard- checked for accuracy. The methodology practice, completing a procedure may ized way following the methodology de- is inexpensive and easily replicable, so take longer if the business lacks informa- veloped by the Doing Business team. data can be collected in a large sample tion or is unable to follow up promptly. To start, the Doing Business team, with of economies. Because standard assump- Alternatively, the business may choose academic advisers, designs a survey. The tions are used in the data collection, to disregard some burdensome proce- survey uses a simple business case to comparisons and benchmarks are valid dures. For both reasons the time delays ensure comparability across economies across economies. Finally, the data not reported in Doing Business in South East and over time—with assumptions about only highlight the extent of specific regu- Europe 2011 would differ from the per- the legal form of the business, its size, its latory obstacles to doing business but ceptions of entrepreneurs reported in the location and the nature of its operations. also identify their source and point to World Bank Enterprise Surveys or other Then the survey is customized to the what might be reformed. perception surveys. DATA NOTES 39 STARTING A BUSINESS TABLE 6.1 What do the starting a business indicators measure? Doing Business in South East Europe 2011 Procedures to legally start and operate a company (number) records all procedures that are officially • Preregistration (for example, name verification or reservation, notarization) required for an entrepreneur to start • Registration in the economy’s largest business city up and formally operate a commercial • Postregistration (for example, social security registration, company seal) business. These include obtaining all Time required to complete each procedure (calendar days) necessary licenses and permits and com- pleting any required notifications, verifi- • Does not include time spent gathering information cations or inscriptions for the company • Each procedure starts on a separate day and employees with relevant authorities. • Procedure completed once final document is received After a study of laws, regulations • No prior contact with officials and publicly available information on Cost required to complete each procedure (% of income per capita) business entry, a detailed list of proce- • Official costs only, no bribes dures is developed, along with the time • No professional fees unless services required by law and cost of complying with each proce- Paid-in minimum capital (% of income per capita) dure under normal circumstances and the paid-in minimum capital require- • Deposited in a bank or with a notary before registration begins ments. Subsequently, local incorporation Source: Doing Business database. lawyers, notaries, and government offi- cials complete and verify the data. mercial activities, such as the produc- counted separately. The founders are as- Information is also collected on the tion or sale of products or services sumed to complete all procedures them- sequence in which procedures are to to the public. The business does not selves, without middlemen, facilitators, be completed and whether procedures perform foreign trade activities and accountants or lawyers, unless the use may be carried out simultaneously. It is does not handle products subject to a of such a third party is mandated by assumed that any required information special tax regime, for example, liquor law. If the services of professionals are is readily available and that all agencies or tobacco. It is not using heavily pol- required, procedures conducted by such involved in the start-up process function luting production processes. professionals on behalf of the company without corruption. If answers by local • Leases the commercial plant and of- are counted separately. Each electronic experts differ, inquiries continue until fices and is not a proprietor of real procedure is counted separately. If 2 pro- the data are reconciled. estate. cedures can be completed through the To make the data comparable across • Does not qualify for investment in- same website but require separate filings, economies, several assumptions about centives or any special benefits. they are counted as 2 procedures. the business and the procedures are used. • Has at least 10 and up to 50 employ- Both pre- and post- incorporation ees 1 month after the commencement procedures that are officially required ASSUMPTIONS ABOUT THE BUSINESS of operations, all of them nationals. for an entrepreneur to formally operate a The business: • Has a turnover of at least 100 times business are recorded (table 6.1). • Is a limited liability company. If there income per capita. Procedures required for official cor- is more than one type of limited li- • Has a company deed 10 pages long. respondence or transactions with public ability company in the country, the agencies are also included. For example, limited liability form most popular PROCEDURES if a company seal or stamp is required among domestic firms is chosen. In- A procedure is defined as any interaction on official documents, such as tax dec- formation on the most popular form of the company founder with external larations, obtaining the seal or stamp is is obtained from incorporation law- parties (for example, government agen- counted. Similarly, if a company must yers or the statistical office. cies, lawyers, auditors or notaries). In- open a bank account before registering • Operates in the selected city. teractions between company founders or for sales tax or value added tax, this • Is 100% domestically owned and has company officers and employees are not transaction is included as a procedure. 5 owners, none of whom is a legal counted as procedures. Procedures that Shortcuts are counted only if they fulfill 4 entity. must be completed in the same build- criteria: they are legal, they are available • Has start-up capital of 10 times in- ing but in different offices are counted to the general public, they are used by come per capita at the end of 2009, as separate procedures. If founders have the majority of companies, and avoiding paid in cash. to visit the same office several times for them causes substantial delays. • Performs general industrial or com- different sequential procedures, each is Only procedures required of all busi- 40 DOING BUSINESS IN SOUTH EAST EUROPE 2011 nesses are covered. Industry-specific pro- taken as an official source. In the absence procedures include submitting all rel- cedures are excluded. For example, pro- of a government officer’s estimate, esti- evant project-specific documents (for cedures to comply with environmental mates of incorporation lawyers are used. example, building plans and site maps) regulations are included only when they If several incorporation lawyers provide to the authorities; obtaining all neces- apply to all businesses conducting general different estimates, the median reported sary clearances, licenses, permits and commercial or industrial activities. value is applied. In all cases the cost ex- certificates; completing all required no- Procedures that the company un- cludes bribes. tifications; and receiving all necessary dergoes to connect to electricity, water, inspections. Doing Business in South East gas and waste disposal services are not PAID-IN MINIMUM CAPITAL Europe 2011 also records procedures included. The paid-in minimum capital require- for obtaining connections for electric- ment reflects the amount that the entre- ity, water, sewerage, and a fixed land TIME preneur needs to deposit in a bank or line. Procedures necessary to register Time is recorded in calendar days. The with a notary before registration and up the property so that it can be used as measure captures the median duration to 3 months following incorporation and collateral or transferred to another entity that incorporation lawyers and notaries is recorded as a percentage of the coun- are also counted. The survey divides the indicate is necessary to complete a pro- try’s income per capita. The amount is process of building a warehouse into dis- cedure with minimum follow-up with typically specified in the commercial code tinct procedures and calculates the time government agencies and no extra pay- or the company law. Many economies and cost of completing each procedure ments. It is assumed that the minimum have a minimum capital requirement but in practice under normal circumstances. time required for each procedure is 1 allow businesses to pay only a part of it Information is collected from ex- day. Although procedures may take place before registration, with the rest to be perts in construction licensing, includ- simultaneously, they cannot start on the paid after the first year of operation. In ing architects, construction lawyers, con- same day (that is, simultaneous pro- Italy in June 2009, the minimum capital struction firms, utility service providers cedures start on consecutive days). A requirement for limited liability compa- and public officials who deal with build- procedure is considered completed once nies was €10,000, of which at least €2,500 ing regulations, including approvals and the company has received the final docu- was payable before registration. The paid- inspections. To make the data comparable ment, such as the company registration in minimum capital recorded for Italy is across economies, several assumptions certificate or tax number. If a procedure therefore €2,500 or 9.7% of income per about the business, the warehouse project can be accelerated for an additional cost, capita. In Mexico the minimum capital and the utility connections are used. the fastest procedure is chosen. It is as- requirement was 50,000 pesos, of which sumed that the entrepreneur does not one-fifth needed to be paid before reg- ASSUMPTIONS ABOUT THE waste time and commits to completing istration. The paid-in minimum capital CONSTRUCTION COMPANY each remaining procedure without delay. recorded for Mexico is therefore 10,000 The business (BuildCo): The time that the entrepreneur spends on pesos or 8.9% of income per capita. • Is a limited liability company. gathering information is ignored. It is as- • Operates in the selected cities. sumed that the entrepreneur is aware of The data details on starting a business can • Is 100% domestically and privately all entry regulations and their sequence be found for each economy at http://www. owned. from the beginning but has had no prior doingbusiness.org by selecting the econ- • Has 5 owners, none of whom is a legal contact with any of the officials. omy in the drop-down list. This method- entity. ology was developed in Djankov, Simeon, • Is fully licensed and insured to carry COST Rafael la Porta, Florencio López-de-Si- out construction projects, such as Cost is recorded as a percentage of the lanes and Andrei Schleifer. 2002. ¨The building warehouses. economy’s income per capita. It includes Regulation of Entry.¨ Quarterly Journal • Has 60 builders and other employees, all official fees and fees for legal or pro- of Economics 117(1):1-37, and is adopted all of them nationals with the techni- fessional services if such services are here with minor changes. cal expertise and professional experi- required by law. Fees for purchasing and ence necessary to obtain construction legalizing company books are included if DEALING WITH CONSTRUCTION permits and approvals. these transactions are required by law. PERMITS • Has at least 1 employee who is a li- The company law, the commercial censed architect and registered with code and specific regulations and fee Doing Business in South East Europe 2011 the local association of architects. schedules are used as sources for calcu- records all procedures required for a • Has paid all taxes and taken out all lating costs. In the absence of fee sched- business in the construction industry to necessary insurance applicable to its ules, a government officer’s estimate is build a standardized warehouse. These DATA NOTES 41 TABLE 6.2 The water and sewerage connection: What do the dealing with construction permits indicators measure? • Is 10 meters (32 feet, 10 inches) from Procedures to legally build a warehouse (number) the existing water source and sewer • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits tap. and certificates • Does not require water for fire pro- • Completing all required notifications and receiving all necessary inspections tection reasons; a fire extinguishing • Obtaining utility connections for electricity, water, sewerage and a land telephone line system (dry system) will be used in- • Registering the warehouse after its completion (if required for use as collateral or for transfer stead. If a wet fire protection system of warehouse) is required by law, it is assumed that Time required to complete each procedure (calendar days) the water demand specified below • Does not include time spent gathering information also covers the water needed for fire • Each procedure starts on a separate day protection. • Procedure completed once final document is received • Has an average water use of 662 liters • No prior contact with officials (175 gallons) a day and an average Cost required to complete each procedure (% of income per capita) wastewater flow of 568 liters (150 gal- lons) a day. Official costs only, no bribes • Has a peak water use of 1,325 liters Source: Doing Business database. (350 gallons) a day and a peak waste- general business activity (for example, • Is a new construction (there was no water flow of 1,136 liters (300 gallons) accidental insurance for construction previous construction on the land). a day. workers and third-person liability • Has complete architectural and tech- • Will have a constant level of water de- insurance). nical plans prepared by a licensed mand and wastewater flow through- • Owns the land on which the ware- architect. out the year. house is built. • Will include all technical equipment required to make the warehouse fully The telephone connection: ASSUMPTIONS ABOUT THE operational. • Is 10 meters (32 feet, 10 inches) from WAREHOUSE • Will take 30 weeks to construct (ex- the main telephone network. The warehouse: cluding all delays due to administra- • Is a fixed land line. • Will be used for general storage ac- tive and regulatory requirements). tivities, such as storage of books or PROCEDURES stationery. The warehouse will not be ASSUMPTIONS ABOUT THE UTILITY A procedure is any interaction of the com- CONNECTIONS used for any goods requiring special pany’s employees or managers with exter- conditions, such as food, chemicals or The electricity connection: nal parties, including government agencies, pharmaceuticals. • Is 10 meters (32 feet, 10 inches) from notaries, the land registry, the cadastre, • Has 2 stories, both above ground, the main electricity network. utility companies, public and private in- with a total surface of approximately • Is a medium-tension, 3-phase, 4-wire spectors and technical experts apart from 14,000 square feet (1,300.6 square Y, 140-kilovolt-ampere (kVA) connec- in-house architects and engineers. meters). Each floor is 9 feet, 10 inches tion. Three-phase service is available Interactions between company (3 meters) high. in the construction area. employees, such as development of the • Has road access and is located in the • Will be delivered by an overhead warehouse plans and inspections con- periurban area of the selected city service, unless overhead service is not ducted by employees, are not counted (that is, on the fringes of the city but available in the periurban area. as procedures. Procedures that the com- still within its official limits). • Consists of a simple hookup unless pany undergoes to connect to electricity, • It is not located in a special economic installation of a private substation water, sewerage and telephone services or industrial zone. The zoning re- (transformer) or extension of network are included. All procedures that are quirements for warehouses are met is required. legally or in practice required for build- by building in an area where similar • Requires the installation of only one ing a warehouse are counted, even if warehouses can be found. electricity meter. they may be avoided in exceptional cases • Is located on a land plot of 10,000 (table 6.2). square feet (929 square meters) that BuildCo is assumed to have a li- is 100% owned by BuildCo and is censed electrician on its team to com- registered in the cadastre and land plete the internal wiring for the ware- registry. house. 42 DOING BUSINESS IN SOUTH EAST EUROPE 2011 TIME REGISTERING PROPERTY • Are located in the periurban area of Time is recorded in calendar days. The the selected cities. measure captures the median duration Doing Business in South East Europe 2011 • Are 100% domestically and privately that local experts indicate is necessary records the full sequence of procedures owned. to complete the procedure in practice. necessary for a business (buyer) to pur- • Have 50 employees each, all of whom It is assumed that the minimum time chase a property from another business are nationals. required for each procedure is 1 day. Al- (seller) and to transfer the property title • Perform general commercial activities. though procedures may take place simul- to the buyer’s name so that the buyer can taneously, they cannot start on the same use the property for expanding its busi- ASSUMPTIONS ABOUT THE PROPERTY day (that is, simultaneous procedures ness, as collateral in taking new loans or, The property: start on consecutive days). If a procedure if necessary, sell to another business. The • Has a value of 50 times income per can be accelerated legally for an addi- process starts with obtaining the neces- capita. The sale price equals the value. tional cost, the fastest procedure is cho- sary documents, such as a copy of the • Is fully owned by the seller. sen. It is assumed that BuildCo does not seller’s title if necessary, and conducting • Has no mortgages attached and has waste time and commits to completing due diligence if required. The transaction been under the same ownership for each remaining procedure without delay. is considered complete when it is oppos- the past 10 years. The time that BuildCo spends on gather- able to third parties and when the buyer • Is registered in the land registry or ing information is ignored. It is assumed can use the property, use it as collateral cadastre, or both, and is free of title that BuildCo is aware of all building for a bank loan or resell it. disputes. requirements and their sequence from Every procedure required by law • Is located in a periurban commercial the beginning. or necessary in practice is included, zone, and no rezoning is required. whether it is the responsibility of the • Consists of land and a building. The COST seller or the buyer or must be completed land area is 6,000 square feet (557.4 Cost is recorded as a percentage of the by a third party on their behalf. Local square meters). A 2-story warehouse economy’s income per capita. Only of- property lawyers, notaries and property of 10,000 square feet (929 square ficial costs are recorded. All the fees registries provide information on pro- meters) is located on the land. The associated with completing the proce- cedures as well as the time and cost to warehouse is 10 years old, is in good dures to legally build a warehouse are complete each of them. condition and complies with all safety recorded, including those associated To make the data comparable across standards, building codes and other with obtaining land use approvals and economies, several assumptions about legal requirements. The property of preconstruction design clearances; re- the parties to the transaction, the prop- land and building will be transferred ceiving inspection before, during and erty and the procedures are used. in its entirety. after construction; getting utility con- • Will not be subject to renovations nections; and registering the warehouse ASSUMPTIONS ABOUT THE PARTIES or additional building following the property. Nonrecurring taxes required The parties (buyer and seller): purchase. for the completion of the warehouse • Are limited liability companies. • Has no trees, natural water sources, project are also recorded. The building TABLE 6.3 code, information from local experts and What do the registering property indicators measure? specific regulations and fee schedules are used as sources for costs. If several local Procedures to legally transfer title on immovable property (number) partners provide different estimates, the • Preregistration (for example, checking for liens, notarizing sales agreement, paying property transfer taxes) median reported value is used. • Registration in the economy’s largest business city • Postregistration (for example, transactions with the local authority, tax authority or cadastre) The data details on dealing with con- Time required to complete each procedure (calendar days) struction permits can be found for each • Does not include time spent gathering information economy at http://www.doingbusiness.org • Each procedure starts on a separate day by selecting the economy in the drop- down list. • Procedure completed once final document is received • No prior contact with officials Cost required to complete each procedure (% of property value) • Official costs only, no bribes • No value added or capital gains taxes included Source: Doing Business database. DATA NOTES 43 natural reserves or historical monu- is assumed that they are. It is assumed • Seller (the plaintiff) sues Buyer (the ments of any kind. that the parties involved are aware of defendant) to recover the amount • Will not be used for special purposes, all regulations and their sequence from under the sales agreement (that is, and no special permits, such as for the beginning. Time spent on gathering 200% of the economy’s income per residential use, industrial plants, information is not considered. capita). Buyer opposes Seller’s claim, waste storage or certain types of agri- saying that the quality of the goods is cultural activities, are required. COST not adequate. The claim is disputed • Has no occupants (legal or illegal), Cost is recorded as a percentage of the on the merits. and no other party holds a legal inter- property value, assumed to be equiva- • A court in the selected city with juris- est in it. lent to 50 times income per capita. Only diction over commercial cases worth official costs required by law are re- 200% of income per capita decides PROCEDURES corded, including fees, transfer taxes, the dispute. A procedure is defined as any interaction stamp duties and any other payment to • Seller attaches Buyer’s movable assets of the buyer or the seller, their agents (if the property registry, notaries, public (for example, office equipment and an agent is legally or in practice required) agencies or lawyers. Other taxes, such as vehicles) before obtaining a judgment or the property with external parties, capital gains tax or value added tax, are because Seller fears that Buyer may including government agencies, inspec- excluded from the cost measure. Both become insolvent. tors, notaries and lawyers. Interactions costs borne by the buyer and those borne • An expert opinion is given on the between company officers and employ- by the seller are included. If cost esti- quality of the delivered goods. If it is ees are not considered. All procedures mates differ among sources, the median standard practice in the economy for that are legally or in practice required for reported value is used. each party to call its own expert wit- registering property are recorded, even ness, the parties each call one expert if they may be avoided in exceptional The data details on registering property witness. If it is standard practice for cases. It is assumed that the buyer fol- can be found for each economy at http:// the judge to appoint an independent lows the fastest legal option available and www.doingbusiness.org by selecting the expert, the judge does so. In this case used by the majority of property owners. economy in the drop-down list. the judge does not allow opposing Although the buyer may use lawyers expert testimony. or other professionals where necessary ENFORCING CONTRACTS • The judgment is 100% in favor of in the registration process, it is assumed Seller: the judge decides that the that it does not employ an outside fa- Indicators on enforcing contracts mea- goods are of adequate quality and that cilitator in the registration process unless sure the efficiency of the judicial system Buyer must pay the agreed price. legally or in practice required to do so in resolving a commercial dispute. The TABLE 6.4 (table 6.3). data are built by following the step-by- What do the enforcing contracts step evolution of a commercial sale dis- indicators measure? TIME pute before local courts. The data are col- Procedures to enforce a contract (number) Time is recorded in calendar days. The lected through study of the codes of civil • Any interaction between the parties in a measure captures the median duration procedure and other court regulations as commercial dispute, or between them and that property lawyers, notaries or registry well as surveys completed by local litiga- the judge or court officer officials indicate is necessary to complete tion lawyers and by judges. • Steps to file the case a procedure. It is assumed that the mini- • Steps for trial and judgment mum time required for each procedure ASSUMPTIONS ABOUT THE CASE • Steps to enforce the judgment is 1 day. Although procedures may take • The value of the claim equals 200% of Time required to complete procedures place simultaneously, they cannot start the economy’s income per capita. (calendar days) on the same day (that is, simultaneous • The dispute concerns a lawful trans- • Time to file and serve the case procedures start on consecutive days). It action between 2 businesses (Seller • Time for trial and obtaining judgment is assumed that the buyer does not waste and Buyer), located in the selected • Time to enforce the judgment time and commits to completing each city. Seller sells goods worth 200% of Cost required to complete procedures remaining procedure without delay. If a the economy’s income per capita to (% of claim) procedure can be accelerated for an ad- Buyer. After Seller delivers the goods • No bribes ditional cost, the fastest legal procedure to Buyer, Buyer refuses to pay for • Average attorney fees available and used by the majority of the goods on the grounds that the • Court costs, including expert fees property owners is chosen. If procedures delivered goods were not of adequate • Enforcement costs can be undertaken simultaneously, it quality. Source: Doing Business database. 44 DOING BUSINESS IN SOUTH EAST EUROPE 2011 • Buyer does not appeal the judgment. COST a simple average of the city percentile The judgment becomes final. Costs recorded as a percentage of the rankings on the procedures, time, and • Seller takes all required steps for claim, assumed to be equivalent to 200% cost (% of claim value) to resolve a com- prompt enforcement of the judgment. of income per capita. No bribes are re- mercial dispute through the courts. The money is successfully collected corded. Three types of costs are recorded: The rankings are limited in scope. through a public sale of Buyer’s mov- court costs, enforcement costs and aver- They do not account for an economy's able assets (for example, office equip- age attorney fees. proximity to large markets, the quality ment and vehicles). Court costs include all court costs of its infrastructure services (other than and expert fees that Seller (plaintiff) services related to construction permits), PROCEDURES must advance to the court, regardless the security of property from theft and The list of procedural steps compiled for of the final cost to Seller. Expert fees, looting, macroeconomic conditions or each economy traces the chronology of a if required by law or commonly used the strength of underlying institutions. commercial dispute before the relevant in practice, are included in court costs. There remains a large unfinished agenda court. A procedure is defined as any in- Enforcement costs are all costs that Seller for research into what regulation consti- teraction, required by law or commonly (plaintiff) must advance to enforce the tutes binding constraints, what package used in practice, between the parties or judgment through a public sale of Buyer’s of reforms is most effective and how between them and the judge or court of- movable assets, regardless of the final these issues are shaped by the context ficer. This includes steps to file and serve cost to Seller. Average attorney fees are of an economy. The Doing Business in- the case, steps for trial and judgment and the fees that Seller (plaintiff) must ad- dicators provide a new empirical data steps necessary to enforce the judgment vance to a local attorney to represent set that may improve understanding of (table 6.4). Seller in the standardized case. these issues. The survey allows respondents to record procedures that exist in civil law The data details on enforcing contracts but not common law jurisdictions and can be found for each economy at http:// vice versa. For example, in civil law www.doingbusiness.org by selecting the countries the judge can appoint an in- economy in the drop-down list. This dependent expert, while in common law methodology was developed in Djankov, countries each party submits a list of La Porta, López-de-Silanes and Shleifer. expert witnesses to the court. To indicate 2003. “Courts”. Quarterly Journal of Eco- overall efficiency, 1 procedure is sub- nomics 118 (2): 453-517; and is adopted tracted from the total number for econo- here with minor changes. mies that have specialized commercial courts, and 1 procedure for economies RANKINGS that allow electronic filing of court cases. Some procedural steps that take place The ranking on each topic is the simple simultaneously with or are included in average of the percentile rankings on other procedural steps are not counted in its component indicators. The ease of the total number of procedures. starting a business is a simple average of the city percentile rankings on the TIME procedures, time, cost (% of income per Time is recorded in calendar days, capita), and paid-in minimum capital counted from the moment the plaintiff to start a business. The ease of dealing decides to file the lawsuit in court until with construction permits is a simple payment. This includes both the days average of the city percentile rankings when actions take place and the waiting on the number of procedures, and the periods between. The average duration associated time and cost (% of income of different stages of dispute resolution per capita) to deal with construction is recorded: the completion of service of permits. The ease of registering property process (time to file and serve the case), is a simple average of the city percentile the issuance of judgment (time for the rankings on the number of procedures, trial and obtaining the judgment) and and the associated time and cost (% of the moment of payment (time for en- the property value) to register prop- forcement of judgment). erty. The ease of enforcing contracts is City tables 46 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Durres, Albania Starting a business (rank) 9 Registering property (rank) 13 Procedures (number) 5 Procedures (number) 6 Time (days) 5 Time (days) 27 Cost (% of income per capita) 30.0 Cost (% of the property value) 3.4 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 14 Dealing with construction permits (rank) 11 Procedures (number) 39 Procedures (number) 21 Time (days) 340 Time (days) 208 Cost (% of claim) 35.0 Cost (% of income per capita) 422.6 Shkodra, Albania Starting a business (rank) 8 Registering property (rank) 9 Procedures (number) 5 Procedures (number) 6 Time (days) 5 Time (days) 24 Cost (% of income per capita) 22.9 Cost (% of the property value) 3.4 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 11 Dealing with construction permits (rank) 3 Procedures (number) 39 Procedures (number) 21 Time (days) 331 Time (days) 176 Cost (% of claim) 33.5 Cost (% of income per capita) 382.7 Tirana, Albania Starting a business (rank) 10 Registering property (rank) 16 Procedures (number) 5 Procedures (number) 6 Time (days) 5 Time (days) 33 Cost (% of income per capita) 31.4 Cost (% of the property value) 3.4 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 18 Dealing with construction permits (rank) 22 Procedures (number) 39 Procedures (number) NO PRACTICE Time (days) 390 Time (days) NO PRACTICE Cost (% of claim) 35.7 Cost (% of income per capita) NO PRACTICE Vlora, Albania Starting a business (rank) 7 Registering property (rank) 10 Procedures (number) 5 Procedures (number) 6 Time (days) 5 Time (days) 25 Cost (% of income per capita) 22.1 Cost (% of the property value) 3.4 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 10 Dealing with construction permits (rank) 9 Procedures (number) 39 Procedures (number) 21 Time (days) 328 Time (days) 184 Cost (% of claim) 33.5 Cost (% of income per capita) 385.9 Banja Luka, Bosnia and Herzegovina Starting a business (rank) 18 Registering property (rank) 21 Procedures (number) 10 Procedures (number) 7 Time (days) 21 Time (days) 103 Cost (% of income per capita) 16.0 Cost (% of the property value) 3.2 Paid-in minimum capital (% of income per capita) 30.5 Enforcing contracts (rank) 15 Dealing with construction permits (rank) 3 Procedures (number) 37 Procedures (number) 18 Time (days) 1,220 Time (days) 228 Cost (% of claim) 27.7 Cost (% of income per capita) 415.3 CIT Y TABLES 47 Mostar, Bosnia and Herzegovina Starting a business (rank) 20 Registering property (rank) 22 Procedures (number) 12 Procedures (number) 7 Time (days) 47 Time (days) 117 Cost (% of income per capita) 22.1 Cost (% of the property value) 5.5 Paid-in minimum capital (% of income per capita) 30.5 Enforcing contracts (rank) 20 Dealing with construction permits (rank) 13 Procedures (number) 38 Procedures (number) 19 Time (days) 1,653 Time (days) 554 Cost (% of claim) 31.5 Cost (% of income per capita) 842.1 Sarajevo, Bosnia and Herzegovina Starting a business (rank) 19 Registering property (rank) 19 Procedures (number) 12 Procedures (number) 7 Time (days) 50 Time (days) 33 Cost (% of income per capita) 15.4 Cost (% of the property value) 5.3 Paid-in minimum capital (% of income per capita) 30.5 Enforcing contracts (rank) 19 Dealing with construction permits (rank) 9 Procedures (number) 37 Procedures (number) 19 Time (days) 595 Time (days) 182 Cost (% of claim) 40.4 Cost (% of income per capita) 1,166.5 Pristina, Kosovo Starting a business (rank) 22 Registering property (rank) 18 Procedures (number) 10 Procedures (number) 8 Time (days) 58 Time (days) 33 Cost (% of income per capita) 28.7 Cost (% of the property value) 0.6 Paid-in minimum capital (% of income per capita) 112.4 Enforcing contracts (rank) 21 Dealing with construction permits (rank) 17 Procedures (number) 53 Procedures (number) 21 Time (days) 420 Time (days) 320 Cost (% of claim) 61.2 Cost (% of income per capita) 856.5 Prizren, Kosovo Starting a business (rank) 21 Registering property (rank) 14 Procedures (number) 11 Procedures (number) 7 Time (days) 36 Time (days) 36 Cost (% of income per capita) 23.9 Cost (% of the property value) 0.5 Paid-in minimum capital (% of income per capita) 112.4 Enforcing contracts (rank) 22 Dealing with construction permits (rank) 6 Procedures (number) 54 Procedures (number) 21 Time (days) 420 Time (days) 160 Cost (% of claim) 61.2 Cost (% of income per capita) 743.9 Bitola, FYR Macedonia Starting a business (rank) 2 Registering property (rank) 3 Procedures (number) 5 Procedures (number) 5 Time (days) 5 Time (days) 22 Cost (% of income per capita) 2.4 Cost (% of the property value) 3.1 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 5 Dealing with construction permits (rank) 12 Procedures (number) 37 Procedures (number) 23 Time (days) 345 Time (days) 96 Cost (% of claim) 21.3 Cost (% of income per capita) 1,308.4 48 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Skopje, FYR Macedonia Starting a business (rank) 1 Registering property (rank) 15 Procedures (number) 3 Procedures (number) 5 Time (days) 3 Time (days) 58 Cost (% of income per capita) 2.5 Cost (% of the property value) 3.1 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 9 Dealing with construction permits (rank) 2 Procedures (number) 37 Procedures (number) 15 Time (days) 370 Time (days) 129 Cost (% of claim) 33.1 Cost (% of income per capita) 1,792.3 Tetovo, FYR Macedonia Starting a business (rank) 3 Registering property (rank) 6 Procedures (number) 5 Procedures (number) 5 Time (days) 5 Time (days) 43 Cost (% of income per capita) 2.5 Cost (% of the property value) 3.1 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 3 Dealing with construction permits (rank) 3 Procedures (number) 37 Procedures (number) 20 Time (days) 290 Time (days) 114 Cost (% of claim) 22.3 Cost (% of income per capita) 1,253.1 Balti, Moldova Starting a business (rank) 13 Registering property (rank) 1 Procedures (number) 8 Procedures (number) 5 Time (days) 8 Time (days) 5 Cost (% of income per capita) 10.9 Cost (% of the property value) 0.9 Paid-in minimum capital (% of income per capita) 11.9 Enforcing contracts (rank) 4 Dealing with construction permits (rank) 8 Procedures (number) 32 Procedures (number) 28 Time (days) 365 Time (days) 152 Cost (% of claim) 22.7 Cost (% of income per capita) 110.2 Chisinau, Moldova Starting a business (rank) 17 Registering property (rank) 1 Procedures (number) 8 Procedures (number) 5 Time (days) 10 Time (days) 5 Cost (% of income per capita) 10.9 Cost (% of the property value) 0.9 Paid-in minimum capital (% of income per capita) 11.9 Enforcing contracts (rank) 2 Dealing with construction permits (rank) 19 Procedures (number) 31 Procedures (number) 30 Time (days) 365 Time (days) 294 Cost (% of claim) 20.9 Cost (% of income per capita) 120.9 Niksic, Montenegro Starting a business (rank) 5 Registering property (rank) 6 Procedures (number) 7 Procedures (number) 6 Time (days) 8 Time (days) 34 Cost (% of income per capita) 1.5 Cost (% of the property value) 3.1 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 17 Dealing with construction permits (rank) 1 Procedures (number) 50 Procedures (number) 16 Time (days) 545 Time (days) 163 Cost (% of claim) 26.4 Cost (% of income per capita) 978.2 CIT Y TABLES 49 Pljevlja, Montenegro Starting a business (rank) 4 Registering property (rank) 4 Procedures (number) 7 Procedures (number) 6 Time (days) 8 Time (days) 18 Cost (% of income per capita) 1.5 Cost (% of the property value) 3.1 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 7 Dealing with construction permits (rank) 6 Procedures (number) 50 Procedures (number) 15 Time (days) 345 Time (days) 182 Cost (% of claim) 25.7 Cost (% of income per capita) 1,738.5 Podgorica, Montenegro Starting a business (rank) 6 Registering property (rank) 20 Procedures (number) 7 Procedures (number) 7 Time (days) 10 Time (days) 71 Cost (% of income per capita) 1.8 Cost (% of the property value) 3.1 Paid-in minimum capital (% of income per capita) 0.0 Enforcing contracts (rank) 16 Dealing with construction permits (rank) 18 Procedures (number) 49 Procedures (number) 18 Time (days) 545 Time (days) 287 Cost (% of claim) 25.7 Cost (% of income per capita) 2,132.1 Belgrade, Serbia Starting a business (rank) 11 Registering property (rank) 16 Procedures (number) 7 Procedures (number) 6 Time (days) 13 Time (days) 91 Cost (% of income per capita) 8.1 Cost (% of the property value) 2.7 Paid-in minimum capital (% of income per capita) 6.0 Enforcing contracts (rank) 11 Dealing with construction permits (rank) 21 Procedures (number) 36 Procedures (number) 21 Time (days) 635 Time (days) 349 Cost (% of claim) 28.9 Cost (% of income per capita) 1,782.2 Krusevac, Serbia Starting a business (rank) 16 Registering property (rank) 10 Procedures (number) 9 Procedures (number) 6 Time (days) 22 Time (days) 74 Cost (% of income per capita) 7.8 Cost (% of the property value) 2.7 Paid-in minimum capital (% of income per capita) 6.0 Enforcing contracts (rank) 11 Dealing with construction permits (rank) 20 Procedures (number) 36 Procedures (number) 21 Time (days) 720 Time (days) 291 Cost (% of claim) 28.7 Cost (% of income per capita) 1,744.4 Uzice, Serbia Starting a business (rank) 12 Registering property (rank) 10 Procedures (number) 9 Procedures (number) 6 Time (days) 16 Time (days) 74 Cost (% of income per capita) 7.9 Cost (% of the property value) 2.7 Paid-in minimum capital (% of income per capita) 6.0 Enforcing contracts (rank) 6 Dealing with construction permits (rank) 16 Procedures (number) 36 Procedures (number) 18 Time (days) 390 Time (days) 261 Cost (% of claim) 27.0 Cost (% of income per capita) 1,804.0 50 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Vranje, Serbia Starting a business (rank) 14 Registering property (rank) 5 Procedures (number) 9 Procedures (number) 6 Time (days) 17 Time (days) 59 Cost (% of income per capita) 7.9 Cost (% of the property value) 2.7 Paid-in minimum capital (% of income per capita) 6.0 Enforcing contracts (rank) 7 Dealing with construction permits (rank) 13 Procedures (number) 36 Procedures (number) 20 Time (days) 540 Time (days) 168 Cost (% of claim) 32.5 Cost (% of income per capita) 2,098.9 Zrenjanin, Serbia Starting a business (rank) 14 Registering property (rank) 6 Procedures (number) 9 Procedures (number) 6 Time (days) 17 Time (days) 70 Cost (% of income per capita) 7.9 Cost (% of the property value) 2.7 Paid-in minimum capital (% of income per capita) 6.0 Enforcing contracts (rank) 1 Dealing with construction permits (rank) 13 Procedures (number) 36 Procedures (number) 20 Time (days) 300 Time (days) 186 Cost (% of claim) 25.2 Cost (% of income per capita) 1,741.4 Doing Business indicators 52 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Starting a business Dealing with construction permits Paid-in Ease of minimum Ease of dealing with Cost capital starting a Cost construction Procedures Time (% of income (% of income business Procedures Time (% of income permits (number) (days) per capita) per capita) (rank) (number) (days) per capita) (rank) Durres 5 5 30.0 0.0 9 21 208 422.6 11 Albania Shkodra 5 5 22.9 0.0 8 21 176 382.7 3 Albania Tirana 5 5 31.4 0.0 10 NO PRACTICE NO PRACTICE NO PRACTICE 22 Albania Vlora 5 5 22.1 0.0 7 21 184 385.9 9 Albania Banja Luka 10 21 16.0 30.5 18 18 228 415.3 3 Bosnia and Herzegovina Mostar 12 47 22.1 30.5 20 19 554 842.1 13 Bosnia and Herzegovina Sarajevo 12 50 15.4 30.5 19 19 182 1,166.5 9 Bosnia and Herzegovina Pristina 10 58 28.7 112.4 22 21 320 856.5 17 Kosovo Prizren 11 36 23.9 112.4 21 21 160 743.9 6 Kosovo Bitola 5 5 2.4 0.0 2 23 96 1,308.4 12 FYR Macedonia Skopje 3 3 2.5 0.0 1 15 129 1,792.3 2 FYR Macedonia Tetovo 5 5 2.5 0.0 3 20 114 1,253.1 3 FYR Macedonia Balti 8 8 10.9 11.9 13 28 152 110.2 8 Moldova Chisinau 8 10 10.9 11.9 17 30 294 120.9 19 Moldova Niksic 7 8 1.5 0.0 5 16 163 978.2 1 Montenegro Pljevlja 7 8 1.5 0.0 4 15 182 1,738.5 6 Montenegro Podgorica 7 10 1.8 0.0 6 18 287 2,132.1 18 Montenegro Belgrade 7 13 8.1 6.0 11 21 349 1,782.2 21 Serbia Krusevac 9 22 7.8 6.0 16 21 291 1,744.4 20 Serbia Uzice 9 16 7.9 6.0 12 18 261 1,804.0 16 Serbia Vranje 9 17 7.9 6.0 14 20 168 2,098.9 13 Serbia Zrenjanin 9 17 7.9 6.0 14 20 186 1,741.4 13 Serbia INDICATORS 53 Registering property Enforcing contracts Cost Ease of Ease of (% of registering enforcing Procedures Time property property Procedures Time Cost contracts (number) (days) value) (rank) (number) (days) (% of claim) (rank) Durres 39 340 35.0 14 6 27 3.4 13 Albania Shkodra 39 331 33.5 11 6 24 3.4 9 Albania Tirana 39 390 35.7 18 6 33 3.4 16 Albania Vlora 39 328 33.5 10 6 25 3.4 10 Albania Banja Luka 37 1,220 27.7 15 7 103 3.2 21 Bosnia and Herzegovina Mostar 38 1,653 31.5 20 7 117 5.5 22 Bosnia and Herzegovina Sarajevo 37 595 40.4 19 7 33 5.3 19 Bosnia and Herzegovina Pristina 53 420 61.2 21 8 33 0.6 18 Kosovo Prizren 54 420 61.2 22 7 36 0.5 14 Kosovo Bitola 37 345 21.3 5 5 22 3.1 3 FYR Macedonia Skopje 37 370 33.1 9 5 58 3.1 15 FYR Macedonia Tetovo 37 290 22.3 3 5 43 3.1 6 FYR Macedonia Balti 32 365 22.7 4 5 5 0.9 1 Moldova Chisinau 31 365 20.9 2 5 5 0.9 1 Moldova Niksic 50 545 26.4 17 6 34 3.1 6 Montenegro Pljevlja 50 345 25.7 7 6 18 3.1 4 Montenegro Podgorica 49 545 25.7 16 7 71 3.1 20 Montenegro Belgrade 36 635 28.9 11 6 91 2.7 16 Serbia Krusevac 36 720 28.7 11 6 74 2.7 10 Serbia Uzice 36 390 27.0 6 6 74 2.7 10 Serbia Vranje 36 540 32.5 7 6 59 2.7 5 Serbia Zrenjanin 36 300 25.2 1 6 70 2.7 6 Serbia List of procedures Starting a business Dealing with construction permits Registering property LIST OF PROCEDURES • STARTING A BUSINESS 55 LIST OF PROCEDURES Procedure 2. Notarize the incorporation documents Time: 1 day Starting a business Cost: ALL 8,700 (ALL 2,700 for articles of incorporation + ALL 2,700 for statute + ALL 3,300 for special proxy to an attorney) Durres, Albania Procedure 3. Request and obtain Business Registration Certificate Standard company legal form: Limited Liability Company (LLC) and a Unique Business Identification Number from NRC Minimum capital requirement: ALL 100 (US$ 1) Time: 1 day Data as of: January 2011 Cost: ALL 100 Comments: The NRC is the new central public institution which functions as a single Procedure 1. Search and reserve a unique company name window where the entrepreneur can complete company registration, tax registra- Time: 1 day tion, social insurance, health insurance and labor directorate registration using a Cost: ALL 100 single application procedure (based on Article 59 of the Law No. 9723 "on National Registration Center"). Comments: Entrepreneurs can reserve a company name at the National Registration Center (NRC) local office in Durres. Efforts are under way to enable entrepreneurs Procedure 4. Obtain Business Registration Certificate from the to do the reservation online. After receiving the application, NRC issues a name reservation certificate. The name reservation form can be downloaded from the NRC Municipal Tax Office website at: http://www.qkr.gov.al/nrc/Forms_for_name_reservation.aspx . Time: 1 day Cost: ALL 68,120 Procedure 2. Notarize the incorporation documents Comments: The 2010 Municipal Fee Schedule sets the municipal fees and taxes as Time: 1 day follows: Cost: ALL 8,700 (ALL 2,700 for articles of incorporation + ALL 2,700 for statute + ALL a. City cleaning fee: ALL 60,000; 3,300 for special proxy to an attorney) b. Billboard fee: ALL 120; c. Street lighting fee: ALL 4,000; Procedure 3. Request and obtain Business Registration Certificate d. Green tax: ALL 4,000. and a Unique Business Identification Number from NRC Time: 1 day Procedure 5. Make a company seal Cost: ALL 100 Time: 1 day Comments: The NRC is the new central public institution which functions as a single Cost: ALL 4,000 (ALL 3,000 to ALL 5,000) window where the entrepreneur can complete company registration, tax registra- tion, social insurance, health insurance and labor directorate registration using a single application procedure (based on Article 59 of the Law No. 9723 "on National STARTING A BUSINESS Registration Center"). Tirana, Albania Standard company legal form: Limited Liability Company (LLC) Procedure 4. Obtain Business Registration Certificate from the Minimum capital requirement: ALL 100 (US$ 1) Municipality Data as of: January 2011 Time: 1 day Cost: ALL 93,120 Procedure 1. Search and reserve a unique company name Comments: Local tariffs and fees are set by Decision No. 195 of the Municipal Time: 1 day Council ("Municipal tariffs and fees in the city of Durres") dated January 18, 2010, Cost: ALL 100 and they are as follows: Comments: Entrepreneurs can reserve a company name at the National Registration a. Registration fee: ALL 15,000 (paid only once at registration); Center (NRC) local office in Tirana. Efforts are under way to enable entrepreneurs b. Street lighting fee: ALL 3,000 (paid annually); to do the reservation online. After receiving the application, NRC issues a name c. Cleaning fee: ALL 70,000 (paid annually); reservation certificate. The name reservation form can be downloaded from the NRC website at: http://www.qkr.gov.al/nrc/Forms_for_name_reservation.aspx . d. Green tax: ALL 5,000 (paid annually); e. Billboard fee: ALL 120 (paid annually). Procedure 2. Notarize the incorporation documents Procedure 5. Make a company seal Time: 1 day Cost: ALL 8,700 (ALL 2,700 for articles of incorporation + ALL 2,700 for statute + ALL Time: 1 day 3,300 for special proxy to an attorney) Cost: ALL 4,000 (ALL 3,000 to ALL 5,000) Procedure 3. Request and obtain Business Registration Certificate STARTING A BUSINESS and a Unique Business Identification Number from NRC Shkodra, Albania Time: 1 day Standard company legal form: Limited Liability Company (LLC) Cost: ALL 100 Minimum capital requirement: ALL 100 (US$ 1) Comments: The NRC is the new central public institution which functions as a single Data as of: January 2011 window where the entrepreneur can complete company registration, tax registra- tion, social insurance, health insurance and labor directorate registration using a Procedure 1. Search and reserve a unique company name single application procedure (based on Article 59 of the Law No. 9723 "on National Time: 1 day Registration Center"). Cost: ALL 100 Procedure 4. Register with the Municipal Sector for Taxpayer Comments: Entrepreneurs can reserve a company name at the National Registration Services, Assistance and Registration Center (NRC) local office in Shkodra. Efforts are under way to enable entrepreneurs to do the reservation online. After receiving the application, NRC issues a name Time: 1 day reservation certificate. The name reservation form can be downloaded from the NRC Cost: ALL 98,120 (ALL 85,000 for city cleaning fee + ALL 13,000 for a green tax + ALL website at: http://www.qkr.gov.al/nrc/Forms_for_name_reservation.aspx . 