Reforms in Eastern Europe and Central Asia, 2008-09

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Albania

Albania’s new insolvency law established time limits during insolvency, professional qualifications for insolvency administrators, and the Agency of Insolvency Supervision to regulate insolvency administrators. A simplified insolvency procedure for small businesses was introduced as well. Business start-up was eased by making registration electronic, enhancing the registry’s capacity, reducing the minimum capital requirement from ALL 100,000 to ALL 100, and eliminating the requirement to register at the Chamber of Commerce. Implementation of ASYCUDA World and the purchase of scanners have reduced customs clearance time for imports.

Areas of Reform: Starting a business, Trading across borders, Closing a business
Rank in Doing Business 2010: 82

Armenia

Armenia strengthened access to credit information by establishing a legal framework for credit bureaus and regulating credit information collection and the preparation of credit reports. Business start-up was eased by removing the minimum capital requirement and the need to obtain an approval from the national police department to prepare the company seal, and by making registration forms available online. By encouraging competition in banking, transportation, and customs brokerage services, as well as reducing the number of goods requiring inspection and streamlining the number of documents needed to clear goods, Armenia has sped up trade across borders.

Areas of Reform: Starting a business, Getting credit (information), Trading across borders
Rank in Doing Business 2010: 43

Azerbaijan

Azerbaijan’s public credit registry enhanced access to credit information by giving banks online access to the database, providing more data on borrowers, and introducing penalties for banks that send late or incorrect information. The time required to clear goods and get them across borders was shortened by regrouping various agencies into a single customs service window.

Areas of Reform: Getting credit (information), Trading across borders
Rank in Doing Business 2010: 38

Belarus

Belarus eased the process for getting construction permits by simplifying approval processes. Restrictions relating to redundancy dismissals were eased by raising the threshold for prior notification requirements. Tax payments were made more convenient through increased use of electronic systems—reducing tax compliance times—while lower ecological and turnover tax rates and a reduction in the number of payments for property tax reduced the tax burden on businesses. Property registration continues to improve, with faster processing and elimination of the requirement for notarization. Business start-up was eased by simplifying registration formalities, abolishing the minimum capital requirement, limiting the role of notaries, and removing the need for a company seal approval. Implementation of a risk-based management system and improvement of border crossing operations reduced transit times for trade.

Areas of Reform: Starting a business, Dealing with construction permits, Employing workers, Registering property, Paying taxes, Trading across borders
Rank in Doing Business 2010: 58

Bosnia and Herzegovina

Bosnia and Herzegovina improved its building permit system by reducing the time to register a new building at the courts and land cadastre.

Areas of Reform: Dealing with construction permits
Rank in Doing Business 2010: 116

Bulgaria

Bulgaria eased business start-up by reducing the paid-in minimum capital requirement to about 21 percent of gross national income per capita and making the company registry more efficient. An integrated Web-based property register providing online access to the ownership and cadastre status of properties shortened the time required to register property.

Areas of Reform: Starting a business, Registering property
Rank in Doing Business 2010: 44

Croatia

Croatia eased the process for getting construction permits by opening a one-stop shop and through enforcement of the building code.

Areas of Reform: Dealing with construction permits
Rank in Doing Business 2010: 103

Cyprus

In Cyprus, no major reform was recorded.

Rank in Doing Business 2010: 40

Estonia

Estonia adopted an act enabling distressed companies on the verge of insolvency to reorganize themselves, restructure their debt, and apply other measures to regain financial health and restore profitability. Property registration was eased with the computerization of property records at the land registry, which also started to allow notaries to register property online.

Areas of Reform: Registering property, Closing a business
Rank in Doing Business 2010: 24

Georgia

Georgia eased the process for dealing with construction permits by introducing a simplified process for obtaining confirmation from utilities, a risk-based approval process for building permits, and new time limits for the occupancy certificate. The documentation requirements for import and export were simplified, and there was a significant decrease in the cost of trade.

