44971 © 2008 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington, D.C. 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved. 1 2 3 4 5 09 08 07 06 A copublication of the World Bank and the International Finance Corporation. This volume is a product of the staff of the World Bank Group. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank Group encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202- 522-2422; e-mail: pubrights@worldbank.org. Copies of Doing Business 2008, Doing Business 2007: How to Reform, Doing Business in 2006: Creating Jobs, Doing Business in 2005: Removing Obstacles to Growth, and Doing Business in 2004: Understanding Regulations may be obtained at www.doingbusiness.org. Doing Business in South East Europe 2008 and other subnational and regional studies can be downloaded at http://subnational.doingbusiness.org. Contents Doing Business in South East Europe 2008 is the first Overview 1 regional and subnational Doing Business report in South East Europe. The report covers 22 cities from South Starting a business 5 East Europe which can be compared against each other, and with 178 economies around the world. The data Dealing with licenses 8 for South East European cities are for January 2008. Registering property 12 Comparisons with other cities, regions and countries in Enforcing contracts 16 the world are based on the data and indicators in Doing Business 2008. Data notes 19 Doing Business measures the ways in which govern- Doing Business indicators 25 ment regulations enhance business activity or restrain it. This report covers four Doing Business topics at the List of procedures subnational and regional level: starting a business, deal- Starting a business 29 ing with licenses, registering property and enforcing Dealing with licenses 44 contracts. These indicators have been selected because Registering property 64 they cover areas of municipal jurisdiction and/or en- forcement. The indicators are used to analyze the eco- Acknowledgments 74 nomic outcomes of the regulations and to identify what reforms have worked, where and why. The methodology has limitations. Other areas im- portant to business--such as proximity to major mar- kets, the quality of infrastructure services (other than those related to trading across borders), the security of property from theft and looting, the transparency of investment climate advisory service of the World Bank government procurement, macroeconomic conditions Group. It was produced with the financial support of the or the underlying strength of institutions--are not stud- International Finance Corporation (IFC), United States ied directly by Doing Business. To make the data compa- Agency for International Development (USAID), and rable across countries, the indicators refer to a specific the Government of Switzerland through the State Secre- type of business--generally a limited liability company. tariat for Economic Affairs (SECO). The report was directed by FIAS, a multi-donor 1 Overview TABLE 1.1 Doing Business in South East Europe--where is it easiest? City City RANK Economy RANK Economy 1 Bitola (easiest) 12 Pristina Macedonia, FYR Kosovo 2 Zrenjanin 13 Belgrade Serbia Serbia 3 Shkodra 14 Vranje Albania Serbia 4 Pljevlje 15 Varazdin Montenegro Croatia 5 Krusevac 16 Sibenik An entrepreneur starting a business in Vlora (Albania) would Serbia Croatia 6 Vlora 17 Niksic only need 7 days to register her business, the same as in Albania Montenegro Paris (France) or Lisbon (Portugal).1 In Mostar (Bosnia and 7 Osijek 18 Podgorica Herzegovina), it would take almost 9 times longer, similar to Croatia Montenegro Ljubljana (Slovenia) and Mbabane (Swaziland). Construction 8 Prizren 19 Zagreb Kosovo Croatia licenses are costly throughout the South East Europe region, 9 Skopje 20 Banja Luka but Tirana (Albania) is least expensive at 461% of income per Macedonia, FYR Bosnia and Herzegovina capita. Enforcing a contract related to a simple commercial 10 Uzice 21 Sarajevo Serbia Bosnia and Herzegovina dispute takes about 10 months in Zrenjanin (Serbia) and 11 Tirana 22 Mostar more than 4 years in Banja Luka (Bosnia and Herzegovina). Albania Bosnia and Herzegovina Doing Business in South East Europe 2008 compares 22 Source: Doing Business database cities in 7 economies: Albania, Bosnia and Herzegovina, Cro- atia, Kosovo2, Macedonia, FYR (former Yugoslav Republic), pension and health services registration online. Two proce- Montenegro, and Serbia. Studying these economies in depth dures and 5 days were cut from the process. In the area of is driven by the common vision of the region--improving the construction licenses, Croatia decentralized its licensing pro- business environment to increase investment flows, enhanc- cess. A new law on zoning and construction came into force ing regional cooperation and eventually integrating with the on October 1, 2007. Reforms in credit and bankruptcy, which European Union (EU). are outside the scope of this report, were also introduced. The report covers 4 Doing Business topics: starting a Macedonia, FYR, another global top reformer in 2008, business, dealing with licenses, registering property and decreased the time to obtain a construction license through enforcing contracts. These indicators have been selected administrative reform of the real estate registry and introduc- because they reveal differences in national and municipal tion of statutory time limits for issuing licenses. Macedonia, regulatory policies and practices--some regulations are FYR also eliminated the minimum capital requirement, mandated and enforced at the national level, while others introduced a one-stop shop, and is working on an online are administered locally. These differences allow for com- parisons within a country, the region and the world and are FIGURE 1.1 Eastern Europe & Central Asia reformed the most strong drivers of reform. Overall, doing business is easiest in Bitola (Macedonia, Countries that made at least one positive reform in 2006/07 (%) FYR) and most difficult in Mostar (Bosnia and Herzegovina) Eastern Europe & Central Asia 79 (table 1.1). Most of the economies in South East Europe are reform- South Asia 63 ing rapidly to improve the ease of doing business. This fits OECD high income 63 the trend observed in Eastern Europe and Central Asia as the Middle East 59 region that reformed the most in 2006/07 (figure 1.1). & North Africa Sub-Saharan Croatia and Macedonia, FYR are among the global Africa 52 top-10 reformers in Doing Business 2008 (table 1.2). This is no East Asia & Paci c 46 accident. Croatia reformed in 4 of the 10 Doing Business areas. Latin America In 2005, registering a property in Croatia took 956 days. Now & Caribbean 36 it takes 174 days. Croatia also sped up company start-up, consolidating procedures at the one-stop shop and allowing Source: Doing Business database. 2 Doing Business in souTH eAsT euRoPe 2008 TABLE 1.2 The top 10 reformers in 2006/07 Starting Dealing with Employing Registering Getting Protecting Paying Trading across Enforcing Closing a Economy a business licenses workers property credit investors taxes borders contracts business Egypt 3 3 3 3 3 Croatia 3 3 3 3 Ghana 3 3 3 3 3 Macedonia, FYR 3 3 3 Georgia 3 3 3 3 3 3 Colombia 3 3 3 Saudi Arabia 3 3 3 Kenya 3 3 3 3 China 3 3 3 Bulgaria 3 3 3 Note: economies are ranked on the number and impact of reforms. First, Doing Business selects the economies that reformed in 3 or more of the Doing Business topics. second, it ranks these economies on the increase in rank on the ease of doing business from the previous year. The larger the improvement, the higher the ranking as a reformer. Source: Doing Business database. registration system for business start-up. Comparing business regulations across South East Other economies are also reforming albeit at a slower Europe pace. Albania established a one-stop shop in September 2007, which slashed the time for starting a business from 36 days to In starting a business, the region has a number of good prac- 7 days. In Montenegro, the new Law on Statistics has reduced tices. Vlora's (Albania) fast and simple business registration the number of days needed to obtain company identification process is comparable to the world's top-25 performers on by 4 days. Serbia reduced the property transfer tax from 5.0% this indicator. Zlatnic, a hypothetical city that combines the to 2.5% of property value. best business start-up practices from the 22 cities covered, To become more competitive, the economies of South would rank 6th globally. Yet, these practices are not consistent East Europe must continue to improve business regulations throughout the region. Some cities perform significantly bet- and keep up with the reformers of Eastern Europe and Cen- ter than others due to more efficient national and municipal tral Asia. Bulgaria and Georgia are among the top-10 reform- regulations in the registration process, fees and post-registra- ers in the world. Armenia, Azerbaijan, Belarus, the Czech tion procedures with departments such as the health fund, Republic, Estonia, Hungary, Kazakhstan, the Kyrgyz Repub- tax authority and social security. The time it takes to register lic, Moldova, Poland, Romania, the Russian Federation, Slo- a business ranges from 7 days in Vlora and Shkodra (Albania) venia, Tajikistan, Turkey and Uzbekistan all improved their to 61 days in Mostar (Bosnia and Herzegovina). This reflects business regulations. Around the world, 200 reforms--in 98 administrative differences--cities that have a one-stop shop economies--were introduced between April 2006 and June complete registration faster than those where businesses reg- 2007. Reformers simplified business regulations, strength- ister through the commercial court. The cost differences are ened property rights, eased tax burdens, increased access to even more pronounced, from as low as 3.9% of income per credit and reduced the cost of exporting and importing. capita in Bitola (Macedonia, FYR) to 79.4% in Prizren (Ko- sovo). Numerous procedures also delay business registration; on average, entrepreneurs go through 10 procedures, 4 more than the OECD average. To comply with all requirements to build a warehouse in South East Europe is not easy or cheap. In all cities, the entre- preneur has to wait a long time to complete the construction licensing process. Bitola (Macedonia, FYR) is fastest with 94 days and Mostar (Bosnia and Herzegovina) is slowest with 535 days, slower than 170 of the 178 economies covered in the global Doing Business 2008. A high number of pre-approval clearances, inefficiencies in the local offices of space planning and a long time to register the new warehouse are among the oVeRVieW 3 major causes of delay. On average it takes 19 procedures to slowest in Mostar (Bosnia and Herzegovina), where courts get a construction license. Osijek (Croatia) is most efficient take more than 2 years to solve a commercial case. Bitola with 13 procedures and Zagreb (Croatia) is most burdensome (Macedonia, FYR) has the fastest enforcement, 45 days, while with 24 procedures, and both are Croatian cities. This gap the same process takes the longest in Sibenik (Croatia), 700 illustrates differences at the municipal level--in Zagreb, an days. The average cost to enforce a contract in South East entrepreneur has to go through 17 pre-construction require- Europe is 30% of the claim value, which is 7% higher than ments with agencies like the waste collection department and the Eastern European and Central Asian average of 23%. the sanitary inspectorate. Although having few procedures However, regional averages do not tell the full story. In Zagreb speeds up the process, healthy construction regulation re- (Croatia), the enforcement cost is 13.8% of the claim value, quires a balance between prudent safety standards and easy less than half of what it costs in Belgrade (Serbia), and about process. This is not the case when it comes to costs--low one-third of the cost in Pristina (Kosovo). costs are always better. Costs are high throughout the region averaging 1,427% of income per capita. As has been noted, Tirana (Albania) is the cheapest at 461% of income per capita What gets measured gets done and Uzice (Serbia) is the most costly at 2,818% of income per capita, comparable to the 10 most expensive economies glob- Publishing comparable data on the ease of doing business in- ally such as Guinea-Bissau and Niger. spires governments to act. Comparisons among cities within Registering property is subject to similar regulations a single economy are even stronger drivers of reform. That across the region but the number of procedures, time and cost was the case in Mexico, where a subnational Doing Business vary significantly among cities. This is due mainly to local study covering 12 states was first published in 2005. The study administrative practices and property transfer taxes, which created competition to reform, as governors and mayors had are applied on top of national regulations. The number of a difficult time explaining why it took longer or cost more to procedures ranges from 5 in Zagreb (Croatia) to 11 in Banja comply with administrative procedures in their city or state Luka (Bosnia and Herzegovina). Time to register property than in their neighbors'--despite sharing identical federal can be as fast as 17 days in Pljevlje (Montenegro), the same laws and regulations. The second benchmarking in 2006 as Slovakia, and as slow as 331 days in Sarajevo (Bosnia and showed that 9 of the 12 states measured the first time had Herzegovina), comparable to Angola. The main bottleneck reformed in at least one of the areas measured by Doing Busi- is the land registry, accounting for 82% of the total time ness. The conclusion: what gets measured gets done. required. Prizren (Kosovo) has the lowest cost to register Payoffs from reform can be large.3 Higher rankings on property--0.8% of property value--due mainly to the fixed- the ease of doing business are associated with more growth, fee property transaction tax, that is, the transaction tax does more jobs and a smaller share of the economy in the informal not depend on the property value as in other economies. In sector.4 In Mexico, reforms cut the time to start a business terms of costs, Prizren (Kosovo) performs better than Canada from 58 to 27 days. A recent study reports that reform pays or Slovenia and ranks just behind Italy. In Mostar (Bosnia and off: the number of registered businesses rose by nearly 6%, Herzegovina) registering property is most expensive--5.5% employment increased by 2.6% and prices fell by 1% because of property value with the transfer tax representing 90% of of the competition from new entrants.5 In Serbia, business the total cost. registration was taken out of the courts and the payoff was The region is marked by lengthy contract enforcement big--the time to register a business fell from 74 days in 2004 processes. The most efficient is Zrenjanin (Serbia); at 300 to 15 days in 2006 while the number of legally registered days, the process is the same as in the United States and companies increased by 50% in the same period. Following faster than in Denmark, the world's 5th performer. In Banja this and other reforms, Serbia was the global top reformer in Luka (Bosnia and Herzegovina), the entrepreneur has to wait Doing Business in 2006. as long as 4 years--similar to some of the slowest courts in To improve the business environment across South East the world, in economies such as Bangladesh or Afghanistan. Europe, national and municipal policymakers do not need to Delays are due to case backlog and an insufficient number of look beyond the region. Cities can learn from each other and judges. Breaking down the process into filing, judgment and adopt good existing regulations and practices. If the hypo- enforcement reveals further variation. Shkodra (Albania) thetical city Zlatnic were to adopt the best existing practices stands out for its fast filing of cases--21 days. The judgment from South East Europe, it would rank 9th among the 178 period is fastest in Pljevlje (Montenegro), at 180 days, and economies measured by Doing Business.6 This would mean 4 Doing Business in souTH eAsT euRoPe 2008 TABLE 1.3 Best practices in South East Europe--"Zlatnic" adopting Vlora's (Albania) procedures to start a business, Global ranking Osijek's (Croatia) procedures to obtain construction licenses, Indicator (178 economies) Podgorica's (Montenegro) time to register property and Zren- Number of procedures to start a business Shkodra, Vlora (6 procedures) 24 janin's (Serbia) contract enforcement practices (table 1.3). Days to open a business With these regulations in place, South East European entre- Shkodra, Vlora (7 days) 12 preneurs would face a business environment similar to that of Cost to open a business Australia, Canada and Ireland. Such improvements will lead Bitola (3.9% of income per capita) 24 to job creation, more local and international investments and Number of procedures to build a warehouse faster economic growth. Osijek (13 procedures) 29 Days to build a warehouse Bitola (94 days) 19 Cost to build a warehouse Notes Tirana (461% of income per capita) 119 Number of procedures to register property 1. The data for all economies in South East Europe are for Janu- Zagreb (5 procedures) 42 ary 2008. Data for all other economies are for June 2007. Days to register property 2. Under UN Security Council Resolution 1244 (1999), Kosovo Pljevlje (17 days) 28 is administered by the United Nations Interim Administration Cost to register property Mission in Kosovo (UNMIK). Prizren (0.8% of property value) 20 3. World Bank. Forthcoming. "Colombia: Inputs for Sub-Regional Days to enforce a contract Zrenjanin (300 days) 22 Competitiveness Policies." Mimeo. Washington, D.C.: World Bank Group. Cost to enforce a contract Zagreb (13.8% of claim) 17 4. Djankov, Simeon, Caralee McLiesh and Rita Ramalho. 2006. "Regulation and Growth." Economics Letters 92 (3):395-401. Source: Doing Business database 5. Bruhn, Miriam. 2007. "License to Sell: The Effects of Business Registration Reform on Entrepreneurial Activity in Mexico." Cambridge, Mass.: Massachusetts Institute of Technology, De- partment of Economics. 6. This is based on composite numbers including indicators not measured in Doing Business in South East Europe 2008. For those indicators the values reported for Albania, Bosnia and Herzegovina, Croatia, Macedonia, FYR, Montenegro and Ser- bia in Doing Business 2008 were used to calculate this ranking. 5 Starting a business TABLE 2.1 Where is it easy to start a business--and where not? City City RANK Economy RANK Economy Entry regulation 1 Bitola (easiest) 11 Vranje Macedonia, FYR Serbia 2 Skopje 13 Zrenjanin Macedonia, FYR Serbia 3 Shkodra 14 Prizren Albania Kosovo 4 Tirana 15 Pristina Albania Kosovo 5 Vlora 16 Sibenik Albania Croatia Zlatko has a dream. He wants to start a Web design company 6 Pljevlje 17 Osijek in his hometown of Bitola (Macedonia, FYR) after completing Montenegro Croatia his computer science degree in Belgium. Zlatko is bursting 7 Podgorica 17 Zagreb Montenegro Croatia with ideas and already has a few clients lined up. All he has 8 Niksic 19 Varazdin to do is register his business before he rolls up his sleeves and Montenegro Croatia gets to work. In only 10 days, his company will be operational 9 Uzice 20 Banja Luka and his first project can be well under way. He is fortunate. If Serbia Bosnia and Herzegovina 10 Krusevac 21 Sarajevo he tried to register his business in Mostar (Bosnia and Her- Serbia Bosnia and Herzegovina zegovina), he would have to wait for 61 days before he could 11 Belgrade 22 Mostar welcome his first clients. He knows that even if he could wait Serbia Bosnia and Herzegovina that long, his clients could not. Source: Doing Business database Note: The ease of starting a business is a simple average of the city rankings on the number of Starting a business in the average South East European procedures, the associated time and cost and minimum capital (% of gni per capita) required at the start of the business. see the data notes for details. city takes 27 days, requires 10 procedures and costs 21% of income per capita. A city with this performance would rank reason behind the high number of procedures (figure 2.1). 114 when compared with the 178 representative cities world- In Niksic and Podgorica (Montenegro), an entrepreneur has wide, roughly the same as Kenya.1 As noted in the previous to conduct 12 post-registration procedures including obtain- chapter, Zlatnic, the hypothetical city that combines the best ing a municipal permit, receiving an inspection from the business start-up practices from the 22 South East European municipality and registering with the pension, employment cities covered in this report, would rank 6th globally, 107 and health funds. Some of these procedures can take a long places higher than the average South East European city. time--in Varazdin (Croatia), the single procedure of obtain- Starting a business in such a city would take 6 procedures and ing a municipal environmental and workplace certificate 7 days as in Shkodra (Albania) and cost 3.9% of income per takes 25 days. capita as in Bitola (Macedonia, FYR). The time it takes to register a business varies greatly The large variation in the ease of starting a business across the 22 cities (figure 2.2). The best performers are across South East Europe is due to a variety of municipal and Shkodra and Vlora (Albania) with 7 days. The slowest to national regulations and practices that affect the business complete the registration process is Mostar (Bosnia and Her- registration process, inspections by various authorities, fees zegovina), where it takes 61 days. and registry with the health fund, tax authority, and social Completing business registration is faster when it is security. It is easiest to set up a business in Bitola (Macedonia, taken out of the courts and done by an administrative body. FYR) and most difficult in Mostar (Bosnia and Herzegovina) It is even faster when the administrative body is a one-stop (table 2.1). shop. Albania offers a good example--the National Registra- Some South East European cities fare well on the num- tion Center conducts simultaneous registration for the com- ber of procedures required to open a business. Shkodra and mercial registry, tax authorities, public institute of social se- Vlora (Albania) have 6 procedures, which is the same as the curity and labor inspectorate office, all within 2 days. Similar United States, the third easiest economy in which to open a one-stop shops exist in Skopje (Macedonia, FYR) and Pristina business. The most burdensome cities, Niksic and Podgorica (Kosovo), where the central agencies complete the registra- (Montenegro), require 15 procedures, similar to Bolivia, tion process in 3 and 4 days respectively. In Belgrade (Serbia), ranking 156 in the world. however, it takes longer. Although the one-stop shop Serbian Requirements following commercial registration are the Business Registers Agency (SBRA) processes registrations in 1 Procedures 8 Source: Doing Business database. 6 Doing Business in souTH eAsT euRoPe 2008 FIGURE 2.1 FIGURE 2.2 Many post-registration procedures Starting a business in Bitola--fast and cheap Procedures Cost Pre-registration Time Post-registration Time (% of GNI per capita) Shkodra 10 5 10 days Albania Vlora Albania 8 4 Tirana Cost Albania 3.6% Bitola 6 3 Macedonia, FYR Skopje Macedonia, FYR 4 2 Zagreb Croatia Osijek 2 1 Croatia Sibenik Croatia 0 0 1 8 Varazdin Procedures Croatia Source: Doing Business database. Belgrade Serbia Krusevac Serbia 22 cities. The lowest costs are seen in Bitola (Macedonia, Uzice Serbia FYR) with 3.6% of income per capita (figure 2.2) and Pljevlje Vranje Serbia (Montenegro) with 3.8%. Prizren and Pristina (Kosovo) stand Zrenjanin out as the most costly to the entrepreneur, with 79% and 78% Serbia Banja Luka of income per capita respectively. The majority of the expense Bosnia and Herzegovina in both cities stems from the Municipality License Permit, Sarajevo Bosnia and Herzegovina which costs EUR 1,000. Mostar Bosnia and Herzegovina A minimum capital requirement represents another Pristina significant cost of business registration--18 of the 22 cities Kosovo Prizren require companies to set aside a minimum amount of capital Kosovo Pljevlje before they start operating. In all cities of Bosnia and Herze- Montenegro govina, this is 43% of GNI per capita, in Croatia 18% and in Niksic Montenegro Serbia 8%. Macedonia, FYR is the friendliest to the entrepre- Podgorica Montenegro neur in this respect and has no such requirement. 5 10 Efforts to improve business registration in South East Source: Doing Business database. Europe are well under way. Albania has been an ambitious recent reformer. It established a one-stop shop in September 7 days, the additional procedures with the tax authorities, 2007 which slashed the time and cost of starting a business pension, employment, and health funds add at least 16 more from 36 days to 9 days. Macedonia, FYR also recently in- days to the process. In Zrenjanin (Serbia), entrepreneurs troduced a one-stop shop and, as a result, registration time spent 36 days completing all registration procedures, 7 of in Skopje has dropped by 3 days. In Montenegro, the new which are needed for registering with the local tax authority. Law on Statistics has reduced the number of days needed to Because of these delays, Serbia is moving towards consolidat- obtain a company identification number by 4 days. Bosnia ing all registration numbers with SBRA and consequently to and Herzegovina adopted a new court-based system in 2007, a single identification number for each enterprise. which sped up court registration and reduced the overall time In economies where a commercial court is involved in to start a business. the registration, the process tends to be slower. In Banja Luka and Mostar (Bosnia and Herzegovina), it takes the municipal What to Reform? court 20 and 21 days respectively to process the registration, due mainly to a backlog. In the Croatian cities of Varazdin Eliminate the minimum capital requirement and Osijek, the commercial court takes only 8 days, but this is Some justify the minimum capital requirement as protect- still longer than the one-stop shops in the other economies. ing creditors. But this makes little sense. Lenders base their The cost of starting a business represents on average decisions on commercial risk, not whether a business meets a 21% of income per capita, with large variations among the government-imposed capital requirement. Recovery rates in sTARTing A Business 7 bankruptcy are no higher in economies with capital require- name checking is also available in Croatia. Such reforms can ments than in those without. be cheap and are a good start for larger and deeper reforms. Economies that have a minimum capital requirement in- clude Ethiopia, Guinea-Bissau, Niger, Togo. No rich economy Make city registries fully functional is in this list. The governments of Serbia, Bosnia and Her- Although local offices of business registries exist in many zegovina, Croatia and Montenegro all stand to benefit from provincial cities, in some cases they are not authorized to such a reform and identify themselves with the world's better perform all the functions that can be carried out in the capi- performers. tals. As a result, entrepreneurs have to travel to the capital or send their paperwork to the central registry. This leads to Eliminate operating or utilization permits unnecessary delays. In Serbia, for instance, if a business is The operating or utilization permit certifies that a business to be open in Krusevac, the local tax authority has to request meets a minimal standard for worker health and safety. This a tax identification number from Belgrade, because the tax permit is inherited from the former Yugoslavia and requires authorities insist on independent administration of the tax local government bodies to inspect businesses and certify registration procedures. The process takes 7 days. Allowing compliance. This procedure remains in Montenegro and Bos- the business registry to handle tax identification will reduce nia and Herzegovina. It has been eliminated in Macedonia, that time. Similarly, Vlora (Albania) does not have a one-stop FYR, and Albania, where a self-compliance principle has shop, so entrepreneurs have to travel to Fier to submit their been adopted in its place and has significantly simplified the paperwork there. Providing the local registries with the same process. In Serbia pre-registration inspection requirements functionality as the capital cities will cut down registration were also eliminated but administrative authorities keep in- time and avoid delays. spection rights, which may be carried out after the business begins to operate. Eliminate antiquated requirements Some requirements are leftovers from a bygone era. These Introduce a one-stop shop should be cut. One example is the requirement for a company One-stop shops have been the most common reform in seal or stamp, still on the books in all 22 cities. In earlier cen- business start-up. Albania and Macedonia, FYR recently turies, a seal symbolized the legal identity of a business and introduced this practice. Croatia, Serbia and Kosovo had authenticated all its contracts. Now most documents are sent already implemented one-stop shops. The governments of electronically. More than 100 economies have regulations al- Montenegro and Bosnia and Herzegovina can benefit from lowing electronic signatures. These cost nothing and are more such a reform. Global experience shows that on average this difficult to forge. reform has cut 5 procedures from the start-up process and more than halved delays. Standardize incorporation documents The one-stop shops can also be used to merge proce- and publish information dures. Currently registrations with the tax authority, the Business registration applications are often rejected for pension, health, and employment funds are done as separate flawed or insufficient paperwork. Standardizing incorpora- procedures after the company is registered. These are par- tion documents would ensure legality without notaries and ticularly burdensome in Serbia, Montenegro and Bosnia and would prevent errors and speed up processing. Furthermore, Herzegovina. In contrast, in Macedonia, FYR, Albania, and application instructions ought to be made easily accessible Kosovo, formalities such as tax and statistical registration to the public--both online and in paper format. This would have been delegated to the company registry. eliminate many of the frustrations of entrepreneurs, who often have to figure out the system through trial and error. Allow start-up online Making registration electronic is one of the most effective ways to speed start-ups. In the past 4 years, 13 economies introduced electronic registration, including Belgium, Ire- Notes land, Mauritius and Norway, which lowered the average time to start a business from 40 to 17 days.2 None of the 1 The data for all economies in South East Europe are for Janu- covered South East European economies have done the same. ary 2008. Data for all other economies are for June 2007. Macedonia, FYR comes closest by publishing the company's 2 World Bank. 2007. Doing Business 2008. Washington, D.C.: creation notice on the Web site of the Central Register. Online World Bank Group. 8 Dealing with TABLE 3.1 Where is it easy to deal with construction licenses--and where not? licenses City City RANK Economy RANK Economy 1 Pristina (easiest) 12 Niksic Kosovo Montenegro Building a warehouse 2 Banja Luka 13 Zrenjanin Bosnia and Herzegovina Serbia 3 Prizren 14 Podgorica Kosovo Montenegro 4 Osijek 15 Bitola Croatia Macedonia, FYR 5 Sibenik 16 Belgrade Dijana, Artan and Ana opened their first bookshop 3 years Croatia Serbia 6 Pljevlje 17 Tirana ago. Thanks to the growing interest in local writers and de- Montenegro Albania mand for foreign books, their network of stores now spans 7 Shkodra 18 Skopje South East Europe. They plan to build a new warehouse, but Albania Macedonia, FYR where to invest? In Sarajevo (Bosnia and Herzegovina), Ti- 8 Sarajevo 19 Krusevac Bosnia and Herzegovina Serbia rana (Albania), Zagreb (Croatia), and other cities where they 9 Vlora 20 Vranje currently operate, obtaining a building permit is expensive Albania Serbia and takes almost a year. This is why they soon start consider- 10 Mostar 21 Uzice Bosnia and Herzegovina Serbia ing cheaper locations in other Eastern European countries. 11 Varazdin 22 Zagreb Governmentsmuststrikeanappropriatebalancebetween Croatia Croatia licensing that protects the public and brings in revenue, and Source: Doing Business database regulations that do not discourage business. Stricter building Note: The ease of dealing with licenses is a simple average of the city rankings on the number of procedures, the associated time and cost (% of gni per capita) required to deal with licenses. see rules and regulations result in fewer accidents but where the the data notes for details. process is too burdensome, fewer projects get started and construction can move to the informal economy--this does dures, 153 days and 62% of income per capita on average--a not serve the public interest. difference of 5 procedures, 115 days and 1,354% of income Doing Business looks at licensing of the construction in- per capita less (figure 3.1).1 dustry as an example of licensing regulations that businesses The average city in South East Europe would rank 170 face. It measures the procedures, time and costs needed for a out of 178 cities around the world on the ease of dealing with construction firm to build a standardized commercial ware- licenses. The hypothetical city of Zlatnic, which combines house, hook it up to utilities and formally register it. In an the best licensing practices from the region, would rank 42 average South East European city, the process consists of 19 globally, 128 places higher. In Zlatnic, Dijana, Artan and Ana procedures which take 268 days and cost 1,427% of income would go through 13 procedures as in Osijek (Croatia), which per capita. In contrast, in OECD countries, it takes 14 proce- would take 94 days as in Bitola (Macedonia, FYR), and cost FIGURE 3.1 Best, worst and average practices in dealing with licenses Procedures Time Cost South East (days) South East (% of GNI per capita) South East 25 Europe Europe 3,000 Europe Worst (Zagreb 24) Worst (Mostar 535) Worst (Belgrade 2,818) 500 20 Global average Average (19) 400 2,000 15 300 Average (1,427) Average (268) OECD average Best (Osijek 13) Global average Global average 200 1,000 10 100 Best (Tirana 461) OECD average Best (Bitola 94) Global best OECD average DENMARK (6) KOREA (34) UNITED ARAB EMIRATES (1.5) Source: Doing Business database. DeALing WiTH LiCenses 9 FIGURE 3.2 FIGURE 3.3 Many pre-construction procedures Big range in the time spent on licensing Procedures: During construction Time to deal with licenses (days) Pre-construction Utilities 0 100 200 300 400 500 Osijek After construction Bitola Croatia Macedonia, FYR Uzice Prizren Serbia Kosovo Skopje Zrenjanin Macedonia, FYR Serbia Banja Luka Pristina Bosnia and Herzegovina Kosovo Mostar Pljevlje Bosnia and Herzegovina Montenegro Sarajevo Niksic Bosnia and Herzegovina Montenegro Shkodra Podgorica Albania Montenegro Vlora Skopje Albania Macedonia, FYR Sibenik Shkodra Croatia Albania Varazdin Belgrade Croatia Serbia Pristina Vlora Kosovo Albania Belgrade Sibenik Serbia Croatia Krusevac Vranje Serbia Serbia Vranje Osijek Serbia Croatia Zrenjanin Krusevac Serbia Serbia Prizren Banja Luka Kosovo Bosnia and Herzegovina Tirana Varazdin Albania Croatia Bitola Tirana Macedonia, FYR Albania Niksic Zagreb Montenegro Croatia Pljevlje Uzice Montenegro Serbia Podgorica Sarajevo Montenegro Bosnia and Herzegovina Zagreb Mostar Croatia Bosnia and Herzegovina 0 5 10 15 20 Source: Doing Business database. Source: Doing Business database. 461% of income per capita as in Tirana (Albania). city on average, which further burden entrepreneurs in South It is easiest to obtain construction licenses in Pristina East Europe (figure 3.2). (Kosovo) and Banja Luka (Bosnia and Herzegovina). Dealing It takes almost 6 times longer to deal with construction with licenses is most difficult in Croatia's capital Zagreb and licenses from one city to another in South East Europe. The in the Serbian cities of Krusevac, Vranje and Uzice. There are time ranges from 94 days in Bitola (Macedonia, FYR) to 535 big variations in the number of procedures, time and cost to days in Mostar (Bosnia and Herzegovina) (figure 3.3). deal with construction licenses due to different local regula- A high number of pre-approval clearances, long waiting tions and practices across South East Europe (table 3.1). times in local space planning offices and slow property reg- On average it takes 19 procedures to get a construc- istration are among the main causes of delay. It takes more tion license in the 22 cities covered. The process is easiest in than 4 months on average before construction can start. Osijek and most burdensome in Zagreb, both Croatian cities, Pre-construction permits are fastest in Skopje (Macedonia, with 13 and 24 procedures respectively. The high number in FYR) and slowest in Varazdin (Croatia)--at 32 and 230 days Zagreb is due to additional pre-construction clearances not respectively. In the 3 Croatian cities and in Krusevac (Serbia), found in other cities. Before even applying for the building it takes 3 months to obtain location and construction permits permit, a builder needs 16 permissions from agencies as from the local space planning offices. Utility clearances also diverse as the waste collection department and the sanitary slow down the process in some locations--in Serbia, they inspectorate. There are 11 pre-construction procedures per cannot be obtained in less than 2 months as opposed to just 10 Doing Business in souTH eAsT euRoPe 2008 FIGURE 3.4 Expensive construction licensing in South East Europe South East Europe has been reforming too. In Croatia, a new law on zoning and construction came into force on Cost to obtain licenses (% of GNI per capita) October 1, 2007. The law also decentralized the licensing 3,000 South Asia HIGHEST process and increased the responsibilities of authorized ar- Uzice Sub-Saharan Africa chitects and engineers. Macedonia, FYR, as part of its recent Serbia reforms, has introduced statutory time limits to shorten the 2,000 South East Europe deadlines for issuing licenses. Furthermore, to make the Range of cost in South East process more transparent, the government has distributed an Europe Eastern Europe & Central Asia electronic construction permitting package with documents Bulgaria 1,000 Middle East and North Africa and manuals to all its municipalities, along with posters and LOWEST East Asia and the Paci c flyers explaining each step for applicants. Banja Luka (Bos- Tirana Slovenia nia and Herzegovina) has introduced different pricing for 6 Albania OECD Czech Republic 0 zones to reflect new territorial development. The impact of these reforms remains to be seen. To support growth of the Source: Doing Business database. construction sector and to encourage investment in property development, reform efforts need to continue. 