120 for billboard fee) Procedure 5. Make a company seal Time: 1 day Cost: ALL 4,000 (ALL 3,000 to ALL 5,000) 56 DOING BUSINESS IN SOUTH EAST EUROPE 2011 STARTING A BUSINESS Procedure 2. Obtain a statement from a commercial bank that Vlora, Albania full amount of the capital has been paid; pay registration fee to Standard company legal form: Limited Liability Company (LLC) the bank account of the District Commercial Court Minimum capital requirement: ALL 100 (US$ 1) Time: 1 day Data as of: January 2011 Cost: BAM 500 (BAM 450 for registration + BAM 50 for advertising in the Official Gazette) Procedure 1. Search and reserve a unique company name Comments: The founder should pay at least half of the minimum capital require- Time: 1 day ment (BAM 1,000 of BAM 2,000) to a temporary account at one of the local banks, Cost: ALL 100 which will subsequently be transferred to the company's permanent banking account within two years of operation. Comments: Entrepreneurs can reserve a company name at the National Registration Center (NRC) local office in Vlora. Efforts are under way to enable entrepreneurs to do the reservation online. After receiving the application, NRC issues a name reservation Procedure 3. Court registration with the District Commercial certificate. The name reservation form can be downloaded from the NRC website at: Court http://www.qkr.gov.al/nrc/Forms_for_name_reservation.aspx . Time: 7 days Cost: No cost Procedure 2. Notarize the incorporation documents Comments: In order to register the company with the District Commercial Court, it is Time: 1 day necessary to submit the following documents: Cost: ALL 8,700 (ALL 2,700 for articles of incorporation + ALL 2,700 for statute + ALL a. Registration form; 3,300 for special proxy to an attorney) b. Four copies of the advertising form; c. Notarized company's founding acts; Procedure 3. Request and obtain Business Registration Certificate and a Unique Business Identification Number from d. Decision on naming a member of the board of directors; NRC e. Certificate of payment of the minimal capital requirement; Time: 1 day f. Notarized copy of the personal identification card of company’s representative; Cost: ALL 100 g. Notarized signature of company’s representative; Comments: The NRC is the new central public institution which functions as a single h. Proof of payment of court fees. window where the entrepreneur can complete company registration, tax registra- Membership at the Republika Srpska Chamber of Commerce is mandatory and tion, social insurance, health insurance and labor directorate registration using a automatic after registration with the District Commercial Court. Companies founded single application procedure (based on Article 59 of the Law No. 9723 "on National in 2009 and 2010 are waived from paying the membership fee for the year they were Registration Center"). founded. Membership fees are decided by the Chamber of Commerce with a clause that annual membership fee for the current year cannot be greater than 0.03% of Procedure 4. Obtain Business Registration Certificate from the the overall annual turnover in the previous year nor smaller than BAM 20 per month. Municipal Tax Directorate Details relating to membership fees of the Republika Srpska Chamber of Commerce can be found at the following web-site: http://www.komorars.ba/a2/index.php/ Time: 1 day pg/0.html. Cost: ALL 65,120 Comments: Local tariffs and fees are set by Decision No. 62 of the Vlora Municipal Procedure 4. Buy a company stamp Council ("Municipal tariffs and fees in the city of Vlora") dated November 26, 2009, Time: 1 day and they are as follows: Cost: BAM 40 a. Registration fee: ALL 10,000 (paid only once); Comments: In Banja Luka, there are several private workshops that specialize in b. City cleaning fee: ALL 50,000 (paid annually); making company stamps. In order to have a company stamp made, it is necessary c. Street lighting fee and green tax: ALL 5,000 (paid annually); to bring the court registration of the company which proves the ownership and d. Billboard fee: ALL 120 (paid annually). company's representation rights. Details on the shape, size and sign of the stamp are specified in the company founding acts. Procedure 5. Make a company seal Time: 1 day Procedure 5. Request and obtain resolution on intended activities (work permit) with the competent municipality Cost: ALL 4,000 (ALL 3,000 to ALL 5,000) Time: 4 days STARTING A BUSINESS Cost: BAM 102 Comments: This certificate has to be obtained only in cases where a commercial Banja Luka, Bosnia and Herzegovina entity may actively engage in commercial, hospitality and/or tourism-related Standard company legal form: Limited Liability Company (LLC) activities. It is necessary to fill out the application form (available on the web site of Minimum capital requirement: BAM 2,000 (US$ 1,434) Banja Luka municipality: http://www2.banjaluka.rs.ba/static/uploads/service/forms/ Data as of: January 2011 ASBL-OB-02-01_.pdf). For entities planning to engage in commercial activities, the ASBL-OB-02/21 form has to be filled out (http://www2.banjaluka.rs.ba/static/up- Procedure 1. Stipulate a founding act and have it notarized loads/ASBL-OB-02-21.pdf). For entities planning to engage in hospitality activities, Time: 2 days the ASBL-OB-02/20 form has to be filled out (http://www2.banjaluka.rs.ba/static/ uploads/ASBL-OB-02-20.pdf). For entities planning to engage in tourism-related Cost: BAM 335 (BAM 300 for founding act stipulation + BAM 15 for court registration activities, the ASBL-OB-02/26 form has to be filled out (http://www2.banjaluka.rs.ba/ + BAM 20 for notarization of the proof of occupancy of office space) static/uploads/ASBL-OB-02-26.pdf). Comments: The Law on Notaries requires all documentation needed for registration In addition, the following documents need to be submitted: of a company to be prepared and certified by a notary. To stipulate the founding acts, company representative(s) needs to submit a copy of his identification card with a. Proof of company's court registration; suggestion of the name of the company to the notary who verifies its availability b. Notarized statement by the company’s director that all conditions to actively at a competent court. Notary submits request to register the company at the court engage in commercial/hospitality/tourism-related activities have been fulfilled. and stipulates company founding act. Notarized copy of the proof of occupancy of office space is not required by law. However, in practice the proof of occupancy Procedure 6. Request and obtain company identification number gives a greater degree of legitimacy to the newly founded company and the tax with the competent tax administration office administration office sometimes asks for it when issuing the company identification Time: 3 days number. After notarizing the proof of occupancy, the notary retains one copy of the Cost: BAM 2 document while the company representative keeps the original. LIST OF PROCEDURES • STARTING A BUSINESS 57 Comments: According to Article 15 of Rules on Registration and Identification of Comments: In order to have the founding act stipulated by the notary, it is neces- Taxpayers, all commercial entities have to obtain a company identification number sary to submit copy of personal identification card and suggestions of names of within 5 days from company’s court registration. Apart from filing out a request to individuals who will be representing the company. Notarized copy of the proof of obtain identification number at a competent tax administration authority (http:// occupancy of an office space is not required by law. However, in practice this proof www.poreskaupravars.org/Documents/Obrasci/PR-1.pdf), the newly founded gives a greater degree of legitimacy to the newly founded company. After notarizing company has to submit the following: the proof of occupancy, the notary retains one copy of the document while the a. Copy of company's court registration; company keeps the original. b. Notarized proof of occupancy of office space; Procedure 2. Obtain a statement from a commercial bank c. Copy of the company director’s personal identification card. that full amount of the capital has been deposited; pay court Procedure 7*. Request and obtain statistical number from the registration fee to the bank account of the municipal court and Institute of Statistics, Republika Srpska fee for approval of intended activities to the bank account of the municipality Time: 2 days Time: 1 day Cost: BAM 70 Cost: BAM 1,055 (BAM 405 for registration + BAM 150 for advertising fee in the Comments: In order to obtain a statistical number, company representatives will Official Gazette + BAM 500 to obtain municipal approval of company's intended have to submit the following documents: activities) a. Notarized copy of company's court registration; Comments: The founder should pay at least the minimum capital amount of b. Notarized copy of company’s founding acts (Form RJR-1); BAM 2,000 to a temporary account at one of the local banks. The amount is to be c. Proof of payment of administrative fees in the amount of BAM 70. subsequently transferred to the company's permanent transaction account after the start of operations. Companies are also required to pay the fee of BAM 500 to the Procedure 8. Open a company account at a commercial bank municipal bank account for approval of intended activities. Time: 1 day Procedure 3*. Obtain a statement from the tax authorities that Cost: No cost the founders have no unpaid taxes Comments: The newly founded company closes the temporary account where it has deposited a minimum capital requirement and opens up a permanent company ac- Time: 1 day count at a commercial bank. It is necessary to fill out a request to open a new bank Cost: BAM 15 account and submit a copy of company’s registration at the court, statistical number and company identification number. Procedure 4. Court registration with the Municipal Court Time: 21 days Procedure 9. Enroll employees in Pension and Health Insurance Cost: No cost Funds with the tax administration office Comments: In order to register, the company’s representative will have to submit Time: 1 day following documents to the municipal court: Cost: No cost a. Registration form(obtained from the court); Comments: The following documentation is needed: b. Four copies of the advertising form; a. Copy of the employees contracts and work booklet; c. Notarized company’s founding acts; b. Employees' identification cards; d. Decision on naming a member of the board of directors representing the com- c. Copy of the company’s court registration. pany; Application form to register employees for Pension and Health Insurance is free and e. Certificate of payment of minimal capital requirement; can be obtained from the tax administration office or from their web site: http:// f. Copy of personal identification card of company's representative; www.poreskaupravars.org/SiteCir/Obrasci.aspx. g. Notarized signature of company’s representative; Procedure 10*. Adopt a Rulebook on matters of salary, work h. Proof of payment of court fee to advertise company’s registration in Official Gazette; organization, discipline, and other employee regulations i. Proof that company’s founders do not have outstanding debt obligations. Time: 1 day Companies voluntarily register for a membership at commercial chambers on Cost: No cost (BAM 250 is the minimum cost if made by a lawyer, depending on cantonal and entity level. Membership fees are as following: complexity) - Entity level (Chamber of Commerce of Federation of Bosnia and Herzegovina): the Comments: This procedure applies to employers who hire more than 15 workers. company may choose one of two options (a) a fee of 0.7% of the company’s gross According to the Republika Srpska Labor law, the company’s body authorized to is- paid salaries for all employees; or (b) a fee based on the number of employees, (e.g., sue internal regulations (usually board of directors) has to adopt and publicly display BAM 150 for 31–50 employees). the Rulebook. It is not required to publish the Rulebook as long as all company’s employees have equal access to it and the book is advertised in the common areas - Cantonal (Chamber of Commerce of Hercegovacko-Neretvanski Canton): member- of the company. ship fee cannot exceed 0,05% of a total annual income which the member has earned in previous year nor be smaller than BAM 20 per month. Fees are to be paid *This procedure can be completed simultaneously with previous procedure. at the end of the month for the membership for the preceding month. Procedure 5. Buy a company stamp STARTING A BUSINESS Time: 1 day Mostar, Bosnia and Herzegovina Cost: BAM 40 Standard company legal form: Limited Liability Company (LLC) Comments: In Mostar, there are several private workshops which specialize in Minimum capital requirement: BAM 2,000 (US$ 1,434) making company stamps. To have the stamp made, it is necessary to present court Data as of: January 2011 registration of the company which proves the ownership structure and right to represent the company. Details on the shape, size and sign of the stamp are specified Procedure 1. Stipulate a founding act and have it notarized in the founding acts of the company. Time: 4 days Cost: BAM 335 (BAM 300 to stipulate founding acts + BAM 15 for court registration + Procedure 6. Request and obtain municipal approval on intended BAM 20 to notarize a proof of occupancy of the office space) activities Time: 10 days Cost: No cost (cost paid in procedure 2) 58 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Comments: Company founder goes to the municipality, fills out a request form Procedure 12*. Adopt a Rulebook on matters of salary, work (available at municipality) and attaches all required documents (proof of company's organization, discipline, and other employee regulations court registration, statement confirming that all business premises fulfill conditions Time: 1 day mandated by the law, and notification about the date when the company will start with operations) and the proof of payment of the administrative fee of BAM 500 paid Cost: No cost (BAM 250 is the minimum cost if made by a lawyer, depending on in the local bank. complexity) Comments: The procedure applies to companies that hire more than 15 workers. Procedure 7. Notify the cantonal inspection authority of the start Company’s representative authorized to issue internal regulations shall pass the of company’s activity Rulebook. It is not required to publish the Rulebook as long as all company’s employees have equal access to it and the book is advertized in the common areas Time: 1 day of the company. Cost: No cost Comments: Company is required to submit (in person or by mail), at least 5 days *This procedure can be completed simultaneously with previous procedure. before start of work, following documents in 2 copies: a. Company's court registration; STARTING A BUSINESS b. Statement that all conditions of the working premises required by the law have Sarajevo, Bosnia and Herzegovina been fulfilled; Standard company legal form: Limited Liability Company (LLC) c. Notification of the date when the company will start with operations; Minimum capital requirement: BAM 2,000 (US$ 1,434) d. Municipal approval of intended activities. Data as of: January 2011 Inspection authority is required by law to inspect business premises within 30 days after receiving company's notification. Companies are allowed to start with work Procedure 1. Stipulate a founding act and have it notarized immediately on the date indicated in the notification submitted to the cantonal Time: 7 days inspection authority and do not need to wait for the inspection commission to come. By law, there is no fee associated with this procedure and no confirmation is to be Cost: BAM 400 received from the cantonal inspection authority. Comments: In order to have the founding acts stipulated by the notary, it is neces- sary to submit a copy of personal identification card, names of individuals who will Procedure 8. Apply for company identification number with the be representing the company and the proof of occupancy of the office space. After competent tax administration office notarizing the proof of occupancy, the notary retains one copy of the document while the company keeps the original. Time: 4 days Cost: No cost Procedure 2. Obtain a statement from a commercial bank that Comments: Newly adopted Rulebook (as published in the OG FBiH 02/10) regulates full amount of the minimum capital has been deposited new tax registration procedures that streamline the process for legal entities. In Time: 1 day accordance with the new Article 8a of this Rulebook, respective court and tax administration initiate tax registration by mutual official correspondence and legal Cost: No cost entities are only obliged to submit required documents (copy of court registry, 2 Comments: The founder should pay the amount of the capital to a temporary bank copies of application form including company stamp, and copies of ID cards) after account. The funds are to be subsequently transferred to a permanent company the court registration is completed. This Rulebook does not require submission of fol- transaction account once the company starts with operations. lowing documents (as previously requested): 1) contract on the lease of the business premises and 2) resolution of the competent municipality on the intended activities. Procedure 3. Obtain a statement from the tax authorities that the founders have no unpaid taxes Procedure 9. Open a company account at a commercial bank Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: The newly founded company closes the temporary account where it has Procedure 4. Court registration with the Municipal Court deposited the minimum capital requirement and transfers the funds to a permanent Time: 10 days company account opened at a commercial bank. To open the permanent account Cost: BAM 555 (BAM 405 for registration fee + BAM 150 for publishing fee) the following should be submitted: Comments: Companies voluntarily register for a membership at commercial cham- a. Copy of company’s court registration; bers on the cantonal and entity level. Membership fees are as following: b. Statistical number; - Entity level (Chamber of Commerce of Federation of Bosnia and Herzegovina): the c. Company's Identification Number; company may choose one of two options (a) a fee of 0.7% of the company’s gross d. Bank account application form. paid salaries for all employees; or (b) a fee based on the number of employees, (e.g., BAM 150 for 31–50 employees). Procedure 10. Enroll employees in Pension Insurance with the - Cantonal (Chamber of Commerce of Sarajevo Canton): membership fee is based Pension Insurance Institute (Zavod za penziono osiguranje) on the number of employees (BAM 3.5 per employee) but it cannot be smaller than Time: 1 day BAM 30 per month. Fees are to be paid at the end of the month for the membership for the preceding month. Cost: BAM 1 (application form) Comments: The following documents are needed: Procedure 5. Buy a company stamp a. Copy of employees contracts; Time: 1 day b. Copy of the company’s court registration; Cost: BAM 40 c. Form M2; Comments: In Sarajevo, there are several private workshops which specialize in d. Employees Work Booklets. making company stamps. To have the stamp made, it is necessary to present court registration of the company which proves the ownership structure and right to Procedure 11. Enroll employees in Health Insurance with the represent the company. Details on the shape, size and sign of the stamp are specified Health Insurance Institute (Zavod za zdravstveno osiguranje) in the founding acts of the company. Time: 1 day Cost: BAM 1 (application form) Procedure 6. Request and obtain municipal approval on intended activities Comments: The following documents are needed for application purposes: Time: 10 days a. Application for pension insurance; Cost: BAM 10 b. Application for health insurance (Form ZO1); c. Employees' identification cards; d. Employees Health Booklets. LIST OF PROCEDURES • STARTING A BUSINESS 59 Comments: Company founder goes to the municipality, fills out a request form Comments: The following documents are needed for application purposes: (available at municipality) and attaches all required documents (proof of company's a. Application for pension insurance; court registration, statement confirming that all business premises fulfill conditions b. Application for health insurance (Form ZO1); mandated by the law, and notification about the date when the company will start with operations) and the proof of payment of the administrative fee of BAM 10 paid c. Employees' identification cards; at the municipality. d. Employees Health Booklets. Procedure 7. Notify the cantonal inspection authority of the start Procedure 12*. Adopt a Rulebook on matters of salary, work of company’s activity organization, discipline, and other employee regulations Time: 1 day Time: 1 day Cost: BAM 2 (administrative fee) Cost: No cost (BAM 250 is the minimum cost if made by a lawyer, depending on Comments: Company is required to submit (in person or by mail), at least 5 days complexity) before start of work, following documents in 2 copies: Comments: The procedure applies to companies that hire more than 15 workers. a. Company's court registration; Company’s representative authorized to issue internal regulations shall pass the Rulebook. It is not required to publish the Rulebook as long as all company’s b. Statement that all conditions of the working premises required by the law have employees have equal access to it and the book is advertized in the common areas been fulfilled; of the company. c. Notification of the date when the company will start with operations; d. Municipal approval of intended activities. *This procedure can be completed simultaneously with previous procedure. Inspection authority is required by law to inspect business premises within 30 days after receiving company's notification. Companies are allowed to start with work im- STARTING A BUSINESS mediately on the date indicated in the notification submitted to the cantonal inspec- tion authority and does not need to wait for the inspection commission to come. Pristina, Kosovo By law, there is no fee associated with this procedure and no confirmation is to be re- Standard company legal form: Limited Liability Company (LLC) ceived from the cantonal inspection authority. Some municipalities in Sarajevo may Minimum capital requirement: EUR 2,500 (US$ 3,543) charge small administrative fees. For example, companies registered in municipality Data as of: January 2011 Novo Sarajevo will have to buy a tax stamp (available at any postal service office) and attach it to other documents to be sent to municipality. In other municipalities, this Procedure 1. Open a bank account and deposit the minimum procedure is free. chartered capital Time: 1 day Procedure 8. Apply for company identification number with the Cost: EUR 5 competent tax office Comments: Within 14 days from the day of incorporation, the company needs to Time: 15 days submit proof of depositing the minimum capital to the Kosovo Business Registration Cost: No cost Agency (KBRA). Comments: Newly adopted Rulebook (as published in the OG FBiH 02/10) regulates new tax registration procedures that streamline the process for legal entities. In Procedure 2. Request and obtain the Business Certificate and accordance with the new Article 8a of this Rulebook, respective court and tax the ‘Business Information’ document from the Kosovo Business administration initiate tax registration by mutual official correspondence and legal Registration Agency (KBRA) entities are only obliged to submit required documents (copy of court registry, 2 Time: 10 days copies of application form including company's stamp, and copies of ID cards) after the court registration is completed. This Rulebook does not require submission of fol- Cost: No cost lowing documents (as previously requested): 1) contract on the lease of the business Comments: In order to complete the registration process, the following documents premises and 2) resolution of the competent municipality on the intended activities. should be submitted to KBRA: a. Business registration form—can be downloaded from the website at www.arbk. Procedure 9. Open a company account at a commercial bank org; Time: 1 day b. Statute of company; Cost: No cost c. Title certificate or lease contract; Comments: The newly founded company closes the temporary account where it has d. Copies of ID cards of all shareholders; deposited the minimum capital requirement and transfers the funds to a permanent e. A resolution showing the decision to establish a business in Kosovo. company account opened at a commercial bank. To open the permanent account There is no requirement to reserve the company name prior to registration. Business the following documents should be submitted: names can be duplicates. It is enough to include the name of the business in the a. Copy of company’s court registration; registration form. b. Statistical number; c. Company identification number; Procedure 3. Pay business registration fee at a bank d. Bank account application form. Time: 1 day Cost: EUR 24 Procedure 10. Enroll employees in Pension Insurance with the Pension Insurance Institute (Zavod za penziono osiguranje) Procedure 4. Make a company seal Time: 1 day Time: 1 day Cost: BAM 1 (application form) Cost: EUR 35 (EUR 20 to EUR 50) Comments: The following documents are needed: Comments: The seal is not legally required. However, the majority of businesses a. Copy of employees contracts; make a seal and use it in their interaction with authorities. Cost is between EUR 20 b. Copy of the company’s court registration; and EUR 50. c. Form M2; Procedure 5. Request and obtain a municipal business permit d. Employees Work Booklets. Time: 30 days Procedure 11. Enroll employees in Health Insurance with the Cost: No cost (cost paid in procedure 6) Health Insurance Institute (Zavod za zdravstveno osiguranje) Comments: The municipal permit fee is paid annually. The cost depends on the commercial activity and ranges between EUR 50 and EUR 1,000. Time: 1 day Cost: BAM 1 (application form) 60 DOING BUSINESS IN SOUTH EAST EUROPE 2011 STARTING A BUSINESS Procedure 6*. Request and obtain inspection from the Municipal Technical Committee Prizren, Kosovo Time: 5 days Standard company legal form: Limited Liability Company (LLC) Cost: EUR 575 (EUR 525 for municipal business permit + EUR 50 for inspection) Minimum capital requirement: EUR 2,500 (US$ 3,543) Comments: After obtaining the Business Registration Certificate from KBRA, the Data as of: January 2011 party must request the Municipal Technical Committee to inspect sanitary conditions and safety of the premises. Procedure 1. Open a bank account, deposit the minimum chartered capital, and pay business registration fee Procedure 7. Request and obtain a fiscal number from the Tax Time: 1 day Administration of Kosovo (TAK) at the Ministry of Economy and Cost: EUR 23 (EUR 10 for registration fee + EUR 10 for statute registration fee + EUR 2 Finance (MEF) for Business Certificate fee + EUR 1 for bank transaction fee) Time: 7 days Comments: Within 14 days from the day of incorporation, the company needs to Cost: No cost submit proof of depositing the minimum capital to the Kosovo Business Registration Agency (KBRA). Comments: Within 15 days, all business organizations registered with KBRA must apply for a fiscal number at TAK before beginning any economic activity. Procedure 2. Request and obtain the Business Certificate and The following documents should be submitted: the ‘Business Information’ document at the Kosovo Business a. Business Certificate; Registration Agency (KBRA) b. 'Business Information' document; Time: 10 days c. Copy of ID card of the owner or authorized person of the company; Cost: EUR 3 (travel expense to Pristina) d. The bank account history in the last 6 months; Comments: Business registration can only be done at the KBRA office in Pristina. As e. Fiscal number application form, which can be obtained from the TAK office or of now, KBRA does not have any office in Prizren. There are plans to open such offices downloaded from: http://www.atk-ks.org/nr-fiskal . in several centers throughout Kosovo. According to article 5, paragraph 3 of Administrative Instruction No. 07/2009 on In order to complete the registration process, the following documents should be Registration, Deregistration and Issuance of Fiscal Number, TAK must make a deci- submitted to KBRA: sion on whether to issue a fiscal number within 10 working days after receiving the a. Business registration form—can be downloaded from the website at www.arbk. application. In practice, it takes around 7 calendar days to issue the fiscal number. org ; b. Statute of company; Procedure 8*. Receive inspection of the business premise from the Tax Administration of Kosovo (TAK) c. Title certificate or lease contract; d. Copies of ID cards of all shareholders; Time: 1 day e. A resolution showing the decision to establish a business in Kosovo. Cost: No cost There is no requirement to reserve the company name prior to registration. Business Comments: TAK may conduct a visit to the business premise to inspect the site prior names can be duplicates. It is enough to include the name of the business in the to issuing a fiscal number. The entrepreneur must be present at the site when the registration form. inspection is conducted. Procedure 9. Register the company for Value Added Tax (VAT) Procedure 3. Make a company seal with the Tax Administration of Kosovo (TAK) at the Ministry of Time: 1 day Economy and Finance (MEF) Cost: EUR 30 (EUR 15 to EUR 45) Time: 7 days Comments: The seal is not legally required. However, the majority of businesses make a seal and use it in their interactions with authorities. Cost varies between EUR Cost: No cost 15 and EUR 45. Comments: The Value Added Tax application is required only for companies with a yearly turnover larger than EUR 50,000. The VAT registration form can be obtained Procedure 4. Request and obtain a confirmation letter proving from TAK offices or downloaded from the following internet link: http://apps.atk-ks. that property tax in the leased premises has been paid org/edeclarations/PDFTemplates/FRTVSH_sq-AL.pdf . A VAT Registration Certificate will be issued showing the business name, the Business Registration Number (BRN) Time: 1 day and the principal address of the business. Cost: No cost Comments: The confirmation letter is issued by the Municipal Directorate of Finance Procedure 10. Register employees for the Pension Fund with the and Economy (MDFE). Tax Administration of Kosovo (TAK) at the Ministry of Economy and Finance (MEF) Procedure 5. Request a municipal business permit and obtain Time: 1 day invoice for permit fee Cost: No cost Time: 1 day Comments: Registering employees for the Pension Fund requires submission of the Cost: EUR 30 (application fee) following documents: Comments: Business permit request is made at the Municipal Directorate of Finance a. Business Registration Certificate; and Economy (MDFE). MDFE issues an invoice with the business permit annual fee b. Copy of ID cards of all employees; to be paid at a local bank. Based on a Municipal Assembly decision on June 18, 2009 about "the Municipal Fees, Taxes, and Fines", the business permit application fee is c. Registration Form. EUR 30. *This procedure can be completed simultaneously with previous procedure. Procedure 6*. Request consent from the Municipal Inspectorate Time: 1 day Cost: EUR 45 (EUR 15 for each inspector) Comments: Municipal Inspectorate sends a team of 3 inspectors/ experts to the business premises: sanitary inspector, trade inspector, and a sector inspector special- ized in the type of business the company plans to perform. Based on a Municipal Assembly decision issued on June 18, 2009, about "the Municipal Fees, Taxes, and Fines", the inspection cost is EUR 45 or EUR 15 for each inspector. LIST OF PROCEDURES • STARTING A BUSINESS 61 STARTING A BUSINESS Procedure 7*. Pay annual business permit fee at a local bank Time: 1 day Bitola, FYR Macedonia Cost: EUR 401 (EUR 400 for business permit fee + EUR 1 for bank transaction fee) Standard company legal form: Limited Liability Company (LLC) Comments: Based on a Municipal Assembly decision on June 18, 2009 about "the Minimum capital requirement: none Municipal Fees, Taxes, and Fines", the annual business permit fee for limited liability Data as of: January 2011 companies (classified under municipal category B) is EUR 400. Procedure 1. Notarize incorporation documents Procedure 8. Receive inspection by the Municipal Inspectorate Time: 1 day and obtain business permit Cost: MKD 1,050 (MKD 500 for notarizing the articles of incorporation—MKD 100 Time: 7 days per signature for 5 co-founders + MKD 250 for court tax + MKD 300 for notarizing the signature specimen of the manager—MKD 150 per copy) Cost: No cost Comments: To register a limited liability company (LLC) articles of incorporation and Comments: Inspectors cited in Procedure 6 perform an inspection of the business signature specimen of the manager need to be notarized. Following the amend- premises and approve the business permit. ments to the Trade Company Law from 2008 and 2010, it is no longer necessary to notarize the statements based on articles 29, 32 and 183 of the Law. The company Procedure 9. Request and obtain a fiscal number from the Tax founders must pay for two notarized copies of the signature specimen of the man- Administration of Kosovo (TAK) at the Ministry of Economy and ager: one for their own and another filed with the notary. Finance (MEF) Time: 10 days Procedure 2. Procure extract of criminal record from the local Cost: No cost Primary Court confirming that the manager is eligible to run the Comments: Within 15 days, all business organizations registered with KBRA must company apply for a fiscal number at TAK before beginning any economic activity. Time: 1 day The following documents should be submitted: Cost: MKD 400 a. Business Certificate; Comments: Although there is no legal basis for submitting the extract in practice, b. 'Business Information' document; this document is still required. The competent authority for issuing the extract is the c. Copy of ID card of the owner or authorized person of the company; Primary Court of the municipality listed as the manager's residence. d. The bank account history in the last 6 months; Procedure 3. Register company with the Central Registry e. Fiscal number application form, which can be obtained from the TAK office or Time: 1 day downloaded from: http://www.atk-ks.org/nr-fiskal . Cost: MKD 2,399 According to article 5, paragraph 3 of Administrative Instruction No. 07/2009 on Registration, Deregistration and Issuance of Fiscal Number, TAK must make a deci- Comments: The company founders can prepare the registration documents by sion on whether to issue a fiscal number within 10 working days after receiving the themselves. The company registration form can be downloaded from the Central application. In practice, it takes around 7 calendar days to issue the fiscal number. Registry website (www.crm.com.mk). The uniqueness of the company name can also be verified online. The one-stop shop system became effective on January 1, 2006. Procedure 10. Register the company for Value Added Tax (VAT) The procedure at the Central Registry covers: with the Tax Administration of Kosovo (TAK) at the Ministry of a. Registration of the company in the Trade Register; Economy and Finance (MEF) b. Providing the company with a unique identification number; Time: 2 days c. Opening the bank account for the company; Cost: No cost d. Providing the company with a unique tax number; Comments: The Value Added Tax application is required only for companies with a e. Publishing the company's creation notice on the website of the Central Registry yearly turnover larger than EUR 50,000. The VAT registration form can be obtained (www.crm.com.mk). from TAK offices or downloaded from the following internet link: http://apps.atk-ks. org/edeclarations/PDFTemplates/FRTVSH_sq-AL.pdf . A VAT Registration Certificate Procedure 4. Make a company seal will be issued showing the business name, the Business Registration Number (BRN) Time: 1 day and the principal address of the business. Cost: MKD 900 (MKD 200 to MKD 2,000) Procedure 11. Register employees for the Pension Fund with the Comments: The fee may vary from MKD 200 to MKD 2,000 depending on the type and quality of the material for the seal. The company certificate of registration is Tax Administration of Kosovo (TAK) at the Ministry of Economy required. and Finance (MEF) Time: 1 day Procedure 5. Register employees at the Employment Agency Cost: No cost Time: 1 day Comments: Registering employees for the Pension Fund requires submission of the Cost: No cost following documents: Comments: Employees can be registered at the Employment Agency by submitting a. Business Registration Certificate; forms M1 and M2 that can be downloaded from the website of the Employment b. Copy of ID cards of all employees; Agency. With the integration of collecting social contributions and personal income c. Registration Form. tax through the Public Revenue Office in January 2009, employee data is automati- cally transferred to the Health Insurance Fund and the Pension Fund and it is not *This procedure can be completed simultaneously with previous procedure. necessary to register employees with these institutions separately. It is expected that in 2011 it would be possible to register the first employees with the Employment Agency through the Central Registry at the time of registration. 62 DOING BUSINESS IN SOUTH EAST EUROPE 2011 STARTING A BUSINESS Procedure 2. Procure extract of criminal record from the local Skopje, FYR Macedonia Primary Court confirming that the manager is eligible to run the Standard company legal form: Limited Liability Company (LLC) company Minimum capital requirement: none Time: 1 day Data as of: January 2011 Cost: MKD 400 Comments: Although there is no legal basis for submitting the extract in practice, Procedure 1. Notarize incorporation documents this document is still required. The competent authority for issuing the extract is the Time: 1 day Primary Court of the municipality listed as the manager's residence. Cost: MKD 1,050 (MKD 500 for notarizing the articles of incorporatio—MKD 100 per signature for 5 co-founders + MKD 250 for court tax + MKD 300 for notarizing the Procedure 3. Register company with the Central Registry signature specimen of the manager—MKD 150 per copy) Time: 1 day Comments: To register a limited liability company (LLC) articles of incorporation and Cost: MKD 2,399 signature specimen of the manager need to be notarized. Following the amend- ments to the Trade Company Law from 2008 and 2010, it is no longer necessary to Comments: The company founders can prepare the registration documents by notarize the statements based on articles 29, 32 and 183 of the Law. The company themselves. The company registration form can be downloaded from the Central founders must pay for two notarized copies of the signature specimen of the man- Registry website (www.crm.com.mk). The uniqueness of the company name can also ager: one for their own and another filed with the notary. be verified online. The one-stop shop system became effective on January 1, 2006. The procedure at the Central Registry covers: Procedure 2. Register company with the Central Registry a. Registration of the company in the Trade Register; Time: 1 day b. Providing the company with a unique identification number; Cost: MKD 2,399 c. Opening the bank account for the company; Comments: The company founders can prepare registration documents themselves. d. Providing the company with a unique tax number; A one-stop shop system was implemented on January 1, 2006. The Central Registry e. Publishing the company's creation notice on the website of the Central Registry of FYR Macedonia is the single institution for registering LLCs and other forms of (www.crm.com.mk). trade companies, foreign representative offices, and other entities. The registration process includes the following: Procedure 4. Make a company seal a. Registration of the company with the Trade Register; Time: 1 day b. Providing a statistical number; Cost: MKD 1,100 (MKD 400 to MKD 2,000) c. Opening the bank account for the company; Comments: The fee may vary from MKD 400 to MKD 2,000 depending on the type d. Registering the company in the Public Revenue Office–Tax Office; and quality of the material for the seal. The company certificate of registration is e. Publishing the company formation notice on the Central Registry’s website (www. required. crm.com.mk). Procedure 5. Register employees at the Employment Agency With the amendments on the Law on One Stop Shop (Official Gazette 150/2007 from 12.12.2007) connection is now established between the Central Registry and Time: 1 day the Employment Agency. Registration of first employment of directors with the Cost: No cost Employment Agency and registration of employees with the Social Fund can now be Comments: Employees can be registered at the Employment Agency by submitting done at the time of registration. As of now, the process has been streamlined only in forms M1 and M2 that can be downloaded from the website of the Employment Skopje. Other cities are to follow. Agency. With the integration of collecting social contributions and personal income tax through the Public Revenue Office in January 2009, employee data is automati- Procedure 3. Make a company seal cally transferred to the Health Insurance Fund and the Pension Fund and it is not Time: 1 day necessary to register employees with these institutions separately. It is expected that Cost: MKD 1,400 (MKD 400 to MKD 2,400) in 2011 it would be possible to register the first employees with the Employment Agency through the Central Registry at the time of registration. Comments: The fee to make a company seal may vary from MKD 400 MKD 2,400, depending on the type and quality of the seal’s material. The company certificate of registration is required to process the request. STARTING A BUSINESS Balti, Moldova STARTING A BUSINESS Standard company legal form: Limited Liability Company (LLC) Tetovo, FYR Macedonia Minimum capital requirement: MDL 2,160 (US$ 190) Standard company legal form: Limited Liability Company (LLC) Data as of: January 2011 Minimum capital requirement: none Procedure 1. File all the documents for the registration of the Data as of: January 2011 company with the local branch of the State Registration Chamber Procedure 1. Notarize incorporation documents (SRC) and obtain IDNO number Time: 1 day Time: 1 day (expedited service) Cost: MKD 1,050 (MKD 500 for notarizing the articles of incorporation—MKD 100 Cost: MDL 1,981 (see comments) per signature for 5 co-founders + MKD 250 for court tax + MKD 300 for notarizing Comments: The official term for company registration is 5 working days. However, the signature specimen of the manager—MKD 150 per copy) an expedited option is available in which company registration can be completed Comments: To register a limited liability company (LLC) articles of incorporation and within 24 hours. signature specimen of the manager need to be notarized. Following the amend- The fee schedule for registering companies with the State Registration Chamber ments to the Trade Company Law from 2008 and 2010, it is no longer necessary to under the expedited procedure is: notarize the statements based on articles 29, 32 and 183 of the Law. The company a. State registration: MDL 1000; founders must pay for two notarized copies of the signature specimen of the man- b. Incorporation document preparation (editing): MDL 432; ager: one for their own and another filed with the notary. c. Name verification: MDL 39; d. Company name approval at the National Centre for Terminology: MDL 20; e. Certification of signatures by the State Registrar: MDL 10; f. Publication in the Official Gazette: MDL 54; g. Extract (for permanent bank account): MDL 252; h. Company stamp: MDL 150; LIST OF PROCEDURES • STARTING A BUSINESS 63 i. Stamp sketches: MDL 15; Procedure 7. Register the company with the local office of the j. License fee (authorization for stamp manufacturing): MDL 9. National Social Security Fund (NSSF) The following documents must be submitted to SRC in order to register a limited Time: 1 day liability company: Cost: No cost a. Filled application form (template provided by SRC); Comments: Every company should receive an individual social security number b. Decision on incorporation of the company approved by founder/s; for each employee. The Law of the Republic of Moldova No. 383-XV (of November c. Incorporation documents; 11, 2004), "On the State Social Security Budget 2005," states that the company d. Document confirming payment of applicable registration fees. must complete a questionnaire for each employee and to present it, along with the Law No. 184/15.07.2010 eliminated the requirement to present a document confirm- copy of the employee’s identification card, to NSSF within 10 days of signing of the ing payment of share capital. labor contract. Later, the company should present the report every 3 months to the National Social Security Fund. A Unique State Identification Number (IDNO) is attributed to each legal entity at the date of its registration. It is inserted in the Registration Certificate and in the Regarding the "one stop shop" principle, the same comment as in procedure 5 constitutive act. applies. Procedure 2*. Open a temporary bank account and deposit at Procedure 8. Register the company with the local office of the least 40% of the registered capital of the company, and pay the National Medical Insurance Company (NMIC) registration fee Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: After registering with the State Registration Chamber, the company must register with the local office of NMIC within 10 days. The medical insurance agree- Comments: At registration, at least 40% of each founder’s declared contribution to ment must be concluded. The company must submit monthly reports on the calcula- company capital should be paid in. The other 60% must be paid within 6 months of tion and the transfer of compulsory insurance payments to the Tax Inspectorate. registration. Law No. 135/14.06.2007 on limited liability companies sets the mini- mum capital requirement at MDL 5,400. Payment of minimum capital requirement is Regarding the "one stop shop" principle, the same comment as in procedure 5 a prerequisite for the establishment of a company (Article 110 of the Civil Code). applies. Procedure 3*. Obtain Registration Certificate and an official *This procedure can be completed simultaneously with previous procedure. company stamp from the local branch of the State Registration Chamber (SRC) STARTING A BUSINESS Time: 1 day Chisinau, Moldova Cost: No cost (cost paid in procedure 1) Standard company legal form: Limited Liability Company (LLC) Comments: SRC will issue the official stamp along with the registration certificate, Minimum capital requirement: MDL 2,160 (US$ 190) after verifying the identity of company's founders. Data as of: January 2011 Procedure 4. Register with the local Tax Inspectorate of the Procedure 1. File all the documents for the registration of the Ministry of Finance company with the local branch of the State Registration Chamber Time: 1 day (SRC) and obtain IDNO number Cost: No cost Time: 1 day (expedited service) Comments: Newly registered companies should register with the Tax Inspectorate. Cost: MDL 1,981 (see comments) Upon presenting the Company Registration Certificate, the Inspectorate will register Comments: The official term for company registration is 5 working days. However, the company and assign it a tax identification number. Only companies that intend an expedited option is available in which company registration can be completed to sell VAT-taxable goods and services for an amount exceeding MDL 600,000 during within 24 hours. 12 consecutive months must obtain a VAT code. The fee schedule for registering companies with the State Registration Chamber under the expedited procedure is: Procedure 5. Register the company with the local Bureau of a. State registration: MDL 1000; Statistics b. Incorporation document preparation (editing): MDL 432; Time: 1 day c. Name verification: MDL 39; Cost: No cost d. Company name approval at the National Centre for Terminology: MDL 20; Comments: After the registration is completed, the company must register with the local office of Bureau of Statistics, which will assign the company a statistical code. e. Certification of signatures by the State Registrar: MDL 10; This code will be assigned according to the activities established in the company’s f. Publication in the Official Gazette: MDL 54; constitutive act and according to the company’s territorial location. g. Extract (for permanent bank account): MDL 252; Law No. 127/18.06.2010 introduced the principle of "one stop shop" under which h. Company stamp: MDL 150; the State Registration Chamber facilitates the registration of the company with i. Stamp sketches: MDL 15; the National Bureau of Statistics, Social Security and Medical Insurance. In practice, entrepreneurs still file their application in person because there are penalties for j. License fee (authorization for stamp manufacturing): MDL 9. failure to register. The “one stop shop" is still in the process of implementation and is The following documents must be submitted to SRC in order to register a limited not fully functional. liability company: a. Filled application form (template provided by SRC); Procedure 6. Convert the company’s temporary bank account to a b. Decision on incorporation of the company approved by founder/s; permanent one c. Incorporation documents; Time: 1 day d. Document confirming payment of applicable registration fees. Cost: No cost Law No. 184/15.07.2010 eliminated the requirement to present a document confirm- Comments: To convert the company’s temporary bank account to a permanent ing payment of share capital. account, the founder must present to the bank: A Unique State Identification Number (IDNO) is attributed to each legal entity at a. Copy of the certificate of registration; the date of its registration. It is inserted in the Registration Certificate and in the b. Copy of incorporation documents; constitutive act. c. Copies of identification cards of company founders; d. Notarized signature cards. 64 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 2*. Open a temporary bank account and deposit at Procedure 8. Register the company with the National Medical least 40% of the registered capital of the company, and pay the Insurance Company (NMIC) registration fee Time: 2 days Time: 1 day Cost: No cost Cost: No cost Comments: After registering with the State Registration Chamber, the company Comments: At registration, at least 40% of each founder’s declared contribution to must register with the local office of NMIC within 10 days. The medical insurance company capital should be paid in. The other 60% must be paid within 6 months of agreement must be concluded. The company must submit monthly reports on the registration. Law No. 135/14.06.2007 on limited liability companies sets the mini- calculation and the transfer of compulsory insurance payments to the Tax Inspector- mum capital requirement at MDL 5,400. Payment of minimum capital requirement is ate. a prerequisite for the establishment of a company (Article 110 of the Civil Code). Regarding the "one stop shop" principle, the same comment as in procedure 5 applies. Procedure 3*. Obtain Registration Certificate and an official company stamp from the local branch of the State Registration *This procedure can be completed simultaneously with previous procedure. Chamber (SRC) Time: 1 day STARTING A BUSINESS Cost: No cost (cost paid in procedure 1) Niksic, Montenegro Comments: SRC will issue the official stamp along with the registration certificate, Standard company legal form: Limited Liability Company (LLC) after verifying the identity of company's founders. Minimum capital requirement: EUR 1 (US$ 1.4) Procedure 4. Register with the local Tax Inspectorate of the Data as of: January 2011 Ministry of Finance Procedure 1. Notarize company's incorporation act at the Primary Time: 2 days (1-3 days) Court Cost: No cost Time: 1 day Comments: Newly registered companies should register with the Tax Inspectorate. Cost: EUR 12 (EUR 2 for request + EUR 10 for notarization) Upon presenting the Company Registration Certificate, the Inspectorate will register Comments: Montenegro does not have public notaries yet, but the profession is the company and assign it a tax identification number. Only companies that intend expected to develop soon. It is required that documents are notarized by the courts. to sell VAT-taxable goods and services for an amount exceeding MDL 600,000 during In accordance with the Law on Improvement of the Business Environment from July 12 consecutive months must obtain a VAT code. 2010 (Official Gazette No. 40/10), the fee for notarizing contracts has been decreased to EUR 10 for all documents regardless of the number of pages and signatories. Procedure 5. Register the company with the National Bureau of Statistics (NBS) Procedure 2. Register the company at the Central Registry of the Time: 1 day Commercial Court (CRCC) and obtain a statistical number Cost: No cost Time: 2 days Comments: After the registration is completed, the company must register with Cost: EUR 28 (EUR 10 for registration + EUR 12 for publication fee + EUR 6 for travel NBS, which will assign the company a statistical code. This code will be assigned ac- expenses to Podgorica) cording to the activities established in the company’s constitutive act and according Comments: The only registry in Montenegro is in Podgorica (in the Commercial to the company’s territorial location. Court building). The registry is computerized. The registration form can be down- Law No. 127/18.06.2010 introduced the principle of "one stop shop" under which loaded from CRCC website (http://www.crps.me/index.php/en/law-and-regulations). the State Registration Chamber facilitates the registration of the company with CRCC prepares the text for the announcement of the incorporation of the company. NBS, Social Security, and Medical Insurance. In practice, entrepreneurs still file their CRCC also estimates the publication fee (based on the length of the notice) and application in person because there are penalties for failure to register. The “one stop sends all notices to the Official Gazette, which publishes them in the upcoming issue shop" is still in the process of implementation and is not fully functional. (usually after 10-15 days). Subsequent procedures do not depend on the announce- ment, so the client can continue to incorporate the company regardless of the Procedure 6. Convert the company’s temporary bank account to a publication date. Since April 2010, companies can obtain a statistical number at the permanent one time of company registration. Time: 1 day Cost: No cost Procedure 3. Make a company seal Comments: To convert the company’s temporary bank account to a permanent Time: 1 day account, the founder must present to the bank: Cost: EUR 30 a. Copy of certificate of registration; Comments: The company seal is a core instrument in the company's legal transac- b. Copy of incorporation documents; tions. The company must order a seal or stamp upon registering with CRCC because it is essential for subsequent company transactions. The seal is made on the day it is c. Copies of identification cards of company founders; ordered. d. Notarized signature cards. Procedure 4. Open a bank account Procedure 7. Register the company with the National Social Time: 1 day Security Fund (NSSF) Cost: No cost Time: 1 day Comments: Opening a bank account is a prerequisite for tax registration. Cost: No cost Comments: Every company should receive an individual social security number Procedure 5. Report company activity to the Municipal for each employee. The Law of the Republic of Moldova No. 383-XV (of November Secretariat for Economy and Finance (MSEF) 11, 2004), "On the State Social Security Budget 2005," states that the company Time: 1 day must complete a questionnaire for each employee and to present it, along with the copy of the employee’s identification card, to NSSF within 10 days of signing of the Cost: EUR 2 labor contract. Later, the company should present the report every 3 months to the Comments: With the introduction of the Law on Domestic Trade in 2008, companies National Social Security Fund. are no longer required to obtain an operation license, but only to report their activity Regarding the "one stop shop" principle, the same comment as in procedure 5 and location to MSEF. applies. LIST OF PROCEDURES • STARTING A BUSINESS 65 Procedure 6. General tax registration of the company with the Procedure 4. Open a bank account municipal tax administration Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: Opening a bank account is a prerequisite for tax registration. Comments: In accordance with the Rulebook for the form and content of the single application form for registering taxpayers, social contributions beneficiaries and the Procedure 5. Report company activity to the Municipal insured, which became effective on March 1, 2010, registration of employees with Secretariat for Economy and Finance (MSEF) the Employment Bureau, Pension Fund, Health Fund, and registration for income tax Time: 1 day was unified in one form (JPR) and one procedure that can be completed at the local Tax Administration office in one day at no cost. The following documents should be Cost: EUR 2 submitted: Comments: With the introduction of the Law on Domestic Trade in 2008, companies а. Аpplication form; are no longer required to obtain an operation license, but only to report their activity and location to MSEF. b. Copy of Company Registration Certificate; c. Company identification number; Procedure 6. General tax registration of the company with the d. Proof of an existing company bank account; municipal tax administration e. Proof that company activity is reported to municipal authorities; Time: 1 day f. Identification documents of company managers and employees. Cost: No cost The tax number always matches the company's ID number. A tax inspection is not Comments: In accordance with the Rulebook for the form and content of the single required prior to issuing the tax number. application form for registering taxpayers, social contributions beneficiaries and the insured, which became effective on March 1, 2010, registration of employees with Procedure 7. Register company for value added tax (VAT) the Employment Bureau, Pension Fund, Health Fund, and registration for income tax Time: 1 day was unified in one form (JPR) and one procedure that can be completed at the local Tax Administration office in one day at no cost. The following documents should be Cost: No cost submitted: Comments: Once the company is registered for income tax, only an application а. Аpplication form; form, duly completed, signed and stamped, is required. b. Copy of Company Registration Certificate; STARTING A BUSINESS c. Company identification number; d. Proof of an existing company bank account; Pljevlja, Montenegro e. Proof that company activity is reported to municipal authorities; Standard company legal form: Limited Liability Company (LLC) f. Identification documents of company managers and employees. Minimum capital requirement: EUR 1 (US$ 1.4) The tax number always matches the company's ID number. A tax inspection is not Data as of: January 2011 required prior to issuing the tax number. Procedure 1. Notarize company's incorporation act at the Primary Court Procedure 7. Register company for value added tax (VAT) Time: 1 day Time: 1 day Cost: No cost Cost: EUR 12 (EUR 2 for request + EUR 10 for notarization) Comments: Once the company is registered for income tax, only an application Comments: Montenegro does not have public notaries yet, but the profession is form, duly completed, signed and stamped, is required. expected to develop soon. It is required that documents are notarized by the courts. In accordance with the Law on Improvement of the Business Environment from July 2010 (Official Gazette No. 40/10), the fee for notarizing contracts has been decreased STARTING A BUSINESS to EUR 10 for all documents regardless of the number of pages and signatories. Podgorica, Montenegro Procedure 2. Register the company at the Central Registry of the Standard company legal form: Limited Liability Company (LLC) Commercial Court (CRCC) and obtain a statistical number Minimum capital requirement: EUR 1 (US$ 1.4) Time: 2 days Data as of: January 2011 Cost: EUR 37 (EUR 10 for registration + EUR 12 for publication fee + EUR 15 for travel Procedure 1. Certify the company’s founding agreements expenses to Podgorica) Time: 1 day Comments: The only registry in Montenegro is in Podgorica (in the Commercial Cost: EUR 21 (EUR 13 for court + EUR 2 per document) Court building). The registry is computerized. The registration form can be down- loaded from CRCC website (http://www.crps.me/index.php/en/law-and-regulations). Comments: The Republic of Montenegro still has no public notaries, but the profes- CRCC prepares the text for the announcement of the incorporation of the company. sion is expected to develop soon. According to the new changes of the Law on CRCC also estimates the publication fee (based on the length of the notice) and Companies (Official Gazette of Montenegro nos. 6/02, 17/07 & 80/08), lawyers are sends all notices to the Official Gazette, which publishes them in the upcoming issue no longer authorized to do the certification of corporate documents. The applicant (usually after 10-15 days). Subsequent procedures do not depend on the announce- certifies company documents at the basic court and copies at municipalities. Certifi- ment, so the client can continue to incorporate the company regardless of the cation fees vary depending on the number of pages and documents. publication date. Since April 2010, companies can obtain a statistical number at the time of company registration. Procedure 2. Register the company at the Central Registry of the Commercial Court (CRCC) and obtain a statistical number Procedure 3. Make a company seal Time: 2 days Time: 1 day Cost: EUR 22 (EUR 10 for registration fee + EUR 12 for publication fee) Cost: EUR 20 Comments: The only registry in Montenegro is in Podgorica (in the Commercial Comments: The company seal is a core instrument in the company's legal transac- Court building). The registry is computerized. The legal time limit for registration is 4 tions. The company must order a seal or stamp upon registering with CRCC because days, but in practice, the registry completes the registration in 2 days. it is essential for subsequent company transactions. The seal is made on the day it is The applicant checks the company name online and then comes to the registry ordered. located at the commercial court with completed documents and register the name and company. At the registry a counter exist for LLC registration and payment of relevant fees can be done at the same place. 