Doing Business 2019 Tajikistan Economy Profile Tajikistan Page 1 Doing Business 2019 Tajikistan Economy Profile of Tajikistan Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Tajikistan About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Tajikistan Ease of Doing Business in Region Europe & Central Asia DB 2019 Rank 190 1 Tajikistan Income Category Low income 126 DB 2019 Ease of doing business score Population 8,921,343 0 100 City Covered Dushanbe 57.11 DB 2019 Ease of Doing Business Score 0 100 77.89: Kazakhstan (Rank: 28) 77.37: Russian Federation (Rank: 31) 73.54: Moldova (Rank: 47) 72.34: Regional Average (Europe & Central Asia) 68.33: Kyrgyz Republic (Rank: 70) 57.11: Tajikistan (Rank: 126) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Tajikistan 1 28 38 55 60 61 82 91 Rank 109 124 135 136 136 148 146 163 173 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Tajikistan 100 90.70 80 66.67 63.86 62.56 61.26 61.35 59.06 Score 60 40.00 40 34.74 30.90 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Tajikistan Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a also collected for the second largest business city. business or to leave the home to register the - The entire office space is approximately 929 square meters (10,000 square feet). company - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 - Does not qualify for investment incentives or any special benefits. procedures cannot start on the same day) - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final The owners: document is received - Have reached the legal age of majority. If there is no legal age of majority, they are • No prior contact with officials assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Tajikistan Starting a Business - Tajikistan Standardized Company Legal form Private Limited Liability Company Paid-in minimum capital requirement TJS 0 City Covered Dushanbe Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Procedure – Men (number) 4 5.2 4.9 1 (New Zealand) Time – Men (days) 11 12.9 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 18.0 4.6 3.1 0.0 (Slovenia) Procedure – Women (number) 4 5.2 4.9 1 (New Zealand) Time – Women (days) 11 12.9 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 18.0 4.6 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 2.3 8.6 0.0 (117 Economies) Figure – Starting a Business in Tajikistan and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 95.55: Moldova (Rank: 14) 93.04: Russian Federation (Rank: 32) 92.97: Kyrgyz Republic (Rank: 35) 92.96: Kazakhstan (Rank: 36) 90.70: Tajikistan (Rank: 60) 90.02: Regional Average (Europe & Central Asia) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Tajikistan Figure – Starting a Business in Tajikistan – Procedure, Time and Cost Time (days) Cost (% of income per capita) 18 10 16 Cost (% of income per capita) 14 8 12 Time (days) 6 10 8 4 6 4 2 2 0 0 1 2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Tajikistan Details – Starting a Business in Tajikistan – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Pay and obtain receipt confirming the payment of the registration fee 1 day included in procedure Agency : Amonatbank 2 The registration fees need to be paid in the office of Amonatbank located under the legal address of LLC. The proof of payment of the (1) company registration fee and (2) printing of the Registration Extract should be submitted to the one stop shop as part of the documents for registering a company. 2 Register the company with the State Registration of Legal Entities and 5 days TJS 1,250 State duty Individual Entrepreneurs (“one stop shop”) and obtain state registration + TJS 100 (fee for the certificate, Statistics Code and Tax Identification Number (TIN) extract summarizing Agency : Tax Authority information about the In accordance with Article 5 of the Law of RT #508 "On State Registration of registered entity) Legal Entities and Individual Entrepreneurs" dated May 19, 2009 the Tax authority is responsible for registration of legal entities. The following documents should be submitted for registration at the one-stop shop: - application; - decision on establishment Company in Tajikistan; - copy of ID document and Tax Clearance Certificate of each shareholder, when shareholders are fisical persons; - copy of certificates of registration of shareholders and Tax Clearance Certificate, when shareholders are legal entities - copy of ID document of applicant; - copy of document confirming legal adress of the company; - proof of payment of state duty. In practice, registration body asks for additional documents which are not stipulated by the Law. In accordance with Article 10 of Law of RT 3508 the registration should be completed within five working days from the moment of submission of documents. Since the amendments to the Law of the Republic of Tajikistan "On State Registration of Legal Entities and Individual Entrepreneurs", upon registration, entrepreneurs obtain a single registration number, a TIN, a statistic code and the SIN (Social Protection and Pension number). According to the Article 4.5.1) of the Law on State Duty, the amount of state duty levied upon registration of an LLC is equal to 25 calculation indexes. According to Article 6.2 of the Law on State Registration of Legal Entities and Individual Entrepreneurs, the amount of state duty levied for the extract summarizing information about the registered entity is equal to 2 calculation indexes. Article 23 of the Law on State Budget for 2018 (adopted on November 16, 2017 and enforced on January 1, 2018) has established the calculation index in amount of 50 somoni, keeping it at the same level as in 2017. The calculation of fees is therefore (25 * TJS 50 + 2 * TJS 50) = TJS 1,350. 3 Make a company seal 2 days TJS 70 Agency : Sealmaker The company seal is required for companies to perform its regular activities and enter in legal relationships – all contracts and agreements, together with any other documents that should have legal force, should be stamped by the company’s seal. While the use of corporate seal is not mandated by law, in practice the seal stamp is needed to sign agreements, issue invoices, etc. 4 Obtain SIN (insurance identification number) at the Agency for Social 3 days no charge Protection and Pension Agency : Agency for Social Protection and Pension Once a business is registered with the “one stop shop” it has to obtain a SIN at the Agency for Social Protection and Pension. Legal entities must register with the Social Fund within 30 days of state registration. Takes place simultaneously with previous procedure. Page 8 Doing Business 2019 Tajikistan Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its topographical experts. completion - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering - Will be used for general storage activities, such as storage of books or stationery. information - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted as procedures. Cost required to complete each procedure (% of - Will take 30 weeks to construct (excluding all delays due to administrative and income per capita) regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be • Quality control before construction (0-1) installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 9 Doing Business 2019 Tajikistan Dealing with Construction Permits - Tajikistan Standardized Warehouse Estimated value of warehouse TJS 394,395.20 City Covered Dushanbe Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 25 16.0 12.7 None in 2017/18 Time (days) 182 170.1 153.1 None in 2017/18 Cost (% of warehouse value) 2.0 4.0 1.5 None in 2017/18 Building quality control index (0-15) 12.0 12.0 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Tajikistan and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 77.10: Kyrgyz Republic (Rank: 29) 75.77: Kazakhstan (Rank: 35) 74.61: Russian Federation (Rank: 48) 69.02: Regional Average (Europe & Central Asia) 61.26: Tajikistan (Rank: 135) 52.19: Moldova (Rank: 172) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Tajikistan – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 180 1.6 160 1.4 Cost (% of warehouse value) 140 1.2 120 Time (days) 1 100 0.8 80 0.6 60 0.4 40 20 0.2 0 0 1 *2 *3 *4 *5 *6 *7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 10 Doing Business 2019 Tajikistan Figure – Dealing with Construction Permits in Tajikistan and comparator economies – Measure of Quality 15 14.0 13.0 12.0 12.0 12.0 11.0 Index score 10 5 0 Tajikistan Kazakhstan Kyrgyz Republic Moldova Russian Federation Europe & Central Asia Details – Dealing with Construction Permits in Tajikistan – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain project design permit 30 days no charge Agency : Local Authority-Hukumat of Dushanbe BuildCo has to apply to Hukumat (Municipality) of Dushanbe city for allocation of land plot for building a warehouse. The Hukumat coordinates the land allocation process with the Department of Architecture and Construction of Dushanbe City which prepares the project design permit. The Department of Architecture and Construction of Dushanbe City sends the project design permit back to Hukumat. At this point, BuildCo will need to coordinate/receive approvals from all the agencies that must approve the project at later stages (for example, electricity company, water company, fire safety, etc.). 