2 days in Macedonia, FYR. Some have addressed these de- lays: In Sarajevo (Bosnia and Herzegovina), a new electronic system reduced the time needed to obtain the fire safety What to reform? clearance to 4 days. The same process takes one month in Tirana (Albania). Post-construction procedures are similarly Consolidate project clearances burdensome. Registering the new warehouse with the Land Why not centralize all municipal project clearances in a single Registry takes 315 days in Sarajevo and 400 days in Mostar, office? In Italy, companies had to make separate visits to the both cities in Bosnia and Herzegovina. fire department, worker safety department, water depart- The costs are high across the region--1,427% of income ment, sanitation department, health department and tax per capita on average. Albanian cities stand out as cheapest department. That process took an average of 8 months. Now for the building company. Uzice and Vranje in Serbia are most all project clearances are centralized into one office, and ne- costly at 2,818% and 2,796% of income per capita respectively. gotiating the bureaucracy takes only 4 months. The challenge They rank among the 10 most expensive locations globally, is convincing the various agencies like utility authorities and comparable to Niger and Guinea-Bissau. To notify and obtain civil defense to send a representative to a centralized loca- a municipal approval for commencement of works and pay tion and delegate decision-making authority to them. One city building land tax is the most costly procedure in Serbian solution would be to work out a part-time system, whereby cities--it represents 77% of the total costs. The average costs representatives from the different agencies work at the one- in South East Europe are higher than most regions in the stop shop regularly a few times a week. world and many new EU member countries (figure 3.4). South East Europe only needs to look to its neighbors to find lessons on how to improve construction licensing. East- Make the permitting process transparent ern Europe saw the biggest reforms in this area in 2006.2 Get- Builders need to understand how the process works. Tools ting a license in Georgia required 285 days and 29 procedures like the electronic construction permitting packages and fly- in 2004, similar to the average South East European city. Con- ers distributed by the government in Macedonia, FYR help sequently, fewer than 45% of construction projects in Tbilisi businesses with their project planning. In 2001, the municipal had legal permits. Over the last 3 years, Georgia eliminated authorities in Riga (Latvia) created a step-by-step guide with many unnecessary approvals and introduced a one-stop shop a list of required documents and flowcharts showing which for licensing, a "silence is consent" rule and statutory time offices to visit when and with what documents, and listing the limits. The number of procedures dropped to 12--all neces- offices' addresses, working hours and contact numbers. This sary to protect public interest and safety--and the time has simple reform cut 2 months off the process and gave builders been reduced to 13 days. As a result, the number of permits confidence and trust in the construction permitting process. issued grew by 151% in 2006/07.3 Georgia's approval process for building a warehouse is now more efficient than any EU country except Denmark. DeALing WiTH LiCenses 11 Make licensing applications and processing electronic Notes In Singapore, builders submit all permit applications elec- tronically. Developers in Austria, Denmark, Iceland, Ma- 1. The data for all economies in South East Europe are for Janu- laysia, Norway and the United States also complete their ary 2008. Data for all other economies are for June 2007. applications online. A number of forms are already available 2. World Bank. 2007. Doing Business 2008. Washington, D.C.: electronically across South East Europe. Further developing World Bank Group. and improving the online systems will save more time for 3. Bagaudinova, Svetlana, Dana Omran and Umar Shavurov. both entrepreneurs and government officials. It will also re- 2007. "Licensing 159 Activities ­ Not 909." In World Bank, Celebrating Reform. Washington, D.C.: World Bank Group and move the contact between them--and the chance for bribes U.S. Agency for International Development. along with it. Provide on-the-job training to spatial planning of- fice staff As building projects become more complex and online systems are put in place, it is important to have staff with adequate technical skills in spatial planning offices. In Bosnia and Herzegovina, capacity-building training has been pro- vided to employees. Ongoing on-the-job training prevents delays due to poor capacity of the local authorities to review building documents and to carry out onsite inspections. Create, regularly update and digitize zoning maps Municipalities should develop, regularly update and eventu- ally digitalize zoning maps and cadastral records so that busi- nesses do not need to obtain zoning permits and cadastral ex- tracts prior to applying for a building license. No old-member European Union country requires a zoning permit or a cadas- tral extract to submit a building permit application. 12 Registering TABLE 4.1 Where is it easy to register property--and where not? property City City RANK Economy RANK Economy 1 Bitola (easiest) 12 Pljevlje Macedonia, FYR Montenegro Regulation of property transfers 2 Krusevac 13 Varazdin Serbia Croatia 3 Vranje 14 Niksic Serbia Montenegro 4 Shkodra 15 Osijek Albania Croatia 5 Prizren 16 Skopje Kosovo Macedonia, FYR "My house is mine and not mine. It is mine because I inher- 6 Zrenjanin 17 Sibenik ited it from my father. It is not mine because it is not regis- Serbia Croatia tered in my name. I cannot spend 3 months without work in 7 Belgrade 18 Zagreb Serbia Croatia order to go through the property registration process." So says 7 Uzice 19 Podgorica Ivana, who works at a small restaurant in Uzice (Serbia). Serbia Montenegro Both the private sector and government can benefit from 9 Vlora 20 Banja Luka an efficient property registration system. But the process has Albania Bosnia and Herzegovina 10 Tirana 21 Sarajevo to be easy and affordable in order to include the big majority Albania Bosnia and Herzegovina who cannot afford to spend a lot of time and money. The re- 11 Pristina 22 Mostar forms are small relative to the enormous pay-offs they offer. Kosovo Bosnia and Herzegovina New Zealand is the world's top performer in this area-- Source: Doing Business database with only 2 procedures, 2 days and a cost of 0.1% of property Note: The ease of registering property is a simple average of the city rankings on the number of procedures, and the associated time and cost (as % of property value) required to register a property. value. Lawyers certify land transfer documents on behalf of see the data notes for details. their clients and submit them electronically for registration. Confirmation is returned within minutes. This efficiency The number of procedures ranges from 5 in Zagreb is not limited to OECD countries--some economies in the (Croatia) to 11 in Banja Luka (Bosnia and Herzegovina). Middle East and North Africa are not far behind. In Oman, it Differences are explained by specific national requirements. takes 2 procedures and 16 days to transfer property from one In general, the number of procedures is similar across cities domestic private company to another. In contrast, in South within each economy. Six procedures are required in all cit- East Europe, the average is 7 procedures and 91 days and the ies in Albania, Croatia (except for Zagreb), Macedonia FYR cost is 3.5% of property value. People from the region spend and Serbia; in Kosovo and Montenegro, entrepreneurs have 3 months more than New Zealanders and 4 times longer than to go through 7 procedures--except for Podgorica (Mon- Slovenians or Bulgarians and pay 6 times more than entre- tenegro), where 8 are required. Bosnia and Herzegovina is preneurs in Poland.1 However, Zlatnic, the hypothetical city the only economy in the region where there are differences that combines the best practices from the 22 South East Eu- across cities--Sarajevo has 7, Mostar 8 and Banja Luka 11 ropean cities covered in this report, would rank 16th globally. procedures (table 4.2). Additional procedures in Banja Luka Registering property in such a city would take 5 procedures include the requirement to provide a lot occupancy drawing, as in Zagreb (Croatia), 17 days as in Pljevlje (Montenegro), confirm that the property does not affect the municipality's and cost 0.8% of property value as in Prizren (Kosovo). In construction plans and obtain a special tax clearance from contrast, a hypothetical city adopting the worse practices of the local tax authority. Also, in Mostar and Banja Luka, the the region would rank 170, just behind Afghanistan. entrepreneur must go through a separate registration with Despite a similar regulatory framework for property the cadastre. registration across the region, the time, cost and number of The time needed to register property varies across the procedures vary due to local administrative practices and 22 cities. In Pljevlje (Montenegro) and Bitola (Macedonia, taxes. The city of Bitola (Macedonia, FYR) ranks 1st with 6 FYR)--the fastest cities--registration takes 17 and 22 days procedures, 22 days and a cost of 3.2% of the property value. respectively. In Sarajevo (Bosnia and Herzegovina), an en- Registering property is most difficult in Mostar (Bosnia and trepreneur has to wait 10 months longer than she would in Herzegovina) where the entrepreneur has to comply with 8 New Zealand. While the process is faster in the other 2 cit- procedures that take 145 days and cost 5.5% of the property ies measured in Bosnia and Herzegovina--Mostar takes 5 value (table 4.1). months, Banja Luka 6 months--this is still a long time for an RegisTeRing PRoPeRTY 13 TABLE 4.2 FIGURE 4.1 Who regulates property registration the least-- Comparing property registration in Mostar and Sarajevo and who the most? Procedures (number) Time to register property in Bosnia and Herzgovina (days) Zagreb (Croatia) 5 FEWEST Uzice (Serbia) 6 Shkodra (Albania) 6 Vranje (Serbia) 6 Tirana (Albania) 6 Zrenjanin (Serbia) 6 240 Vlora (Albania) 6 Sarajevo (BosniaandHerzegovina) 7 307 Osijek (Croatia) 6 Pristina (Kosovo) 7 180 days Sibenik (Croatia) 6 Prizren (Kosovo) 7 Apply for registration Varazdin (Croatia) 6 Niksic (Montenegro) 7 at the Land Registry Bitola (Macedonia, FYR) 6 Pljevlje (Montenegro) 7 120 100 Skopje (Macedonia, FYR) 6 Mostar (BosniaandHerzegovina) 8 days Belgrade (Serbia) 6 Podgorica (Montenegro) 8 60 Krusevac (Serbia) 6 Banja Luka (Bosnia and Herzegovina) 11 MOST All other procedures Time (days) 0 Mostar Sarajevo Pljevlje (Montenegro) 17 LEAST Vranje (Serbia) 84 8 procedures, 145 days 7 procedures, 331 days Bitola (Macedonia, FYR) 22 Podgorica (Montenegro) 86 Source: Doing Business database. Shkodra (Albania) 24 Skopje (Macedonia, FYR) 98 Prizren (Kosovo) 36 Zrenjanin (Serbia) 100 Niksic (Montenegro) 36 Uzice (Serbia) 104 land. "Land registry does not exist as such and the cadastre is Vlora (Albania) 37 Belgrade (Serbia) 111 Pristina (Kosovo) 38 Mostar (BosniaandHerzegovina) 145 only showing who is using the property at the moment," says Varazdin (Croatia) 41 Sibenik (Croatia) 153 an entrepreneur from Vranje. Tirana (Albania) 42 Zagreb (Croatia) 174 Kosovo is the cheapest economy with regards to the cost Osijek (Croatia) 63 Banja Luka (Bosnia and Herzegovina) 190 Krusevac (Serbia) 74 Sarajevo (BosniaandHerzegovina) 331 MOST to register property--0.8% of the property value in Prizren and 0.9% in Pristina. This is due mainly to a fixed property Cost (% of the property value) transaction tax. As a result, these 2 cities perform better than Prizren (Kosovo) 0.8 LOWEST Podgorica (Montenegro) 3.4 Pristina (Kosovo) 0.9 Shkodra (Albania) 3.5 Canada or Slovenia and are just slightly more expensive than Belgrade (Serbia) 2.8 Tirana (Albania) 3.5 Italy. In Mostar (Bosnia and Herzegovina) registering property Krusevac (Serbia) 2.9 Vlora (Albania) 3.5 is most expensive--5.5% of the property value. Here the trans- Uzice (Serbia) 2.9 Skopje (Macedonia, FYR) 3.5 fer tax is calculated as a percentage of property value (5%), as Vranje (Serbia) 2.9 Osijek (Croatia) 5.0 Zrenjanin (Serbia) 2.9 Varazdin (Croatia) 5.0 it is calculated in the neighboring city of Banja Luka, where Bitola (Macedonia, FYR) 3.2 Sibenik (Croatia) 5.0 the transfer tax is 3% of the property value (figure 4.2). Niksic (Montenegro) 3.3 Zagreb (Croatia) 5.0 Serbia reduced the transfer tax from 5.0% to 2.5% and Pljevlje (Montenegro) 3.3 Sarajevo (BosniaandHerzegovina) 5.0 Banja Luka (Bosnia and Herzegovina) 3.4 Mostar (BosniaandHerzegovina) 5.5 MOST now the average total cost is 2.9% of the property value. In contrast, Montenegro increased the transfer tax from 2% to Source: Doing Business database 3%. A recent reform in Egypt shows that a reduction in fees entrepreneur to wait for his property to be transferred. The FIGURE 4.2 main bottlenecks are the land registries, which on average ac- Registering a property in Prizren is cheap count for 82% of the total time to register property in Bosnia Cost to register property and Herzegovina (figure 4.1). (% of property value) Mostar The third slowest city is Zagreb (Croatia) where-- 5.0 Sarajevo, Zagreb, despite a reform that cut the time for registering property by Osijek, Varazdin, Sibenik 225 days--the process still takes 174 days. Compare that to 4.0 Tirana, Skopje, Shkodra, Varazdin or Osijek, both also in Croatia, where it takes 41 and Vlora, Podgorica, Banja Luka, 63 days respectively. The main reason is lower volume at the 3.0 Niksic, Pljevlje, Bitola, land registry courts. In Serbia, it takes on average 95 days to Krusevac, Uzice, Vranje, 2.0 Zrenjanin, Belgrade complete the same procedures; within this country, an entre- preneur in Krusevac will wait 74 days while his competitor in 1.0 Uzice or Belgrade will wait 104 and 111 days respectively. The Pristina Prizren property registry system in southern Serbia called Tapijski Saudi Arabia 0.0 Global best practice 0 dates from Ottoman times; in this system, the landowner has Source: Doing Business database. a paper or contract (tapija) which proves the ownership of the 14 Doing Business in souTH eAsT euRoPe 2008 can actually increase revenue from new registrations. One property registration have less time for their main work-- year ago, registering a property in Cairo cost 5.9% of property resolving disputes. Taking registration out of the courts, as value. Ninety percent of properties were either not registered Norway has done, means that registration can be more eas- or registered at below market values.2 Then the government ily linked with the agency responsible for the cadastre. That decided to lower the rate. Today, it costs 1%. As a result, rev- makes it easier to detect overlapping and duplicate titles, enues from title registrations rose by 39%.3 which improves the security of property rights. In Serbia the A number of economies in Eastern Europe and Central reform is underway. Asia saw other interesting positive changes in the period 2006/07: Uzbekistan reduced the notarization fee from 10% Make the registry electronic--including payments of of the property value to a fee based on surface area. As a re- registration taxes and rights sult, the cost to register property fell from 10.5% of the prop- Economies that transfer records from paper to electronic erty value to 1.4%. Poland converted registration fees from a forms benefit from shorter processing times. Going electronic percentage to a fixed fee, lowering the total cost to only 0.5%. also makes it easier to identify errors and overlapping titles, In Hungary, a second registry operating in Budapest reduced improving title security. Croatia digitized land records as part the backlog and cut the time from 78 days to 63. Georgia cut of its far-reaching land reform. The next step is to put pro- the requirement to involve notaries. The cities in South East cedures online. This works when people using the registra- Europe could follow the suit. tion services (notaries, lawyers and the public at large) have Internet access. Other economies can benefit from putting individual procedures rather than the entire system online. What to reform? Bosnia and Herzegovina recently allowed property records to be consulted online. Eliminate the requirement for special certificates Being able to make registration tax payments and rights Doing Business promotes cutting unnecessary or redundant online saves time--the entrepreneur no longer needs to go procedures. For example, Albania, Bosnia and Herzegovina, personally to the government office or a commercial bank. Croatia, Kosovo, Montenegro and Serbia require a recent She would be able to go straight from her own desk to the excerpt from the property registry to prove ownership--the virtual registry to register the deed. This reform would cut at property deed should be sufficient. In Bosnia and Herze- least 2 procedures for all the 22 measured cities. govina, Kosovo, Macedonia, FYR and Montenegro, special tax clearances and non-encumbrance certificates are required, Introduce fast-track procedures regardless of the fact that the property tax or most recent pub- To register property in Lithuania, entrepreneurs must obtain lic utility receipts prove that the property has no such debts. a certificate of execution and a land and building reappraisal. This takes 9 days. Then they apply for title transfer at the reg- Reduce transfer tax and introduce fixed fees istry, which takes another 20 days. But if they don't want to This does not necessarily imply less tax revenue as evidenced wait, they can pay a higher fee which cuts delays from 29 to by reforms in other countries, such as India or Egypt. A good 3 days. Fast-track procedures help prioritize the work of the example of fixed fees is Kosovo, where the transfer tax is not registry and allow entrepreneurs to focus on their business. based on the property value. High transfer costs discourage Another 56 economies try to expedite registration by setting the formalization of titles and fees charged on a percentage time limits at the registry. This works best when registrars are basis encourage below-market property value declarations. evaluated on whether they meet the targets. Take registration out of the courts Make the use of notaries optional Bosnia and Herzegovina, Croatia, Kosovo, Montenegro and Standard deeds can be provided to be filled out by the entre- Serbia require the involvement of the courts for certain prop- preneur. If the law requires the deed to be notarized, govern- erty registration procedures. In 2004, the Dominican Repub- ments can endow registrars with the requisite notary powers lic took these procedures out of the courts and made them for this purpose. Around the globe, 3 out of 4 economies administrative. The time to register property fell by 44%. manage property registration without mandating the use In the South East European economies where courts of notaries; in those economies, property rights are no less are involved, property registration takes more than twice the secure, and efficiency is greater. time as in economies where courts are not involved, such as Whatever the motivation for reform, the social problem in Albania or Macedonia FYR. And judges who deal with it addresses is clear: without the ability to legally own land, RegisTeRing PRoPeRTY 15 some people are denied opportunities that others enjoy. Reforming land laws and related registration requirements goes a long way towards reducing inequality in economic op- portunities. It is what many urban and rural poor people need and governments would be wise to oblige. Notes 1. The data for all economies in South East Europe are for Janu- ary 2008. Data for all other economies are for June 2007. 2. OPIC (Overseas Private Investment Corporation). 2005. "Egypt: Overview of the Housing Sector." Office of Economic Development, Issues Paper 1, July. 3. World Bank. 2007. Doing Business in Egypt 2008. Washington D.C.: World Bank Group. 16 Enforcing contracts TABLE 5.1 Where is it easy to enforce a contract--and where not? City City RANK Economy RANK Economy Court efficiency 1 Zrenjanin (easiest) 12 Vlora Serbia Albania 2 Krusevac 13 Skopje Serbia Macedonia, FYR 3 Bitola 14 Tirana Macedonia, FYR Albania 4 Uzice 15 Shkodra Serbia Albania 5 Zagreb 16 Podgorica Croatia Montenegro There is no doubt: without efficient courts, less wealth is cre- 6 Osijek 17 Niksic ated. Fewer transactions take place, and those that do gener- Croatia Montenegro ally involve a small group of people who are linked through 7 Varazdin 18 Sarajevo Croatia Bosnia and Herzegovina kinship, ethnic origin or previous dealings. Businesses that 8 Sibenik 19 Mostar have little or no access to courts must rely on social networks Croatia Bosnia and Herzegovina to decide whom to do business with. 9 Pljevlje 20 Pristina Based on analysis of pertinent regulations, Doing Busi- Montenegro Kosovo 10 Belgrade 21 Prizren ness tracks the efficiency of contract enforcement by mea- Serbia Kosovo suring time, cost and procedural steps to resolve a standard 11 Vranje 22 Banja Luka commercial case. It takes on average 573 days, 30.3% of the Serbia Bosnia and Herzegovina value of the claim and 40 procedural steps to enforce a con- Source: Doing Business database tract in South East Europe. An average city from the region would rank 122 out of 178 economies on the ease of enforcing contracts. The easiest cities in which to enforce a contract are and enforcement. Shkodra, Vlora and Tirana (Albania) stand Zrenjanin (Serbia) and Krusevac (Serbia). The most difficult out for fast filing of cases--21, 28 and 30 days respectively. ones are Banja Luka (Bosnia and Herzegovina), Pristina (Ko- Courts in these cities use a computerized lottery system that sovo) and Prizren (Kosovo) (table 5.1).1 randomly assigns judges and schedules hearings.3 Across the The time to enforce a contract varies a great deal across region--with the exception of Mostar and Banja Luka (Bos- the 22 South East European cities (figure 5.1). Dragan, an nia and Herzegovina), where it takes around 9 and 6 months entrepreneur, has to wait less than one year in Zrenjanin (Ser- respectively--the longest it takes to file a case is 2 months, bia), Bitola (Macedonia, FYR) and Pljevlje (Montenegro)-- similar to Athens (Greece) and Budapest (Hungary). similar to the United States and Norway. In Mostar and Banja Bitola (Macedonia, FYR) is the city with the fastest en- Luka (Bosnia and Herzegovina), he has to wait almost 5 times forcement, 45 days. Bitola is followed by Zrenjanin (Serbia), longer--almost as long as countries with the world's slowest Krusevac (Serbia) and Skopje (Macedonia, FYR), where it courts, such as Bangladesh and Afghanistan. Lawyers and takes 60 days. This relative efficiency reflects recently in- court officials in both cities attribute delay to case backlog troduced laws in Macedonia FYR and Serbia that reduced and an insufficient number of judges. enforcement times. Sibenik (Croatia) is the slowest in the Mostar and Banja Luka (Bosnia and Herzegovina) could region; enforcing a contract takes 700 days due to the over- look to other cities in the region for better practices. In burdened basic court. In contrast, other Croatian cities-- Macedonia FYR, a program to reduce delays cut the number Zagreb, Osijek, and Varazdin--have introduced out-of-court of cases pending for more than 3 years by 46%. Litigants in enforcement for small and uncontested claims and enforce- long-standing disputes were contacted and asked to appear ment there is about 4 times faster. In 2007, the number of in court. If neither party showed up, the case was dismissed. pending cases in Croatia decreased by 230,000--mainly due Statistics on court backlog were circulated monthly to track to faster enforcement. However, more needs to be done as progress. The reform cut the time to enforce a contract in slow enforcement of judgments continues to account for 25% Skopje from 509 days to 385 days.2 Bitola (Macedonia, FYR) of all pending cases.4 fares even better with 345 days. The average cost to enforce a contract in South East Eu- Doing Business divides the time it takes to conclude the rope is 30.3% of the claim value. However, regional averages entiredisputeresolutionprocessinto3stages:filing,judgment do not tell the full story. The cost to enforce a contract varies enFoRCing ConTRACTs 17 FIGURE 5.1 FIGURE 5.2 Time to enforce a contract in South East Europe Cost to enforce a contract in South East Europe Filing Judgement Enforcement Attorney Court Enforcement Zrenjanin Zagreb Serbia Croatia Pljevlje Bitola Montenegro Macedonia, FYR Bitola Sibenik Macedonia, FYR Croatia Krusevac Varazdin Serbia Croatia Pristina Osijek Kosovo Croatia Prizren Zrenjanin Kosovo Regional average Serbia Regional average South East Europe 573 days to enforce a contract South East Europe 30.3% of claim Average Average Sarajevo Shkodra Bosnia and Herzegovina Albania Belgrade Vlora Serbia Albania Vranje Sarajevo Serbia Bosnia and Herzegovina Sibenik Banja Luka Croatia Bosnia and Herzegovina Mostar Pristina Bosnia and Herzegovina Kosovo Banja Luka Prizren Bosnia and Herzegovina Kosovo 0 365 730 1,095 1,460 0 10 20 30 40 Source: Doing Business database. Days Source: Doing Business database. % of claim a great deal across the region. In Zagreb (Croatia), resolv- the world. In Montenegro, 50% of firms identify corruption ing a dispute costs 13.8% of the claim value, less than half as a major constraint to doing business, the highest rate in of the costs in Niksic (Montenegro) and Uzice (Serbia), and the region.6 about one-third of the costs in Pristina and Prizren (Kosovo) There have been positive initiatives to improve contract (figure 5.2). enforcement in the region. Most cities surveyed introduced There is no clear relationship between time and cost, commercial courts, many use case management systems and as in most economies the cost to enforce contracts is deter- the practice of commercial mediation is becoming increas- mined by either a national or a local fee schedule rather than ingly common. However, running an efficient court system is by the actual time it takes to resolve a commercial dispute. no easy task. There is still a long way to go for the judiciary Tina, the owner of a flower shop, would pay similar amounts systems in South East Europe to become as efficient as those to enforce a contract in any of the cities of Montenegro in Hong Kong and Luxemburg--the global leaders in con- or Kosovo. In Bosnia and Herzegovina, there are different tract enforcement. schedules and the costs to enforce a contract range among FIGURE 5.3 cities--from 34% of the claim value in Mostar to 41% of the Procedures to enforce a contract in South East Europe claim value in Banja Luka. Number Some would argue that more formal procedures in dis- Brunei 58 of procedures Global worst pute resolution ensure that due process is followed and justice is done. Evidence suggests otherwise. The more complex the 50 Montenegro 49 procedure for resolving disputes, the less likely firms are to report that judges are impartial and court decisions fair.5 In Kosovo 42 40 Albania, Macedonia FYR 39 South East Europe, the number of procedural steps to enforce Bosnia and Herzegovina 38 Croatia 38 a contract varies from 36 in Serbia to 49 in Montenegro Serbia 36 (figure 5.3). Montenegro's performance is similar to the 10 30 economies with the highest number of procedural steps in Ireland 20 Global best Note: The number of procedures is determined by national regulations and therefore is the same within countries. Source: Doing Business database. 18 Doing Business in souTH eAsT euRoPe 2008 What to reform? Notes Introduce or improve case management systems 1. The data for all economies in South East Europe are for Janu- Case management systems monitor cases in the court docket ary 2008. Data for all other economies are for June 2007. to ensure they proceed efficiently from the moment the case 2. World Bank. 2006. Doing Business 2007: How to Reform. Wash- is filed until it is decided. They also prevent parties from ington, D.C.: World Bank Group. shopping for the judge most willing to accept bribes. In 2006, 3. CEELI (Central and East European Initiative). October 2006. Judicial Reform Index for Albania. Washington, D.C.: Ameri- Macedonia, FYR introduced case management software that can Bar Association and CEELI for United States Agency for randomly assigns cases to judges and by July 2007 the judicial International Development. http://www.abanet.org/ceeli council had brought charges of corruption against 10 judges. 4. US Commercial Services. Doing Business in Croatia, 2008. A similar system was implemented in Albania. Now Vlora, Country Commercial Guide for U.S. Companies. http://www. Shkodra and Tirana stand out for fast notification. But case buyusa.gov/croatia/en/27.html management is more than random assignment of judges. It 5. Based on the analysis of the Doing Business 2005 indicators can only be successful if the court data for the entire process with indicators of impartiality of the judiciary from the Eco- are computerized and support functions such as case track- nomic Freedom of the World; Geeta Batra, Daniel Kaufmann and Andrew Stone. 2003. Investment Climate Around the ing, document management, deadline reminders and sched- World: Voices of the Firms from the World Business Survey. uling of hearings are done automatically. Washington, D.C.: World Bank Group. Results are significant at the 5% level, controlling for income per capita. Improve enforcement 6. World Bank. 2003. Enterprise survey 2003, Montenegro: On average, 25% of the time to resolve a commercial dispute Country Profile. Washington, D.C.: World Bank Group. across South East Europe is spent enforcing the judgment. In 2007, several Eastern European economies including Mace- donia, FYR have reformed their enforcement laws. Courts in the Czech Republic can now order financial instutions to check whether the debtor holds an account with them and, if that is the case, to automatically pay the due amount from that account. In the past, creditors themselves had to identify the banks where debtors held an account. In Macedonia, FYR, private bailiffs have started operating, shortening the average time to enforce a judgment in Skopje from 90 to 60 days. 19 Data notes Starting a business Dealing with licenses Registering property Enforcing contracts The indicators presented and analyzed in Doing Business in proprietorships. Third, transactions described in a standardized South East Europe 2008 measure government regulation and case study refer to a specific set of issues and may not represent the protection of property rights and their effect on businesses, the full set of issues a business encounters. Fourth, the measures especially small and medium-size domestic firms. First, the in- of time involve an element of judgment by the expert respondents. dicators document the degree of regulation, such as the number When sources indicate different estimates, the time indicators re- of procedures to start a business or register commercial property. ported in Doing Business in South East Europe 2008 represent the Second, they gauge regulatory outcomes, such as the time and median values of several responses given under the assumptions cost to enforce a contract. Third, they measure the extent of legal of the standardized case. Finally, the methodology assumes that protections of property, for example, the scope of assets that can be the business has full information on what is required and does used as collateral according to secured transactions laws. The data not waste time in completing procedures. In practice, completing for the 22 South East European cities are for January 2008. Data for a procedure may take longer if the business lacks information or is all other economies are for June 2007 and are based on the global unable to follow up promptly. report Doing Business in 2008. Data corrections Methodology Questions on the methodology and challenges to data may be submitted through the "Contact us" function on the Subnational Based on the study of laws and regulations with input and verifica- Doing Business website at http://subnational.doingbusiness.org. tion by more than 200 lawyers, construction experts, accountants, Updated indicators, as well as any revisions of or corrections to the businesspeople and public officials routinely administering or printed data, are posted on the website. advising on legal and regulatory requirements the Doing Business methodology offers several advantages. It uses factual information Economy characteristics about what laws and regulations say and allows for multiple inter- actions with local respondents to clarify potential misinterpreta- Exchange rates tions of questions. Having representative samples of respondents The exchange rates used in this report are: is not an issue, as the texts of the relevant laws and regulations Albania: 1 USD = 98.48 ALL are collected and answers checked for accuracy. The methodol- Bosnia and Herzegovina: 1 USD = 1.56 BAM ogy is inexpensive, so data can be collected in a large sample of Croatia: 1 USD = 5.84 HRK economies--178 published in the global report Doing Business Kosovo: 1 USD = 0.80 EUR in 2008 and the 22 cities in South East Europe for this report. Macedonia, FYR: 1 USD = 48.78 MKD Because the same standard assumptions are applied in the data Montenegro: 1 USD = 0.80 EUR collection, which is transparent and easily replicable, comparisons Serbia: 1 USD = 66.43 RSD and benchmarks are valid across economies and states. And the Gross national income (GNI) per capita data not only highlight the extent of obstacles but also help identify their source, supporting policymakers in designing reform. Doing Business in South East Europe 2008 reports 2006 income per capita as published in the World Bank's World Development Limitations to what is measured Indicators 2007. Income is calculated using the Atlas method The Doing Business methodology has 5 limitations that should (current USD). For cost indicators expressed as a percentage of be considered when interpreting the data. First, the collected data income per capita, 2006 GNI in local currency units is used as the refer to businesses in the selected cities and may not be representa- denominator. tive of regulatory practices in other parts of the measured econo- Population mies. Second, the data often focus on a specific business form--a limited liability company of a specified size--and may not be rep- Doing Business in South East Europe 2008 reports midyear resentative of the regulation on other businesses, for example, sole 2006 population statistics as published in World Development Indicators 2007. 20 Doing Business in souTH eAsT euRoPe 2008 Starting a business Procedures that must be completed in the same building but in different offices are counted as separate procedures. If founders Doing Business in South East Europe 2008 records all procedures have to visit the same office several times for different sequential that are officially required for an entrepreneur to start up and for- procedures, each is counted separately. The founders are assumed mally operate an industrial or commercial business. These include to complete all procedures themselves, without middlemen, facili- obtaining all necessary licenses and permits and completing any tators, accountants or lawyers, unless the use of such a third party required notifications, verifications or inscriptions for the com- is mandated by law. If the services of professionals are required, pany and employees with relevant authorities. procedures conducted by such professionals on behalf of the com- After a study of laws, regulations and publicly available pany are counted separately. information on business entry, a detailed list of procedures is Both pre- and postincorporation procedures that are officially developed, along with the time and cost of complying with each required for an entrepreneur to formally operate a business are procedure under normal circumstances and the paid-in mini- recorded (table 5.1). mum capital requirements. Subsequently, local incorporation Procedures required for official correspondence or transac- lawyers and government officials complete and verify the data. tions with public agencies are also included. For example, if a Information is also collected on the sequence in which pro- company seal or stamp is required on official documents, such as cedures are to be completed and whether procedures may be tax declarations, obtaining the seal or stamp is counted. Similarly, carried out simultaneously. It is assumed that any required infor- if a company must open a bank account before registering for sales mation is readily available and that all agencies involved in the tax or value added tax, this transaction is included as a procedure. start-up process function without corruption. If answers by local Shortcuts are counted only if they fulfill 4 criteria: they are legal, experts differ, inquiries continue until the data are reconciled. they are available to the general public, they are used by the major- To make the data comparable across countries, several assump- ity of companies, and avoiding them causes substantial delays. tions about the business and the procedures are used. Only procedures required of all businesses are covered. Indus- try-specific procedures are excluded. For example, procedures to Assumptions about the business comply with environmental regulations are included only when The business: they apply to all businesses conducting general commercial or · Isalimitedliabilitycompany.Ifthereismorethanone industrial activities. Procedures that the company undergoes to type of limited liability company in the country, the limited connect to electricity, water, gas and waste disposal services are liability form most popular among domestic firms is chosen. not included. Information on the most popular form is obtained from incorporation lawyers or the statistical office. Time · Operatesinthecountry'smostpopulouscity. Time is recorded in calendar days. The measure captures the me- · Is100%domesticallyownedandhas5owners,noneofwhom dian duration that incorporation lawyers indicate is necessary to is a legal entity. complete a procedure with minimum follow-up with government · Hasstart-upcapitalof10timesincomepercapitaattheendof agencies and no extra payments. It is assumed that the minimum 2006, paid in cash. time required for each procedure is 1 day. Although procedures · Performsgeneralindustrialorcommercialactivities,suchas may take place simultaneously, they cannot start on the same the production or sale of products or services to the public. The day (that is, simultaneous procedures start on consecutive days). business does not perform foreign trade activities and does not A procedure is considered completed once the company has handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes. TABLE 5.1 What does starting a business measure? · Leasesthecommercialplantandofficesandisnotaproprietor of real estate. Procedures to legally start and operate a company · Preregistration(nameverification,notarization) · Doesnotqualifyforinvestmentincentivesoranyspecial · Registrationintheeconomy'smostpopulouscity benefits. · Postregistration(socialsecurityregistration,companyseal) · Hasatleast10andupto50employees1monthafterthe Time required to complete each procedure commencement of operations, all of them nationals. · Doesnotincludetimespentgatheringinformation · Eachprocedurestartsonaseparateday · Hasaturnoverofatleast100timesincomepercapita. · Procedurecompletedoncefinaldocumentisreceived · Hasacompanydeed10pageslong. · Nopriorcontactwithofficials Cost required to complete each procedure Procedures · Officialcostsonly,nobribes A procedure is defined as any interaction of the company founder · Noprofessionalfeesunlessservicesrequiredbylaw with external parties (for example, government agencies, lawyers, Paid-in minimum capital · Depositedinabankorwithanotarybeforeregistrationbegins auditors or notaries). Interactions between company founders or company officers and employees are not counted as procedures. Source: Doing Business database. DATA noTes 21 received the final document, such as the company registration certificate or tax number. If a procedure can be accelerated for Dealing with licenses an additional cost, the fastest procedure is chosen. It is assumed Doing Business in South East Europe 2008 records all procedures that the entrepreneur does not waste time and commits to com- required for a business in the construction industry to build a pleting each remaining procedure without delay. The time that standardized warehouse. These procedures include submitting all the entrepreneur spends on gathering information is ignored. It relevant project-specific documents (for example, building plans is assumed that the entrepreneur is aware of all entry regulations and site maps) to the authorities; obtaining all necessary clearances, and their sequence from the beginning but has had no prior licenses, permits and certificates; completing all required notifica- contact with any of the officials. tions; and receiving all necessary inspections. Doing Business also Cost records procedures for obtaining all utility connections. Procedures necessary to register the property so that it can be used as collateral Cost is recorded as a percentage of the country's income per or transferred are also counted. The survey divides the process of capita. It includes all official fees and fees for legal or professional building a warehouse into distinct procedures and calculates the services if such services are required by law. Fees for purchasing time and cost of completing each procedure in practice under nor- and legalizing company books are included if these transactions mal circumstances. are required by law. The company law, the commercial code and Information is collected from experts in construction licens- specific regulations and fee schedules are used as sources for ing, including architects, construction lawyers, construction firms, calculating costs. In the absence of fee schedules, a government utility service providers and public officials who deal with building officer's estimate is taken as an official source. In the absence of a regulations, including approvals and inspections. To make the data government officer's estimate, estimates of incorporation lawyers comparable across countries, several assumptions about the busi- are used. If several incorporation lawyers provide different esti- ness, the warehouse project and the procedures are used. mates, the median reported value is applied. In all cases the cost excludes bribes. Assumptions about the construction company Paid-in minimum capital The business (BuildCo): The paid-in minimum capital requirement reflects the amount that · Isalimitedliabilitycompany. the entrepreneur needs to deposit in a bank or with a notary before · Operatesinthecountry'smostpopulouscity. registration and up to 3 months following incorporation and is · Is100%domesticallyandprivatelyowned. recorded as a percentage of the country's income per capita. The · Has5owners,noneofwhomisalegalentity. amount is typically specified in the commercial code or the com- · Isfullylicensedandinsuredtocarryoutconstructionprojects, pany law. Many countries have a minimum capital requirement such as building warehouses. but allow businesses to pay only a part of it before registration, · Has20buildersandotheremployees,allofthemnationalswith with the rest to be paid after the first year of operation. In Germany the technical expertise and professional experience necessary in June 2007 the minimum capital requirement for limited liability to obtain construction permits and approvals. companies was 25,000, of which at least 12,500 was payable · Hasatleast1employeewhoisalicensedarchitectand before registration. The paid-in minimum capital recorded for registered with the local association of architects. Germany is therefore 12,500, or 42.8% of income per capita. · Haspaidalltaxesandtakenoutallnecessaryinsurance applicable to its general business activity (for example, This methodology was developed in Djankov and others (2002) accidental insurance for construction workers and third-person and is adopted here with minor changes. liability insurance). · Ownsthelandonwhichthewarehouseisbuilt. Assumptions about the warehouse project The warehouse: · Has2stories,bothaboveground,withatotalsurfaceof approximately 14,000 square feet (1,300.6 square meters). Each floor is 9 feet, 10 inches (3 meters) high. · Hasroadaccessandislocatedintheperiurbanareaofthe country's most populous city (that is, is on the fringes of the city but still within its official limits). It is not located in a special economic or industrial zone. · Islocatedonalandplotof10,000squarefeet(929square meters) that is 100% owned by BuildCo and is registered in the cadastre and land registry. · Isanewconstruction(nopreviousconstructionontheland). 