Areas of Reform: Dealing with construction permits, Trading across borders
Rank in Doing Business 2010: 11

Kazakhstan

Kazakhstan has eased the process for getting construction permits by eliminating the requirement to pay for new electrical connections, reducing time limits for building permits, and lowering the cost of topographic surveys. The tax burden on companies was eased by lowering the social tax for 2008 and the corporate income tax for 2009 (from 30 percent to 20 percent). Business start-up was made easier by simplifying documentation requirements and abolishing the requirement to register at the local tax office.

Areas of Reform: Starting a business, Dealing with construction permits, Paying taxes
Rank in Doing Business 2010: 63

Kosovo

Kosovo cut the corporate income tax rate from 20 percent to 10 percent in 2009.

Area of Reform: Paying taxes
Rank in Doing Business 2010: 113

The Kyrgyz Republic

The Kyrgyz Republic eased the process for getting construction permits by streamlining the fee structure, introducing a risk-based system of approval and building control, allowing low-risk projects to conduct an internal building control process, and simplifying the process for obtaining utility connections. Requirements relating to redundancy dismissals and worker reassignment were eased. Access to credit was enhanced by making secured lending more flexible and allowing general descriptions of encumbered assets and of debts and obligations. In addition, amendments to the Civil Code provide for automatic extension of security rights to proceeds of the original assets. The tax burden on businesses was eased by reducing the rates for several taxes and the number of payments for several. Surveying and notarization requirements were made optional for property registration, and business start-up was eased by eliminating the minimum capital requirement, reducing the registration time, and abolishing various post-registration fees and the need to open a bank account before registration. The elimination of six previously required documents and the simplification of inspection procedures has sped up trading across borders.

Areas of Reform: Starting a business, Dealing with construction permits, Employing workers, Registering property, Getting credit (legal rights), Paying taxes, Trading across borders
Rank in Doing Business 2010: 41

Latvia

Latvia’s new public credit registry started sharing data on loans, improving access to credit information. Registering property is easier due to simplified procedures, including allowing payment of registration fees and stamp duties at the land registry.

Areas of Reform: Registering property, Getting credit (information)
Rank in Doing Business 2010: 27

Lithuania

Lithuania eased the process of closing a business through amendments to the enterprise bankruptcy law. At the same time, the corporate income tax was raised from 15 percent to 20 percent.

Areas of Reform: Paying taxes (making it more difficult), Closing a business
Rank in Doing Business 2010: 26

Macedonia, FYR

The Former Yugoslav Republic of Macedonia has been reforming the construction permit process, shortening waiting times but raising fees. Worker hiring was made more flexible by allowing greater use of fixed-term contracts, easing restrictions on working hours, and making redundancy dismissals more flexible. The public credit bureau increased its coverage by introducing a better database that includes more information and by lowering the minimum loan threshold. Social security payments were classified in five groups, and social security contribution rates reduced. Investor protections were increased by regulating the approval of transactions between interested parties, increasing disclosure requirements in annual reports, and making it easier to sue directors in cases of prejudicial transactions between interested parties. Property registration was eased with the introduction of new time limits at the real estate cadastre—reducing the average time to register a title deed by eight days—and a non-encumbrance certificate can now be obtained from the real estate registry instead of through the court. Business start-up was simplified by integrating procedures at a one-stop shop.

Areas of Reform: Starting a business, Dealing with construction permits, Employing workers, Registering property, Getting credit (information), Protecting investors, Paying taxes
Rank in Doing Business 2010: 32

Moldova

Moldova lowered the rates for social security contributions paid by employers. Property registration was simplified by eliminating the requirement for a cadastral sketch, reducing procedures from six to five and days from 48 to 5. Business start-up was eased by implementing an expedited company registration service.

Areas of Reform: Starting a business, Registering property, Paying taxes
Rank in Doing Business 2010: 94

Montenegro

Montenegro improved the process for construction permits with a new construction law that eliminated procedures, provided new mechanisms for permit approval and building control processes in general, and introduced a risk-based approval system that assigns control for small projects to municipalities. Labor laws were brought more in line with EU requirements: employment was made more flexible by allowing fixed-term contracts to be used for permanent tasks, restrictions on redundancy dismissals were eased by eliminating the requirement for prior notification for a single redundancy dismissal, and the notice period for redundancy dismissals was shortened. The corporate income tax rate was cut by almost half, to 9 percent, and social security tax rates to 12 percent for 2009 and 9 percent for 2010. Business start-up was eased by simplifying post-registration, including registration for taxes, social security, and employment, as well as the process of obtaining a municipal license.