2 Request and obtain environmental project clearance from the 30 days TJS 200 Environmental Protection Agency Agency : Environmental Protection Agency BuildCo must obtain a permit for air pollutant emissions and waste disposal after environmental clearance has been obtained. Although official tariffs have been adopted and collected, they are not published, disclosed in full to applicants, or registered with the Ministry of Justice as required by law. The statutory time limit is 30 days. The applicable legislation is the Order of the State Environmental Review, approved by the Gov. Resolution №697 from 3.12.2012. 3 Request and obtain technical conditions for water connection from the 10 days no charge Water and Sewerage Agency Agency : Dushanbe Water and Sewerage Company While the Assignment is being prepared technical conditions for water connection have to be obtained. Water services are requested in writing by filling out the application form. 4 Request and obtain Architecture Planning Assignment 10 days TJS 1,000 Agency : Chief Architect of the City of Dushanbe According to the regulations, construction companies must obtain the architectural planning assignment ("Assignment") at this stage. A site visit might be required to prepare the Assignment. However, in most of the cases no representative of a construction company has to be present during the site visit. Documents which have to be submitted to obtain the Assignment are: • The Act on the Selection of the Land Plot and the Decision on the Project • Assignment for the project put together by a project design firm hired by the client and the client himself 5 Request and obtain project clearance from State Sanitary Hygienic Service 10 days TJS 150 under the Ministry of Health Agency : State Sanitary Hygienic Service (Ministry of Health) Although official tariffs have been adopted and collected, they are not published, disclosed in full to applicants, or registered with the Ministry of Justice as required by law. The applicable legislation is Articles 9, 13, 25, and 26 of the Regulation of the Government on the Order of Registration, Drawing and Issuing of Sanitary Hygienic Conclusion, No. 139 (dated March 31, 2004). 6 Request and obtain project clearance from the Dushanbe Water and 10 days TJS 100 Sewerage Agency Agency : Dushanbe Water and Sewerage Agency The applicable legislation is the Rules of connection to utilities and public services, approved by the Resolution of the Government of the Republic of Tajikistan on June 3, 2014, №354. Page 11 Doing Business 2019 Tajikistan 7 Request and obtain fire safety project clearance from the State Anti-Fire 7 days TJS 150 Agency under the Ministry of Domestic Affairs Agency : State Anti-Fire Agency (Ministry of Domestic Affairs) The approval is granted with technical requirements to be complied with. Although official tariffs have been adopted and collected, they are not published, disclosed in full to applicants, or registered with the Ministry of Justice as required by law. The applicable legislation is the Law № 363 "On Fire Safety" as of 20 March 2009. 8 Request and obtain approval of project design drawings by Construction 30 days TJS 5,916 and Architecture Department Agency : Construction and Architecture Department under State Committee on Construction and Architecture Approval is granted in the form of a Consolidated Expert Approval of the Project. The tariffs have been approved by the State Committee on Construction and Architecture under the Government in June 14, 2007 under which payment for the expertise is calculated based on the design estimate. In our case, it is calculated as 15% of the design project cost, which is assumed to be approximately 10% of the value of the warehouse. The applicable legislation is the Code of Norms and Rules of the Republic of Tajikistan, Structure and the Order of Development, Concordance and Approval of Project Estimates on Construction of Buildings, registered in the Ministry of Justice, No. 199 (dated April 25, 2006); Valuation of Works on Holding State Expertise of Design Estimates, on Major and Current Repairs of Objects Irrespective the Sources of Finance and Forms of Enterprise Property, approved by the Chairman of the Committee on Architecture and Construction under the Government (dated September 20, 2002). Government Resolution #282 on May 6, 2009 changed the statutory time limit to 20 working days for constructions over 1,000 cubic meters. However, in practice it takes more than stipulated time limit. 9 Request and obtain final project clearance from the Construction and 20 days TJS 43 Architecture Department Agency : Construction and Architecture Department under State Committee on Construction and Architecture On June 14, 2007 a new normative legal act "Prices for State Expertise and Project Design Estimates" was approved upon which the rate of 0.11% is applied on the project design value. The project design value in our case is 10% of overall construction cost. The Construction and Architecture Department of the State Committee on Construction and Architecture, after considering all the clearances from the above agencies, issues a permit for the start of construction work. The applicable legislation is the Regulation of the Government of Republic of Tajikistan, Provision on Agencies Involved in State Construction Inspection, No. 553 (dated December 25, 1997); Articles 1.1, 2.6, 2.7, and 2.9 of the Regulation of the Chairman of Dushanbe City, On Applying a Simple Mechanism of Receiving and Reviewing of Applications Submitted by Legal Entities and Physical Persons with Regard to Construction, Architecture, and Land Allocation; The order of administrative procedures related to the construction activities in Tajikistan, validated by the Government Resolution №282 from 6.05.2009. 10 Receive a periodic inspection from the Sanitary Hygienic Service 1 day no charge Agency : Sanitary Hygienic Service Periodic inspections occur during construction at the discretion of the authority and without prior notice. BuildCo does not request these inspections. The applicable legislation is Regulation of the Government of Republic of Tajikistan on Approving the Order of Registration, Drawing and Issuing of Sanitary Hygienic Conclusion, No. 139 (dated March 31, 2004); Provision on State Sanitary Hygienic Services of Republic of Tajikistan, Regulation of the Government of Republic of Tajikistan, Provision on Agencies Involved in State Construction Inspection, No. 553 (dated December 25, 1997). 11 Receive a periodic inspection from the Fire Safety Agency 1 day no charge Agency : Fire Safety Agency Periodic inspections occur during construction at the discretion of the authority and without prior notice. BuildCo does not request these inspections. The applicable legislation is the Law on Fire Safety, No. 995 (dated July 21, 1994), Regulation on State Fire Control, dated December 1, 1995; Regulation of the Government of RT, Provision on Agencies Involved in State Construction Inspection, No. 553, dated December 25, 1997. Page 12 Doing Business 2019 Tajikistan 12 Receive a periodic inspection from the Ministry of Environmental 1 day no charge Protection Agency : Ministry of Environmental Protection Periodic inspections occur during construction at the discretion of the authority and without prior notice. BuildCo does not request these inspections. 