SOLUTION OF THE CONSTITUTIONAL COURT OF THE REPUBLIC OF UZBEKISTAN

of August 9, 2001

About interpretation of part two of article 16 of the Law of the Republic of Uzbekistan "About guarantees, freedoms of business activity"

Constitutional court of the Republic of Uzbekistan as a part of the Chairman B. Eshonov, judges B. Mirboboyev, U. Bazarov, G. Pirzhanov and S. Hakimova, being guided by Item third parts one of article 109 of the Constitution of the Republic of Uzbekistan and article 1 of the Law of the Republic of Uzbekistan "About the Constitutional court of the Republic of Uzbekistan", considered at open session case "About interpretation of part two of article 16 of the Law of the Republic of Uzbekistan "About guarantees of freedom of business activity", accepted on May 25, 2000.

The question is brought according to article 19 of the Law of the Republic of Uzbekistan "About the Constitutional court of the Republic of Uzbekistan" at the initiative of judges U. Bazarov, G. Pirzhanov and S. Hakimova in connection with the address to the Constitutional court of the business owner V. Frolov.

Having heard the message of the judge-speaker S. Hakimova, opinion of the vice-chairman of Committee of Oliy Majlis of the Republic of Uzbekistan on reforming of economy and to questions of entrepreneurship of K. Yuldashev, consultant of the Group of experts on bonds with bodies of legislative and judicial authority of the Office of the President of the Republic of Uzbekistan Yu.Nazarov managing legal department of the Cabinet of Ministers of the Republic of Uzbekistan of B. Kuchkarov, the chief of head department of the legislation of the Ministry of Justice of the Republic of Uzbekistan H.Sadikov, the vice-chairman of the State Tax Committee of the Republic of Uzbekistan E.Gadoyev, the deputy head of department on tax policy the Ministry of Finance of the Republic of Uzbekistan of T. Minibayeva, head of department method and declarations of the income of the State Tax Committee of the Republic, Uzbekistan of O. Ganiyev the President of Chamber of producers and entrepreneurs of Uzbekistan M. Sobirov and members of Scientific and advisory council in case of the Constitutional court of the Republic of Uzbekistan: the deputy director of Institute of monitoring of the current legislation in case of Oliy Majlis of the Republic of Uzbekistan M. Gasanov, the vice-chairman of the Supreme Economic Court of the Republic of Uzbekistan M. Azimov, the Chairman of presidium of the Tashkent city Bar S. Yakubov, the chief of department of Academy of the Ministry of Internal Affairs of the Republic of Uzbekistan H.Odilkariyev, having studied all materials and documents which are available on case, the Constitutional court established:

The business owner V. Frolov with the claim to illegal deprivation of its privileges provided by part two of article 16 of the Law of the Republic of Uzbekistan "About guarantees of freedom of business activity" appealed to the Constitutional court of the Republic of Uzbekistan.

Being individual entrepreneur since October, 1999, V. Frolov paid tax according to article 64-1 of the Tax Code of the Republic of Uzbekistan and the resolution of the Cabinet of Ministers of the Republic of Uzbekistan to N541 of December 31, 1998 at the rate of 5 minimum sizes of the salary in month. Later changes and maximum rate of the income tax levied in the fixed sizes were made to the tax legislation, it was increased to 10, and then to 20 and to 30 minimum sizes of the salary a month (resolutions of the Cabinet of Ministers of the Republic of Uzbekistan by N554 of December 31, 1999 and N500 of December 26, 2000).

In spite of the fact that V. Frolov shall use the privileges provided by part two of article 16 of the Law of the Republic of Uzbekistan "About guarantees of freedom of business activity" the Ministry of Finance and the State Tax Committee of the Republic of Uzbekistan the joint letter explanation for NTD/04-01-05/213 N15/3-3987 of June 13, 2001 deprived of it such right.

According to article 2 of the Law of the Republic of Uzbekistan "About regulatory legal acts" "The regulatory legal act is the official document accepted in the form determined by this Law, directed to establishment, change or cancellation of regulations of the legislation as obligatory state instructions". Article 5 of the same law lists acts which are normative and legal. Proceeding from it the Constitutional court notes that the letter explanation of the Ministry of Finance and State Tax Committee of the Republic of Uzbekistan of NTD (04-01-05/213 N15/3-3987 of June 13, 2001) is not the regulatory legal act.

For this reason containing in it, and also in similar letters of explanation on application of part two of article 16 of the Law of the Republic of Uzbekistan "About guarantees of freedom of business activity" are unconstitutional.

The constitution of the Republic of Uzbekistan (Article 15) is recognized unconditional rule of the Constitution and the laws, and no acts of other level can change the law.

Because the wrong understanding and use of the provisions of the law by tax and financial bodies entailed occurrence of certain legal consequences not only for V. Frolov, but also for other subjects of small and private business, the Constitutional court of the Republic of Uzbekistan came to conclusion about need to give interpretation of part two of article 16 of the Law of the Republic of Uzbekistan "About guarantees of freedom of business activity".

In the analysis of current laws the Constitutional court of the Republic of Uzbekistan proceeds from the following:

1. According to part two of article 18 of the Constitution of the Republic of Uzbekistan privileges can be established only by the law and shall correspond to principles of social justice.

2. Article 19 of the Constitution of the Republic of Uzbekistan "Citizens of the Republic of Uzbekistan and the state are connected by the rights and the cross liability. The rights and freedoms of citizens enshrined in the Constitutional laws are firm and nobody has the right to deprive or limit without court them".

3. According to article 51 of the Constitution of the Republic of Uzbekistan citizens shall pay the taxes and local charges established by the law. In Item the second article 11 of the Tax Code it is told that taxpayers have the right to use tax benefits according to the procedure and on the bases established by this code and other acts of the legislation".

4. According to part two of article 16 of the Law of the Republic of Uzbekistan "About guarantees of freedom of business activity" if the changes creating less favorable conditions for subjects of small and private business are made to the tax legislation, taxes according to the legislation existing before entry into force of such changes are levied from them within the next two years.

Analyzing the given regulations in their interrelation and considering that citizens, making the decision on occupation business activity, in the conditions of market economy independently plan and perform these activities, proceeding from the system of the taxation, that is the established taxes and local charges, their rates, privileges etc. operating at the time of their registration, the Constitutional court states need of application of the considered privileges within two years for adaptation of entrepreneurs.

Based on stated, being guided by the articles 1,19,25,26,27 of the Law of the Republic of Uzbekistan "About the Constitutional court of the Republic of Uzbekistan" the Constitutional court decided:

1. The changes in the tax legislation connected with introduction of new taxes and local charges, increase in rates of taxes and local charges, cancellation of privileges it is necessary to consider less favorable conditions for subjects of small and private business.

2. The provision enshrined in part two of article 16 of the Law of the Republic of Uzbekistan "About guarantees of freedom of business activity" grants the right to entrepreneurs to pay tax at the rate operating at the time of their state registration within two years from the moment of entering into the tax legislation of the changes creating less favorable conditions for subjects of small and private business.

3. This decision to publish in mass media.

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