Areas of Reform: Starting a business, Dealing with construction permits, Employing workers, Paying taxes
Rank in Doing Business 2010: 71

Poland

Poland eased the process of dealing with distressed companies with an amendment to its bankruptcy law introducing the option of prebankruptcy reorganization for companies facing financial difficulties. Business start-up was eased by reducing the minimum capital requirement from PLN 50,000 to PLN 5,000 and consolidating applications for company registration and registrations with the tax, social security, and statistics authorities. Social security taxes were cut for businesses, and the value added tax (VAT) law was simplified. Access to credit was improved by allowing all legal persons (including foreign entities) to hold or grant security interests.

Areas of Reform: Starting a business, Getting credit (legal rights), Paying taxes, Closing a business
Rank in Doing Business 2010: 72

Romania

Romania increased the cost of insolvency procedures by requiring that 1.5 percent of the amount recovered from each insolvency procedure be transferred to a fund that reimburses the expenses of insolvency administrators when debtors have no assets. Construction permit costs rose because of a new fee equal to 0.05 percent of the project value. In addition, labor taxes were increased. Property registration was expedited with the introduction of new procedures at the land registry and cadastre.

Areas of Reform: Dealing with construction permits (making it more difficult), Registering property, Paying taxes (making it more difficult), Closing a business (making it more difficult)
Rank in Doing Business 2010: 55

The Russian Federation

The Russian Federation introduced several changes to its insolvency law to speed up liquidation and strengthen the legal status of secured creditors. The corporate income tax rate was cut from 24 percent to 20 percent. Property registration was expedited by introducing new documentation requirements—such as cadastral passports—in lieu of inventory documents and cadastral maps.

Areas of Reform: Registering property, Paying taxes, Closing a business
Rank in Doing Business 2010: 120

Serbia

Serbia’s new law on personal data protection guarantees that borrowers can inspect their own data, thus improving access to credit information. Business start-up was eased by creating a one-stop shop for company registration.

Areas of Reform: Starting a business, Getting credit (information)
Rank in Doing Business 2010: 88

Slovenia

Slovenia streamlined processes for dealing with construction permits, such as by lowering costs and no longer requiring a cadastre plan. Business start-up was eased by shortening the time for company registration, allowing for simultaneous tax registration during company registration, and abolishing use of company seals.

Areas of Reform: Starting a business, Dealing with construction permits
Rank in Doing Business 2010: 53

Tajikistan

Tajikistan amended its insolvency law, aiming to reduce statutory time limits and the costs of proceedings. Changes were introduced that simplified the construction permit process, reducing procedures and time. A new law on credit histories improves access to credit information by creating a private credit bureau. Investor protections were strengthened with amendments to the joint stock companies law, increasing disclosure requirements for transactions involving conflicts of interest, allowing for greater director liability, and giving shareholders the chance to request that harmful related-party transactions be rescinded. The state duty for property transfer has quadrupled, raising the cost of registering property by 2.8 percent of a property’s value. Business start-up was eased by reducing the minimum capital requirement and shortening the time to obtain a tax identification number.

Areas of Reform: Starting a business, Dealing with construction permits, Registering property (making it more difficult), Getting credit (information), Protecting investors, Closing a business
Rank in Doing Business 2010: 152

Turkey

Turkey’s private credit bureau now includes firms in its database.

Areas of Reform: Getting credit (information)
Rank in Doing Business 2010: 73

Ukraine

Ukraine enhanced investor protections by adopting a new law on joint stock companies that regulates approval of transactions between interested parties, increases disclosure requirements in annual reports, and makes it easier to sue directors in cases of prejudicial transactions between interested parties.

Areas of Reform: Protecting investors
Rank in Doing Business 2010: 142

Uzbekistan

Uzbekistan introduced a new tax code combining corporate income tax provisions. A presidential resolution reduced building permit fees.

Areas of Reform: Dealing with construction permits, Paying taxes
Rank in Doing Business 2010: 150