13 Receive foundation works inspection from the State Architecture 1 day no charge Inspection - Dushanbe City Agency : State Architecture Inspection - Dushanbe City The applicable legislation is the Regulation of the Chairman of Dushanbe City on Applying a Simple Mechanism of Receiving and Reviewing of Applications Submitted by Legal Entities and Physical Persons with Regard to Construction, Architecture, and Land Allocation. Law No .194, as of June 28, 2006 “On Inspections of Business Entities in Republic of Tajikistan” was amended through List of Inspection Authorities, approved by Resolution (№38/оп) as of 23 May 2008 and registered in Ministry of Justice №426. According to these changes, if an inspection is conducted by one controlling entity (district, city, province or national level) then the other entities of the same controlling authority are not allowed to inspect the same business within the next two years. The State Architecture Inspection of Dushanbe inspects the construction process in every major milestone, including foundations, structure, plumbing works and roofing works. Once the construction permit the state architecture and construction inspection authority registers the newly issued permit for construction in the register of new building objects. It also opens a journal of planned inspection for the object, which is synchronized with the construction schedule. 14 Receive structure works inspection from the State Architecture Inspection - 1 day no charge Dushanbe City Agency : State Architecture Inspection - Dushanbe City The State Architecture Inspection of Dushanbe inspects the construction process in every major milestone, including foundations, structure, plumbing works and roofing works. Once the construction permit the state architecture and construction inspection authority registers the newly issued permit for construction in the register of new building objects. It also opens a journal of planned inspection for the object, which is synchronized with the construction schedule. 15 Receive plumbing works inspection from the State Architecture Inspection 1 day no charge - Dushanbe City Agency : State Architecture Inspection - Dushanbe City The State Architecture Inspection of Dushanbe inspects the construction process in every major milestone, including foundations, structure, plumbing works and roofing works. Once the construction permit the state architecture and construction inspection authority registers the newly issued permit for construction in the register of new building objects. It also opens a journal of planned inspection for the object, which is synchronized with the construction schedule. 16 Receive roofing works inspection from the State Architecture Inspection - 1 day no charge Dushanbe City Agency : State Architecture Inspection - Dushanbe City The State Architecture Inspection of Dushanbe inspects the construction process in every major milestone, including foundations, structure, plumbing works and roofing works. Once the construction permit the state architecture and construction inspection authority registers the newly issued permit for construction in the register of new building objects. It also opens a journal of planned inspection for the object, which is synchronized with the construction schedule. 17 Receive a periodic inspection from the Labor Authority 1 day no charge Agency : Labor Authority There is no legal basis for the inspection by this agency, but it occurs in practice. 18 Request water and sewage connection 1 day no charge Agency : Dushanbe Water and Sewerage Company BuildCo has to request water and sewage connection from the Water and Sewerage Agency. This procedure is regulated by the Decree of the Government of Tajikistan # 354 on "Rules of connection to utilities and public services" from June 3, 2014, №354. 19 Receive inspection for water and sewage connection 1 day no charge Agency : Dushanbe Water and Sewerage Company Periodic inspections may occur several times at the discretion of inspecting bodies. There is no legal fee, though there is a penalty for violations. Page 13 Doing Business 2019 Tajikistan 20 Obtain water and sewage connection 29 days no charge Agency : Dushanbe Water and Sewerage Company The applicable legislation is Code of Norms and Rules of the Republic of Tajikistan, Structure and the Order of Development, Concordance and Approval of Project Documents with Regard to Construction of Buildings and Erections, No. 199 (dated April 25, 2006); Water Code of the Republic of Tajikistan No. 34 (dated November 29, 2000). 21 Request and receive a decision by Working Commission 15 days no charge Agency : Working Commission The Working Commission includes representatives from the customer (BuildCo), general contractors and subcontractors and the general designer. The applicable legislation is the Regulation of Construction and Architecture Committee under the Government of the Republic of Tajikistan on Approving Code of Rules and Norms of the Republic of Tajikistan (dated January 3, 2001); Basic Provisions of Putting into Operation of constructed objects, No. 1 (dated January 4, 2002). 22 Receive inspection by the State Acceptance Commission 1 day no charge Agency : State Acceptance Commission 23 Obtain decision of the State Acceptance Commission / final decision of the 30 days no charge Mayor Agency : State Acceptance Commission The Chairman of the State Acceptance Commission acts as the representative of the city. The decision of the mayor is made based on the commission’s decision. The State Acceptance Commission includes representatives from the city, the rayon, the customer (the builder), general contractors and subcontractors, the general designer, the senior architect of the city, the Fire and Sanitary Station, the electric power agency, the Environment Ministry, the water agency, and other interested state agencies. The applicable legislation is the Regulation of the Committee on Architecture and Construction under the Government of the Government of the Republic of Tajikistan on Approving Code of Norms and Rules (dated January 3, 2004); Basic Provisions of Putting constructed objects into Operation, No. 1 (dated January 4, 2002); and Articles 1.1., 2.6., 2.7., and 2.9 of the Regulation of the Chairman of Dushanbe City on Applying of a Simple Mechanism of Receiving and Reviewing of Applications Submitted by Legal Entities and Physical Persons with Regard to Construction, Architecture and Land Allocation, No. 264 (dated June 12, 2006). Law No. 380 “On Architecture, Urban Construction and Construction Activities” as of March 2008, introduced two time frames for obtaining the final decision of the State Acceptance Commission. Depending on the type of the construction it should take 30 days for commercial buildings and 10 days for residential buildings. 24 Obtain approval of the Bureau on Technical Inventory (BTI) on acceptance 15 days TJS 312 of building and issuance of technical passport Agency : Bureau on Technical Inventory (BTI) The price list for the technical passport is approved by the Ministry of Economic Development and Trade of the Republic of Tajikistan on the November 12, 1999, N3/1-382 and approved by the State Company “TajikUtilityServices” on the 26th of November 1999, N262/4 and implemented on the January 1, 2000. According to the price list, the calculation is computed according to the surface area, number of rooms and additional work completed based on worker hours. 25 Register the building 1 day TJS 24 Agency : State Committee on Land Registration of constructions is completed by the Bureau of Technical Inventory. Required documents for submission are the Act on the Allocation of Land for the Construction and the Construction Acceptance Act. According to the law, after registration at the Bureau of Technical Inventory a notary issues a certificate certifying the right to property. This certificate is issued for immovable property newly constructed. The following documents are required to submit to the notary: - Land allocation permit for construction - Decision of the local authorities on the acceptance of the constructed object as finished - Acceptance act - Note of registration at the Bureau of Technical Inventory. The cost of the certificate is 2 calculation indices. Takes place simultaneously with previous procedure. Page 14 Doing Business 2019 Tajikistan Details – Dealing with Construction Permits in Tajikistan – Measure of Quality Answer Score Building quality control index (0-15) 12.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge; In official gazette. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0 (0-2) house engineer; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, in- house engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 0.0 Which parties (if any) are held liable by law for structural flaws or problems in the building No party is held 0.