22 Doing Business in souTH eAsT euRoPe 2008 · Hascompletearchitecturalandtechnicalplanspreparedbya licensed architect. Registering property · Willbeconnectedtothefollowingutilities--electricity,water, sewerage (sewage system, septic tank or their equivalent) and Doing Business in South East Europe 2008 records the full one land phone line. The connection to each utility network sequence of procedures necessary when a business purchases will be 32 feet, 10 inches (10 meters) long. land and a building to transfer the property title from another · Willrequirea10-amperepowerconnectionand140kilowatts business so that the buyer can use the property for expanding its of electricity. business, as collateral in taking new loans or, if necessary, to sell · Willrequireupto100cubicmetersofwaterdaily. to another business. Every procedure required by law or necessary · Willbeusedforgeneralstorageactivities,suchasstorageof in practice is included, whether it is the responsibility of the seller books or stationery. The warehouse will not be used for any or the buyer or must be completed by a third party on their behalf. goods requiring special conditions, such as food, chemicals or Local property lawyers, notaries and property registries provide pharmaceuticals. information on procedures as well as the time and cost to complete · Willincludealltechnicalequipmentrequiredtomakethe each of them. warehouse fully operational. To make the data comparable across countries, several assump- · Willtake30weekstoconstruct(excludingalldelaysdueto tions about the parties to the transaction, the property and the administrative and regulatory requirements). procedures are used. Procedures Assumptions about the parties A procedure is any interaction of the company's employees or The parties (buyer and seller): managers with external parties, including government agencies, · Arelimitedliabilitycompanies. notaries, the land registry, the cadastre, utility companies, public · Arelocatedintheperiurbanareaofthecountry'smost and private inspectors and technical experts apart from in-house populous city. architects and engineers. Interactions between company employ- · Are100%domesticallyandprivatelyowned. ees, such as development of the warehouse plans and inspections · Have50employeeseach,allofwhomarenationals. conducted by employees, are not counted as procedures. Proce- dures that the company undergoes to connect to electricity, water, · Performgeneralcommercialactivities. sewerage and phone services are included. All procedures that Assumptions about the property are legally or in practice required for building a warehouse are counted, even if they may be avoided in exceptional cases. The property: · Hasavalueof50timesincomepercapita.Thesalepriceequals Time the value. Time is recorded in calendar days. The measure captures the me- · Isfullyownedbytheseller. dian duration that local experts indicate is necessary to complete · Hasnomortgagesattachedandhasbeenunderthesame a procedure in practice. It is assumed that the minimum time ownership for the past 10 years. required for each procedure is 1 day. If a procedure can be acceler- · Isregisteredinthelandregistryorcadastre,orboth,andisfree ated legally for an additional cost, the fastest procedure is chosen. of title disputes. It is assumed that BuildCo does not waste time and commits to · Islocatedinaperiurbancommercialzone,andnorezoningis completing each remaining procedure without delay. The time required. that BuildCo spends on gathering information is ignored. It is as- · Consistsoflandandabuilding.Thelandareais6,000square sumed that BuildCo is aware of all building requirements and their feet (557.4 square meters). A 2-story warehouse of 10,000 sequence from the beginning. square feet (929 square meters) is located on the land. The warehouse is 10 years old, is in good condition and complies Cost with all safety standards, building codes and other legal requirements. The property of land and building will be Cost is recorded as a percentage of the country's income per capita. transferred in its entirety. Only official costs are recorded. All the fees associated with com- · Willnotbesubjecttorenovationsoradditionalbuilding pleting the procedures to legally build a warehouse are recorded, following the purchase. including those associated with obtaining land use approvals and · Hasnotrees,naturalwatersources,naturalreservesor preconstruction design clearances; receiving inspections before, historical monuments of any kind. during and after construction; getting utility connections; and · Willnotbeusedforspecialpurposes,andnospecialpermits, registering the warehouse property. Nonrecurring taxes required such as for residential use, industrial plants, waste storage or for the completion of the warehouse project also are recorded. The certain types of agricultural activities, are required. building code, information from local experts and specific regula- · Hasnooccupants(legalorillegal),andnootherpartyholdsa tions and fee schedules are used as sources for costs. If several legal interest in it. local partners provide different estimates, the median reported value is used. DATA noTes 23 TABLE 5.2 Enforcing contracts What does registering property measure? Procedures to legally transfer title on real property Indicators on enforcing contracts measure the efficiency of the · Preregistration(checkingforliens,notarizingsalesagreement) judicial system in resolving a commercial dispute. The data are · Registrationintheeconomy'smostpopulouscity · Postregistration(payingtaxes,filingtitlewithmunicipality) built by following the step-by-step evolution of a commercial sale dispute before local courts. The data are collected through study of Time required to complete each procedure · Doesnotincludetimespentgatheringinformation the codes of civil procedure and other court regulations as well as · Eachprocedurestartsonaseparateday surveys completed by local litigation lawyers (and, in a quarter of · Procedurecompletedoncefinaldocumentisreceived the countries, by judges as well). · Nopriorcontactwithofficials Cost required to complete each procedure Assumptions about the case · Officialcostsonly,nobribes · Novalueaddedorcapitalgainstaxesincluded · Thevalueoftheclaimequals200%ofthecountry'sincomeper Source: Doing Business database. capita. · Thedisputeconcernsalawfultransactionbetween2businesses Procedures (Seller and Buyer), located in the country's most populous city. Seller sells goods worth 200% of the country's income per A procedure is defined as any interaction of the buyer or the seller, capita to Buyer. After Seller delivers the goods to Buyer, Buyer their agents (if an agent is legally or in practice required) or the does not pay for the goods on the grounds that the delivered property with external parties, including government agencies, goods were not of adequate quality. inspectors, notaries and lawyers. Interactions between company · Seller(theplaintiff)suesBuyer(thedefendant)torecover officers and employees are not considered. All procedures that are the amount under the sales agreement (that is, 200% of the legally or in practice required for registering property are recorded, country's income per capita). Buyer opposes Seller's claim, even if they may be avoided in exceptional cases. It is assumed that saying that the quality of the goods is not adequate. The claim the buyer follows the fastest legal option available and used by the is disputed on the merits. majority of property owners. Although the buyer may use lawyers · Acourtinthecountry'smostpopulouscitywithjurisdiction or other professionals where necessary in the registration process, over commercial cases worth 200% of income per capita it is assumed that it does not employ an outside facilitator in the decides the dispute. registration process unless legally or in practice required to do so · SellerattachesBuyer'sgoodspriortoobtainingajudgment (table 5.2). because Seller fears that Buyer may become insolvent during the lawsuit. Time · Expertopinionsaregivenonthequalityofthedelivered goods. If it is standard practice in the country for parties to Time is recorded in calendar days. The measure captures the me- call witnesses or expert witnesses to give an opinion on the dian duration that property lawyers, notaries or registry officials quality of the goods, the parties each call one witness or expert indicate is necessary to complete a procedure. It is assumed that witness. If it is standard practice for the judge to appoint an the minimum time required for each procedure is 1 day. Although independent expert to give an expert opinion on the quality procedures may take place simultaneously, they cannot start on of the goods, the judge does so. In this case the judge does not the same day. It is assumed that the buyer does not waste time and allow opposing expert testimony. commits to completing each remaining procedure without delay. · Thejudgmentis100%infavorofSeller:thejudgedecidesthat If a procedure can be accelerated for an additional cost, the fast- the goods are of adequate quality and that Buyer must pay the est legal procedure available and used by the majority of property agreed price. owners is chosen. If procedures can be undertaken simultaneously, · Buyerdoesnotappealthejudgment.Thejudgmentbecomes it is assumed that they are. It is assumed that the parties involved final. are aware of all regulations and their sequence from the beginning. · Sellertakesallrequiredstepsforpromptenforcementofthe Time spent on gathering information is not considered. judgment. The money is successfully collected through a public sale of Buyer's movable assets (for example, office equipment). Cost Procedures Cost is recorded as a percentage of the property value, assumed A procedure is defined as any interaction between the parties, or to be equivalent to 50 times income per capita. Only official costs between them and the judge or court officer. This includes steps to required by law are recorded, including fees, transfer taxes, stamp file the case, steps for trial and judgment and steps necessary to duties and any other payment to the property registry, notaries, enforce the judgment. This year the survey allowed respondents public agencies or lawyers. Other taxes, such as capital gains tax to record procedures that exist in civil law but not common law or value added tax, are excluded from the cost measure. Both costs jurisdictions, and vice versa. For example, the judge can appoint borne by the buyer and those borne by the seller are included. If an independent expert in civil law countries whereas both parties cost estimates differ among sources, the median value is used. in common law countries send a list of their expert witnesses to the court. To indicate the overall efficiency of court procedures, 24 Doing Business in souTH eAsT euRoPe 2008 1 procedure is now subtracted for countries that have specialized commercial courts and 1 procedure for countries that allow elec- Ease of doing business tronic filing of court cases. The ease of doing business index ranks the selected cities from 1 to Time 22. The index is calculated as the ranking on the simple average of city percentile rankings on each of the 4 topics covered in Doing Time is recorded in calendar days, counted from the moment the Business in South East Europe 2008. The ranking on each topic plaintiff files the lawsuit in court until payment. This includes both is the simple average of the percentile rankings on its component the days when actions take place and the waiting periods between. indicators. The respondents make separate estimates of the average duration of The ease of doing business index is limited in scope. It does not different stages of dispute resolution: the completion of service of account for an economy's proximity to large markets, the quality process (time to file the case), the issuance of judgment (time for of its infrastructure (other than services related to obtaining util- the trial and obtaining the judgment) and the moment of payment ity connections), the security of property from theft and looting, (time for enforcement). macroeconomic conditions or the strength of underlying institu- Cost tions. There remains a large unfinished agenda for research into what regulation constitutes binding constraints, what package of Cost is recorded as a percentage of the claim, assumed to be reforms is most effective and how these issues are shaped by the equivalent to 200% of income per capita. Only official costs re- economy context. The Doing Business indicators provide a new em- quired by law are recorded, including court and enforcement costs pirical data set that may improve understanding of these issues. and average attorney fees where the use of attorneys is mandatory or common. This methodology was developed in Djankov and others (2003) and is adopted here with minor changes. 25 Doing Business indicators for South East Europe 26 Doing Business in souTH eAsT euRoPe 2008 Albania Bosnia and Herzegovina Shkodra Tirana Vlora Banja Luka Mostar Sarajevo Ease of doing business (south east europe rank) 3 11 6 20 22 21 Starting a buSineSS (rank) 3 4 5 20 22 21 Procedures (number) 6 7 6 11 12 12 Time (days) 7 8 7 51 61 54 Cost (% of income per capita) 25.7 23.9 33.7 33.0 40.9 30.1 Minimum capital (% of income per capita) 0.03 0.03 0.03 43.05 43.05 43.05 Dealing with licenSeS (rank) 7 17 9 2 10 8 Procedures (number) 21 24 21 16 16 16 Time (days) 202 332 215 306 535 467 Cost (% of income per capita) 470.9 461.0 470.9 750.2 875.3 790.3 regiStering property (rank) 4 10 9 20 22 21 Procedures (number) 6 6 6 11 8 7 Time (days) 24 42 37 190 145 331 Cost (% of the property value) 3.5 3.5 3.5 3.4 5.5 5.0 enforcing contractS (rank) 15 14 12 22 19 18 Procedures (number) 39 39 39 38 38 38 Time (days) 381 390 373 1,480 1,390 595 Cost (% of debt) 35.1 31.8 35.1 41.1 34.0 38.4 Macedonia, FYR Montenegro Bitola Skopje Niksic Pljevlje Podgorica Ease of doing business (south east europe rank) 1 9 17 4 18 Starting a buSineSS (rank) 1 2 8 6 7 Procedures (number) 8 8 15 14 15 Time (days) 10 12 20 16 20 Cost (% of income per capita) 3.9 4.6 6.5 3.8 6.2 Minimum capital (% of income per capita) 0.00 0.00 0.03 0.03 0.03 Dealing with licenSeS (rank) 15 18 12 6 14 Procedures (number) 23 21 20 20 20 Time (days) 94 198 192 190 197 Cost (% of income per capita) 1,195.7 2,067.8 1,293.3 1,168.7 1,615.9 regiStering property (rank) 1 16 14 12 19 Procedures (number) 6 6 7 7 8 Time (days) 22 98 36 17 86 Cost (% of the property value) 3.2 3.5 3.3 3.3 3.4 enforcing contractS (rank) 3 12 17 9 16 Procedures (number) 39 39 49 49 49 Time (days) 345 385 545 345 545 Cost (% of debt) 21.1 33.1 26.4 25.7 25.7 Doing Business inDiCAToRs 27 Croatia Kosovo Osijek Sibenik Varazdin Zagreb Pristina Prizren Ease of doing business (south east europe rank) 7 16 15 19 12 8 Starting a buSineSS (rank) 17 16 19 17 15 14 Procedures (number) 9 9 9 8 12 12 Time (days) 34 31 39 40 22 18 Cost (% of income per capita) 11.7 11.7 11.7 11.7 78.0 79.4 Minimum capital (% of income per capita) 18.36 18.36 18.36 18.36 0.00 0.00 Dealing with licenSeS (rank) 4 5 11 22 1 3 Procedures (number) 13 17 17 24 19 18 Time (days) 295 252 323 390 188 151 Cost (% of income per capita) 1,089.8 1,090.2 1,090.2 1,224.6 1,005.0 1,191.1 regiStering property (rank) 15 17 13 18 11 5 Procedures (number) 6 6 6 5 7 7 Time (days) 63 153 41 174 38 36 Cost (% of the property value) 5.0 5.0 5.0 5.0 0.9 0.8 enforcing contractS (rank) 6 8 7 5 20 20 Procedures (number) 38 38 38 38 42 42 Time (days) 525 1,125 575 561 360 360 Cost (% of debt) 24.7 22.9 24.2 13.8 47.5 47.5 Serbia Belgrade Krusevac Uzice Vranje Zrenjanin Ease of doing business (south east europe rank) 13 5 10 14 2 Starting a buSineSS (rank) 11 10 9 11 13 Procedures (number) 11 11 11 11 11 Time (days) 23 29 25 28 37 Cost (% of income per capita) 8.9 8.6 8.8 8.8 8.6 Minimum capital (% of income per capita) 8.02 8.02 8.02 8.02 8.02 Dealing with licenSeS (rank) 16 19 21 20 13 Procedures (number) 20 20 17 20 20 Time (days) 204 304 414 253 183 Cost (% of income per capita) 2,713.1 2,593.1 2,818.3 2,796.0 2,613.3 regiStering property (rank) 7 2 7 3 6 Procedures (number) 6 6 6 6 6 Time (days) 111 74 104 84 100 Cost (% of the property value) 2.8 2.9 2.9 2.9 2.9 enforcing contractS (rank) 10 2 4 11 1 Procedures (number) 36 36 36 36 36 Time (days) 635 355 390 650 300 Cost (% of debt) 28.4 27.6 27.0 28.4 25.7 28 List of procedures Starting a business Dealing with licenses Registering property LIST OF PROCEDURES · STARTING A BUSINESS 29 STARTING A BUSINESS LIST OF PROcEdURES Vlora, Albania Starting a business Standard company legal form: Limited Liability Company (LLC) Minimum capital requirement: ALL 100 Shkodra, Albania Date as of: January 2008 Standard company legal form: Limited Liability Company (LLC) Procedure 1. Search and reserve a unique company name Minimum capital requirement: ALL 100 Time: 1 day Date as of: January 2008 Cost: ALL 100 Procedure 1. Search and reserve a unique company name Comments: The name can be searched online at http://www.qkr.gov.al/nrc/Forms_ for_name_reservation.aspx Time: 1 day Cost: ALL 100 Procedure 2. Notarize the incorporation documents Comments: The name can be searched online at http://www.qkr.gov.al/nrc/Forms_ Time: 1 day for_name_reservation.aspx Cost: ALL 8,000 (Notarization of Articles of Incorporation is ALL 2,500, Notarization of Statute is ALL 2,500 and an eventual special proxy to an attorney is ALL 3,000) Procedure 2. Notarize the incorporation documents Comments: The above mentioned professional fees are mostly charged in Euros. Time: 1 day Cost: ALL 8,000 (Notarization of Articles of Incorporation is ALL 2,500, Notarization of Procedure 3. Request and obtain the registration certification Statute is ALL 2,500 and an eventual special proxy to an attorney is ALL 3,000) and unique business identification number with the National Comments: The above mentioned professional fees are mostly charged in Euros. Registration Center, NRC (Qendra Kombëtare për Regjistrim, QRK) Time: 2 days Procedure 3. Request and obtain the registration certification and unique business identification number with the National Cost: ALL 100 Registration Center, NRC (Qendra Kombëtare për Regjistrim, QRK) Comments: A new law on business registration reform was enacted by the Parlia- ment on May 3, 2007. Law 9723 On the National Registration Center establishes the Time: 2 days National Registration Center (NRC) as a new central public institution. The newly Cost: ALL 100 established NRC started operation on September 1st, 2007. According to Law Comments: A new law on business registration reform was enacted by the Parlia- 9723, the NRC conducts a simultaneous registration for the Commercial Registry, ment on May 3, 2007. Law 9723 On the National Registration Center establishes the tax authorities, Public Institute of Social Security and Labor Inspectorate Office. The National Registration Center (NRC) as a new central public institution. The newly office represents a one-stop shop and is intended to complete the registration within established NRC started operation on September 1st, 2007. According to Law 9723, 24 hours. The new company obtains a certificate which contains a unique business the NRC conducts a simultaneous registration for the Commercial Registry, tax identification number. The first registration center was opened in Tirana. Initially, authorities, Public Institute of Social Security and Labor Inspectorate Office. The due to a high demand for registration, the company was required to wait in line and office represents a one-stop shop and is intended to complete the registration within obtain a number and estimated date after which it could submit the application for 24 hours. The new company obtains a certificate which contains a unique business registration. Later, the number of windows increased and the demand lessened. Still, identification number. The first registration center was opened in Tirana. Initially, in Tirana a number is taken first, and then a party needs to stand in line to submit the due to a high demand for registration, the company was required to wait in line and application. By the end of 2007, other centers were opened in Shkodra, Gjirokastra, obtain a number and estimated date after which it could submit the application Fier and Korça. The plan is to open branches throughout Albania. Businesses in Vlora for registration. The number of windows increased and the demand lessened since can choose to register at any center, but they prefer Fier due to its proximity. then. Still, in Tirana, a number is taken first, and then a party needs to stand in line to submit the application. By the end of 2007, other centers were opened in Shkodra, Procedure 4. Register for membership with the local Chamber of Gjirokastra, Fier and Korça. The plan is to open branches throughout Albania. Commerce and Industry Time: 1 day Procedure 4. Register for membership with the local Chamber of Cost: ALL 10,000 Commerce and Industry Comments: The registration fee in Vlora is 10,000 ALL for the first year of activity. Time: 1 day Thereafter, the following fee rate schedule applies: Cost: ALL 20,000 a. For a yearly turnover of up to ALL 5 million (M), the fee is ALL 10,000; Comments: The registration fee in Shkodra is ALL 20,000 for the first year of activity b. For a turnover between ALL 5M and 10 M, the fee is ALL 20,000; and the fee is applied proportionately: i.e. if the company registers in October, then c. For a turnover between ALL 10M and 20M, the fee is ALL 25,000; it pays the fee only for three months, (20,000/12)X3 = 5,000. Thereafter, the fee is 1% of Net Profit, but not less than ALL 20,000 and not more than ALL 120,000. d. For a turnover between ALL 20M and 50M, the fee is ALL 30,000; e. For a turnover between ALL 50M and 100M, the fee is ALL 35,000; Procedure 5. Registration with the Municipality Bureau of f. For a turnover between ALL 100M and 300M, the fee is ALL 40,000; Internal Revenue g. For a turnover between 300M and 500M, the fee is ALL 50,000; and Time: 1 day h.For a turnover above ALL 500M, the fee is ALL 100,000. Cost: ALL 43,800 (environmental tariff of ALL 15,000 for commercial activities; registration fee of ALL 20,000; billboard fee of ALL 800 and advertisement sign fee Procedure 5. Registration with the Municipality Bureau of of ALL 8,000) Internal Revenue Comments: According to the decision of the Municipality Assembly of Shkodra, Time: 1 day the following yearly fees need to be paid in order to obtain the registration from Cost: ALL 77,000 (environmental tariff of ALL 50,000 due to the case assumption; the municipality: an environmental tariff that varies from ALL 5,000 to ALL 60,000; a registration fee of ALL 10,000; billboard fee of ALL 2,000; advertisement sign fee of one-time registration tax of ALL 20,000; a billboard fee of ALL 800; an advertisement sign fee of ALL 8,000/m2 for signs placed by companies and ALL 3,000/m2 for signs ALL 10,000 and green fee of ALL 5,000) placed by businesspersons themselves; and a property tax of ALL150/m2 for com- Comments: According to Decision No. 9 of 04/30/2007 of the Municipality Assembly mercial and service businesses, ALL 40/m2 for production units and ALL 30/m2 for of Vlora, the following yearly fees apply to an LLC and need to be paid in order to non-governmental organizations (already paid due to our case assumption). obtain the registration from the municipality: an environmental fee of ALL 30,000 for companies with a yearly turnover up to ALL 20 million and ALL 50,000 for companies Procedure 6. Make a company seal with a yearly turnover above ALL 20 million; a registration fee of ALL 10,000; a billboard fee of ALL 2,000 (in Albanian) and ALL 5,000 (in a foreign language); an Time: 1 day advertisement sign fee (a temporary fee) of ALL 5,000/m2 for a standard sign and Cost: ALL 3,000 ALL 10,000/m2 for an electronic sign; a lighting service and green fee of ALL 5,000 Comments: The fee can vary from ALL 2,000 to 4,000. and a property tax of ALL 150/m2 (already paid due to our case assumption). 30 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure 6. Make a company seal the inspection at the business premises of the company and issue the Approval to Time: 1 day Perform Business. For example, if the scope of business of the company is trade, the Cost: ALL 3,000 trade inspector and employment inspector shall perform the inspection. To obtain this permit, it is necessary to submit the following documents: copy of the resolution Comments: The fee can vary from ALL 2,000 to 4,000. on the intended activities, copy of the court registration, evidence of possession of the business premises, appropriate attestation for electric power issued by an autho- rized institution (the landlord should have obtained this document), and copy of the STARTING A BUSINESS registration forms for employees. If the company produces a product it is required to Banja Luka, Bosnia and Herzegovina submit an attestation for the machines. Standard company legal form: Limited Liability Company (LLC) Minimum capital requirement: BAM 2,000 Procedure 7. Apply for company identification number with the competent tax office Date as of: January 2008 Time: 5 days Procedure 1. Stipulate the founding act and have it notarized in Cost: No cost (included in the previous procedure) the municipality office Comments: When filing the application for obtaining simultaneously the statisti- Time: 1 day cal and taxpayer number with the competent tax authority (in accordance with Cost: BAM 55 (court fee) Regulations on Obtaining Identification Numbers), the newly incorporated company shall submit the following documents: application form, photocopy of the court Procedure 2. Obtain a statement from commercial bank that full resolution (registration) and contract on lease of business premises, resolution of the amount of the capital has been paid in; pay the registration fee competent municipality on the intended activities (this resolution shall confirm that to the budget account of the municipal court certain activities may be exercised at a certain address) and utilization permit (issued by canton ministry of commerce). The competent tax office shall also nominate the Time: 1 day committee (for company inspection) which shall confirm that the company exists Cost: No cost at the specified address and, based upon the report of this committee, the taxpayer and statistical number shall be obtained. Procedure 3. Registration with the municipal court Time: 20 days Procedure 8. Open a company account with a commercial bank Cost: BAM 1,013 (BAM 950 for Court Registration and BAM 63 for the advertisement) Time: 1 day Comments: The municipal court deals with a high number of cases. The fees are Cost: No cost BAM 950 for court registration and BAM 4.5 for every line in the advertisement (as- suming around 14 lines X BAM 4.5 per line). By law, a number of standard forms must Procedure 9. Enroll the employees in pension insurance with be completed. These forms may be purchased at a stationery shop or at the court (for Pension Insurance Institute (Zavod za Penziono Osiguranje) BAM 15), to be prepared according to the regulations on registering legal entities in Time: 1 day the Court Register. After the court registers the new company, the court informs the Cost: BAM 1 (application form fee) Official Gazette to announce the prepared notice. Companies are automatically reg- istered for membership with the Chambers of Economy at the state, entity, canton Comments: The following documentation should be submitted: copy of the and regional levels. Since 2004, membership with the Chamber of Economy of the concluded employment contract, copy of the company registration set at the Court Federation of Bosnia and Herzegovina and the Chamber of Economy of the Republic Register of Companies, form M2 (obrazac M2), and employees work booklet. of Srpska is voluntary. The fees are as follows: Procedure 10. Enroll the employees in health insurance with 1. State level: For the membership with the Foreign Trade Chamber of Bosnia and Herzegovina, the company may choose one of two options: Health Insurance Institute (Zavod za zdravstveno osiguranje) a. Fee of 1% of the declared customs value of imported or exported goods and Time: 1 day services; Cost: BAM 1 (application form fee) b. Fee of 2% of the monthly sum of paid salaries; Comments: For health insurance, it is necessary to submit: application for pension 2. Entity level: For the membership fee with the Chamber of Commerce of Federation insurance, application form for health insurance (obrazac ZO1), identification card of of Bosnia and Herzegovina, the company may choose one of two options: employee and health booklet. a. Fee of 1.7% of the company's gross paid salaries for all employees; or Procedure 11. Adopt and publish a rule book on matters of b. Fee based on the number of employees (e.g., BAM 150 for 31­50 employees); salary, work organization, discipline and other employee 3. Cantonal (for Federation of Bosnia and Herzegovina) and regional (for the Republic regulations of Srpska) level: For the membership fee with the Chamber of Economy, the company pays 3% of its gross income. Time: 1 day 4. At the Brcko District level, the fee is determined by the Chamber of Economy. Cost: No cost Comments: BAM 250 if done by a lawyer. Procedure 4. Buy a company stamp Time: 1 day STARTING A BUSINESS Cost: BAM 40 Mostar, Bosnia and Herzegovina Comments: The stamp costs between BAM 35 and 45. Standard company legal form: Limited Liability Company (LLC) Procedure 5. Application for resolution on intended activities to Minimum capital requirement: BAM 2,000 the competent municipality Date as of: January 2008 Time: 4 days Procedure 1. Stipulate the founding act and have it notarized in Cost: BAM 201 (application fee) the municipality office Procedure 6. Application for utilization permit to the Ministry of Time: 2 days Commerce Cost: BAM 55 (court fee) Time: 15 days Procedure 2. Obtain a statement from commercial bank that full Cost: BAM 220 amount of the capital has been paid in; pay the registration fee Comments: The application should be submitted to the Banja Luka Commercial to the budget account of the municipal court Department (all the inspections are centralized in one place) and depending on the Time: 1 day scope of business of the company the relevant inspector or inspectors will perform Cost: BAM 600 LIST OF PROCEDURES · STARTING A BUSINESS 31 Procedure 3*. Obtain a statement from tax authorities that the certain activities may be exercised at a certain address) and utilization permit (issued founder/s have no tax debts by canton ministry of commerce). The competent tax office shall also nominate the Time: 1 day committee (for company inspection) which shall confirm that the company exists at the specified address and, based upon the report of this committee, the taxpayer Cost: No cost and statistical number shall be obtained. Procedure 4. Registration with the municipal court Procedure 9. Open a company account with a commercial bank Time: 21 days Time: 1 day Cost: BAM 555 (BAM 405 is the registration fee and BAM 150 is the publishing fee) Cost: No cost Comments: The municipal court deals with a high number of cases. The fees are BAM 950 for court registration and BAM 4.5 for every line in the advertisement (as- Procedure 10. Enroll the employees in pension insurance with suming around 14 lines X BAM 4.5 per line). By law, a number of standard forms must Pension Insurance Institute (Zavod za Penziono Osiguranje) be completed. These forms may be purchased at a stationery shop or at the court (for BAM 15), to be prepared according to the regulations on registering legal entities in Time: 1 day the Court Register. After the court registers the new company, the court informs the Cost: BAM 1 (application form fee) Official Gazette to announce the prepared notice. Companies are automatically reg- Comments: The following documentation should be submitted: copy of the istered for membership with the Chambers of Economy at the state, entity, canton concluded employment contract, copy of the company registration set at the Court and regional levels. Since 2004, membership with the Chamber of Economy of the Register of Companies, form M2 (obrazac M2), and employees work booklet. Federation of Bosnia and Herzegovina and the Chamber of Economy of the Republic of Srpska is voluntary. The fees are as follows: Procedure 11. Enroll the employees in health insurance with 1. State level: For the membership with the Foreign Trade Chamber of Bosnia and Health Insurance Institute (Zavod za Zdravstveno Osiguranje) Herzegovina, the company may choose one of two options: Time: 1 day a. Fee of 1% of the declared customs value of imported or exported goods and Cost: BAM 1 (application form fee) services; Comments: For health insurance, it is necessary to submit: application for pension b. Fee of 2% of the monthly sum of paid salaries; insurance, application form for health insurance (obrazac ZO1), identification card of 2. Entity level: For the membership fee with the Chamber of Commerce of Federation employee and health booklet. of Bosnia and Herzegovina, the company may choose one of two options: a. Fee of 1.7% of the company's gross paid salaries for all employees; or Procedure 12. Adopt and publish a rule book on matters of b. Fee based on the number of employees (e.g., BAM 150 for 31­50 employees); salary, work organization, discipline and other employee 3. Cantonal (for Federation of Bosnia and Herzegovina) and regional (for the Republic regulations of Srpska) level: For the membership fee with the Chamber of Economy, the Time: 1 day company pays 3% of its gross income. Cost: No cost 4. At the Brcko District level, the fee is determined by the Chamber of Economy. Comments: BAM 250 if done by a lawyer. Procedure 5. Buy a company stamp * This procedure can be completed simultaneously with previous procedures Time: 1 day Cost: BAM 40 STARTING A BUSINESS Comments: The stamp costs between BAM 35 and 45. Osijek, Croatia Procedure 6. Application for resolution on intended activities to Standard company legal form: Limited Liability Company (LLC) the competent municipality Minimum capital requirement: HRK 10,000 Date as of: January 2008 Time: 1 day Cost: BAM 500 (application fee) Procedure 1. Visit single access point HITRO at FINA (financial agency) Procedure 7. Application for utilization permit to the Ministry of Time: 1 day Commerce Cost: No cost Time: 15 days Comments: The procedure is as follows: Cost: BAM 150 a. The employees of FINA check whether the name the founder selected is available; Comments: The application should be submitted to the Mostar Commercial Depart- b. The employees of FINA provide the prospective founder with the required infor- ment (all the inspections are centralized at one place) and, depending on the scope mation, forms and payment slips; of business of the company, the relevant inspector or inspectors will perform the control at the business premises of the company and issue the Approval to Perform c. The founder deposits the initial capital (min HRK 10,000), and pays court fees Business. For example, if the scope of business of the company is trade, the trade (HRK 400), publication fee (HRK 900), State Office for Statistics (Drzavni Zavod za inspector and employment inspector shall perform the control. To obtain this permit, Statistiku) fees (HRK 55) (included in procedures 3 and 4); and it is necessary to submit the following documents: copy of the resolution on the d. The founder provides the employees of FINA with information on the main busi- intended activities, copy of the court registration, evidence of possession of the ness activity for the purpose of registering the company with the State Office for business premises, appropriate attestation for electric power issued by an authorized Statistics (Drzavni Zavod za Statistiku). institution (the landlord should have obtained this document) and copy of the registration forms for employees. If the company produces a product it is required to Procedure 2. Notarize memorandum of association (notary office) submit an attestation for the machines. Time: 1 day Cost: HRK 4,000 Procedure 8. Apply for the company identification number with the competent tax office Comments: The Deed of Incorporation and the Articles of Association of the prospective company, the Application to the Court Registry, and the Director's Time: 15 days Statement on Acceptance of the Appointment can be drafted by the notary or by Cost: No cost (included in the previous procedure) the one-stop shop (HITRO) personnel. However, if done by HITRO, the documents Comments: When filing the application for obtaining simultaneously the statisti- must be notarized by the notary. The cost depends on the number of founders and cal and taxpayer number with the competent tax authority (in accordance with the founding capital. At the notary the Deed of Incorporation/Articles of Association Regulations on Obtaining Identification Numbers), the newly incorporated company of the Prospective Company cost HRK 3,150, Application for the Court Registry costs shall submit the following documents: application form, photocopy of the court HRK 220, Statement on Acceptance of the Appointment as Director costs HRK 160 resolution (registration) and contract on lease of business premises, resolution of the and value added tax. On other documents, the notary verifies the signatures for HRK competent municipality on the intended activities (this resolution shall confirm that 46.60 per signature. 