66 DOING BUSINESS IN SOUTH EAST EUROPE 2011 The Company Registry prepares text for the announcement of company formation. STARTING A BUSINESS The Registry also estimates the publication fee (based on notice length) and sends Belgrade, Serbia all notices to the Official Gazette, which are published in the upcoming issue. Publication lead time is 10–15 days. Subsequent procedures do not depend on the Standard company legal form: Limited Liability Company (LLC) announcement, so the client can continue to incorporate the company regardless of Minimum capital requirement: RSD 23,068 (US$ 357) the publication date. Data as of: January 2011 Required documents for registration are: Procedure 1. Notarize the memorandum of association and lease a. Foundation act; contract at the Basic Court b. Statute; Time: 1 day c. List of founders, members of a company, managers and members of the board of directors, if they are appointed; Cost: RSD 22,503 (see comments) d. Name of the executive director; Comments: The notarization cost depends on the amount of capital and the value of the lease. The promoters must notarize at least four copies of the memorandum of e. Name of the company, address of the company's headquarters and address for association and the lease contract. receiving official correspondence, if they are different; As of July 2009, the Law on Court Taxes established a new fee schedule based on the f. Persons authorized to represent the company and information if the representa- incorporation contract value (start-up capital): tion is collective or individual; a. Incorporation contract value of up to RSD 10,000: RSD 980; g. Written consent of the members of board of director for their appointment, if they have been appointed; b. From RSD 10,001 to RSD 100,000: RSD 980 plus 1% of contract value; h. Receipt confirming payment of registration fee. c. From RSD 100,001 to RSD 1,000,000: RSD 2,900 plus 0.5% of contract value; d. Over RSD 1,000,000: RSD 12,600 plus 0.25% of contract value; Procedure 3. Make a company seal Note that the fee will not exceed RSD 39,000. Time: 1 day In addition, the promoter will be assessed miscellaneous fees to notarize the lease Cost: EUR 35 (EUR 30 to EUR 40) contract and the memorandum of association: Comments: The company seal is a core instrument in the company's legal transac- a. Notarization request: RSD 70 (applies to one or several documents); tions. The company must order a seal or stamp upon registering with the Company b. Notarization of signature specimen with competent court: RSD 160 per signature; Registry because it is essential for subsequent company transactions. The seal is c. Signature verification of proxy (power of attorney): RSD 560. made on the day it is ordered. Procedure 2. Open a temporary bank account; pay founding Procedure 4. Open a bank account deposit or its part and all other fees Time: 1 day Time: 1 day Cost: No cost Cost: No cost Comments: Opening a bank account is a prerequisite for tax registration. Comments: The founding deposit is paid to a temporary account at one of the commercial banks. The decision or contract of incorporation must be submitted to Procedure 5. Register the company with the tax authorities, the chosen bank to open a temporary bank account. At least half of the initial capital Employment Bureau, Health Fund and Pension Disability Fund is payable in advance, and the rest is due within 2 years of registration. After registra- Time: 3 days tion is completed, the funds are transferred to a company Giro-account (permanent Cost: No cost account), which may be used for business transactions. The company must obtain a payment slip from the bank. Comments: A single registration form is submitted to the tax authorities in order to register the company at: Procedure 3. Apply and obtain Registration Certificate, tax a. The taxpayers office; identification number, pension fund (PIO Fund) and Health Fund b. The Employment Bureau; certificates, certify the signatures (three copies) for opening c. The Health Fund; bank account and register the employment contracts with the d. The Pension Disability Fund. Employment Organization at the Serbian Business Registers This single registration form replaces 16 different application forms that previously Agency (SBRA) should have been filed with 4 different authorities. Consolidation of registrations, Time: 3 days pursuant to new Rulebook is in place as of 1 March 2010. If the application form is Cost: RSD 5,750 (RSD 4,000 for application form + RSD 1,750 for the registration completed correctly, the company tax number and VAT number certificate are issued number and the code of the Republic Statistical Agency) in 2-3 days. The tax number always matches the company number. A tax inspection is not required before issuing the number. Comments: Under the Business Registration Law (effective July 2004), the company registration was transferred from the commercial courts to the Serbian Business Registers Agency (SBRA). Instead of two separate procedures, the SBRA now issues Procedure 6. Register company for value added tax (VAT) the registration number and code of the Republic Statistical Agency (RSA) simultane- Time: 1 day ously with the Registration Certificate. The Registry also administers the registration Cost: No cost with the tax authority and issues the Tax Identification Number (TIN). The local Comments: Once the company is registered for income tax, the only required docu- authority will require certain documentation from the company but only after the ment is an application form, duly completed, signed, and stamped. company is validly registered. Registration for pension fund (PIO Fund) and Health Fund, certification of the signatures (three copies) for opening bank account and Procedure 7. Notify the competent inspection authority and the registering the employment contracts with the Employment Organization are also municipal authority in charge of economic affairs done at SBRA. The company can obtain all forms on-line. The required forms for the establishment Time: 1 day of a company are: Cost: EUR 8 a. Company registration request and application form (downloaded from the SBRA Comments: New reforms have abolished the requirement of a municipal business website—www. apr.gov.rs—free of charge); license and made a notification sufficient. If the company is engaged in trade, it b. Request for opening an account and request for transfer of money from a tempo- pays the administrative fee in the amount of EUR 8 within the municipal authority in rary bank account to a company permanent account (requests are obtained from charge of economic affairs. a commercial bank free of charge); c. Tax identification number (TIN) application form—Form JRPPS-2 (downloaded from the SBRA website free of charge); d. Registration of lease questionnaire (obtained from the Tax Administration free of charge); LIST OF PROCEDURES • STARTING A BUSINESS 67 e. VAT Form (downloaded from the Tax Administration website—www.poreskaupra- d. Completed VAT registration form. Note that according to the amendment to va.gov.rs—free of charge); the Law on Value Added Tax adopted on June 30, 2007, the total (generated or f. Health Fund form OPD and Form M (obtained from the Post Office). projected) turnover which will oblige a company to submit a completed VAT registration form is increased from RSD 2 million (approx. EUR 20,000) to RSD 4 To register a company, the applicant must also submit additional documents: million (approx. EUR 40,000); a. Set of registration forms; e. Certified OP form; b. Contract of incorporation (deed on establishment) or decision on the company f. Statement on employed workers; founding with authenticated signatures of founder(s) that are notarized; g. Certified lists of taxpayer real estate, motor vehicles, and aircrafts; c. Decision of founders on appointment of the director; h. List of all stores and numbers of fiscal cash registers; d. Information on the founder(s) (i.e. registration documents if the founder is a legal entity or identity number and proof of registered residence if the founder i. Agreement concluded with the bookkeeping agency; is a physical person). If the documents are in a foreign language, they must be j. Copy of the agreement on opening of permanent bank account and a copy of translated into Serbian by an authorized court translator (fee is about RSD 800 per specimen card. page); Depending on the local tax authority, some or all of the above documents must be e. Certified signature on the OP form of the director (or deputy director or other submitted to the tax authority no later than 10–15 days after obtaining the Personal authorized person); Tax Number. f. Evidence of payment of the administrative fee; g. Bank confirmation that the capital has been deposited to a temporary bank ac- Procedure 7. Register the employment contracts with the count or certified statement from the founder that the financial capital has been Employment Organization/Fund secured; Time: 1 day h. Power of attorney if an attorney-at-law files the registration. Cost: No cost SBRA examines the request to determine whether it complies with current Comments: Company founders must submit and certify the following: legislation and whether these documents are attached. The Registry publishes the a. Application for insurance (the new Form M1); company registration on the Internet. b. Application for insurance and establishment of employment (the old Form M1); Procedure 4. Open a permanent business account with a c. Application on vacancy for working place along with the employee's medical-care booklet (Form E1); commercial bank d. Application for establishing or terminating employment (Form E3); Time: 1 day e. Application on beginning/ending/changing the terms of the payers of the contri- Cost: RSD 400 (signature notarization and tax) butions (Form ROD 1); Comments: The documentation for setting up a permanent business account with f. Employees’ identity cards and employment contracts; the commercial bank varies from bank to bank. The following documents are gener- ally submitted: g. Copy of the SBRA Registration Certificate. a. Original or certified copy of the company’s registration with the SBRA (evidence of the company identification number and other relevant data); STARTING A BUSINESS b. Application for opening the permanent account; Krusevac, Serbia c. Contract for depositing funds; Standard company legal form: Limited Liability Company (LLC) d. Tax Identification Number (residents only); Minimum capital requirement: RSD 23,068 (US$ 357) e. The bank-provided specimen card for legal entities (original); Data as of: January 2011 f. Copy of identification cards of the founders; Procedure 1. Notarize the memorandum of association and lease g. Copy of incorporation deed. contract at the Basic Court At this point, the founders convert the personal bank account into the company’s bank account and deposit the minimum capital. Although the law allows for in-kind Time: 1 day contributions (labor, machinery, or other assets), in practice, the founders are Cost: RSD 22,503 (see comments) required to deposit the full amount in cash. Comments: The notarization cost depends on the amount of capital and the value The new Law on the Prevention of Money Laundering and Financing of Terrorism of the lease. The promoters must notarize at least four copies of the memorandum of ("Zakon o sprecavanju pranja novca i finansiranju terorizma" Official Gazette of the association and the lease contract. RS", No. 20/2009 and 72/2009) provides that, in order to open a permanent account, As of July 2009, the Law on Court Taxes established a new fee schedule based on the the relevant bank must verify the chain of ownership of a company, as well as all per- incorporation contract value (start-up capital): sons and entities holding 25% or more of the capital of the company's shareholders/ a. Incorporation contract value of up to RSD 10,000: RSD 980; members. b. From RSD 10,001 to RSD 100,000: RSD 980 plus 1% of contract value; Procedure 5. Make a stamp and a seal c. From RSD 100,001 to RSD 1,000,000: RSD 2,900 plus 0.5% of contract value; Time: 1 day d. Over RSD 1,000,000: RSD 12,600 plus 0.25% of contract value; Cost: RSD 2,500 (RSD 1,500 to RSD 4,000) Note that the fee will not exceed RSD 39,000. Comments: Companies can obtain a company stamp and a seal in 1–2 days for a fee In addition, the promoter will be assessed miscellaneous fees to notarize the lease of RSD 1,500 to RSD 4,000, depending on the number of words, design, and the like. contract and the memorandum of association: Before making the stamp and the seal, the stamp maker must receive a copy of the a. Notarization request: RSD 70 (applies to one or several documents); registration ruling. b. Notarization of signature specimen with competent court: RSD 160 per signature; c. Signature verification of proxy (power of attorney): RSD 560. Procedure 6. Register with local tax authority Time: 5 days Procedure 2. Open a temporary bank account; pay founding Cost: No cost deposit or its part and all other fees Comments: Upon receiving the Tax Identification Number, the company's repre- Time: 1 day sentative must register with the local tax authority by submitting the following Cost: No cost documents: Comments: The founding deposit is paid to a temporary account at one of the a. SBRA Registration Certificate (copy); commercial banks. The decision or contract of incorporation must be submitted to b. Tax Identification Number Certificate (copy); the chosen bank to open a temporary bank account. At least half of the initial capital c. Employment contract of the general manager or company founder; is payable in advance, and the rest is due within 2 years of registration. After registra- tion is completed, the funds are transferred to a company Giro-account (permanent account), which may be used for business transactions. The company must obtain a payment slip from the bank. 68 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 3. Apply and obtain Registration Certificate, tax The new Law on the Prevention of Money Laundering and Financing of Terrorism ("Zakon o sprecavanju pranja novca i finansiranju terorizma" Official Gazette of the identification number and certify the signatures (three copies) RS", No. 20/2009 and 72/2009) provides that, in order to open a permanent account, for opening bank account at the Serbian Business Registers the relevant bank must verify the chain of ownership of a company, as well as all per- Agency (SBRA) sons and entities holding 25% or more of the capital of the company's shareholders/ Time: 7 days members. Cost: RSD 5,750 (RSD 4,000 for application form + RSD 1,750 for the registration number and the code of the Republic Statistical Agency) Procedure 5. Make stamp and seal Comments: Under the Business Registration Law (effective July 2004), the company Time: 1 day registration was transferred from the commercial courts to the Serbian Business Cost: RSD 2,000 Registers Agency (SBRA). Instead of two separate procedures, the SBRA now issues Comments: Cost depends on number of words, design, etc. The stamp maker must the registration number and code of the Republic Statistical Agency (RSA) simultane- have a copy of the registration decision. ously with the Registration Certificate. The Registry also administers the registration with the tax authority and issues the Tax Identification Number (TIN) as well as the Procedure 6. Register with local tax authority registration for pension fund (PIO Fund) and Health Fund. Unlike in Belgrade, in other cities entrepreneurs still have to obtain confirmations from the Pension Fund Time: 7 days and the Health Fund. Cost: No cost The company can obtain all forms on-line. The required forms for the establishment Comments: Upon receiving the Tax Identification Number, the company's repre- of a company are: sentative must register with the local tax authority by submitting the following a. Company registration request and application form (downloaded from the SBRA documents: website—www. apr.gov.rs—free of charge); a. SBRA Registration Certificate (copy); b. Request for opening an account and request for transfer of money from a tempo- b. Tax Identification Number Certificate (copy); rary bank account to a company permanent account (requests are obtained from c. Employment contract of the general manager or company founder; a commercial bank free of charge); d. Completed VAT registration form. Note that according to the amendment to c. Tax identification number (TIN) application form—Form JRPPS-2 (downloaded the Law on Value Added Tax adopted on June 30, 2007, the total (generated or from the SBRA website free of charge); projected) turnover which will oblige a company to submit a completed VAT d. Registration of lease questionnaire (obtained from the Tax Administration free of registration form is increased from RSD 2 million (approx. EUR 20,000) to RSD 4 charge); million (approx. EUR 40,000); e. VAT Form (downloaded from the Tax Administration website—www.poreskaupra- e. Certified OP form; va.gov.rs—free of charge); f. Statement on employed workers; f. Health Fund form OPD and Form M (obtained from the Post Office). g. Certified lists of taxpayer real estate, motor vehicles, and aircrafts; To register a company, the applicant must also submit additional documents: h. List of all stores and numbers of fiscal cash registers; a. Set of registration forms; i. Agreement concluded with the bookkeeping agency; b. Contract of incorporation (deed on establishment) or decision on the company j. Copy of the agreement on opening of permanent bank account and a copy of founding with authenticated signatures of founder(s) that are notarized; specimen card. c. Decision of founders on appointment of the director; Depending on the local tax authority, some or all of the above documents must be d. Information on the founder(s) (i.e. registration documents if the founder is a submitted to the tax authority no later than 10–15 days after obtaining the Personal legal entity or identity number and proof of registered residence if the founder Tax Number. is a physical person). If the documents are in a foreign language, they must be translated into Serbian by an authorized court translator (fee is about RSD 800 per Procedure 7. Register the employment contracts with the page); Employment Organization/Fund e. Certified signature on the OP form of the director (or deputy director or other Time: 1 day authorized person); Cost: No cost f. Evidence of payment of the administrative fee; Comments: Company founders must submit and certify the following: g. Bank confirmation that the capital has been deposited to a temporary bank ac- a. Application for insurance (the new Form M1); count or certified statement from the founder that the financial capital has been secured; b. Application for insurance and establishment of employment (the old Form M1); h. Power of attorney if an attorney-at-law files the registration. c. Application on vacancy for working place along with the employee's medical-care booklet (Form E1); SBRA examines the request to determine whether it complies with current legislation and whether these documents are attached. The Registry publishes the d. Application for establishing or terminating employment (Form E3); company registration on the Internet. e. Application on beginning/ending/changing the terms of the payers of the contri- butions (Form ROD 1); Procedure 4. Open a permanent business account with a f. Employees’ identity cards and employment contracts; commercial bank g. Copy of the SBRA Registration Certificate. Time: 1 day Cost: No cost Procedure 8. Obtain confirmation from Pension Fund Comments: The documentation for setting up a permanent business account with Time: 2 days the commercial bank varies from bank to bank. The following documents are gener- Cost: No cost ally submitted: Comments: In order to obtain confirmation from Pension Fund, founders must a. Original or certified copy of the company’s registration with the SBRA (evidence of submit the following documents: the company identification number and other relevant data); a. Application for insurance (Form M1); b. Application for opening the permanent account; b. Application for personal taxpayer’s number of contribution payers (Form M4); c. Contract for depositing funds; c. Form E1, E3 and employment contract. d. Tax Identification Number (residents only); If request to obtain confirmation from Pension Fund is not submitted within 8 e. The bank-provided specimen card for legal entities (original); days from the start of employment, it is also necessary to submit a statement that f. Copy of identification cards of the founders; explains reasons for late submission. The personal taxpayer’s number will be issued within 24 hours and it is necessary to come to the Pension Fund twice. g. Copy of incorporation deed. At this point, the founders convert the personal bank account into the company’s bank account and deposit the minimum capital. Although the law allows for in-kind contributions (labor, machinery, or other assets), in practice, the founders are required to deposit the full amount in cash. LIST OF PROCEDURES • STARTING A BUSINESS 69 Procedure 9. Obtain confirmation from Health Fund a. Company registration request and application form (downloaded from the SBRA website—www. apr.gov.rs—free of charge); Time: 1 day b. Request for opening an account and request for transfer of money from a tempo- Cost: No cost rary bank account to a company permanent account (requests are obtained from Comments: In order to obtain confirmation from Health Fund, company will have to a commercial bank free of charge); submit the following documents: c. Tax identification number (TIN) application form—Form JRPPS-2 (downloaded a. Employees’ identity and health cards and employment contracts; from the SBRA website free of charge); b. Application of insurance and Application for establishing employment (M1 and d. Registration of lease questionnaire (obtained from the Tax Administration free of M2); charge); c. Application on beginning/ending/changing the terms of the payers of the contri- e. VAT Form (downloaded from the Tax Administration website—www.poreskaupra- butions (ROD 1); va.gov.rs—free of charge); d. List of all issued health cards in the company. f. Health Fund form OPD and Form M (obtained from the Post Office). To register a company, the applicant must also submit additional documents: STARTING A BUSINESS a. Set of registration forms; Uzice, Serbia b. Contract of incorporation (deed on establishment) or decision on the company Standard company legal form: Limited Liability Company (LLC) founding with authenticated signatures of founder(s) that are notarized; Minimum capital requirement: RSD 23,068 (US$ 357) c. Decision of founders on appointment of the director; Data as of: January 2011 d. Information on the founder(s) (i.e. registration documents if the founder is a legal entity or identity number and proof of registered residence if the founder Procedure 1. Notarize the memorandum of association and lease is a physical person). If the documents are in a foreign language, they must be contract at the Basic Court translated into Serbian by an authorized court translator (fee is about RSD 800 per page); Time: 1 day e. Certified signature on the OP form of the director (or deputy director or other Cost: RSD 22,503 (see comments) authorized person); Comments: The notarization cost depends on the amount of capital and the value f. Evidence of payment of the administrative fee; of the lease. The promoters must notarize at least four copies of the memorandum of association and the lease contract. g. Bank confirmation that the capital has been deposited to a temporary bank ac- count or certified statement from the founder that the financial capital has been As of July 2009, the Law on Court Taxes established a new fee schedule based on the secured; incorporation contract value (start-up capital): h. Power of attorney if an attorney-at-law files the registration. a. Incorporation contract value of up to RSD 10,000: RSD 980; SBRA examines the request to determine whether it complies with current b. From RSD 10,001 to RSD 100,000: RSD 980 plus 1% of contract value; legislation and whether these documents are attached. The Registry publishes the c. From RSD 100,001 to RSD 1,000,000: RSD 2,900 plus 0.5% of contract value; company registration on the Internet. d. Over RSD 1,000,000: RSD 12,600 plus 0.25% of contract value; Note that the fee will not exceed RSD 39,000. Procedure 4. Open a permanent business account with the In addition, the promoter will be assessed miscellaneous fees to notarize the lease commercial bank contract and the memorandum of association: Time: 1 day a. Notarization request: RSD 70 (applies to one or several documents); Cost: No cost b. Notarization of signature specimen with competent court: RSD 160 per signature; Comments: The documentation for setting up a permanent business account with c. Signature verification of proxy (power of attorney): RSD 560. the commercial bank varies from bank to bank. The following documents are gener- ally submitted: Procedure 2. Open a temporary bank account; pay founding a. Original or certified copy of the company’s registration with the SBRA (evidence of deposit or its part and all other fees the company identification number and other relevant data); Time: 1 day b. Application for opening the permanent account; Cost: No cost c. Contract for depositing funds; Comments: The founding deposit is paid to a temporary account at one of the d. Tax Identification Number (residents only); commercial banks. The decision or contract of incorporation must be submitted to e. The bank-provided specimen card for legal entities (original); the chosen bank to open a temporary bank account. At least half of the initial capital f. Copy of identification cards of the founders; is payable in advance, and the rest is due within 2 years of registration. After registra- g. Copy of incorporation deed. tion is completed, the funds are transferred to a company Giro-account, which may be used for business transactions. The company must obtain a payment slip from At this point, the founders convert the personal bank account into the company’s the bank. bank account and deposit the minimum capital. Although the law allows for in-kind contributions (labor, machinery, or other assets), in practice, the founders are Procedure 3. Apply and obtain Registration Certificate, tax required to deposit the full amount in cash. identification number and certify the signatures (three copies) The new Law on the Prevention of Money Laundering and Financing of Terrorism for opening bank account at the Serbian Business Registers ("Zakon o sprecavanju pranja novca i finansiranju terorizma" Official Gazette of the RS", No. 20/2009 and 72/2009) provides that, in order to open a permanent account, Agency (SBRA) the relevant bank must verify the chain of ownership of a company, as well as all per- Time: 1 day sons and entities holding 25% or more of the capital of the company's shareholders/ Cost: RSD 5,750 (RSD 4,000 for application form + RSD 1,750 for the registration members. number and the code of the Republic Statistical Agency) Comments: Under the Business Registration Law (effective July 2004), the company Procedure 5. Make stamp and seal registration was transferred from the commercial courts to the Serbian Business Time: 1 day Registers Agency (SBRA). Instead of two separate procedures, the SBRA now issues Cost: RSD 2,500 the registration number and code of the Republic Statistical Agency (RSA) simultane- ously with the Registration Certificate. The Registry also administers the registration Comments: Cost depends on number of words, design, etc. The stamp maker must with the tax authority and issues the Tax Identification Number (TIN) as well as the have a copy of the registration decision. registration for pension fund (PIO Fund) and Health Fund. Unlike in Belgrade, in other cities entrepreneurs still have to obtain confirmations from the Pension Fund and the Health Fund. The company can obtain all forms on-line. The required forms for the establishment of a company are: 70 DOING BUSINESS IN SOUTH EAST EUROPE 2011 STARTING A BUSINESS Procedure 6. Register with local tax authority Time: 7 days Vranje, Serbia Cost: No cost Standard company legal form: Limited Liability Company (LLC) Comments: Upon receiving the Tax Identification Number, the company's repre- Minimum capital requirement: RSD 23,068 (US$ 357) sentative must register with the local tax authority by submitting the following Data as of: January 2011 documents: Procedure 1. Notarize the memorandum of association and lease a. SBRA Registration Certificate (copy); contract at the Basic Court b. Tax Identification Number Certificate (copy); Time: 1 day c. Employment contract of the general manager or company founder; Cost: RSD 22,503 (see comments) d. Completed VAT registration form. Note that according to the amendment to the Law on Value Added Tax adopted on June 30, 2007, the total (generated or Comments: The notarization cost depends on the amount of capital and the value projected) turnover which will oblige a company to submit a completed VAT of the lease. The promoters must notarize at least four copies of the memorandum of registration form is increased from RSD 2 million (approx. EUR 20,000) to RSD 4 association and the lease contract. million (approx. EUR 40,000); As of July 2009, the Law on Court Taxes established a new fee schedule based on the e. Certified OP form; incorporation contract value (start-up capital): f. Statement on employed workers; a. Incorporation contract value of up to RSD 10,000: RSD 980; g. Certified lists of taxpayer real estate, motor vehicles, and aircrafts; b. From RSD 10,001 to RSD 100,000: RSD 980 plus 1% of contract value; h. List of all stores and numbers of fiscal cash registers; c. From RSD 100,001 to RSD 1,000,000: RSD 2,900 plus 0.5% of contract value; i. Agreement concluded with the bookkeeping agency; d. Over RSD 1,000,000: RSD 12,600 plus 0.25% of contract value; j. Copy of the agreement on opening of permanent bank account and a copy of Note that the fee will not exceed RSD 39,000. specimen card. In addition, the promoter will be assessed miscellaneous fees to notarize the lease Depending on the local tax authority, some or all of the above documents must be contract and the memorandum of association: submitted to the tax authority no later than 10–15 days after obtaining the Personal a. Notarization request: RSD 70 (applies to one or several documents); Tax Number. b. Notarization of signature specimen with competent court: RSD 160 per signature; c. Signature verification of proxy (power of attorney): RSD 560. Procedure 7. Register the employment contracts with the Employment Organization/Fund Procedure 2. Open a temporary bank account; pay founding Time: 1 day deposit or its part and all other fees Cost: No cost Time: 1 day Comments: Company founders must submit and certify the following: Cost: No cost a. Application for insurance (the new Form M1); Comments: The founding deposit is paid to a temporary account at one of the b. Application for insurance and establishment of employment (the old Form M1); commercial banks. The decision or contract of incorporation must be submitted to c. Application on vacancy for working place along with the employee's medical-care the chosen bank to open a temporary bank account. At least half of the initial capital booklet (Form E1); is payable in advance, and the rest is due within 2 years of registration. After registra- tion is completed, the funds are transferred to a company Giro-account, which may d. Application for establishing or terminating employment (Form E3); be used for business transactions. The company must obtain a payment slip from 5. Application on beginning/ending/changing the terms of the payers of the contri- the bank. butions (Form ROD 1); 6. Employees’ identity cards and employment contracts; Procedure 3. Apply and obtain Registration Certificate, tax 7. Copy of the SBRA Registration Certificate. identification number and certify the signatures (three copies) for opening bank account at the Serbian Business Registers Procedure 8. Obtain confirmation from Pension Fund Agency (SBRA) Time: 2 days Time: 2 days Cost: No cost Cost: RSD 5,750 (RSD 4,000 for application form + RSD 1,750 for the registration Comments: In order to obtain confirmation from Pension Fund, founders must number and the code of the Republic Statistical Agency) submit the following documents: Comments: Under the Business Registration Law (effective July 2004), the company 1. Application for insurance (Form M1); registration was transferred from the commercial courts to the Serbian Business 2. Application for personal taxpayer’s number of contribution payers (Form M4); Registers Agency (SBRA). Instead of two separate procedures, the SBRA now issues the registration number and code of the Republic Statistical Agency (RSA) simultane- 3. Form E1, E3 and employment contract. ously with the Registration Certificate. The Registry also administers the registration If request to obtain confirmation from Pension Fund is not submitted within 8 with the tax authority and issues the Tax Identification Number (TIN) as well as the days from the start of employment, it is also necessary to submit a statement that registration for pension fund (PIO Fund) and Health Fund. Unlike in Belgrade, in explains reasons for late submission. The personal taxpayer’s number will be issued other cities entrepreneurs still have to obtain confirmations from the Pension Fund within 24 hours and it is necessary to come to the Pension Fund twice. and the Health Fund. The company can obtain all forms on-line. The required forms for the establishment Procedure 9. Obtain confirmation from Health Fund of a company are: Time: 1 day a. Company registration request and application form (downloaded from the SBRA Cost: No cost website—www. apr.gov.rs—free of charge); Comments: In order to obtain confirmation from Health Fund, company will have to b. Request for opening an account and request for transfer of money from a tempo- submit the following documents: rary bank account to a company permanent account (requests are obtained from a. Employees’ identity and health cards and employment contracts; a commercial bank free of charge); b. Application of insurance and Application for establishing employment (M1 and c. Tax identification number (TIN) application form—Form JRPPS-2 (downloaded M2); from the SBRA website free of charge); c. Application on beginning/ending/changing the terms of the payers of the contri- d. Registration of lease questionnaire (obtained from the Tax Administration free of butions (ROD 1); charge); d. List of all issued health cards in the company. e. VAT Form (downloaded from the Tax Administration website—www.poreskaupra- va.gov.rs—free of charge); f. Health Fund form OPD and Form M (obtained from the Post Office). To register a company, the applicant must also submit additional documents: LIST OF PROCEDURES • STARTING A BUSINESS 71 a. Set of registration forms; h. List of all stores and numbers of fiscal cash registers; b. Contract of incorporation (deed on establishment) or decision on the company i. Agreement concluded with the bookkeeping agency; founding with authenticated signatures of founder(s) that are notarized; j. Copy of the agreement on opening of permanent bank account and a copy of c. Decision of founders on appointment of the director; specimen card. d. Information on the founder(s) (i.e. registration documents if the founder is a Depending on the local tax authority, some or all of the above documents must be legal entity or identity number and proof of registered residence if the founder submitted to the tax authority no later than 10–15 days after obtaining the Personal is a physical person). If the documents are in a foreign language, they must be Tax Number. translated into Serbian by an authorized court translator (fee is about RSD 800 per page); Procedure 7. Register the employment contracts with the e. Certified signature on the OP form of the director (or deputy director or other Employment Organization/Fund authorized person); Time: 1 day f. Evidence of payment of the administrative fee; Cost: No cost g. Bank confirmation that the capital has been deposited to a temporary bank ac- count or certified statement from the founder that the financial capital has been Comments: Company founders must submit and certify the following: secured; a. Application for insurance (the new Form M1); h. Power of attorney if an attorney-at-law files the registration. b. Application for insurance and establishment of employment (the old Form M1); SBRA examines the request to determine whether it complies with current c. Application on vacancy for working place along with the employee's medical-care legislation and whether these documents are attached. The Registry publishes the booklet (Form E1); company registration on the Internet. d. Application for establishing or terminating employment (Form E3); e. Application on beginning/ending/changing the terms of the payers of the contri- Procedure 4. Open a permanent business account with the butions (Form ROD 1); commercial bank f. Employees’ identity cards and employment contracts; Time: 1 day g. Copy of the SBRA Registration Certificate. Cost: No cost Comments: The documentation for setting up a permanent business account with Procedure 8. Obtain confirmation from Pension Fund the commercial bank varies from bank to bank. The following documents are gener- Time: 2 days ally submitted: Cost: No cost a. Original or certified copy of the company’s registration with the SBRA (evidence of Comments: In order to obtain confirmation from Pension Fund, founders must the company identification number and other relevant data); submit the following documents: b. Application for opening the permanent account; a. Application for insurance (Form M1); c. Contract for depositing funds; b. Application for personal taxpayer’s number of contribution payers (Form M4); d. Tax Identification Number (residents only); c. Form E1, E3 and employment contract. e. The bank-provided specimen card for legal entities (original); If request to obtain confirmation from Pension Fund is not submitted within 8 f. Copy of Identification Cards of the founders; days from the start of employment, it is also necessary to submit a statement that g. Copy of incorporation deed. explains reasons for late submission. The personal taxpayer’s number will be issued At this point, the founders convert the personal bank account into the company’s within 24 hours and it is necessary to come to the Pension Fund twice. bank account and deposit the minimum capital. Although the law allows for in-kind contributions (labor, machinery, or other assets), in practice, the founders are Procedure 9. Obtain confirmation from Health Fund required to deposit the full amount in cash. Time: 1 day The new Law on the Prevention of Money Laundering and Financing of Terrorism Cost: No cost ("Zakon o sprecavanju pranja novca i finansiranju terorizma" Official Gazette of the Comments: In order to obtain confirmation from Health Fund, company will have to RS", No. 20/2009 and 72/2009) provides that, in order to open a permanent account, submit the following documents: the relevant bank must verify the chain of ownership of a company, as well as all per- a. Employees’ identity and health cards and employment contracts; sons and entities holding 25% or more of the capital of the company's shareholders/ members. b. Application of insurance and Application for establishing employment (M1 and M2); Procedure 5. Make stamp and seal c. Application on beginning/ending/changing the terms of the payers of the contri- Time: 1 day butions (ROD 1); Cost: RSD 2,500 d. List of all issued health cards in the company. Comments: Cost depends on number of words, design, etc. The stamp maker must have a copy of the registration decision. STARTING A BUSINESS Zrenjanin, Serbia Procedure 6. Register with local tax authority Standard company legal form: Limited Liability Company (LLC) Time: 7 days Minimum capital requirement: RSD 23,068 (US$ 357) Cost: No cost Data as of: January 2011 Comments: Upon receiving the Tax Identification Number, the company's repre- sentative must register with the local tax authority by submitting the following Procedure 1. Notarize the memorandum of association and lease documents: contract at the Basic Court a. SBRA Registration Certificate (copy); Time: 1 day b. Tax Identification Number Certificate (copy); Cost: RSD 22,503 (see comments) c. Employment contract of the general manager or company founder; Comments: The notarization cost depends on the amount of capital and the value d. Completed VAT registration form. Note that according to the amendment to of the lease. The promoters must notarize at least four copies of the memorandum of the Law on Value Added Tax adopted on June 30, 2007, the total (generated or association and the lease contract. projected) turnover which will oblige a company to submit a completed VAT As of July 2009, the Law on Court Taxes established a new fee schedule based on the registration form is increased from RSD 2 million (approx. EUR 20,000) to RSD 4 incorporation contract value (start-up capital): million (approx. EUR 40,000); a. Incorporation contract value of up to RSD 10,000: RSD 980; e. Certified OP form; b. From RSD 10,001 to RSD 100,000: RSD 980 plus 1% of contract value; f. Statement on employed workers; c. From RSD 100,001 to RSD 1,000,000: RSD 2,900 plus 0.5% of contract value; g. Certified lists of taxpayer real estate, motor vehicles, and aircrafts; 72 DOING BUSINESS IN SOUTH EAST EUROPE 2011 d. Over RSD 1,000,000: RSD 12,600 plus 0.25% of contract value; Procedure 4. Open a permanent business account with the Note that the fee will not exceed RSD 39,000. commercial bank In addition, the promoter will be assessed miscellaneous fees to notarize the lease Time: 1 day contract and the memorandum of association: Cost: No cost a. Notarization request: RSD 70 (applies to one or several documents); Comments: The documentation for setting up a permanent business account with b. Notarization of signature specimen with competent court: RSD 160 per signature; the commercial bank varies from bank to bank. The following documents are gener- c. Signature verification of proxy (power of attorney): RSD 560. ally submitted: a. Original or certified copy of the company’s registration with the SBRA (evidence of Procedure 2. Open a temporary bank account; pay founding the company identification number and other relevant data); deposit or its part and all other fees b. Application for opening the permanent account; Time: 1 day c. Contract for depositing funds; Cost: No cost d. Tax Identification Number (residents only); Comments: The founding deposit is paid to a temporary account at one of the e. The bank-provided specimen card for legal entities (original); commercial banks. The decision or contract of incorporation must be submitted to the chosen bank to open a temporary bank account. At least half of the initial capital f. Copy of Identification Cards of the founders; is payable in advance, and the rest is due within 2 years of registration. After registra- g. Copy of incorporation deed. tion is completed, the funds are transferred to a company Giro-account, which may At this point, the founders convert the personal bank account into the company’s be used for business transactions. The company must obtain a payment slip from bank account and deposit the minimum capital. Although the law allows for in-kind the bank. contributions (labor, machinery, or other assets), in practice, the founders are required to deposit the full amount in cash. Procedure 3. Apply and obtain Registration Certificate, tax The new Law on the Prevention of Money Laundering and Financing of Terrorism identification number and certify the signatures (three copies) ("Zakon o sprecavanju pranja novca i finansiranju terorizma" Official Gazette of the for opening bank account at the Serbian Business Registers RS", No. 20/2009 and 72/2009) provides that, in order to open a permanent account, Agency (SBRA) the relevant bank must verify the chain of ownership of a company, as well as all per- Time: 3 days sons and entities holding 25% or more of the capital of the company's shareholders/ members. Cost: RSD 5,750 (RSD 4,000 for application form + RSD 1,750 for the registration number and the code of the Republic Statistical Agency) Procedure 5. Make stamp and seal Comments: Under the Business Registration Law (effective July 2004), the company Time: 1 day registration was transferred from the commercial courts to the Serbian Business Registers Agency (SBRA). Instead of two separate procedures, the SBRA now issues Cost: RSD 2,500 the registration number and code of the Republic Statistical Agency (RSA) simultane- Comments: Cost depends on number of words, design, etc. The stamp maker must ously with the Registration Certificate. The Registry also administers the registration have a copy of the registration decision. with the tax authority and issues the Tax Identification Number (TIN) as well as the registration for pension fund (PIO Fund) and Health Fund. Unlike in Belgrade, in Procedure 6. Register with local tax authority other cities entrepreneurs still have to obtain confirmations from the Pension Fund Time: 7 days and the Health Fund. Cost: No cost The company can obtain all forms on-line. The required forms for the establishment Comments: Upon receiving the Tax Identification Number, the company's repre- of a company are: sentative must register with the local tax authority by submitting the following a. Company registration request and application form (downloaded from the SBRA documents: website—www. apr.gov.rs—free of charge); a. SBRA Registration Certificate (copy); b. Request for opening an account and request for transfer of money from a tempo- b. Tax Identification Number Certificate (copy); rary bank account to a company permanent account (requests are obtained from a commercial bank free of charge); c. Employment contract of the general manager or company founder; c. Tax identification number (TIN) application form—Form JRPPS-2 (downloaded d. Completed VAT registration form. Note that according to the amendment to from the SBRA website free of charge); the Law on Value Added Tax adopted on June 30, 2007, the total (generated or projected) turnover which will oblige a company to submit a completed VAT d. Registration of lease questionnaire (obtained from the Tax Administration free of registration form is increased from RSD 2 million (approx. EUR 20,000) to RSD 4 charge); million (approx. EUR 40,000); e. VAT Form (downloaded from the Tax Administration website—www.poreskaupra- e. Certified OP form; va.gov.rs—free of charge); f. Statement on employed workers; f. Health Fund form OPD and Form M (obtained from the Post Office). g. Certified lists of taxpayer real estate, motor vehicles, and aircrafts; To register a company, the applicant must also submit additional documents: h. List of all stores and numbers of fiscal cash registers; a. Set of registration forms; i. Agreement concluded with the bookkeeping agency; b. Contract of incorporation (deed on establishment) or decision on the company founding with authenticated signatures of founder(s) that are notarized; j. Copy of the agreement on opening of permanent bank account and a copy of specimen card. c. Decision of founders on appointment of the director; Depending on the local tax authority, some or all of the above documents must be d. Information on the founder(s) (i.e. registration documents if the founder is a submitted to the tax authority no later than 10–15 days after obtaining the Personal legal entity or identity number and proof of registered residence if the founder Tax Number. is a physical person). If the documents are in a foreign language, they must be translated into Serbian by an authorized court translator (fee is about RSD 800 per page); Procedure 7. Register the employment contracts with the Employment Organization/Fund e. Certified signature on the OP form of the director (or deputy director or other authorized person); Time: 1 day f. Evidence of payment of the administrative fee; Cost: No cost g. Bank confirmation that the capital has been deposited to a temporary bank ac- Comments: Company founders must submit and certify the following: count or certified statement from the founder that the financial capital has been a. Application for insurance (the new Form M1); secured; b. Application for insurance and establishment of employment (the old Form M1); h. Power of attorney if an attorney-at-law files the registration. c. Application on vacancy for working place along with the employee's medical-care SBRA examines the request to determine whether it complies with current booklet (Form E1); legislation and whether these documents are attached. The Registry publishes the d. Application for establishing or terminating employment (Form E3); company registration on the Internet. LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 73 e. Application on beginning/ending/changing the terms of the payers of the contri- Procedure 3*. Request and obtain document attesting that the butions (Form ROD 1); firm has no unpaid taxes or fees from the municipal tax office f. Employees’ identity cards and employment contracts; Time: 2 days g. Copy of the SBRA Registration Certificate. Cost: No cost Procedure 8. Obtain confirmation from Pension Fund Procedure 4*. Request and obtain opinion of the municipal Time: 1 day Urban Planning Department Cost: No cost Time: 10 days Comments: In order to obtain confirmation from Pension Fund, founders must Cost: No cost submit the following documents: Comments: The opinion from the municipal Urban Planning Department is required a. Application for insurance (Form M1); at the moment BuildCo applies for the building permit. b. Application for personal taxpayer’s number of contribution payers (Form M4); c. Form E1, E3 and employment contract. Procedure 5*. Request and obtain updated information on the If request to obtain confirmation from Pension Fund is not submitted within 8 closest connection point to the water network from the local days from the start of employment, it is also necessary to submit a statement that water authority (Ndërmarrja e Ujësjellësit dhe Kanalizimeve explains reasons for late submission. The personal taxpayer’s number will be issued Sh.A. Durrës) within 24 hours and it is necessary to come to the Pension Fund twice. Time: 7 days Procedure 9. Obtain confirmation from Health Fund Cost: ALL 2,200 Time: 1 day Comments: The local water authority approves the project and provides information to BuildCo on the closest connection point to the water network. Cost: No cost Comments: In order to obtain confirmation from Health Fund, company will have to Procedure 6*. Request and obtain environmental approval from submit the following documents: the Regional Agency of Environmental Protection (Agjencia a. Employees’ identity and health cards and employment contracts; Rajonale e Ruajtjes së Mjedisit–ARM) b. Application of insurance and Application for establishing employment (M1 and Time: 10 days M2); Cost: ALL 2,000 c. Application on beginning/ending/changing the terms of the payers of the contri- Comments: According to Law No. 8934 on Environmental Protection, all local ap- butions (ROD 1); proval requests are managed by the Regional Environmental Agencies in collabora- d. List of all issued health cards in the company. tion with municipal authorities. The fee for this procedure is set by Order No. 5 issued by the Minister of Environment, Forestry, and Water Administration on December LIST OF PROCEDURES 28, 2007. Dealing with construction permits Procedure 7*. Request and obtain updated information on the closest connection point to the electricity grid from the electricity distributor (CEZ Shpërndarje Sh. A. Durrës) Time: 3 days Durres, Albania Cost: ALL 500 Warehouse Value: ALL 40,000,000 (US$ 447,337) Data as of: January 2011 Procedure 8*. Request and obtain Fire and Rescue Department approval (Policia e Mbrojtjes nga Zjarri dhe Shpëtimit - PMNZSH) Procedure 1. Request and obtain a recent property ownership Time: 20 days certificate and a copy of the land plot map from the Immovable Cost: ALL 10,000 Property Registration Office (IPRO) Comments: The fee for investments between ALL 20 million and ALL 50 million is Time: 10 days ALL 10,000. Fees are set by Decision No. 285 "Regarding Fire Department fees" dated Cost: ALL 1,020 (ALL 400 for ownership certificate + ALL 400 for map + ALL 100 June 27, 2002. service fee + ALL 120 mailing fee) Comments: These documents are used to verify property ownership and are Procedure 9. Request and obtain "buildable land" permit from required when BuildCo applies for the "building land" permit (this is an application the Technical Council of the municipal Urban Department to make the land plot buildable). All documents have to be no older than 3 months (Këshilli Teknik) and the municipal Territorial Adjustment Council and they need to show the size of the land surface in square meters. (TAC) The application is done at the IPRO in Durres. The legal IPRO deadline to provide the Time: 59 days (10 days at Technical Council and 49 days at TAC) documents is set by Order No. 861 dated June 3, 2010 issued by the Head of IPRO. Cost: No cost Procedure 2*. Request and obtain extract of master plan and Comments: The Technical Council convenes and checks all documentation general plan of the plot from the municipal Urban Planning submitted by BuildCo. Article 45 of the Law 8405 on Urban Planning states that the Technical Council checks all documents and informs the applicant of their receipt Department within 5 business days. The Council informs the applicant of approval or rejection of Time: 25 days the application within 35 business days. If approved, the application is put forth for Cost: ALL 3,000 approval at the upcoming meeting of TAC. TAC is supposed to meet every 30 days. Comments: The master and general plans of the plot are issued by the Urban Article 45 of the Law 8405 on Urban Planning states that the "buildable land" permit Planning Department. The general plan is a topographic map of the situation of the is valid for 6 months, within which period BuildCo has to submit the application existing property, while the master plan is a plan of the proposed development. for building permit. If this deadline is passed, the "buildable land" permit becomes The fee covers both plans. Master plan is obtained in order to analyze the buildings invalid and BuildCo has to reapply. (existing and planned) and the surrounding areas of the land plot. Article 36 of the Law 8405 on Urban Planning states that all regional plans, master plans, general regulatory plans and partial urban studies, drafted by legally authorized institutions, have to be submitted to the technical secretary of the Territorial Adjustment Council (TAC) of the municipality within 15 business days. The plans have to be published for interested parties no later than 30 business days from the day received by TAC. 74 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 10. Apply and obtain building permit from the b. Certificate showing BuildCo has no unpaid bills from previous dealings with the municipal Territorial Adjustment Council (TAC) electricity provider (if any); Time: 30 days c. Building permit; Cost: No cost d. Property registration certificate; Comments: Article 50 of the Law 8405 on Urban Planning states that municipal TAC e. General plan and project plan at scale 1:1000 (format A3); has to approve or reject the building permit request within 45 business days from f. Copy of license of the electrical engineer who performed electrical installation. the moment of application. Durres is a category I municipality. By law, category I municipal TAC consists of the following 15 members: Procedure 17*. Request connection and connect to water and a. Mayor; sewage services (Ndërmarrja e Ujësjellësit dhe Kanalizimeve b. Head of Urban Planning Department; Sh.A. Durrës) c. Head of Cadastre; Time: 20 days d. Inspector from the municipal Urban Inspectorate (UI) delegated by the chief Cost: ALL 20,580 inspector of UI; e. Head of Legal Department; Procedure 18*. Request connection and connect to f. Head of Public Infrastructure Department; telecommunications network (ALBtelecom) g. Inspector from the Regional Environmental Protection Agency; Time: 25 days h. Landscape specialist; Cost: ALL 4,800 i. Three urban specialists or architects appointed by Municipal Council; Comments: Land line connection costs can be found at the ALBtelecom website: (http://www.albtelecom.al/web/page_alb.aspx?id=658). j. Two urban specialists or architects, one construction specialist and one structural engineer appointed by the prefecture. Procedure 19. Receive inspection and obtain compliance report Procedure 11*. Pay building permit fees at a commercial bank or Time: 3 days post office Cost: ALL 48,000 (0.12% of the investment value) Time: 1 day Comments: This procedure is performed by a private licensed compliance inspector. BuildCo submits all documentation to the inspector who performs the inspection, Cost: ALL 1,200,000 (3% of investment value) drafts the compliance report, which BuildCo submits to the municipal Urban Plan- Comments: According to law, the minimum building permit fee is 1% of the total ning Department. Compliance report fees are regulated by Decision No. 444 issued investment value. This amount is deposited to the fund that finances urban studies. by the Council of Ministers on September 5, 1994. Private entities cannot charge 2% of the total investment value is charged by the municipality as infrastructural more than the rates published in the schedule below: impact tax. The building permit fees can be paid at a local bank or through the postal Investment value: . . . . . . . . . . . . . . . . . . . . Fee as % of the investment value: service. ALL 1 to ALL 2 million . . . . . . . . . . . . . . . . 0.85% Procedure 12. Request inspection of property boundaries by ALL 2 million to ALL 2.5 million. . . . . . . . 0.5% licensed surveyor ALL 2.5 million to ALL 5 million. . . . . . . . 0.45% Time: 1 day ALL 5 million to ALL 7.5 million. . . . . . . . 0.3% Cost: ALL 10,000 ALL 7.5 million to ALL 10 million . . . . . . 0.25% Comments: This inspection is performed by a licensed surveyor. ALL 10 million to ALL 20 million . . . . . . . 0.22% ALL 20 million to ALL 30 million . . . . . . . 0.15% Procedure 13. Request inspection of construction foundations ALL 30 million and above . . . . . . . . . . . . . 