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) liable under the law. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Passing a certification exam. Page 15 Doing Business 2019 Tajikistan What are the qualification requirements for the professional who supervises the construction Minimum number 2.0 on the ground? (0-2) of years of experience; University degree in engineering, construction or construction management; Passing a certification exam. Page 16 Doing Business 2019 Tajikistan Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). • Does not include time spent gathering information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property Cost required to complete each procedure (% of because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy • Tools to monitor power outages (0–1) consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 17 Doing Business 2019 Tajikistan Getting Electricity - Tajikistan Standardized Connection Price of electricity (US cents per kWh) 6.4 Name of utility Shabakhoi Barki Shari Dushanbe City Covered Dushanbe Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 9 5.3 4.5 3 (25 Economies) Time (days) 133 110.3 77.2 18 (3 Economies) Cost (% of income per capita) 893 325.1 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 0 5.5 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Tajikistan and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 94.00: Russian Federation (Rank: 12) 76.79: Kazakhstan (Rank: 76) 74.88: Moldova (Rank: 81) 71.66: Regional Average (Europe & Central Asia) 46.01: Kyrgyz Republic (Rank: 164) 34.74: Tajikistan (Rank: 173) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 18 Doing Business 2019 Tajikistan Figure – Getting Electricity in Tajikistan – Procedure, Time and Cost Time (days) Cost (% of income per capita) 900 120 800 Cost (% of income per capita) 700 100 600 Time (days) 80 500 60 400 300 40 200 20 100 0 0 1 2 3 4 5 *6 7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Tajikistan and comparator economies – Measure of Quality 8 8 8 7 7 6 5.5 Index score 5 4 3 2 1 0 0 0 Tajikistan Kazakhstan Kyrgyz Republic Moldova Russian Federation Europe & Central Asia Page 19 Doing Business 2019 Tajikistan Details – Getting Electricity in Tajikistan – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application and await technical conditions 30 calendar days TJS 0 Agency : Barki Tojik/Dushanbe City Electrical Grid The customer submits the application for an electricity connection to the City Electric Grid (Shabakhoi Barki Sahri Dushanbe) stating the amount of power to be consumed and area where the building is located. The City Electric Grid after analyzing the application passes its Technical Proposal to JSHC Barki Tojik. Documents attached to the application: copy of owner’s passport and the permit from Hukumat. JSHC Barki Tojik prepares technical conditions Technical conditions include the point of connection, allowed load, connection voltage and calculation of the connection fee. Five copies of the technical conditions are prepared and are submitted to the applicant, Dushanbe City Electric Grid, archive at State Agency at the Energy Supervision and JSHC Barki Tojik. 2 Obtain external inspection and approval of technical conditions 3 calendar days TJS 40 Agency : State Agency for Energy Supervision State Agency for Energy Supervision inspects the site before the external connection works can start. In some cases inspection does not take place, however, in other cases it does. 3 Obtain project design of connection and await its approval 24 calendar days TJS 6,500 Agency : Project design organization Once the technical conditions are ready and approved by the State Agency for Energy Supervision, the electrical engineer develops the project design of connection. The project design must be reviewed and cleared by several agencies, such as the Dushanbe City Electrical Grid "Shabakahoi Barki shahri Dushanbe", Ministry of Transport and Communications, Water Agency, State Fire Services, State Construction and Architecture Agency and others. A total of 12 agencies. 4 Obtain excavation permit from Ministry of Transport 13 calendar days TJS 0 Agency : Ministry of Transport If the building is located on the outskirts of the city near big roads the excavation permit has to be obtained at the Ministry of Transport. 5 Await completion of external works by private electrical contractor 35 calendar days USD 8,000 Agency : Electrical Contractor Once the plan is approved an electrical contractor hired by the customer can complete external connection works according to the technical conditions. At the end of the works the following documents are prepared by the electrical contractor: documentation on the running of the 10 kV cable (акт работ по прокладке кабеля 10 кВ), documentation on the testing of the transformer (протокол испытания трансформатора), documentation on the testing of 10 kV cable (протокол испытания кабеля 10 кВ) etc. The electrical contractor also installs a meter. Once the external connection works are finished the completed by the electrical contractor high voltage side of the connection up to the meter point is the responsibility of the utility for maintenance purposes and from the meter point up to the building is the responsibility of the customer. 6 Await and receive inspection of meter 4 calendar days USD 0 Agency : Tajik Agency for Standards Once the meter is installed the Tajik Agency for Standards checks whether the meter is installed in compliance with the technical rules. 7 Await and receive inspection of completed works by State Energy 3 calendar days TJS 0 Supervision Service Agency : State Energy Supervision Once the external connection works are completed the State Agency for Energy Supervision also inspects whether the completed works (internal and external) are in line with the technical conditions and whether the laboratory testing and measurements are in order. 8 Await and receive second inspection of completed works by Barki Tochik 3 calendar days TJS 0 Agency : Barki Tochik Once the external connection works are completed Dushanbe City Electric Grids inspects whether the completed works (internal and external) are in line with the technical conditions and whether the laboratory testing and measurements are in order. They prepare specifications of any faults in an inspection report and give a time limit for fixing the faults. Page 20 Doing Business 2019 Tajikistan 9 Sign supply contract and await final connection 22 calendar days USD 20 Agency : Dushanbe City Electrical Grid Once the faults are fixed a visit by an inspector from the State Agency for Energy supervision is requested by the electrical contractor so that the inspector can issue an order to turn on the substation. Once the order is issued by the Agency, the customer submits it to Dushanbe City Electrical Grid (диспетчерская служба). The power is turned on and electricity starts flowing. After normal functioning of the substation on at least 50% of the load an inspector from the Dushanbe City Electrical Grid fills out an acceptance report (акт приемки учета) where he specifies the type and the number of the meter and the transformer and records the first reading of the meter. Once the report is ready the customer concludes a supply contract with the Dushanbe City Electrical Grid. Takes place simultaneously with previous procedure. Page 21 Doing Business 2019 Tajikistan Details – Getting Electricity in Tajikistan – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) .. System average interruption frequency index (SAIFI) .. What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of No supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.ams.tj/ind ex.php? option=com_content &view=article&id=22 &Itemid=22&lang=ru Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 22 Doing Business 2019 Tajikistan Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past 10 years. • Each procedure starts on a separate day - - Is registered in the land registry or cadastre, or both, and is free of title disputes. though procedures that can be fully completed online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. - Has no trees, natural water sources, natural reserves or historical monuments of • Official costs only (such as administrative fees, any kind. duties and taxes). - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 23 Doing Business 2019 Tajikistan Registering Property - Tajikistan Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 