32 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure 3. Deposit incorporation documents at FINA for Procedure 8*. Obtain municipal certificate that environment and registration at the commercial court workplace safety laws are observed (municipal office- Zupanijski Time: 8 days Ured) Cost: HRK 1,300 (HRK 400 is the court fee + HRK 900 is the publication fee) Time: 20 days Comments: All required incorporation documents are submitted to the employees Cost: HRK 670 (the cost includes HRK 70 for revenue stamp + HRK 350 official fee + of FINA who submit them to the competent commercial court. This procedure can HRK 200 to 300 depending on company's type of business activity) also be done directly at the commercial court. The commercial court registers the company with the Court Register in accordance with the Companies Act (Zakon Procedure 9*. Register with Croatian Pension Insurance Fund o trgovackim drustvima). Registration is done based on the application form and (Hrvatski Zavod za Mirovinsko Osiguranje, HZMO) or FINA documents required by law to be submitted. If all the conditions prescribed by the Time: 1 day law are fulfilled, the court is obliged to register the company. Before the company is entered into the Register, it may operate as"provisional company,"upon adoption of Cost: No cost the Memorandum of Association. The company automatically becomes a member of Comments: The company must register with the Croatian Pension Insurance Fund the Chamber of Commerce at registration. In April 2005, by amending the Court Reg- within 15 days of incorporation, and must also register their employees within 15 ister Act, the documentation requirements were reduced. Three different documents days from the date of employment agreements. The procedure may be completed at are no longer required; namely, the founders of the company do not have to give a the competent HZMO office or the HITRO.HR centers. Electronic filing of the applica- statement related to previous unsettled debts. It is also not necessary to submit a tion for registration with the HZMO has been available since May 2006. Certificate of the Tax Office and Health and Pensions Insurance Funds in that respect. The company needs to register with HZMO as a contributions payer. The company The court forwards the registration data to the Official Gazette (Narodne Novine) also needs to register its employees within 15 days of the date of the execution of of the Republic of Croatia and any daily newspaper. According to the changes in the employment agreements. No fees are required. Registration can be completed the Company Law (effective as of 01 January 2004), it's mandatory only to have the within one day, if all required documents are submitted. The procedure may be registration data published in the Official Gazette, but the company may choose to completed at the competent HZMO office or at HITRO.HR centers. The following publish the incorporation of the company in Vjesnik or another daily newspaper with documents should be submitted: decision about the registration into the Court a fee of about HRK 900. Registry, notice of classification from the National Institute for Statistics, application In April 2005, by amending the Court Register Act (Zakon o izmjenama i dopunama to the Croatian Pension Insurance Fund, proof of residence, and work contracts. All Zakona o sudskom registru, Official Gazette 54/05), a statutory time limit of 15 days persons employed for the first time and under 40 years or age are obliged to register for deciding on any company registration, including registration of incorporation in into the Second Pillar of retirement insurance. A person has to choose the obligatory the Court Registry was introduced. Furthermore, the amended act also introduced a pension fund within 3 months following the starting date of employment. If the statutory term of 8 days for amending and completing documents, after which the fund is not chosen upon the expiration of that period, REGOS (The Central Register court invites the company to execute any amendment or confirm registration. The of the Insured) itself chooses the obligatory pension fund for the person. All persons entrepreneur is informed by the Commercial Court of the decision and can return to employed for the first time and between 40 and 50 years of age can, if so desiring, HITRO to complete subsequent formalities. register into the Second Pillar of retirement insurance. A person has to choose the obligatory pension fund within 6 months following the starting date of employment. Procedure 4. Order official seal at a specialized shop If the fund is not chosen upon the expiration of that period, a person permanently loses the right to register into the Second Pillar of retirement insurance. Time: 1 day Cost: HRK 150 * This procedure can be completed simultaneously with previous procedures Comments: Official seals are readily available throughout Croatia at special seal- making shops. A copy of the court decision on registration of incorporation should STARTING A BUSINESS be presented in order to have the seal made. Sibenik, Croatia Procedure 5*. Apply for statistical number at FINA Standard company legal form: Limited Liability Company (LLC) Time: 1 day Minimum capital requirement: HRK 10,000 Cost: HRK 55 Date as of: January 2008 Comments: FINA registers the company with the State Office for Statistics (Drzavni Procedure 1. Visit single access point HITRO at FINA (financial Zavod za Statistiku) and obtains the Statistical File Number in the form of"Informa- agency) tion on classification of the business entity pursuant to the National Classification of Activities." Time: 1 day Cost: No cost Procedure 6. Open a bank account (local bank) Comments: The procedure is as follows: Time: 1 day a. The employees of FINA check whether the name the founder selected is available; Cost: HRK 175 b. The employees of FINA provide the prospective founder with the required infor- Comments: The company has to open a Croatian Kuna (HRK) account with a bank mation, forms and payment slips; operating in Croatia. The cost of opening a bank account varies from one bank to c. The founder deposits the initial capital (min HRK 10,000), and pays court fees another. Some banks offer this service free of charge while some request a special (HRK 400), publication fee (HRK 900), State Office for Statistics (Drzavni Zavod za fee to be paid. The maximum fee is HRK 175. Statistiku) fees (HRK 55) (included in procedures 3 and 4); and d. The founder provides the employees of FINA with information on the main busi- Procedure 7. Register with tax authority (Porezna Uprava) for ness activity for the purpose of registering the company with the State Office for 'Value Added Tax' (VAT) and employee income tax withdrawals Statistics (Drzavni Zavod za Statistiku). Time: 1 day Cost: No cost Procedure 2. Notarize memorandum of association (notary office) Comments: Upon registering the company with the Commercial Court Register and Time: 1 day fulfilling obligations of the State Bureau of Statistics, the company needs to register Cost: HRK 4,000 with the competent tax authority. Once the company is registered at the National Comments: The Deed of Incorporation and the Articles of Association of the Bureau of Statistics, the company data are automatically delivered through APIS - IT prospective company, the Application to the Court Registry, and the Director's State- (www.apis-it.hr) to the tax authority so that it can charge the annual company tax. ment on Acceptance of the Appointment can be drafted by the notary or by the one- The company has to register at the tax office for VAT only when it issues its first stop shop (HITRO) personnel. However, if done by HITRO, the documents must be invoice (within 15 days of issuance). Once the company is registered for VAT, all tax notarized. The cost depends on the number of founders and the founding capital. At payments can be done through the e-VAT electronic system. A company whose total the notary the Deed of Incorporation/Articles of Association of the Prospective Com- taxable annual income exceeds HRK 85,000 must register itself as an entity within pany cost HRK 3,150, Application for the Court Registry costs HRK 220, Statement on the VAT system of taxation to the competent tax authority, based on the company's Acceptance of the Appointment as Director costs HRK 160 and value added tax. On registered location. other documents, the notary verifies the signatures for HRK 46.60 per signature. LIST OF PROCEDURES · STARTING A BUSINESS 33 Procedure 3. Deposit incorporation documents at FINA for Procedure 8*. Obtain municipal certificate that environment and registration at the commercial court workplace safety laws are observed (municipal office- Zupanijski Time: 5 days Ured) Cost: HRK 1,300 (HRK 400 is the court fee + HRK 900 is the publication fee) Time: 22 days Comments: All required incorporation documents are submitted to the employees Cost: HRK 670 (the cost includes HRK 70 for revenue stamp + HRK 350 official fee + of FINA who submit them to the competent commercial court. This procedure can HRK 200 to 300 depending on company's type of business activity) also be done directly at the commercial court. The commercial court registers the company with the Court Register in accordance with the Companies Act (Zakon Procedure 9*. Register with Croatian Pension Insurance Fund o trgovackim drustvima). Registration is done based on the application form and (Hrvatski Zavod za Mirovinsko Osiguranje, HZMO) or FINA documents required by law to be submitted. If all the conditions prescribed by the Time: 1 day law are fulfilled, the court is obliged to register the company. Before the company is entered into the Register, it may operate as"provisional company,"upon adoption of Cost: No cost the Memorandum of Association. The company automatically becomes a member of Comments: The company needs to register with the Croatian Pension Insurance the Chamber of Commerce at registration. In April 2005, by amending the Court Reg- Fund within 15 days of incorporation. Companies must also register their employees ister Act, the documentation requirements were reduced. Three different documents within 15 days from the date of employment agreements. The procedure may be are no longer required; namely, the founders of the company do not have to give a completed at the competent HZMO office or at the HITRO.HR centers. Electronic statement related to previous unsettled debts. It is also not necessary to submit a filing of the application for registration with the Pension Insurance Fund (HZMO) has Certificate of the Tax Office and Health and Pensions Insurance Funds in that respect. been available since May 2006. The court forwards the registration data to the Official Gazette (Narodne Novine) The company needs to register with HZMO as a contributions payer. The company of the Republic of Croatia and any daily newspaper. According to the changes in also needs to register its employees within 15 days of the date of the execution of the Company Law (effective as of 01 January 2004), it's mandatory only to have the the employment agreements. No fees are required. Registration can be completed registration data published in the Official Gazette, but the company may choose to within one day, if all required documents are submitted. The procedure may be publish the incorporation of the company in Vjesnik or another daily newspaper with completed at the competent HZMO office or at HITRO.HR centers. The following a fee of about HRK 900. documents should be submitted: decision about the registration into the Court In April 2005, by amending the Court Register Act (Zakon o izmjenama i dopunama Registry, notice of classification from the National Institute for Statistics, application Zakona o sudskom registru, Official Gazette 54/05), a statutory time limit of 15 days to the Croatian Pension Insurance Fund, proof of residence, and work contracts. All for deciding on any company registration, including registration of incorporation in persons employed for the first time and under 40 years or age are obliged to register the Court Registry was introduced. Furthermore, the amended act also introduced a into the Second Pillar of retirement insurance. A person has to choose the obligatory statutory term of 8 days for amending and completing documents, after which the pension fund within 3 months following the starting date of employment. If the court invites the company to execute any amendment or confirm registration. The fund is not chosen upon the expiration of that period, REGOS (The Central Register entrepreneur is informed by the Commercial Court of the decision and can return to of the Insured) itself chooses the obligatory pension fund for the person. All persons HITRO to complete subsequent formalities. employed for the first time and between 40 and 50 years of age can, if so desiring, register into the Second Pillar of retirement insurance. A person has to choose the Procedure 4. Order official seal at a specialized shop obligatory pension fund within 6 months following the starting date of employment. If the fund is not chosen upon the expiration of that period, a person permanently Time: 1 day loses the right to register into the Second Pillar of retirement insurance. Cost: HRK 150 Comments: Official seals are readily available throughout Croatia at special seal- * This procedure can be completed simultaneously with previous procedures making shops. A copy of the court decision on registration of incorporation should be presented in order to have the seal made. STARTING A BUSINESS Procedure 5*. Apply for statistical number at FINA Varazdin, Croatia Time: 1 day Standard company legal form: Limited Liability Company (LLC) Cost: HRK 55 Minimum capital requirement: HRK 10,000 Date as of: January 2008 Comments: FINA registers the company with the State Office for Statistics (Drzavni Zavod za Statistiku) and obtains the Statistical File Number in the form of"Informa- Procedure 1. Visit single access point HITRO at FINA (financial agency) tion on classification of the business entity pursuant to the National Classification of Activities." Time: 1 day Cost: No cost Procedure 6. Open a bank account (local bank) Comments: The procedure is as follows: Time: 1 day a. The employees of FINA check whether the name the founder selected is available; Cost: HRK 175 b. The employees of FINA provide the prospective founder with the required infor- Comments: The company has to open a Croatian Kuna (HRK) account with a bank mation, forms and payment slips; operating in Croatia. The cost of opening a bank account varies from one bank to c. The founder deposits the initial capital (min HRK 10,000), and pays court fees another. Some banks offer this service free of charge while some request a special (HRK 400), publication fee (HRK 900), State Office for Statistics (Drzavni Zavod za fee to be paid. The maximum fee is HRK 175. Statistiku) fees (HRK 55) (included in procedures 3 and 4); and d. The founder provides the employees of FINA with information on the main busi- Procedure 7. Register with tax authority (Porezna Uprava) for ness activity for the purpose of registering the company with the State Office for 'Value Added Tax' (VAT) and employee income tax withdrawals Statistics (Drzavni Zavod za Statistiku). Time: 1 day Cost: No cost Procedure 2. Notarize memorandum of association (notary office) Comments: Upon registering the company with the Commercial Court Register and Time: 1 day fulfilling obligations of the State Bureau of Statistics, the company needs to register Cost: HRK 4,000 with the competent tax authority. Once the company is registered at the National Comments: The Deed of Incorporation and the Articles of Association of the Bureau of Statistics, the company data are automatically delivered through APIS - IT prospective company, the Application to the Court Registry, and the Director's (www.apis-it.hr) to the tax authority so that it can charge the annual company tax. Statement on Acceptance of the Appointment can be drafted by the notary or by The company has to register at the tax office for VAT only when it issues its first the one-stop shop (HITRO) personnel. However, if done by HITRO, the documents invoice (within 15 days of issuance). Once the company is registered for VAT, all tax must be notarized by the notary. The cost depends on the number of founders and payments can be done through the e-VAT electronic system. A company whose total the founding capital. At the notary the Deed of Incorporation/Articles of Association taxable annual income exceeds HRK 85,000 must register itself as an entity within of the Prospective Company cost HRK 3,150, Application for the Court Registry costs the VAT system of taxation to the competent tax authority, based on the company's HRK 220, Statement on Acceptance of the Appointment as Director costs HRK 160 registered location. and value added tax. On other documents, the notary verifies the signatures for HRK 46.60 per signature. 34 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure 3. Deposit incorporation documents at FINA for Procedure 8*. Obtain municipal certificate that environment and registration at the commercial court workplace safety laws are observed (municipal office- Zupanijski Time: 8 days Ured) Cost: HRK 1,300 (HRK 400 is the court fee + HRK 900 is the publication fee) Time: 25 days Comments: All required incorporation documents are submitted to the employees Cost: HRK 670 (the cost includes HRK 70 for revenue stamp + HRK 350 official fee + of FINA who submit them to the competent commercial court. This procedure can HRK 200 to 300 depending on company's type of business activity) also be done directly at the commercial court. The commercial court registers the company with the Court Register in accordance with the Companies Act (Zakon Procedure 9*. Register with Croatian Pension Insurance Fund o trgovackim drustvima). Registration is done based on the application form and (Hrvatski Zavod za Mirovinsko Osiguranje, HZMO) or FINA documents required by law to be submitted. If all the conditions prescribed by the Time: 1 day law are fulfilled, the court is obliged to register the company. Before the company is entered into the Register, it may operate as"provisional company,"upon adoption of Cost: No cost the Memorandum of Association. The company automatically becomes a member of Comments: The company needs to register with the Croatian Pension Insurance the Chamber of Commerce at registration. In April 2005, by amending the Court Reg- Fund within 15 days of incorporation. Companies must also register their employees ister Act, the documentation requirements were reduced. Three different documents within 15 days from the date of employment agreements. The procedure may be are no longer required; namely, the founders of the company do not have to give a completed at the competent HZMO office or at the HITRO.HR centers. Electronic statement related to previous unsettled debts. It is also not necessary to submit a filing of the application for registration with the Pension Insurance Fund (HZMO) has Certificate of the Tax Office and Health and Pensions Insurance Funds in that respect. been available since May 2006. The court forwards the registration data to the Official Gazette (Narodne Novine) The company needs to register with HZMO as a contributions payer. The company of the Republic of Croatia and any daily newspaper. According to the changes in also needs to register its employees within 15 days of the date of the execution of the Company Law (effective as of 01 January 2004), it's mandatory only to have the the employment agreements. No fees are required. Registration can be completed registration data published in the Official Gazette, but the company may choose to within one day, if all required documents are submitted. The procedure may be publish the incorporation of the company in Vjesnik or another daily newspaper with completed at the competent HZMO office or at HITRO.HR centers. The following a fee of about HRK 900. documents should be submitted: decision about the registration into the Court In April 2005, by amending the Court Register Act (Zakon o izmjenama i dopunama Registry, notice of classification from the National Institute for Statistics, application Zakona o sudskom registru, Official Gazette 54/05), a statutory time limit of 15 days to the Croatian Health Insurance Fund, proof of residence, and work contracts. All for deciding on any company registration, including registration of incorporation in persons employed for the first time and under 40 years or age are obliged to register the Court Registry was introduced. Furthermore, the amended act also introduced a into the Second Pillar of retirement insurance. A person has to choose the obligatory statutory term of 8 days for amending and completing documents, after which the pension fund within 3 months following the starting date of employment. If the court invites the company to execute any amendment or confirm registration. The fund is not chosen upon the expiration of that period, REGOS (The Central Register entrepreneur is informed by the Commercial Court of the decision and can return to of the Insured) itself chooses the obligatory pension fund for the person. All persons HITRO to complete subsequent formalities. employed for the first time and between 40 and 50 years of age can, if so desiring, register into the Second Pillar of retirement insurance. A person has to choose the Procedure 4. Order official seal at a specialized shop obligatory pension fund within 6 months following the starting date of employment. If the fund is not chosen upon the expiration of that period, a person permanently Time: 1 day loses the right to register into the Second Pillar of retirement insurance. Cost: HRK 179.9 Comments: Official seals are readily available throughout Croatia at special seal- * This procedure can be completed simultaneously with previous procedures making shops. A copy of the court decision on registration of incorporation should be presented in order to have the seal made. STARTING A BUSINESS Procedure 5*. Apply for statistical number at FINA Pristina, Kosovo Time: 1 day Standard company legal form: Limited Liability Company (LLC) Cost: HRK 55 Minimum capital requirement: none Date as of: January 2008 Comments: FINA registers the company with the State Office for Statistics (Drzavni Zavod za Statistiku) and obtains the Statistical File Number in the form of"Informa- Procedure 1. Search and reserve a unique company name tion on classification of the business entity pursuant to the National Classification of Activities." Time: 1 day Cost: No cost Procedure 6. Open a bank account (local bank) Time: 1 day Procedure 2. Pay business registration fee payment at a bank Cost: HRK 175 Time: 1 day Comments: The company has to open a Croatian Kuna (HRK) account with a bank Cost: EUR 21 (EUR 10 is the registration fee and EUR 10 is to file for the Statute. EUR 1 operating in Croatia. The cost of opening a bank account varies from one bank to is the bank transaction fee) another. Some banks offer this service free of charge while some request a special fee to be paid. The maximum fee is HRK 175. Procedure 3. Request and obtain the business certificate at the Agency for Business Registration (ARBK) Procedure 7. Register with tax authority (Porezna Uprava) for Time: 4 days 'Value Added Tax' (VAT) and employee income tax withdrawals Cost: EUR 2 (when receiving the certificate, a party needs to pay EUR 2 to receive the Time: 1 day certificate and`Business Information'document that provides general information Cost: No cost about business structures) Comments: Upon registering the company with the Commercial Court Register and Comments: Registration of a business to obtain the certificate can only be done in fulfilling obligations of the State Bureau of Statistics, the company needs to register Pristina. The corporation is considered founded at the moment when the Business with the competent tax authority. Once the company is registered at the National Registry official accepts the application. The following documents constitute the Bureau of Statistics, the company data are automatically delivered through APIS - IT application for an LLC: business registration form (can be downloaded for free online (www.apis-it.hr) to the tax authority so that it can charge the annual company tax. at www.arbk.org), Statute, electricity statement proving that the electricity at the The company has to register at the tax office for VAT only when it issues its first leased premises has been paid (last statement suffices if the amount owed is below invoice (within 15 days of issuance). Once the company is registered for VAT, all tax the maximum accepted by KEK), title certificate or lease contract, copies of ID cards payments can be done through the e-VAT electronic system. A company whose total of all the shareholders. The business registration form contains an identification taxable annual income exceeds HRK 85,000 must register itself as an entity within number that represents the tax identification number. After a company receives the VAT system of taxation to the competent tax authority, based on the company's the business certificate, the information from the agency is processed by the tax registered location. authorities and Statistics Office. The Agency for Business Registration (Agjencioni per Regjistrimin e Bizneseve Kosovare, www.arbk.org) is under the authority of the Ministry of Trade and Industry. Sections 26.2 and 26.3 of UNMIK regulation 2001/6 on LIST OF PROCEDURES · STARTING A BUSINESS 35 business organizations specify that the charter capital"(26.2) for a LLC, [it] shall be at tration can be picked up in the next day or two. For more urgent cases, businesses least 5,000 Deutsche Marks. The charter capital may be expressed as the equivalent can orally request that the procedure be completed faster. The Tax Administration in any currency that is lawful in Kosovo at the time the shareholders make their initial authority has two offices in Pristina: one for the Municipality of Pristina and one for contributions (re-valued to 2,500 EUR after the conversion and according to Adminis- the other small towns that fall under the jurisdiction of the Municipality of Pristina. trative Guideline 2003/1, No. 5.2). (26.3) 50% of a corporation's charter capital shall be paid to the corporation by its shareholders before the corporation is registered. Procedure 12*. Register employees for Social Security with the The unpaid portion of the charter capital stated in the foundation documents shall tax authority of the Ministry of Economy and Finance be paid within one year from the date of the corporation's registration."This proce- dure is not followed in practice as the company can declare the capital in any form in Time: 1 day the application and it does not need to submit any actual proof of its existence. Cost: No cost Comments: Business certificate, a copy of an identification card and a completed Procedure 4. Make a company seal registration form are required to register. Time: 1 day Cost: EUR 30 (price may vary from EUR 20 to 40) * This procedure can be completed simultaneously with previous procedures Comments: Seal is not legally required. However, a legal entity must have a seal for any interaction with the authorities. STARTING A BUSINESS Prizren, Kosovo Procedure 5. Request and obtain a confirmation letter proving Standard company legal form: Limited Liability Company (LLC) that property tax in the leased premises has been paid Minimum capital requirement: none Time: 1 day Date as of: January 2008 Cost: No cost Comments: This letter is obtained from the Municipality Finance and Property Procedure 1. Search and reserve a unique company name Directorate. Time: 1 day Cost: No cost Procedure 6. Request and obtain the work permit from the municipality Procedure 2. Pay business registration fee payment at a bank Time: 10 days Time: 1 day Cost: No cost Cost: EUR 21 (EUR 10 is the registration fee and EUR 10 is to file for the Statute. EUR 1 Comments: Each municipality has its own regulations determining the require- is the bank transaction fee) ments, including fees, to obtain the permit. According to the Regulation for Work Permits of the Municipality of Pristina, the application should consist of: business Procedure 3. Request and obtain the business certificate at the operation certificate, building permit, lease contract, inspection committee approval, Agency for Business Registration (ARBK) paid municipality fee, photocopy of the identification card and cadastral extracts. Time: 4 days Upon showing the inspection approval and bank receipt for fee payment, the com- Cost: EUR 2 (when receiving the certificate, a party needs to pay EUR 2 to receive the pany may receive the municipal work license. certificate and`Business Information'document that provides general information about business structures) Procedure 7*. Request and obtain approval from the Municipality Technical Committee Comments: Registration of a business to obtain the certificate can only be done in Pristina. The corporation is considered founded at the moment when the Business Time: 7 days Registry official accepts the application. The following documents constitute the Cost: EUR 10 application for an LLC: business registration form (can be downloaded for free online at www.arbk.org), Statute, electricity statement proving that the electricity at the Procedure 8*. Request and obtain inspection from the leased premises has been paid (last statement suffices if the amount owed is below Municipality Technical Committee the maximum accepted by KEK), title certificate or lease contract, copies of ID cards of all the shareholders. The business registration form contains an identification Time: 5 days number that represents the tax identification number. After a company receives Cost: No cost (included in the previous procedure) the business certificate, the information from the agency is processed by the tax authorities and Statistics Office. The Agency for Business Registration (Agjencioni Procedure 9*. Pay the fee for the work permit at the bank per Regjistrimin e Bizneseve Kosovare, www.arbk.org) is under the authority of the Time: 1 day Ministry of Trade and Industry. Sections 26.2 and 26.3 of UNMIK regulation 2001/6 on Cost: EUR 1,000 business organizations specify that the charter capital"(26.2) for a LLC, [it] shall be at least 5,000 Deutsche Marks. The charter capital may be expressed as the equivalent Comments: The yearly commercial activity fee for an LLC is EUR 1,000. The fee varies in any currency that is lawful in Kosovo at the time the shareholders make their initial across businesses from EUR 75 to 1,000 and needs to be renewed yearly. For some contributions (re-valued to 2,500 EUR after the conversion and according to Adminis- businesses, the fee is determined based on the size of the premises. A detailed trative Guideline 2003/1, No. 5.2). (26.3) 50% of a corporation's charter capital shall schedule can be found at http://www.prishtina-komuna.org/?mod=rregulloret&bid be paid to the corporation by its shareholders before the corporation is registered. =1&smid=112 (see: Vendim për ndryshimet dhe plotësimet e Rregullores). The unpaid portion of the charter capital stated in the foundation documents shall be paid within one year from the date of the corporation's registration."This proce- Procedure 10*. Open a bank account dure is not followed in practice as the company can declare the capital in any form in Time: 1 day the application and it does not need to submit any actual proof of its existence. Cost: EUR 20 Comments: Business certificate, business information, a copy of an identification Procedure 4. Make a company seal card of the legal representative and other people authorized to make withdrawals Time: 1 day and deposits are required. Cost: EUR 30 (price may vary from EUR 20 to 40) Comments: Seal is not legally required. However, a legal entity must have a seal for Procedure 11. Register for Value Added Tax (VAT) with the tax any interaction with the authorities. authority of the Ministry of Economy and Finance Time: 4 days Procedure 5. Request and obtain a confirmation letter proving Cost: No cost that property tax in the leased premises has been paid Comments: The Value Added Tax (VAT) application is required only for companies Time: 1 day with a yearly turnover of more than EUR 50,000. The VAT form can be downloaded at Cost: No cost http://www.mfe-ks.org/mefwww/atatimore/files/lltatimeve/tvsh/formregjtvsh.pdf. Comments: This letter is obtained from the Municipality Finance and Property Once the request is submitted, the tax authorities conduct an inspection. The regis- Directorate. 36 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure 6. Request and obtain the work permit from the Procedure 2. Notarize the incorporation documents (notary municipality office) Time: 8 days Time: 1 day Cost: No cost Cost: MKD 2,000 Comments: Each municipality has its own regulations determining the requirements, Comments: To register a limited liability company (LLC), a founder must notarize the including fees, to obtain the permit. Upon showing the inspection approval and bank following documents: receipt for fee payment, the company may receive the municipal work license. a. Foundation agreement; Procedure 7*. Request and obtain approval from the Municipality b. Statement in accordance with article 29 of the Trade Company Law stating that Technical Committee there are no limitations to starting a company as defined by this article; c. Statement in accordance with article 32 of the Trade Company Law listing all the Time: 5 days activities undertaken in order to establish the company and that the company is Cost: EUR 30 founded in accordance with the law; d. Statement in accordance with article 183 of the Trade Company Law; and Procedure 8*. Receive inspection from the Municipality Technical Committee e. Signature of the person authorized to act as a signatory of the company. Time: 3 days Procedure 3. Procure extract of criminal record confirming that Cost: No cost (included in the previous procedure) the manager is eligible to run the company (local Principal Court) Time: 1 day Procedure 9*. Pay the fee for the work permit at the bank Cost: MKD 400 (court fee) Time: 1 day Comments: The competent authority for issuing the extracts from criminal records Cost: EUR 1,000 is the principal court of the municipality listed as the manager's residence. Comments: The yearly commercial activity fee for an LLC is EUR 1,000 in Prizren. The fee ranges from EUR 50 to 1,000 and needs to be renewed yearly. For some busi- Procedure 4. Registration with the Central Registry nesses, the fee is determined based on the size of the premises. A detailed schedule Time: 3 days can be found at http://www.prizren-komuna.org (Vendimet e Asamblesë të datës 22 02 2007). Cost: MKD 2,552 Comments: The company founders can prepare the registration documents. If Procedure 10*. Open a bank account professional (lawyer) services are used, a fee of EUR 500 is charged for one month of service. A one-stop shop system was implemented on January 1, 2006. The Central Time: 1 day Registry of the Republic of Macedonia, FYR is the unique institution for registration Cost: EUR 20 of LLCs and other forms of trade companies, foreign representative offices, and oth- Comments: Business certificate, business information, a copy of an identification ers. The procedure at the Central Register covers: card of the legal representative and other people authorized to make withdrawals a. registration of the company in the Trade Register; and deposits are required. b. providing the statistics identification number for the company; Procedure 11. Register for Value Added Tax (VAT) with the tax c. opening the bank account of the company; authority of the Ministry of Economy and Finance d. registration of the company in the Public Revenue Office - Tax Office; Time: 2 days e. publishing the company's creation notice on the web site of the Central Register (www.crm.com.mk). Cost: No cost The cost of starting a business was decreased in October 2007 when a Government Comments: The Value Added Tax (VAT) application is required only for companies decision changed the tariff of the Central Registry published in the Official Gazette with a yearly turnover of more than EUR 50,000. The VAT form can be downloaded at No. 119/07. http://www.mfe-ks.org/mefwww/atatimore/files/lltatimeve/tvsh/formregjtvsh.pdf. Once the request is submitted (in the morning), the tax authorities conduct an inspec- Procedure 5. Make a company seal (specialized shop) tion during the same day. The registration can be picked up the next day. For more urgent cases, businesses can orally require for the procedure to be completed faster. Time: 1 day Cost: MKD 900 Procedure 12*. Register employees for Social Security with the Comments: The fee may vary depending on the type and quality of the material for tax authority of the Ministry of Economy and Finance the seal. The company certificate of registration is required. Time: 1 day Cost: No cost Procedure 6. Inform the Employment Agency for hiring employees Comments: Business certificate, a copy of an identification card and a completed Time: 1 day registration form are required to register. Cost: No cost Comments: Documents to be submitted to the Employment Agency include the * This procedure can be completed simultaneously with previous procedures registration forms (M1 and M2) and the employment contract for each employee. Copies of the registration forms are taken to the Pension and Health Insurance Fund STARTING A BUSINESS offices. The registration forms can be downloaded on-line from the website of the Bitola, Macedonia, FYR Employment Agency. Standard company legal form: Limited Liability Company (LLC) Procedure 7. Register with the Health Insurance Fund Minimum capital requirement: none Time: 1 day Date as of: January 2008 Cost: No cost Procedure 1. Check the uniqueness of the company name and Comments: To register with the Health Insurance Fund, the company needs to bring pick up a company registration form at the Central Registry (CR) copies of employment registration forms. The offices of the Health Insurance Fund and the Pension Fund in Bitola are on different floors in the same building and are Time: 1 day hence counted as two separate procedures. Cost: No cost Comments: Company registration forms are now available at the central register's website (www.crm.com.mk) and at the 30 offices of the Companies Registry; alterna- tively, the forms can be bought at any bookstore that sells administrative materials. LIST OF PROCEDURES · STARTING A BUSINESS 37 Procedure 8*. Register with the Pension Insurance Fund d. Confirmation of the payment of EUR 5.00 in the account. Time: 1 day Of all the company types that register with the Company Registry in the Economic Cost: No cost Court in Podgorica, small businesses and some forms of foreign companies are Comments: To register with the Pension Insurance Fund, the company needs to exempted from the statistical registration. The number can be obtained within the same or next business day. The above-mentioned forms (RJR-1and RJR-1a) can be bring copies of employment registration forms. The offices of the Health Insurance obtained at the Bureau. The application can be submitted by mail or in person, but Fund and the Pension Fund in Bitola are on different floors in the same building and the number can be received only in person. are hence counted as two separate procedures. Procedure 6. Open a bank account * This procedure can be completed simultaneously with previous procedures Time: 1 day STARTING A BUSINESS Cost: No cost Niksic, Montenegro Comments: Proof of having opened a bank account is required to register for taxes. The bank account is opened once the company is registered with the Company Standard company legal form: Limited Liability Company (LLC) Registry and the Statistical Office. Minimum capital requirement: EUR 1 Date as of: January 2008 Procedure 7. Obtain municipal license Procedure 1. Obtain application form and reserve the company Time: 12 days name Cost: EUR 94.5 (based on the size of premises the license fee is EUR 40, the request is EUR 3 and the inspection fee is EUR 51.5 - assuming that the offices are used for Time: 1 day commercial activity where the fee is EUR 35.79, the area is 100 m2 (add 20% or 7.16) Cost: EUR 15 (EUR 10 to 20) and is located in Zone III (add another 20% or 8.59) and they have been previously Comments: The company name can be checked online at the Central Registry of used as business premises) Companies of Montenegro (www.crps.cg.yu). The company name reservation is valid Comments: Once registered, the company must file the verified copy of registration for 120 days with no possibility for extension. The name reservation can be trans- with the Central Registry; the copy of registration with the Bureau of Statistics; ferred to a third party (upon notification of the Company Registry). The application and the copy of the bank account the incorporation documents, the certified lease form can be obtained at a bookstore or on the aforementioned website. agreement, a professional evaluation that the registered business activity can be conducted in that particular business premise, and the appropriate application form Procedure 2. Certify the company's founding agreements duly completed, signed and stamped, with the municipality where the company is Time: 1 day seated and shall conduct business activities. The appointed commission will visit the business premises and issue the license. The municipal license is required for all Cost: EUR 30 companies, regardless of the field of their activity. In addition, some activity-specific Comments: The Republic of Montenegro still has no public notaries, but the profes- licenses may apply. The cost depends on the size of the premises and is based on the sion is expected to develop soon. The Law on Companies of the Republic of Mon- following schedule: tenegro authorizes all lawyers to certify documents. In practice, however, only the up to 50 m2 EUR 20 Company Registry accepts such certified documents. All other institutions require court certification of documents. Certification fees vary depending on the number of above 50 m2 EUR 40. pages, documents, and so forth. Documents can be certified at the lawyer's office on EUR 3 is the request fee. The cost of the Municipality Technical Commission (inspec- the spot, without an appointment. tion) depends on the type, area of the leased business premises and location, and it is based on the following schedule for premises up to 50m2: Procedure 