0.12% Time: 1 day Cost: ALL 10,000 Procedure 20. Request and obtain occupancy permit Comments: The cost for this inspection is set by the Municipal Fee Schedule. The Time: 30 days inspection has to take place within 25 days of submitting the request. Construction Cost: ALL 117,054 (ALL 30 per cubic meter) work is not disrupted during the inspection. Comments: BuildCo submits the occupancy permit application accompanied by the compliance report and other necessary documentation. Procedure 14. Request on-site inspection of the completed construction skeleton Procedure 21. Register property with the Immovable Property Time: 1 day Registration Office (IPRO) Cost: ALL 20,000 Time: 25 days Comments: The cost for this inspection is set by the Municipal Fee Schedule. The Cost: ALL 3,420 (ALL 3,000 registration fee + ALL 300 service fee + ALL 120 mailing inspection has to take place within 25 days of submitting the request. Construction fee) work is not disrupted during the inspection. Comments: After obtaining the occupancy permit, all documentation is submitted to IPRO for property registration. Documents include the building permit and all Procedure 15. Request on-site inspection of the adjustment inspection reports. of the surroundings of the building according to the initial drawings *This procedure can be completed simultaneously with previous procedure. Time: 1 day Cost: No cost Comments: The inspection has to take place within 25 days of submitting the request. Construction work is not disrupted during the inspection. Procedure 16*. Request connection and connect to electrical power grid (CEZ Shpërndarje sh.a. Durrës) Time: 30 days Cost: ALL 40,000 Comments: When requesting to connect to the electrical power grid, BuildCo submits the following documents: a. Filled out application form; LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 75 DEALING WITH CONSTRUCTION PERMITS Procedure 7*. Request and obtain updated information on Shkodra, Albania the closest connection point to the electricity grid from the Warehouse Value: ALL 40,000,000 (US$ 447,337) electricity distributor (CEZ Shpërndarje Sh. A. Shkodër) Data as of: January 2011 Time: 5 days Cost: ALL 500 Procedure 1. Request and obtain a recent property ownership certificate and a copy of the land plot map from the Immovable Procedure 8*. Request and obtain Fire and Rescue Department Property Registration Office (IPRO) approval (Policia e Mbrojtjes nga Zjarri dhe Shpëtimit - PMNZSH) Time: 7 days Time: 15 days Cost: ALL 1,020 (ALL 400 for ownership certificate + ALL 400 for map + ALL 100 Cost: ALL 10,000 service fee + ALL 120 mailing fee) Comments: The fee for investments between ALL 20 million and ALL 50 million is Comments: These documents are used to verify property ownership and are ALL 10,000. Fees are set by Decision No. 285 "Regarding Fire Department fees" dated required when BuildCo applies for the "building land" permit (this is an application June 27, 2002. to make the land plot buildable). All documents have to be no older than 3 months and they need to show the size of the land surface in square meters. Procedure 9. Request and obtain "buildable land" permit from The application is done at the IPRO in Skhodra. The legal IPRO deadline to provide the Technical Council of the municipal Urban Department the documents is set by Order No. 861 dated June 3, 2010 issued by the Head of (Këshilli Teknik) and the municipal Territorial Adjustment Council IPRO. (TAC) Procedure 2*. Request and obtain extract of master plan and Time: 45 days general plan of the plot from the municipal Urban Planning Cost: No cost Department Comments: The Technical Council convenes and checks all documentation Time: 23 days submitted by BuildCo. Article 45 of the Law 8405 on Urban Planning states that the Technical Council checks all documents and informs the applicant of their receipt Cost: No cost within 5 business days. The Council informs the applicant of approval or rejection of Comments: The master and general plans of the plot are issued by the Urban the application within 35 business days. If approved, the application is put forth for Planning Department. The general plan is a topographic map of the situation of the approval at the upcoming meeting of TAC. TAC is supposed to meet every 30 days. existing property, while the master plan is a plan of the proposed development. Article 45 of the Law 8405 on Urban Planning states that the "buildable land" permit Master plan is obtained in order to analyze the buildings (existing and planned) and is valid for 6 months, within which period BuildCo has to submit the application the surrounding areas of the land plot. Article 36 of the Law 8405 on Urban Planning for building permit. If this deadline is passed, the "buildable land" permit becomes states that all regional plans, master plans, general regulatory plans and partial invalid and BuildCo has to reapply. urban studies, drafted by legally authorized institutions, have to be submitted to the technical secretary of the Territorial Adjustment Council (TAC) of the municipality Procedure 10. Apply and obtain building permit from the within 15 business days. The plans have to be published for interested parties no municipal Territorial Adjustment Council (TAC) later than 30 business days from the day received by TAC. Time: 30 days Procedure 3*. Request and obtain document attesting that the Cost: No cost firm has no unpaid taxes or fees from the municipal tax office Comments: Article 50 of the Law 8405 on Urban Planning states that municipal TAC Time: 2 days has to approve or reject the building permit request within 45 business days from the moment of application. Shkodra is a category I municipality. By law, category I Cost: No cost municipal TAC consists of the following 15 members: Procedure 4*. Request and obtain opinion of the municipal a. Mayor; Urban Planning Department b. Head of Urban Planning Department; Time: 3 days c. Head of Cadastre; Cost: No cost d. Inspector from the municipal Urban Inspectorate (UI) delegated by the chief inspector of UI; Comments: The opinion from the municipal Urban Planning Department is required at the moment BuildCo applies for the building permit. e. Head of Legal Department; f. Head of Public Infrastructure Department; Procedure 5*. Request and obtain updated information on the g. Inspector from the Regional Environmental Protection Agency; closest connection point to the water network from the local h. Landscape specialist; water authority (Ndërmarrja e Ujësjellësit dhe Kanalizimeve i. Three urban specialists or architects appointed by Municipal Council; Sh.A. Shkodër) j. Two urban specialists or architects, one construction specialist and one structural Time: 3 days engineer appointed by the prefecture. Cost: No cost Comments: The local water authority approves the project and provides information Procedure 11*. Pay building permit fees at a commercial bank or on the closest connection point to the water network to BuildCo. post office Time: 1 day Procedure 6*. Request and obtain environmental approval from Cost: ALL 1,200,000 (3% of investment value) the Regional Agency of Environmental Protection (Agjencia Comments: According to law, the minimum building permit fee is 1% of the total Rajonale e Ruajtjes së Mjedisit–ARM) investment value. This amount is deposited to the fund that finances urban studies. Time: 3 days 2% of the total investment value is charged by the municipality as infrastructural Cost: ALL 2,000 impact tax. The building permit fees can be paid at a local bank or through the postal Comments: According to Law No. 8934 on Environmental Protection, all local ap- service. proval requests are managed by the Regional Environmental Agencies in collabora- tion with municipal authorities. The fee for this procedure is set by Order No. 5 issued Procedure 12. Request inspection of property boundaries by by the Minister of Environment, Forestry, and Water Administration on December licensed surveyor 28, 2007. Time: 1 day Cost: ALL 3,000 Comments: This inspection is performed by a licensed surveyor. 76 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 13. Request inspection of construction foundations Procedure 21. Register property with the Immovable Property Time: 1 day Registration Office (IPRO) Cost: ALL 3,000 Time: 15 days Cost: ALL 3,420 (ALL 3,000 registration fee + ALL 300 service fee + ALL 120 mailing Procedure 14. Request on-site inspection of the completed fee) construction skeleton Comments: After obtaining the occupancy permit, all documentation is submitted Time: 1 day to IPRO for property registration. Documents include the building permit and all Cost: ALL 3,000 inspection reports. Procedure 15. Request on-site inspection of the adjustment *This procedure can be completed simultaneously with previous procedure. of the surroundings of the building according to the initial drawings DEALING WITH CONSTRUCTION PERMITS Time: 1 day Vlora, Albania Cost: ALL 3,000 Warehouse Value: ALL 40,000,000 (US$ 447,337) Data as of: January 2011 Procedure 16*. Request connection and connect to electrical power grid (CEZ Shpërndarje sh.a. Shkodër) Procedure 1. Request and obtain a recent property ownership Time: 25 days certificate and a copy of the land plot map from the Immovable Cost: ALL 40,000 Property Registration Office (IPRO) Comments: When requesting to connect to electrical power grid, BuildCo submits Time: 11 days the following documents: Cost: ALL 1,020 (ALL 400 for ownership certificate + ALL 400 for map + ALL 100 a. Filled out application form; service fee + ALL 120 mailing fee) b. Certificate showing BuildCo has no unpaid bills from previous dealings with the Comments: These documents are used to verify property ownership and are electricity provider (if any); required when BuildCo applies for the "building land" permit (this is an application to make the land plot buildable). All documents have to be no older than 3 months c. Building permit; and they need to show the size of the land surface in square meters. d. Property registration certificate; The application is done at the IPRO in Vlora. The legal IPRO deadline to provide the e. General plan and project plan at scale 1:1000 (format A3); documents is set by Order No. 861 dated June 3, 2010 issued by the Head of IPRO. f. Copy of license of the electrical engineer who performed electrical installation. Procedure 2*. Request and obtain extract of master plan and Procedure 17*. Request connection and connect to water and general plan of the plot from the municipal Urban Planning sewage services (Ndërmarrja e Ujësjellësit dhe Kanalizimeve Department Sh.A. Shkodër) Time: 23 days Time: 14 days Cost: ALL 12,000 Cost: ALL 25,000 Comments: The master and general plans of the plot are issued by the Urban Planning Department. The general plan is a topographic map of the situation of the Procedure 18*. Request connection and connect to existing property, while the master plan is a plan of the proposed development. telecommunications network (ALBtelecom) Master plan is obtained in order to analyze the buildings (existing and planned) and Time: 10 days surrounding areas of the land plot. Article 36 of the Law 8405 on Urban Planning states that all regional plans, master plans, general regulatory plans and partial Cost: ALL 4,800 urban studies, drafted by legally authorized institutions, have to be submitted to the Comments: Land line connection costs can be found at the ALBtelecom website technical secretary of the Territorial Adjustment Council (TAC) of the municipality (http://www.albtelecom.al/web/page_alb.aspx?id=658). within 15 business days. The plans have to be published for interested parties no later than 30 business days from the day received by TAC. Procedure 19. Receive inspection and obtain compliance report Time: 3 days Procedure 3*. Request and obtain document attesting that the Cost: ALL 48,000 (0.12% of the investment value) firm has no unpaid taxes or fees from the municipal tax office Comments: This procedure is performed by a private licensed compliance inspector. Time: 2 days BuildCo submits all documentation to the inspector who performs the inspection, Cost: ALL 100 drafts the compliance report, which BuildCo submits to the municipal Urban Plan- ning Department. Compliance report fees are regulated by Decision No. 444 issued Procedure 4*. Request and obtain opinion of the municipal by the Council of Ministers on September 5, 1994. Private entities cannot charge Urban Planning Department more than the rates published in the schedule below: Time: 7 days Investment value: . . . . . . . . . . . . . . . . . . . . Fee as % of the investment value: Cost: No cost ALL 1 to ALL 2 million . . . . . . . . . . . . . . . . 0.85% Comments: The opinion from the municipal Urban Planning Department is required ALL 2 million to ALL 2.5 million. . . . . . . . 0.5% at the moment BuildCo applies for the building permit. ALL 2.5 million to ALL 5 million. . . . . . . . 0.45% ALL 5 million to ALL 7.5 million. . . . . . . . 0.3% Procedure 5*. Request and obtain updated information on the ALL 7.5 million to ALL 10 million . . . . . . 0.25% closest connection point to the water network from the local ALL 10 million to ALL 20 million . . . . . . . 0.22% water authority (Ndërmarrja e Ujësjellësit dhe Kanalizimeve ALL 20 million to ALL 30 million . . . . . . . 0.15% Sh.A. Vlorë) ALL 30 million and above . . . . . . . . . . . . . 0.12% Time: 3 days Cost: ALL 2,000 Procedure 20. Request and obtain occupancy permit Comments: The local water authority approves the project and provides information Time: 30 days on the closest connection point to the water network to BuildCo. Cost: ALL 5,000 Comments: BuildCo submits the occupancy permit application accompanied by the compliance report and other necessary documentation. LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 77 Procedure 6*. Request and obtain environmental approval from Procedure 11*. Pay building permit fees at a commercial bank or the Regional Agency of Environmental Protection (Agjencia post office Rajonale e Ruajtjes së Mjedisit–ARM) Time: 1 day Time: 4 days Cost: ALL 1,200,000 (3% of investment value) Cost: ALL 2,000 Comments: According to law, the minimal building permit fee is 1% of the total in- Comments: According to Law No. 8934 on Environmental Protection, all local ap- vestment value. This amount is deposited to the fund that finances urban studies. 2% proval requests are managed by the Regional Environmental Agencies in collabora- of the total investment value is charged by the municipality as infrastructural impact tion with municipal authorities. The fee for this procedure is set by Order No. 5 issued tax. The building permit fees can be paid at a local bank or through the postal service. by the Minister of Environment, Forestry, and Water Administration on December 28, 2007. Procedure 12. Request inspection of property boundaries by licensed surveyor Procedure 7*. Request and obtain updated information on Time: 1 day the closest connection point to the electricity grid from the Cost: ALL 3,000 electricity distributor (CEZ Shpërndarje Sh. A. Vlorë) Comments: This inspection is performed by a licensed surveyor. Time: 5 days Cost: ALL 500 Procedure 13. Request inspection of construction foundations Time: 1 day Procedure 8*. Request and obtain Fire and Rescue Department Cost: ALL 3,000 approval (Policia e Mbrojtjes nga Zjarri dhe Shpëtimit - PMNZSH) Comments: Inspection is performed within 20 business days of request receipt. Time: 15 days Construction work is not disrupted while inspectors go on the ground. The request Cost: ALL 10,000 for such inspection is accompanied by a copy of the building permit and a copy of Comments: The fee for investments between ALL 20 million and ALL 50 million is the project plan. ALL 10,000. Fees are set by Decision No. 285 "Regarding Fire Department fees" dated June 27, 2002. Procedure 14. Request on-site inspection of the completed construction skeleton Procedure 9. Request and obtain "buildable land" permit from Time: 1 day the Technical Council of the municipal Urban Department Cost: ALL 3,000 (ALL 1,500 per floor) (Këshilli Teknik) and the municipal Territorial Adjustment Council Comments: Inspection is performed within 20 business days of request receipt. (TAC) Construction work is not disrupted while inspectors go on the ground. The request Time: 45 days for such inspection is accompanied by a copy of the building permit and a copy of Cost: No cost the project plan. Comments: The Technical Council convenes and checks all documentation submitted by BuildCo. Article 45 of the Law 8405 on Urban Planning states that the Procedure 15. Request on-site inspection of the adjustment Technical Council checks all documents and informs the applicant of their receipt of the surroundings of the building according to the initial within 5 business days. The Council informs the applicant of approval or rejection of drawings the application within 35 business days. If approved, the application is put forth for Time: 1 day approval at the upcoming meeting of TAC. TAC is supposed to meet every 30 days. Cost: ALL 3,000 Article 45 of the Law 8405 on Urban Planning states that the"buildable land" permit is valid for 6 months, within which period BuildCo has to submit the application Comments: Inspection is performed within 20 business days of request receipt. for building permit. If this deadline is passed, the "buildable land" permit becomes Construction work is not disrupted while inspectors go on the ground. The request invalid and BuildCo has to reapply. for such inspection is accompanied by a copy of the building permit and a copy of the project plan. Procedure 10. Apply and obtain building permit from the municipal Territorial Adjustment Council (TAC) Procedure 16*. Request connection and connect to electrical power grid (CEZ Shpërndarje Sh.A. Vlorë) Time: 30 days Time: 25 days Cost: No cost Cost: ALL 40,000 Comments: Article 50 of the Law 8405 on Urban Planning states that municipal TAC has to approve or reject the building permit request within 45 business days Comments: When requesting to connect to electrical power grid, BuildCo submits from the moment of application. Vlora is a category I municipality. By law, category I the following documents: municipal TAC consists of the following 15 members: a. Filled out application form; a. Mayor; b. Certificate showing BuildCo has no unpaid bills from previous dealings with the b. Head of Urban Planning Department; electricity provider (if any); c. Head of Cadastre; c. Building permit; d. Inspector from the municipal Urban Inspectorate (UI) delegated by the chief d. Property registration certificate; inspector of UI; e. General plan and project plan at scale 1:1000 (format A3); e. Head of Legal Department; f. Copy of license of the electrical engineer who performed electrical installation. f. Head of Public Infrastructure Department; g. Inspector from the Regional Environmental Protection Agency; Procedure 17*. Request connection and connect to water and sewage services (Ndërmarrja e Ujësjellësit dhe Kanalizimeve h. Landscape specialist; Sh.A. Vlorë) i. Three urban specialists or architects appointed by Municipal Council; Time: 25 days j. Two urban specialists or architects, one construction specialist and one structural engineer appointed by the prefecture. Cost: ALL 22,000 Procedure 18*. Request connection and connect to telecommunications network (ALBtelecom) Time: 7 days Cost: ALL 4,800 Comments: Land line connection costs can be found at the ALBtelecom website (http://www.albtelecom.al/web/page_alb.aspx?id=658). 78 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 19. Receive inspection and obtain compliance report Procedure 3. Obtain urban planning consent (location permit) Time: 4 days from the municipal Department of Construction and Urban Cost: ALL 48,000 (0.12% of the investment value) Planning Comments: This procedure is performed by a private licensed compliance inspector. Time: 25 days BuildCo submits all documentation to the inspector who performs the inspection, Cost: BAM 1,524 (BAM 1,500 to have urban planning documents made + BAM 22 for drafts the compliance report, which BuildCo submits to the municipal Urban Plan- land registry extract+ BAM 2 for administrative fee) ning Department. Compliance report fees are regulated by Decision No. 444 issued Comments: BuildCo must hire a private bureau that specializes in construction by the Council of Ministers on September 5, 1994. Private entities cannot charge planning to create an Urban Planning Certificate and have it submitted to municipal more than the rates published in the schedule below: Department of Construction and Urban Planning for approval. Law on Urban Plan- Investment value: . . . . . . . . . . . . . . . . . . . . Fee as % of the investment value: ning and Construction states that, if the property is being built in the zone for which ALL 1 to ALL 2 million . . . . . . . . . . . . . . . . 0.85% planning documentation has already been done (meaning that there are similar constructions in its vicinity), preliminary verifications from utility companies have ALL 2 million to ALL 2.5 million. . . . . . . . 0.5% already been obtained. Before submitting all the documentation to the Department ALL 2.5 million to ALL 5 million. . . . . . . . 0.45% of Construction and Urban Planning , private bureau consults with the Center for ALL 5 million to ALL 7.5 million. . . . . . . . 0.3% Permits at the Municipal Court in order to find out about all the necessary docu- ALL 7.5 million to ALL 10 million . . . . . . 0.25% mentation to obtain urban planning consent. It is necessary to fill out and submit ALL 10 million to ALL 20 million . . . . . . . 0.22% a Request for Urban Consent that can be obtained in the Administrative Services Department of the municipality or downloaded from Department’s web site: http:// ALL 20 million to ALL 30 million . . . . . . . 0.15% www2.banjaluka.rs.ba/static/uploads/service/forms/ASBL-OB-03-03_.pdf. Apart ALL 30 million and above . . . . . . . . . . . . . 0.12% from the request form, bureau will ask BuildCo to provide a copy of the cadastre ex- tract (which cannot be older than six months) and project construction design plan. Procedure 20. Request and obtain occupancy permit Time: 30 days Procedure 4*. Obtain preliminary verification of study on fire Cost: ALL 5,000 and explosion prevention from the Public Safety Department at Comments: BuildCo submits the occupancy permit application accompanied by the Ministry of Internal Affairs compliance report and other necessary documentation. Time: 10 days Cost: BAM 200 Procedure 21. Register property with the Immovable Property Comments: BuildCo must submit a complete description of the main project plan Registration Office (IPRO) describing all construction phases of the project. Time: 21 days Cost: ALL 3,420 (ALL 3,000 registration fee + ALL 300 service fee + ALL 120 mailing Procedure 5. Obtain validation of the technical audit of the main fee) project from the Construction Institute of Banja Luka Comments: After obtaining the occupancy permit, all documentation is submitted Time: 15 days to IPRO for property registration. Documents include the building permit and all Cost: BAM 2,459 (BAM 1.64 per square meter of the land and building for technical inspection reports. audit of the project + 0.15% of the overall value of the land and building for the technical audit of property's surroundings) *This procedure can be completed simultaneously with previous procedure. Comments: BuildCo must undergo a technical audit that shows that the project was designed in accordance with the conditions stated in the location permit and provi- DEALING WITH CONSTRUCTION PERMITS sions of the Law on Urban Planning and Construction. All objects bigger than 400 square meters have to undergo a technical audit. The auditing entity must have at Banja Luka, Bosnia and Herzegovina least one engineer who has passed the state exam and has 5 years of working expe- Warehouse Value: BAM 1,013,350 (US$ 726,607) rience. The signature of an authorized auditor is required to confirm that the project Data as of: January 2011 has been revised in its entirety and is in compliance with the law. No individual who takes part in preparation of documents for the location permit can be part of the Procedure 1. Obtain cadastre extract showing status of the land auditing entity. Cost of the audit is paid at the Construction Institute of Banja Luka. plot from the Republic Administration for Geodetic and Property Affairs Procedure 6*. Pay the rent and cadastre fee at a commercial bank Time: 1 day on the account of municipal Department of Construction and Cost: BAM 27 (BAM 10 for cadastre extract+ BAM 10 for the land occupation certifi- Urban Planning cate + BAM 7 per number of registered properties) Time: 1 day Comments: BuildCo must submit a request form available at the municipality. If the Cost: BAM 16,059 (BAM 10.01 per square meter of the land and building for the rent cadastre extract has already been digitized, this procedure may be done in one day fee + 0.3% of the overall value of the land and building for the cadastre fee) (30 minutes). More than two thirds of all properties registered in cadastre are now Comments: In order to calculate the cost of the rent and cadastre fee, BuildCo must in digital form. However, if a particular property’s cadastre extract is not digitized, fill out a form obtained on the following web site: http://www2.banjaluka.rs.ba/ cadastre extract may be obtained within 7 days. static/uploads/service/forms/ASBL-OB-03-16_.pdf. Procedure 2*. Obtain extract from the land registry book Procedure 7. Apply for building permit with the municipal showing proper registration at the Land Registry Department at Department of Construction and Urban Planning the District Court Banja Luka Time: 25 days Time: 1 day Cost: BAM 102 (BAM 2 for administrative fee + BAM 100 for building permit) Cost: BAM 10 Comments: BuildCo must submit a request for the building permit to the Depart- Comments: BuildCo has to know the number of the property in cadastre. If the ment of Construction and Urban Planning. The request form can be found on the property’s land registry extract has already been digitized, this procedure may be following web-site: http://www2.banjaluka.rs.ba/static/uploads/service/forms/ done in 1 day (30 minutes). However, if the property’s land registry extract is not ASBL-OB-03-02_.pdf. digitized, extract may be obtained within 7 days. More than 90% of all properties Along with the form, BuildCo needs to submit the following documents: registered in the land registry are now in digital form. a. Cadastre extract; b. Proof of payment for purchase of the construction land; c. Proof of rent payments and cadastre fee; d. Land registry extract as a proof of ownership or occupancy; e. Certificate of undergoing technical audit of project documentation; LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 79 f. Construction planning project (two copies); Procedure 13*. Request electricity connection at ZP g. Location permit including Book 1 (Architecture project) and Book 2 (Building Elektrokrajina Banja Luka project). Time: 20 days Procedure 8. Request marking out of the land plot at the Cost: BAM 375 Construction Institute of Banja Luka Comments: BuildCo must contact ZP Elektrokrajina to obtain an electrical connec- Time: 9 days tion. The request should include: Cost: BAM 400 a. Building permit; Comments: The Construction Institute issues a certificate that proves that the land b. Land registry extract; plot has been marked out and submits it to the municipal Department of Construc- c. BuildCo's court registration; tion and Urban Planning along with the building permit and the urban planning d. BuildCo’s company identification number; consent issued by the same authority. e. Cadastre extract. Procedure 9. Notify the municipality about the commencement Procedure 14. Request issuance of the building usage permit of works and compliance with safety standards at the from the municipal Department of Construction and Urban Inspectorate of Republika Srpska Planning Time: 1 day Time: 46 days Cost: No cost Cost: BAM 32 (BAM 2 for the request form + BAM 30 for the permit) Comments: BuildCo must notify the Inspectorate of Republika Srpska of the start Comments: BuildCo must submit a request for the building usage permit. The of construction and compliance with safety of construction site no later than 7 days request form can be downloaded here: http://www2.banjaluka.rs.ba/static/uploads/ before the start of construction. Inspectorate’s officers inspect the construction site service/forms/ASBL-OB-03-01_.pdf. and issue a Certificate of Compliance. Other required documents include: BuildCo also has to submit the following documents: a. Building permit (copy); a. Copy of the building permit; b. Cadastre extract (copy); b. Construction site organizational scheme; c. Exact plan of the final building position; c. Certificate of naming supervisory body of the construction site (BuildCo names d. Written statements from each contractor stating the work has been properly the supervisory body); performed according to the project design and future maintenance plans; d. Construction site safety certificate. e. Written report (by the construction supervisor) that all materials were of standard quality (certified as such by the suppliers); Procedure 10. Receive control of construction foundations from the Construction Institute, Banja Luka f. Construction diary and construction book; g. Book of all relevant inspections; Time: 8 days h. Certificate on marked-out land plot. Cost: BAM 200 Upon submitting request to obtain building usage permit, BuildCo has to receive Comments: After marking out the land plot, the municipal inspector from the technical inspection. The building usage permit is issued upon completion of Department of Construction and Urban Planning checks if the construction’s founda- technical inspection. By law, the Construction Institute should perform technical tions have been properly built. If he finds any errors, responsibility is assumed by inspection within 15 days of receiving a duly submitted request for a building usage the institution that marked out the land plot (Construction Institute of Banja Luka). permit. The relevant municipal department must appoint an independent profes- BuildCo's representative has to accompany the inspector. After the inspector issues sional inspection board for a technical inspection within 8 days of receiving the duly a Certificate of Foundation's Audit, he submits it to the Department of Construction submitted request for issuance of a building usage permit. In practice, it takes longer. and Urban Planning. Procedure 11. Request telephone line connection at Telekom Procedure 15*. Receive technical inspection from the Srpske Construction Institute of Banja Luka Time: 1 day Time: 10 days Cost: BAM 5,058 (BAM 2.2 per square meter of the land and building for the techni- Cost: No cost cal inspection + 0.79% of the overall value of the surrounding land not including the Comments: BuildCo must contact Telekom Srpske to obtain a phone line connec- building for the technical inspection of property's surroundings) tion. Apart from submitting the request form, BuildCo should provide following Comments: No later than the inspection date, BuildCo must present the following documents: documentation to the board: a. Building permit; a. Excerpt from the Commercial Court Register, showing that BuildCo is properly b. BuildCo’s company identification number; registered; c. Proof of BuildCo's court registration; b. Details on the each work phase of the construction; d. BuildCo’s bank account number; c. Building permit (copy); e. Land registry extract. d. Performance reports verified by the designer of the main project plan to validate compliance with the main project plan as well as terms and conditions specified Procedure 12*. Request water and sewage connection from in the building permit; Vodovod Banja Luka e. Construction diary and construction book; Time: 20 days f. Proof of testing the quality of materials and equipment received from suppliers at Cost: BAM 200 the time of purchase; Comments: BuildCo must contact Vodovod Banja Luka to obtain water and sewage g. Construction mark-out plan and minutes on the performed mark out; connection. Request should include: h. Construction-site organization scheme; a. Building permit; i. Decision on the appointed construction engineers and the supervisors; b. Land registry extract; j. Cadastre extract. c. BuildCo's court registration; The number of board members appointed depends on the type and the complexity d. BuildCo’s company identification number; of the building; the board will consist of one professional for each type of construc- e. Cadastre extract. tion work to be inspected (architectural/engineering, electrical, mechanical, water and sewage system, and so forth). After drawing up a protocol, signed by the president and each board member, the inspection board must forward the signed protocol to the Department of Construction and Urban Planning within 8 days of performing the site inspection. If the protocol states that the building is defective 80 DOING BUSINESS IN SOUTH EAST EUROPE 2011 and that the defective parts need to be removed, the municipality will set a deadline Procedure 3. Obtain urban planning consent from the municipal of up to 90 days to remedy defects. The building cannot be registered in the land registry if the building usage permit has not been issued. Department for Spatial Planning, Urbanism and Communal Matters Procedure 16. Obtain geodetic image of the property site from a Time: 15 days private geodetic firm Cost: BAM 3,300 (BAM 2.5 per square meter of the land and building to have urban Time: 5 days and development consent documentation prepared + BAM 50 for a fee to request issuance of urban consent) Cost: BAM 400 Comments: In order to obtain urban planning consent, BuildCo submits a request Comments: Before registering the building into the cadastre, BuildCo needs to ob- to the municipal Department for Spatial Planning, Urbanism and Communal Matters tain a new geodetic image of the plot in order to show that there was no additional with the following documents: construction on the site except what is agreed in the urban planning consent. a. Reason for the request, including the project information and documentation Procedure 17. Register the building into cadastre book at the required for the assessment by the Department for Spatial Planning, Urbanism and Communal Matters; Republic Administration for Geodetic and Property Affairs b. Preliminary project design in 2 copies (or project proposal/sketch, depending on Time: 25 days the level of construction's complexity); Cost: BAM 145.4 (BAM 96 for the maintenance of cadastre + BAM 9 for cadastre c. General schemes for power, heating and telecommunication installations, fire network usage + BAM 40.4 for making of the new property occupancy certificate) prevention and security systems, water supply and sewage systems; Comments: BuildCo needs to submit a request to register the building in the ca- d. Extract from the cadastre plan, showing the right to build and ownership of the dastre books at the Republic Administration for Geodetic and Property Affairs along land plot (not older than 6 months); with the following documents: e. Extract from the land registry book, showing BuildCo’s proper court registration a. Building usage permit; Once issued, the urban planning consent is effective for a year, during which time b. Copy of the cadastre plan; BuildCo needs to submit a construction permit request. c. Construction permit; d. Certificate showing marking out of the property construction site. Procedure 4. Obtain preliminary verification of the heating and electricity installations from Elektroprivreda Procedure 18. Register the building in the land registry books Time: 30 days with the Land Registry Department at the District Court Banja Cost: BAM 40 Luka Comments: BuildCo must submit to Elektroprivreda the description of the main Time: 45 days project plan, which consists of the following documents: Cost: BAM 30 a. Book 1 (Architecture project) and Book 2 (Building project); Comments: BuildCo has to submit a request to register the property into the land b. Description of the main project plan, which consists of a preliminary consent on registry books. The registration request form can be found here: http://www. electrical installation; osnovnisudbl.org/Libraries/%d0%94%d0%be%d0%ba%d1%83%d0%bc%d0%b5% d0%bd%d1%82%d0%b8/Zahtjev_za_uknjizbu_objektas_CIR.sflb.ash. c. Land registry extract to prove ownership of the property; Apart from the registration request form, BuildCo has to submit the following docu- d. Consent from the Urban Planning Department already containing cadastre ments: extract; a. Purchasing agreement of the land or other document as a proof of ownership; e. Original construction project sketch of electrical installations. b. Building usage permit; Procedure 5*. Obtain preliminary verification of water supply c. Rent and shelter fee payment certificate; and sewage system projects from JP Vodovod Mostar d. Payment of BAM 30 for administrative expenses. Time: 15 days The private geodetic bureau submits the newly created geodetic image of the plot- Cost: BAM 40 land and a ground-plan of the building to the municipal Department of Construction and Urban Planning. The Department of Construction and Urban Planning then Comments: BuildCo must submit the following documents to JP Vodovod Mostar: forwards documents to the land registry. a. Description of the main project plan; b. Request for a preliminary consent for water and sewage installations; *This procedure can be completed simultaneously with previous procedure. c. Land registry extract as a proof of ownership of the property; d. Urban planning consent from the Urban Planning Department which already DEALING WITH CONSTRUCTION PERMITS contains cadastre extract. Mostar, Bosnia and Herzegovina Procedure 6*. Obtain preliminary verification of the Warehouse Value: BAM 1,013,350 (US$ 726,607) telecommunication installations from BH Telekom Data as of: January 2011 Time: 40 days Procedure 1. Obtain cadastre extract showing status of the land Cost: BAM 70 plot from the municipal Cadastre Department Comments: BuildCo must submit to BH Telekom or HT Mostar the description of the Time: 3 days main project plan, which consists of the following documents: Cost: BAM 35 a. Preliminary consent on telecommunication installation; Comments: BuildCo must submit a registration request form available at the munici- b. Land registry extract to prove ownership of the property; pality. c. Urban consent from the municipal Department for Spatial Planning, Urbanism and Communal Matters, which already contains cadastre extract and the original Procedure 2*. Obtain extract from the land registry book construction project sketch. showing proper registration from the Land Registry Department with the District Court in Mostar Procedure 7*. Obtain preliminary verification of Study on Fire Time: 13 days and Explosion Prevention from the Public Safety Department at Cost: BAM 10 the Ministry of Internal Affairs Comments: BuildCo has to know the number of the property in cadastre registry. Time: 7 days Cost: BAM 50 Comments: BuildCo must submit the complete description of the main project plan describing all construction phases to the Public Safety Department at the Ministry of Internal Affairs. LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 81 Procedure 8. Obtain validation of the technical audit of the main Procedure 15*. Request electricity connection at Elektroprivreda project from a private geodetic firm Time: 10 days Time: 10 days Cost: BAM 2,000 Cost: BAM 3,902 (BAM 3 per square meter of the land and building for the technical Comments: BuildCo must contact Elektroprivreda to obtain an electrical connec- audit of the main project) tion. The request should include a building permit and a preliminary verification of Comments: BuildCo must undergo a technical audit, showing that the project was electrical installations. designed in compliance with the urban planning consent and the provisions of the Law on Spatial Planning. The auditing entity must have at least one engineer who Procedure 16. Request issuance of the building usage permit passed the state exam and has 5 years of experience. The signature of an authorised from the municipal Department for Spatial Planning, Urbanism auditor is required to confirm that the project has been revised in its entirety and in and Communal Matters compliance with the law. Time: 30 days Procedure 9*. Pay the rent fee and shelter construction fee at a Cost: BAM 4,602 (BAM 3.5 per square meter for technical inspection + BAM 50 for an administrative fee to have building usage permit issued) commercial bank on the account of the municipal Department for Spatial Planning, Urbanism and Communal Matters Comments: BuildCo must submit a request for the building usage permit with the following documents: Time: 1 day a. Building permit (copy); Cost: BAM 40,425 (BAM 23.29 per square meter of the land and building for the rent fee + 1% of the overall value of the land and building for the shelter fee) b. Cadastre plan (copy), including an exact plan of the marked final building position; c. Written statements from each contractor, stating the work has been properly Procedure 10. Apply for building permit with the municipal performed according to the project design and future maintenance plans; Department for Spatial Planning, Urbanism and Communal d. Written report (by the construction supervisor) that all materials were of standard Matters quality (certified as such by the suppliers). Time: 15 days Upon submitting the request to obtain the building usage permit, BuildCo has to receive a technical inspection. The building usage permit is issued upon completion Cost: BAM 200 of the technical inspection. By law, the technical inspection should be performed Comments: BuildCo must submit a request for the building permit to the Depart- within 15 days of receiving a duly submitted request for a building usage permit. ment for Spatial Planning, Urbanism and Communal Matters, with the following After drawing up a protocol, signed by the president and each board member, the documents: inspection board must forward the signed protocol to the Department for Spatial a. Valid urban planning consent; Planning, Urbanism and Communal Matters, within 8 days of performing the site b. Cadastre extract; inspection. If the protocol states that the building is defective and that the defective parts need to be removed, the municipality will set a deadline of up to 90 days for c. Proof of payment for purchase of the construction land; BuildCo to take action. In practice, it takes longer than the time limits set by law. d. Proof of rent payment and shelter fee; e. Consents obtained during the issuing of the urban planning permit; Procedure 17*. Receive technical inspection from the municipal f. Verified development project (two copies); Department of Construction and Urban Planning g. Consents for the project documentations (Project Books 1 and 2, including the Time: 1 day preliminary verifications applied for in Procedures 4 to 7). Cost: No cost Comments: No later than the inspection date, BuildCo must present the following Procedure 11. Request marking out of the land plot from the documentation to the board: municipal Department for Spatial Planning, Urbanism and a. Excerpt from the Commercial Court Register, showing that BuildCo is properly Communal Matters registered; Time: 15 days b. Details on each work phase of the construction; Cost: BAM 50 c. Building permit (copy); Comments: The request for marking out the land plot must be submitted to the d. Performance reports verified by the designer of the main project plan to validate municipal Department for Spatial Planning, Urbanism and Communal Matters, with compliance with the main project plan as well as terms and conditions specified the building permit and the urban planning consent. The municipal authorities mark in the building permit; out the land plot. e. Construction diary and construction book; Procedure 12. Notify the municipality about the commencement f. Proof of testing the quality of materials and equipment received from suppliers at of works at the municipal Department for Spatial Planning, the time of purchase; Urbanism and Communal Matters g. Construction mark-out plan and minutes on the performed mark out; Time: 1 day h. Construction-site organization scheme; Cost: BAM 10 i. Decision on the appointed construction engineers and the supervisors; Comments: BuildCo must notify the municipal Department for Spatial Planning, j. Cadastre plan. Urbanism and Communal Matters of the start of construction no later than 8 days The relevant municipal department must appoint an independent professional before work begins. inspection board for a technical inspection within 8 days of receiving the request for issuance of a building usage permit. The number of board members appointed Procedure 13. Request telephone line connection at BH Telekom depends on the type and the complexity of the building; the board will consist of Time: 7 days one professional for each type of construction work to be inspected (architectural/ engineering, electrical, mechanical, water and sewage system, and so forth). Cost: BAM 150 Comments: BuildCo must contact BH Telekom to obtain a telephone line connec- Procedure 18. Register the building into cadastre books at the tion. The request should include the preliminary verification of the phone installation municipal Cadastre Department and a building permit. Time: 30 days Procedure 14*. Request water and sewage connection at JP Cost: BAM 135 Vodovod Mostar Comments: BuildCo must submit a request to register the building in the cadastre Time: 10 days books at the municipal Cadastre Office, along with a building usage permit, a build- ing permit and a proof of marking out of the property construction site. During the Cost: BAM 150 technical review of the completed construction, the designated authority checks Comments: BuildCo must contact JP Vodovod Mostar to obtain water and sewage whether there have been any additional changes to the construction and whether connection. The request should include the preliminary verification of water installa- the construction was built in accordance with urban planning consent. If there were tions and a building permit. any changes, it is necessary to obtain a new geodetic image of the plot. 82 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 19. Register the building into land registry books with Procedure 4. Obtain preliminary verification of the heating and the Land Registry Department at the District Court Mostar electricity installations from Elektroprivreda Time: 370 days Time: 29 days Cost: BAM 27 Cost: BAM 88 Comments: BuildCo must submit a request to register the warehouse in the land Comments: BuildCo must submit to the municipal electricity provider (Elektro- registry books. The request form can be found on the following web site: http:// privreda) the description of the main project plan, which consists of the following opsud-bihac.pravosudje.ba/vstv/faces/vijesti.jsp?id=19663. documents: Other required documents include: a. Book 1, Architecture Project: a. Purchasing agreement or other document as a proof of building and land ownership; b. Book 2, Building Project; b. Building usage permit; c. Electrical installations (IT, lightning rod) and fire prevention technology; c. Rent and shelter fee payment certificate; d. Heating installations (including pre-measurements and technical descriptions); d. Payment of BAM 27 for administrative expenses. e. Water supply and sewage system installations (including pre-measurements and Land Registry Department will register the property upon receiving the cadastre technical descriptions); extract. Because of a great number of pending requests, registration in the land f. Information on the geotechnical and civil engineering aspects of the project; registry takes a long time. Currently, the Land Registry Department is working on g. Study on waste management and environment protection; requests from 2008. h. Study on fire and explosion prevention. *This procedure can be completed simultaneously with previous procedure. Procedure 5*. Obtain preliminary verification of water supply and sewage system projects from Vodovod i Kanalizacije DEALING WITH CONSTRUCTION PERMITS Time: 28 days Sarajevo, Bosnia and Herzegovina Cost: BAM 117 Warehouse Value: BAM 1,013,350 (US$ 726,607) Comments: Apart from the request for a preliminary verification of water supply Data as of: January 2011 and sewage and all other preliminary verifications by utility providers, BuildCo must submit the description of the main project plan to the municipal water and sewage Procedure 1. Obtain cadastre extract showing status of the land authority (Vodovod i Kanalizacija). All documents should be submitted in two copies plot from the municipal Cadastre Department (one for water supply authority, one for sewage authority). Time: 1 day Cost: BAM 15 Procedure 6*. Obtain preliminary verification of the telecommunication installations from BH Telekom Comments: BuildCo must submit a request form available at the municipality. Due to internal reorganization and automatization of cadastre books, cadastre extract Time: 15 days can be obtained in 1 day, given that all cadastre books are in digital form. Cost: BAM 21 Comments: BuildCo must submit to BH Telekom the description of the main project Procedure 2*. Obtain extract from the land registry book plan, which consists of the following documents: showing proper registration from the municipal Land Registry a. Preliminary consent on telecommunication installation; Department b. Land registry extract to prove ownership of the property; Time: 1 day c. Urban consent from the municipal Department for Spatial Planning, Urbanism Cost: BAM 4 and Communal Matters which already contains cadastre extract and the original Comments: The extract is available from the Land Registry Department of the construction project sketch. Municipal Court. The company representative must take a queue number at the office counter in the morning and make a written or oral request. The extract will be Procedure 7*. Obtain preliminary verification of Study on Fire provided on the same day (usually within 1 hour). and Explosion Prevention from the Public Institute for Fire Protection Procedure 3. Obtain urban planning consent from the municipal Time: 4 days Department for Spatial Planning, Urbanism and Communal Cost: BAM 150 Matters Comments: BuildCo must submit electronically the description of the main project Time: 30 days plan to the Public Institute for Fire Protection, an independent agency. Cost: BAM 30 Comments: BuildCo submits a request to the municipality for an urban planning Procedure 8. Obtain validation of the technical audit of the main consent with the following required documents: project from the auditing entity a. Reason for the request, including the project data and documentation required Time: 5 days for the assessment by the municipal Department for Spatial Planning, Urbanism Cost: BAM 28,180 and Communal Matters; Comments: BuildCo must undergo a technical audit, showing that the project was b. Program sketch; designed in compliance with the urban planning consent and provisions of the c. Preliminary (or first draft) project design, two examples (or depending on the Law on Spatial Planning. The auditing entity must have at least one engineer who level of construction complexity, project proposal or program sketch); passed the state exam and has 5 years of experience. The signature of an authorised d. General schemes for power installations, heating installations, fire prevention and auditor is required to confirm that the project has been revised in its entirety and in security systems, water supply and sewage systems; compliance with the Law. The total fee for technical audits varies across municipali- e. Extract from the cadastre plan, showing right to build and ownership of plot (not ties, according to municipal decisions on the fee schedule for the technical audit of older than 6 months); construction. f. Extract from the land registry book, showing proper registration. Procedure 9*. Pay the rent fee and shelter construction fee at Once issued, the urban planning consent is effective for a year, during which time a commercial bank on the account of Department for Spatial BuildCo may submit a construction permit request. Planning, Urbanism and Communal Matters Time: 1 day Cost: BAM 38,487 (BAM 21.80 per square meter of the land and building for the rent fee + 1% of the overall value of the land and building for the shelter fee) LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 83 Procedure 10. Apply for building permit with the municipal Procedure 16. Request issuance of the building usage permit Department for Spatial Planning, Urbanism and Communal from the municipal Department for Spatial Planning, Urbanism Matters and Communal Matters Time: 30 days Time: 30 days Cost: No cost Cost: BAM 7,804 Comments: BuildCo must submit a request for the building permit to the municipal Comments: BuildCo must submit a request for the building usage permit with the Department for Spatial Planning, Urbanism and Communal Matters, with the follow- following documents: ing documents: a. Building permit (copy); a. Valid urban planning consent; b. Cadastre plan (copy), including an exact plan of the marked final building posi- b. Cadastre extract: land plot and proof of right to build; tion; c. Proof of payment for purchase of the construction land; c. Written statements from each contractor, stating the work has been properly d. Proof of rent payments and shelter fee; performed according to the project design and future maintenance plans; e. Consents obtained during the issuing of the urban planning permit; d. Written report (by the construction supervisor) that all materials were of standard quality (certified as such by the suppliers). f. Consent for stated building and any other enclosures as requested by the authori- ties; Upon submitting request to obtain the building usage permit, BuildCo has to receive a technical inspection. The building usage permit is issued upon completion of the g. Verified development project (two copies); technical inspection. By law, the technical inspection should be performed within 15 h. Consents for the project documentations (Project Books 1 and 2, including the days of receiving a request for a building usage permit. After drawing up a protocol, preliminary verifications applied for in Procedures 4 to 7). signed by the president and each board member, the inspection board must forward There is no fee associated with the application. the signed protocol to the municipal Department for Spatial Planning, Urbanism and Communal Matters, within 8 days of performing the site inspection. If the protocol Procedure 11. Request marking out of the land plot at the states that the building is defective and that the defective parts need to be removed, municipal Department for Spatial Planning, Urbanism and the municipality will set a deadline of up to 90 days for BuildCo to take action. In Communal Matters practice, it takes longer than the time limits set by law. Time: 7 days Procedure 17*. Receive technical inspection from the municipal Cost: BAM 15 Department for Spatial Planning, Urbanism and Communal Comments: The request for marking out the land plot must be submitted to the Matters municipal Department for Spatial Planning, Urbanism and Communal Matters, with the building permit and the urban planning consent. The municipal authorities mark Time: 1 day out the land plot. The request fee depends on the annual municipal pricing decisions Cost: No cost and on the on-site assessment. Comments: No later than the inspection date, BuildCo must present the following documentation to the board: Procedure 12. Notify the municipality about the commencement a. Excerpt from the Commercial Court Register, showing that BuildCo is properly of works at the Department for Spatial Planning, Urbanism and registered; Communal Matters b. Details on the each work phase of the construction; Time: 1 day c. Building permit (copy); Cost: No cost d. Performance reports verified by the designer of the main project plan to validate Comments: BuildCo must notify the municipal Department for Spatial Planning, compliance with the main project plan as well as terms and conditions specified Urbanism and Communal Matters, of the start of construction no later than 8 days in the building permit; before work begins. e. Construction diary and construction book; f. Proof of testing the quality of materials and equipment received from suppliers at Procedure 13. Request telephone line connection at BH Telekom the time of purchase; Time: 13 days g. Construction mark-out plan and minutes on the performed mark out; Cost: BAM 60 h. Construction-site organization scheme; Comments: BuildCo must contact the BH Telekom to obtain a telephone line i. Decision on the appointed construction engineers and the supervisors; connection. The request should include the preliminary verification of the phone j. Cadastre plan. installation and Project Books 1 and 2. The relevant municipal department must appoint an independent professional in- Procedure 14*. Request water and sewage connection at spection board for a technical inspection within 8 days of receiving the duly submit- Vodovod i Kanalizacije ted request for issuance of a building usage permit. The number of board members appointed depends on the type and the complexity of the building; the board will Time: 30 days consist of one professional for each type of construction work to be inspected (archi- Cost: BAM 500 tectural/engineering, electrical, mechanical, water and sewage system, and so forth). Comments: BuildCo must contact Vodovod i Kanalizacije to obtain water and sew- age connection. The request should include the preliminary verification and Project Procedure 18. Register the building into cadastre books at the Books 1 and 2. municipal Cadastre Department Time: 15 days Procedure 15*. Request electricity connection at Elektroprivreda Cost: BAM 180 Time: 30 days Comments: BuildCo must submit a request to register the building in the cadastre Cost: BAM 750 books at the municipal Cadastre Office. Along with the request, BuildCo must submit Comments: BuildCo must contact Elektroprivreda to obtain an electrical connec- the building usage permit, the building permit, the certificate proving the marking tion. The request should include the proof of property ownership, the construction out of the property construction site and other documents showing ownership over permit, and other data, as requested. the property. During the technical review of the completed construction, the designated authority checks whether there have been any additional changes in the construction and whether the construction was built in accordance with the urban planning consent. If there were any changes, it is necessary to obtain a new geodetic image of the plot. Upon registration of the property in the cadastre records, the cadastre forwards an extract to the Land Registry, which will serve for having the property registered in the land registry books. 