5 5.3 4.7 1 (4 Economies) Time (days) 36 20.3 20.1 1 (New Zealand) Cost (% of property value) 2.9 2.6 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 7.5 19.6 23.0 None in 2017/18 Figure – Registering Property in Tajikistan and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 90.27: Kyrgyz Republic (Rank: 8) 88.74: Russian Federation (Rank: 12) 84.62: Kazakhstan (Rank: 18) 82.62: Moldova (Rank: 22) 75.57: Regional Average (Europe & Central Asia) 63.86: Tajikistan (Rank: 91) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Tajikistan – Procedure, Time and Cost Time (days) Cost (% of property value) 3.5 35 3 30 Cost (% of property value) 25 2.5 Time (days) 20 2 15 1.5 10 1 5 0.5 0 0 1 *2 3 4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 24 Doing Business 2019 Tajikistan Figure – Registering Property in Tajikistan and comparator economies – Measure of Quality 30 26.0 25 24.0 22.0 Index score 19.6 20 17.0 15 10 7.5 5 0 Tajikistan Kazakhstan Kyrgyz Republic Moldova Russian Federation Europe & Central Asia Details – Registering Property in Tajikistan – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain the non-encumbrance certificate from the Bureau of Technical 2 days TJS 100.2 Inventory (BTI) Agency : State Unitary Enterprise "Real Estate Registration" (SUE). The vendor prepares documents confirming the ownership rights for the buildings and documents confirming absence of bans, arrest and mortgage on the property to be sold. Among ownership documents for the building is a SUE certificate, which provides technical characteristics of the building and its inventory cost, as well as information on encumbrance. It is issued for 3 months. The current certificate is taken to the SUE, where there is a database with all plots of land. The certificate is to be updated with the most recent information on an actual size of the land/immovable property, on changes made (i.e. additional buildings constructed, or any changes made to the immovable property), including additional obligations and characteristics. The updated certificate is returned to the vendor. If the building is a new construction, an inspection is likely to be conducted at this stage. The certificate is required for notarization of sale purchase agreement by notary. 2 Obtain the tax clearance certificate from the Ministry of State Revenue and 1 day no charge Duties Agency : Tax Committee under the Government of the Republic of Tajikistan The vendor obtains a certificate (spravka) to show that all taxes have been paid, and makes any necessary payments in arrears. It is required for protection of the buyer from the unforeseen tax burdens related to the property being acquired and also for the notary to confirm the absence of any tax arrears. 3 Prepare and notarize the sale purchase agreement 2 days TJS 11,248; (40% of Agency : Public Notary the calculation index It is mandatory for the notary to notarize the sale purchase agreement. applied on each square meter of the Documentation requirements: property lot (50 • Identification documents of buyer and seller, including document conforming tax ID (either ID certificate or a passport with a tax ID stamp) of each of the party Somoni x 0.4=20 involved Somoni per square • Documents confirming the seller’s ownership rights for the property meter of the land plot • SUE Certificate providing characteristics of the building and its inventory cost only) + 100 Somoni (including information on encumbrances – bans, arrests, mortgages.) (registration fee)) • Certificate from the Tax inspection confirming absence of tax debts • Rights confirming documents for the land plot where the building is located • Original foundations documents of the agreement parties i.e. charters, foundation agreements and documents on registration • Documents evidencing authorities of the agreement signatories such as Power of Attorney, Extract from the Minutes of the General Meeting of Shareholders or Order on appointment of the CEO etc. 4 Register the property rights for the building at the State Unitary Enterprise 2 days TJS 157; (97 Somoni Agency : State Unitary Enterprise "Real Estate Registration" (SUE) (Registration fee) + The purchaser goes to the SUE in order to register the building and the property 60 Somoni rights transfer. A note is made in the registry book and the inventory cards of (Certificate)) SUE on the basis of the purchase agreement. Thus, a new entry is made in the SUE database. Page 25 Doing Business 2019 Tajikistan 5 Register the land use rights with the State Land Use Committee 30 days TJS 28.84; (28.84 Agency : State Land Use Committee Somoni (for new Parties prepare documents confirming land use rights for the land plot where the Land Use Certificate)) building is located, including current land use certificate and other documents confirming the rights for the land. An application is submitted to the State Land Use Committee in order to receive the new land use certificate. It can take up to one month to re-register the rights on land use to the new owner. According to the Land Code, land rights are automatically transferred with the rights to the building, however, the purchaser still needs to make a visit to the State Land Use Committee affiliate, where the old land use certificate is cancelled and a new certificate is issued. The Rules adopted by governmental Decree No. 374 on July 02, 2009 govern the issuance of the certificate. The Rules provide that before issuing a new Land Use Certificate the State Land Use Committee should give its permission for replacement of the old Land Use Certificate. The Committee issues its permission upon receipt of documents outlined in the Rules. However, the Rules are silent regarding the time-frame within which such permission should be provided. In practice both procedures jointly often take more than 30 days. Takes place simultaneously with previous procedure. Page 26 Doing Business 2019 Tajikistan Details – Registering Property in Tajikistan – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 0.0 What is the institution in charge of immovable property registration? State Subsidiary Enterprise "Registration of Immovable Property" in Dushanbe In what format are the majority of title or deed records kept in the largest business city—in a Paper 0.0 paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions No 0.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Land Administration Committee of Dushanbe In what format are the majority of maps of land plots kept in the largest business city—in a Paper 0.0 paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing No 0.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0 or mapping agency kept in a single database, in different but linked databases or in separate databases databases? Do the immovable property registration agency and cadastral or mapping agency use the No 0.0 same identification number for properties? Transparency of information index (0–6) 1.0 Who is able to obtain information on land ownership at the agency in charge of immovable Only 0.0 property registration in the largest business city? intermediaries and interested parties Is the list of documents that are required to complete any type of property transaction made Yes, on public 0.5 publicly available–and if so, how? boards Link for online access: Is the applicable fee schedule for any property transaction at the agency in charge of Yes, on public 0.5 immovable property registration in the largest business city made publicly available–and if boards so, how? Link for online access: Does the agency in charge of immovable property registration commit to delivering a legally No 0.0 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2017: Who is able to consult maps of land plots in the largest business city? Only 0.0 intermediaries and interested parties Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, in person 0.0 and if so, how? Page 27 Doing Business 2019 Tajikistan Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0 specific time frame—and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Land dispute resolution index (0–8) 6.5 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Lawyer; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? No 0.0 For a standard land dispute between two local businesses over tenure rights of a property Economic court worth 50 times gross national income (GNI) per capita and located in the largest business of Dushanbe city city, what court would be in charge of the case in the first instance? How long does it take on average to obtain a decision from the first-instance court for such a Less than a year 3.0 case (without appeal)? Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 28 Doing Business 2019 Tajikistan Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 29 Doing Business 2019 Tajikistan Getting Credit - Tajikistan Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Strength of legal rights index (0-12) 1 7.2 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.6 6.7 8 (42 Economies) Credit registry coverage (% of adults) 0 25.3 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 44.9 43.4 65.3 100.0 (25 Economies) Figure – Getting Credit in Tajikistan and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 80.00: Russian Federation (Rank: 22) 75.00: Kyrgyz Republic (Rank: 32) 70.00: Moldova (Rank: 44) 68.70: Regional Average (Europe & Central Asia) 65.00: Kazakhstan (Rank: 60) 40.00: Tajikistan (Rank: 124) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Tajikistan and comparator economies 9 8 9 8 7.2 7 6 6 Index Score 5 4 3 2 1 1 0 Tajikistan Kazakhstan Kyrgyz Republic Moldova Russian Federation Europe & Central Asia Page 30 Doing Business 2019 Tajikistan Details – Legal Rights in Tajikistan Strength of legal rights index (0-12) 1 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a No specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be No secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by No asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow Yes the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Tajikistan and comparator economies 8 7 7 7 7 6.6 6 6 6 Index Score 5 4 3 2 1 0 Tajikistan Kazakhstan Kyrgyz Republic Moldova Russian Federation Europe & Central Asia Page 31 Doing Business 2019 Tajikistan Details – Credit Information in Tajikistan Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 7 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 2,434,107 0 Number of firms 21,489 0 Total 2,455,596 0 Percentage of adult population 44.9 0 Page 32 Doing Business 2019 Tajikistan Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand • Extent of ownership and control index (0-10): Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price Governance safeguards protecting shareholders is equal to 10% of Buyer’s assets and is higher than the market value. from undue board control and entrenchment - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 33 Doing Business 2019 Tajikistan Protecting Minority Investors - Tajikistan Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Extent of disclosure index (0-10) 8.0 7.3 6.5 10 (13 Economies) Extent of director liability index (0-10) 6.0 4.9 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 6.0 6.8 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 9.0 7.1 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 4.0 5.6 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 7.0 7.5 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Tajikistan and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 85.00: Kazakhstan (Rank: 1) 68.33: Moldova (Rank: 33) 66.67: Kyrgyz Republic (Rank: 38) 66.67: Tajikistan (Rank: 38) 65.29: Regional Average (Europe & Central Asia) 61.67: Russian Federation (Rank: 57) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Tajikistan and comparator economies – Measure of Quality Tajikistan 7 6 8 4 9 6 Kazakhstan 9 6 9 8 10 9 Kyrgyz Republic 7 5 7 8 5 8 Moldova 9 4 7 5 8 8 Russian Federation 8 2 6 5 9 7 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Europe & Central Asia 7.6 4.6 7.2 5.6 7.3 6.8 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 34 Doing Business 2019 Tajikistan Details – Protecting Minority Investors in Tajikistan – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 6.7 Extent of disclosure index (0-10) 8.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) Yes 1.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0 obligation Extent of director liability index (0-10) 6.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if unfair or 2.0 2) prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Not liable 0.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair 2.0 or prejudicial Ease of shareholder suits index (0-10) 6.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Documents that 1.0 the defendant relied on Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 6.7 Extent of shareholder rights index (0-10) 9.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Page 35 Doing Business 2019 Tajikistan Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require Yes 1.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a Yes 1.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to No 0.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 4.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of Yes 1.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board Yes 1.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of No 0.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 7.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? No 0.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 36 Doing Business 2019 Tajikistan Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and mandatory contributions are measured at all levels of government. • Collecting information, computing tax payable • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be Total tax and contribution rate (% of commercial fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. • Dividend, capital gains, financial transactions discovered the error and voluntarily notified the tax authority. The value of the taxes underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 37 Doing Business 2019 Tajikistan Paying Taxes - Tajikistan Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Payments (number per year) 6 16.6 11.2 3 (Hong Kong SAR, China) Time (hours per year) 224 214.8 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 67.3 32.3 39.8 26.1% (32 Economies) Postfiling index (0-100) 40.40 64.41 84.41 None in 2017/18 Figure – Paying Taxes in Tajikistan and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 84.55: Moldova (Rank: 35) 79.77: Russian Federation (Rank: 53) 79.28: Kazakhstan (Rank: 56) 75.80: Regional Average (Europe & Central Asia) 61.35: Tajikistan (Rank: 136) 56.55: Kyrgyz Republic (Rank: 150) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Tajikistan and comparator economies – Measure of Quality 100 90.79 80 73.14 64.41 Index score 60 48.85 40.40 37.38 40 20 0 Tajikistan Kazakhstan Kyrgyz Republic Moldova Russian Federation Europe & Central Asia Page 38 Doing Business 2019 Tajikistan Details – Paying Taxes in Tajikistan Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Social tax 1.0 online 48.0 25% gross salaries 28.48 Corporate 1.0 online 74.0 14% (but not taxable profit 17.68 income tax less than 1% of turnover) Road tax 1.0 online 1% adjusted 16.66 turnover Real estate 1.0 online various rates per square 3.97 tax meter Vehicle tax 1.0 online 12.5% of vehicle 0.47 calculation capacity index (TJS 40) Tax on 0.0 12% interest 0.31 not included interest Value added 1.0 online 102.0 18% value added 0.00 not included tax (VAT) Employee 0.0 online and 1% gross salaries 0.00 withheld paid - Social jointly tax Totals 6 224 67.3 Page 39 Doing Business 2019 Tajikistan Details – Paying Taxes in Tajikistan – Tax by Type Taxes by type Answer Profit tax (% of profit) 17.7 Labor tax and contributions (% of profit) 28.5 Other taxes (% of profit) 21.1 Page 40 Doing Business 2019 Tajikistan Details – Paying Taxes in Tajikistan – Measure of Quality Answer Score Postfiling index (0-100) 40.40 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process Restricted to international traders Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund 0 per case study scenario Time to obtain a VAT refund (weeks) No VAT refund 0 per case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 50% - 74% Time to comply with a corporate income tax correction (hours) 10.5 83.49 Time to complete a corporate income tax correction (weeks) 7.0 78.13 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 41 Doing Business 2019 Tajikistan Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. • Transport between warehouse and port/border Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 42 Doing Business 2019 Tajikistan Trading across Borders - Tajikistan Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Time to export: Border compliance (hours) 51 22.1 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 313 157.5 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 66 24.3 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 330 97.9 35.2 0 (20 Economies) Time to import: Border compliance (hours) 107 21.1 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 223 162.3 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 126 24.