3. Register with the Company Registry Food-related businesses EUR 40.99 Time: 2 days Commercial EUR 35.79 and Cost: EUR 25 (EUR 10 registration + EUR 15 publishing fee) Craftsperson EUR 30.67. Comments: The only registry in Montenegro is in Podgorica (in the Commercial For premises from 50 to 100 m2, there is a surcharge of 20% and above 100 square Court Building). The registry is computerized. The legal time limit for registration is 4 meters, the surcharge is 50%. These fees are valid for Zone I, while for Zone II there is days, but in practice, the registry completes the registration in 2 days. The Company a 10% surcharge, for Zone III a 20% surcharge and for Zone IV a 50% surcharge. Registry prepares text for the announcement of the company formation. The Regis- try also estimates the publication fee (based on notice length) and sends all notices Procedure 8*. Receive municipal inspection to the Official Gazette, which are published in an upcoming issue. Publication lead Time: 7 days time is 10­15 days. Subsequent procedures do not depend on the announcement, so the client can continue to form the company regardless of the publication date. Cost: No cost Comments: If the business premises have been previously used for commercial Procedure 4. Make a company seal activities, the appointed commission conducts a site visit and determines whether Time: 1 day the business premises can be used for a commercial activity. If the business premises have not been previously used for commercial activities, the company needs also Cost: EUR 30 to get a proof from the power supply company asserting that the meter has been Comments: The company seal or stamp is a core instrument in company's legal adjusted to reflect for business charges. Our case assumes that the premises have transactions. The company must order a seal or stamp upon registering with the been used previously for business activity. Company Registry because it is essential for subsequent company transactions. The seal is made on the day it is ordered. Procedure 9*. Register with the Pension Fund Time: 2 days Procedure 5. Obtain statistical number of the company Cost: No cost Time: 2 days Comments: A filed application form (ROD 1), a certified copy of registration from the Cost: EUR 5 Company Registry, and a copy of the notification from the Statistics Fund are needed Comments: Upon registering, the company must apply for the statistical identifica- to register with the Pension Fund. tion number with the Statistical Office of the Republic of Montenegro. The new Law for Statistics and Statistical System has helped reduce the number of days required Procedure 10*. Register with the Employment Bureau to obtain the number. Similarly to the company registration, this procedure is also Time: 2 days completed in Podgorica. The company may obtain the number during the same day, especially if they have traveled a long distance. The following documents are needed Cost: No cost for the statistical registration or change of existing registration: Procedure 11*. Register with the Health Fund a. Copy of the company registration or of the possible changes; Time: 2 days b. Form RJR-1 filed, signed and stamped; Cost: No cost c. Form RJR-1a filed, for business and other units; and 38 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure 12*. Register for income tax to the Official Gazette, which are published in an upcoming issue. Publication lead Time: 2 days time is 10­15 days. Subsequent procedures do not depend on the announcement, Cost: No cost so the client can continue to form the company regardless of the publication date. Comments: The following documents are required: application form duly filed with Procedure 4. Make a company seal the company's information and signed by the company representative, copies of the registration documents, copy of the certificate of the identification number of the Time: 1 day company, certificate of the bank account opened, proof that the company filed for a Cost: EUR 20 business license, and identification cards or passports of the executive director. If the Comments: The company seal or stamp is a core instrument in company's legal application form is completed correctly, the tax number and VAT number certificates transactions. The company must order a seal or stamp upon registering with the are issued within 2-3 days. The tax number always matches the company number. Company Registry because it is essential for subsequent company transactions. The The tax number is issued after obtaining the municipal business license. There is no seal is made on the day it is ordered. tax inspection before issuing the number. Procedure 5. Obtain statistical number of the company Procedure 13*. Register for Value Added Tax (VAT) Time: 2 days Time: 2 days Cost: EUR 5 Cost: No cost Comments: Upon registering, the company must apply for the statistical identifica- Comments: Once the company is registered for income tax, only an application tion number with the Statistical Office of the Republic of Montenegro. The new Law form, duly completed, signed and stamped, is required. for Statistics and Statistical System has helped reduce the number of days required to obtain the number. Similarly to the company registration, this procedure is also Procedure 14*. Register employees for Social Security completed in Podgorica. The company may obtain the number during the same day, Time: 2 days especially if they have traveled a long distance. The following documents are needed Cost: No cost for the statistical registration or change of existing registration: Comments: Employees are registered for the social security insurance with the a. Copy of the company registration or of the possible changes; Pension Fund. In addition to completing a standard Pension Fund form, the company b. Form RJR-1 filed, signed and stamped; must include proof of registration with the following entities: the Central Registry, c. Form RJR-1a filed, for business and other units; and the Bureau of Statistics, and the Pension Fund. d. Confirmation of the payment of EUR 5.00 in the account. Procedure 15*. Register company with Chamber of Commerce Of all the company types that register with the Company Registry in the Economic Court in Podgorica, small businesses and some forms of foreign companies are Time: 1 day exempted from the statistical registration. The number can be obtained within the Cost: No cost same or next business day. The above-mentioned forms (RJR-1and RJR-1a) can be Comments: Chamber of Commerce membership is obligatory and requires submis- obtained at the Bureau. The application can be submitted by mail or in person, but sion of an application form. the number can be received only in person. Procedure 6. Open a bank account * This procedure can be completed simultaneously with previous procedures Time: 1 day STARTING A BUSINESS Cost: No cost Pljevlje, Montenegro Comments: Proof of having opened a bank account is required to register for taxes. The bank account is opened once the company is registered with the Company Standard company legal form: Limited Liability Company (LLC) Registry and the Statistical Office. Minimum capital requirement: EUR 1 Date as of: January 2008 Procedure 7. Obtain municipal license Procedure 1. Obtain application form and reserve the company Time: 7 days name Cost: EUR 22 (the license fee is EUR 20 and the request is EUR 2) Time: 1 day Comments: The municipal license is required for all companies, regardless of the field of their activity. In addition, some activity-specific licenses may apply. Once Cost: EUR 15 (EUR 10 to 20) registered, the company must file the verified copy of registration with the Central Comments: The company name can be checked online at the Central Registry of Registry; the copy of registration with the Bureau of Statistics; the copy of the bank Companies of Montenegro (www.crps.cg.yu). The company name reservation is valid account, the incorporation documents, the certified lease agreement, a professional for 120 days with no possibility for extension. The name reservation can be trans- evaluation that the registered business activity can be conducted in that particular ferred to a third party (upon notification of the Company Registry). The application business premise, and the appropriate application form duly completed, signed form can be obtained at a bookstore or on the aforementioned website. and stamped, with the municipality where the company is seated and shall conduct business activities. Procedure 2. Certify the company's founding agreements If the business premises have been previously used for commercial activities, the Time: 1 day technical commission (inspection) usually does not visit the site. If the business Cost: EUR 30 premises have not been previously used for commercial activities, the company Comments: The Republic of Montenegro still has no public notaries, but the profes- needs also to get permission that the transformed premises can be used for business sion is expected to develop soon. The Law on Companies of the Republic of Mon- operation and proof from the local offices of the power supply company that the tenegro authorizes all lawyers to certify documents. In practice, however, only the meter has been adjusted to reflect for business charges. In this case, the appointed Company Registry accepts such certified documents. All other institutions require commission (for a fee of EUR 60) will visit the site in order to issue their approval. The court certification of documents. Certification fees vary depending on the number of process of obtaining the license can last up to 7 days in such case. Our case assumes pages, documents, and so forth. Documents can be certified at the lawyer's office on that the premises have been used previously for business activities and no further the spot, without an appointment. permissions are necessary. During 2007, the commission has not conducted any site visits because licenses have been issued mostly for locations where business activi- Procedure 3. Register with the Company Registry ties have been conducted previously. The technical commission can also conduct other site visits, especially if any concerns are raised by various subjects. Time: 2 days Cost: EUR 25 (EUR 10 registration + EUR 15 publishing fee) Procedure 8*. Register with the Pension Fund Comments: The only registry in Montenegro is in Podgorica (in the Commercial Time: 2 days Court Building). The registry is computerized. The legal time limit for registration is 4 Cost: No cost days, but in practice, the registry completes the registration in 2 days. The Company Registry prepares text for the announcement of the company formation. The Regis- Comments: A filled application form (ROD 1), a certified copy of registration from try also estimates the publication fee (based on notice length) and sends all notices the Company Registry and a copy of the notification from the Statistics Fund are needed to register with the Pension Fund. 39 LIST OF PROCEDURES · STARTING A BUSINESS 39 Procedure 9*. Register with the Employment Bureau a. Up to RSD 10,000 value - RSD 650; Time: 2 days b. From RSD 10,001 to 100,000 value - RSD 650 increased for 1% of the contract value; Cost: No cost c. From RSD 100,001 to 1,000,000 value - RSD 1,950 increased for 0.5% of the con- Procedure 10*. Register with the Health Fund tract value; and Time: 2 days d. Over RSD 1,000,000 - RSD 8450 increased for 0.25% of the contract value, but not more than RSD 26,000. Cost: No cost In addition, there is a fee for requesting the notarization of RSD 32.5. In case of Procedure 11*. Register for income tax notarization of several documents only one request fee should be paid. The price for notarization of the signatures specimen with a competent court is RSD 65 and RSD Time: 2 days 325 for every proxy's signature verification (power of attorney). The previous practice Cost: No cost of requesting the court clerk to come to the business premises to certify a document Comments: The following documents are required: application form duly filed with against payment of the additional tax was revoked by a decision of the Constitu- the company's information and signed by the company representative, copies of the tional Court of Serbia which found it to be unconstitutional. registration documents, copy of the certificate of the identification number of the company, certificate of the bank account opened, proof that the company filed for a Procedure 3. Open a temporary bank account; pay initial deposit business license, and identification cards or passports of the executive director. If the or its part and all other fees application form is completed correctly, the tax number and VAT number certificates Time: 1 day are issued within 2-3 days. The tax number always matches the company number. Cost: No cost The tax number is issued after obtaining the municipal business license. There is no tax inspection before issuing the number. Comments: In order to open a temporary account, the decision or contract of incorporation must be submitted to the chosen bank. At least half of the initial Procedure 12*. Register for Value Added Tax (VAT) capital is payable in advance, the rest within a period of 2 years from the registration. The initial deposit is paid to a temporary account at one of the commercial banks. Time: 2 days After registration is completed, the funds are transferred to a Giro-account of the Cost: No cost enterprise and may be used in business transactions. Obtain the payment slip from Comments: Once the company is registered for income tax, only an application the bank. form, duly completed, signed and stamped, is required. Procedure 4. Obtain the registration certificate from the Business Procedure 13*. Register employees for Social Security Registers Agency (SBRA) Time: 2 days Time: 7 days Cost: No cost Cost: RSD 5,060 (RSD 3,600 for registration application + RSD 1,460 for obtaining the Comments: Employees are registered for the social security insurance with the registration number) Pension Fund. In addition to completing a standard Pension Fund form, the company Comments: Under the Business Registration Law, which came into effect in July must include proof of registration with the following entities: the Central Registry, 2004, the company registration is transferred from the Commercial Courts to the the Bureau of Statistics, and the Pension Fund. Serbian Business Registers Agency (SBRA). The payment of RSD 3,600 is made for the registration application in the account of Procedure 14*. Register company with Chamber of Commerce SBRA. The amount of RSD 1,460 has to be paid for obtaining the registration number Time: 1 day and code from the Republic Statistical Agency. Instead of two separate proceedings, Cost: No cost the agency now issues the number and the code of the Republic Statistical Agency simultaneously with the registration certificate. The following documents need to Comments: Chamber of Commerce membership is obligatory and requires submis- be submitted: sion of an application form. a. Set of forms for registration; b. Contract of incorporation (deed of establishment) or decision on the company * This procedure can be completed simultaneously with previous procedures founding with authentic signatures of founder(s) notarized by the Municipal Court; STARTING A BUSINESS c. Decision on appointment of the director by the founders; Krusevac, Serbia d. Information on the founder(s) (i.e. registration documents, if the founder is a legal entity or identification number and proof of registered residence, if the founder Standard company legal form: Limited Liability Company (LLC) is a physical person. If such documents are in a foreign language, they must be Minimum capital requirement: RSD 20,836 translated into Serbian by an authorized court translator (approximate costs RSD Date as of: January 2008 800 per page); e. Certified signature of the director on the OP form (or deputy director or other Procedure 1. Obtain registration forms, form RJR-1, form OP, authorized person); forms M1 and M4 f. Evidence of payment of the administrative fee; Time: 1 day g. Bank confirmation that the capital has been paid to the temporary bank account Cost: RSD 5 (OP form fee) or certified statement from the founder that the financial capital has been secured; Comments: Registration forms for the Business Registration Agency (Registar h.Optionally, power of attorney if filing is made by an attorney. privrednih subjekata) are free and are available exclusively at the Agency and at its The court will examine if the request complies with current legislation and whether official Web site (free download at www.apr.sr.gov.yu/APRWeb). Forms M1, M4, E1, all necessary documents are attached to it. The requirement to submit the statute of E3 are available on the Web site www.minrzs.sr.gov.yu, but the OP forms are not. the company upon registration has been abolished. In addition, the assessment of the contribution in kind by the authorized appraisers is no longer required (submis- Procedure 2. Notarize the Memorandum of Association and lease sion of an agreement between the founders on the value of contribution in kind has contract at the basic court replaced the aforementioned requirement). The registry at that point publishes the Time: 1 day registration on the Internet. Cost: RSD 15,301 (RSD 8,450+ (0.25%X Initial Capital of 2,597,510) + RSD 32.5 for Notarization request + 5 owners X RSD 65 per signature Notarization) Procedure 5. Make stamp and seal Comments: Cost depends on the amount of capital and the value of the lease. At Time: 1 day least 4 copies should be notarized with the Municipal Court, as the court will keep at Cost: RSD 2,000 least one copy, one copy will be filed later with the commercial court, and the filer Comments: The price varies between RSD 1,000 to 3,000, depending on the number will want to retain at least 2 originals. The cost of such certification varies depending of words, design, etc. In order to make a stamp, the copy of the registration ruling on the value of the incorporation contract. The Law on Court Taxes as of July 2005 must be submitted to the stamp-maker. establishes the following costs: 40 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure 6. Obtain PIB ­ tax identification number at the Procedure 10. Obtain certificate from the PIO Fund (pension Municipal Hall; certify the signatures (3 copies) for opening bank fund) account Time: 2 days Time: 7 days Cost: No cost Cost: No cost Comments: To obtain a certificate from the Employees'Pension and Disability Comments: To obtain the tax identification number (PIB), the founders must Insurance (PIO) Fund (Fond za penzijsko i invalidsko osiguranje zaposlenih), founders submit the following documents to the tax authorities of the municipality where must submit Form M1 (used for reporting employee insurance); Form M4 (for obtain- the company is registered: registration ruling (copy), statistic ruling (copy), and a ing a taxpayer registry number and paying contributions), Forms E1 and E3, and the completed, signed, and stamped tax identification form. The RUJP office has a seat in employment contract for inspection. If the application is not submitted within 8 days every municipality. of the start of employment, a statement explaining the delay must be submitted. The registry number is issued within 24 hours and requires two visits to the Fund. Procedure 7. Register with local tax authority Time: 7 days Procedure 11. Obtain certificate from the Health Fund Cost: No cost Time: 1 day Comments: The local tax authority sends the case to Belgrade and the registration Cost: No cost process takes 7 days. When the tax identification number is obtained, the company's Comments: To obtain a certificate from the Health Fund, the company must submit representative has to submit all or some of the following documents to the local tax the following documents: employment record card; medical examination record authority (documentation requirements vary among different local authorities): (medical identity card); Forms M1 and M2 (application for health insurance); RSD 1 a. Copy of the registration certificate of the Business Registration Agency; (application for beginning/ending/changing the terms of the payers of the contribu- b. Copy of the certificate on the personal tax number; tions) and a list of medical identity cards issued by the company. c. Labor contract with the general manager/founder of the company; d. Completed registration form for the VAT; in accordance with the Law on Value STARTING A BUSINESS Added Tax (Official Gazette RS no. 84/2004, 86/2004, 61/2005) companies that Uzice, Serbia predict that their total turnover in the period of 12 months will be more than RSD 2,000,000 are obliged to submit a completed registration form for the VAT registra- Standard company legal form: Limited Liability Company (LLC) tion; Minimum capital requirement: RSD 20,836 e. Certified OP form; Date as of: January 2008 f. Statement on the employed workers; Procedure 1. Obtain registration forms, form RJR-1, form OP, g. Certified lists of real estates, motor vehicles and aircraft of the taxpayer; forms M1 and M4 h.List of all stores and numbers of fiscal cash registers; and Time: 1 day i. Agreement concluded with the book-keeping agency. Cost: RSD 5 (OP form fee) Depending on the local tax authority, all the above documents have to be submitted Comments: Registration forms for the Business Registration Agency (Registar to the tax authority at latest 10-15 days following the day the personal tax number privrednih subjekata) are free and are available exclusively at the Agency and at its is obtained. official Web site (free download at www.apr.sr.gov.yu/APRWeb). Forms M1, M4, E1, E3 are available on the Web site www.minrzs.sr.gov.yu, but the OP forms are not. Procedure 8. Open a permanent business account with the commercial bank Procedure 2. Notarize the Memorandum of Association and lease Time: 1 day contract at the basic court Cost: No cost Time: 1 day Comments: The documentation for setting up a permanent business account with a Cost: RSD 15,301 (RSD 8,450+ (0.25%X Initial Capital of 2,597,510) + RSD 32.5 for commercial bank varies. The following documents are generally required: Notarization request + 5 owners X RSD 65 per signature Notarization) a. Original or certified copy of the company's registration with the SBRA (evidence of Comments: Cost depends on the amount of capital and the value of the lease. At the company identification number and other relevant data); least 4 copies should be notarized with the Municipal Court, as the court will keep at b. Application for opening the permanent account; least one copy, one copy will be filed later with the commercial court, and the filer c. Contract for depositing funds; will want to retain at least 2 originals. The cost of such certification varies depending on the value of the incorporation contract. The Law on Court Taxes as of July 2005 d. Tax number for PIB (residents only); establishes the following costs: e. The bank-provided specimen card for legal entities (original); a. Up to RSD 10,000 value - RSD 650; f. Identity card of the founders (copy); and b. From RSD 10,001 to 100,000 value - RSD 650 increased for 1% of the contract g. Incorporation deed (copy). value; Although the law allows for in-kind contributions (labor, machinery, or other assets), c. From RSD 100,001 to 1,000,000 value - RSD 1,950 increased for 0.5% of the con- in practice, the founders are required to deposit the full amount in cash. Accord- tract value; and ing to the Law on Preventing Money Laundering (December 2005), the bank must d. Over RSD 1,000,000 - RSD 8450 increased for 0.25% of the contract value, but not require identification of the company when opening the account. The company that more than RSD 26,000. opens the bank account must submit to the bank the name, family name, date and the place of birth, and the residence of any individual who possesses at least 10% In addition, there is a fee for requesting the notarization of RSD 32.5. In case of of shares or other rights that enable him or her to participate in managing the legal notarization of several documents only one request fee should be paid. The price for entity. notarization of the signatures specimen with a competent court is RSD 65 and RSD 325 for every proxy's signature verification (power of attorney). The previous practice Procedure 9. Register the employment contracts with the of requesting the court clerk to come to the business premises to certify a document Employment Organization/Fund against payment of the additional tax was revoked by a decision of the Constitu- tional Court of Serbia which found it to be unconstitutional. Time: 1 day Cost: No cost Procedure 3. Open a temporary bank account; pay initial deposit Comments: Founders must submit and certify the following documents: forms or its part and all other fees M1 new (application for insurance) and M1 old (application for insurance and Time: 1 day establishment of the working relation); form E1 (application on vacancy for working Cost: No cost place) along with the employee's medical-care booklet; form E3 (application for establishing or ending of working relation); RSD 1 (application for beginning/end- Comments: To open a temporary account, the decision or contract of incorporation ing/changing the terms of the payers of the contributions) and worker's id card and must be submitted to the chosen bank. At least half of the initial capital is payable in employment contract. advance, the rest within a period of 2 years from the registration. The initial deposit LIST OF PROCEDURES · STARTING A BUSINESS 41 is paid to a temporary account at one of the commercial banks. After registration is Added Tax (Official Gazette RS no. 84/2004, 86/2004, 61/2005) companies that completed, the funds are transferred to a Giro-account of the enterprise and may be predict that their total turnover in the period of 12 months will be more than RSD used in business transactions. Obtain the payment slip from the bank. 2,000,000 are obliged to submit a completed registration form for the VAT registra- tion; Procedure 4. Obtain the registration certificate from the Business e. Certified OP form; Registers Agency (SBRA) f. Statement on the employed workers; Time: 3 days g. Certified lists of real estates, motor vehicles and aircraft of the taxpayer; Cost: RSD 5,060 (RSD 3,600 for registration application + RSD 1,460 for obtaining the h.List of all stores and numbers of fiscal cash registers; and registration number) i. Agreement concluded with the book-keeping agency. Comments: Under the Business Registration Law, which came into effect in July Depending on the local tax authority, all the above documents have to be submitted 2004, the company registration is transferred from the Commercial Courts to the to the tax authority at latest 10-15 days following the day the personal tax number Serbian Business Registers Agency (SBRA). is obtained. The payment of RSD 3,600 is made for the registration application in the account of SBRA. The amount of RSD 1,460 has to be paid for obtaining the registration number Procedure 8. Open a permanent business account with the and code from the Republic Statistical Agency. Instead of two separate proceedings, commercial bank the agency now issues the number and the code of the Republic Statistical Agency Time: 1 day simultaneously with the registration certificate. The following documents need to be submitted: Cost: No cost a. Set of forms for registration; Comments: The documentation for setting up a permanent business account with a commercial bank varies. The following documents are generally required: b. Contract of incorporation (deed of establishment) or decision on the company founding with authentic signatures of founder(s) notarized by the Municipal Court; a. Original or certified copy of the company's registration with the SBRA (evidence of the company identification number and other relevant data); c. Decision on appointment of the director by the founders; b. Application for opening the permanent account; d. Information on the founder(s) (i.e. registration documents, if the founder is a legal entity or identification number and proof of registered residence, if the founder c. Contract for depositing funds; is a physical person. If such documents are in a foreign language, they must be d. Tax number for PIB (residents only); translated into Serbian by an authorized court translator (approximate costs RSD e. The bank-provided specimen card for legal entities (original); 800 per page); f. Identity card of the founders (copy); and e. Certified signature of the director on the OP form (or deputy director or other g. Incorporation deed (copy). authorized person); Although the law allows for in-kind contributions (labor, machinery, or other assets), f. Evidence of payment of the administrative fee; in practice, the founders are required to deposit the full amount in cash. According to g. Bank confirmation that the capital has been paid to the temporary bank account the Law on Preventing Money Laundering (December 2005), the bank must require or certified statement from the founder that the financial capital has been secured; identification of the company when opening the account. The company that opens h.Optionally, power of attorney if filing is made by an attorney. the bank account must submit to the bank the name, family name, date and the place The court will examine if the request complies with current legislation and whether of birth, and the residence of any individual who possesses at least 10% of shares or all necessary documents are attached to it. The requirement to submit the statute of other rights that enable him or her to participate in managing the legal entity. the company upon registration has been abolished. In addition, the assessment of the contribution in kind by the authorized appraisers is no longer required (submis- Procedure 9. Register the employment contracts with the sion of an agreement between the founders on the value of contribution in kind has Employment Organization/Fund replaced the aforementioned requirement). The registry at that point publishes the Time: 1 day registration on the Internet. Cost: No cost Procedure 5. Make stamp and seal Comments: Founders must submit and certify the following documents: forms M1 new (application for insurance) and M1 old (application for insurance and Time: 1 day establishment of the working relation); form E1 (application on vacancy for working Cost: RSD 2,000 place) along with the employee's medical-care booklet; form E3 (application for Comments: The price varies between RSD 1,000 to 3,000, depending on the number establishing or ending of working relation); RSD 1 (application for beginning/end- of words, design, etc. In order to make a stamp, the copy of the registration ruling ing/changing the terms of the payers of the contributions) and worker's id card and must be submitted to the stamp-maker. employment contract. Procedure 6. Obtain PIB ­ tax identification number at the Procedure 10. Obtain certificate from the PIO Fund (pension fund) Municipal Hall; certify the signatures (3 copies) for opening bank Time: 2 days account Cost: No cost Time: 6 days Comments: To obtain a certificate from the Employees'Pension and Disability Cost: No cost Insurance (PIO) Fund (Fond za penzijsko i invalidsko osiguranje zaposlenih), founders Comments: To obtain the tax identification number (PIB), the founders must must submit Form M1 (used for reporting employee insurance); Form M4 (for obtain- submit the following documents to the tax authorities of the municipality where ing a taxpayer registry number and paying contributions), Forms E1 and E3, and the the company is registered: registration ruling (copy), statistic ruling (copy), and a employment contract for inspection. If the application is not submitted within 8 days completed, signed, and stamped tax identification form. The RUJP office has a seat in of the start of employment, a statement explaining the delay must be submitted. every municipality. The registry number is issued within 24 hours and requires two visits to the Fund. Procedure 7. Register with local tax authority Procedure 11. Obtain certificate from the Health Fund Time: 7 days Time: 1 day Cost: No cost Cost: No cost Comments: The local tax authority sends the case to Belgrade and the registration Comments: To obtain a certificate from the Health Fund, the company must submit process takes 7 days. When the tax identification number is obtained, the company's the following documents: employment record card; medical examination record representative has to submit all or some of the following documents to the local tax (medical identity card); Forms M1 and M2 (application for health insurance); RSD 1 authority (documentation requirements vary among different local authorities): (application for beginning/ending/changing the terms of the payers of the contribu- tions) and a list of medical identity cards issued by the company. a. Copy of the registration certificate of the Business Registration Agency; b. Copy of the certificate on the personal tax number; c. Labor contract with the general manager/founder of the company; d. Completed registration form for the VAT; in accordance with the Law on Value 42 DOING BUSINESS IN SOUTH EAST EUROPE 2008 STARTING A BUSINESS d. Information on the founder(s) (i.e. registration documents, if the founder is a legal Vranje, Serbia entity or identification number and proof of registered residence, if the founder is a physical person. If such documents are in a foreign language, they must be Standard company legal form: Limited Liability Company (LLC) translated into Serbian by an authorized court translator (approximate costs RSD Minimum capital requirement: RSD 20,836 800 per page); Date as of: January 2008 e. Certified signature of the director on the OP form (or deputy director or other Procedure 1. Obtain registration forms, form RJR-1, form OP, authorized person); forms M1 and M4 f. Evidence of payment of the administrative fee; Time: 1 day g. Bank confirmation that the capital has been paid to the temporary bank account or certified statement from the founder that the financial capital has been secured; Cost: RSD 5 (OP form fee) h.Optionally, power of attorney if filing is made by an attorney. Comments: Registration forms for the Business Registration Agency (Registar privrednih subjekata) are free and are available exclusively at the Agency and at its The court will examine if the request complies with current legislation and whether official Web site (free download at www.apr.sr.gov.yu/APRWeb). Forms M1, M4, E1, all necessary documents are attached to it. The requirement to submit the statute of E3 are available on the Web site www.minrzs.sr.gov.yu, but the OP forms are not. the company upon registration has been abolished. In addition, the assessment of the contribution in kind by the authorized appraisers is no longer required (submis- Procedure 2. Notarize the Memorandum of Association and lease sion of an agreement between the founders on the value of contribution in kind has contract at the basic court replaced the aforementioned requirement). The registry at that point publishes the registration on the Internet. Time: 1 day Cost: RSD 15,301 (RSD 8,450+ (0.25%X Initial Capital of 2,597,510) + RSD 32.5 for Procedure 5. Make stamp and seal Notarization request + 5 owners X RSD 65 per signature Notarization) Time: 1 day Comments: Cost depends on the amount of capital and the value of the lease. At Cost: RSD 2,000 least 4 copies should be notarized with the Municipal Court, as the court will keep at Comments: The price varies between RSD 1,000 to 3,000, depending on the number least one copy, one copy will be filed later with the commercial court, and the filer of words, design, etc. In order to make a stamp, the copy of the registration ruling will want to retain at least 2 originals. The cost of such certification varies depending must be submitted to the stamp-maker. on the value of the incorporation contract. The Law on Court Taxes as of July 2005 establishes the following costs: Procedure 6. Obtain PIB ­ tax identification number at the a. Up to RSD 10,000 value - RSD 650; Municipal Hall; certify the signatures (3 copies) for opening bank b. From RSD 10,001 to 100,000 value - RSD 650 increased for 1% of the contract account value; Time: 9 days c. From RSD 100,001 to 1,000,000 value - RSD 1,950 increased for 0.5% of the con- tract value; and Cost: No cost d. Over RSD 1,000,000 - RSD 8450 increased for 0.25% of the contract value, but not Comments: To obtain the tax identification number (PIB), the founders must more than RSD 26,000. submit the following documents to the tax authorities of the municipality where the company is registered: registration ruling (copy), statistic ruling (copy), and a In addition, there is a fee for requesting the notarization of RSD 32.5. In case of completed, signed, and stamped tax identification form. The RUJP office has a seat in notarization of several documents only one request fee should be paid. The price for every municipality. notarization of the signatures specimen with a competent court is RSD 65 and RSD 325 for every proxy's signature verification (power of attorney). The previous practice Procedure 7. Register with local tax authority of requesting the court clerk to come to the business premises to certify a document against payment of the additional tax was revoked by a decision of the Constitu- Time: 7 days tional Court of Serbia which found it to be unconstitutional. Cost: No cost Comments: The local tax authority sends the case to Belgrade and the registration Procedure 3. Open a temporary bank account; pay initial deposit process takes 7 days. When the tax identification number is obtained, the company's or its part and all other fees representative has to submit all or some of the following documents to the local tax Time: 1 day authority (documentation requirements vary among different local authorities): Cost: No cost a. Copy of the registration certificate of the Business Registration Agency; Comments: To open a temporary account, the decision or contract of incorporation b. Copy of the certificate on the personal tax number; must be submitted to the chosen bank. At least half of the initial capital is payable in c. Labor contract with the general manager/founder of the company; advance, the rest within a period of 2 years from the registration. The initial deposit d. Completed registration form for the VAT; in accordance with the Law on Value is paid to a temporary account at one of the commercial banks. After registration is Added Tax (Official Gazette RS no. 84/2004, 86/2004, 61/2005) companies that pre- completed, the funds are transferred to a Giro-account of the enterprise and may be dict their total turnover in the period of 12 months will be more than RSD 2 million used in business transactions. Obtain the payment slip from the bank. are obliged to submit a completed registration form for the VAT registration; e. Certified OP form; Procedure 4. Obtain the registration certificate from the Business Registers Agency (SBRA) f. Statement on the employed workers; g. Certified lists of real estates, motor vehicles and aircraft of the taxpayer; Time: 3 days h.List of all stores and numbers of fiscal cash registers; and Cost: RSD 5,060 (RSD 3,600 for registration application + RSD 1,460 for obtaining the registration number) i. Agreement concluded with the book-keeping agency. Comments: Under the Business Registration Law, which came into effect in July Depending on the local tax authority, all the above documents have to be submitted 2004, the company registration is transferred from the Commercial Courts to the to the tax authority at latest 10-15 days following the day the personal tax number Serbian Business Registers Agency (SBRA). is obtained. The payment of RSD 3,600 is made for the registration application in the account of Procedure 8. Open a permanent business account with the SBRA. The amount of RSD 1,460 has to be paid for obtaining the registration number and code from the Republic Statistical Agency. Instead of two separate proceedings, commercial bank the agency now issues the number and the code of the Republic Statistical Agency Time: 1 day simultaneously with the registration certificate. The following documents need to Cost: No cost be submitted: Comments: The documentation for setting up a permanent business account with a a. Set of forms for registration; commercial bank varies. The following documents are generally required: b. Contract of incorporation (deed of establishment) or decision on the company a. Original or certified copy of the company's registration with the SBRA (evidence of founding with authentic signatures of founder(s) notarized by the Municipal Court; the company identification number and other relevant data); c. Decision on appointment of the director by the founders; b. Application for opening the permanent account; LIST OF PROCEDURES · STARTING A BUSINESS 43 c. Contract for depositing funds; on the value of the incorporation contract. The Law on Court Taxes as of July 2005 d. Tax number for PIB (residents only); establishes the following costs: e. The bank-provided specimen card for legal entities (original); a. Up to RSD 10,000 value - RSD 650; f. Identity card of the founders (copy); and b. From RSD 10,001 to 100,000 value - RSD 650 increased for 1% of the contract value; g. Incorporation deed (copy). c. From RSD 100,001 to 1,000,000 value - RSD 1,950 increased for 0.5% of the con- Although the law allows for in-kind contributions (labor, machinery, or other assets), tract value; and in practice, the founders are required to deposit the full amount in cash. According to d. Over RSD 1,000,000 - RSD 8450 increased for 0.25% of the contract value, but not the Law on Preventing Money Laundering (December 2005), the bank must require more than RSD 26,000. identification of the company when opening the account. The company that opens In addition, there is a fee for requesting the notarization of RSD 32.5. In case of the bank account must submit to the bank the name, family name, date and the place notarization of several documents only one request fee should be paid. The price for of birth, and the residence of any individual who possesses at least 10% of shares or notarization of the signatures specimen with a competent court is RSD 65 and RSD other rights that enable him or her to participate in managing the legal entity. 