84 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 19. Register the building into land registry books with Comments: BuildCo presents the water plans for assessment of compliance with safety standards. There is no charge for the clearance, but the total fee including the the Land Registry Department at the District Court Sarajevo connection is EUR 181 (reflected in Procedure 11). Time: 1 day Cost: BAM 60 Procedure 7. Pay municipal fees for the building permit at a Comments: BuildCo must submit a request to register the warehouse in the land commercial bank registry books. The request form can be found in the Land Registry Department. Time: 1 day Other required documents include: Cost: EUR 13,007 a. Purchasing agreement or other document as a proof of building and land owner- ship; Procedure 8. Request and obtain building permit from the b. Building usage permit; Department of Urbanism, Construction, and Environmental c. Rent and shelter fee payment certificate; Protection d. Payment of BAM 60 for administrative expenses. Time: 30 days The Land Registry office will register the property upon receiving the cadastre Cost: No cost extract. Comments: The applicant presents the receipt of payment and requests the build- ing permit. Usually, applicants will have to wait between 20 to 35 days in order to *This procedure can be completed simultaneously with previous procedure. receive the building permit. DEALING WITH CONSTRUCTION PERMITS Procedure 9. Notify the Department of Urbanism, Construction, and Environmental Protection about the start of construction Pristina, Kosovo work Warehouse Value: EUR 700,000 (US$ 1,020,128) Time: 1 day Data as of: January 2011 Cost: No cost Procedure 1. Request and obtain the property certificate and a Comments: The notification needs to be submitted 8 days before the beginning of copy of land plot plan from the municipal Geodesy and Cadastral construction. The Technical Commission may visit the site unannounced to verify Directorate whether the construction is in accordance with the plan. Due to the volume of construction in Pristina, such visits are rare. Time: 2 days Cost: EUR 8 (EUR 4 for ownership certificate + EUR 4 for a copy of the land plot plan) Procedure 10. Receive on-site inspection by the municipal Comments: Property certificates are valid for 180 days and will be required for the Technical Commission building permit application. Time: 1 day Cost: No cost Procedure 2. Request and obtain approval of compliance with urban and technical requirements from the Department of Procedure 11. Request connection and connect to water and Urbanism, Construction, and Environmental Protection sewage services (Ujësjellësi Rajonal Prishtina) Time: 30 days Time: 7 days Cost: EUR 10 Cost: EUR 181 Comments: Authorities verify if the building can be constructed in the specific area and if the building's design complies with the urban plan. In addition, the authorities Procedure 12*. Request connection and connect to analyze the building plans to assess the compliance with security and technical telecommunications network construction standards. The legal deadline for this procedure is 30 business days. Time: 5 days Procedure 3. Request and obtain validation of the main Cost: EUR 31 project from the Department of Urbanism, Construction, and Environmental Protection Procedure 13*. Apply for electricity connection at KEK (Korporata Time: 5 days Energjetike e Kosovës) Cost: No cost Time: 1 day Comments: The Department verifies the main project plan and assesses the fees Cost: No cost that need to be paid in order to obtain the building permit. Comments: Applicants should apply in person. The forms are available on-line. The following documents should be attached to the application: electrical plan, Procedure 4. Request and obtain initial clearance from the construction permit and receipts stating the origin of materials. electricity authority KEK (Korporata Energjetike e Kosovës) Procedure 14*. Receive an inspection from KEK (Korporata Time: 2 days Energjetike e Kosovës) Cost: EUR 10 Time: 1 day Comments: BuildCo presents the electrical plans for assessment of compliance with safety standards. Cost: No cost Comments: An inspector visits the property and assesses the connection costs. Procedure 5. Request and obtain fire protection clearance from After the visit, the staff from KEK will prepare the “energy agreement”. This document the Department of Emergencies and Civil Protection explains the required next steps and provides connection works’ guidelines for the electrical contractor. KEK is unable to provide materials or workers for the connec- Time: 15 days tion. Therefore, the electrical contractor will lead the works under KEK’s supervision. Cost: EUR 50 Comments: BuildCo presents the emergency plans in case of fire for assessment of Procedure 15*. Sign energy agreement with KEK and pay compliance with safety standards. associated fees at a commercial bank Time: 1 day Procedure 6. Request and obtain initial clearance from the water Cost: EUR 501 (EUR 500 connection fee + EUR 1 bank transaction fee) authority (Ujësjellësi Rajonal Prishtina) Comments: The applicant pays the EUR 500 fee (for processing the technical docu- Time: 2 days mentation) at any commercial bank and EUR 1 (for bank transaction fee). Applicants Cost: No cost have 4 days to request any amendment to the energy agreement. LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 85 Procedure 16*. Receive inspection by KEK of purchased Procedure 4. Receive on-site inspection by the municipal equipment and connection works, external connection and Technical Commission and obtain urban and technical installation of the meter requirements approval Time: 21 days Time: 30 days Cost: No cost Cost: No cost Comments: Electricity starts to flow upon installation of the meter. All the connec- Comments: The municipal Technical Commission conducts an on-site visit and de- tion related works will be performed by the electrical contractor under the supervi- termines the necessary permissions that need to be obtained by BuildCo thereafter sion of KEK. The meter will be provided by KEK (usually applicants have to buy the in order to obtain the building permit. The Technical Commission may also conduct meter and register it at KEK). For large construction projects, KEK provides the meter. other random visits during the construction to see whether the building is in compli- ance with the approved standards. Construction cannot start before the building Procedure 17. Request technical approval of the building by the permit has been obtained. Municipal Technical Commission Time: 1 day Procedure 5*. Request and obtain initial clearance from the electricity authority KEK (Korporata Energjetike e Kosovës) Cost: EUR 30 Time: 2 days Procedure 18. Receive technical approval of the building by the Cost: EUR 10 Municipal Technical Commission and obtain usage permit Comments: BuildCo presents the electrical plans for assessment of compliance with Time: 39 days safety standards. Cost: EUR 10 Procedure 6*. Request and obtain initial clearance from the Procedure 19. Register property at the municipal Geodesy and water authority (Ujësjellësi Rajonal Prizren) Cadastral Directorate Time: 2 days Time: 165 days Cost: No cost Cost: No cost Comments: BuildCo presents the water plans for assessment of compliance with safety standards. There is no charge for the clearance, but the total fee including the Procedure 20*. Pay registration fee at a commercial bank connection is EUR 180 (reflected in Procedure 16). Time: 1 day Procedure 7*. Request and obtain initial clearance from Cost: EUR 5,203 (EUR 4 for each square meter of construction + EUR 1 bank transac- the postal and telecommunication authorities (Posta dhe tion fee) Telekomunikacioni i Kosovës) Procedure 21*. Receive inspection from the Geodesy and Time: 2 days Cadastral Directorate of the Municipality Cost: EUR 5 Time: 1 day Procedure 8*. Request and obtain fire protection clearance from Cost: No cost the municipal Department of Emergencies (Ekoregjioni) *This procedure can be completed simultaneously with previous procedure. Time: 15 days Cost: EUR 50 DEALING WITH CONSTRUCTION PERMITS Comments: BuildCo presents the emergency plans in case of fire for assessment of compliance with safety standards. Prizren, Kosovo Warehouse Value: EUR 700,000 (US$ 1,020,128) Procedure 9. Request and obtain validation of the technical audit Data as of: January 2011 of the main project from the municipal Directorate of Planning, Urbanism and Construction Procedure 1. Request and obtain the property certificate and Time: 5 days a copy of the land plot plan from the municipal Geodesy and Cadastral Directorate Cost: No cost Comments: The Directorate verifies the main project plan and assesses the fees that Time: 2 days need to be paid in order to obtain the building permit. Cost: EUR 7 (EUR 4 for ownership certificate + EUR 3 for a copy of the land plot plan) Comments: The property certificate and lot plan copy are valid for 180 days each. Procedure 10. Request and obtain the building permit from the They are required when applying for building permit. If the lot plan copy is obtained municipal Directorate of Planning, Urbanism and Construction in A3 format, the cost is EUR 10. Time: 30 days Procedure 2*. Request and obtain a confirmation letter that there Cost: EUR 10 (application fee) are no tax obligations from the municipal Finance and Economy Comments: According to Law No. 2004/15 on Construction, the building permit is Directorate issued if all requirements stated in Article 33 of the law are complied with. The build- ing permit is issued within 30 days from the application date. Time: 1 day Cost: No cost Procedure 11*. Pay municipal fees for the building permit at a commercial bank Procedure 3. Request urban and technical requirements approval Time: 1 day Time: 1 day Cost: EUR 15,607 (EUR 2 per cubic meter) Cost: EUR 13 (EUR 0.5 for request + EUR 2.5 approval fee + EUR 10 inspection fee) Comments: According to the municipal schedule on fees, taxes, and fines for Comments: The approval is valid for one year, within which period the applicant municipal services, the building permit fees are determined based on the following needs to obtain all the necessary permits and start construction. schedule: a. Zone I: EUR 3 per cubic meter; b. Zone II: EUR 2 per cubic meter; c. Zone III: EUR 1 per cubic meter. 86 DOING BUSINESS IN SOUTH EAST EUROPE 2011 DEALING WITH CONSTRUCTION PERMITS Procedure 12. Notify the municipal Directorate of Planning, Urbanism and Construction about the start of construction work Bitola, FYR Macedonia Time: 1 day Warehouse Value: MKD 25,000,000 (US$ 566,425) Cost: No cost Data as of: January 2011 Comments: The notification needs to be submitted 8 days before the beginning of Procedure 1. Obtain proof of ownership (title deed) from the construction. local Cadastre office Procedure 13*. Request connection and connect to electricity Time: 1 day services from KEK (Korporata Energjetike e Kosovës) Cost: MKD 175 (MKD 125 title deed + MKD 50 administrative tax) Time: 21 days Comments: The company has to obtain proof of ownership of the property where Cost: No cost the building will be located. This document is issued by the local Cadastre office no earlier than 6 months before construction begins. Procedure 14*. Receive an inspection from KEK (Korporata Procedure 2*. Obtain copy of cadastre plan from the local Energjetike e Kosovës) Cadastre office Time: 1 day Time: 5 days Cost: No cost Cost: MKD 215 (MKD 165 copy of cadastre plan + MKD 50 administrative tax) Comments: An inspector visits the property and assesses connection costs. After the visit, the staff from KEK will prepare the “energy agreement”. This document explains Procedure 3. Obtain extract of detailed space plan from the required next steps and provides connection works’ guidelines for the electrical contractor. KEK is unable to provide materials or workers for the connection. There- municipal Office of Urban Development and Spatial Planning fore, the electrical contractor will lead the works under KEK’s supervision. Time: 3 days Cost: MKD 800 (MKD 750 extract + MKD 50 administrative tax) Procedure 15*. Sign energy agreement and pay associated fees Comments: The request for the extract should be accompanied by the following at a commercial bank documents: title deed and copy of the cadastre plan. Time: 1 day Cost: EUR 501 (EUR 500 connection fee + EUR 1 bank transaction fee) Procedure 4. Obtain Account of Numerical Data study (Elaborat Comments: The applicant pays the EUR 500 fee (for processing the technical docu- od Numerichki Podatoci) from a private cadastre office mentation) at any commercial bank and EUR 1 (for bank transaction fee). Applicants Time: 4 days have 4 days to request any amendment to the energy agreement. Cost: MKD 3,500 Comments: The fee for the study is MKD 3,500 if the cadastre plan and the detailed Procedure 16*. Request connection and connect to water and space plan are identical. If the plot needs to be divided or there is a road that cuts sewage services through the plot then the private company will measure the plot on-site and charge Time: 7 days MKD 12.5 per square meter. Cost: EUR 180 Procedure 5. Obtain information about underground terrain from Procedure 17*. Request connection and connect to electric grid company telecommunications network Time: 7 days Time: 5 days Cost: No cost Cost: EUR 20 Comments: BuildCo obtains information about the location of underground electric cables under the plot. The information should be obtained by the Office of Space Procedure 18. Request technical approval of the building by the Planning after the company submits the request for the location permit, but in prac- municipal Technical Commission and obtain usage permit tice the companies obtain the necessary documents themselves. The project design and the extract of the detailed space plan should be submitted. The information is Time: 10 days used for the creation of the main project plan. Cost: EUR 15 Procedure 6*. Obtain information about underground terrain Procedure 19. Receive an inspection from the municipal Geodesy from water company and Cadastral Directorate Time: 7 days Time: 45 days Cost: MKD 1,000 Cost: No cost Comments: Information about the location of water pipes under the plot is obtained. The information should be obtained by the Office of Spacial Planning Procedure 20. Register property with the municipal Geodesy and after the applicant submits the request for the location permit, but in practice Cadastral Directorate entrepreneurs obtain the necessary documents themselves. The project design and Time: 15 days the extract of the detailed space plan should be submitted. The information is used Cost: No cost for the creation of the main project plan. Procedure 21*. Pay registration fee at a commercial bank Procedure 7*. Obtain information about underground terrain from sewage company Time: 1 day Time: 7 days Cost: EUR 120 Cost: No cost Comments: The cost includes the fee to reflect changes in the city's urban plan (Procedure 20) as well as the cost of the inspection by the municipal Geodesy and Comments: Information about the location of sewage pipes under the plot is Cadastral Directorate (Procedure 19). obtained. The information should be obtained by the Office of Spacial Planning after the applicant submits the request for the location permit, but in practice *This procedure can be completed simultaneously with previous procedure. entrepreneurs obtain the necessary documents themselves. The project design and the extract of the detailed space plan should be submitted. The information is used for the creation of the main project plan. LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 87 Procedure 8. Request and obtain location permit from the Office Procedure 14*. Pay the municipal spatial planning and urban of Urban Development and Spatial Planning development fee in a bank Time: 25 days Time: 1 day Cost: MKD 2,050 (MKD 2,000 fee for location permit + MKD 50 administrative tax) Cost: MKD 2,087,380 (MKD 3,150 urban development fee x 1,300.6 square meters x Comments: When requesting the location permit the following documents should 0.5 warehouse coefficient + MKD 59.9 spatial planning fee (0.3% of average salary) x be submitted: copy of the cadastre plan, extract from the detailed space plan, title 650 square meters (base of warehouse)) deed, account of numerical data and the project design. Once the request is granted, Comments: The urban development fee for Zone II in Bitola is MKD 3,150 per square the owners of the neighboring parcels are informed. If no complaints are filed within meter. The warehouse coefficient of 0.5 is in accordance with the Rulebook on as- 8 days, the permit becomes effective. The fee for the location permit was increased sessing the communal fee. The fee for spatial planning is 0.3% of the average salary in January 2010 as a result of the amendment of the Law on Administrative Taxes in FYR Macedonia. (Official Gazette No. 06/2010). Procedure 15*. Receive an on-site inspection by representatives Procedure 9. Obtain approval for connecting to power grid from the Office of Urban Development and Spatial Planning Time: 7 days Time: 1 day Cost: No cost Cost: No cost Comments: Approval should be obtained by the Office of Spacial Planning after Comments: Once the Office of Urban Development and Spatial Planning receives the applicant submits the request for building permit, but in practice entrepreneurs the request for the building permit, they send a team to the site to verify that the obtain the necessary approvals themselves and submit them together with the plot is really suitable for construction. request for the building permit. The approval is issued on the basis of reviewing the main project plan. The power grid approval is now free of charge. Procedure 16*. Receive on-site inspection by geometric engineer and obtain protocol Procedure 10*. Obtain approval for connecting to the water line (hydrotechnical conditions) Time: 2 days Time: 7 days Cost: MKD 21,250 (MKD 32 x 650 square meters base of building + MKD 450 admin- istrative tax) Cost: No cost Comments: The municipal Office for Urban Development sends a geometric engi- Comments: Approval should be obtained by the Office of Spacial Planning after neer to inspect the site and prepare the protocol. The protocol consists of informa- the applicant submits the request for building permit, but in practice entrepreneurs tion about the plot and the location of the building on the plot. obtain the necessary approvals themselves and submit them together with the request for the building permit. The approval is issued on the basis of reviewing the Procedure 17. Hire a third party supervisor for the construction main project plan. work Procedure 11*. Obtain approval for connecting to the sewage Time: 1 day line Cost: MKD 375,000 (1.5% of the property value) Time: 7 days Comments: Before construction starts BuildCo must hire a private company or Cost: MKD 1,000 engineer licensed to perform construction supervision. The supervisory organ would oversee construction from beginning to end, perform the technical inspection Comments: Approval should be obtained by the Office of Spacial Planning after after construction, and prepare the final report. A company would usually charge the applicant submits the request for building permit, but in practice entrepreneurs between 1% and 2% of the value of the property for construction supervision. obtain the necessary approvals themselves and submit them together with the request for the building permit. The approval is issued on the basis of reviewing the Procedure 18. Request and obtain connection to power grid main project plan. Time: 7 days Procedure 12*. Obtain project clearance from the local Office of Cost: MKD 26,312 Environmental Protection Comments: The applicant should submit the following documents along with the Time: 3 days request: building permit, proof of payment of electricity bills, and project plans. Cost: MKD 250 Procedure 19*. Request and obtain connection to water line Comments: Before a building permit can be issued, the investor is obliged to obtain project clearance from the local Office of Environmental Protection. Time: 7 days Cost: MKD 8,000 Procedure 13. Request the building permit from the Office of Comments: The connection is executed in accordance with the previously issued Urban Development and Spatial Planning hydro-technical conditions. Time: 20 days Procedure 20*. Request and obtain connection to sewage line Cost: MKD 2,050 (MKD 2,000 building permit + MKD 50 administrative tax) Time: 7 days Comments: The Law on Amendments and Modification of the Law on Spatial and Urban Planning was adopted on June 8, 2008, and enforced on June 16, 2008. Under Cost: MKD 10,000 these changes the authorized body must provide opinions from other state bodies within 5 days and issue the permit within 5 days after the documentation has been Procedure 21*. Request and obtain connection to completed. The building permit requires the investor to start construction work telecommunications network within 6 months from the issuance date. In the case of a warehouse, according to Time: 7 days Article 51 of the Law on Spatial and Urban Planning, the permit is issued by the Cost: MKD 1,463 authorized municipality. In practice the time-limits are not fully observed and it takes an average of 20 days to obtain the building permit. The request should be Comments: The request for telephone services should include a copy of BuildCo’s accompanied by the following documents: copy of the project design, the location court registration. The connection fee for a PPTSN package is MKD 1,463. permit, 4 copies of the main project plan, and the approvals from the relevant public institutions. One copy of the main plan is submitted to the Office of Communal Services where the communal tax is calculated and an invoice is sent to the client. The building permit fee was increased in January 2010 following the amendments to the Law on Administrative Taxes (Official Gazette No. 06/2010). 88 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 22. Receive on-site technical inspection of finished Procedure 5. Pay municipal tax, obtain proof of payment, and building by a supervisory body and prepare the final inspection obtain relevant approvals report Time: 15 days Time: 7 days Cost: MKD 3,047,628 (see comments) Cost: No cost (cost reflected in procedure 17) Comments: Before the building permit is issued, BuildCo must pay a fee for the Comments: In accordance with the amendment to the Construction Law dated preparation of the spatial plan and the urban plan. The applicant goes to the September 20, 2010, buildings that belong to the third, fourth and fifth category can municipality to find out the fees to be to paid and then goes to the bank to pay the be used after a report on the finished technical inspection is prepared by a licensed fees. The fees are distributed as follows: 30% of these fees are revenue for the state supervisory engineer or company. An occupancy permit for this building is no budget, while the remaining 70% are revenue for the budget of the municipalities longer required. The company that supervises the construction would usually charge (60% of fees go to the city of Skopje, and 40% of fees go to the relevant municipal- between 1% and 2% of the value of the property to oversee construction from ity). The applicant then goes back to the Finance Department of the Skopje city that beginning to end and submit the final report. ensures that payments are in order, which usually takes about 2 days. After that, the applicant signs the contract with the city of Skopje, and the contract is signed by Procedure 23. Register the new building with the municipal both the applicant and the Mayor. Cadastre office Fees amount to 0.3% of the average salary (MKD 19,616) = MKD 58.84 x 1300.6 Time: 2 days square meters (size of building). The other part of the fee is MKD 2,284.40 x 1300.6 square meters which is called 'communal tax' for the maintenance of existing infra- Cost: MKD 550 (MKD 500 registration fee + MKD 50 stamp duty) structure and development of new roads, social facilities such as schools and utilities. The tariff for communal tax depends on the zone where the construction is taking *This procedure can be completed simultaneously with previous procedure. place. Skopje is divided in 4 zones, Zone 1 being the center of the city and Zone 4 being the periphery. For Zone 3, the total cost is: MKD 3,047,628.3 DEALING WITH CONSTRUCTION PERMITS Skopje, FYR Macedonia Procedure 6. Request and obtain approval for construction (building permit) from the municipality Warehouse Value: MKD 25,000,000 (US$ 566,425) Time: 45 days Data as of: January 2011 Cost: MKD 2,050 Procedure 1. Request and obtain proof of land ownership from Comments: Law on amendments and modification of the Law on Spatial and Urban the Real Estate Cadastre Planning was adopted on June 8, 2008 and enforced on June 16, 2008. Under these Time: 1 day changes the authorized body must provide opinions from other state bodies within 5 days and issue the permit within 5 days after the documentation has been com- Cost: MKD 175 (MKD 125 title deed + MKD 50 administrative tax) pleted. The building permit requires the investor to start construction work within 6 Comments: BuildCo must obtain proof of ownership of the land where construction months from the issuance date. In the case of a warehouse, according to Article 51 of is to take place. This document must be obtained at least 6 months before the begin- Law on Spatial and Urban Planning the permit is issued by the authorized municipal- ning of the process. The municipalities of Skopje update annually their tariff for fees ity. In practice, time-limits are not fully observed and it takes on average a month associated with surveying and geodetic data for real estate. Obtaining proof of land and a half to obtain the building permit. ownership cost can vary from municipality to municipality. The average cost would The building permit fee was increased in January 2010 following the amendments to be MKD 125 for one parcel. If the land includes more than one parcel, the cost would the Law on Administrative Taxes (Official Gazette No. 06/2010). be MKD 125 for the first parcel and MKD 25 for each additional parcel. Procedure 7*. Request and obtain project clearance from the Fire Procedure 2*. Request and obtain the extract of detailed space Department plan from the municipal Office of Space Planning Time: 10 days Time: 6 days (1 day to submit the request + 5 days to obtain the extract) Cost: No cost Cost: MKD 1,050 (MKD 300 for request + MKD 750 for the extract of detailed space plan) Comments: Project clearance from the Fire Department is processed simultaneously with the building permit. Private project companies, the so called 'Bureaus', can Comments: The requested extract of the detailed space plan is issued by the respec- obtain project clearance from the Fire Department within 2-3 days. They charge on tive office of the municipality. Together with the request for obtaining an extract of average MKD 15,000 for their services. However, this clearance can be obtained by the detailed space plan applicants have to submit the following documents: a proof BuildCo if it wishes so without any intermediaries. of land ownership and extract from a cadastre plan obtained by the Real Estate Cadastre Agency. The extract of the detailed space plan is to be obtained within 5 working days after submitting the request. Procedure 8*. Request and obtain project clearance from the Health Department Procedure 3*. Hire a private cadastre office and obtain Account of Time: 3 days Numerical Data study (elaborat od numerichki podatoci) Cost: No cost Time: 1 day Comments: Project clearance from the Health Department is processed simultane- Cost: MKD 6,000 ously with the building permit. Private project companies (so called 'Bureaus') can obtain project clearance from the Health Department within 2-3 days. They charge Comments: The cost of this study ranges from MKD 6,000 to MKD 10,000. In Skopje on average MKD 15,000 for their services. However, this clearance can be obtained there are a number of private cadastre offices that can be hired by BuildCo. The by BuildCo if it wishes so without any intermediaries. private cadastre office shall then obtain approval and certification of the Real Estate Cadastre Agency. Procedure 9*. Request and obtain project clearance from the Procedure 4. Request and obtain decision on conditions for Environmental Department construction (location permit) from the municipality Time: 2 days Time: 5 days Cost: No cost Cost: MKD 2,050 Comments: Project clearance from the Environmental Department is processed simultaneously with the building permit. Comments: Under the new construction law, the authorized body for issuing deci- sions on construction conditions is the municipality, and in the case of projects of special importance to the country, the state body. The application for this document should be accompanied by proof of ownership, proof of a long-term lease of the land, an agreement for concession or other documents, and a geodetic study pre- pared by authorized specialists. The decision on conditions for construction is issued within 5 working days. The fee for the location permit was increased in January 2010 as a result of the amendment of the Law on Administrative Taxes (Official Gazette No. 06/2010). LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 89 DEALING WITH CONSTRUCTION PERMITS Procedure 10. Hire a third party supervisor for the construction work Tetovo, FYR Macedonia Time: 1 day Warehouse Value: MKD 25,000,000 (US$ 566,425) Cost: MKD 375,000 (1.5% of the property value) Data as of: January 2011 Comments: Before construction starts BuildCo must hire a private company or Procedure 1. Obtain proof of ownership (title deed) from the engineer licensed to perform construction supervision. The supervisory organ would oversee construction from beginning to end, perform the technical inspection local Cadastre office after construction, and prepare the final report. A company would usually charge Time: 1 day between 1% and 2% of the value of the property for construction supervision. Cost: MKD 175 (MKD 125 title deed + MKD 50 administrative tax) Comments: The company has to obtain proof of ownership of the property where Procedure 11. Request and obtain connection to power services the building will be located. This document is issued by the local Cadastre office no Time: 22 days earlier than 6 months before construction begins. Cost: MKD 1,700 Comments: The applicant should include the following documents along with the Procedure 2*. Obtain copy of cadastre plan from the local request: the construction conditions, a request submitted to the electricity provider, Cadastre office proof of payment of electricity bills, and project plans. Time: 4 days Cost: MKD 215 (MKD 165 copy of cadastre plan + MKD 50 administrative tax) Procedure 12*. Request and obtain water and sewage installation Time: 15 days Procedure 3. Obtain extract of detailed space plan from Cost: MKD 43,219 municipal Office of Urban Development and Spatial Planning Comments: To obtain a water and sewage installation, an application must be Time: 7 days submitted along with the following documents: Cost: MKD 800 (MKD 750 extract + MKD 50 administrative tax) 1. Hydro-technical conditions issued by JP "Vodovod i Kanalizacija"; Comments: The request for the extract should be accompanied by the following 2. A directive from the construction company, issued by the State Committee for documents: title deed and copy of the cadastre plan. Urban, Communal, and Housing Works. Procedure 4. Obtain Account of Numerical Data study (Elaborat Procedure 13*. Request and obtain connection to od Numerichki Podatoci) from a private cadastre office telecommunication services Time: 5 days Time: 7 days Cost: MKD 8,000 Cost: MKD 1,463 Comments: The request for telephone services should include a copy of BuildCo’s Procedure 5. Obtain information about underground terrain from court registration. Macedonian Telecommunication Company (MakTel) increased its power grid company annual fee for connecting to telephone. Provided the company chooses the PTSN Time: 3 days package, the connection fee within the existing capacity is MKD 1,463 since January Cost: No cost 2009. Following the deregulation of the fixed line market in 2008, increased compe- Comments: BuildCo obtains information about the location of underground electric tition made companies expedite the connection time. cables under the plot. The information should be obtained by the Office of Spacial Planning after the applicant submits the request for the location permit, but in Procedure 14. Receive on-site technical inspection of finished practice the entrepreneurs obtain the necessary documents themselves. The project building by a supervisory body and prepare the final inspection design and the extract of the detailed space plan should be submitted. The informa- report tion is used for the creation of the main project plan. Time: 4 days Cost: No cost (cost reflected in procedure 10) Procedure 6*. Obtain information about underground terrain Comments: In accordance with the amendment to the Construction Law dated Sep- from water and sewage company tember 20, 2010, buildings that belong to the third, fourth and fifth category can be Time: 4 days occupied after a report on the finished technical inspection is prepared by a licensed Cost: No cost supervisory engineer or company. An occupancy permit for these building is no Comments: Information about the location of water and sewage pipes under the longer required. It takes one day to perform the technical inspection and three days plot is obtained. The information should be obtained by the Office of Spacial Plan- to draft and submit the final report. The company that supervises the construction ning after the applicant submits the request for the location permit, but in practice would usually charge between 1% and 2% of the value of the property to oversee the entrepreneurs obtain the necessary documents themselves. The project design construction from beginning to end and submit the final report. and the extract of the detailed space plan should be submitted. The information is used for the creation of the main project plan. Procedure 15. Register the warehouse with the Real Estate Registry Procedure 7. Request and obtain location permit from Office of Time: 30 days Urban Development and Spatial Planning Cost: MKD 400 (MKD 350 registration fee + MKD 50 stamp duty) Time: 10 days Comments: Under the new Law on Real Estate Cadastre (Official gazette 40/2008), Cost: MKD 2,050 (MKD 2,000 fee for location permit + MKD 50 administrative tax) the process of registration of new buildings has become shorter. The new time-limits Comments: When requesting the location permit the following documents should for complex cases was reduced from 60 to 3 days, and 30 to 1 day for simple cases. be submitted: copy of the cadastre plan, extract from the detailed space plan, title While resources are still insufficient and do not allow the registry to respect the time- deed, account of numerical data and the project design. Once the request is granted, limits fully, the average time to register a new building was reduced to 30 days. the owners of the neighboring parcels are informed. If no complaints are filed within 8 days, the permit becomes effective. The fee for the location permit was increased *This procedure can be completed simultaneously with previous procedure. in January 2010 as a result of the amendment of the Law on Administrative Taxes (Official Gazette No. 06/2010). Procedure 8. Obtain approval for connecting to power grid Time: 15 days Cost: No cost Comments: Approval should be obtained by the Office of Spacial Planning after the applicant submits the request for building permit, but in practice entrepreneurs obtain the approvals themselves and submit them together with the request for the building permit. The approval is issued on the basis of reviewing the main project plan. 90 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 9*. Obtain approval for connecting to the water and Procedure 15. Hire a third party supervisor for the construction sewage line (hydrotechnical conditions) work Time: 15 days Time: 1 day Cost: MKD 1,500 Cost: MKD 375,000 (1.5% of the property value) Comments: Approval should be obtained by the Office of Spacial Planning after Comments: Before construction starts BuildCo must hire a private company or the applicant submits the request for building permit, but in practice entrepreneurs engineer licensed to perform construction supervision. The supervisory organ would obtain the approvals themselves and submit them together with the request for the oversee construction from beginning to end, perform the technical inspection building permit. The approval is issued on the basis of reviewing the main project after construction, and prepare the final report. A company would usually charge plan. between 1% and 2% of the value of the property for construction supervision. Procedure 10. Obtain project clearance from the local Office of Procedure 16. Request and obtain connection to power grid Security and Protection Time: 7 days Time: 3 days Cost: MKD 26,312 Cost: No cost Comments: The applicant should submit the following documents along with the Comments: In accordance with the Law on Security and Protection, the Law on request: building permit, proof of payment of electricity bills, and project plans. Firefighting and the letter of the Tetovo Office of Security and Protection dated November 29, 2010, BuildCo is obliged to obtain project clearance from the local Procedure 17*. Request and obtain connection to water and Office of Security and Protection. sewage line Time: 7 days Procedure 11*. Obtain project clearance from the local Office of Cost: MKD 18,000 Environmental Protection Comments: The connection is executed in accordance with the previously issued Time: 3 days hydrotechnical conditions. Cost: No cost Comments: Before a building permit can be issued the investor is obliged to obtain Procedure 18*. Request and obtain connection to project clearance from the local Office of Environmental Protection. telecommunications network Time: 7 days Procedure 12. Request building permit from Office of Urban Cost: MKD 1,463 Development and Spatial Planning Comments: The request for telephone services should include a copy of BuildCo’s Time: 30 days court registration. Macedonian Telecommunication Company (MakTel) increased Cost: MKD 2,050 (MKD 2,000 building permit + MKD 50 administrative tax) its annual fee for connecting to telephone. Since January 2009 the connection fee Comments: The Law on Amendments and Modification of the Law on Spatial and within existing capacity is MKD 1,463 for a PTSN package. Urban Planning was adopted on June 8, 2008, and enforced on June 16, 2008. Under these changes the authorized body must provide opinions from other state bodies Procedure 19. Receive on-site technical inspection of finished within 5 days and issue the permit within 5 days after the documentation has been building by a supervisory body and prepare the final inspection completed. The building permit requires the investor to start construction work report within 6 months from the issuance date. In the case of a warehouse, according to Ar- Time: 7 days ticle 51 of Law on Spatial and Urban Planning the permit is issued by the authorized municipality. In practice the time-limits are not fully observed and it takes an aver- Cost: No cost (cost reflected in procedure 15) age of 30 days to obtain the building permit. The request should be accompanied by Comments: In accordance with the amendment to the Construction Law dated the following documents: copy of the project design, the location permit, 4 copies of September 20, 2010, buildings that belong to the third, fourth and fifth category can the main project plan, and the approvals from the relevant public institutions. One be used after a report on the finished technical inspection is prepared by a licensed copy of the main plan is submitted to the Office of Communal Services where the supervisory engineer or company. An occupancy permit for these building is no communal tax is calculated and an invoice is sent to the client. The building permit longer required. The company that supervises the construction would usually charge fee was increased in January 2010 following the amendment to the Law on Adminis- between 1% and 2% of the value of the property to oversee construction from trative Taxes (Official Gazette No. 06/2010). beginning to end and submit the final report. Procedure 13*. Pay the municipal spatial planning and urban Procedure 20. Register the new building with the municipal development fee in a bank Cadastre office Time: 1 day Time: 15 days Cost: MKD 1,976,179 (MKD 2,979 urban development fee x 1,300.6 square meters x Cost: MKD 550 (MKD 500 registration + MKD 50 administrative tax) 0.5 warehouse coefficient + MKD 59.9 spatial planning fee (0.3% of average salary) x 650 square meters (base of warehouse)) *This procedure can be completed simultaneously with previous procedure. Comments: The urban development fee is assessed by the utility company Geoengi- neering. The fee for Zone II in Tetovo is MKD 2,979 per square meter times the ware- DEALING WITH CONSTRUCTION PERMITS house coefficient of 0.5 in accordance with the Rulebook on assessing the communal fee. The fee for spatial planning is 0.3% of the average salary in FYR Macedonia. Balti, Moldova Warehouse Value: MDL 6,519,887 (US$ 572,623) Procedure 14*. Receive on-site inspection by geometric engineer Data as of: January 2011 and obtain protocol Procedure 1. Request and obtain approval of project plans from Time: 2 days the municipal One Stop Shop Cost: MKD 21,250 (MKD 32 x 650 square meters base of building + MKD 450 admin- istrative tax) Time: 5 days Comments: The municipal Office for Urban Development sends a geometric engi- Cost: MDL 1,000 neer to inspect the site and prepare the protocol. The protocol consists of informa- Comments: The request, along with a proof of the legal status of the property and tion about the plot and the location of the building on the plot. For buildings with the design of the project to be built, is presented to the Department of Planning a base smaller than 250 square meters, the protocol costs MKD 2,000. For bigger and Design within the municipal One Stop Shop. Based on the approval from the buildings the fee is MKD 32 per square meter of the base of the building. municipality, a complete set of city planning documentation is prepared. Depending on the location and the project design, a number of clearances and approvals need to be obtained in order to be included in the city planning documentation. LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 91 Procedure 2*. Request and obtain location clearance from the Procedure 11*. Request and obtain expertise clearance from the Fire Department Center for Preventive Medicine Time: 4 days Time: 8 days Cost: MDL 250 Cost: MDL 310 Comments: This procedure is the first in a series of initial procedures that are done Comments: The Center for Preventive Medicine must approve the complete set simultaneously. of designs and drawings after the technical conditions have been assigned. The clearance will be included in the city planning documentation. By law, the clearance Procedure 3*. Request and obtain location clearance from the should be issued within 5 days. In practice, it takes 8 days on average. The cost is not Center for Preventive Medicine fixed by any law or government decision. Time: 14 days Procedure 12*. Request and obtain expertise clearance from the Cost: MDL 250 Environmental Protection Agency Procedure 4*. Request and obtain location clearance from the Time: 10 days Environmental Protection Agency Cost: MDL 500 Time: 10 days Comments: The Environmental Protection Agency will not issue any clearance unless the Fire Department and the Center for Preventive Medicine have previously Cost: MDL 300 issued their clearances. The clearance is usually issued in 7-15 days. Procedure 5*. Request and obtain technical conditions for Procedure 13. Request and obtain a city planning certificate from electricity connection and street lighting from RED Nord the municipal One Stop Shop Time: 7 days Time: 30 days Cost: MDL 200 Cost: MDL 50 Comments: By law, the approvals for connecting to utility networks, necessary to Comments: The certificate is prepared based on the urban planning documentation, prepare the city planning documentation, should be issued free of charge by suppli- which includes the clearances and approvals detailed above. ers, no later than 20 working days after the request was made. Procedure 6*. Request and obtain technical conditions for water Procedure 14. Request and obtain expertise of project and industrial sewage system from Apa Canal documents at the State Service for Verification and Expertise of Projects in Construction Time: 14 days Time: 14 days Cost: MDL 310 Cost: MDL 3,200 (MDL 3,000 verification tax + MDL 200 travel costs) Comments: After the application is submitted, it takes a week for it to be considered and another week for the beneficiary to receive an answer. Comments: The State Service for Verification and Expertise of Projects in Construc- tion is responsible for undertaking an internal verification of technical conditions Procedure 7*. Request and obtain technical conditions for with all the utility service providers. In addition to the charge for verification, appli- cants for Balti also pay for transport to Chisinau, where the Service is located. telephone connection from MoldTelecom Time: 20 days Procedure 15. Request and obtain building permit from the Cost: MDL 136 municipal One Stop Shop Comments: This procedure takes 7–30 days depending on the district where the Time: 30 days plot is located. The technical conditions are valid for a year. Since 2006, MoldTelecom Cost: MDL 5,000 has started installing wireless telephone service under CDMA 2000. Many companies opt for this because of the low cost and speed of obtaining service. Comments: The building permit is issued based on the application, enclosing the following documents: Procedure 8*. Request and obtain technical conditions for a. Extract from the register of immovable property issued by the cadastral office; heating services from CET Nord b. City planning certificate; Time: 7 days c. Project documentation; Cost: MDL 130 d. Company registration certificate; Comments: State Service for Verification and Expertise of Projects in Construction e. Contract for supervision signed by the applicant (beneficiary) and the architect. will not issue its approval of the project without obtaining the technical specifica- The issuer of the building permit sets the deadline for starting construction of up to tions from CET Nord. This procedure is linked to fire safety regulations in effect dur- 6 months from the date of its issuance. ing winter. In practice, connecting the CET Nord no longer happens. Most buildings are equipped with central heating. Procedure 16. Notify construction authorities of the start of construction Procedure 9*. Request and obtain clearance from the municipal Time: 1 day traffic police Cost: No cost Time: 7 days Comments: At least 5 days before starting construction, the company must notify Cost: MDL 300 the authority (the State Construction Inspectorate) in writing. The written notifica- Comments: The applicant must contact the municipal traffic police if the building is tion is submitted in person and must also be filed with the State Inspectorate of less than 10 meters from an existing road. Construction. If construction begins without prior written notification, sanctions would be applied against the company. The construction period begins the day the Procedure 10*. Request and obtain expertise clearance from the permit is issued. Relevant authorities and ministries may require the company to Fire Department provide valid proof of the legality of the start of construction work. Time: 7 days Procedure 17. Receive inspection on foundation works by the Cost: MDL 112 State Construction Inspectorate (1) Comments: The Fire Department must approve the completed set of designs and drawings after the conditions have been assigned. The clearance will be included Time: 1 day in the city planning documentation. By law, the clearance should be issued within Cost: No cost 5 days. In practice, it takes 7 days on average. The cost is not fixed by any law or government decision. 