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 260 93.9 24.9 0 (30 Economies) Figure – Trading across Borders in Tajikistan and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 92.32: Moldova (Rank: 35) 86.17: Regional Average (Europe & Central Asia) 80.74: Kyrgyz Republic (Rank: 70) 71.06: Russian Federation (Rank: 99) 70.36: Kazakhstan (Rank: 102) 59.06: Tajikistan (Rank: 148) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Tajikistan – Time and Cost Time (hours) Cost (USD) 140 330 350 313 126 120 107 300 260 Time (hours) 100 223 250 Cost (USD) 80 66 200 60 51 150 40 100 20 50 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 43 Doing Business 2019 Tajikistan Details – Trading across Borders in Tajikistan Characteristics Export Import Product HS 08 : Edible fruit and nuts; peel of citrus HS 8708: Parts and accessories of motor fruit or melons vehicles Trade partner Turkey China Border Dusty-Tursunzade border crossing Dusty-Tursunzade border crossing Distance (km) 71 71 Domestic transport time (hours) 3 3 Domestic transport cost (USD) 433 433 Details – Trading across Borders in Tajikistan – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 48.0 313.3 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 2.5 0.0 Import: Clearance and inspections required 104.0 223.3 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 2.5 0.0 Page 44 Doing Business 2019 Tajikistan Details – Trading across Borders in Tajikistan – Trade Documents Export Import Certificate of conformity Bill of lading Certificate of origin Certificate of conformity Commercial invoice Commercial invoice Customs export declaration Customs import declaration Document confirming payment of customs fees Document confirming payment of customs fees CMR waybill Inspection report Sales purchase contract Packing list Terminal handling receipts CMR waybill TIR carnet Sales purchase contract Import permit from Turkey Terminal handling receipts Phytosanitary certificate SOLAS certificate Phytosanitary permit to export to Turkey Inspection report from the Customs Committee Page 45 Doing Business 2019 Tajikistan Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are not of adequate quality. • Court fees - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The seller enforces the judgment through a public sale of the buyer’s movable • Alternative dispute resolution (0-3) assets. Page 46 Doing Business 2019 Tajikistan Enforcing Contracts - Tajikistan Standardized Case Claim value TJS 33,110 Court name Dushanbe Commercial Court City Covered Dushanbe Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Time (days) 430 496.3 582.4 None in 2017/18 Cost (% of claim value) 25.5 26.3 21.2 None in 2017/18 Quality of judicial processes index (0-18) 7.5 10.3 11.5 None in 2017/18 Figure – Enforcing Contracts in Tajikistan and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 81.25: Kazakhstan (Rank: 4) 72.18: Russian Federation (Rank: 18) 65.65: Regional Average (Europe & Central Asia) 62.56: Tajikistan (Rank: 61) 60.87: Moldova (Rank: 69) 50.42: Kyrgyz Republic (Rank: 131) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Tajikistan – Time and Cost Time (days) Cost (% of claim value) 700 47.0 50 Cost (% of claim value) 585 582.4 600 496.3 40 Time (days) 500 430 410 28.6 400 26.3 370 25.5 30 337 22.0 21.2 300 16.5 20 200 10 100 0 0 Europe Kazakhstan Kyrgyz Moldova OECD Russian Tajikistan & Republic high Federation Central income Asia Page 47 Doing Business 2019 Tajikistan Figure – Enforcing Contracts in Tajikistan and comparator economies – Measure of Quality Tajikistan 2 2 1 2.5 Kazakhstan 3 5 3 5 Kyrgyz Republic 1.5 1 0 2.5 Moldova 2.5 3 2 2 Russian Federation 2.5 4 0 3 OECD high income 2.5 3.1 2.3 3.6 Europe & Central Asia 2.1 3 1.4 3.6 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Tajikistan Indicator Time (days) 430 Filing and service 40 Trial and judgment 120 Enforcement of judgment 270 Cost (% of claim value) 25.5 Attorney fees 8.5 Court fees 10 Enforcement fees 7 Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 2.5 Case management (0-6) 2.0 Court automation (0-4) 1.0 Alternative dispute resolution (0-3) 2.0 Page 48 Doing Business 2019 Tajikistan Details – Enforcing Contracts in Tajikistan – Measure of Quality Answer Score Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 2.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 0.0 2.a. Is there a small claims court or a fast-track procedure for small claims? No 2.b. If yes, is self-representation allowed? n.a. 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? No 0.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 2.0 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to No 0.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court for No 0.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for No 0.0 use by lawyers? Court automation (0-4) 1.0 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme No court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.0 1. Arbitration 1.5 Page 49 Doing Business 2019 Tajikistan 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 0.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or No consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation No (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 50 Doing Business 2019 Tajikistan Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered. • Assessors’ and auctioneers’ fees • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 51 Doing Business 2019 Tajikistan Resolving Insolvency - Tajikistan Indicator Tajikistan Europe & OECD high Best Regulatory Central Asia income Performance Recovery rate (cents on the dollar) 34.2 38.6 70.5 None in 2017/18 Time (years) 1.7 2.3 1.7 0.4 (Ireland) Cost (% of estate) 9.0 13.2 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 4.0 11.1 11.9 None in 2017/18 Figure – Resolving Insolvency in Tajikistan and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 67.83: Kazakhstan (Rank: 37) 58.61: Russian Federation (Rank: 55) 55.58: Regional Average (Europe & Central Asia) 54.12: Moldova (Rank: 68) 47.62: Kyrgyz Republic (Rank: 82) 30.90: Tajikistan (Rank: 146) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Tajikistan – Time and Cost Time (years) Cost (% of estate) 3 15.0 15.0 2.8 15.0 16 13.2 14 Cost (% of estate) 2.5 2.3 12 Time (years) 2.0 2 1.7 9.3 1.7 9.0 9.0 10 1.5 1.5 1.5 8 6 1 4 0.5 2 0 0 Europe Kazakhstan Kyrgyz Moldova OECD Russian Tajikistan & Republic high Federation Central income Asia Page 52 Doing Business 2019 Tajikistan Figure – Resolving Insolvency in Tajikistan and comparator economies – Measure of Quality Tajikistan 1 1.5 1 0.5 Kazakhstan 6 3 4 2 Kyrgyz Republic 3 3 1 2 Moldova 4 2.5 3 2.5 Russian Federation 5 2.5 3 1 OECD high income 5.3 2.8 2.2 1.9 Europe & Central Asia 4.5 2.6 2.3 1.8 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Tajikistan and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 60 38.9 42.1 36.2 38.6 40 34.2 30.9 20 0 Tajikistan Kazakhstan Kyrgyz Republic Moldova Russian Federation Europe & Central Asia Page 53 Doing Business 2019 Tajikistan Details – Resolving Insolvency in Tajikistan Indicator Answer Score Proceeding foreclosure Because the company has assets that can be sold through foreclosure proceedings, this procedure will be used because it is faster and less costly than insolvency proceedings. Outcome piecemeal sale It will be very difficult to find a buyer for the hotel as a whole. Time (in years) 1.7 It can take up to 20 months to complete foreclosure proceedings in Tajikistan. It will take around 4- 5 court hearings to get a court decision due the large number of creditors and it will likely take several auctions to sell the assets. In practice, it may take up to one year to sell the property, since it is difficult to find a buyer. It may also take some time to make an evaluation of the property before the auction. Cost (% of 9.0 For a foreclosure procedure, the cost is approximately 9% of the value of the estate to resolve the estate) case. Attorneys' fees (around 4%) will represent the major component of the cost associated with this procedure. The rest would be accountants and assessors' fees (2%), court expenses (2%) and auctioneer's fees (1%). Recovery rate 34.2 (cents on the dollar) Page 54 Doing Business 2019 Tajikistan Details – Resolving Insolvency in Tajikistan – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 4.0 Commencement of proceedings index (0-3) 1.