325 for every proxy's signature verification (power of attorney). The previous practice of requesting the court clerk to come to the business premises to certify a document Procedure 9. Register the employment contracts with the against payment of the additional tax was revoked by a decision of the Constitu- Employment Organization/Fund tional Court of Serbia which found it to be unconstitutional. Time: 1 day Procedure 3. Open a temporary bank account; pay initial deposit Cost: No cost or its part and all other fees Comments: Founders must submit and certify the following documents: forms M1 new (application for insurance) and M1 old (application for insurance and Time: 1 day establishment of the working relation); form E1 (application on vacancy for working Cost: No cost place) along with the employee's medical-care booklet; form E3 (application for Comments: In order to open a temporary account, the decision or contract of establishing or ending of working relation); RSD 1 (application for beginning/end- incorporation must be submitted to the chosen bank. At least half of the initial capital ing/changing the terms of the payers of the contributions) and worker's id card and is payable in advance, the rest within a period of 2 years from the registration. The employment contract. initial deposit is paid to a temporary account at one of the commercial banks. After registration is completed, the funds are transferred to a Giro-account of the enterprise Procedure 10. Obtain certificate from the PIO Fund (pension fund) and may be used in business transactions. Obtain the payment slip from the bank. Time: 2 days Cost: No cost Procedure 4. Obtain the registration certificate from the Business Registers Agency (SBRA) Comments: To obtain a certificate from the Employees'Pension and Disability Insurance (PIO) Fund (Fond za penzijsko i invalidsko osiguranje zaposlenih), founders Time: 10 days must submit Form M1 (used for reporting employee insurance); Form M4 (for obtain- Cost: RSD 5,060 (RSD 3,600 for registration application + RSD 1,460 for obtaining the ing a taxpayer registry number and paying contributions), Forms E1 and E3, and the registration number) employment contract for inspection. If the application is not submitted within 8 days Comments: Under the Business Registration Law, which came into effect in July of the start of employment, a statement explaining the delay must be submitted. 2004, the company registration is transferred from the Commercial Courts to the The registry number is issued within 24 hours and requires two visits to the Fund. Serbian Business Registers Agency (SBRA). Procedure 11. Obtain certificate from the Health Fund The payment of RSD 3,600 is made for the registration application in the account of SBRA. The amount of RSD 1,460 has to be paid for obtaining the registration number Time: 1 day and code from the Republic Statistical Agency. Instead of two separate proceedings, Cost: No cost the agency now issues the number and the code of the Republic Statistical Agency Comments: To obtain a certificate from the Health Fund, the company must submit simultaneously with the registration certificate. The following documents need to the following documents: employment record card; medical examination record be submitted: (medical identity card); Forms M1 and M2 (application for health insurance); RSD 1 a. Set of forms for registration; (application for beginning/ending/changing the terms of the payers of the contribu- b. Contract of incorporation (deed of establishment) or decision on the company tions) and a list of medical identity cards issued by the company. founding with authentic signatures of founder(s) notarized by the Municipal Court; c. Decision on appointment of the director by the founders; STARTING A BUSINESS d. Information on the founder(s) (i.e. registration documents, if the founder is a legal Zrenjanin, Serbia entity or identification number and proof of registered residence, if the founder is a physical person. If such documents are in a foreign language, they must be Standard company legal form: Limited Liability Company (LLC) translated into Serbian by an authorized court translator (approximate costs RSD Minimum capital requirement: RSD 20,836 800 per page); Date as of: January 2008 e. Certified signature of the director on the OP form (or deputy director or other authorized person); Procedure 1. Obtain registration forms, form RJR-1, form OP, f. Evidence of payment of the administrative fee; forms M1 and M4 g. Bank confirmation that the capital has been paid to the temporary bank account Time: 1 day or certified statement from the founder that the financial capital has been secured; Cost: RSD 5 (OP form fee) h.Optionally, power of attorney if filing is made by an attorney. Comments: Registration forms for the Business Registration Agency (Registar The court will examine if the request complies with current legislation and whether privrednih subjekata) are free and are available exclusively at the Agency and at its all necessary documents are attached to it. The requirement to submit the statute of official Web site (free download at www.apr.sr.gov.yu/APRWeb). Forms M1, M4, E1, the company upon registration has been abolished. In addition, the assessment of E3 are available on the Web site www.minrzs.sr.gov.yu, but the OP forms are not. the contribution in kind by the authorized appraisers is no longer required (submis- sion of an agreement between the founders on the value of contribution in kind has Procedure 2. Notarize the Memorandum of Association and lease replaced the aforementioned requirement). The registry at that point publishes the contract at the basic court registration on the Internet. Time: 1 day Procedure 5. Make stamp and seal Cost: RSD 15,301 (RSD 8,450+ (0.25%X Initial Capital of 2,597,510) + RSD 32.5 for Notarization request + 5 owners X RSD 65 per signature Notarization) Time: 1 day Comments: Cost depends on the amount of capital and the value of the lease. At Cost: RSD 2,000 least 4 copies should be notarized with the Municipal Court, as the court will keep at Comments: The price varies between RSD 1,000 to 3,000, depending on the number least one copy, one copy will be filed later with the commercial court, and the filer of words, design, etc. In order to make a stamp, the copy of the registration ruling will want to retain at least 2 originals. The cost of such certification varies depending must be submitted to the stamp-maker. 44 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure 6. Obtain PIB ­ tax identification number at the Procedure 10. Obtain certificate from the PIO Fund (pension fund) Municipal Hall; certify the signatures (3 copies) for opening bank Time: 2 days account Cost: No cost Time: 10 days Comments: To obtain a certificate from the Employees'Pension and Disability Cost: No cost Insurance (PIO) Fund (Fond za penzijsko i invalidsko osiguranje zaposlenih), founders Comments: To obtain the tax identification number (PIB), the founders must must submit Form M1 (used for reporting employee insurance); Form M4 (for obtain- submit the following documents to the tax authorities of the municipality where ing a taxpayer registry number and paying contributions), Forms E1 and E3, and the the company is registered: registration ruling (copy), statistic ruling (copy), and a employment contract for inspection. If the application is not submitted within 8 days completed, signed, and stamped tax identification form. The RUJP office has a seat in of the start of employment, a statement explaining the delay must be submitted. every municipality. The registry number is issued within 24 hours and requires two visits to the Fund. Procedure 7. Register with local tax authority Procedure 11. Obtain certificate from the Health Fund Time: 8 days Time: 1 day Cost: No cost Cost: No cost Comments: The local tax authority sends the case to Belgrade and the registration Comments: To obtain a certificate from the Health Fund, the company must submit process takes 7 days. When the tax identification number is obtained, the company's the following documents: employment record card; medical examination record representative has to submit all or some of the following documents to the local tax (medical identity card); Forms M1 and M2 (application for health insurance); RSD 1 authority (documentation requirements vary among different local authorities): (application for beginning/ending/changing the terms of the payers of the contribu- a. Copy of the registration certificate of the Business Registration Agency; tions) and a list of medical identity cards issued by the company. b. Copy of the certificate on the personal tax number; c. Labor contract with the general manager/founder of the company; LIST OF PROcEdURES d. Completed registration form for the VAT; in accordance with the Law on Value Added Tax (Official Gazette RS no. 84/2004, 86/2004, 61/2005) companies that pre- Dealing with licenses dict their total turnover in the period of 12 months will be more than RSD 2 million are obliged to submit a completed registration form for the VAT registration; e. Certified OP form; Shkodra, Albania f. Statement on the employed workers; Procedures to build a warehouse g. Certified lists of real estates, motor vehicles and aircraft of the taxpayer; Warehouse Value: USD 406,184 = ALL 40,000,000 h.List of all stores and numbers of fiscal cash registers; and Date as of: January 2008 i. Agreement concluded with the book-keeping agency. Depending on the local tax authority, all the above documents have to be submitted Procedure: 1. Request and obtain recent property certificate at to the tax authority at latest 10-15 days following the day the personal tax number the Real Estate Property Registry is obtained. Time: 7 days Procedure 8. Open a permanent business account with the Cost: ALL 500 commercial bank Comments: The certificate of ownership of the property where construction site shall be located can be obtained from the Real Estate Registry. This certificate cannot Time: 1 day be more than 3 months old. The authority has an electronic system, which expedites Cost: No cost the process. The fee was set by the Council of Ministers Decision No. 549, from Comments: The documentation for setting up a permanent business account with a 08/26/2002 in regard to Real Estate Property Registry fees. commercial bank varies. The following documents are generally required: a. Original or certified copy of the company's registration with the SBRA (evidence of Procedure: 2*. Request and obtain extract of master plan of the the company identification number and other relevant data); plot from the Urban Planning Department b. Application for opening the permanent account; Time: 45 days c. Contract for depositing funds; Cost: ALL 37,160 (land area­ 929 square meters, fee per square meter­ALL 40) d. Tax number for PIB (residents only); Comments: The master plan of the plot received by the municipal Urban Planning e. The bank-provided specimen card for legal entities (original); Department should also contain the approval of the municipal Department of Road Projects. The Road Projects Department is part of the municipality and the procedure f. Identity card of the founders (copy); and is handled internally. Article 36 of the Law On City Planning states that the master g. Incorporation deed (copy). plan of the plot shall be submitted to the technical secretary of the Territory Man- Although the law allows for in-kind contributions (labor, machinery, or other assets), agement Council and the municipality within 15 days from the date of its inclusion. in practice, the founders are required to deposit the full amount in cash. According to It should be available to the company within 30 days. the Law on Preventing Money Laundering (December 2005), the bank must require identification of the company when opening the account. The company that opens Procedure: 3*. Request and obtain document attesting that the the bank account must submit to the bank the name, family name, date and the place firm has no unpaid environmental fines of birth, and the residence of any individual who possesses at least 10% of shares or Time: 2 days other rights that enable him or her to participate in managing the legal entity. Cost: ALL 100 Procedure 9. Register the employment contracts with the Comments: This is required by Point 18 of the Council of Ministers' approval of the Employment Organization/Fund city planning regulations. It must be submitted with the required set of documents when applying for the construction site permit and the construction permit. Time: 1 day Cost: No cost Procedure: 4*. Request and obtain opinion of the local Urban Comments: Founders must submit and certify the following documents: forms Planning Department M1 new (application for insurance) and M1 old (application for insurance and Time: 3 days establishment of the working relation); form E1 (application on vacancy for working place) along with the employee's medical-care booklet; form E3 (application for Cost: ALL 100 establishing or ending of working relation); RSD 1 (application for beginning/end- Comments: BuildCo should request an attestation of the drawings'compliance with ing/changing the terms of the payers of the contributions) and worker's id card and the urban zoning regulations from the district Urban Planning Department. This employment contract. requirement is provided for by Point 21 of the regulations on construction (of up to three stories),"Documents that an Investor Should Submit for Obtaining Construction Site Permit and Construction Permit,"published by the Shkodra Municipal Council. LIST OF PROCEDURES · DEALING WITH LICENSES 45 Procedure: 5*. Request and obtain project clearance from water Procedure: 14*. Request and connect to electricity services authority Time: 25 days Time: 3 days Cost: ALL 40,000 Cost: No cost Comments: The water authority approves the project and indicates the nearest Procedure: 15*. Request and connect to water and sewage water supply sources. services Time: 14 days Procedure: 6*. Request and obtain project clearance from Cost: ALL 40,000 environmental protection agency Time: 3 days Procedure: 16*. Request and connect to telecommunications Cost: No cost services Time: 10 days Procedure: 7*. Request and obtain electricity authority approval Cost: ALL 30,000 Time: 5 days Cost: ALL 500 Procedure: 17. Receive on-site inspection and obtain approval from an authorized expert Procedure: 8*. Request and obtain fire department approval Time: 1 day Time: 15 days Cost: No cost Cost: ALL 20,000 Comments: The authorized expert from the Urban Planning Department will sign Comments: The fee for this procedure is 0.5% of the project value for objects with the inspection completion statement after performing the on-site inspection. the investment value of up to ALL 50 million, according to Decision No. 285 (of June 27, 2002) On Tariffs of the Police for Protection against Fire Services. The fee is Procedure: 18. Request and receive inspection from municipality estimated at 0.5% of the design value (generally 10% of the warehouse value, which Time: 5 days would be ALL 4 million in the case considered here).. Cost: No cost Procedure: 9. Request and obtain a decision from the Technical Commission of the Urban Planning Department Procedure: 19. Receive compliance report after inspection Time: 2 days Time: 45 days Cost: No cost Cost: ALL 800,000 (2% of the project value of ALL 40,000,000) Comments: The construction firm usually receives the compliance report within 3 Comments: The time for this procedure depends on the meeting schedule of the days of inspection. Commission for Regulating the Territory. This commission is supposed to meet once a month, but it may meet less frequently. Procedure: 20. Request and obtain the occupancy permit Procedure: 10. Request and obtain building permit Time: 30 days Time: 30 days Cost: No cost Cost: ALL 400,000 (1% of the project value of ALL 40,000,000) Comments: The occupancy permit grants the right to use the building after the con- struction is completed. Addressed to the Urban Planning Department, the request Comments: The building permit is valid for a term determined by the Commission must be accompanied by a set of documents related to the construction process and for Regulating the Territory. According to Article 46 of the Law On City Planning, by the completion statement, duly signed by the authorized expert. the permit is valid for 180 days. This permit grants the right to build on the site. The building permit shall be issued only to juridical persons who are licensed contractors. Procedure: 21. Register with the Real Estate Registry Several forms and documents are required to obtain this permit: a. Technical project; Time: 15 days b. Building plan chart; Cost: ALL 4,250 c. Budget and cost projection; Comments: After the issuance of the occupancy permit, the construction file is sub- mitted to the Real Estate Registry in order to register the warehouse. The submitted d. Seismologic study. file must include the building permit and reports from the above-mentioned inspec- According to Article 50 of the Law On City Planning, the Commission for Regulat- tion. The registration tax is EUR 8 per square meter. The fee was set by the Council of ing the Territory has 45 days to decide on the construction permit. According to Ministers Decision No. 549, from 08/26/2002 and was modified by decision No. 292 Article 51 of the same law, the fee is 1% of the investment value. At least 10 days on 04/24/2003. in advance, BuildCo must notify the construction office about the start of the con- struction. This notification must contain construction drawings, together with the * This procedure can be completed simultaneously with previous procedures construction permit, and topographic and engineering drawings of the foundations. The time for this procedure also depends on the meeting of the Commission for dEALING WITH LIcENSES Regulating the Territory. Vlora, Albania Procedure: 11. Receive on-site inspection of construction Procedures to build a warehouse foundations Warehouse Value: USD 406,184 = ALL 40,000,000 Time: 1 day Date as of: January 2008 Cost: No cost Procedure: 1. Request and obtain recent property certificate at Procedure: 12. Receive on-site inspection of the completion of the Real Estate Property Registry construction skeleton Time: 14 days Time: 1 day Cost: ALL 500 Cost: No cost Comments: The certificate of ownership of the property where construction site shall be located can be obtained from the Real Estate Registry. This certificate cannot Procedure: 13. Receive on-site inspection of the adjustment of be more than 3 months old. The authority has an electronic system, which expedites the surroundings of the building according to the drawings the process. The fee was set by the Council of Ministers Decision No. 549, from 08/26/2002 in regard to Real Estate Property Registry fees. Time: 1 day Cost: No cost 46 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 2*. Request and obtain extract of master plan of the Procedure: 10. Request and obtain building permit plot from the Urban Planning Department Time: 30 days Time: 45 days Cost: ALL 400,000 (1% of the project value of ALL 40,000,000) Cost: ALL 37,160 (land area- 929 square meters, fee per square meter-ALL 40) Comments: The building permit is valid for a term determined by the Commission Comments: The master plan of the plot received by the municipal Urban Planning for Regulating the Territory. According to Article 46 of the Law On City Planning, Department should also contain the approval of the municipal Department of Road the permit is valid for 180 days. This permit grants the right to build on the site. The Projects. The Road Projects Department is part of the municipality and the procedure building permit shall be issued only to juridical persons who are licensed contractors. is handled internally. Article 36 of the Law On City Planning states that the master Several forms and documents are required to obtain this permit: plan of the plot shall be submitted to the technical secretary of the Territory Man- a. Technical project; agement Council and the municipality within 15 days from the date of its inclusion. b. Building plan chart; It should be available to the company within 30 days. c. Budget and cost projection; Procedure: 3*. Request and obtain document attesting that the d. Seismologic study. firm has no unpaid environmental fines According to Article 50 of the Law On City Planning, the Commission for Regulat- Time: 2 days ing the Territory has 45 days to decide on the construction permit. According to Article 51 of the same law, the fee is 1% of the investment value. At least 10 days Cost: ALL 100 in advance, BuildCo must notify the construction office about the start of the con- Comments: This attestation is required by Point 18 of the Council of Ministers' struction. This notification must contain construction drawings, together with the approval of the city planning regulations. It must be submitted with the required set construction permit, and topographic and engineering drawings of the foundations. of documents when applying for the construction site permit and the construction The time for this procedure also depends on the meeting of the Commission for permit. Regulating the Territory. Procedure: 4*. Request and obtain opinion of the local Urban Procedure: 11. Receive on-site inspection of construction Planning Department foundations Time: 7 days Time: 1 day Cost: ALL 100 Cost: No cost Comments: BuildCo should request an attestation of the drawings'compliance with the urban zoning regulations from the district Urban Planning Department. This Procedure: 12. Receive on-site inspection of the completion of requirement is provided for by Point 21 of the regulations on construction (of up to construction skeleton three stories),"Documents that an Investor Should Submit for Obtaining Construc- Time: 1 day tion Site Permit and Construction Permit,"published by the Vlora Municipal Council. Cost: No cost Procedure: 5*. Request and obtain project clearance from water authority Procedure: 13. Receive on-site inspection of the adjustment of the surroundings of the building according to the drawings Time: 3 days Time: 1 day Cost: No cost Cost: No cost Comments: The water authority approves the project and indicates the nearest water supply sources. Procedure: 14*. Request and connect to electricity services Procedure: 6*. Request and obtain project clearance from Time: 25 days environmental protection agency Cost: ALL 40,000 Time: 4 days Procedure: 15*. Request and connect to water and sewage services Cost: No cost Time: 25 days Procedure: 7*. Request and obtain electricity authority approval Cost: ALL 40,000 Time: 5 days Procedure: 16*. Request and connect to telecommunications Cost: ALL 500 services Procedure: 8*. Request and obtain fire department approval Time: 10 days Time: 15 days Cost: ALL 30,000 Cost: ALL 20,000 Procedure: 17. Receive on-site inspection and obtain approval Comments: The fee for this procedure is 0.5% of the project value for objects with from an authorized expert the investment value of up to ALL 50 million, according to Decision No. 285 (of June 27, 2002) On Tariffs of the Police for Protection against Fire Services. The fee is Time: 1 day estimated at 0.5% of the design value (generally 10% of the warehouse value, which Cost: No cost would be ALL 4 million in the case considered here).. Comments: The authorized expert from the Urban Planning Department will sign the inspection completion statement after performing the on-site inspection. Procedure: 9. Request and obtain a decision from the Technical Commission of the Urban Planning Department Procedure: 18. Request and receive inspection from municipality Time: 45 days Time: 10 days Cost: ALL 800,000 (2% of the project value of ALL 40,000,000) Cost: No cost Comments: The time for this procedure depends on the meeting schedule of the Commission for Regulating the Territory. This commission is supposed to meet once Procedure: 19. Receive compliance report after inspection a month, but it may meet less frequently. Time: 3 days Cost: No cost Comments: The construction firm usually receives the compliance report within 3 days of inspection. Another 30 days are required to obtain the occupancy permit. LIST OF PROCEDURES · DEALING WITH LICENSES 47 Procedure: 20. Request and obtain the occupancy permit Procedure: 4. Request and obtain preliminary verification of the Time: 30 days heating installations and electrical installations Cost: No cost Time: 25 days Comments: The occupancy permit grants the right to use the building after the con- Cost: BAM 40 struction is completed. Addressed to the Urban Planning Department, the request Comments: BuildCo must submit the description of the main project plan to the must be accompanied by a set of documents related to the construction process and municipal electricity provider (Elektroprivreda), it consists of: by the completion statement, duly signed by the authorized expert. 1. Architecture Project or Book 1, which contains a site plan (scale: 1:200), all special Procedure: 21. Register with the Real Estate Registry features, at least two detailed cross-sectional plans, the facade (scale: 1:500), de- sign details (scale: 1:10), carpentry and locksmith plans, and technical description Time: 21 days and pre-measurements; and Cost: ALL 4,250 2. Building Project or Book 2, which contains cost estimates, technical descriptions Comments: After the issuance of the occupancy permit, the construction file is and reports, as well as a description of all phases of construction, including: submitted to the Real Estate Registry in order to register the warehouse. The submit- a. Electrical installations (IT, lightning rod) and fire prevention technology and video ted file must include the building permit and reports from the above-mentioned surveillance with pre-measurements and technical descriptions; inspections. The registration tax is EUR 8 per square meter. The total fee is thus ALL b. Heating installations (including pre-measurements and technical descriptions); 4,250. The fee was set by the Council of Ministers Decision No. 549, from 08/26/2002 and was modified by decision No. 292 on 04/24/2003. c. Water supply and sewage system installations (including pre-measurements and technical descriptions); * This procedure can be completed simultaneously with previous procedures d. Information on the geotechnical and civil engineering aspects of the project; e. Study on waste management and environment protection (required when busi- dEALING WITH LIcENSES ness activities impact the environment); Banja Luka, Bosnia and Herzegovina f. Study on fire and explosion prevention. Procedures to build a warehouse Procedure: 5*. Request and obtain preliminary verification of Warehouse Value: USD 650,000 = BAM 1,013,350 water supply and sewage system Date as of: January 2008 Time: 25 days Procedure: 1. Request and obtain excerpt from the cadastre plan Cost: BAM 150 showing status of the land plot Comments: BuildCo must submit the description of the main project plan to the Time: 2 days municipal water and sewage authority (Vodovod i Kanalizacije). Cost: BAM 27 Procedure: 6*. Obtain preliminary verification of study on fire Comments: BuildCo must submit a request for issuance of a copy of the cadastre and explosion prevention plan. The form is available from the municipality. Time: 10 days Procedure: 2*. Request and obtain excerpt from the land registry Cost: BAM 150 book showing proper registration Comments: BuildCo must submit electronically the description of the main project Time: 7 days plan to the Public Institute for Fire Protection, an independent agency. Cost: BAM 5 Procedure: 7. Obtain validation of the technical audit of the main Comments: The excerpt is available from the Land Registry Department of the project municipal court. The excerpt will be provided on the same day on written or oral request at the counter. Time: 15 days Cost: BAM 30,401 Procedure: 3. Request and obtain urban planning consent from Comments: BuildCo must have the technical audit showing that the project was the municipality (Urban Planning Department) designed in accordance with the conditions stated in the urban permit and the Time: 25 days provisions of the Law on Spatial Planning. Projects and their attachments must be validated by the legal entities/auditors authorized for the completion and verifica- Cost: BAM 16 tion of the projects. This legal entity must have at least one engineer having passed Comments: BuildCo submits a request for receiving urban planning consent with the state exam and with 5 years of experience. The authorized auditor signs the the following documents: statement by which it confirms that the project is entirely in compliance. The request a. Reason for the request including data necessary for planning department to assess and the total price for technical audits vary among municipalities depending on the project (program sketch, first design draft or preliminary project design or municipal decisions about the prices for technical audit of constructions. similar documentation); b. Preliminary project design in 2 copies (or project proposal or program sketch Procedure: 8. Apply for building permit with the municipality depending on the level of complexity); Time: 25 days c. General schemes for power installations, heating installations, fire prevention and Cost: BAM 41 security systems, water supply and sewage installation systems; Comments: BuildCo must submit a request to the Department for Spatial Planning, d. Excerpt from the cadastre plan showing right to build/ownership of plot not older Urbanism and Communal Matters with the following documents: than 6 month; a. Valid urban planning consent; e. Excerpt from the land registry book showing proper registration; b. Cadastre excerpt, land plot and proof of right to build; f. Environmental consent, if required; c. Proof of payment for purchase of the construction land; g. Other data if requested by a competent body; d. Proof of rent payments for the paid rent compensation; h. Consent on the protection from fire and explosion issued by a competent company; e. Consents obtained during the issuance of the urban planning permit; i. Consent for the heating installations from a competent company. f. Consent with the planned building; any other enclosures as requested by the Once issued the urban permit is valid for a period of one year during which the com- authorities; pany may submit the request for the construction permit. The time needed for this g. Verified development project (two copies); procedure has decreased due to administrative reform throughout the municipalities h.Consents with the project documentations (Project Books 1 and 2, including the and staff changes. preliminary verifications applied for in procedures 4 to 7). There is no fee associated with the application. 48 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 9. Request and obtain marking out of the land plot inspection board as to the date and time of the inspection no less than 10 days prior Time: 9 days to the inspection scheduled date. No later than on the day of the inspection the Cost: BAM 1,521 company is obliged to present the following documentation to the board: Comments: The request for marking out the land plot must be submitted to the a. Excerpt from the commercial court register showing that the company is duly registered; municipal construction department with the construction permit and the urban planning consent. The municipal authorities mark out the land plot. Cost depends b. Details of the people/person responsible for each phase of the work (if the project on the municipal decisions on prices adopted annually and on the on-site inspection is not complex, then one person may be appointed to be responsible for all the estimation. work); c. Construction permit and copy of the Main Project (Books 1 and 2); Procedure: 10. Notify the municipality about the commencement d. Performance reports verified by the designer of the Main Project, for the purpose of works of validation of compliance with the Main Project, as well as terms and conditions Time: 7 days specified in the building permit; Cost: No cost e. The construction diary maintained by the company; Comments: BuildCo must notify the municipal construction department about the f. Construction book, which is a document containing the verified performed quan- start of construction no later than 8 days before work begins. tity of works in compliance with the main project (by the company); g. Proof of testing and quality of materials and equipment used received from suppli- Procedure: 11. Request and obtain phone line connection ers at the time of purchase of materials and equipment; Time: 45 days h.Construction mark out plan and minutes on the performed mark out. This is the Cost: BAM 52 procedure of transferring the dimensions of the future construction from the plans to the site and marking the edges of the construction surface. The construction Comments: BuildCo must contact BH Telecom to obtain a phone line connection. mark out is carried out by the physical or legal person registered for performing The request should include the preliminary verification of the phone installation and geodetic activities; Project Books 1 and 2. i. Scheme of the construction-site organization; and Procedure: 12*. Request and connect to water and sewage j. Decision on the appointed engineers and the supervisors. services k. Proof that any special conditions defined in the urban planning consent have been Time: 20 days fulfilled; and Cost: BAM 100 l. Project of the executed activities if some construction activities were done ad- ditionally and not included in the main or design verified by a competent body. Comments: BuildCo must contact the municipal water and sewage authority (Vodovod i Kanalizacije) to obtain water and sewage connection. The request should The inspection board will draw up a protocol which needs to be signed by the presi- include the preliminary verification and Project Books 1 and 2. dent and each board member. The board is obliged to forward the signed protocol to the relevant municipal department within eight days following the site inspection. Procedure: 13*. Request electricity connection Even in cases where the authorized representatives were not present at the inspec- tion or have not forwarded the written report within 8 days after the site inspection, Time: 20 days the building usage permit will be issued. However, if the protocol by the technical Cost: BAM 100 inspection board states that the building is defective and the defective parts need Comments: BuildCo must contact the municipal electricity provider (Elektro- to be removed, then the municipality will set a deadline of up to 90 days for the privreda) to obtain an electrical connection. The request should include the proof of removal of the defects. Once the defects have been removed to the satisfaction of property ownership, the construction permit, and other data, as requested. the municipality, the permit for construction usage will be issued. If the protocol by the technical inspection board states that a building usage permit can be issued Procedure: 14. Request and obtain the building usage permit then the construction department of the relevant municipality, is obliged to issue the usage permit within 10 days from the day of receiving the protocol on technical Time: 30 days inspection performed. A building for which a building usage permit has not been Cost: BAM 31 issued can not be registered in the land registry books at the municipal court (see Comments: After the technical review of completed construction, BuildCo must sub- procedure 16 below). mit a request for the building usage permit, including the following documents: a. Copy of the building permit; Procedure: 16. Register the building into the cadastre book b. Copy of a cadastre plan including an exact plan of the marked final building posi- records tion; Time: 75 days c. Written statements from each contractor stating that the work has been properly Cost: BAM 700 performed in accordance with the project design and future maintenance plans; Comments: The request for registration in the land books should be submitted and with an application sheet, which is available from the municipality, and the build- d. Written report by the work supervisor that all materials used were of standard ing usage permit. The duration is not defined. This procedure is protracted due to quality (certified by the suppliers). the privatization of the apartments in Bosnia and Herzegovina and therefore the BuildCo submits these documents to the construction department of the relevant cadastre departments in the municipalities are overwhelmed with new registrations. municipality (the same municipal department that issued the building permit). The The procedure for completion is lengthy as the cadastre departments are currently building usage permit is issued upon completion of the technical inspection. It is processing the requests for registrations from 2004. Court tax per request is 4 BAM. only after the issuance of this permit that the building may be used. However, if some activities need to be done by the cadastre for the registration this price can increase. Procedure: 15*. Receive technical inspection Time: 70 days * This procedure can be completed simultaneously with previous procedures Cost: BAM 1,521 Comments: The relevant municipal department which issued the building permit performs the technical inspection within 15 days from the day of receiving of a duly submitted request for issuance of a building usage permit. The relevant municipal department must appoint an independent professional inspection board for the technical inspection within eight days from the date of a duly submitted request for issuance of a building usage permit. The number of board members appointed depends on the type and complexity of the building: the board will consist of one professional for each type of works to be inspected (architectural/construction, mechanical, water and sewage system, electric installations, etc.). The relevant municipal department is obliged to notify the company, and the members of the LIST OF PROCEDURES · DEALING WITH LICENSES 49 dEALING WITH LIcENSES Procedure: 5*. Request and obtain preliminary verification of Mostar, Bosnia and Herzegovina water supply and sewage system project Procedures to build a warehouse Time: 15 days Warehouse Value: USD 650,000 = BAM 1,013,350 Cost: BAM 40 Date as of: January 2008 Comments: BuildCo must submit the description of the main project plan to the Procedure: 1. Request and obtain excerpt from the cadastre plan municipal water and sewage authority (Vodovod i Kanalizacije). showing status of the land plot Procedure: 6*. Obtain preliminary verification of study on fire Time: 3 days and explosion prevention Cost: BAM 35 Time: 7 days Comments: BuildCo must submit a request for issuance of a copy of the cadastre Cost: BAM 100 plan. The form is available from the municipality. Comments: BuildCo must submit electronically the description of the main project Procedure: 2*. Request and obtain excerpt from the land registry plan to the Public Institute for Fire Protection, an independent agency. book showing proper registration Procedure: 7. Obtain validation of the technical audit of the main Time: 13 days project Cost: BAM 10 Time: 10 days Comments: The excerpt is available from the Land Registry Department of the Cost: BAM 30,401 municipal court. Comments: BuildCo must have the technical audit showing that the project was Procedure: 3. Request and obtain urban planning consent from designed in accordance with the conditions stated in the urban permit and the the municipality (Urban Planning Department) provisions of the Law on Spatial Planning. Projects and their attachments must be validated by the legal entities/auditors authorized for the completion and verifica- Time: 15 days tion of the projects. This legal entity must have at least one engineer having passed Cost: BAM 650 the state exam and with 5 years of experience. The authorized auditor signs the Comments: BuildCo submits a request for receiving urban planning consent with statement by which it confirms that the project is entirely in compliance. The request the following documents: and the total price for technical audits vary among municipalities depending on municipal decisions about the price list for technical audit of constructions. a. Reason for the request including data necessary for planning department to assess the project (program sketch, first design draft or preliminary project design or Procedure: 8. Apply for building permit with the municipality similar documentation); b. Preliminary project design in 2 copies (or project proposal or program sketch Time: 15 days depending on the level of complexity); Cost: BAM 350 c. General schemes for power installations, heating installations, fire prevention and Comments: BuildCo must submit a request to the Department for Spatial Planning, security systems, water supply and sewage installation systems; Urbanism and Communal Matters with the following documents: d. Excerpt from the cadastre plan showing right to build/ownership of plot not older a. Valid urban planning consent; than 6 month; b. Cadastre excerpt, land plot and proof of right to build; e. Excerpt from the land registry book showing proper registration; c. Proof of payment for purchase of the construction land; f. Environmental consent, if required; d. Proof of rent payments for the paid rent compensation; g. Other data if requested by a competent body; e. Consents obtained during the issuance of the urban planning permit; h.Consent on the protection from fire and explosion issued by a competent com- f. Consent with the planned building; any other enclosures requested by the pany; authorities; i. Consent for the heating installations from a competent company. g. Verified development project (two copies); Once issued the urban permit is valid for a period of one year during which the com- h.Consents with the project documentations (Project Books 1 and 2, including the pany may submit the request for the construction permit. The time needed for this preliminary verifications applied for in procedures 4 to 7). procedure has decreased due to administrative reform throughout the municipalities There is no fee associated with the application. and staff changes. Procedure: 9. Request marking out of the land plot Procedure: 4. Request and obtain preliminary verification of the heating and electricity installations Time: 15 days Cost: BAM 30 Time: 30 days Comments: The request must be submitted to the municipal construction depart- Cost: BAM 40 ment with the construction permit and the urban planning consent. The municipal Comments: BuildCo must submit the description of the main project plan to the authorities mark out the land plot. Cost depends on the municipal decisions on municipal electricity provider (Elektroprivreda), it consists of: prices adopted annually and on the on-site inspection estimation. 