92 DOING BUSINESS IN SOUTH EAST EUROPE 2011 DEALING WITH CONSTRUCTION PERMITS Procedure 18. Receive inspection on structure works by the State Construction Inspectorate (2) Chisinau, Moldova Time: 1 day Warehouse Value: MDL 6,519,887 (US$ 572,623) Cost: No cost Data as of: January 2011 Procedure 19. Receive inspection of roofing by the State Procedure 1. Request and obtain project plans according to city Construction Inspectorate (3) planning documentation from the Design Institute of Moldova on Engineering and Research Works Time: 1 day Time: 1 day Cost: No cost Cost: MDL 1,500 Procedure 20. Request and connect to water and sewage services Comments: BuildCo hires a licensed design institute to prepare a complete set of Time: 15 days city planning documents. It should contain technical conditions from many agencies (as mentioned below) and be submitted to the Design Institute for incorporation Cost: MDL 1,000 into the design documents. Comments: The applicant must extend the pipelines to the connection points (10 meters). The inspector visits the site, approves the connection by sealing it, and Procedure 2*. Request and obtain location clearance from the opens the water shafts. Fire Department Time: 7 days Procedure 21*. Request power connection services and sign contract with RED Nord Cost: MDL 250 Time: 7 days Comments: Clearance from the Fire Department is needed for developing the city planning documentation. This procedure is the first in a series of initial procedures Cost: MDL 4,000 that are done simultaneously. Comments: The applicant must sign a contract with the electricity provider, which then conducts an inspection. Procedure 3*. Request and obtain location clearance from the Health Department Procedure 22*. Receive energo-inspection from RED Nord Time: 30 days Time: 1 day Cost: MDL 500 Cost: No cost Comments: Clearance from the Health Department is needed for developing the city planning documentation. Officially, this procedure should take no more than 10 Procedure 23*. Connect to power services, RED Nord days. However, in practice, it takes on average 30 days. The Law on Basic Principles Time: 5 days for Entrepreneurial Activity, which took effect on July 11, 2007, eliminated this cost. Cost: No cost The law states that all payments should be stated in a law. In practice, internal fees are charged. Procedure 24*. Request and connect to telephone services, MoldTelekom Procedure 4*. Request and obtain location clearance from the Time: 7 days Environmental Protection Agency Cost: MDL 1,900 Time: 14 days Cost: MDL 500 Procedure 25. Receive final inspection by the Working Comments: Clearance from the Ecological Services is needed for developing the Commission city planning documentation. Although Cabinet Decision No. 920, dated August 30, Time: 1 day 2005, stipulates a statutory time limit of 10 days, in practice, the process takes 14 days. Cost: No cost Comments: After the completion of construction, the company convenes the Procedure 5*. Request and obtain technical conditions for Working Commission to undertake the final inspection. The Commission consists of electricity connection from Union Fenosa representatives from the water and sewage authority, the sanitary services, power services, and fire safety. At the final inspection, a representative of the local authority Time: 30 days is also present. Cost: No cost Comments: At this stage, BuildCo requests technical conditions. Due to a backlog Procedure 26. Request and obtain the act of completion of at Union Fenosa caused by a massive number of small projects, the average time construction from the Working Commission required to obtain the clearance is 30 days. Payment is made when concluding the Time: 25 days agreement on electricity supply. Cost: No cost Procedure 6*. Request and obtain technical conditions for Procedure 27. Request and obtain the occupancy permit from the electricity connection from public lighting service provider municipal One Stop Shop Lumteh Time: 30 days Time: 5 days Cost: MDL 300 Cost: No cost Comments: Lumteh sometimes imposes additional costs for designing a public Comments: The agencies that issued the technical conditions (The Center for utility lighting network in the nearby area. The costs of this procedure could amount Preventive Medicine, the Fire Department and the Environmental Protection Agency) to up to 30% of the total design costs of a project. This procedure applies to both must also give their approval of the occupancy permit. The One Stop Shop coordi- private and public projects. nates with these agencies the signing of the occupancy permit. Procedure 28. Register the building at the local Cadastre Office Procedure 7*. Request and obtain technical conditions for water and industrial sewage system from Apa Canal Time: 2 days (expedited option) Time: 14 days Cost: MDL 1,000 (fee for expedited option) Cost: MDL 343 Comments: Seals are put on six copies of the blueprints; the company is given one copy. Comments: After the application is submitted, it takes a week for it to be considered and another week for the beneficiary to receive an answer. *This procedure can be completed simultaneously with previous procedure. LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 93 Procedure 8*. Request and obtain technical conditions for Procedure 16. Request and obtain expertise of project sewage system from Exdrupo documents at the State Service for Verification and Expertise of Time: 7 days Projects in Construction Cost: MDL 200 Time: 14 days Comments: A separate specification is obtained from Exdrupo (the Urban Roads and Cost: MDL 3,000 Bridges Management Authority) on rainwater drainage. Comments: The State Service for Verification and Expertise of Projects in Construc- tion is responsible for undertaking an internal verification of technical conditions Procedure 9*. Request and obtain technical conditions for with all the service providers. telephone connection from MoldTelecom Time: 7 days Procedure 17. Request and obtain building permit from the local Cost: MDL 136 City Planning Services Agency Comments: This procedure takes 7–30 days depending on the district where the Time: 45 days plot is located. The technical conditions are valid for a year. Since 2006, MoldTelecom Cost: MDL 6,000 has started installing wireless telephone service under CDMA 2000. Many companies Comments: The building permit is issued based on the application, enclosing the opt for this because of the low cost and speed of obtaining service. following documents: a. Extract from the Register of Immovable Property issued by the cadastral office; Procedure 10*. Request and obtain technical conditions for b. City planning certificate; heating services from Termokom c. Project documentation; Time: 14 days d. Company registration certificate; Cost: MDL 832 e. Contract for supervision signed by the applicant (beneficiary) and the architect. Comments: State Service for Verification and Expertise of Projects in Construction will not issue its approval of the project without obtaining the technical specifica- The City Planning Services Agency sets the deadline for starting construction of up tions from Termokom. This procedure is linked to fire safety regulations in effect to 6 months from the date of its issuance. during winter. Procedure 18. Notify the State Construction Inspectorate of the Procedure 11*. Request and obtain clearance from the Zoning start of construction and Road Construction Division of the municipality Time: 1 day Time: 18 days Cost: No cost Cost: MDL 600 Comments: At least 5 days before starting construction, the company must notify Comments: BuildCo must contact the Road Inspectorate if the building is less than the State Construction Inspectorate in writing. The written notification is submitted 10 meters from an existing road. This authority has discretionary power and often in person and must also be filed with the State Inspectorate of Construction. If requires other documents in addition to the ones publicly listed. construction begins without prior written notification, sanctions would be applied against the company. The construction period begins the day the permit is issued. Relevant authorities and ministries may require the company to provide valid proof Procedure 12*. Request and obtain expertise clearance from the of the legality of the start of construction work. Fire Department Time: 8 days Procedure 19. Receive inspection on foundation works by the Cost: No cost State Construction Inspectorate (1) Comments: The Fire Department must approve the completed set of designs and Time: 1 day drawings after the technical conditions have been assigned. Cost: No cost Procedure 13*. Request and obtain expertise clearance from the Procedure 20. Receive inspection on structure works by the State Health Department Construction Inspectorate (2) Time: 21 days Time: 1 day Cost: MDL 300 Cost: No cost Comments: The Health Department must approve the completed set of designs and drawings after the technical conditions have been assigned. Procedure 21. Receive inspection of roofing by the State Construction Inspectorate (3) Procedure 14*. Request and obtain expertise clearance from the Time: 1 day Environmental Protection Agency Cost: No cost Time: 30 days Cost: MDL 250 Procedure 22. Request and connect to water and sewage services Comments: The Environmental Protection Agency will not issue any clearance un- Time: 22 days less the Health and Fire Departments have previously issued their clearances. By law, Cost: MDL 1,056 this takes 30 days. Comments: The applicant must extend the pipelines to the connection points (10 Procedure 15. Request and obtain a city planning certificate meters). The inspector visits the site, approves the connection by sealing it, and opens the water shafts. from the General Direction on Architecture, Urbanism and Land Relations, Municipal Council Procedure 23*. Request power connection services and sign Time: 45 days contract with Union Fenosa Cost: MDL 23 Time: 1 day Comments: To obtain the city planning certificate, the applicant must pay a fee Cost: MDL 4,620 for a standard form at the local municipality and submit it to the local registrar along with a confirmation of payment. The local architectural authorities define the Comments: The applicant must sign a contract with the electricity provider, which amount to be paid, based on the size of the plot declared by the applicant. In the then conducts an inspection. case considered here, the cost is MDL 10 + MDL 0.01 per square meter, which is a total of MDL 23. Procedure 24*. Receive inspection by the Working Commission Time: 10 days Cost: No cost 94 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Comments: After the completion of construction, the company convenes the Work- Comments: According to the New Construction Law (2008), building companies ing Commission, consisting of representatives from the water and sewage authority, do not need to go through a time-consuming procedures to obtain the decision on Health Department, power services, and Fire Department. The final approval is made location as a precondition for entering the design phase. This process is done at the by the chair of commission, the investor’s representative, and the local authority’s stage of issuance of building permit. At the pre-design stage it is sufficient to follow representative. By law, the commission is to be created within 15 days. However, that the urban-technical conditions for that particular area contained in the general or lo- time limit is not respected in practice. cal spatial plan. The responsible authority for projects less than 3,000 square meters is the local government. Procedure 25*. Connect to power services, Union Fenosa Time: 11 days Procedure 3. Obtain main project study Cost: No cost Time: 30 days Cost: EUR 10,405 (EUR 8 x 1,300.6 square meters) Procedure 26*. Request and connect to telephone services Comments: BuildCo must hire a licensed design and engineering company to create Time: 30 days the main project study. The cost is EUR 6 to EUR 10 per square meter. Cost: MDL 900 Procedure 4. Obtain fire protection study Procedure 27. Receive final inspection by the State Construction Time: 15 days Inspectorate and sign the Act of Completion of Construction Cost: EUR 1,410 (EUR 500 for study + EUR 0.7 x 1,300.6 square meters for sprinkler Time: 1 day installation project) Cost: No cost Comments: BuildCo must hire a private licensed company to create a fire protection study and sprinkler installation project. The study is later submitted to the Ministry of Procedure 28. Request and obtain the act of completion of Interior for clearance. The sprinkler installation system is required for buildings over construction from the Working Commission 400 square meters and industrial buildings. The study costs between EUR 300 and EUR 600 while the creation of the sprinkler installation project costs between EUR 0.6 Time: 30 days and EUR 0.8 per square meter. Cost: No cost Procedure 5. Obtain clearance to connect to the power grid Procedure 29. Request and receive the occupancy permit from Time: 15 days the State Commission Cost: No cost Time: 60 days Comments: Article 62 of the new Construction Law (2008) stipulates that the utility Cost: MDL 330 companies are required to issue any preliminary clearance to provide connection Comments: The main authority in charge of issuing the occupancy permit is the Min- to their services before the design stage. It is assumed that the urban development istry of Construction; the chief architect has the definitive word on the decision. The plans and technical requirement plans bear all relevant information and are publicly other authorities that must sign the occupancy permit are the Health Department, available. However, in practice due to early stages of reform and lack of capacity of the Bureau of Technical Inventory (BTI), and the Fire Department among others. utility companies, builders still have to visit each authority separately. As a rule, the commission does not meet. Instead, the company must request the signatures on an individual basis. The agencies that issue technical conditions must Procedure 6*. Obtain clearance to connect to the water and also give their approval. According to Cabinet Decision No. 285, final approval is sewage line completed within 15 days of the guaranteed term provided in the contract, which Time: 10 days could be 5 days or 60. On average, it takes 60 days to obtain the occupancy permit. Cost: EUR 897 (1,300.6 square meters x EUR 0.18 tax for clearance + 1,300.6 square meters x EUR 0.51 for hydro-technical conditions) Procedure 30. Register the building at the Bureau of Technical Comments: Article 62 of the new Construction Law (2008) stipulates that the utility Inventory (BTI) companies are required to issue any preliminary clearance to provide connection Time: 18 days to their services before the design stage. It is assumed that the urban development Cost: MDL 250 plans and technical requirement plans bear all relevant information and are publicly Comments: Seals are put on 6 copies of the blueprints; the company is given 1 copy. available. However, in practice due to early stages of reform and lack of capacity of utility companies, builders still have to visit each authority separately. *This procedure can be completed simultaneously with previous procedure. Procedure 7*. Obtain clearance to connect to the telecommunications network DEALING WITH CONSTRUCTION PERMITS Time: 7 days Niksic, Montenegro Cost: EUR 340 Warehouse Value: EUR 715,000 (US$ 992,934) Comments: According to municipal tariffs and fees the cost is calculated based on Data as of: January 2011 the total area of warehouse. Anything between 1,000- 3,000 square meters is EUR 340. Procedure 1. Obtain title deed and copy of site map from the Article 62 of the new Construction Law (2008) stipulates that the utility companies local Real Estate Administration office are required to issue any preliminary clearance to provide connection to their Time: 4 days services before the design stage. It is assumed that the urban development plans Cost: EUR 16 (EUR 5 national administrative tax for title deed + EUR 3 Real Estate and technical requirement plans bear all relevant information and are publicly avail- Administration tax + EUR 3 per plot + EUR 5 national administrative tax for copy of able. However, in practice due to early stages of reform and lack of capacity of utility site map) companies, builders still have to visit each authority separately. Comments: The requests for both documents can be filed at the local Real Estate Administration at the same time. Procedure 8*. Obtain traffic clearance from the municipal traffic administration Procedure 2. Obtain urban development and technical Time: 10 days requirements from the municipality Cost: EUR 2 Time: 30 days Cost: EUR 62 (EUR 60 tax + EUR 2 request form) Procedure 9*. Obtain fire prevention clearance from the Ministry of Interior Time: 15 days Cost: EUR 300 LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 95 Comments: Previously obtained fire protection study is submitted to the Ministry of DEALING WITH CONSTRUCTION PERMITS Interior in order to obtain clearance. Pljevlja, Montenegro Procedure 10*. Pay the municipality tax (a compensation for Warehouse Value: EUR 715,000 (US$ 992,934) using the city's land and the needed adjustments to city’s spatial Data as of: January 2011 plan) to the local Secretariat for Urban Development Procedure 1. Obtain title deed and copy of site map from the Time: 2 days local Real Estate Administration office Cost: EUR 29,264 (EUR 50 per square meter for Zone III x 1,300.6 square meters - 50% Time: 2 days discount for building a warehouse - 10% discount for paying the total amount at Cost: EUR 16 (EUR 5 national administrative tax for title deed + EUR 3 Real Estate once) Administration tax + EUR 3 per plot + EUR 5 national administrative tax for copy of Comments: Before the building permit is issued, the company must pay the so site map) called "communal tax" for the maintenance of existing infrastructure, compensation Comments: The requests for both documents can be filed at the local Real Estate for using the city's land and the adjustment that the city needs to make to its urban Administration office at the same time. plan due to the new construction. The fees are determined according to the following schedule (in EUR per square Procedure 2. Obtain urban development and technical meter): requirements from the municipality a. ZONE I: ZONE A - EUR 152; ZONE B - EUR 132; ZONE C - EUR 112; Time: 15 days b. ZONE II: EUR 82; Cost: EUR 62 (EUR 60 tax + EUR 2 request form) c. ZONE III: EUR 50; Comments: According to the New Construction Law (2008), building companies d. ZONE IV: EUR 25. do not need to go through time-consuming procedures to obtain the decision on For warehouses, only 50% of the fee is applied. The cost reflected here is for a ware- location as a precondition for entering the design phase. This process is done at the house in Zone III. The amount is to be paid in total before submitting the request for stage of issuance of building permit. At the pre-design stage it is sufficient to follow building permit. If the tax is paid at once, the amount due is discounted by 10%. the urban-technical conditions for that particular area contained in the general or lo- cal spatial plan. The responsible authority for projects less than 3,000 square meters Procedure 11. Obtain building permit from local Secretariat of is the local government. Urban Development Time: 15 days Procedure 3. Obtain main project study Cost: EUR 715 (0.1% of the property value) Time: 45 days Cost: EUR 10,405 (EUR 8 x 1,300.6 square meters) Procedure 12. Obtain connection to power grid Comments: BuildCo must hire a licensed design and engineering company to create Time: 20 days the main project study. The cost is EUR 6 to EUR 10 per square meter. Cost: EUR 300 Procedure 4. Obtain fire protection study Procedure 13*. Obtain connection to water and sewage line Time: 15 days Time: 10 days Cost: EUR 1,410 (EUR 500 for study + EUR 0.7 x 1,300.6 square meters for sprinkler Cost: EUR 200 installation project) Comments: BuildCo must hire a private licensed company to create a fire protection Procedure 14*. Obtain connection to telecommunications study and sprinkler installation project. The study is later submitted to the Ministry of network Interior for clearance. The sprinkler installation system is required for buildings over 400 square meters and industrial buildings. The creation of the study costs between Time: 5 days EUR 300 and EUR 600 while the creation of the sprinkler installation project costs Cost: EUR 80 between EUR 0.6 and EUR 0.8 per square meter. Procedure 15. Request occupancy permit from Secretariat for Procedure 5. Obtain clearance to connect to the power grid Urban Development and receive technical inspection Time: 30 days Time: 10 days Cost: No cost Cost: EUR 715 (0.1% of the property value) Comments: Article 62 of the new Construction Law (2008) stipulates that the utility Comments: After the Secretariat for Urban Development receives a request for companies are required to issue any preliminary clearance to provide connection issuing occupancy permit they will assemble a commission to perform the technical to their services before the design stage. It is assumed that the urban development inspection of the building. The commission usually comprises licensed architects, plans and technical requirement plans bear all relevant information and are publicly construction engineers, and electrical engineers. available. However, in practice due to early stages of reform and lack of capacity of utility companies, builders still have to visit each authority separately. Since 2009, Procedure 16. Obtain occupancy permit from the Secretariat for this clearance is issued free of charge. Urban Development Time: 20 days Procedure 6*. Obtain clearance to connect to the water and sewage line Cost: EUR 1,430 (0.2% of the property value) Time: 7 days *This procedure can be completed simultaneously with previous procedure. Cost: EUR 800 (EUR 350 hydro-technical conditions + EUR 450 approval) Comments: Article 62 of the new Construction Law (2008) stipulates that the utility companies are required to issue any preliminary clearance to provide connection to their services before the design stage. It is assumed that the urban development plans and technical requirement plans bear all relevant information and are publicly available. However, in practice due to early stages of reform and lack of capacity of utility companies, builders still have to visit each authority separately. Procedure 7*. Obtain clearance to connect to the telecommunications network Time: 7 days Cost: EUR 150 96 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Comments: Article 62 of the new Construction Law (2008) stipulates that the utility DEALING WITH CONSTRUCTION PERMITS companies are required to issue any preliminary clearance to provide connection Podgorica, Montenegro to their services before the design stage. It is assumed that the urban development plans and technical requirement plans bear all relevant information and are publicly Warehouse Value: EUR 715,000 (US$ 992,934) available. However, in practice due to early stages of reform and lack of capacity of Data as of: January 2011 utility companies, builders still have to visit each authority separately. Procedure 1. Obtain proof of ownership from the Real Estate Procedure 8*. Obtain fire prevention clearance from the Ministry Administration of Interior office Time: 1 day Time: 15 days Cost: EUR 5 Cost: EUR 300 Procedure 2. Obtain a copy of the site map from the Real Estate Comments: Previously obtained fire protection study is submitted to Ministry of Interior in order to obtain clearance. Administration Time: 2 days Procedure 9*. Pay the municipality tax (a compensation for using Cost: EUR 8 the city's land and the needed adjustments to city’s spatial plan) Comments: It takes 2 days, as graphical database is not digital and analogue plans to the local Secretariat for Urban Development need drafting for each separate project. Time: 2 days Cost: EUR 62,584 ((500 square meters x EUR 68 x 0.95) + (500 square meters x EUR Procedure 3. Obtain urban development and technical 68 x 0.9) + (300.6 square meters x EUR 68 x 0.75) - 20% discount for paying the total requirements from the municipality amount at once) Time: 60 days Comments: Before the building permit is issued, the company must pay the so Cost: EUR 150 called "communal tax" for the maintenance of existing infrastructure, compensation Comments: According to the new Construction Law (2008), companies do not for using the city's land and the adjustment that the city needs to make to its urban need to go through time-consuming procedures to obtain the decision on location plan due to the new construction. The fees per square meter are set at EUR 68 while as a precondition for entering the design phase. This process is done at the stage the total amount depends on coefficients (K) that are set according to the size of the of issuance of building permit. At the pre-design stage it is sufficient to follow the building as follows: urban-technical conditions for that particular area contained in the general or local a. For areas smaller than 500 square meters, K=1; spatial plan. However, Podgorica does not have a completely updated set of techni- b. For areas bigger than 500 square meters: 1) For the first 500 square meters, cal conditions, detailed spatial plans and maps yet. According to the implementation K=0.95; 2) For the second 500 square meters, K=0.9; 3) For every additional 500 regulations there is a one year period for each local government to adopt its local de- square meters, K will decrease by 0.15. tailed maps and plans. Thereafter, spatial plans, urban technical conditions, requests for issuance of construction permits, construction permits and commencement of The amount is to be paid in total before submitting the request for building permit. If construction works notices are to be published on the governmental web sites. The the tax is paid at once, the total amount due is discounted by 20%. implementation period for all local authorities to introduce web-based platforms is also one year and has not expired yet. Procedure 10. Obtain building permit from local Secretariat of Urban Development The responsible authority for projects less than 3,000 square meters is the Municipal- ity of Podgorica. This procedure takes on average 60 days. Time: 30 days According to the new Construction Law (2008) Article 88, the process of review of Cost: EUR 3,575 (0.5% of the property value) conceptual project and main project may be conducted by a business organization Comments: The building permit is issued by the local Secretariat for Urban Develop- which is licensed and which meets the conditions referred to in Articles 83, 84 and ment. Although the Construction Law stipulates that building permits must be 85 of the law. The review of the conceptual project and the main project must not be issued within 15 days, in practice it still takes 30 days. performed by a person who participated in producing such projects. Previously this function was performed by the Ministry of Economic Development. Procedure 11. Obtain connection to power grid Time: 15 days Procedure 4. Obtain main project study Cost: EUR 300 Time: 60 days Cost: EUR 13,006 (EUR 10 x 1,300.6 square meters) Procedure 12*. Obtain connection to water and sewage line Comments: BuildCo must hire a licensed design and engineering company to create Time: 10 days the main project study. The cost is between EUR 6 to EUR 10 per square meter. Cost: EUR 200 Procedure 5. Obtain fire protection study Procedure 13*. Obtain connection to telecommunications Time: 15 days network Cost: EUR 1,410 (EUR 500 for study + EUR 0.7 x 1,300.6 square meters for sprinkler Time: 3 days installation project) Cost: EUR 50 Comments: BuildCo must hire a private licensed company to create a fire protection study and sprinkler installation project. The study is later submitted to the Ministry of Procedure 14. Request occupancy permit from the Secretariat for Interior for clearance. The sprinkler installation system is required for buildings over Urban Development and receive technical inspection 400 square meters and industrial buildings. The creation of the study costs between EUR 300 and EUR 600 while the creation of the sprinkler installation project costs Time: 10 days between EUR 0.6 and EUR 0.8 per square meter. Cost: EUR 715 (0.1% of the property value) Comments: After the Secretariat for Urban Development receives a request for Procedure 6. Obtain clearance to connect to the electricity issuing occupancy permit they will assemble a commission to perform the technical network inspection of the building. The commission usually comprises licensed architects, Time: 20 days construction engineers, and electrical engineers. Cost: EUR 200 (EUR 50 for taxes + EUR 150 for service) Procedure 15. Obtain occupancy permit from the Secretariat for Comments: In Podgorica, BuildCo pays for the initial clearance from utility companies. Urban Development Procedure 7*. Obtain clearance to connect to the water and Time: 20 days sewerage network Cost: EUR 1,430 (0.2% of the property value) Time: 16 days *This procedure can be completed simultaneously with previous procedure. Cost: EUR 234 (EUR 0.18 x 1,300.6 square meters) LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 97 Comments: Article 62 of the new Construction Law (2008) stipulates that the utility The procedure for issuance of the building permit has been simplified. Various companies are required to issue any preliminary clearance to provide connection approvals and opinions from ministries and utilities companies that were, under the to their services before the design stage. It is assumed that the urban development former law, required to be submitted before the issuance of the construction permit plans and technical requirement plans bear all relevant information and are publicly are no longer required. Moreover, the building permit may be issued based on the available. However, in practice due to early stages of reform and lack of capacity of preliminary design, whereas the main design and its audit are required before the utility companies, builders still have to visit each authority separately. commencement of construction. This part also includes the review of location permit aspects. However, in practice most of the approvals and opinions are still required Procedure 8*. Obtain clearance to connect to the before the final decision on construction permit. telecommunications network Building control process during construction has been amended as well. Under the Time: 15 days Article 105, companies following the issuance of the building permit must notify the Construction Inspection within 7 days before the actual works begins. The notifica- Cost: EUR 340 tion can be done via email, provided there is a scanned copy of the building permit. Comments: According to municipal tariffs and fees the cost is calculated based on Thereafter the Construction Inspectorate, which is a national entity, must publish the total area of warehouse. Anything between 1,000- 3,000 square meters is EUR the information on its website, including the schedule of inspections. It is most 340. likely the inspections will take place at the foundation, structural and final stages of Article 62 of the new Construction Law (2008) stipulates that the utility companies construction works. Inspections are risk-based. All inspections are registered in the are required to issue any preliminary clearance to provide connection to their construction site ledger. services before the design stage. It is assumed that the urban development plans and technical requirement plans bear all relevant information and are publicly avail- Procedure 14. Obtain power connection able. However, in practice due to early stages of reform and lack of capacity of utility Time: 20 days companies, builders still have to visit each authority separately. Cost: EUR 300 Procedure 9*. Pay compensation for utilities provision on construction land Procedure 15*. Obtain water and sewerage connection Time: 10 days Time: 1 day Cost: EUR 200 Cost: EUR 72,168 (EUR 65.28 x 1,300.6 square meters for Zone V - 15% discount for paying the total amount at once) Procedure 16*. Obtain telephone connection Comments: Before the building permit is issued, the company must pay the so called "communal tax" to the Agency for Construction and Development of Pod- Time: 7 days gorica for the maintenance of existing infrastructure, compensation for using the Cost: EUR 80 city's land and the adjustment that the city needs to make to its urban plan due to the new construction. Procedure 17. Request and receive technical inspection for Fees are determined according to the following schedule (per square meter): building control from the Ministry of Economic Development a. ZONE I: EUR 191.87; Time: 1 day b. ZONE II: EUR 125.6; Cost: EUR 2,861 (EUR 2.20 x 1,300.6 square meters) c. ZONE III: EUR 103.28; Comments: The Ministry of Economic Development nominates the members of the d. ZONE IV: EUR 86.31; inspection panel, which includes experts from architecture, sewage/water, technical standards, electricity, etc. Additionally, the architects which designed the project e. ZONE V: EUR 65.28; must be part of the technical inspection. This came as a result of multiple copyright f. ZONE VI: EUR 22.17. violations by various builders. The cost is paid for inspection services. The cost reflected here is for a warehouse in Zone V. The amount is to be paid in total before submitting the request for building permit. If the tax is paid at once, the total Procedure 18. Obtain building use permit from the Ministry of amount is discounted by 15%. Economic Development Time: 49 days Procedure 10*. Obtain ecological approval from the Ministry for Cost: EUR 1,430 (0.2% x warehouse value of EUR 715,000) Tourism and Environmental Protection Comments: All buildings must have a building use permit in order to be able to reg- Time: 30 days ister with the respective agency. Before, however, buildings could be registered with Cost: EUR 7,150 only a building permit and without a building use permit. The building use permit must be issued within 7 days following the final report by the inspection. However, Procedure 11*. Obtain traffic approval from the municipality prior to that, the competent authority has 7 days to decide on the performance of Time: 10 days the technical inspection. Thereafter, the inspector has another 7 days to submit the Cost: EUR 3 final report. Procedure 12. Obtain fire prevention approval *This procedure can be completed simultaneously with previous procedure. Time: 15 days DEALING WITH CONSTRUCTION PERMITS Cost: EUR 300 Comments: Under the Construction Law (2008) the Fire Authority must issue the Belgrade, Serbia approval within 6 days. However, in practice it still takes two weeks. Warehouse Value: RSD 42,112,996 (US$ 651,959) Data as of: January 2011 Procedure 13. Obtain a building permit from the Ministry of Economic Development Procedure 1. Request and obtain proof of ownership of the Time: 30 days construction land from Republic Geodetic Authority Cost: EUR 715 (0.1% of warehouse value of EUR 715,000) Time: 6 days Comments: Under the new Construction Law (2008), the deadline for issuance of a Cost: RSD 130 building permit is now 15 days. However, in practice, due to lack of adequate man- Comments: Proof of ownership is provided either by a competent municipal court power and technology, it still takes 30 days. The Ministry of Economic Development (with a land register extract) or the Republic Geodetic Authority (an extract from the is conducting a constant monitoring of the progress and helps applicants whose re- newly established cadastre). quests are not replied within the time-limit. Applicants can only file a complaint with the local government first, and then if there is no reaction, appeal to the local courts. Procedure 2*. Request and obtain consent from electricity In practice most companies prefer to wait rather than challenge the authorities. provider (Elektrodistribucija Beograd) Time: 45 days Cost: RSD 10,000 98 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Comments: When obtaining the main construction project clearance from the elec- Procedure 9*. Request and obtain technical control of the main tricity authority, the authority issues a set of conditions which have to be respected when developing the main construction project plan. The main construction project project from a licensed firm plan has to be submitted to the electricity provider only when requesting a connec- Time: 10 days tion to the power supply. Apart from the request form, BuildCo needs to submit a Cost: RSD 92,071 copy of cadastre excerpt and the construction plan of the building as well as a proof Comments: A duly licensed company, other than the one that furnished the main of administrative tax payment. construction project plan, must verify whether the main construction project has been made in accordance with the law and with the technical standards, and Procedure 3*. Request and obtain consent from the water and whether it has all necessary clearances. The main construction project must be certi- sewerage authority (JKP Vodovod i Kanalizacija) fied and stamped to that effect. Time: 60 days Cost: RSD 159,500 (RSD 70,500 for the preparation of the conditions regarding water Procedure 10*. Request and obtain main construction project and sewerage service + RSD 44,000 for issuance of the consent (clearance) + RSD clearance from the labor inspection of the Department for Safety 45,000 for a connection to the public electricity network) at Work Comments: When obtaining the main construction project clearance from the water Time: 60 days authority, the authority issues a set of conditions which have to be respected when Cost: RSD 5,900 developing the main construction project plan. Comments: In order to obtain project clearance from the labor inspection, BuildCo will have to obtain a study on safety of construction site and health of workers. This Procedure 4*. Request and obtain consent from the study can be obtained right before the start of construction. Competent authorities telecommunications authority (Telekom Srbija) will have to be notified of the start of construction eight days before the start of Time: 45 days construction. Cost: RSD 20,000 Comments: The telecommunications authority makes a list of conditions within 10 Procedure 11. Request and obtain building permit from days from the day the application was submitted. After that, BuildCo prepares the municipality and pay compensation for land usage (city building relevant drawings and project designs according to the specified norms. The overall land tax) time has decreased from 60 days to 45 days because of the more efficient internal Time: 120 days document processing. The time limit for issuing the technical project clearances Cost: RSD 5,379,282 from various authorities is 30 days, concurrently. However, in practice it takes much Comments: Along with the request form to obtain building permit, BuildCo will longer and requires various follow-ups by applicants. have to submit the following documents: Procedure 5*. Request and obtain consent from the heating a. Three copies of the main construction plan as proof of technical control of the authority main project; b. Proof of payment of shelter fee; Time: 45 days c. Proof of payment of city building land tax; Cost: RSD 12,500 d. Urban consent along with the evidence of the ownership status or rental status of Comments: When obtaining the main construction project clearance from the the building plot; heating authority, the authority issues a set of conditions which have to be respected when developing the main construction project plan. e. All acquired clearances as well as the clearance on fire hazard prevention and safety. Procedure 6*. Request and obtain consent on requirements for Procedure 12. Notify and obtain approval for commencement of fire prevention regulations from the Department of Fire Hazard construction work from municipal Department for Urbanism and Prevention and Safety Inspectorate at the Ministry of Interior Construction Affairs Time: 1 day Time: 30 days Cost: No cost Cost: RSD 33,840 Comments: According to Article 148 of the Law on Planning and Construction Comments: BuildCo has to obtain technical clearance from the Fire Hazard Preven- (Zakon o planiranju i izgradnji, Official Gazette 72/09), the investor informs the tion inspection. This means that when developing the main construction project municipal department that issued the building permit as well as the construction plan, BuildCo has to comply with fire hazard prevention and safety standards and inspection commission of the start of construction activities. The investor has to obtain the Study on Fire Hazard Prevention and Safety. submit information on the construction company that will be engaged in construc- tion works and timeline of construction activities. The start of construction activities Procedure 7*. Request and obtain consent from the municipal must be reported to the municipality at least 8 days before commencement. traffic authority Procedure 13. Nominate expert supervisor of the construction Time: 60 days Time: 1 day Cost: RSD 5,900 Cost: RSD 455,000 (1% of building's overall value) Comments: When obtaining the main construction project clearance from the traffic Comments: Expert supervision of the construction must be provided during the authority, the authority issues a set of conditions which have to be respected when entire period of construction by a licensed independent engineer. This person can- developing the main construction project plan. not be affiliated with BuildCo. The expert supervisor visits the site once a week on average. Procedure 8. Request and obtain location permit from municipality Procedure 14*. Request and obtain consent regarding the Time: 30 days connection of the plot of land to the nearest public road from Cost: RSD 30,740 public roads authority (JP Putevi Srbije) Comments: Along with the request form to obtain the permit, BuildCo will have to Time: 30 days submit the following documents: Cost: RSD 61,000 a. Proof of ownership (excerpt from the land registry not older than six months and Comments: BuildCo must undertake this procedure should it require access to or a proof that investor is registered as the owner of the property); use of the nearest public road. b. Cadastre excerpt; c. Preliminary clearances from utility companies (water, electricity and heating Procedure 15*. Request and obtain consent regarding providers); regulations on environmental protection from municipality d. The main construction project plan that defines building location and the number Time: 30 days of floors. Cost: RSD 80,000 LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 99 DEALING WITH CONSTRUCTION PERMITS Procedure 16*. Request and obtain water and sewerage connection from municipal water and sewage authority (JP Krusevac, Serbia Vodovod) Warehouse Value: RSD 42,112,996 (US$ 651,959) Time: 10 days Data as of: January 2011 Cost: No cost Procedure 1. Request and obtain proof of ownership of the Comments: In order to obtain water and sewage connection, BuildCo has to submit construction land from Republic Geodetic Authority a request form for connection to water and sewage installations along with the main construction plan which shows precise installation plans of the building. In order Time: 3 days to receive a connection, there has to be a sewage shaft and water-gage. BuildCo Cost: RSD 2,200 will also have to obtain clearances from all utility companies to ensure that no Comments: Proof of ownership is provided either by a competent municipal court underground installations will be affected when connecting the building to the main (with a land register extract) or the Republic Geodetic Authority (an extract from the water and sewage installations. newly established cadastre). Procedure 17*. Request and obtain electricity connection from Procedure 2*. Request and obtain consent from electricity municipal electricity provider (Elektrodistribucija Beograd) provider (Elektrodistribucija Krusevac) Time: 7 days Time: 30 days Cost: RSD 508,200 Cost: RSD 20,000 Comments: Obtaining electricity connection is similar to obtaining water and sew- Comments: When obtaining the main construction project clearance from the elec- age connection, except that in case of obtaining electricity connection, Elektrodis- tricity authority, the authority issues a set of conditions which have to be respected tribucija Beograd issues all necessary connection documents and performs all works when developing the main construction project plan. The main construction project in providing the connection. plan has to be submitted to the electricity provider only when requesting a connec- tion to the power supply. Apart from the request form, BuildCo needs to submit a Procedure 18*. Request and obtain phone connection from copy of cadastre excerpt and the construction plan of the building as well as a proof telecommunications authority (Telekom Srbija) of administrative tax payment. Time: 7 days Cost: RSD 12,000 Procedure 3*. Request and obtain consent from the water and sewerage authority (JKP Vodovod i Kanalizacija) Procedure 19. Request and obtain technical examination of Time: 30 days the building from municipal Department of Urbanism and Cost: RSD 100,000 Construction Comments: When obtaining the main construction project clearance from the water Time: 8 days authority, the authority issues a set of conditions which have to be respected when Cost: RSD 120 (administrative tax) developing the main construction project plan. Comments: After all construction work has been completed, a municipal commis- Procedure 4*. Request and obtain consent from the sion examines whether the constructed building complies with the issued building permit, all applicable laws and regulations, and technical standards. The municipality telecommunications authority (Telekom Srbija) issues the use permit within 7 days after the commission responsible for the techni- Time: 60 days cal examination reports that the building is suitable for use. Cost: RSD 16,000 The municipal commission does not issue the use permit if the building is not in Comments: When obtaining the main construction project clearance from the compliance with technical standards and technical documentation. Instead, it orders telecommunications authority, the authority issues a set of conditions which have to BuildCo to correct all irregularities and, after re-examining the building, it issues the be respected when developing the main construction project plan. use permit. If the irregularities cannot be fixed and use of the building is dangerous, the commission orders the demolition of the building. Procedure 5*. Request and obtain consent from the heating authority Procedure 20. Request and obtain use permit from municipality Time: 3 days Time: 15 days Cost: RSD 16,000 Cost: RSD 25,686 Comments: When obtaining the main construction project clearance from the Comments: In order to submit a request to obtain the use permit, BuildCo will have heating authority, the authority issues a set of conditions which have to be respected to undergo technical examination of the building. With the request form for the use when developing the main construction project plan. permit, BuildCo also needs to submit the following documents: a. Four copies of the technical examination form; Procedure 6*. Request and obtain consent on requirements for b. Cadastre excerpt; fire prevention regulations from the Department of Fire Hazard c. Proof of payment of the municipal building land tax; Prevention and Safety Inspectorate at the Ministry of Interior d. Clearance from the Fire Hazard Prevention and Safety Inspectorate that ensures Affairs that the building complies with fire hazard prevention and safety standards. Time: 7 days Cost: RSD 51,000 (RSD 25,000 for administrative tax + RSD 26,000 to have construc- Procedure 21. Register the building at the Republic Geodetic tion plan design created) Authority Comments: BuildCo has to obtain technical clearance from the Fire Hazard Preven- Time: 45 days tion inspection. This means that when developing the main construction project Cost: RSD 4,000 plan, BuildCo has to comply with fire hazard prevention and safety standards and obtain the Study on Fire Hazard Prevention and Safety. Comments: BuildCo must submit a formal request to register the building along with the building permit and the use permit. If there is a cadastral register in the area where the warehouse was constructed, the company should register the building Procedure 7*. Request and obtain consent from the municipal with the Republic Geodetic Authority (cadastral registry). Otherwise, the building traffic authority should be registered in the land books. Time: 40 days Cost: RSD 35,000 *This procedure can be completed simultaneously with previous procedure. Comments: When obtaining the main construction project clearance from the traffic authority, the authority issues a set of conditions which have to be respected when developing the main construction project plan. 100 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 8. Request and obtain location permit from Procedure 14*. Request and obtain consent regarding the connec- municipality tion of the plot of land to the nearest public road from municipal De- Time: 30 days partment of Urbanism and Construction and public roads authority Cost: RSD 35,000 Time: 30 days Comments: Along with the request form to obtain location permit, BuildCo has to Cost: RSD 12,000 submit following documents: Comments: BuildCo must undertake this procedure should it require access to or a. Proof of ownership (excerpt from the land registry not older than six months and use of the nearest public road. a proof that investor is registered as the owner of the property); b. Excerpt from cadastre; Procedure 15*. Request and obtain consent regarding c. Preliminary clearances from utility companies (water, electricity and heating regulations on environmental protection from municipality providers); Time: 8 days d. The main construction project plan that defines building location and the number Cost: RSD 80,000 of floors. Procedure 16*. Request and obtain water and sewerage connec- Procedure 9*. Request and obtain technical control of the main tion from municipal water and sewage authority (JP Vodovod) project from a licensed firm Time: 45 days Time: 3 days Cost: No cost Cost: RSD 40,000 Comments: In order to obtain water and sewage connection, BuildCo has to submit Comments: A duly licensed company, other than the one that furnished the main a request form for connection to water and sewage installations along with the main construction project plan, must verify whether the main construction project has construction plan which shows precise installation plans of the building. In order been made in accordance with the law and with technical standards, and whether to receive a connection, there has to be a sewage shaft and water-gage. BuildCo it has all necessary clearances. The main construction project must be certified and will also have to obtain clearances from all utility companies to ensure that no stamped to that effect. underground installations will be affected when connecting the building to the main water and sewage installations. Procedure 10*. Request and obtain main construction project clearance from the labor inspection of the Department for Safety Procedure 17*. Request and obtain electricity connection from at Work municipal electricity provider (Elektrodistribucija Krusevac) Time: 1 day Time: 40 days Cost: RSD 10,000 Cost: RSD 350,000 Comments: In order to obtain project clearance from the labor inspection, BuildCo Comments: Obtaining electricity connection is similar to obtaining water and sew- has to obtain a Study on Safety of Construction Site and Health of Workers. This age connection, except that in case of obtaining electricity connection, Elektrodis- study can be obtained right before the start of construction. Competent authori- tribucija Krusevac issues all necessary connection documents and performs all works ties will have to be notified of the start of construction 8 days before the start of in providing the connection. construction. Procedure 18*. Request and obtain phone connection from Procedure 11. Request and obtain building permit from telecommunications authority (Telekom Srbija) municipality and pay compensation for land usage (city building Time: 15 days land tax) Cost: RSD 20,000 Time: 90 days Cost: RSD 5,379,282 Procedure 19. Request and obtain technical examination of Comments: Along with the request form to obtain building permit, BuildCo has to the building from municipal Department of Urbanism and submit the following documents: Construction a. Three copies of the main construction plan as a proof of undergoing a technical Time: 5 days control of the main project; Cost: RSD 150,000 b. Proof of payment of shelter fee; Comments: After all construction work has been completed, a municipal commis- c. Proof of payment of city building land tax; sion from the Department of Urbanism or the licensed firm which has not taken part in development of the main construction project, technical control of the main d. Urban consent along with the evidence of the ownership status or rental status of project, construction works and supervision of construction itself, examines whether the building plot; the constructed building complies with the issued building permit, all applicable e. All acquired clearances as well as the clearance on fire hazard prevention and laws, regulations and technical standards. BuildCo submits a request to the compe- safety. tent municipality with suggestions on which licensed firm will assemble technical examination commission. Commission is comprised of several experts necessary Procedure 12. Notify and obtain approval for commencement of to examine whether the building was built in compliance with urban development construction work from municipal Department for Urbanism and plans of the project. Construction Note: In this case, the commission from the municipal Department of Urbanism Time: 20 days would classify the building’s intended activities as commercial and take a note that Cost: No cost its size is greater than 250 square meters, as required by municipal decision of city of Krusevac which simultaneously contradicts the Law on Planning and Construction. Comments: Article 148 of the Law on Planning and Construction from 2009 requires that the investor informs the municipal department that issued the building permit as well as the construction inspection commission of the start of construction activi- Procedure 20. Request and obtain use permit from municipality ties at least 8 days before commencement of any works. The investor has to submit Time: 30 days information on the construction company that will be engaged in construction Cost: RSD 1,800 works and timeline of construction activities. Comments: In order to submit a request to obtain the use permit, BuildCo will have to undergo technical examination of the building. With the request form for the use Procedure 13. Nominate expert supervisor of the construction permit, BuildCo also needs to submit the following documents: Time: 1 day a. Four copies of technical examination form; Cost: RSD 421,130 (1% of building's overall value) b. Cadastre excerpt; Comments: Expert supervision of the construction must be provided during the en- c. Proof of payment of the municipal building land tax; tire period of construction by an independent licensed engineer. This person cannot d. Clearance from the Fire Hazard Prevention and Safety Inspectorate that ensures be affiliated with BuildCo and visits the construction site once a week on average. that the building complies with fire hazard prevention and safety standards. LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 101 Procedure 21. Register the building at the Republic Geodetic Comments: BuildCo has to obtain technical clearance from the Fire Hazard Preven- tion inspection. This means that when developing the main construction project Authority plan, BuildCo has to comply with fire hazard prevention and safety standards and Time: 5 days obtain the Study on Fire Hazard Prevention and Safety. Cost: RSD 10,000 Comments: BuildCo must submit a formal request to register the building along Procedure 7. Request and obtain location permit from with the building permit and the use permit. If there is a cadastral register in the area municipality where the warehouse was constructed, the company should register the building Time: 7 days with the Republic Geodetic Authority (cadastral registry). Otherwise, the building Cost: RSD 1,500 should be registered in the land books. Comments: Along with the request form to obtain location permit, BuildCo has to *This procedure can be completed simultaneously with previous procedure. submit the following documents: a. Proof of ownership (excerpt from the land registry no older than six months and a proof that investor is registered as the owner of the property); DEALING WITH CONSTRUCTION PERMITS b. Excerpt from cadastre; Uzice, Serbia c. Preliminary clearances from utility companies (water, electrical and heating Warehouse Value: RSD 42,112,996 (US$ 651,959) providers); Data as of: January 2011 d. The main construction project plan that defines building location and the number of floors. Procedure 1. Request and obtain proof of ownership of the construction land from Republic Geodetic Authority Procedure 8. Request and obtain main construction project Time: 1 day clearance from the labor inspection of the Department for Safety Cost: RSD 1,694 at Work Comments: Proof of ownership is provided either by a competent municipal court Time: 7 days (with a land register extract) or the Republic Geodetic Authority (an extract from the Cost: RSD 1,500 newly established cadastre). Comments: In order to obtain project clearance from the labor inspection, BuildCo will have to obtain a Study on Safety of Construction Site and Health of Workers. This Procedure 2*. Request and obtain consent from electricity study can be obtained right before the start of construction. Competent authorities provider (Elektrodistribucija Uzice) will have to be notified of the start of construction eight days before the start of Time: 30 days construction. Cost: RSD 2,500 Comments: When obtaining the main construction project clearance from the elec- Procedure 9. Request and obtain building permit and pay tricity authority, the authority issues a set of conditions which have to be respected compensation for land usage (city building land tax) from when developing the main construction project plan. The main construction project municipal Department for Urbanism and Construction plan has to be submitted to the electricity provider only when requesting a connec- Time: 45 days tion to the power supply. Apart from the request form, BuildCo needs to submit a Cost: RSD 5,379,282 copy of cadastre excerpt and the construction plan of the building as well as a proof of administrative tax payment. Comments: Along with the request form to obtain building permit, BuildCo has to submit the following documents: Procedure 3*. Request and obtain consent from the water and a. Three copies of the main construction plan as a proof of undergoing a technical sewerage authority (JKP Vodovod i Kanalizacija) control of the main project; Time: 30 days b. Proof of payment of shelter fee; Cost: RSD 150,000 c. Proof of payment of city building land tax; Comments: When obtaining the main construction project clearance from the water d. Urban consent along with the evidence of the ownership status or rental status of authority, the authority issues a set of conditions which have to be respected when the building plot; developing the main construction project plan. e. All acquired clearances as well as the clearance on fire hazard prevention and safety. Procedure 4*. Request and obtain consent from the telecommunications authority (Telekom Srbija) Procedure 10. Notify and obtain approval for commencement of Time: 15 days construction work from municipal Department for Urbanism and Construction Cost: RSD 11,900 Time: 21 days Comments: When obtaining the main construction project clearance from the telecommunications authority, the authority issues a set of conditions which have to Cost: No cost be respected when developing the main construction project plan. Comments: Article 148 of the Law on Planning and Construction from 2009 requires that the investor informs the municipal department that issued the building permit Procedure 5*. Request and obtain consent from the heating as well as the construction inspection commission of the start of construction activi- authority ties at least 8 days before commencement of any works. The investor has to submit information on the construction company that will be engaged in construction Time: 8 days works and timeline of construction activities. Cost: RSD 380,000 Comments: When obtaining the main construction project clearance from the Procedure 11. Nominate expert supervisor of the construction heating authority, the authority issues a set of conditions which have to be respected Time: 15 days when developing the main construction project plan. Cost: RSD 421,130 (1% of building's overall value) Procedure 6*. Request and obtain consent on requirements for Comments: Expert supervision of the construction must be provided during the en- fire prevention regulations from the Department of Fire Hazard tire period of construction by an independent licensed engineer. This person cannot Prevention and Safety Inspectorate at the Ministry of Interior be affiliated with BuildCo and visits the construction site once a week on average. Affairs Procedure 12*. Request and obtain consent regarding Time: 7 days regulations on environmental protection from municipality Cost: RSD 50,000 Time: 80 days Cost: RSD 60,000 102 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 13*. Request and obtain water and sewerage Comments: Proof of ownership is provided either by a competent municipal court (with a land register extract) or the Republic Geodetic Authority (an extract from the connection from municipal water and sewage authority (JKP newly established cadastre). Vodovod i Kanalizacija) Time: 8 days Procedure 2*. Request and obtain consent from electricity Cost: No cost provider (Elektrodistribucija Vranje) Comments: In order to obtain water and sewage connection, BuildCo has to submit Time: 3 days a request form for connection to water and sewage installations along with the main Cost: RSD 10,000 construction plan which shows precise installation plans of the building. In order Comments: When obtaining the main construction project clearance from the elec- to receive a connection, there has to be a sewage shaft and water-gage. BuildCo tricity authority, the authority issues a set of conditions which have to be respected will also have to obtain clearances from all utility companies to ensure that no when developing the main construction project plan. The main construction project underground installations will be affected when connecting the building to the main plan has to be submitted to the electricity provider only when requesting a connec- water and sewage installations. tion to the power supply. Apart from the request form, BuildCo needs to submit a copy of cadastre excerpt and the construction plan of the building as well as a proof Procedure 14*. Request and obtain electricity connection from of administrative tax payment. municipal electricity provider (Elektrodistribucija Uzice) Time: 8 days Procedure 3*. Request and obtain consent from the water and Cost: RSD 400,000 sewerage authority (JKP Vodovod i Kanalizacija) Comments: Obtaining electricity connection is similar to obtaining water and sew- Time: 5 days age connection, except that in case of obtaining electricity connection, Elektrodis- Cost: RSD 10,000 tribucija Uzice issues all necessary connection documents and performs all works in Comments: When obtaining the main construction project clearance from the water providing the connection. authority, the authority issues a set of conditions which have to be respected when developing the main construction project plan. Procedure 15*. Request and obtain phone connection from telecommunications authority (Telekom Srbija) Procedure 4*. Request and obtain consent from the Time: 7 days telecommunications authority (Telekom Srbija) Cost: RSD 12,000 Time: 5 days Cost: RSD 380,000 Procedure 16. Request and obtain technical examination of the building from a commission of Higher Polytechnic School Comments: When obtaining the main construction project clearance from the telecommunications authority, the