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may 0.5 file for liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (d) Both (a) and 0.5 insolvency framework? (b) options need to be complied with, concurrently Management of debtor's assets index (0-6) 1.0 Does the insolvency framework allow the continuation of contracts supplying essential goods No 0.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? No 0.0 Does the insolvency framework allow avoidance of undervalued transactions? No 0.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after No 0.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial Yes 1.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions No 0.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 55 Doing Business 2019 Tajikistan Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 56 Doing Business 2019 Tajikistan Labor Market Regulation - Tajikistan Details – Labor Market Regulation in Tajikistan Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 50.2 Ratio of minimum wage to value added per worker 0.4 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 50.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 100.0 Restrictions on night work? Yes Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 18.0 Paid annual leave for a worker with 5 years of tenure (working days) 18.0 Paid annual leave for a worker with 10 years of tenure (working days) 18.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 18.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? Yes Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 8.7 Notice period for redundancy dismissal for a worker with 5 years of tenure 8.7 Notice period for redundancy dismissal for a worker with 10 years of tenure 8.7 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.7 Severance pay for redundancy dismissal for a worker with 1 year of tenure 13.0 Page 57 Doing Business 2019 Tajikistan Severance pay for redundancy dismissal for a worker with 5 years of tenure 13.0 Severance pay for redundancy dismissal for a worker with 10 years of tenure 13.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 13.0 Job quality Equal remuneration for work of equal value? Yes Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 140.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? No Unemployment protection after one year of employment? No Minimum contribution period for unemployment protection (months)? 18.0 Page 58 Doing Business 2019 Tajikistan Business Reforms in Tajikistan In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Trading across Borders: Tajikistan made trading across borders easier by streamlining customs clearance with Uzbekistan through the Simplified Customs Corridor agreement. DB2018 Starting a Business: Tajikistan made starting a business easier by raising the revenue threshold for mandatory value added tax registration. Registering Property: Tajikistan made registering property easier by eliminating a procedure and reducing time as the registration of the sale-purchase agreement at the city government is no longer practiced. At the same time, fee increases raise the cost of transferring property. Labor Market Regulation: Tajikistan adopted legislation that changes to the rules of severance payments. It also abolished restrictions on night work by non-pregnant women and non-nursing mothers. DB2017 Starting a Business: Tajikistan made starting a business more difficult by requiring that companies with annual revenue of more than SM 500,000 register as a VAT payer Paying Taxes: Tajikistan made paying taxes easier by introducing electronic invoices and expanding the electronic system for filing and paying taxes to include road tax. It also made paying taxes less costly by reducing road tax rates. On the other hand, land tax rates were increased. DB2016 Paying Taxes: Tajikistan made paying taxes easier for companies by introducing an electronic filing and payment system for corporate income tax, VAT and labor taxes. On the other hand, it increased real estate tax fees. Trading across Borders: Tajikistan made trading across borders easier by making it possible to submit customs declarations electronically. DB2015 Starting a Business: Tajikistan made starting a business easier by enabling the Statistics Agency to issue the statistics code for the new business at the time of registration. Dealing with Construction Permits: Tajikistan made dealing with construction permits less costly by reducing the fee to obtain the architectural planning assignment. Getting Credit: Tajikistan improved access to credit information by beginning to provide credit scores. Paying Taxes: Tajikistan made paying taxes easier for companies by introducing an electronic system for filing and paying corporate income tax, VAT and labor taxes. DB2014 Starting a Business: Tajikistan made starting a business more difficult by requiring preliminary approval from the tax authority and the submission of additional documents at registration. Getting Credit: Tajikistan improved access to credit information by establishing a private credit bureau. Paying Taxes: Tajikistan made paying taxes easier and less costly for companies by reducing the corporate income tax rate, merging the minimal income tax with the corporate income tax and abolishing the retail sales tax. At the same time, Tajikistan increased the land and vehicle tax rates. DB2013 Protecting Minority Investors: Tajikistan strengthened investor protections by making it easier to sue directors in cases of prejudicial related-party transactions. Page 59 Doing Business 2019 Tajikistan DB2012 Starting a Business: Tajikistan made starting a business easier by allowing entrepreneurs to pay in their capital up to 1 year after the start of operations, thereby eliminating the requirements related to opening a bank account. Getting Credit: Access to credit using movable property in Tajikistan became more complicated because the movable collateral registry stopped its operations in January, 2011. DB2011 Starting a Business: Tajikistan made starting a business easier by creating a one-stop shop that consolidates registration with the state and the tax authority. Protecting Minority Investors: Tajikistan strengthened investor protections by requiring greater corporate disclosure in the annual report and greater access to corporate information for minority investors. Paying Taxes: Tajikistan lowered its corporate income tax rate. DB2010 Starting a Business: Tajikistan made starting a business easier by reducing the minimum capital requirement and speeding up the issuance of tax identification numbers. Dealing with Construction Permits: Tajikistan made dealing with construction permits easier and less time consuming by eliminating several procedures. Registering Property: Tajikistan made transferring property more costly by increasing the state duty for property transactions. Getting Credit: Tajikistan improved its credit information system through a new law allowing the creation of a private credit bureau. Protecting Minority Investors: Tajikistan strengthened investor protections through amendments to the joint stock companies law enhancing disclosure requirements for related-party transactions, increasing director liability in cases where related-party transactions harm the company and allowing shareholders to request the rescission of such transactions. Resolving Insolvency: Tajikistan improved its insolvency process by amending its insolvency law to reduce the duration and cost of proceedings. DB2009 Dealing with Construction Permits: In Tajikistan dealing with construction permits became more time consuming because of administrative backlogs and more costly because of an increase in fees. Protecting Minority Investors: Tajikistan strengthened investor protections by introducing rules on the approval of related-party transactions, increasing disclosure requirements for such transactions and allowing minority investors to initiate suits against directors on behalf of the company in order to defend their rights as shareholders. DB2008 Starting a Business: Tajikistan made starting a business easier by reducing the number of business activities subject to licensing requirements. Page 60 Doing Business 2019 Tajikistan Page 61