1. Architecture Project or Book 1, which contains a site plan (scale: 1:200), all special features, at least two detailed cross-sectional plans, the facade (scale: 1:500), de- Procedure: 10. Notify the municipality about the commencement sign details (scale: 1:10), carpentry and locksmith plans, and technical description of works and pre-measurements; and Time: 8 days 2. Building Project or Book 2, which contains cost estimates, technical descriptions Cost: BAM 10 and reports, as well as a description of all phases of construction, including: Comments: BuildCo must notify the municipal construction department about the a. Electrical installations (IT, lightning rod) and fire prevention technology and video start of construction no later than 8 days before work begins. surveillance with pre-measurements and technical descriptions; b. Heating installations (including pre-measurements and technical descriptions); Procedure: 11. Request phone line connection c. Water supply and sewage system installations (including pre-measurements and Time: 7 days technical descriptions); Cost: BAM 150 d. Information on the geotechnical and civil engineering aspects of the project; Comments: BuildCo must contact BH Telecom to obtain a phone line connection. e. Study on waste management and environment protection (required when busi- The request should include the preliminary verification of the phone installation and ness activities impact the environment); Project Books 1 and 2. f. Study on fire and explosion prevention. 50 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 12*. Request and connect to water and sewage services l. Project of the executed activities if some construction activities were done ad- Time: 10 days ditionally and not included in the main or design verified by a competent body. Cost: BAM 150 The inspection board will draw up a protocol which needs to be signed by the presi- Comments: BuildCo must contact the municipal water and sewage authority dent and each board member. The board is obliged to forward the signed protocol to the relevant municipal department within eight days following the site inspection. (Vodovod i Kanalizacije) to obtain water and sewage connection. The request should Even in cases where the authorized representatives were not present at the inspec- include the preliminary verification and Project Books 1 and 2. tion or have not forwarded the written report within 8 days after the site inspection, Procedure: 13*. Request electricity connection the building usage permit will be issued. However, if the protocol by the technical inspection board states that the building is defective and the defective parts need Time: 10 days to be removed, then the municipality will set a deadline of up to 90 days for the Cost: BAM 2,000 removal of the defects. Once the defects have been removed to the satisfaction of Comments: BuildCo must contact the municipal electricity provider (Elektro- the municipality, the permit for construction usage will be issued. If the protocol privreda) to obtain an electrical connection. The request should include the proof of by the technical inspection board states that a building usage permit can be issued property ownership, the construction permit, and other data, as requested. then the construction department of the relevant municipality, is obliged to issue the usage permit within 10 days from the day of receiving the protocol on technical Procedure: 14. Request and obtain the building usage permit inspection performed. A building for which a building usage permit has not been issued can not be registered in the land registry books at the municipal court (see Time: 15 days procedure 16 below). Cost: BAM 6,500 Comments: After the technical review of completed construction, BuildCo must sub- Procedure: 16. Register the building into the cadastre book mit a request for the building usage permit, including the following documents: Time: 400 days a. Copy of the building permit; Cost: BAM 200 b. Copy of a cadastre plan including an exact plan of the final building position; Comments: The request for registration in the land books should be submitted c. Written statements from each contractor stating that the work has been properly with an application sheet, which is available from the municipality, and the build- performed in accordance with the design and future maintenance plans; and ing usage permit. The duration is not defined. This procedure is protracted due to d. Written report by the work supervisor that all materials used were of standard the privatization of the apartments in Bosnia and Herzegovina and therefore the quality (certified by the suppliers). cadastre departments in the municipalities are overwhelmed with new registrations. The procedure for completion is lengthy as the cadastre departments are currently BuildCo submits these documents to the construction department of the relevant processing the requests for registrations from 2004. Court tax per request is 4 BAM. municipality (the same municipal department that issued the building permit). The However, if some activities need to be done by the cadastre for the registration this building usage permit is issued upon completion of the technical inspection. It is price can increase. only after the issuance of this permit that the building may be used. Procedure: 15*. Receive technical inspection * This procedure can be completed simultaneously with previous procedures Time: 15 days dEALING WITH LIcENSES Cost: No cost Osijek, Croatia Comments: The relevant municipal department which issued the building permit performs the technical inspection within 15 days from the day of receiving of a duly Procedures to build a warehouse submitted request for issuance of a building usage permit. The relevant municipal Warehouse Value: USD 513,901 = HRK 3,000,000 department must appoint an independent professional inspection board for the Date as of: January 2008 technical inspection within eight days from the date of a duly submitted request for issuance of a building usage permit. The number of board members appointed Procedure: 1. Request and obtain preliminary approval from depends on the type and complexity of the building: the board will consist of one National Croatian Electric Grid professional for each type of works to be inspected (architectural/construction, Time: 30 day mechanical, water and sewage system, electric installations, etc.). The relevant municipal department is obliged to notify the company, and the members of the Cost: HRK 402 (HRK 152 for the approval + HRK 250 for the electro-energy approval) inspection board as to the date and time of the inspection no less than 10 days prior Comments: The Croatian Electricity Company issues the approval based on the to the inspection scheduled date. No later than on the day of the inspection the review of the project design for compliance with the regulations. The Croatian Elec- company is obliged to present the following documentation to the board: tricity Company can also issue a written approval within the timeframe stipulated a. Excerpt from the commercial court register showing that the company is duly by law. It is also necessary to obtain an electroenergy approval, which is one of the registered; preconditions for obtaining a construction permit, and also determines the cost of connecting to the grid. b. Details of the people/person responsible for each phase of the work (if the project is not complex, then one person may be appointed to be responsible for all the Procedure: 2*. Request and obtain extract from the Land Registry work); for subject and bordering lands c. Construction permit and copy of the Main Project (Books 1 and 2); Time: 7 days d. Performance reports verified by the designer of the Main Project, for the purpose of validation of compliance with the Main Project, as well as terms and conditions Cost: HRK 20 (Administrative tax) specified in the building permit; Comments: The extract can be obtained at the Land Registry of the local court for e. The construction diary maintained by the company; an administrative tax of HRK 20. The extracts for bordering lands can be obtained for free online. The possession record is obtained together with the extract. f. Construction book, which is a document containing the verified performed quan- tity of works in compliance with the main project (by the company); Procedure: 3*. Request and obtain copy of the cadastre plan g. Proof of testing and quality of materials and equipment used received from suppli- Time: 7 days ers at the time of purchase of materials and equipment; Cost: HRK 70 h.Construction mark out plan and minutes on the performed mark out. This is the procedure of transferring the dimensions of the future construction from the plans Comments: This copy can be obtained from the local Office for Cadastre and to the site and marking the edges of the construction surface. The construction Geodetic Activities. mark out is carried out by the physical or legal person registered for performing geodetic activities; i. Scheme of the construction-site organization; and j. Decision on the appointed engineers and the supervisors. k. Proof that any special conditions defined in the urban planning consent have been fulfilled; and LIST OF PROCEDURES · DEALING WITH LICENSES 51 Procedure: 4. Request and obtain location permit from local Procedure: 10*. Connect to power grid Office of Space Planning and Construction Time: 30 days Time: 90 days Cost: HRK 230,830 (1,647 HRK X 140kw + 250 HRK fee) Cost: HRK 770 (Administrative tax) Comments: The formulas for the calculation of connection fees are set pursuant Comments: Pursuant to the Law on Physical Planning it is necessary to obtain to the Energy Law that the Croatian Energy Regulatory Agency adopted in March a location permit, to ensure that the project (preliminary drawings) meets the 2006. The fees are calculated either on the basis of the unit price and the connection applicable zoning regulations. The preliminary approvals precede the request for a power or on the basis of the real costs of connecting to the network. location permit. The municipality should act as a one-stop shop and obtain all the preliminary approvals: from the fire department, the waste collection department, Procedure: 11*. Connect to telecommunications system the National Telecommunications Agency, and the local waterworks administration. Time: 30 days The location permit is valid for 2 years and may be extended for additional 2 years, Cost: HRK 610 provided the zoning regulations have not been changed. The request for the location permit should be accompanied by the documents obtained in procedures 2 and 3. Comments: The cost varies depending on the service required. Procedure: 5. Obtain decision from municipal authorities Procedure: 12. Request and obtain occupancy permit from local regarding utilities and pay utility fee Office for Space Planning and Construction Time: 15 days Time: 30 days Cost: HRK 144,300 (650m base X 6m height X HRK 37) Cost: HRK 1,200 Comments: The company must obtain a decision on the payment of utility fees from Comments: The company should request approval of the building by the competent the municipal authorities for utilities. Such decision is made by the authority based building authority (Tjelo Graditeljstva). The request has to be accompanied by a list on the construction permit. The fee is paid for the purpose of financing the utilities. of documents related to the construction process, such as a copy of the building The amount of the fee depends on the volume of the building (in cubic meters) and permit, data on construction participants (investor, designer, constructor, supervi- on the location. It can be paid at once or in installments. Whenever it is necessary to sory engineer, and reviewer), builder's written statement on executed works and refinance utilities or public roads, and the financing is the responsibility of the city, conditions of construction maintenance, and supervisory engineer's final report on the investor can arrange with the city to finance these works and such financing can construction execution. Afterwards, a special commission is established to carry out be considered towards the investor's obligation to pay the utility fees. The utility fees an on-site inspection, which occurs within 30 days after the receipt of the request. range from HRK 20 to HRK 180 per m3, depending on the zone. The cost for the ware- The municipal authority will issue the occupancy permit within 30 days from the house described in the questionnaire would be 650m (base) X 6m (height) X HRK 37. on-site inspection. Pursuant to the Building Code, the occupancy permit shall not be issued if the construction is not connected to the public-traffic surface and other Procedure: 6*. Pay water contribution to the state company utilities as provided in the conditions of the location permit. Croatian Waters (Hrvatske Vode) Procedure: 13. Register new construction with the Land Registry Time: 15 days Time: 7 days Cost: HRK 163,800 (650m base X 6m height X HRK 42) Cost: HRK 500 Comments: The water contribution is paid to finance the management of water re- sources and flood protection. The cost is based on the zone of the new construction Comments: Registering the new construction is not mandatory, but without (Zones A, B, and C ­ Zone A is Zagreb and the protected coastal area, Zone B is the registration the owner cannot take out a mortgage. Having an occupancy permit is a rest of the country, and Zone C are areas subject to a special Government care), the precondition for registering the new construction. purpose of the construction (residential, industrial, public interest), and the volume of the construction. The cost for the warehouse described in the questionnaire would * This procedure can be completed simultaneously with previous procedures be 650m (base) X 6m (height) X 42 HRK according to the price list of Hrvatske Vode. dEALING WITH LIcENSES Procedure: 7. Request and obtain building permit from the local Sibenik, Croatia Office for Space Planning and Construction Procedures to build a warehouse Time: 90 days Warehouse Value: USD 513,901 = HRK 3,000,000 Cost: HRK 1,050 (0.035% of the value of the project of HRK 4,000,000) Date as of: January 2008 Comments: The building permit is the document upon which the investor can begin construction. The Building Code stipulates that the project design must be in Procedure: 1. Request and obtain preliminary approval from the compliance with the conditions provided in the location permit and with the condi- Inspectorate for Fire at the Ministry of Interior Affairs tions provided in special laws and regulations. The project designer is liable for such Time: 15 days compliance. The competent authority for issuance of the building permit needs to obtain the approvals (clearances) related to fire-fighting protection, work safety, ion- Cost: No cost izing and non-ionizing protection and protection of cultural heritage. The competent Comments: The Inspectorate issues the approval based on the review of the project authority shall check whether the project design has been executed in accordance design at the municipal offices for space planning, environment protection, con- with the conditions provided in the location permit, whether the necessary docu- struction, and property rights. It reviews whether the project has been prepared in ments have been attached to the application, whether there is an access from the accordance with the regulations. The Inspectorate can also issue a written approval land plot to the public-traffic surface and whether the utility fees have been settled. within the timeframe stipulated by law. Although the local Office of Space Planning According to the amendments to the Building Code, the following documents need and Construction is officially required to obtain the necessary approvals, in practice to be attached to the application for issuance of the building permit: location permit the client has to obtain the approvals on his/her own. or excerpt from the detailed zoning plan; three sets of project design drawings, and other eventual studies, if necessary. Procedure: 2*. Request and obtain preliminary approval from National Croatian Electric Grid Procedure: 8*. Receive on-site inspection Time: 15 days Time: 1 day Cost: HRK 402 (HRK 152 for the approval + HRK 250 for the electro-energy approval) Cost: No cost Comments: The Croatian Electricity Company issues the approval based on the Comments: The inspection is performed by a team from the local Office for Space review of the project design for compliance with the regulations. The Croatian Elec- Planning and Construction. tricity Company can also issue a written approval within the timeframe stipulated by law. It is also necessary to obtain an electroenergy approval, which is one of the Procedure: 9. Connect to water and sewage system preconditions for obtaining a construction permit, and also determines the cost of Time: 30 days connecting to the grid. Cost: HRK 50,000 Comments: The cost is not standardized, but calculated by the water and sewage company on a case-by-case basis. 52 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 3*. Request and obtain preliminary approval from Procedure: 10*. Pay water contribution to the state company waste collection department Croatian Waters (Hrvatske Vode) Time: 15 days Time: 20 days Cost: No cost Cost: HRK 163,800 (650m base X 6m height X HRK 42) Comments: Although the local Office of Space Planning and Construction is of- Comments: The water contribution is paid to finance the management of water ficially required to obtain the necessary approvals, in practice the client has to obtain resources and flood protection. The cost is determined based on the zone of the new the approvals himself/herself. construction (Zones A, B, and C ­ Zone A is Zagreb and the protected coastal area, Zone B is the rest of the country, and Zone C are areas subject to a special Govern- Procedure: 4*. Request and obtain preliminary approval from the ment care), the purpose of the construction (residential, industrial, public interest), national telecommunications agency and the volume of the construction. The cost for the warehouse described in the Time: 15 days questionnaire would be 650m (base) X 6m (height) X 42 HRK according to the price list of Hrvatske Vode. Cost: No cost Comments: Although the local Office of Space Planning and Construction is of- Procedure: 11. Request and obtain building permit from the local ficially required to obtain the necessary approvals, in practice the client has to obtain Office for Space Planning and Construction the approvals himself/herself. Time: 90 days Procedure: 5*. Request and obtain preliminary approval from the Cost: HRK 1,050 (0.035% of the value of the project of HRK 4,000,000) local water authority Comments: The building permit is the document upon which the investor can Time: 15 days begin construction. The Building Code stipulates that the project design must be in compliance with the conditions provided in the location permit and with the condi- Cost: HRK 214 tions provided in special laws and regulations. The project designer is liable for such Comments: Although the local Office of Space Planning and Construction is of- compliance. The competent authority for issuance of the building permit needs to ficially required to obtain the necessary approvals, in practice the client has to obtain obtain the approvals (clearances) related to fire-fighting protection, work safety, ion- the approvals himself/herself. izing and non-ionizing protection and protection of cultural heritage. The competent authority shall check whether the project design has been executed in accordance Procedure: 6*. Request and obtain extract from the Land Registry with the conditions provided in the location permit, whether the necessary docu- for subject land and bordering lands ments have been attached to the application, whether there is an access from the Time: 1 day land plot to the public-traffic surface and whether the utility fees have been settled. According to the amendments to the Building Code, the following documents need Cost: HRK 20 (Administrative tax) to be attached to the application for issuance of the building permit: location permit Comments: The extract can be obtained at the Land Registry of the local court for or excerpt from the detailed zoning plan; three sets of project design drawings, and an administrative tax of HRK 20. The extracts for bordering lands can be obtained for other eventual studies, if necessary. free online. The possession record is obtained together with the extract. Procedure: 12. Connect to water and sewage system Procedure: 7*. Request and obtain copy of the cadastre plan Time: 20 days Time: 7 days Cost: HRK 50,000 Cost: HRK 70 Comments: The cost is not standardized, but calculated by the water and sewage Comments: This copy can be obtained from the local Office for Cadastre and company on a case-by-case basis. Geodetic Activities. Procedure: 13*. Connect to power grid Procedure: 8. Request and obtain location permit from local Time: 20 days Office of Space Planning and Construction Cost: HRK 230,830 (1,647 HRK x 140kw + 250 HRK fee) Time: 60 days Comments: The formulas for the calculation of connection fees are set pursuant Cost: HRK 770 (Administrative tax) to the Energy Law that the Croatian Energy Regulatory Agency adopted in March Comments: Pursuant to the Law on Physical Planning it is necessary to obtain a 2006. The fees are calculated either on the basis of the unit price and the connection location permit, the purpose of which is to ensure that the project (preliminary power or on the basis of the real costs of connecting to the network. drawings) meets the applicable zoning regulations. The preliminary approvals precede obtaining a location permit. The municipality should act as a one stop shop Procedure: 14*. Connect to telecommunications system and obtain all the preliminary approvals. However, in practice it the company that Time: 20 days carries out these procedures. The validity of a location permit is 2 years and may be extended for additional 2 years, provided the zoning regulations in respect of Cost: HRK 610 the location have not been changed. The request for the location permit should be Comments: The cost varies depending on the service required. accompanied by the documents obtained in Procedures 6 and 7. Procedure: 15. Request and obtain occupancy permit from local Procedure: 9. Obtain decision from municipal authorities Office for Space Planning and Construction regarding utilities and pay utility fee Time: 30 days Time: 20 days Cost: HRK 1,200 Cost: HRK 144,300 (650m base X 6m height X HRK 37) Comments: The company should request approval of the building by the competent Comments: The company must obtain a decision on the payment of utility fees from building authority (Tjelo Graditeljstva). The request has to be accompanied by a list the municipal authorities for utilities. Such decision is made by the said authority of documents related to the construction process, such as a copy of the building based on the construction permit. The fee is paid for the purpose of financing the permit, data on construction participants (investor, designer, constructor, supervi- utilities. The amount of the fee depends on the volume of the building (in cubic sory engineer, and reviewer), builder's written statement on executed works and meters) and on the location. It can be paid at once or in installments. Whenever it is conditions of construction maintenance, and supervisory engineer's final report on necessary to refinance utilities or public roads, and the financing is the responsibility construction execution. Afterwards, a special commission is established to carry out of the city, the investor can arrange with the city to finance these works and such an on-site inspection, which occurs within 30 days after the receipt of the request. financing can be considered towards the investor's obligation to pay the utility fees. The municipal authority will issue the occupancy permit within 30 days from the The utility fees range from HRK 20 to HRK 180 per m3, depending on the zone. The on-site inspection. Pursuant to the Building Code, the occupancy permit shall not cost for the warehouse described in the questionnaire would be 650m (base) X 6m be issued if the construction is not connected to the public-traffic surface and other (height) X HRK 37. utilities as provided in the conditions of the location permit. LIST OF PROCEDURES · DEALING WITH LICENSES 53 Procedure: 16*. Receive on-site inspection and signing of the Procedure: 6*. Request and obtain extract from the Land Registry completion statement for subject land and bordering lands Time: 1 day Time: 1 day Cost: No cost Cost: HRK 20 (Administrative tax) Comments: The inspection is performed by a team from the local Office for Space Comments: The extract can be obtained at the Land Registry of the local court for Planning and Construction. an administrative tax of HRK 20. The extracts for bordering lands can be obtained for free online. The possession record is obtained together with the extract. Procedure: 17. Register new construction with Land Registry Time: 10 days Procedure: 7*. Request and obtain copy of the cadastre plan Cost: HRK 500 Time: 1 day Comments: Registering the new construction is not mandatory, but without Cost: HRK 70 registration the owner cannot take out a mortgage. Having an occupancy permit is a Comments: This copy can be obtained from the local Office for Cadastre and precondition for registering the new construction. Geodetic Activities. * This procedure can be completed simultaneously with previous procedures Procedure: 8. Request and obtain location permit from local Office of Space Planning and Construction dEALING WITH LIcENSES Time: 90 days Varazdin, Croatia Cost: HRK 770 (Administrative tax) Procedures to build a warehouse Comments: Pursuant to the Law on Physical Planning it is necessary to obtain a Warehouse Value: USD 513,901 = HRK 3,000,000 location permit, the purpose of which is to ensure that the project (preliminary Date as of: January 2008 drawings) meets the applicable zoning regulations. The preliminary approvals precede obtaining a location permit. The municipality should act as a one stop shop Procedure: 1. Request and obtain preliminary approval from the and obtain all the preliminary approvals. However, in practice it the company that Inspectorate for Fire at the Ministry of Interior Affairs carries out these procedures. The validity of a location permit is 2 years and may be extended for additional 2 years, provided the zoning regulations in respect of Time: 15 day the location have not been changed. The request for the location permit should be Cost: No cost accompanied by the documents obtained in Procedures 6 and 7. Comments: The Inspectorate issues the approval based on the review of the project design at the municipal offices for space planning, environment protection, con- Procedure: 9. Obtain decision from municipal authorities struction, and property rights. It reviews whether the project has been prepared in regarding utilities and pay utility fee accordance with the regulations. The Inspectorate can also issue a written approval Time: 15 days within the timeframe stipulated by law. Although the local Office of Space Planning and Construction is officially required to obtain the necessary approvals, in practice Cost: HRK 144,300 (650m base X 6m height X HRK 37) the client has to obtain the approvals on his/her own. Comments: The company must obtain a decision on the payment of utility fees from the municipal authorities for utilities. Such decision is made by the said authority Procedure: 2*. Request and obtain preliminary approval from the based on the construction permit. The fee is paid for the purpose of financing the National Croatian Electric Grid utilities. The amount of the fee depends on the volume of the building (in cubic meters) and on the location. It can be paid at once or in installments. Whenever it is Time: 30 days necessary to refinance utilities or public roads, and the financing is the responsibility Cost: HRK 402 (HRK 152 for the approval + HRK 250 for the electro-energy approval) of the city, the investor can arrange with the city to finance these works and such Comments: The Croatian Electricity Company issues the approval based on the financing can be considered towards the investor's obligation to pay the utility fees. review of the project design for compliance with the regulations. The Croatian Elec- The utility fees range from HRK 20 to HRK 180 per m3, depending on the zone. The tricity Company can also issue a written approval within the timeframe stipulated cost for the warehouse described in the questionnaire would be 650m (base) X 6m by law. It is also necessary to obtain an electroenergy approval, which is one of the (height) X HRK 37. preconditions for obtaining a construction permit, and also determines the cost of connecting to the grid. Procedure: 10*. Pay water contribution to the state company Croatian Waters (Hrvatske Vode) Procedure: 3*. Request and obtain preliminary approval from Time: 15 days waste collection department Cost: HRK 163,800 (650m base X 6m height X HRK 42) Time: 30 days Comments: The water contribution is paid to finance the management of water Cost: No cost resources and flood protection. The cost is determined based on the zone of the new Comments: Although the local Office of Space Planning and Construction is of- construction (Zones A, B, and C ­ Zone A is Zagreb and the protected coastal area, ficially required to obtain the necessary approvals, in practice the client has to obtain Zone B is the rest of the country, and Zone C are areas subject to a special Govern- the approvals himself/herself. ment care), the purpose of the construction (residential, industrial, public interest), and the volume of the construction. The cost for the warehouse described in the Procedure: 4*. Request and obtain preliminary approval from the questionnaire would be 650m (base) X 6m (height) X 42 HRK according to the price national telecommunications agency list of Hrvatske Vode. Time: 15 days Procedure: 11. Request and obtain building permit from the local Cost: No cost Office for Space Planning and Construction Comments: Although the local Office of Space Planning and Construction is of- Time: 90 days ficially required to obtain the necessary approvals, in practice the client has to obtain the approvals himself/herself. Cost: HRK 1,050 (0.035% of the value of the project of HRK 4,000,000) Comments: The building permit is the document upon which the investor can Procedure: 5*. Request and obtain preliminary approval from the begin construction. The Building Code stipulates that the project design must be in local water authority compliance with the conditions provided in the location permit and with the condi- tions provided in special laws and regulations. The project designer is liable for such Time: 30 days compliance. The competent authority for issuance of the building permit needs to Cost: HRK 214 obtain the approvals (clearances) related to fire-fighting protection, work safety, ion- Comments: Although the local Office of Space Planning and Construction is of- izing and non-ionizing protection and protection of cultural heritage. The competent ficially required to obtain the necessary approvals, in practice the client has to obtain authority shall check whether the project design has been executed in accordance the approvals himself/herself. with the conditions provided in the location permit, whether the necessary docu- ments have been attached to the application, whether there is an access from the land plot to the public-traffic surface and whether the utility fees have been settled. 54 DOING BUSINESS IN SOUTH EAST EUROPE 2008 According to the amendments to the Building Code, the following documents need Procedure: 2*. Request and obtain a confirmation letter from the to be attached to the application for issuance of the building permit: location permit Municipality Finance and Property Directorate that there are no or excerpt from the detailed zoning plan; three sets of project design drawings, and tax obligations other eventual studies, if necessary. Time: 1 day Procedure: 12. Connect to water and sewage system Cost: No cost Time: 30 days Comments: The approval is valid for one year, within which BuildCo needs to obtain Cost: HRK 50,000 all the necessary permits and start construction. Form can be downloaded online at http://www.prishtina-komuna.org/index.php?mod=formularet&bid=1&smid=113 Comments: The cost is not standardized, but calculated by the water and sewage (KËRKESË PËR CAKTIMIN E KUSHTEVE URBANISTIKE-TEKNIK). company on a case-by-case basis. Procedure: 3. Request and obtain the technical-urbanism Procedure: 13*. Connect to power grid requirements approval Time: 30 days Time: 30 days Cost: HRK 230,830 (1,647 HRK X 140kw + 250 HRK fee) Cost: EUR 10 Comments: The formulas for the calculation of connection fees are set pursuant to the Energy Law that the Croatian Energy Regulatory Agency adopted in March Procedure: 4*. Request and obtain initial clearance from the 2006. The fees are calculated either on the basis of the unit price and the connection electricity authority (Korporata Energjetike e Kosovës) power or on the basis of the real costs of connecting to the network. Time: 2 days Procedure: 14*. Connect to telecommunications system Cost: EUR 10 Time: 30 days Procedure: 5*. Request and obtain initial clearance from the Cost: HRK 610 water authority (Ujësjellësi Rajonal, Prishtinë) Comments: The cost varies depending on the service required. Time: 2 days Procedure: 15. Request and obtain occupancy permit from local Cost: No cost Office for Space Planning and Construction Comments: There is no charge for the clearance, but the total fee including the Time: 60 days connection is EUR 180 (reflected in Procedure 14). Cost: HRK 1,200 Procedure: 6*. Request and obtain project clearance from the Comments: The company should request approval of the building by the competent heating authority (Ngrohtorja, Prishtinë) building authority (Tjelo Graditeljstva). The request has to be accompanied by a list of documents related to the construction process, such as a copy of the building Time: 2 days permit, data on construction participants (investor, designer, constructor, supervi- Cost: EUR 5 sory engineer, and reviewer), builder's written statement on executed works and conditions of construction maintenance, and supervisory engineer's final report on Procedure: 7*. Request and obtain the fire protection clearance construction execution. Afterwards, a special commission is established to carry out from the Ministry of Internal Affairs, Emergency Department an on-site inspection, which occurs within 30 days after the receipt of the request. Time: 15 days The municipal authority will issue the occupancy permit within 30 days from the on-site inspection. Pursuant to the Building Code, the occupancy permit shall not Cost: EUR 50 be issued if the construction is not connected to the public-traffic surface and other utilities as provided in the conditions of the location permit. Procedure: 8. Request and obtain validation of the technical audit of the main project Procedure: 16*. Receive on-site inspection and signing of the Time: 5 days completion statement Cost: No cost Time: 1 day Comments: Directorate verifies the main project plan and assesses the amount of Cost: No cost fees that need to be paid in order to obtain the building permit. Comments: The inspection is performed by a team from the local Office for Space Planning and Construction. Procedure: 9. Request and obtain the building permit from the municipal Planning, Urbanism and Construction Directorate Procedure: 17. Register new construction with Land Registry Time: 35 days Time: 1 day Cost: EUR 10 Cost: HRK 500 Comments: Form can be downloaded online at http://www.prishtinakomuna.org/ Comments: Registering the new construction is not mandatory, but without index.php?mod=formularet&bid=1&smid=113 (KËRKESË PËR DHËNIEN E LEJES registration the owner cannot take out a mortgage. Having an occupancy permit is a NDËRTIMORE). precondition for registering the new construction. Procedure: 10*. Pay municipal fees for the building permit in a bank * This procedure can be completed simultaneously with previous procedures Time: 1 day Cost: EUR 13,006 (1,300.6 warehouse area X EUR 10 per square meter) dEALING WITH LIcENSES Comments: For the construction of a warehouse, the fee is EUR 10 per square meter. Pristina, Kosovo If the warehouse will be used for commercial activities, then the fee is EUR 22 per square meter. In general, most of the building permit fees are per cubic meter. Procedures to build a warehouse Warehouse Value: USD 250,847 = EUR 200,000 Procedure: 11. Notify the municipal Planning, Urbanism and Date as of: January 2008 Construction Directorate about the start of construction work Procedure: 1. Request and obtain the property certificate and Time: 1 day a copy of lot plan from the municipal Geodesy and Cadastral Cost: No cost Directorate Comments: The notification needs to be submitted 8 days before the beginning of Time: 2 days construction. The Technical Commission may visit the site on an unannounced basis to verify whether the construction is in accordance with the plan. Due to the volume Cost: EUR 8 (EUR 4 for the property certificate and EUR 4 for the lot plan copy) of construction in Pristina, such visits are rare. Comments: Property certificate and a copy of the lot plan are valid for 180 days each and cost 4 EUR each. LIST OF PROCEDURES · DEALING WITH LICENSES 55 Procedure: 12. Receive on-site inspection by the municipal Procedure: 3. Request and obtain the technical-urbanism Technical Commission requirements approval Time: 8 days Time: 30 days Cost: No cost Cost: EUR 18 Comments: The approval is valid for one year, within which a party needs to obtain Procedure: 13*. Request and connect to electricity services all the necessary permits and start construction. Time: 15 days Cost: EUR 500 Procedure: 4*. Receive on-site inspection by the municipal Comments: For a higher-voltage connection, a prior permission from the Ministry of Technical Commission Energy is needed. Time: 5 days Cost: No cost Procedure: 14*. Request and connect to water and sewage Comments: The municipal Technical Commission conducts an on-site visit and de- services termines the necessary permissions that need to be obtained by BuildCo. to obtain Time: 7 days the building permit. The Technical Commission may also conduct other random visits Cost: EUR 180 during the construction to see whether the building complies with the approved standards. Construction cannot start until the building permit has been obtained. Procedure: 15*. Request and connect to telecommunications services (Posta dhe Telekomunikacioni i Kosovës) Procedure: 5*. Request and obtain initial clearance from the electricity authority (Korporata Energjetike e Kosovës) Time: 5 days Cost: EUR 20 Time: 2 days Cost: EUR 10 Procedure: 16. Request technical approval of the building by the municipal Technical Commission Procedure: 6*. Request and obtain initial clearance from the water authority (Ujësjellësi Rajonal, Prizren) Time: 1 day Cost: EUR 30 Time: 2 days Cost: No cost Procedure: 17. Receive technical approval of the building by the Comments: There is no charge for the clearance, but the total fee including the municipal Technical Commission and obtain the usage permit connection is EUR 180 (reflected in Procedure 14). Time: 39 days Procedure: 7*. Request and obtain initial clearance from Cost: EUR 10 the post and telecommunication authorities (Posta dhe Comments: Form can be downloaded online at http://www.prishtina-komuna.org/ Telekomunikacioni i Kosovës) index.php?mod=formularet&bid=1&smid=113 (KËRKESË PËR DHËNIEN E LEJES PËR PËRDORIM). Time: 2 days Cost: EUR 5 Procedure: 18. Register construction with the municipal Geodesy and Cadastral Directorate Procedure: 8*. Request and obtain the fire protection clearance Time: 60 days from the Ministry of Internal Affairs, Emergency Department Cost: EUR 120 Time: 15 days Comments: Cost includes the fee to reflect changes in the city's urban plan as well Cost: EUR 50 as the inspection. Procedure: 9. Request and obtain validation of the technical Procedure: 19*. Obtain an inspection from the municipal audit of the main project Geodesy and Cadastral Directorate Time: 5 days Time: 45 days Cost: No cost Cost: No cost Comments: Directorate verifies the main project plan and assesses the amount of fees that need to be paid in order to obtain the building permit. * This procedure can be completed simultaneously with previous procedures Procedure: 10. Request and obtain the building permit from the dEALING WITH LIcENSES municipal Planning, Urbanism and Construction Directorate Prizren, Kosovo Time: 28 days Procedures to build a warehouse Cost: EUR 10 Warehouse Value: USD 250,847 = EUR 200,000 Procedure: 11*. Pay municipal fees for the building permit in a Date as of: January 2008 bank Procedure: 1. Request and obtain the property certificate and Time: 1 day a copy of lot plan from the municipal Geodesy and Cadastral Cost: EUR 15,607 (1,300.6 area X 6 m height (3m each floor) X EUR 2 Zone II fee) Directorate Comments: The following schedule for warehouses is applied: Time: 2 days a. Zone I: EUR 3 per m3; Cost: EUR 9 (EUR 5 for the property certificate and EUR 4 for the lot plan copy) b. Zone II: EUR 2 per m3; Comments: Property certificate and lot plan copy are valid for 180 days each. c. Zone III: EUR 1 per m3. Procedure: 2*. Request and obtain a confirmation letter from the Procedure: 12. Notify the municipal Planning, Urbanism and Municipality Finance and Property Directorate that there are no Construction Directorate about the start of construction work tax obligations Time: 8 days Time: 1 day Cost: No cost Cost: No cost Comments: The notification needs to be submitted 8 days before the beginning of construction. 