authority issues a set of conditions which have to Time: 1 day be respected when developing the main construction project plan. Cost: RSD 25,000 Procedure 5*. Request and obtain consent from the heating Procedure 17. Request and obtain use permit from municipal authority Department for Urbanism and Construction Time: 15 days Time: 60 days Cost: RSD 300,000 Cost: RSD 80,000 Comments: When obtaining the main construction project clearance from the Comments: In order to submit a request to obtain the use permit, BuildCo will have heating authority, the authority issues a set of conditions which have to be respected to undergo technical examination of the building. With the request form for the use when developing the main construction project plan. permit, BuildCo also needs to submit the following documents: a. Four copies of technical examination form; Procedure 6*. Request and obtain consent on requirements for b. Cadastre excerpt; fire prevention regulations from the Department of Fire Hazard c. Proof of payment of the municipal building land tax; Prevention and Safety Inspectorate at the Ministry of Interior d. Clearance from the Fire Hazard Prevention and Safety Inspectorate that ensures Affairs that the building complies with fire hazard prevention and safety standards. Time: 30 days Cost: RSD 38,000 Procedure 18. Register the building at the Republic Geodetic Comments: BuildCo has to obtain technical clearance from the Fire Hazard Preven- Authority tion inspection. This means that when developing the main construction project Time: 7 days plan, BuildCo has to comply with fire hazard prevention and safety standards and Cost: RSD 3,466 obtain the Study on Fire Hazard Prevention and Safety. Comments: BuildCo must submit a formal request to register the building along Procedure 7*. Request and obtain consent from the municipal with the building permit and the use permit. If there is a cadastral register in the area where the warehouse was constructed, the company should register the building traffic authority with the Republic Geodetic Authority (cadastral registry). Otherwise, the building Time: 60 days should be registered in the land books. Cost: RSD 5,900 Comments: When obtaining the main construction project clearance from the traffic *This procedure can be completed simultaneously with previous procedure. authority, the authority issues a set of conditions which have to be respected when developing the main construction project plan. DEALING WITH CONSTRUCTION PERMITS Vranje, Serbia Procedure 8. Request and obtain location permit from municipality Warehouse Value: RSD 42,112,996 (US$ 651,959) Time: 30 days Data as of: January 2011 Cost: RSD 50,000 Procedure 1. Request and obtain proof of ownership of the Comments: According to the Law on Planning and Construction, the municipal construction land from Republic Geodetic Authority Secretariat on Urbanism and Property Affairs issues the location permit that states Time: 2 days the main conditions relating to the property construction (minimal distance of the building from other buildings in its vicinity, number of floors, construction index, Cost: RSD 1,200 usage index, access to the public road, connectivity to utility infrastructure, vehicle LIST OF PROCEDURES • DEALING WITH CONSTRUCTION PERMITS 103 parking solution proposals etc.). The Secretariat can issue location permit only based Comments: In order to obtain water and sewage connection, BuildCo has to submit on existing urban plans. Vranje is one of the cities with a General Urban Plan adopted a request form for connection to water and sewage installations along with the main by the Municipal Commission for Planning and Construction. construction plan which shows precise installation plans of the building. In order to receive a connection, there has to be a sewage shaft and water-gage. BuildCo Procedure 9*. Request and obtain technical control of the main will also have to obtain clearances from all utility companies to ensure that no project from a licensed firm underground installations will be affected when connecting the building to the main water and sewage installations. Time: 8 days Cost: RSD 80,000 Procedure 16*. Request and obtain electricity connection from Comments: A duly licensed company, other than the one that furnished the main municipal electricity provider (Elektrodistribucija Vranje) construction project plan, must verify whether the main construction project has Time: 15 days been made in accordance with the law and with technical standards, and whether it has all necessary clearances. The main construction project must be certified and Cost: RSD 600,000 stamped to that effect. Comments: Obtaining electricity connection is similar to obtaining water and sew- age connection, except that in case of obtaining electricity connection, Elektrodis- Procedure 10. Request and obtain building permit from tribucija Vranje issues all necessary connection documents and performs all works in municipality and pay compensation for land usage (city building providing the connection. land tax) Procedure 17*. Request and obtain phone connection from Time: 8 days telecommunications authority (Telekom Srbija) Cost: RSD 5,379,282 Time: 10 days Comments: Along with the request form to obtain building permit, BuildCo has to submit the following documents: Cost: RSD 10,000 a. Three copies of the main construction plan as a proof of undergoing a technical Procedure 18. Request and obtain technical examination of the control of the main project; building from a commission of Higher Polytechnic School b. Proof of payment of shelter fee; Time: 7 days c. Proof of payment of city building land tax; Cost: RSD 200,000 d. Urban consent along with the evidence of the ownership status or rental status of the building plot; Procedure 19. Request and obtain use permit from municipality e. All acquired clearances as well as the clearance on fire hazard prevention and Time: 10 days safety. Cost: RSD 8,000 Procedure 11. Notify and obtain approval for commencement of Comments: In order to submit a request to obtain the use permit, BuildCo will have construction work from municipal Department for Urbanism and to undergo technical examination of the building. With the request form for the use Construction permit, BuildCo also needs to submit the following documents: Time: 8 days a. Four copies of technical examination form; Cost: No cost b. Cadastre excerpt; Comments: Article 148 of the Law on Planning and Construction from 2009 requires c. Proof of payment of the municipal building land tax; that the investor informs the municipal department that issued the building permit d. Clearance from the Fire Hazard Prevention and Safety Inspectorate that ensures as well as the construction inspection commission of the start of construction activi- that the building complies with fire hazard prevention and safety standards. ties at least 8 days before commencement of any works. The investor has to submit information on the construction company that will be engaged in construction Procedure 20. Register the building at the Republic Geodetic works and timeline of construction activities. Authority Time: 7 days Procedure 12. Nominate expert supervisor of the construction Cost: RSD 23,000 Time: 1 day Comments: BuildCo must submit a formal request to register the building along Cost: RSD 421,130 (1% of building's overall value) with the building permit and the use permit. If there is a cadastral register in the area Comments: Expert supervision of the construction must be provided during the en- where the warehouse was constructed, the company should register the building in tire period of construction by an independent licensed engineer. This person cannot the Republic Geodetic Authority (cadastral registry). Otherwise, the building should be affiliated with BuildCo and visits the construction site once a week on average. be registered in the land books. Procedure 13*. Request and obtain consent regarding the *This procedure can be completed simultaneously with previous procedure. connection of the plot of land to the nearest public road from public roads authority (JP Putevi Srbije) DEALING WITH CONSTRUCTION PERMITS Time: 30 days Zrenjanin, Serbia Cost: RSD 500,000 Warehouse Value: RSD 42,112,996 (US$ 651,959) Comments: BuildCo must undertake this procedure should it require access to or Data as of: January 2011 use of the nearest public road. Procedure 1. Request and obtain proof of ownership of the Procedure 14*. Request and obtain consent regarding construction land from Republic Geodetic Authority regulations on environmental protection from municipality Time: 10 days Time: 30 days Cost: RSD 1,500 Cost: RSD 4,600 Comments: Proof of ownership is provided either by a competent municipal court (with a land register extract) or the Republic Geodetic Authority (an extract from the Procedure 15*. Request and obtain water and sewerage newly established cadastre). connection from municipal water and sewage authority (JKP Vodovod i Kanalizacija) Procedure 2*. Request and obtain consent from electricity Time: 15 days provider (Elektrodistribucija Zrenjanin) Cost: RSD 100,000 Time: 60 days Cost: RSD 10,000 104 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Procedure 3*. Request and obtain consent from the water and Procedure 10. Request and obtain building permit from sewerage authority (JKP Vodovod i Kanalizacija) municipality and pay compensation for land usage (city building Time: 3 days land tax) Cost: RSD 35,000 Time: 20 days Comments: When obtaining the main construction project clearance from the water Cost: RSD 5,379,282 authority, the authority issues a set of conditions which have to be respected when Comments: Along with the request to obtain building permit, BuildCo has to submit developing the main construction project plan. the following documents: a. Three copies of the main construction plan as a proof of undergoing a technical Procedure 4*. Request and obtain consent from the control of the main project; telecommunications authority (Telekom Srbija) b. Proof of payment of shelter fee; Time: 20 days c. Proof of payment of city building land tax; Cost: RSD 20,000 d. Urban consent along with the evidence of the ownership status or rental status of Comments: When obtaining the main construction project clearance from the the building plot; telecommunications authority, the authority issues a set of conditions which have to e. All acquired clearances as well as the clearance on fire hazard prevention and be respected when developing the main construction project plan. safety. Procedure 5*. Request and obtain consent from the heating Procedure 11. Notify and obtain approval for commencement of authority construction work from municipal Department for Urbanism and Time: 10 days Construction Cost: RSD 70,000 Time: 8 days Comments: When obtaining the main construction project clearance from the Cost: No cost heating authority, the authority issues a set of conditions which have to be respected Comments: Article 148 of the Law on Planning and Construction from 2009 requires when developing the main construction project plan. that the investor informs the municipal department that issued the building permit as well as the construction inspection commission of the start of construction activi- Procedure 6*. Request and obtain consent on requirements for ties at least 8 days before commencement of any works. The investor has to submit fire prevention regulations from the Department of Fire Hazard information on the construction company that will be engaged in construction Prevention and Safety Inspectorate at the Ministry of Interior works and timeline of construction activities. Affairs Time: 7 days Procedure 12. Nominate expert supervisor of the construction Cost: RSD 50,000 Time: 5 days Comments: BuildCo has to obtain technical clearance from the Fire Hazard Preven- Cost: RSD 421,130 (1% of building's overall value) tion inspection. This means that when developing the main construction project Comments: Expert supervision of the construction must be provided during the en- plan, BuildCo has to comply with fire hazard prevention and safety standards and tire period of construction by an independent licensed engineer. This person cannot obtain the Study on Fire Hazard Prevention and Safety. be affiliated with BuildCo and visits the construction site once a week on average. Procedure 7*. Request and obtain consent from the municipal Procedure 13*. Request and obtain consent regarding the traffic authority connection of the plot of land to the nearest public road from Time: 15 days public roads authority (JP Putevi Srbije) Cost: RSD 6,000 Time: 30 days Comments: When obtaining the main construction project clearance from the traffic Cost: RSD 15,000 authority, the authority issues a set of conditions which have to be respected when Comments: BuildCo must undertake this procedure should it require access to or developing the main construction project plan. use of the nearest public road. Procedure 8. Request and obtain location permit from Procedure 14*. Request and obtain consent regarding municipality regulations on environmental protection from municipality Time: 15 days Time: 10 days Cost: RSD 9,000 Cost: RSD 80,000 Comments: Along with the request form to obtain location permit, BuildCo has to submit the following documents: Procedure 15*. Request and obtain water and sewerage a. Proof of ownership (excerpt from the land registry not older than six months and connection from municipal water and sewage authority (JKP a proof that investor is registered as the owner of the property); Vodovod i Kanalizacija) b. Excerpt from cadastre; Time: 10 days c. Preliminary clearances from utility companies (water, electrical and heating Cost: RSD 100,000 providers); Comments: In order to obtain water and sewage connection, BuildCo has to submit d. The main construction project plan that defines building location and the number a request form for connection to water and sewage installations along with the main of floors. construction plan which shows precise installation plans of the building. In order to receive a connection, there has to be a sewage shaft and water-gage. BuildCo Procedure 9*. Request and obtain technical control of the main will also have to obtain clearances from all utility companies to ensure that no project from a licensed firm underground installations will be affected when connecting the building to the main Time: 5 days water and sewage installations. Cost: RSD 20,000 Procedure 16*. Request and obtain electricity connection from Comments: A duly licensed company, other than the one that furnished the main municipal electricity provider (Elektrodistribucija Zrenjanin) construction project plan, must verify whether the main construction project has been made in accordance with the law and with technical standards, and whether Time: 10 days it has all necessary clearances. The main construction project must be certified and Cost: RSD 500,000 stamped to that effect. Comments: Obtaining electricity connection is similar to obtaining water and sewage connection, except that in case of obtaining electricity connection Elektro- distribucija Zrenjanin issues all necessary connection documents and performs all works in providing the connection. LIST LIST PROCEDURES OFOF • REGISTERING PROCEDURES • STARTING APROPERT Y BUSINESS 105 Procedure 17*. Request and obtain phone connection from Procedure 3*. Comparison of property map with the real telecommunications authority (Telekom Srbija) situation and position of the land Time: 10 days Time: 2 days Cost: RSD 6,000 Cost: ALL 41,805 (ALL 50 to ALL 100 per square meter) Comments: This procedure prevents the buyer from any dispute with third parties Procedure 18. Request and obtain technical examination of the caused from overlapping, borders misfit and land surface. Verification is performed building from a commission of Higher Polytechnic School by a private authorized expert (surveyor) at the buyer's expense. Such procedure is Time: 1 day not mandatory, but it is considered necessary especially regarding properties with considerable economic value. The fee is between ALL 50 and ALL 100 per square Cost: RSD 9,000 meter of land. Procedure 19. Request and obtain use permit from municipality Procedure 4. Notarization of the sale and purchase contract by a Time: 30 days notary public Cost: RSD 120 Time: 1 day Comments: In order to submit a request to obtain the use permit, BuildCo will have Cost: ALL 24,862 to undergo technical examination of the building. With the request form for the use permit, BuildCo also needs to submit the following documents: Comments: The sale and purchase contract must be notarized by a notary public. The contract can be drafted by a notary public, lawyer, attorney at law, legal consul- a. Four copies of technical examination form; tant or the parties themselves—Albanian law does not put any restrictions on the b. Cadastre excerpt; issue. In case the sale and purchase contract is not drafted by a lawyer, the notary c. Proof of payment of the municipal building land tax; public is held responsible for the terms and conditions provided therein. An updated d. Clearance from the Fire Hazard Prevention and Safety Inspectorate that ensures Ownership Title Certificate of the property with a layout and an updated record file that the building complies with fire hazard prevention and safety standards. issued by the IPRO office in Durres is attached and is an integral part of the sale and purchase contract. Procedure 20. Register the building at the Republic Geodetic The fees applied are calculated according to the following schedule: Authority Value of real estate: . . . . . . . . . . . . . . . . . . Notary fees: Time: 20 days From ALL 100,000 to 3,000,000. . . . . . . . from ALL 3,500 to 7,000 ( fee is estimated Cost: RSD 6,000 proportionally) Comments: BuildCo must submit a formal request to register the building along From ALL 3,000,000 to 4,000,000 . . . . . . from ALL 7,000 to 8,500 with the building permit and the use permit. If there is a cadastral register in the area From ALL 4,000,000 to 6,000,000 . . . . . . from ALL 8,500 to 10,000 where the warehouse was constructed, the company should register the building in From ALL 6,000,000 to 8,000,000 . . . . . . from ALL 10,000 to 15,000 the Republic Geodetic Authority (cadastral registry). Otherwise, the building should From ALL 8,000,000 to 10,000,000. . . . . from ALL 15,000 to 18,000 be registered in the land books. From ALL 10,000,000 to 15,000,000 . . . from ALL 18,000 to 23,000 *This procedure can be completed simultaneously with previous procedure. From ALL 15,000,000 to 25,000,000 . . . from ALL 23,000 to 30,000 From ALL 25,000,000 to 40,000,000 . . . from ALL 30,000 to 35,000 LIST OF PROCEDURES From ALL 40,000,000 to 50,000,000 . . . from ALL 35,000 to 40,000 From ALL 50,000,000 to 70,000,000 . . . from ALL 40,000 to 50,000 Registering property From ALL 70,000,000 to 100,000,000 . . from ALL 50,000 to 100,000 Over ALL 100,000,000 . . . . . . . . . . . . . . . . up to ALL 150,000 Durres, Albania Procedure 5. Payment of transfer tax at a second-tier bank Property value: ALL 17,660,061 (US$ 197,500) Time: 1 day Data as of: January 2011 Cost: ALL 529,802 (0.5% - 3% of the property value determined by Guidelines No. 9 (February 26, 2008) and No. 21 (February 26, 2009) issued jointly by the Minister of Procedure 1. Seller obtains an Ownership Title Certificate with Finance and the Minister of Justice. The schedule is the following: an accompanying map of the plot from the Immovable Property Value of real estate: . . . . . . . . . . . . . . . . . . Tax: Registration Office (IPRO) Up to ALL 2,000,000 . . . . . . . . . . . . . . . . . . 0.5% of the property value Time: 10 days from ALL 2,000,000 to 4,000,000 . . . . . . 1% of the property value Cost: ALL 1,020 (ALL 400 Ownership Title Certificate + ALL 400 land map + ALL 100 from ALL 4,000,000 to 6,000,000 . . . . . . 2% of the property value service fee + ALL 120 mailing fee) over ALL 6,000,000 . . . . . . . . . . . . . . . . . . . 3% of the property value) Comments: The seller files the required documents with the IPRO branch in Durres to obtain an updated Ownership Title Certificate with a layout or a record file. The Comments: If the property is sold at a higher price than initially bought, the seller is Certificate includes the property number, cadastral area, name of owner, surface subject to a capital gain tax of 10%. in square meters, building data (if there are any) and a special section certifying that the property is not subject to any dispute, lien, encumbrance, mortgage or Procedure 6. Buyer applies for property registration at the IPRO lease agreement. The Certificate should be associated with the relevant map of the Time: 15 days property. In order to avoid any possible dispute, a new certificate is strictly required Cost: ALL 1,920 (ALL 1500 registration fee + ALL 300 service fee + ALL 120 mailing for any kind of property transfer. fee) Procedure 2*. Buyer verifies Ownership Title Certificate at the *This procedure can be completed simultaneously with previous procedure. IPRO Time: 5 days Cost: ALL 1,500 (ALL 550 for an updated record file + ALL 950 for an updated Owner- ship Title Certificate with a layout) Comments: Buyer verifies the Ownership Title Certificate with the layout at the IPRO in Durres. This procedure is undertaken in order to avoid any possible frauds. The buyer ensures that the property is free of any dispute, lien, encumbrance, mortgage or any other property rights. Although not required by law, this procedure is common practice and deemed necessary, especially for properties with significant values. 106 DOING BUSINESS IN SOUTH EAST EUROPE 2011 REGISTERING PROPERTY Procedure 5. Payment of transfer tax at a second-tier bank Shkodra, Albania Time: 1 day Property value: ALL 17,660,061 (US$ 197,500) Cost: ALL 529,802 (0.5% - 3% of the property value determined by Guidelines No. 9 Data as of: January 2011 (February 26, 2008) and No. 21 (February 26, 2009) issued jointly by the Minister of Finance and the Minister of Justice. The schedule is the following: Procedure 1. Seller obtains an Ownership Title Certificate with Value of real estate: . . . . . . . . . . . . . . . . . . Tax: an accompanying map of the plot from the Immovable Property Up to ALL 2,000,000 . . . . . . . . . . . . . . . . . . 0.5% of the property value Registration Office (IPRO) from ALL 2,000,000 to 4,000,000 . . . . . . 1% of the property value Time: 7 days from ALL 4,000,000 to 6,000,000 . . . . . . 2% of the property value Cost: ALL 1,020 (ALL 400 Ownership Title Certificate + ALL 400 land map + ALL 100 over ALL 6,000,000 . . . . . . . . . . . . . . . . . . . 3% of the property value) service fee + ALL 120 mailing fee) Comments: If the property is sold at a higher price than initially bought, the seller is Comments: The seller files the required documents with the IPRO branch in subject to a capital gain tax of 10%. Shkodra to obtain an updated Ownership Title Certificate with a layout or a record file. The Certificate includes the property number, cadastral area, name of owner, surface in square meters, building data (if there are any) and a special section certify- Procedure 6. Buyer applies for property registration at the IPRO ing that the property is not subject to any dispute, lien, encumbrance, mortgage or Time: 15 days lease agreement. The Certificate should be associated with the relevant map of the Cost: ALL 1,920 (ALL 1500 registration fee + ALL 300 service fee + ALL 120 mailing property. In order to avoid any possible dispute, a new certificate is strictly required fee) for any kind of property transfer. *This procedure can be completed simultaneously with previous procedure. Procedure 2*. Buyer verifies Ownership Title Certificate at the IPRO REGISTERING PROPERTY Time: 5 days Tirana, Albania Cost: ALL 1,500 (ALL 550 for an updated record file + ALL 950 for an updated Owner- ship Title Certificate with a layout) Property value: ALL 17,660,061 (US$ 197,500) Comments: Buyer verifies the Ownership Title Certificate with the layout at the Data as of: January 2011 IPRO in Shkodra. This procedure is undertaken in order to avoid any possible frauds. Procedure 1. Seller obtains an Ownership Title Certificate with The buyer ensures that the property is free of any dispute, lien, encumbrance, mortgage or any other property rights. Although not required by law, this procedure an accompanying map of the plot from the Immovable Property is common practice and deemed necessary, especially for properties with significant Registration Office (IPRO) values. Time: 10 days Cost: ALL 1,020 (ALL 400 Ownership Title Certificate + ALL 400 land map + ALL 100 Procedure 3*. Comparison of property map with the real service fee + ALL 120 mailing fee) situation and position of the land Comments: The seller files the required documents with the IPRO branch in Tirana Time: 3 days to obtain an updated Ownership Title Certificate with a layout or a record file. The Cost: ALL 41,805 (ALL 50 to ALL 100 per square meter) Certificate includes the property number, cadastral area, name of owner, surface in square meters, building data (if there are any) and a special section certifying Comments: This procedure prevents the buyer from any dispute with third parties that the property is not subject to any dispute, lien, encumbrance, mortgage or caused from overlapping, borders misfit and land surface. Verification is performed lease agreement. The Certificate should be associated with the relevant map of the by a private authorized expert (surveyor) at the buyer's expense. Such procedure is property. In order to avoid any possible dispute, a new certificate is strictly required not mandatory, but it is considered necessary especially regarding properties with for any kind of property transfer. considerable economic value. The fee is between ALL 50 and ALL 100 per square meter of land. Procedure 2*. Buyer verifies Ownership Title Certificate at the Procedure 4. Notarization of the sale and purchase contract by a IPRO notary public Time: 2 days Time: 1 day Cost: ALL 1,500 (ALL 550 for an updated record file + ALL 950 for an updated Owner- ship Title Certificate with a layout) Cost: ALL 24,862 Comments: Buyer verifies the Ownership Title Certificate with the layout at the IPRO Comments: The sale and purchase contract must be notarized by a notary public. in Tirana. This procedure is undertaken in order to avoid any possible frauds. The buy- The contract can be drafted by a notary public, lawyer, attorney at law, legal consul- er ensures that the property is free of any dispute, lien, encumbrance, mortgage or tant or the parties themselves—Albanian law does not put any restrictions on the any other property rights. Although not required by law, this procedure is common issue. In case the sale and purchase contract is not drafted by a lawyer, the notary practice and deemed necessary, especially for properties with significant values. public is held responsible for the terms and conditions provided therein. An updated Ownership Title Certificate of the property with a layout and an updated record file issued by the IPRO office in Shkodra is attached and is an integral part of the sale and Procedure 3*. Comparison of property map with the real purchase contract. situation and position of the land The fees applied are calculated according to the following schedule: Time: 1 day Value of real estate: . . . . . . . . . . . . . . . . . . Notary fees: Cost: ALL 41,805 (ALL 50 to ALL 100 per square meter) From ALL 100,000 to 3,000,000. . . . . . . . from ALL 3,500 to 7,000 ( fee is estimated Comments: This procedure prevents the buyer from any dispute with third parties proportionally) caused from overlapping, borders misfit and land surface. Verification is performed by a private authorized expert (surveyor) at the buyer's expense. Such procedure is From ALL 3,000,000 to 4,000,000 . . . . . . from ALL 7,000 to 8,500 not mandatory, but it is considered necessary especially regarding properties with From ALL 4,000,000 to 6,000,000 . . . . . . from ALL 8,500 to 10,000 considerable economic value. The fee is between ALL 50 and ALL 100 per square From ALL 6,000,000 to 8,000,000 . . . . . . from ALL 10,000 to 15,000 meter of land. From ALL 8,000,000 to 10,000,000. . . . . from ALL 15,000 to 18,000 From ALL 10,000,000 to 15,000,000 . . . from ALL 18,000 to 23,000 Procedure 4. Notarization of the sale and purchase contract by a notary public From ALL 15,000,000 to 25,000,000 . . . from ALL 23,000 to 30,000 Time: 1 day From ALL 25,000,000 to 40,000,000 . . . from ALL 30,000 to 35,000 Cost: ALL 24,862 From ALL 40,000,000 to 50,000,000 . . . from ALL 35,000 to 40,000 From ALL 50,000,000 to 70,000,000 . . . from ALL 40,000 to 50,000 From ALL 70,000,000 to 100,000,000 . . from ALL 50,000 to 100,000 Over ALL 100,000,000 . . . . . . . . . . . . . . . . up to ALL 150,000 LIST LIST PROCEDURES OFOF • REGISTERING PROCEDURES • STARTING APROPERT Y BUSINESS 107 Comments: The sale and purchase contract must be notarized by a notary public. Comments: Buyer verifies the Ownership Title Certificate with the layout at the IPRO The contract can be drafted by a notary public, lawyer, attorney at law, legal consul- in Vlora. This procedure is undertaken in order to avoid any possible frauds. The buyer tant or the parties themselves—Albanian law does not put any restrictions on the ensures that the property is free of any dispute, lien, encumbrance, mortgage or issue. In case the sale and purchase contract is not drafted by a lawyer, the notary any other property rights. Although not required by law, this procedure is common public is held responsible for the terms and conditions provided therein. An updated practice and deemed necessary, especially for properties with significant values. Ownership Title Certificate of the property with a layout and an updated record file issued by the IPRO office in Tirana is attached and is an integral part of the sale and Procedure 3*. Comparison of property map with the real purchase contract. situation and position of the land The fees applied are calculated according to the following schedule: Time: 3 days Value of real estate: . . . . . . . . . . . . . . . . . . Notary fees: Cost: ALL 41,805 (ALL 50 to ALL 100 per square meter) From ALL 100,000 to 3,000,000. . . . . . . . from ALL 3,500 to 7,000 ( fee is estimated Comments: This procedure prevents the buyer from any dispute with third parties proportionally) caused from overlapping, borders misfit and land surface. Verification is performed From ALL 3,000,000 to 4,000,000 . . . . . . from ALL 7,000 to 8,500 by a private authorized expert (surveyor) at the buyer's expense. Such procedure is From ALL 4,000,000 to 6,000,000 . . . . . . from ALL 8,500 to 10,000 not mandatory, but it is considered necessary especially regarding properties with considerable economic value. The fee is between ALL 50 and ALL 100 per square From ALL 6,000,000 to 8,000,000 . . . . . . from ALL 10,000 to 15,000 meter of land. From ALL 8,000,000 to 10,000,000. . . . . from ALL 15,000 to 18,000 From ALL 10,000,000 to 15,000,000 . . . from ALL 18,000 to 23,000 Procedure 4. Notarization of the sale and purchase contract by a From ALL 15,000,000 to 25,000,000 . . . from ALL 23,000 to 30,000 notary public From ALL 25,000,000 to 40,000,000 . . . from ALL 30,000 to 35,000 Time: 1 day From ALL 40,000,000 to 50,000,000 . . . from ALL 35,000 to 40,000 Cost: ALL 24,862 From ALL 50,000,000 to 70,000,000 . . . from ALL 40,000 to 50,000 Comments: The sale and purchase contract must be notarized by a notary public. From ALL 70,000,000 to 100,000,000 . . from ALL 50,000 to 100,000 The contract can be drafted by a notary public, lawyer, attorney at law, legal consul- Over ALL 100,000,000 . . . . . . . . . . . . . . . . up to ALL 150,000 tant or the parties themselves—Albanian law does not put any restrictions on the issue. In case the sale and purchase contract is not drafted by a lawyer, the notary public is held responsible for the terms and conditions provided therein. An updated Procedure 5. Payment of transfer tax at a second-tier bank Ownership Title Certificate of the property with a layout and an updated record file Time: 1 day issued by the IPRO office in Vlora is attached and is an integral part of the sale and Cost: ALL 529,802 (0.5% - 3% of the property value determined by Guidelines No. 9 purchase contract. (February 26, 2008) and No. 21 (February 26, 2009) issued jointly by the Minister of The fees applied are calculated according to the following schedule: Finance and the Minister of Justice. The schedule is the following: Value of real estate: . . . . . . . . . . . . . . . . . . Notary fees: Value of real estate: . . . . . . . . . . . . . . . . . . Tax: From ALL 100,000 to 3,000,000. . . . . . . . from ALL 3,500 to 7,000 ( fee is estimated Up to ALL 2,000,000 . . . . . . . . . . . . . . . . . . 0.5% of the property value proportionally) from ALL 2,000,000 to 4,000,000 . . . . . . 1% of the property value From ALL 3,000,000 to 4,000,000 . . . . . . from ALL 7,000 to 8,500 from ALL 4,000,000 to 6,000,000 . . . . . . 2% of the property value From ALL 4,000,000 to 6,000,000 . . . . . . from ALL 8,500 to 10,000 over ALL 6,000,000 . . . . . . . . . . . . . . . . . . . 3% of the property value) From ALL 6,000,000 to 8,000,000 . . . . . . from ALL 10,000 to 15,000 Comments: If the property is sold at a higher price than initially bought, the seller is From ALL 8,000,000 to 10,000,000. . . . . from ALL 15,000 to 18,000 subject to a capital gain tax of 10%. From ALL 10,000,000 to 15,000,000 . . . from ALL 18,000 to 23,000 Procedure 6. Buyer applies for property registration at the IPRO From ALL 15,000,000 to 25,000,000 . . . from ALL 23,000 to 30,000 Time: 21 days From ALL 25,000,000 to 40,000,000 . . . from ALL 30,000 to 35,000 Cost: ALL 1,920 (ALL 1500 registration fee + ALL 300 service fee + ALL 120 mailing From ALL 40,000,000 to 50,000,000 . . . from ALL 35,000 to 40,000 fee) From ALL 50,000,000 to 70,000,000 . . . from ALL 40,000 to 50,000 From ALL 70,000,000 to 100,000,000 . . from ALL 50,000 to 100,000 *This procedure can be completed simultaneously with previous procedure. Over ALL 100,000,000 . . . . . . . . . . . . . . . . up to ALL 150,000 REGISTERING PROPERTY Procedure 5. Payment of transfer tax at a second-tier bank Vlora, Albania Time: 1 day Property value: ALL 17,660,061 (US$ 197,500) Cost: ALL 529,802 (0.5% - 3% of the property value determined by Guidelines No. 9 (February 26, 2008) and No. 21 (February 26, 2009) issued jointly by the Minister of Data as of: January 2011 Finance and the Minister of Justice. The schedule is the following: Procedure 1. Seller obtains an Ownership Title Certificate with Value of real estate: . . . . . . . . . . . . . . . . . . Tax: an accompanying map of the plot from the Immovable Property Up to ALL 2,000,000 . . . . . . . . . . . . . . . . . . 0.5% of the property value Registration Office (IPRO) from ALL 2,000,000 to 4,000,000 . . . . . . 1% of the property value Time: 11 days from ALL 4,000,000 to 6,000,000 . . . . . . 2% of the property value Cost: ALL 1,020 (ALL 400 Ownership Title Certificate + ALL 400 land map + ALL 100 over ALL 6,000,000 . . . . . . . . . . . . . . . . . . . 3% of the property value) service fee + ALL 120 mailing fee) Comments: If the property is sold at a higher price than initially bought, the seller is Comments: The seller files the required documents with the IPRO branch in Vlora subject to a capital gain tax of 10%. to obtain an updated Ownership Title Certificate with a layout or a record file. The Certificate includes the property number, cadastral area, name of owner, surface Procedure 6. Buyer applies for property registration at the IPRO in square meters, building data (if there are any) and a special section certifying Time: 12 days that the property is not subject to any dispute, lien, encumbrance, mortgage or lease agreement. The Certificate should be associated with the relevant map of the Cost: ALL 1,920 (ALL 1500 registration fee + ALL 300 service fee + ALL 120 mailing property. In order to avoid any possible dispute, a new certificate is strictly required fee) for any kind of property transfer. *This procedure can be completed simultaneously with previous procedure. Procedure 2*. Buyer verifies Ownership Title Certificate at the IPRO Time: 5 days Cost: ALL 1,500 (ALL 550 for an updated record file + ALL 950 for an updated Owner- ship Title Certificate with a layout) 108 DOING BUSINESS IN SOUTH EAST EUROPE 2011 REGISTERING PROPERTY Procedure 4. Submit a request for evaluation of the property Banja Luka, Bosnia and Herzegovina regarding tax payments to the municipal Tax Administration Property value: BAM 327,739 (US$ 235,000) Time: 2 days Data as of: January 2011 Cost: No cost Procedure 1. Obtain a land registry extract as a proof of Comments: The deadline for filing the request for evaluation of the property is 10 days from the signing of the sale and purchase agreement. ownership from the Land Registry of the Basic Court in Banja Luka Required documentation includes: a. Copy of sale and purchase agreement; Time: 1 day b. Copy of Cadastre extract; Cost: BAM 10 c. Copy of Land Registry extract; Comments: In order to obtain a land registry extract, seller needs to submit his/her identification card and the number of the property in the cadastre. The administra- d. Extract from the company’s court registry certifying the person is authorized to tive fee of BAM 10 can be paid at the postal office window within the Land Registry act on behalf of the company and to sign the sale and purchase agreement. of the Basic Court of Banja Luka. Property tax is calculated according to market price (when agreed price is smaller than the market price) or agreed price (when market price is smaller than the agreed Procedure 2. Obtain a cadastre extract from the Republic price). Buyer pays the tax for the transfer of the ownership. Administration for Geodetic and Property Affairs Time: 1 day Procedure 5. Payment of the property transfer tax at a commercial bank Cost: BAM 27 (BAM 10 for the copy of the cadastre plan + BAM 10 for proof of residence + BAM 7 per land parcel) Time: 1 day Comments: In order to obtain cadastre extract, seller must submit the land registry Cost: BAM 9,832 (3% of the property value) extract and a request for cadastre extract. The administrative fee of BAM 27 can be Comments: Upon submission of the sale and purchase agreement to the Tax paid at the postal office window within the Republic Administration for Geodetic Administration office, buyer pays the property transfer tax amounting to 3% of the and Property Affairs. overall property value at a commercial bank to the account of the Tax Administration office in Banja Luka. The tax must be paid within 15 days from receiving payment Procedure 3*. Notarize the sale and purchase agreement instructions from the tax authority. Time: 3 days Procedure 6. Register the property at the Land Registry of the Cost: BAM 700 Basic Court of Banja Luka Comments: According to the Law on Notaries, the sale and purchase agreement of the real estate must be prepared as a notary deed. Buyer and seller contact the nota- Time: 50 days ry, schedule an appointment, submit all the necessary documents and are invited by Cost: No cost the notary to have the sale and purchase agreement read to them before signing it. Comments: Parties submit the request for the property ownership registration at The cost of notarizing the sale and purchase agreement depends on the value of the the Land Registry along with a notarized copy of the sale and purchase agreement real estate at the time of purchase. and the certification of the property transfer tax payment. Application for the trans- Parties provide the notary with: fer of the ownership at the Land Registry can be found on the following website: a. Land registry extract (obtained in procedure 1); http://osnovnisudbl.org/Libraries/%d0%94%d0%be%d0%ba%d1%83%d0%bc%d0 %b5%d0%bd%d1%82%d0%b8/Zahtjev_na_osnovu_kopoprodaje_CIR.sflb.ashx . b. Cadastre extract (obtained in procedure 2); c. Approval of the founder (i.e. the General Assembly or Supervisory Board, in case Procedure 7. Register the property at the Republic that the value of the property exceeds 1/3 of the company’s book value). Administration for Geodetic and Property Affairs The presence of both parties is necessary at notary's office or verification of the Time: 45 days signatures should be based on a special power of notary. The notary fee depends on the value of the property and is set by the Rulebook on Notary Fees (Official Gazette Cost: BAM 14 of Republika Srpska, n. 21/08) as follows. Comments: The buyer must submit the following documents: Value of property: . . . . . . . . . . . . . . . . . . . . Points: a. Copy of sale and purchase agreement; Up to BAM 1,000 . . . . . . . . . . . . . . . . . . . . . 120 points b. Certificate that the property transfer tax has been fully paid; from BAM 1,001 to 2,500 . . . . . . . . . . . . . 180 points c. Extract from the Land Registry; from BAM 2,501 to 5,000 . . . . . . . . . . . . . 250 points d. Filled out request to register the property with the Cadastre. from BAM 5,001 to 10,000 . . . . . . . . . . . . 300 points *This procedure can be completed simultaneously with previous procedure. from BAM 10,001 to 20,000 . . . . . . . . . . . 400 points from BAM 20,001 to 30,000 . . . . . . . . . . . 500 points REGISTERING PROPERTY from BAM 30,001 to 40,000 . . . . . . . . . . . 550 points from BAM 40,001 to 50,000 . . . . . . . . . . . 600 points Mostar, Bosnia and Herzegovina from BAM 50,001 to 60,000 . . . . . . . . . . . 650 points Property value: BAM 327,739 (US$ 235,000) from BAM 60,001 to 80,000 . . . . . . . . . . . 700 points Data as of: January 2011 from BAM 80,001 to 100,000 . . . . . . . . . 750 points Procedure 1. Obtain a land registry extract as a proof of from BAM 100,001 to 150,000. . . . . . . . . 850 points ownership from the Land Registry of the Municipal Court from BAM 150,001 to 200,000. . . . . . . . . 900 points Time: 10 days from BAM 200,001 to 250,000 . . . . . . . . 1,000 points Cost: BAM 9 from BAM 250,001 to 300,000. . . . . . . . . 1,200 points Comments: The seller obtains a land registry extract from the Land Registry as a from BAM 300,001 to 400,000. . . . . . . . . 1,400 points proof of ownership and to check the property against encumbrances. In practice, the from BAM 400,001 to 500,000. . . . . . . . . 1,600 points extract must be obtained by the seller before the start of the transaction. The seller needs to provide a personal identification card and the number of the property in from BAM 500,001 to 750,000. . . . . . . . . 2,000 points the Cadastre. from BAM 750,001 to 1,000,000 . . . . . . 2,500 points The value of a point is 0.5 BAM. Procedure 2. Parties obtain a court extract certifying the person authorized to act on behalf of each company at Municipal Court Time: 12 days LIST LIST PROCEDURES OFOF • REGISTERING PROCEDURES • STARTING APROPERT Y BUSINESS 109 Cost: BAM 40.5 (BAM 9 per extract + BAM 4.5 per page of the court extract) Procedure 6. Payment of the property transfer tax at a Comments: Both the seller and the buyer submit the request for obtaining the commercial bank court extract certifying persons authorized to act on behalf of each of the compa- nies. The seller has to submit extract from the Land Registry where he shows that Time: 1 day he is authorized to sign the sale and purchase agreement. The court extract usually Cost: BAM 16,387 (5% of the property value) has 4-5 pages. The Administrative fee of BAM 40.5 has to be paid at the postal office Comments: The transfer tax has to be paid within 15 days from receiving payment window of the Land Registry of the Municipal Court in Mostar. instructions from the tax authority. Procedure 3*. Notarize the sale and purchase agreement Procedure 7. Register the property at the Land Registry of the Time: 4 days Municipal Court Cost: BAM 700 Time: 70 days Comments: According to the Law on Notaries, the sale and purchase agreement of Cost: BAM 615 (0.18% of the property value + BAM 27 court fee) the real estate must be prepared as a notary deed. Buyer and seller contact the nota- Comments: To register the property at the Land Registry, parties need to submit ry, schedule an appointment, submit all the necessary documents and are invited by following documents: the notary to have the sale and purchase agreement read to them before signing it. a. Request for the transfer of the ownership at the competent court’s Land Registry; The cost of notarizing the sale and purchase agreement depends on the value of the b. Copy of sale and purchase agreement; real estate at the time of purchase. c. Certificate that shows the property transfer tax has been paid in full. Parties provide the notary with: After the registration in the Land Registry is finished, the Land Registry forwards a. Land registry extract (obtained in procedure 1); all required documents to the cadastre so the property ownership change can be b. Court extract (obtained in procedure 2); registered there as well. The cadastre charges a fee of 0.18% of the total property c. Approval of the founder (i.e. the General Assembly or Supervisory Board, in case value and the Land Registry charges a processing fee of BAM 27. that the value of the property exceeds 1/3 of the company’s book value). The presence of both parties is necessary at notary's office or verification of the *This procedure can be completed simultaneously with previous procedure. signatures should be based on a special power of notary. The notary fee depends on the value of the property and is set by the Rulebook on Notary Fees (Official Gazette REGISTERING PROPERTY of Republika Srpska, n. 21/08) as follows: Sarajevo, Bosnia and Herzegovina Value of property: . . . . . . . . . . . . . . . . . . . . Points: Property value: BAM 327,739 (US$ 235,000) Up to BAM 1,000 . . . . . . . . . . . . . . . . . . . . . 120 points Data as of: January 2011 from BAM 1,001 to 2,500 . . . . . . . . . . . . . 180 points from BAM 2,501 to 5,000 . . . . . . . . . . . . . 250 points Procedure 1. Obtain a land registry extract as a proof of from BAM 5,001 to 10,000 . . . . . . . . . . . . 300 points ownership from the Land Registry of the Municipal Court from BAM 10,001 to 20,000 . . . . . . . . . . . 400 points Time: 1 day from BAM 20,001 to 30,000 . . . . . . . . . . . 500 points Cost: BAM 30 (BAM 10 per page, court extract usually has 3 pages) from BAM 30,001 to 40,000 . . . . . . . . . . . 550 points Comments: The seller obtains an extract from the Land Registry as proof of owner- from BAM 40,001 to 50,000 . . . . . . . . . . . 600 points ship and to check the property against encumbrances. In practice, the excerpt must from BAM 50,001 to 60,000 . . . . . . . . . . . 650 points be obtained by the seller before the start of the transaction. The seller needs to from BAM 60,001 to 80,000 . . . . . . . . . . . 700 points provide a personal identification card and a number of the property in the cadastre. from BAM 80,001 to 100,000 . . . . . . . . . . 750 points from BAM 100,001 to 150,000. . . . . . . . . 850 points Procedure 2*. Parties obtain a court extract certifying the person authorized to act on behalf of each company at Municipal Court from BAM 150,001 to 200,000. . . . . . . . . 900 points from BAM 200,001 to 250,000. . . . . . . . . 1,000 points Time: 10 days from BAM 250,001 to 300,000. . . . . . . . . 1,200 points Cost: BAM 66 (BAM 8 per extract + BAM 10 per page of the court extract) from BAM 300,001 to 400,000. . . . . . . . . 1,400 points Comments: Both the seller and the buyer submit the request for obtaining the court extract certifying the person authorized to act on behalf of each company from BAM 400,001 to 500,000. . . . . . . . . 1,600 points to the court that keeps the Registry of Commercial Companies. Each court extract from BAM 500,001 to 750,000. . . . . . . . . 2,000 points contains approximately 4-5 pages. from BAM 750,001 to 1,000,000 . . . . . . . 2,500 points The value of a point is 0.5 BAM. Procedure 3. Notarize the sale and purchase agreement Time: 1 day Procedure 4. Submit a request for evaluation of the property Cost: BAM 700 regarding tax payments to the municipal Tax Administration Comments: According to the Law on Notaries, the sale and purchase agreement of Time: 1 day the real estate must be prepared as a notary deed. Buyer and seller contact the nota- Cost: BAM 75 ry, schedule an appointment, submit all the necessary documents and are invited by Comments: The deadline for filing the request for property evaluation is 15 days the notary to have the sale and purchase agreement read to them before signing it. from the verification of signatures on the sale and purchase agreement. A notarized The cost of notarizing the sale and purchase agreement depends on the value of the copy of the sale and purchase agreement and a copy of the land registry extract real estate at the time of purchase. must be submitted. Parties provide the notary with: a. Land Registry extract (obtained in procedure 1); Procedure 5. On-site inspection of the property by the tax office commission b. Court extract (obtained in procedure 2); c. Approval of the founder (i.e. the General Assembly or Supervisory Board, in case Time: 23 days that the value of the property exceeds 1/3 of the company’s book value). Cost: BAM 100 The presence of both parties is necessary at notary's office or verification of the Comments: Upon submission of the sale and purchase agreement, the tax office signatures should be based on a special power of notary. The notary fee depends on commission performs an on-site inspection of the property. The tax office adopts an the value of the property and is set by the Rulebook on Notary Fees (Official Gazette official decision on the tax duty of the taxpayer (in practice it is always the buyer). of Republika Srpska, n. 21/08) as follows: Upon reaching a decision on the amount of property transfer tax to be paid, the Value of property . . . . . . . . . . . . . . . . . . . . Points commission delivers the certification with a clear guideline on the amount and time permitted to have the property transfer tax paid. Up to BAM 1,000 . . . . . . . . . . . . . . . . . . . . 120 points from BAM 1,001 to 2,500 . . . . . . . . . . . . . 180 points from BAM 2,501 to 5,000 . . . . . . . . . . . . . 250 points 110 DOING BUSINESS IN SOUTH EAST EUROPE 2011 from BAM 5,001 to 10,000 . . . . . . . . . . . . 300 points REGISTERING PROPERTY from BAM 10,001 to 20,000 . . . . . . . . . . . 400 points Pristina, Kosovo from BAM 20,001 to 30,000 . . . . . . . . . . . 500 points Property value: EUR 111,163 (US$ 162,000) from BAM 30,001 to 40,000 . . . . . . . . . . . 550 points Data as of: January 2011 from BAM 40,001 to 50,000 . . . . . . . . . . . 600 points from BAM 50,001 to 60,000 . . . . . . . . . . . 650 points Procedure 1. Obtain Property Ownership Certificate and lot plan from the Municipal Cadastral Directorate from BAM 60,001 to 80,000 . . . . . . . . . . . 700 points Time: 2 days from BAM 80,001 to 100,000 . . . . . . . . . . 750 points Cost: EUR 8 (EUR 4 for the Property Ownership Certificate + EUR 4 for the lot plan) from BAM 100,001 to 150,000. . . . . . . . . 850 points Comments: Seller needs to present these documents to the lawyer who will from BAM 150,001 to 200,000. . . . . . . . . 900 points prepare the sale agreement. The lawyer checks for encumbrances, mortgages, liens from BAM 200,001 to 250,000. . . . . . . . . 1,000 points or other charges on the property while drafting the sale agreement. from BAM 250,001 to 300,000. . . . . . . . . 1,200 points from BAM 300,001 to 400,000. . . . . . . . . 1,400 points Procedure 2. Obtain tax confirmation letter from the Finance and from BAM 400,001 to 500,000. . . . . . . . . 1,600 points Property Directorate of the Municipality from BAM 500,001 to 750,000. . . . . . . . . 2,000 points Time: 2 days from BAM 750,001 to 1,000,000 . . . . . . . 2,500 points Cost: EUR 4 The value of a point is 0.5 BAM. Comments: Seller requests this confirmation letter from the Municipality in order to prove that all property taxes have been paid. Seller needs to present these docu- Procedure 4. Submit a request for evaluation of the property ments to the lawyer who will prepare the sale agreement. regarding tax payments to the municipal Tax Administration Procedure 3. Obtain certified copies of business certificates at the Time: 1 day municipality Cost: No cost Time: 1 day Comments: The deadline for filing the request for property evaluation is 15 days Cost: EUR 4 (EUR 1 per page—most business certificates have 4 pages) from the verification of signatures on the sale and purchase agreement. A notarized copy of the sale and purchase agreement and a copy of the Land Registry extract Comments: Both buyer and seller need to present copies of their business certificates must be submitted. certifing existence of their business to the lawyer who will prepare the sale agreement. Procedure 5. On-site inspection of the property by the tax office Procedure 4. Lawyer drafts the sale agreement commission Time: 2 days Time: 10 days Cost: EUR 200 Cost: No cost Comments: Lawyers charge between EUR 100 and EUR 300. Some lawyers charge Comments: Upon submission of the sale and purchase agreement, the tax office VAT, some do not. According to Kosovo's Tax Law, businesses collect VAT only if they commission performs an on-site inspection of the property. The tax office adopts an earn more than EUR 50,000 per year. Anyone can draft a sale agreement. Laws do not official decision on the tax duty of the taxpayer (in practice it is always the buyer). mandate the intervention of lawyers during a real estate transaction. Upon reaching a decision on the amount of property transfer tax to be paid, the commission delivers the certification with a clear guideline on the amount and time Procedure 5. Receive confirmation of the validity of the sale permitted to have the property transfer tax paid. agreement by the Municipal Court Time: 2 days Procedure 6. Payment of the property transfer tax at a Cost: EUR 56 (EUR 50 confirmation fee + EUR 1 application fee + EUR 5 lawyer commercial bank authorization fee) Time: 1 day Comments: The signed contract is submitted to the court for approval and certifica- Cost: BAM 16,387 (5% of the property value) tion. The court clerk will verify the identity of both parties, check that they are legally Comments: The transfer tax has to be paid within 15 days from receiving payment mandated to sign this agreement, assessing that the transaction complies with the instructions from the tax authority. law. This procedure can be done either by the parties (no cost) or by the lawyer (law- yer needs an authorization by the parties, which costs EUR 5). This is done to prevent Procedure 7. Register the property at the Land Registry of the the parties' denial of their physical presence for the sale agreement at a later time. Municipal Court Procedure 6. Seller pays property transfer tax at a commercial bank Time: 9 days Time: 1 day Cost: BAM 60 (BAM 10 for the extract + BAM 50 court fee) Cost: EUR 151 (EUR 150 property transfer tax + EUR 1 bank transaction fee) Comments: To register the property at the Land Registry, parties need to submit Comments: In the past, the property transfer tax was a percentage of the property following documents: value, but now it is a flat fee per land plot transferred. After paying it at a bank, proof a. Filled out request for the transfer of ownership at the competent court’s Land of payment should be submitted to the municipality. Registry department; b. Copy of sale and purchase agreement; Procedure 7. Register the transfer of property at the Municipal c. Certificate that shows the property transfer tax has been paid in full. Cadastral Directorate After registration in the Land Registry is finished, the land registry office will send all Time: 23 days the required documents to the cadastre so the property ownership change can be Cost: No cost registered there as well. Comments: After submitting all documentation, the municipality provides a pay- ment slip to pay the registration fees at a commercial bank. *This procedure can be completed simultaneously with previous procedure. Procedure 8*. Pay registration fees at a commercial bank Time: 1 day Cost: EUR 201 (EUR 200 registration fee + EUR 1 bank transaction fee) Comments: In the past, the registration fee was a percentage of the property value, but now it is a flat fee per land plot transferred. After paying at a bank, proof of pay- ment should be submitted to the municipality. *This procedure can be completed simultaneously with previous procedure. LIST LIST PROCEDURES OFOF • REGISTERING PROCEDURES • STARTING APROPERT Y BUSINESS 111 REGISTERING PROPERTY REGISTERING PROPERTY Prizren, Kosovo Bitola, FYR Macedonia Property value: EUR 111,163 (US$ 162,000) Property value: MKD 9,710,025 (US$ 220,000) Data as of: January 2011 Data as of: January 2011 Procedure 1. Obtain Property Ownership Certificate and lot plan Procedure 1. Obtain a non-encumbrance certificate on the from the Municipal Geodesy and Cadastre Directorate property and copy of the title deed from the local office of the Time: 2 days Cadastre Cost: EUR 7 (EUR 4 for the Property Ownership Certificate + EUR 3 for the lot plan) Time: 2 days Comments: The Property Ownership Certificate and the lot plan copy are valid for Cost: MKD 575 (MKD 350 non-encumbrance certificate + MKD 125 title deed + MKD 180 days each. 100 administrative tax) Comments: The seller should obtain a copy of title deed from the local office of the Procedure 2*. Obtain tax confirmation letter from the Municipal Cadastre before starting the transaction formally. With the introduction of Law on Directorate of Finance, Economy and Development Real Estate Cadastre on March 23, 2008, the information on encumbrances over land Time: 2 days and property has moved from the First Instance Courts to the Cadastre Registry's Public Book. Thus, parties check for encumbrances over the land and property and Cost: EUR 5 obtain a non–encumbrance certificate from the Real Estate Cadastre at the same Comments: One confirmation letter is issued to both buyer and seller. For a con- time when obtaining a copy of the title deed. struction on agricultural land, the confirmation letter needs to be obtained from the Agricultural Institution and costs EUR 30. Procedure 2. A lawyer prepares the sale and purchase agreement Time: 1 day Procedure 3. Lawyer drafts the sale agreement Cost: MKD 2,000 Time: 2 days Comments: According to practice, the Revenue Office requests that an attorney- Cost: EUR 175 at-law prepares the sale and purchase agreement. While in Skopje clients usually Comments: The fee that lawyers charge depends on the value of the contract. It hire the lawyer to complete the registration, clients in Bitola prefer to complete the varies from EUR 50 to EUR 300 and is subject to negotiation. process themselves; hence the cost in Bitola is lower. Procedure 4. Receive confirmation of the validity of the sale Procedure 3. Calculation and payment of the property transfer agreement by the Municipal Court tax at the municipal Revenue Office Time: 2 days Time: 8 days Cost: EUR 56 (EUR 50 confirmation fee + EUR 1 application fee + EUR 5 lawyer Cost: MKD 291,601 (3% of the property value + MKD 250 taxation decision + MKD authorization fee) 50 administrative tax) Comments: Hiring a lawyer to draft the transaction contract and obtain the court Comments: The tax liability is incurred on the date of conclusion of the agreement confirmation is a common practice. The lawyer needs to have an authorization in on the transfer of ownership. The base of the property transfer tax is the market order to be able to confirm the contract in the court. Authorization for the lawyer value of the real estate at the moment of the tax liability. Previously paid to the needs to be confirmed by the municipality court and costs EUR 5. Public Revenue Authority, the payment of this tax moved from the Revenue Author- ity to the municipalities in 2005. According to the Law on Property Taxes (Official Procedure 5. Seller pays property transfer tax at a commercial Gazette of RoM, No. 61, dated September 13, 2004), the tax rates are determined by bank each municipality, and the municipal administration is authorized to calculate and Time: 1 day collect the property taxes as per the location of the property. The mayor should pass and deliver the decision on the amount of the property tax within 30 days from the Cost: EUR 201 (EUR 200 transfer tax + EUR 1 bank transaction fee) submission of the application by the taxpayer. The rate of the property transfer tax is Comments: Previously, the property transfer tax was a fixed percentage charged on proportionate and equals 3% of the determined market value of the property. the property value. Currently, transfer tax is EUR 200 per lot. Procedure 4. Notarize the sale and purchase agreement at a Procedure 6. Register the transfer of property at the Municipal public notary office Geodesy and Cadastre Directorate Time: 1 day Time: 28 days Cost: MKD 5,500 (MKD 5,000 for notarizing the signatures + MKD 500 court tax) Cost: EUR 5 (application fee) Comments: The agreement is authenticated before a notary public by both parties Comments: The new owner needs to request and obtain an approval in order to (seller and buyer). In case the notary only authorizes (notarizes) a sale and purchase reflect the changes in ownership and obtain a new title certificate. agreement previously prepared by a lawyer the notary fee is MKD 5,000. If the notary also prepares (drafts) the sale and purchase agreement, the notary fee for a contract Procedure 7*. Pay registration fees at a commercial bank of this value is MKD 10,000. The notary will not authenticate the agreement if the Time: 1 day property transfer tax has not been paid to the revenue authority. Cost: EUR 131 (EUR 130 registration fee + EUR 1 bank transaction fee) Procedure 5. Register change of ownership at the Cadastre Comments: Payments of up to EUR 20 can be made at the Cadastral Office. Pay- ments above this value need to be made at a bank. Time: 10 days Cost: MKD 475 (MKD 250 ownership change + MKD 125 new title deed + MKD 100 *This procedure can be completed simultaneously with previous procedure. administrative tax) Comments: A request for changing the ownership title is submitted to the local office of the Cadastre. The buyer will obtain from the Cadastre a new title deed on which the new owner will be registered. The right of ownership over the property is established at the moment of registration in the Public Book at the Cadastre. 