Tax Alert: 6 December 2013

New Rules of internal control in commercial banks

New Rules of internal control on prevention of legalisation of income, received from criminal activity and terrorist financing (Rules) were approved by the Resolution No.2528 dated 21 November 2013 of the Board of the Central Bank and the Prosecutor General’s Office.

According to the new Rules a number of additional verification measures were introduced.  Please note that verification measures included personal identification, verification of powers, identification of the bank client’s owner and review of business transactions/documents of bank clients on a constant basis.  The most notable additions to these measures are as follows.

Now commercial banks are obliged to perform due verification measures in respect of:

  • individuals applying for opening bank plastic card;
  • legal entities and (or) individuals  – shareholders of commercial bank with ownership equal or exceeding one percent of the bank’s charter capital;
  • one-time transactions on sale of cash foreign currency by individuals for the amount equal/exceeding 100 times the minimum monthly wage (MMW) (previously - 1000 MMW);
  • one-time transactions on exchange, change and (or) conversion of cash foreign currency by individuals for the amount equal/exceeding 25 times MMW (previously - 100 MMW).

In addition, the Rules regulate relationships with non-resident banks and with banks performing international money transfer transactions.  Now commercial banks are obliged to request from the mentioned banks minimum information (sender’s full name, passport details, address or date/place of birth, and account number) on the clients performing money transfers of more than 25 MMW.

The list of prohibitions for banking activities is extended.  Commercial banks are prohibited to perform money transfer transactions in foreign currency without client identification, to establish subsidiaries/branches/representations in states not participating in international cooperation on prevention of legalisation of proceeds from crime and terrorist financing, and etc.

The Rules also extended criteria and characteristics for recognition of doubtful transactions by the following transactions:

  • transfer from accounts of legal entities or individual entrepreneurs of amount equal/exceeding 500 times MMW as financial assistance or loan;
  • transfer from accounts of legal entities to accounts of individuals of amount equal/exceeding 500 times MMW as dividends;
  • transactions from five and more international payment cards during one day, if the amount of transactions per each card is equal/exceeding 25 times MMW;
  • deposit of cash by individuals to the accounts of legal entity or individual entrepreneur as a loan, financial assistance or contribution to charter capital in the amount equal/exceeding 500 times MMW.

The criteria for transactions considered as suspicious are also revised.  Now transfer to or receipt from abroad as well as purchase or sale of cash foreign currency by individuals for the amount equal/exceeding 500 times MMW (previously - 1000 MMW) at one time or several times during a 3 months period will be recognised as suspicious.
 

National standard of tax consulting

The Order of the Ministry of Finance No.2526 dated 18 November 2013 approved National standard of tax consulting No.4 “Representation of interests of the client (principal) during pre-trial settlement of tax dispute and in the court” (Standard).

In accordance with the Standard tax consulting firms have right to act on behalf of the client in pre-trial instances and in the court performing services as per the  list established in the Standard.  The list includes the following services:

  • analysis of the regulatory compliance of tax audit materials, order of their consideration and decision of the state tax authorities on the results of tax audit materials consideration;
  • development of the client’s legal position for appeals against state tax authorities;
  • selection of documents supporting legal position of the client.

Requirements of the Standard are obligatory for all tax consulting organisations.
 

Increase of the Minimum Monthly Wage

In accordance with Presidential Decree No. УП-4582 of 2 December 2013 effective from 15 December 2013 the MMW is increased from UZS 91,530 to UZS 96,105.  MMW affects, among others, calculation of salaries in public sector, retirement pensions, statutory fines and duties etc.

Online state registration as of 2014

As of 1 January 2014 entrepreneurs may perform state registration via internet (as stipulated by Resolution of the Cabinet of Ministers No.312 of 25 November 2013 "On measures on implementation of the mechanism of state registration of business entities through Internet").

Online registration will be done through the Single portal of online state services of the Republic of Uzbekistan with possibility of preparation and submission of application, charter documents and other requested documents remotely via internet.  Issuance of registered documents of incorporation and certificate of state registration would be also performed in electronic form using electronic digital signature.