112 DOING BUSINESS IN SOUTH EAST EUROPE 2011 REGISTERING PROPERTY Procedure 5. Register change of ownership at the Cadastre Skopje, FYR Macedonia Time: 23 days Property value: MKD 9,710,025 (US$ 220,000) Cost: MKD 425 (MKD 250 for change of ownership + MKD 125 for the new title deed Data as of: January 2011 + MKD 50 stamp duty) Procedure 1. Obtain a non-encumbrance certificate on the REGISTERING PROPERTY property from the Cadastre Time: 2 days Tetovo, FYR Macedonia Cost: MKD 575 (MKD 350 non-encumbrance certificate + MKD 125 title deed + MKD Property value: MKD 9,710,025 (US$ 220,000) 100 stamp duty) Data as of: January 2011 Comments: With the introduction of Law on Real Estate Cadastre on March 23, 2008, the information on encumbrances over land and property has moved from Procedure 1. Obtain a non-encumbrance certificate on the the First Instance Courts to the Cadastre Registry's public book. Thus, parties check property and copy of the title deed from the local office of the for encumbrances over the land and property and obtain a non–encumbrance Cadastre certificate from the Real Estate Cadastre at the same time when they obtain a copy Time: 10 days of the title deed. Cost: MKD 575 (MKD 350 non-encumbrance certificate + MKD 125 title deed + MKD The seller should obtain a title deed from the Department of Cadastre and 100 administrative tax) Registration of Real Estate before starting the transaction formally. In the above Comments: The seller should obtain a copy of title deed from the local office of the case the seller as a company should provide a copy of its registration papers with cadastre before starting the transaction formally. With the introduction of Law on the evidence that the General Manager is authorized to sign the agreement and a Real Estate Cadastre on March 23, 2008, the information on encumbrances over land verified paper form of the signature before a notary public. This form will be used as and property has moved from the First Instance Courts to the Cadastre Registry's evidence before the lawyer and later before the notary public who will verify the sale Public Book. Parties check for encumbrances over the land and the property and and purchase agreement. obtain a non–encumbrance certificate from the Real Estate Cadastre at the same time when obtaining a copy of the title deed. Procedure 2. A lawyer prepares the sale and purchase agreement Time: 2 days Procedure 2. A lawyer prepares the sale and purchase agreement Cost: MKD 6,000 Time: 1 day Comments: A lawyer prepares the sale and purchase agreement and usually Cost: MKD 3,900 completes the whole process on behalf of parties, hence the higher fees noted here. In practice the Revenue Office requests the sale and purchase agreement to be Procedure 3. Calculation and payment of the property transfer prepared by an attorney-at-law. tax at the municipality Revenue Office As the seller is a company, it must produce a certificate showing that the company Time: 10 days has not initiated any bankruptcy procedures. This certificate has to be presented to Cost: MKD 291,401 (3% of the property value + MKD 100 administrative tax) the lawyer for the preparation of the sale and purchase agreement, and must be pre- sented to the notary public for the verification of the sale and purchase agreement. Comments: The tax liability is incurred on the date of conclusion of the agreement on the transfer of ownership. The base of the property transfer tax is the market The buying company must issue a decision for buying the warehouse, signed by the value of the real estate at the moment the tax liability is assessed. Previously paid to company’s manager. This decision will be used both for preparation of the sale and the Public Revenue Authority, the payment of this tax moved from the Revenue Au- purchase agreement by the lawyer, as well as at the notary public for the verification thority to the municipalities in 2005. According to the Law on Property Taxes (Official of the sale and purchase agreement. Gazette of RoM, No. 61, dated September 13, 2004), the tax rates are determined by each municipality, and the municipal administration is authorized to calculate and Procedure 3. Assessment and payment of property transfer tax at collect the property taxes as per the location of the property. The mayor should pass the municipal Revenue Office and deliver the decision on the amount of the property tax within 30 days from the Time: 30 days submission of the application by the taxpayer. The rate of the property transfer tax is Cost: MKD 291,601 ( 3% of property value + MKD 300 administration fee) proportionate and equals 3% of the determined market value of the property. Comments: The tax liability is incurred on the date of conclusion of the agreement on the transfer of ownership. The base of the property transfer tax is the market Procedure 4. Notarize the sale and purchase agreement at a value of the real estate at the moment the tax liability is assesed. Previously paid to public notary office the Public Revenue Authority, the payment of this tax moved from the Revenue Au- Time: 1 day thority to the municipalities in 2005. According to the Law on Property Taxes (Official Cost: MKD 5,500 (MKD 5,000 for notarizing the signatures + MKD 500 court tax) Gazette of RoM, No. 61, dated September 13, 2004), the tax rates are determined by Comments: The agreement is authenticated before a notary public by both parties each municipality, and the municipal administration is authorized to calculate and (seller and buyer). In case the notary only authorizes (notarizes) a sale and purchase collect the property taxes as per the location of the property. The mayor should pass agreement previously prepared by a lawyer the notary fee is MKD 5,000. If the notary and deliver the decision on the amount of the property tax within 30 days from the also prepares (drafts) the sale and purchase agreement, the notary fee for a contract submission of the application by the taxpayer. The rate of the property transfer tax is of this value is MKD 10,000. The notary will not authenticate the agreement if the proportionate and equals 3% of the determined market value of the property. property transfer tax has not been paid to the revenue authority. Procedure 4. The contract is approved by a public notary Procedure 5. Register change of ownership at the Cadastre Time: 1 day Time: 21 days Cost: MKD 5,500 (MKD 5,000 MKD for notarizing the signatures + MKD 500 court tax) Cost: MKD 475 (MKD 250 ownership change + MKD 125 new title deed + MKD 100 Comments: The agreement is verified before a notary public by both parties (seller administrative tax) and buyer). The notary will not verify the agreement if the property transfer tax has Comments: A request for changing the title is submitted to the local office of the not been paid to the revenue authority. In case that the tax is not paid when the Cadastre. The buyer will obtain from the Cadastre a new title deed on which the new agreement is signed before a notary public, the seller will be obliged to pay tax after owner will be registered. The right of ownership over the property is established at signing and to submit the evidence of payment to the notary public who will then the moment of registration of that right in the Public Book of the Cadastre. verify the agreement. According to the Law on Notary Public, a notary public is obliged to submit these documents to the Cadastre in order to inform the Cadastre about the change in ownership. The selling company must provide a certificate showing that it has not initiated any bankruptcy procedures and the buying company must provide a document signed by the manager of the company showing the decision to buy the warehouse. LIST LIST PROCEDURES OFOF • REGISTERING PROCEDURES • STARTING APROPERT Y BUSINESS 113 REGISTERING PROPERTY Procedure 5. Submit the application for registration to the Balti, Moldova Territorial Cadastral Office Property value: MDL 905,188 (US$ 79,500) Time: 1 day (7 days—normal option, 3 days—fast option, 1 day—expedited option) Data as of: January 2011 Cost: MDL 2,716 (5 x 0.06% of estimated property value—expedited option) Procedure 1. Obtain a non-encumbrance certificate from the Comments: The notarized transfer deed is required for registration. The Cadastre Office (http://www.cadastre.md) will examine the documentation and register it in Territorial Cadastral Office the Register of Immovable Assets. The title registration is conducted by applying a Time: 1 day (expedited service) stamp on all originals or notary-certified copies of the property title documents. The Cost: MDL 255 (MDL 51 regular service -OR- MDL 255 expedited service) registration of transfer of ownership over the property is usually done within 7 busi- Comments: A certificate containing information regarding the encumbrances on ness days and costs 0.06% of property value but not less than MDL 267 and not more the property must be obtained from the Territorial Cadastral Office (an office like than MDL 1,335. (http://www.cadastre.md/upfiles/kfm_catalog//anexa%201%20 this exists in each district of the country). Generally, all services have an expedited HG%20770.pdf). It takes either 3 or 5 times less to get the property registered under option. The notary will also request a certificate at the Territorial Cadastre Office, the fast and expedited options—within 3 days and 1 day, respectively. concerning the value of the property put on sale. The State Cadastre has a computerized database regarding encumbrances (www. *This procedure can be completed simultaneously with previous procedure. cadastre.md) but getting information online is only possible after signing a contract for access to the database. REGISTERING PROPERTY Chisinau, Moldova Procedure 2*. Obtain a current excerpt from the Company Property value: MDL 905,188 (US$ 79,500) Register of the State Registration Chamber Data as of: January 2011 Time: 1 day (expedited service) Cost: MDL 126 (MDL 63 regular service -OR- MDL 126 expedited service) Procedure 1. Obtain a non-encumbrance certificate from the Comments: This document proves the legal status of the seller (the person em- Territorial Cadastral Office powered to act on behalf of a company without a proxy). The fee for obtaining the Time: 1 day (expedited service) excerpt is published on the website of the State Registration Chamber: http://cis.gov. Cost: MDL 255 (MDL 51 regular service -OR- MDL 255 expedited service) md/content/61. Comments: A certificate containing information regarding the encumbrances on Procedure 3*. Obtain a tax clearance certificate from the Tax the property must be obtained from the Territorial Cadastral Office (an office like this exists in each district of the country). Generally, all services have an expedited Office option. The notary will also request a certificate at the Territorial Cadastre Office, Time: 1 day concerning the value of the property put on sale. Cost: No cost The State Cadastre has a computerized database regarding encumbrances (www. Comments: A tax clearance certificate from the Tax Office should be produced to cadastre.md) but getting information online is only possible after signing a contract confirm the absence of unpaid taxes for the real estate involved in the transaction. for access to the database. No fees are charged for this document. Procedure 2*. Obtain a current excerpt from the Company Procedure 4. Execution of the transfer deed by a public notary Register of the State Registration Chamber Time: 1 day Time: 1 day (expedited service) Cost: MDL 4,979 (0.2% of land value for state duty + 0.5% of building price for state Cost: MDL 126 (MDL 63 regular service -OR- MDL 126 expedited service) tax + 0.2% of the property value for notary fees) Comments: This document proves the legal status of the seller (the person em- Comments: The public notary will execute the contract in the form prescribed by powered to act on behalf of a company without a proxy). The fee for obtaining the law, in three original or notary-certified copies. The notary will usually request the excerpt is published on the website of the State Registration Chamber: http://cis.gov. submission of the company registration certificate, a current excerpt from the Com- md/content/61. pany Register, the non-encumbrance certificate from the cadastre, and the property title. Upon execution of the deed at the notary, the following state taxes need to be Procedure 3*. Obtain a tax clearance certificate from the Tax paid as well: Office a. For certification of deed of land sale: a state duty of 0.2% of land value if the Time: 1 day transaction takes place between two private persons. When the state sells land Cost: No cost to private individuals a different state duty applies: MDL 5 if the land is outside locality boundaries and MDL 10 if the land plot is within locality boundaries; Comments: A tax clearance certificate from the Tax Office should be produced to confirm the absence of unpaid taxes for the real estate involved in the transaction. b. For certification of deed of sale of buildings: 0.5% of the building price. The state No fees are charged for this document. tax may be paid to the notary in cash. The notary fees are according to the values determined in the following table: Procedure 4. Execution of the transfer deed by a public notary Value of property: . . . . . . . . . . . . . . . . . . . . Notary fees: Time: 1 day Up to MDL 20,000 . . . . . . . . . . . . . . . . . . . . 1.3 %, but not less than MDL 180 Cost: MDL 4,979 (0.2% of land value for state duty + 0.5% of building price for state From MDL 20,001 to 50,000. . . . . . . . . . . 1% tax+ 0.2% of the property value for notary fees) From MDL 50,001 to 100,000 . . . . . . . . . 0.9% Comments: The public notary will execute the contract in the form prescribed by From MDL 100,001 to 200,000 . . . . . . . . 0.8% law, in three original or notary-certified copies. The notary will usually request the From MDL 200,001 to 400,000 . . . . . . . . 0.6% submission of the company registration certificate, a current excerpt from the Com- pany Register, the non-encumbrance certificate from the cadastre, and the property From MDL 400,001 to 600,000 . . . . . . . . 0.5% title. Upon execution of the deed at the notary, the following state taxes need to be From MDL 600,001 to 800,000 . . . . . . . . 0.3% paid as well: From MDL 800,001 to 1,000,000 0.2% a. For certification of deed of land sale: a state duty of 0.2% of land value if the More than MDL 1,000,000 . . . . . . . . . . . . 0.1% transaction takes place between two private persons. When the state sells land The requirement on notarization of land sale and purchase agreements is mentioned to private individuals a different state duty applies: MDL 5 if the land is outside in the Law on Normative Price of Land. locality boundaries and MDL 10 if the land plot is within locality boundaries; b. For certification of deed of sale of buildings: 0.5% of the building price. The state tax may be paid to the notary in cash. The notary fees are according to the values determined in the following table: 114 DOING BUSINESS IN SOUTH EAST EUROPE 2011 Value of property: . . . . . . . . . . . . . . . . . . . . Notary fees: Cost: EUR 7,075 (3% of the property value) Up to MDL 20,000 . . . . . . . . . . . . . . . . . . . . 1.3 %, but not less than MDL 180 Comments: The buyer will deposit the amount assessed by the tax authorities to be From MDL 20,001 to 50,000. . . . . . . . . . . 1% paid as transfer tax into the bank account assigned by the tax authorities. From MDL 50,001 to 100,000. . . . . . . . . . 0.9% Procedure 6. Request registration of new ownership at the From MDL 100,001 to 200,000 . . . . . . . . 0.8% Agency for Real Estate From MDL 200,001 to 400,000 . . . . . . . . 0.6% Time: 23 days From MDL 400,001 to 600,000 . . . . . . . . 0.5% Cost: EUR 13 From MDL 600,001 to 800,000 . . . . . . . . 0.3% Comments: The request takes 1 day and the change of ownership 15-30 days. From MDL 800,001 to 1,000,000. . . . . . . 0.2% Parties fill in a standard form or make a simple written request at the local branch More than MDL 1,000,000 . . . . . . . . . . . . 0.1% of the Agency for Real Estate in order for the name on the property to be changed The requirement on notarization of land sale and purchase agreements is mentioned to the buyer’s name. After the Agency changes the name of the owner, they issue a in the Law on Normative Price of Land. decision of registry change. Procedure 5. Submit the application for registration to the REGISTERING PROPERTY Territorial Cadastral Office Pljevlja, Montenegro Time: 1 day (7 days—normal option, 3 days—fast option, 1 day—expedited option) Property value: EUR 235,829 (US$ 327,500) Cost: MDL 2,716 (5 x 0.06% of estimated property value—expedited option) Data as of: January 2011 Comments: The notarized transfer deed is required for registration. The Cadastre Office (http://www.cadastre.md) will examine the documentation and register it in Procedure 1. Obtain property excerpt from the Agency for Real the Register of Immovable Assets. The title registration is conducted by applying a Estate stamp on all originals or notary-certified copies of the property title documents. The Time: 1 day registration of transfer of ownership over the property is usually done within 7 busi- ness days and costs 0.06% of property value but not less than MDL 267 and not more Cost: EUR 8 (EUR 5 national administrative tax + EUR 3 Agency for Real Estate tax) than MDL 1,335. (http://www.cadastre.md/upfiles/kfm_catalog//anexa%201%20 Comments: The buyer goes to the local branch of the Agency for Real Estate to HG%20770.pdf). It takes either 3 or 5 times less to get the property registered under obtain an excerpt on the property, proving the seller’s ownership. the fast and expedited options—within 3 days and 1 day, respectively. Procedure 2. Lawyer drafts the sale and purchase agreement *This procedure can be completed simultaneously with previous procedure. Time: 1 day Cost: EUR 150 REGISTERING PROPERTY Comments: Lawyer fees varies from EUR 100 to EUR 200 and depend on the value Niksic, Montenegro of the contract. For some transactions, a party may choose to hire a lawyer to check the boundaries and limitations of the property against the excerpt. The fee for this Property value: EUR 235,829 (US$ 327,500) service ranges between EUR 50 and EUR 100. Data as of: January 2011 Procedure 1. Obtain property excerpt from the Agency for Real Procedure 3. Sign and notarize the sale and purchase agreement Estate at the Municipal Court Time: 1 day Time: 1 day Cost: EUR 8 (EUR 5 national administrative tax + EUR 3 Agency for Real Estate tax) Cost: EUR 10 Comments: The buyer goes to the local branch of the Agency for Real Estate to Comments: It is mandatory that the sale and purchase agreement be notarized. In obtain an excerpt on the property, proving the seller’s ownership. accordance with the Law on Business Environment Improvement adopted on July 9, 2010, the fee for notarizing contracts of any value is EUR 10. Procedure 2. Lawyer drafts the sale and purchase agreement Procedure 4. Tax authorities assess the amount of transfer tax to Time: 1 day be paid by the buyer Cost: EUR 150 Time: 5 days Comments: Lawyer fees vary from EUR 100 to EUR 200 and depend on the value Cost: No cost of the contract. For some transactions, a party may choose to hire a lawyer to check the boundaries and limitations of the property against the excerpt. The fee for this Comments: During this period the tax authorities will compare their valuation of service ranges between EUR 50 and EUR 100. the property with the value of the sale and purchase agreement. They will assess how much the buyer should pay as transfer tax (3% of the property value) and assign Procedure 3. Sign and notarize the sale and purchase agreement a bank at which to pay. This assessment may take from 4 to 10 days. at the Municipal Court Procedure 5. Buyer pays transfer tax at a commercial bank Time: 1 day Time: 1 day Cost: EUR 10 Cost: EUR 7,075 (3% of the property value) Comments: It is mandatory that the sale and purchase agreement be notarized. In accordance with the Law on Business Environment Improvement adopted on July 9, Comments: The buyer will deposit the amount assessed by the tax authorities to be 2010, the fee for notarizing contracts of any value is EUR 10. paid as transfer tax into the bank account assigned by the tax authorities. Procedure 4. Tax authorities assess the amount of transfer tax to Procedure 6. Request registration of new ownership at the be paid by the buyer Agency for Real Estate Time: 7 days Time: 9 days Cost: No cost Cost: EUR 13 Comments: During this period the tax authorities will compare their valuation of Comments: The buyer submits a request together with the sale and purchase the property with the value of the sale and purchase agreement. They will assess agreement and confirmation that the administrative tax has been paid. The Agency how much the buyer should pay as transfer tax (3% of the property value) and assign for Real Estate changes the ownership immediately, but the decision is effective a bank at which to pay. This assessment may take from 4 to 10 days. only after the appeal period of 8 days as required by law has expired. Before, it was possible for the buyer and seller to relinquish their right to appeal and make the change effective immediately, but now the legal period of 8 days is being respected. Procedure 5. Buyer pays transfer tax at a commercial bank After the appeal period expires the change of ownership is registered at the Agency Time: 1 day for Real Estate and the buyer and seller are informed in writing that the change has been effected. LIST LIST PROCEDURES OFOF • REGISTERING PROCEDURES • STARTING APROPERT Y BUSINESS 115 REGISTERING PROPERTY REGISTERING PROPERTY Podgorica, Montenegro Belgrade, Serbia Property value: EUR 235,829 (US$ 327,500) Property value: RSD 19,346,070 (US$ 299,500) Data as of: January 2011 Data as of: January 2011 Procedure 1. Obtain property excerpt from the Agency for Real Procedure 1. Obtain an extract from the Register of Companies Estate Time: 1 day Time: 1 day Cost: RSD 3,120 (RSD 1,560 per extract) Cost: EUR 8 (EUR 5 national administrative tax + EUR 3 to Agency for Real Estate) Comments: Considering the transaction involves two companies, they each must Comments: The buyer goes to the local branch of the Agency for Real Estate to obtain the extract from the Register of Companies confirming that the persons sign- obtain an excerpt on the property, proving the seller’s ownership. ing the contract are authorized to sign on behalf of the companies. Procedure 2*. Check boundaries and limitations of the property Procedure 2. Verify the sale and purchase agreement before the against the excerpt court Time: 1 day Time: 1 day Cost: No cost (included in procedure 3) Cost: RSD 39,000 (court fees depend on the property value and are determined ac- Comments: It is standard practice for the buyer to check the boundaries and limita- cording to the following schedule [with a maximum of RSD 39,000]: tions of the property against the excerpt obtained at the local branch of the Agency Property Value . . . . . . . . . . . . . . . . . . . . . . . Court Fees for Real Estate. If it is the buyer’s lawyer that does this, which is normally the case, he Up to RSD 10,000 . . . . . . . . . . . . . . . . . . . . RSD 980 may include this in his fees. From RSD 10,000 to RSD 100,000. . . . . . RSD 650 + 1% of the property value From RSD 100,000 to RSD 1,000,000 . . . RSD 1,950 + 0.5% of the property value Procedure 3. Lawyer drafts the sale and purchase agreement Over RSD1,000,000. . . . . . . . . . . . . . . . . . . RSD 16,600 + 0.25% of the property value) Time: 1 day Comments: The court verifies the documentation, as the notaries do in other Cost: EUR 250 (EUR 200-300) countries. In Serbia, the procedure of establishing the notary instead of the court Comments: It is standard practice for parties to hire a lawyer to draft the sale and verifications is under way. According to the Law on the Transfer of the Immovable, it purchase agreement. A new standardized form for the sale and purchase agreement is obligatory for the sale and purchase agreement on real estate to be verified before is now available online at http://www.nekretnine.co.me/. the court. Effective as of January 6, 2010, the sale and purchase agreement can be certified only before the basic court competent for the territory where the purchased Procedure 4. Sign and notarize the sale and purchase agreement property is located. Prior to this legal reform, sale and purchase agreements could be at the Municipal Court certified before any basic court, regardless of where the property is located. Time: 1 day A lawyer may prepare the sale and purchase agreement (charging an additional RSD Cost: EUR 10 15,000). Comments: It is mandatory that the sale and purchase agreement be notarized. Au- thentication of contractual parties' signatures on the sale and purchase agreement is Procedure 3. Submit request for registration to the Municipal done by basic courts. They act only as a witness (checking the signatures of the seller Court's Land Registry or to the Cadastre and buyer). In accordance with the Law on Business Environment Improvement Time: 1 day adopted on July 9, 2010, the fee for notarizing contracts of any value is EUR 10. Cost: RSD 6,163 Comments: There is a transition from a system where the registration is performed Procedure 5. Tax authorities assess the amount of transfer tax to by the Land Register (a court) to a system where it is all handled by the Cadastre be paid by the buyer (administrative procedure). The new concept is to join legal record keeping (land Time: 20 days register) with factual record keeping (old cadastre) providing a unified system for Cost: No cost registration of real property. The new real property cadastre is maintained by an administrative body: Republic Geodesy Institute (RGZ), through its operational units Comments: The Municipal (basic) court delivers the sale and purchase agreement organized on the territorial principle. with the authenticated signatures to the tax administration. During this period, the tax authorities will compare their valuation of the property with the sale and purchase agreement price. They will assess how much the buyer should pay as Procedure 4. Submit an application to tax authorities to approve transfer tax (3% of the property value) and assign a bank at which to pay. The buyer transaction value and authorize payment of property transfer tax must then go to the tax administration office to get a copy of the agreement with Time: 2 days the stamp (clearance). Cost: No cost Comments: The parties submit an application to the local tax authorities in order Procedure 6. Buyer pays transfer tax at a commercial bank to get approval of the sale price that will be used to calculate the property transfer Time: 1 day tax. The parties have 10 days after the sale contract has been verified by the court to Cost: EUR 7,075 (3% of the property value) submit this application. The parties have 15 days to pay the transfer tax. Comments: The buyer will deposit the amount assessed by the tax authorities to be paid as transfer tax into the bank account assigned by the tax authorities. Procedure 5. Pay the property transfer tax at a commercial bank Time: 1 day Procedure 7. Request inscription of the new owner at the Agency Cost: RSD 483,652 (2.5% of the property value) for Real Estate Comments: The tax is paid in a commercial bank into the account of the local tax Time: 46 days authority. Cost: EUR 18 (EUR 5 request + EUR 13 inscription) Comments: Parties fill in a standard form or make a simple written request at the Procedure 6. The Cadastre/Land Registry makes a decision on the local branch of the Agency for Real Estate in order for the name on the property to title be changed to the buyer’s. It will take between one and two months for the Agency Time: 85 days to inscribe the name, at which point the transfer is considered final. The parties are Cost: No cost notified in writing after the inscription has taken place. There is no mandatory docu- Comments: The time depends on which agency takes charge of the registration. ment to pick up at the end of this period, though the buyer can request a copy of the Registration in the Cadastre takes long due to the backlog in updating records inscription if he wishes. from previous years. Once this transition is complete, the system should work more efficiently. This procedure may last between 30 and 180 days depending on the *This procedure can be completed simultaneously with previous procedure. respective cadastre municipality within the territory of the City of Belgrade. When the new Cadastre is established in a certain area, the Land Registry ceases to exist in the same area. This case assumes the registration takes place in the Cadastre. 116 DOING BUSINESS IN SOUTH EAST EUROPE 2011 REGISTERING PROPERTY REGISTERING PROPERTY Krusevac, Serbia Uzice, Serbia Property value: RSD 19,346,070 (US$ 299,500) Property value: RSD 19,346,070 (US$ 299,500) Data as of: January 2011 Data as of: January 2011 Procedure 1. Obtain an extract from the Register of Companies Procedure 1. Obtain an extract from the Register of Companies Time: 3 days Time: 1 day Cost: RSD 3,120 (RSD 1,560 per extract) Cost: RSD 3,120 (RSD 1,560 per extract) Comments: Considering the transaction involves two companies, they each must Comments: Considering the transaction involves two companies, they each must obtain the extract from the Register of Companies confirming that the persons sign- obtain the extract from the Register of Companies confirming that the persons sign- ing the contract are authorized to sign on behalf of the companies. ing the contract are authorized to sign on behalf of the companies. Procedure 2. Verify the sale and purchase agreement before the Procedure 2. Verify the sale and purchase agreement before the court court Time: 1 day Time: 1 day Cost: RSD 39,000 (court fees depending on the property value and are determined Cost: RSD 39,000 (court fees depending on the property value and are determined according to the following schedule [with a maximum of RSD 39,000]: according to the following schedule [with a maximum of RSD 39,000]: Property Value: . . . . . . . . . . . . . . . . . . . . . . Court Fees: Property Value: . . . . . . . . . . . . . . . . . . . . . . Court Fees: Up to RSD 10,000 . . . . . . . . . . . . . . . . . . . . RSD 980 Up to RSD 10,000 . . . . . . . . . . . . . . . . . . . . RSD 980 From RSD 10,000 to RSD 100,000. . . . . . RSD 650 + 1% of the property value From RSD 10,000 to RSD 100,000. . . . . . RSD 650 + 1% of the property value From RSD 100,000 to RSD 1,000,000 . . . RSD 1,950 + 0.5% of the property value From RSD 100,000 to RSD 1,000,000 . . . RSD 1,950 + 0.5% of the property value Over RSD1,000,000. . . . . . . . . . . . . . . . . . . RSD 16,600 + 0.25% of the property value) Over RSD1,000,000. . . . . . . . . . . . . . . . . . . RSD 16,600 + 0.25% of the property value) Comments: The court verifies the documentation, as the notaries do in other Comments: The court verifies the documentation, as the notaries do in other countries. In Serbia, the procedure of establishing the notary instead of the court countries. In Serbia, the procedure of establishing the notary instead of the court verifications is under way. According to the Law on the Transfer of the Immovable, it verifications is under way. According to the Law on the Transfer of the Immovable, it is obligatory for the sale and purchase agreement on real estate to be verified before is obligatory for the sale and purchase agreement on real estate to be verified before the court. Effective as of January 6, 2010, the sale and purchase agreement can be the court. Effective as of January 6, 2010, the sale and purchase agreement can be certified only before the basic court competent for the territory where the purchased certified only before the basic court competent for the territory where the purchased property is located. Prior to this legal reform, sale and purchase agreements could be property is located. Prior to this legal reform, sale and purchase agreements could be certified before any basic court, regardless of where the property is located. certified before any basic court, regardless of where the property is located. A lawyer may prepare the sale and purchase agreement (charging an additional RSD A lawyer may prepare the sale and purchase agreement (charging an additional RSD 15,000). 15,000). Procedure 3. Submit request for registration to the Municipal Procedure 3. Submit request for registration to the Municipal Court's Land Registry or to the Cadastre Court's Land Registry or to the Cadastre Time: 2 days Time: 1 day Cost: RSD 6,163 Cost: RSD 6,163 Comments: In Krusevac, the cadastre is complete for some municipalities but for Comments: There is a transition from a system where the registration is performed the centre of the city only 85% is covered; it is expected that 100% will be achieved by the Land Register (a court) to a system where it is all handled by the Cadastre within months (see www.rgz.sr.gov.yu). (administrative procedure). The new concept is to join legal record keeping (land register) with factual record keeping (old cadastre) providing a unified system for Procedure 4. Submit an application to tax authorities to approve registration of real property. The new real property cadastre is maintained by an transaction value and authorize payment of property transfer tax administrative body: Republic Geodesy Institute (RGZ), through its operational units organized on the territorial principle. Time: 7 days So far, approximately 78% of the municipalities have been covered by the new Cost: No cost Cadastre in Serbia, while in Uzice it is almost 85%. The Cadastre reform is planned to Comments: The parties submit an application to the local tax authorities in order be completed within months (see www.rgz.sr.gov.yu). to get approval of the sale price that will be used to calculate the property transfer tax. The parties have 10 days after the sale contract has been verified by the court Procedure 4. Submit an application to tax authorities to approve to submit this application. The request will be approved in a few days and then the transaction value and authorize payment of property transfer tax parties have 15 days to pay the transfer tax. Time: 10 days Procedure 5. Pay the property transfer tax at a commercial bank Cost: No cost Time: 1 day Comments: The parties submit an application to the local tax authorities in order Cost: RSD 483,652 (2.5% of the property value estimated by the tax authority) to get approval of the sale price that will be used to calculate the property transfer tax. The parties have 10 days after the sale contract has been verified by the court Comments: The tax is paid in a commercial bank into the account of the local tax to submit this application. The request will be approved in a few days and then the authority. parties have 15 days to pay the transfer tax. Procedure 6. The Cadastre/Land Registry makes a decision on the Procedure 5. Pay the property transfer tax at a commercial bank title Time: 1 day Time: 60 days Cost: RSD 483,652 (2.5% of the property value estimated by the tax authority) Cost: No cost Comments: The tax is paid in a commercial bank into the account of the local tax authority. Procedure 6. The Cadastre/Land Registry makes a decision on the title Time: 60 days Cost: No cost Comments: The registration and granting of the decision in the cadastre lasts longer than usual due to the number of cases. The process can take up to 60 days. When the new cadastre of immovables is implemented, the Land Registry will cease to operate. LIST LIST PROCEDURES OFOF • REGISTERING PROCEDURES • STARTING APROPERT Y BUSINESS 117 REGISTERING PROPERTY REGISTERING PROPERTY Vranje, Serbia Zrenjanin, Serbia Property value: RSD 19,346,070 (US$ 299,500) Property value: RSD 19,346,070 (US$ 299,500) Data as of: January 2011 Data as of: January 2011 Procedure 1. Obtain an extract from the Register of Companies Procedure 1. Obtain an extract from the Register of Companies Time: 5 days Time: 7 days Cost: RSD 3,120 (RSD 1,560 per extract) Cost: RSD 3,120 (RSD 1,560 per extract) Comments: Considering the transaction involves two companies, they each must Comments: Considering the transaction involves two companies, they each must obtain the extract from the Register of Companies confirming that the persons sign- obtain the extract from the Register of Companies confirming that the persons sign- ing the contract are authorized to sign on behalf of the companies. ing the contract are authorized to sign on behalf of the companies. Procedure 2. Verify the sale and purchase agreement before the Procedure 2. Verify the sale and purchase agreement before the court court Time: 3 days Time: 1 day Cost: RSD 39,000 (court fees depending on the property value and are determined Cost: RSD 39,000 (court fees depending on the property value and are determined according to the following schedule [with a maximum of RSD 39,000]: according to the following schedule [with a maximum of RSD 39,000]: Property Value: . . . . . . . . . . . . . . . . . . . . . . Court Fees: Property Value . . . . . . . . . . . . . . . . . . . . . . . Court Fees Up to RSD 10,000 . . . . . . . . . . . . . . . . . . . . RSD 980 Up to RSD 10,000 . . . . . . . . . . . . . . . . . . . . RSD 980 From RSD 10,000 to RSD 100,000. . . . . . RSD 650 + 1% of the property value From RSD 10,000 to RSD 100,000. . . . . . RSD 650 + 1% of the property value From RSD 100,000 to RSD 1,000,000 . . . RSD 1,950 + 0.5% of the property value From RSD 100,000 to RSD 1,000,000 . . . RSD 1,950 + 0.5% of the property value Over RSD1,000,000. . . . . . . . . . . . . . . . . . . RSD 16,600 + 0.25% of the property value) Over RSD1,000,000. . . . . . . . . . . . . . . . . . . RSD 16,600 + 0.25% of the property value) Comments: The court verifies the documentation, as the notaries do in other Comments: The court verifies the documentation, as the notaries do in other countries. In Serbia, the procedure of establishing the notary instead of the court countries. In Serbia, the procedure of establishing the notary instead of the court verifications is under way. According to the Law on the Transfer of the Immovable, it verifications is under way. According to the Law on the Transfer of the Immovable, it is obligatory for the sale and purchase agreement on real estate to be verified before is obligatory for the sale and purchase agreement on real estate to be verified before the court. Effective as of January 6, 2010, the sale and purchase agreement can be the court. Effective as of January 6, 2010, the sale and purchase agreement can be certified only before the basic court competent for the territory where the purchased certified only before the basic court competent for the territory where the purchased property is located. Prior to this legal reform, sale and purchase agreements could be property is located. Prior to this legal reform, sale and purchase agreements could be certified before any basic court, regardless of where the property is located. certified before any basic court, regardless of where the property is located. A lawyer may prepare the sale and purchase agreement (charging an additional RSD A lawyer may prepare the sale and purchase agreement (charging an additional RSD 15,000). 15,000). Procedure 3. Submit request for registration to the Municipal Procedure 3. Submit request for registration to the Municipal Court's Land Registry or to the Cadastre Court's Land Registry or to the Cadastre Time: 15 days Time: 1 day Cost: RSD 6,163 Cost: RSD 6,163 Comments: There is a transition from a system where the registration is performed Comments: There is a transition from a system where the registration is performed by the Land Register (a court) to a system where it is all handled by the Cadastre by the Land Register (a court) to a system where it is all handled by the Cadastre (administrative procedure). The new concept is to join legal record keeping (land (administrative procedure). The new concept is to join legal record keeping (land register) with factual record keeping (old cadastre) providing a unified system for register) with factual record keeping (old cadastre) providing a unified system for registration of real property. The new real property cadastre is maintained by an registration of real property. The new real property cadastre is maintained by an administrative body: Republic Geodesy Institute (RGZ), through its operational units administrative body: Republic Geodesy Institute (RGZ), through its operational units organized on the territorial principle. organized on the territorial principle. Procedure 4. Submit an application to tax authorities to approve Procedure 4. Submit an application to tax authorities to approve transaction value and authorize payment of property transfer tax transaction value and authorize payment of property transfer tax Time: 20 days Time: 15 days Cost: No cost Cost: No cost Comments: The parties submit an application to the local tax authorities in order Comments: The parties submit an application to the local tax authorities in order to get approval of the sale price that will be used to calculate the property transfer to get approval of the sale price that will be used to calculate the property transfer tax. The parties have 10 days after the sale contract has been verified by the court tax. The parties have 10 days after the sale contract has been verified by the court to submit this application. The request will be approved in a few days and then the to submit this application. The request will be approved in a few days and then the parties have 15 days to pay the transfer tax. parties have 15 days to pay the transfer tax. Procedure 5. Pay the property transfer tax at a commercial bank Procedure 5. Pay the property transfer tax at a commercial bank Time: 1 day Time: 1 day Cost: RSD 483,652 (2.5% of the property value estimated by the tax authority) Cost: RSD 483,652 (2.5% of the property value estimated by the tax authority) Comments: The tax is paid in a commercial bank into the account of the local tax Comments: The tax is paid in a commercial bank into the account of the local tax authority. authority. Procedure 6. The Cadastre/Land Registry makes a decision on the Procedure 6. The Cadastre/Land Registry makes a decision on the title title Time: 15 days Time: 45 days Cost: No cost Cost: No cost Comments: The time depends on which agency takes charge of the registration. Registration in the Cadastre takes long due to the backlog in updating records from previous years. Once this transition is complete, the system should work more efficiently. 118 DOING BUSINESS IN THE ARAB WORLD 2010 Acknowledgments Doing Business in South East Europe 2011 and Ministry of Economy, Herzegovacko- was prepared by a team led by Madalina Neretvanski Canton in the Federation of Papahagi, Trimor Mici, and Luis Aldo Bosnia and Herzegovina Sanchez-Ortega under an IFC Southern Kosovo: Ministry of Trade and Industry, Europe Investment Climate Advisory Ser- Ministry of Economy and Finance, and vices project led by Lazar Ristic. The report the Investment Promotion Agency of was prepared under the general supervi- Kosovo (IPAK) sion of Mierta Capaul and Ivan Nimac. FYR Macedonia: Ministry of Finance The team comprised Goran Amidzic, Fat- Moldova: Ministry of Economy bardh Cangu, Sladjana Ilic, Shpresa Kas- Montenegro: Ministry of Finance, Min- trati, Jana Malinska, Alexandra Mincu, istry of Economy, and Ministry of Spatial Eugen Osmochescu, Deanna Despodova Development and Environmental Protec- Pajkovski, Ratka Stijepovic, Tea Trumbic, tion and Alejandro Espinosa Wang. Serbia: Ministry of Economy and Re- gional Development, and Ministry of En- Contact details for local partners Aurora Ferrari, Jana Malinska, Gordana vironment, Mining and Spatial Planning. are available on the Popovik, and Tarik Sahovic reviewed the full text. Peer review comments were The project was funded by the Govern- Doing Business website at received from Iaroslav Baclajanschi, ment of Switzerland through the State www.doingbusiness.org/subnational Karim Ouled Belayachi, Lada Busevac, Secretariat for Economic Affairs (SECO), Ghenadie Cotelnic, Akvile Gropper, Iva the Government of Austria, and the Hamel, Oliver Lorenz, Martin Melecky, United States Agency for International Andrei Mikhnev, Nina Pavlova Mocheva, Development (USAID). Thomas Moullier, Pilar Salgado Otonel, and Wendy Jo Werner. More than 100 lawyers, architects, engi- neers, accountants, business consultants, Slobodan Brkic, Marie-Lily Delion, and utility providers contributed to Doing Nadine Shamounki Ghannam, Oliver Business in South East Europe 2011. Data Griffith, Baaqia S. Holloway, Farah She- collection was coordinated by Renata hadah Hussein, Marton Kerkapoly, Ai- Leka from Boga & Associates in Albania; katerini Leris, Haris Mesinovic, Frederic Branko Maric from Maric Law Office in Meunier, Joanna Nasr, Nuria De Oca, Bosnia and Herzegovina; Gail Warrander Kristyn Schrader, Anastasia Shegay, Yas- from GW Legal LLC in Kosovo; Tatjana min Zand and Alessio Zanelli provided Popovski Bulovski from Polenak Law valuable assistance at various stages of Firm in FYR Macedonia; Octavian Cazac the project. The website (http://www.do- from Turcan & Turcan Law Firm and ingbusiness.org/SEE) was developed by Petru Pripa from City Agency of Mort- Preeti Endlaw, Graeme Littler, Hashim gage Corporation in Moldova; Budimka Zia and Kunal Patel. The report was ed- Mickovic and Dragana Radevic from Cen- ited by Cintra Scott and designed by G. ter for Entrepreneurship and Economic Quinn Information Design. Development in Montenegro; and Jelena Matovic from IPSOS Strategic Marketing The report was made possible thanks to in Serbia and Bosnia and Herzegovina. the support of government institutions in The team would also like to extend its all participating economies: special gratitude to the more than 130 Albania: Ministry of Economy, Trade government officials who participated in and Energy the project and made valuable comments Bosnia and Herzegovina: Ministry of during the consultation and data review Foreign Trade and Economic Relations, periods. The names of those wishing to be Ministry of Economic Relations and Re- acknowledged individually are listed on gional Cooperation in Republika Srpska, the following pages. ACKNOWLEDGMENTS 119 P U B L IC OF F I C IA L S A L BA N IA B O SN IA A N D R E P U B L I KA SR P SKA BITOLA M ON T E N E G RO H E R Z E G OV I NA C E N T R A L L EV E L Ministry of Economic Agency for Real Estate C E N T R A L L EV E L Relations and Regional and Cadastre C E N T R A L L EV E L Cooperation Ministry of Economy, Katerina Petrovska Department for Trade, and Energy Ministry of Foreign Trade Sladana Jagodic Cerketa Zoran Stojkovski Entrepreneurship Ramis Lleshi and Economic Relations Gordana Opacic-Zecevic Development Mirza Hujic PE Water Supply Boris Mugosa DURRES Zehra Selimovic BA N JA LU KA Zoran Ilioski Ministry of Economy Development Policy City Development Agency Spatial Planning M O S TA R Goran Nikolic Department Ivan Babic Department Vilma Hyseni Department of Economy, Vesna Jurak Ministry of Finance Sokol Kokomani Utilities and Inspections Ivana Maric KO S OVO Bojana Boskovic Lena Dojosevska Tatjana Boskovic Tax Department C E N T R A L L EV E L Blagica Talevska Milorad Katnic Alketa Macukulli Department of Urban Planning and Miodrag Pajevic Ministry of Economy and SKO P J E Jelena Vojinovic Transportation Construction Finance Department Tihomir Sesar Mayor Emira Ajeti Ministry of Spatial Elvis Lila Naim Baftiu Koce Trajanovski Development and Ministry of Economy, Environmental Protection SH KODR A Canton Herzegovacko- Agency for Real Estate Neretvanski Ministry of Trade and Tatjana Vujosevic Industry and Cadastre Deputy Mayor Maid Ljubovic Hykmete Bajrami Tatjana Cenova-Mitrevska N I K SIC Ridvan Troshani Senita Babovic Sonja Dimova Xhavit Buzhala Lidija Krstevska Department for Spatial Municipality of Shkodra Municipal Council Petrit Gashi Planning Edvin Puka Radmila Komadina Central Registry Milica Zoric Investment Promotion Property Management Agency of Kosovo (IPAK) Marijana Gjoreska Municipal Court Economy and Finance Department Mustafe Hasani Department Marin Zadric Liridon Latifi Department for Manjola Lesha International and NGO Ivana Jovovic Public Utility and Cooperation Public Works Department Inspection Services P R I S T I NA Mirjana Apostolova Slavica Pejovic Marcela Gjeluci Mirna Trcalo Deputy Mayor Avdullah Hoti Finance Department P L J EV L JA Revenue Department S A R AJ EVO Snezana Mitrevska Blendi Gjylbeqaj Department for Economy Economic Department BH Telecom and Development Infrastructure Slavka Milinkovic Urban Planning Emil Trnka Department Department Agim Dibrani Zarko Causevski Spatial Development Klaudian Luka Department of Economy Department and Finance Cadastre Office Aida Shllaku Shiqeri Spahiu Snezana Mitovska Dragan Subaric Siruan Zaja Edina Habibija Milanka Milic Daniela Trimcevska Property Directorate Urban Department Irma Temoli Nazmije Tora T E T OVO Sead Vesnic Department of Local T I R A NA Entrepreneurship and City Department of Urbanism Development PRIZREN Maida Beslic and Public Affairs Milko Colovic Deputy Mayor Jelena Cebic Department of Public Skender Palloshi Igor Golubovic Albana Dhimitri Sahrudin Sarajcic Services Slavica Krstajic Fail Hoxhaj Geoinzenering General Directorate of Department of Property Affairs, Geodesy and Imran Kurtishi P O D G O R IC A Development and Planning Directorate of Policies Cadastre Administration Podgorica City Local Economic Majlinda Dhuka Damir Konjicanin Gursel Skenderi Development Office Administration Albert Qazimi Pavle Radulovic General Directorate of Department of Urban Geodetic and Cadastre Supportive Services Planning and Municipal Benizar Ganiu Department Real Estate Viola Haxhiademi Affairs Administration Avni Ademaj Alma Sadovic M OL D OVA Mirjana Ljumovic General Directorate of Urban Department Urban Development and KJKP Vodovod i C E N T R A L L EV E L Spatial Development Territory Control kanalizacija d.o.o. Sadik Paqarizi Department Sonila Qato Ahmed Brkic Ministry of Economy Rina Ivancevic Sabaha Harilagic Basri Begaj Alexandru Gozun Strategic Planning Amela Kadic Mehdi Llashniku Cezar Ilias Department Eldin Suljagic Islam Osmaukaj SE R B IA Vasilika Vjero Regulatory Impact Sarajevo Municipal F Y R M AC E D ON IA Assessment (RIA) C E N T R A L L EV E L VLORA Council Secretariat Mustafa Handzic Oleg Chelaru Council for Regulatory Deputy Mayor C E N T R A L L EV E L Reform Mihail Onu Ilir Banushi Sarajevo Municipal Court Ministry of Finance Iolanta Pasicinicov Milan Stefanovic Urban Planning Aziz Babic Aneta Acevska Ministry of Economy and Asaf Dautovic Snezana Delevska BA LT I Department Regional Development Darjan Hudhra Ismeta Huremovic Aneta Dimovska Deputy Mayor Branko Radulovic Goran Salihovic Gjoko Gjorgjeski Lilia Gutul Tax Inspectorate Hakija Zaimovic Bojana Ilieva Ministry of Environment, Ilia Mustaqi Desanka Zdravkovska Architecture and Mining and Spatial Constructions Department Planning Anila Canaj Vasile Romanciuc Nebojsa Janjic Aleksandar Damnjanovic Dusan Vasiljevic 120 DOING BUSINESS IN SOUTH EAST EUROPE 2011 BELGRADE U Z IC E Z R E N JA N I N Office of the Mayor Department of Local Department of Local Natasa Golubovic Economic Development Economic and Rural Nadica Jovanovic Development K RU SEVAC Stana Babic Directorate for Mayor Construction Department of Property Miroljub Stojcic Radojka Cerovac and Legal Affairs Simo Babic Municipal Council Municipal Council Nebojsa Jovic Predrag Gavovic Municipal Council Durdina Grbic Municipality of Krusevac VRANJE Dejan Molnar Vesna Andjelic Municipal Council Dragan Spiric Ivan Stojkovic P R I VAT E P ROF E S SI ONA L S A L BA N IA Edin Durakovic Dastid Pallaska Vladimir Teleba Zoran Cvetkovic AAA-Group Pallaska & Associates Individual Attorneys Law office “Zoran Zhyljen Batalli Office “Vladislav Teleba” Cvetkovic” Semir Guzin Gail Warrander Procredit Bank (Vlora) Law office Kebo & Guzin GW Legal LLC Miljka Guskic Alier Cara Law office “Miljka Suada Hasanagic M ON T E N E G RO Guskic” G+A Projekt sh.p.k. 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