56 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 13*. Request and connect to electricity services Procedure: 4*. Obtain Account of Numerical Data (Elaborat od Time: 15 days Numerichki Podatoci) from a private cadastre office Cost: EUR 500 Time: 4 days Comments: For a higher-voltage connection, a prior permission from the Ministry of Cost: MKD 3,500 Energy is needed. Comments: The charge for the Account of Numerical Data is MKD 3,500 if the cadastre plan is the same as the space plan. If the plot has to be divided or there is a Procedure: 14*. Request and connect to water and sewage road going through it then it is necessary to perform new measurements on the spot services and the charge is MKD 12.5 per square meter. Time: 7 days Procedure: 5. Request location permit from Office of Space Cost: EUR 180 Planning Procedure: 15*. Request and connect to telecommunications Time: 25 days services Cost: MKD 1,250 Time: 5 days Comments: When requesting the location permit the following documents should be submitted: copy of the cadastre plan, extract from the detailed space plan, Cost: EUR 20 account of numerical data (obtained in procedures 1 through 4) and the project design. Once the request is granted, the owners of the neighboring parcels are Procedure: 16. Request technical approval of the building by the informed. If no complaints are filled within 8 days, the decision enters into force. municipal Technical Commission The period for filing a complaint was recently decreased from 15 days as a result Time: 10 days of the amendment to the Space Planning Law passed on November 14, 2007 and Cost: EUR 15 published in the Official Gazette No. 137/07. Procedure: 17. Register construction with the municipal Geodesy Procedure: 6*. Obtain information about underground terrain and Cadastral Directorate from electric grid company Time: 60 days Time: 7 days Cost: EUR 120 Cost: MKD 1,100 Comments: Cost includes the fee to reflect changes in the city's urban plan as well Comments: Information about the location of underground electric cables is as the inspection. obtained. The information should be obtained by the Office of Space Planning after the company submits the request for the location permit, but in practice the Procedure: 18*. Obtain an inspection from the municipal companies obtain the necessary documents themselves. The project design should Geodesy and Cadastral Directorate be submitted. Time: 45 days Procedure: 7*. Obtain information about underground terrain Cost: No cost from water supply company Time: 7 days * This procedure can be completed simultaneously with previous procedures Cost: No cost dEALING WITH LIcENSES Comments: Information about the location of underground sewage pipes is Bitola, Macedonia, FYR obtained. The information should be obtained by the Office of Space Planning after the company submits the request for the location permit, but in practice the Procedures to build a warehouse companies obtain the necessary documents themselves. The project design should Warehouse Value: USD 327,751 = MKD 15,989,459 be submitted. Date as of: January 2008 Procedure: 8*. Obtain information about underground terrain Procedure: 1. Obtain copy of cadastre plan from sewage company Time: 5 days Time: 7 days Cost: MKD 225 Cost: No cost Comments: The copy can be obtained if the property is registered in the space plan. Comments: Information about the location of underground sewage pipes is ob- The cost was decreased in October 2007 as a result of the Government decision tained. The information should be obtained by the Office of Space Planning after the published in the Official Gazette No. 119/07. company submits the request for location permit, but in practice the companies ob- tain the necessary documents themselves. The project design should be submitted. Procedure: 2*. Obtain extract of detailed space plan from municipal Office of Space Planning Procedure: 9*. Obtain information about underground terrain Time: 6 days from telecommunications company Cost: MKD 800 Time: 7 days Comments: This document and the copy of the space plan should be submitted Cost: No cost when requesting the location permit. Comments: Information about the location of underground telecommunication cables is obtained. The information should be obtained by the Office of Space Plan- Procedure: 3*. Obtain proof of ownership from Cadastre Office ning after the company submits the request for the location permit, but in practice (title deed) the companies obtain the necessary documents themselves. The project design should be submitted. Time: 1 day Cost: MKD 125 Procedure: 10. Obtain electroenergy approval from electric grid Comments: The title deed can be obtained at the local Cadastre. The cost decreased company in October 2007 as a result of the Government decision published in the Official Time: 7 days Gazette No. 119/07. Cost: MKD 6,000 Comments: The following approvals should be obtained by the Office of Space Plan- ning after the company submits the request for building permit, but in practice the companies obtain the necessary approvals themselves and submit them together with the request for the building permit. The approval is issued on the basis of reviewing the main project plan. LIST OF PROCEDURES · DEALING WITH LICENSES 57 Procedure: 11*. Obtain approval from water supply company Procedure: 20*. Obtain phone line Time: 7 days Time: 7 days Cost: MKD 1,000 Cost: MKD 3,000 Comments: The following approvals should be obtained by the Office of Space Plan- ning after the company submits the request for building permit, but in practice the Procedure: 21. Request and obtain a decision on building use companies obtain the necessary approvals themselves and submit them together from the municipality with the request for the building permit. The approval is issued on the basis of Time: 20 days reviewing the main project plan. Cost: MKD 1,750 Procedure: 12*. Obtain approval from sewage company Comments: The request for the occupancy permit is submitted once the building is completed. A report by engineers who supervised the construction is also submitted. Time: 7 days The report should confirm that the main project plan was followed. Cost: MKD 1,000 Comments: The approval should be obtained by the Office of Space Planning after Procedure: 22*. Technical examination by a team of experts the company submits the request for building permit, but in practice the companies Time: 1 day obtain the necessary approvals themselves and submit them together with the request for a building permit. The approval is issued on the basis of reviewing the Cost: MKD 25,000 (Fee for the contribution of the experts) main project plan. Comments: The experts should be from various fields of expertise relevant to the construction: electrical, machanical and construction engineers, and architect. Procedure: 13. Request and obtain building permit from Office of Space Planning Procedure: 23. Register the warehouse with the Real Estate Time: 20 days Registry Cost: MKD 1,250 Time: 3 days Comments: The request should be accompanied by the following documents: a Cost: MKD 325 (MKD 275 is the registration fee and MKD 50 is the stamp duty) copy of the project design, the location permit, 4 copies of the main project plan, Comments: The new construction is registered at the Cadastre. and the approval of procedures 10 through 12 if the client has obtained them himself/herself. One copy of the main plan is submitted to the Office of Communal * This procedure can be completed simultaneously with previous procedures Services where the communal tax is calculated and an invoice is sent to the client. dEALING WITH LIcENSES Procedure: 14*. Receive an on-site inspection by representatives Niksic, Montenegro of Space Planning Office Procedures to build a warehouse Time: 1 day Warehouse Value: USD 438,982 = EUR 350,000 Cost: No cost Date as of: January 2008 Comments: Once the Office of Space Planning receives the request for the building permit they send a team to the site to verify that the plot is suitable to be built on. Procedure: 1. Obtain proof of ownership Time: 1 day Procedure: 15*. Receive an on-site inspection by a geometric engineer and obtain the protocol Cost: EUR 5 Republic Administrative Tax and EUR 3 Agency for Real Estate fee Time: 2 days Procedure: 2. Obtain copy of site map Cost: MKD 1,400 Time: 3 days Comments: The protocol consists of information about the plot and the location of Cost: EUR 15 the building on the plot. Procedure: 3. Obtain land use permit Procedure: 16*. Pay municipal tax (contribution for utilities) for preparation of space and urban plan at a commercial bank or Time: 30 days post office and obtain proof of payment Cost: EUR 150 Time: 1 day Comments: For a property above 1,000 square meters, all the permissions need to be obtained from the Ministry of Economic Development in Podgorica. Cost: MKD 1,697,283 (Utility contribution of MKD 1,260 per square meter X 1,300.6 warehouse area + MKD 45 (0.3% of the average salary MKD 15,066) X 1,300.6 area) Procedure: 4. Obtain a geotechnical study Comments: The utilities contribution is MKD 1,260 MKD per square meter of usable Time: 7 days space. The contribution for preparing the detailed space plan is 0.3% of the average salary in Macedonia, FYR per square meter. Cost: No cost Procedure: 17. Connect to electric grid Procedure: 5. Obtain approval of the geotechnical study from the Ministry of Economy Time: 7 days Cost: MKD 22,000 Time: 7 days Comments: The cost is determined in consultation with the electrical power Cost: EUR 150 company. Comments: Ministry of Economic Development gives a permission for the geotechni- cal study. The results are submitted to the Ministry to obtain the approval. The report Procedure: 18*. Connect to water supply system contains the approval and detailed information about the study and the construction. Time: 7 days Procedure: 6. Revision of geotechnical condition report Cost: MKD 8,000 Time: 10 days Comments: The cost is determined in consultation with the water and sewage company. Cost: No cost Procedure: 19*. Connect to sewage system Procedure: 7*. Obtain clearance to connect to the electricity network Time: 7 days Time: 15 days Cost: MKD 10,000 Cost: EUR 200 (EUR 50 for taxes and EUR 150 for the service) Comments: The cost is determined in consultation with the water and sewage company. Comments: BuildCo would have to pay for the initial clearance from utility compa- nies. In the case of electricity the cost would be EUR 200. 58 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 8*. Obtain clearance to connect to water and sewage Procedure: 19. Receive technical control of building network Time: 3 days Time: 10 days Cost: EUR 350 (0.1% of the property value of EUR 350,000) Cost: EUR 274 (1,300.6 warehouse area X EUR 0.18 fee + 17% Value Added Tax) Procedure: 20. Obtain use permit Procedure: 9*. Obtain clearance to connect to Time: 50 days telecommunications network Cost: EUR 700 (0.2% of the property value of EUR 350,000) Time: 7 days Cost: EUR 340 * This procedure can be completed simultaneously with previous procedures Comments: According to municipal tariffs and fees, the cost is calculated based on the total area of the warehouse. Anything between 1,000 and 3,000 m2 is EUR 340. dEALING WITH LIcENSES Pljevlje, Montenegro Procedure: 10*. Pay the municipality tax (a compensation for using the city's land and the needed adjustments to city's space Procedures to build a warehouse and urban plan), Komunalije ­ Niksic Warehouse Value: USD 438,982 = EUR 350,000 Date as of: January 2008 Time: 2 days Cost: EUR 32,515 (1,300.6 warehouse area X EUR 50 per square meter (Zone III fee) X Procedure: 1. Obtain proof of ownership 50% warehouse applicability fee) Time: 1 day Comments: Before the building permit is issued, the company must pay the so Cost: EUR 8 (EUR 5 Republic Administrative Tax and EUR 3 Agency for Real Estate fee) called"communal tax"fee for the maintenance of existing infrastructure, compensa- tion for using the city's land and the adjustment that the city needs to make to its Procedure: 2. Obtain copy of site map urban plan due to the new construction. The fees are determined according to the following schedule (in EUR): Time: 2 days a. In Zone I, the fees are: Cost: EUR 15 In Zone A EUR 152/m2, Procedure: 3. Obtain land use permit In Zone B EUR 132/m2, and Time: 30 days In Zone C EUR 112/m2; Cost: EUR 150 b. In Zone II EUR 82/m2; Comments: For a property above 1,000 square meters, all the permissions need to c. In Zone III EUR 50/m2; and be obtained from the Ministry of Economic Development in Podgorica. d. In Zone IV EUR 25/m2. For warehouses, only 50% of the fee is applied. Due to the assumption of building Procedure: 4. Obtain a geotechnical study the warehouse in a periurban area, BuildCo would build its warehouse either in Zone Time: 7 days III and IV (that is why the average of the two costs was taken to calculate the total Cost: No cost cost for this procedure). Procedure: 11. Obtain urban consent from Ministry of Economic Procedure: 5. Obtain approval of the geotechnical study from the Development Ministry of Economy Time: 7 days Time: 30 days Cost: EUR 150 Cost: EUR 175 (0.05% of the property value of EUR 350,000) Comments: Ministry of Economic Development gives a permission to conduct the Procedure: 12*. Obtain ecological consent from Ministry for geotechnical study. The results are then submitted to the Ministry to obtain the Tourism and Environmental Protection approval. The report contains the approval and detailed information about the study and the construction. Time: 10 days Cost: EUR 3,500 (1% of the property value of EUR 350,000) Procedure: 6. Revision of geotechnical condition report Time: 15 days Procedure: 13*. Obtain traffic consent Cost: No cost Time: 10 days Cost: EUR 2 Procedure: 7*. Obtain clearance to connect to the electricity network Procedure: 14. Obtain fire prevention consent Time: 10 days Time: 15 days Cost: EUR 200 (EUR 50 for taxes and EUR 150 for the service) Cost: EUR 500 Comments: BuildCo would have to pay for the initial clearance from utility compa- nies. In the case of electricity the cost would be EUR 200. Procedure: 15. Obtain building permit Time: 30 days Procedure: 8*. Obtain clearance to connect to water and sewage Cost: EUR 350 (0.1% of the property value of EUR 350,000) network Time: 7 days Procedure: 16*. Obtain power connection Cost: EUR 274 (1,300.6 warehouse area X EUR 0.18 fee + 17% Value Added Tax) Time: 20 days Cost: EUR 300 Procedure: 9*. Obtain clearance to connect to telecommunications network Procedure: 17*. Obtain water and sewerage connection Time: 7 days Time: 10 days Cost: EUR 340 Cost: EUR 200 Comments: According to municipal tariffs and fees, the cost is calculated based on the total area of the warehouse. Anything between 1,000 and 3,000 square meters Procedure: 18*. Obtain phone connection is EUR 340. Time: 5 days Cost: EUR 80 LIST OF PROCEDURES · DEALING WITH LICENSES 59 Procedure: 10*. Pay the municipality tax (a compensation for dEALING WITH LIcENSES using the city's land and the needed adjustments to city's space Krusevac, Serbia and urban plan), Komunalije ­ Pljevlja Procedures to build a warehouse Time: 2 days Warehouse Value: USD 650,300 = RSD 43,201,055 Cost: EUR 28,678 (1,300.6 warehouse area X EUR 31.5 per square meter (Zone V fee) Date as of: January 2008 X 70% due to the assumption that land is already privately owned) Comments: Before the Building Permit is issued, the company must pay the so Procedure: 1. Request and obtain extract from the urban plan or called"communal tax"fee for the maintenance of existing infrastructure, compensa- act on zoning conditions tion for using the city's land and the adjustment that the city needs to make to its Time: 10 days urban plan due to the new construction. This adjustment is supposed to contribute Cost: RSD 10,000 to the development of new roads, schools, utilities and other facilities. The fees are Comments: Request for either of these documents should be submitted to the determined according to the following schedule (in EUR): municipality on which territory the building plot is situated. The extract from the a. Zone I: EUR 70/m2; urban plan could be obtained only if an urban plan for the respective site exists. An b. Zone II: EUR 63/m2 (90% of Zone I fee); excerpt from an urban plan contains all the conditions and data necessary for the c. Zone III: EUR 56/m2 (80% of Zone I fee); development of a conceptual project and, in particular, the regulations (set-back), d. Zone IV: EUR 45.5/m2 (65% of Zone I fee); construction line and height restrictions and conditions. When constructing in an area for which an urban plan is not envisaged and upon the request of an interested e. Zone V: EUR 31.5/m2 (45% of Zone I fee); company, the competent municipality will issue an act on zoning conditions in f. Zone VI: EUR 21/m2 (30% of Zone I fee). accordance with the space plan. However, if the construction site is located within If the land is privately owned, then only 70% of the corresponding fee is applied. an area for which an urban plan exists (adopted on the basis of old laws), the act on Due to the assumption of building the warehouse in a periurban area, BuildCo would zoning conditions shall be issued in conformity with such an urban plan, until the build its warehouse either in Zone IV or V (that is why the average of the two costs deadline for adopting the new urban plan expires. The required plans and docu- was taken to calculate the total cost for this procedure). ments for connecting to roads and other communal infrastructure shall be obtained, at the investor's expense, ex officio by the municipality competent for issuing a Procedure: 11. Obtain urban consent from Ministry of Economic building permit regarding the warehouse. Development Procedure: 2*. Request and obtain proof of ownership of the Time: 30 days construction land Cost: EUR 175 (0.05% of the property value of EUR 350,000) Time: 5 days Procedure: 12*. Obtain ecological consent from Ministry for Cost: RSD 200 Tourism and Environmental Protection Comments: The proof of ownership is granted by either the competent munici- Time: 10 days pal court (land register extract) or Republic Geodesy Institute (newly established cadastre's extract). The proof of ownership (the land register extract) is granted by Cost: EUR 3,500 (1% of the property value of EUR 350,000) the competent municipal court and it can be obtained within 10 days. The proof of ownership (cadastre extract) can be obtained in 1 day from the Republic Geodesy Procedure: 13*. Obtain traffic consent Institute and this extract costs RSD 1,300 ­ RSD 1,700 (the price depends on the Time: 10 days number of pages). In the case considered here, only proof of ownership from the Cost: EUR 2 municipal court is needed. Procedure: 14. Obtain fire prevention consent Procedure: 3. Request and obtain main construction project Time: 15 days clearance from the electric energy authority Cost: EUR 500 Time: 30 days Cost: RSD 20,000 Procedure: 15. Obtain building permit Time: 30 days Procedure: 4*. Request and obtain main construction project clearance from the water and sewerage authority Cost: EUR 350 (0.1% of the property value of EUR 350,000) Time: 30 days Procedure: 16*. Obtain power connection Cost: RSD 100,000 Time: 15 days Procedure: 5*. Request and obtain main construction project Cost: EUR 300 clearance from the labor inspection department for safety at Procedure: 17*. Obtain water and sewerage connection work Time: 10 days Time: 1 day Cost: EUR 200 Cost: RSD 2,000 Procedure: 18*. Obtain phone connection Procedure: 6*. Request and obtain main construction project clearance from the heating authority Time: 3 days Cost: EUR 80 Time: 3 days Cost: RSD 16,000 Procedure: 19. Receive technical control of building Comments: The building authority will not approve the project without a clearance Time: 3 days from the heating authority. Cost: EUR 350 (0.1% of the property value of EUR 350,000) Procedure: 7*. Request and obtain main construction project Procedure: 20. Obtain use permit clearance from the telecommunication authority Time: 50 days Time: 60 days Cost: EUR 700 (0.2% of the property value of EUR 350,000) Cost: RSD 16,000 Comments: The telecom authority makes a list of conditions within 10 days from the time the application was submitted. After that the company prepares the relevant * This procedure can be completed simultaneously with previous procedures set of drawings and designs according to their norms. 60 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 8*. Request and obtain main construction project Procedure: 15*. Request and obtain water and sewerage connection clearance from the traffic authority Time: 30 days Time: 30 days Cost: RSD 100,000 Cost: RSD 16,000 Comments: A duly licensed company other than the one that furnished the main Procedure: 16*. Request and obtain electricity connection construction project plan must verify whether the main construction project has Time: 60 days been made in accordance with the law and with the technical standards, and wheth- Cost: RSD 500,000 er it has all necessary clearances described in Procedures 3­9. The main construction project must be certified and stamped to that effect. Procedure: 17*. Request and obtain phone connection Procedure: 9. Request and obtain building permit Time: 30 days Time: 90 days Cost: RSD 16,000 Cost: RSD 680 Procedure: 18. Request and obtain usage permit Comments: A request for obtaining a building permit should be submitted to the Time: 68 days Secretariat for Urbanism and Construction Affairs of the municipality on whose terri- tory the building plot is situated, with the following documentation: Cost: RSD 120 a. Extracts from the urban plan issued within 6 months prior to the filing of the Comments: After all construction activities have been completed, a municipal request for a building permit; commission examines if the constructed building complies with the issued building permit, all laws and technical standards. The municipality issues the usage permit b. Preliminary design project that has to be in conformity with the urban plan men- within 7 days after the commission has conducted the technical examination and tioned above; and reports that the building is suitable for use. The municipality commission shall not c. Evidence of the ownership status or rental status on the building plot. issue the usage permit if the building is not in compliance with the technical stan- dards and the technical documentation. It shall order to the company to eliminate all Procedure: 10*. Request and obtain technical review of the main the irregularities and again examine the building and then issue the usage permit. If project the irregularities cannot be fixed and the usage of the building would be dangerous, Time: 7 days the municipality commission shall order the demolition of the building. Cost: RSD 190 Procedure: 19*. Receive technical examination of the building Comments: A duly licensed company other than the one that furnished the main from municipality commission construction project plan must verify whether the main construction project has been made in accordance with the law and with the technical standards, and wheth- Time: 1 day er it has all necessary clearances described in Procedures 3­9. The main construction Cost: RSD 5,000 project must be certified and stamped to that effect. Comments: BuildCo must submit a formal request along with the building and usage permits. If there is a cadastral register in the area where the warehouse is Procedure: 11. Notify and obtain approval for the start of constructed, the company should register the building at the cadastral registry. construction from the municipality and pay city building land tax Otherwise, the building should be registered in the land books. Time: 7 days Cost: RSD 5,200,000 Procedure: 20. Register the building with the land or cadastral register Comments: The start of construction activities must be reported to the municipality at least 8 days before commencement. The notification must be accompanied by all Time: 1 day necessary documentation described in Procedures 1­10 above, including the main Cost: RSD 5,000 construction project design and description of the equipment to be used, to be certi- Comments: BuildCo must submit a formal request along with the building and fied by the municipality within 8 days of submission. After this certification has been usage permits. If there is a cadastral register in the area where the warehouse was obtained, construction may commence. The company must pay the land usage tax constructed, the company should register the building in the cadastral registry. that is charged by the City Building Directorate and varies from EUR 50 to EUR 60 per Otherwise, the building should be registered in the land books. square meter of the building plot. Construction activities cannot begin before this fee is paid. Proof of payment of this fee (if not agreed otherwise with the City Build- ing Directorate) is submitted to the municipality along with the other documents * This procedure can be completed simultaneously with previous procedures mentioned above, which are submitted as attachments to the notification to the municipality. The cost depends on the city suburb in which the facility is built. Land dEALING WITH LIcENSES taxes differ from one suburb to the other. Uzice, Serbia Procedures to build a warehouse Procedure: 12. Hire and nominate expert supervisor of the Warehouse Value: USD 650,300 = RSD 43,201,055 construction work Date as of: January 2008 Time: 1 day Cost: RSD 648,016 Procedure: 1. Request and obtain extract from the urban plan or Comments: Expert supervision of the construction must be secured during the act on zoning conditions entire period of construction. Such expert supervision must be done by a licensed Time: 60 day independent engineer. This person cannot be affiliated with BuildCo. The expert Cost: RSD 20,500 supervisor comes on average once a week. Comments: Request for either of these documents should be submitted to the municipality on which territory the building plot is situated. The extract from the Procedure: 13. Request and obtain consent regarding the urban plan could be obtained only if an urban plan for the respective site exists. An connection of the plot of land to the nearest public road excerpt from an urban plan contains all the conditions and data necessary for the Time: 7 days development of a conceptual project and, in particular, the regulations (set-back), Cost: RSD 500 construction line and height restrictions and conditions. When constructing in an area for which an urban plan is not envisaged and upon the request of an interested Comments: BuildCo needs to undertake this procedure should it require access/use company, the competent municipality will issue an act on zoning conditions in of the nearest public road. accordance with the space plan. However, if the construction site is located within Procedure: 14*. Request and obtain consent regarding an area for which an urban plan exists (adopted on the basis of old laws), the act on zoning conditions shall be issued in conformity with such an urban plan, until the regulations on environmental protection deadline for adopting the new urban plan expires. The required plans and docu- Time: 14 days ments for connecting to roads and other communal infrastructure shall be obtained, Cost: RSD 80,000 at the investor's expense, ex officio by the municipality competent for issuing a building permit regarding the warehouse. LIST OF PROCEDURES · DEALING WITH LICENSES 61 Procedure: 2*. Request and obtain proof of ownership of the ing Directorate) is submitted to the municipality along with the other documents construction land mentioned above, which are submitted as attachments to the notification to the Time: 1 day municipality. The cost depends on the city suburb in which the facility is built. Land taxes differ from one suburb to the other. Cost: RSD 1,694 Comments: The proof of ownership is granted by either the competent munici- Procedure: 10. Hire and nominate expert supervisor of the pal court (land register extract) or Republic Geodesy Institute (newly established construction work cadastre's extract). The proof of ownership (the land register extract) is granted by Time: 15 days the competent municipal court and it can be obtained within 10 days. The proof of ownership (cadastre extract) can be obtained in 1 day from the Republic Geodesy Cost: RSD 648,016 Institute and this extract costs RSD 1,300 ­ RSD 1,700 (the price depends on the Comments: Expert supervision of the construction must be secured during the number of pages). In the case considered here, only proof of ownership from the entire period of construction. Such expert supervision must be done by a licensed municipal court is needed. independent engineer. This person cannot be affiliated with BuildCo. The expert supervisor comes on average once a week. Procedure: 3. Request and obtain main construction project clearance from the electric energy authority Procedure: 11. Request and obtain consent regarding regulations Time: 8 days on environmental protection Cost: RSD 1,500 Time: 120 days Cost: RSD 60,000 Procedure: 4*. Request and obtain main construction project clearance from the water and sewerage authority Procedure: 12*. Request and obtain water and sewerage Time: 30 days connection Cost: RSD 135,000 Time: 8 days Cost: RSD 325,000 Procedure: 5*. Request and obtain main construction project clearance from the labor inspection department for safety at Procedure: 13*. Request and obtain electricity connection work Time: 8 days Time: 5 days Cost: RSD 448,000 Cost: RSD 1,500 Procedure: 14*. Request and obtain phone connection Procedure: 6*. Request and obtain main construction project Time: 1 day clearance from the heating authority Cost: RSD 150 Time: 8 days Cost: RSD 380,000 Procedure: 15. Request and obtain usage permit Comments: The building authority will not approve the project without a clearance Time: 90 days from the heating authority. Cost: RSD 80,000 Comments: After all construction activities have been completed, a municipal Procedure: 7*. Request and obtain main construction project commission examines if the constructed building complies with the issued building clearance from the telecommunication authority permit, all laws and technical standards. The municipality issues the usage permit Time: 15 days within 7 days after the commission has conducted the technical examination and Cost: RSD 11,900 reports that the building is suitable for use. The municipality commission shall not issue the usage permit if the building is not in compliance with the technical stan- Comments: The telecom authority makes a list of conditions within 10 days from the dards and the technical documentation. It shall order to the company to eliminate all time the application was submitted. After that the company prepares the relevant the irregularities and again examine the building and then issue the usage permit. If set of drawings and designs according to their norms. the irregularities cannot be fixed and the usage of the building would be dangerous, the municipality commission shall order the demolition of the building. Procedure: 8. Request and obtain building permit Time: 60 days Procedure: 16*. Receive technical examination of the building Cost: RSD 600 from municipality commission Comments: A request for obtaining a building permit should be submitted to the Time: 1 day Secretariat for Urbanism and Construction Affairs of the municipality on whose terri- Cost: RSD 3,166 tory the building plot is situated, with the following documentation: Comments: BuildCo must submit a formal request along with the building and a. Extracts from the urban plan issued within 6 months prior to the filing of the usage permits. If there is a cadastral register in the area where the warehouse is request for a building permit; constructed, the company should register the building at the cadastral registry. b. Preliminary design project that has to be in conformity with the urban plan men- Otherwise, the building should be registered in the land books. tioned above; and c. Evidence of the ownership status or rental status on the building plot. Procedure: 17. Register the building with the land or cadastral register Procedure: 9. Notify and obtain approval for the start of Time: 8 days construction from the municipality and pay city building land tax Cost: RSD 3,466 Time: 30 days Comments: BuildCo must submit a formal request along with the building and Cost: RSD 5,200,000 usage permits. If there is a cadastral register in the area where the warehouse was Comments: The start of construction activities must be reported to the municipality constructed, the company should register the building in the cadastral registry. at least 8 days before commencement. The notification must be accompanied by all Otherwise, the building should be registered in the land books. necessary documentation described in Procedures 1­10 above, including the main construction project design and description of the equipment to be used, to be certi- * This procedure can be completed simultaneously with previous procedures fied by the municipality within 8 days of submission. After this certification has been obtained, construction may commence. The company must pay the land usage tax that is charged by the City Building Directorate and varies from EUR 50 to EUR 60 per square meter of the building plot. Construction activities cannot begin before this fee is paid. Proof of payment of this fee (if not agreed otherwise with the City Build- 62 DOING BUSINESS IN SOUTH EAST EUROPE 2008 dEALING WITH LIcENSES Procedure: 8*. Request and obtain main construction project Vranje, Serbia clearance from the traffic authority Procedures to build a warehouse Time: 60 days Warehouse Value: USD 650,300 = RSD 43,201,055 Cost: RSD 5,900 Date as of: January 2008 Comments: According to oral information provided by the traffic authority, this Procedure: 1. Request and obtain extract from the urban plan or clearance can be obtained within 30 days at a cost of RSD 5,900. act on zoning conditions Procedure: 9. Request and obtain building permit Time: 40 days Time: 15 days Cost: RSD 16,000 Cost: RSD 600 Comments: Request for either of these documents should be submitted to the municipality on which territory the building plot is situated. The extract from the Comments: A request for obtaining a building permit should be submitted to the urban plan could be obtained only if an urban plan for the respective site exists. An Secretariat for Urbanism and Construction Affairs of the municipality on whose terri- excerpt from an urban plan contains all the conditions and data necessary for the tory the building plot is situated, with the following documentation: development of a conceptual project and, in particular, the regulations (set-back), a. Extracts from the urban plan issued within 6 months prior to the filing of the construction line and height restrictions and conditions. When constructing in an request for a building permit; area for which an urban plan is not envisaged and upon the request of an interested b. Preliminary design project that has to be in conformity with the urban plan men- company, the competent municipality will issue an act on zoning conditions in tioned above; and accordance with the space plan. However, if the construction site is located within c. Evidence of the ownership status or rental status on the building plot. an area for which an urban plan exists (adopted on the basis of old laws), the act on zoning conditions shall be issued in conformity with such an urban plan, until the Procedure: 10*. Request and obtain technical review of the project deadline for adopting the new urban plan expires. The required plans and docu- ments for connecting to roads and other communal infrastructure shall be obtained, Time: 15 days at the investor's expense, ex officio by the municipality competent for issuing a Cost: RSD 80,000 building permit regarding the warehouse. Comments: A duly licensed company other than the one that furnished the main construction plan must verify that the project is in accordance with the law and Procedure: 2*. Request and obtain proof of ownership of the technical standards, and that it has all necessary clearances described in Procedures construction land 3­9. The main construction project must be certified and stamped to that effect. Time: 2 days Procedure: 11. Notify and obtain approval for the start of Cost: RSD 1,000 construction from the municipality and pay city building land tax Comments: The proof of ownership is granted by either the competent munici- pal court (land register extract) or Republic Geodesy Institute (newly established Time: 8 days cadastre's extract). The proof of ownership (the land register extract) is granted by Cost: RSD 5,200,000 the competent municipal court and it can be obtained within 10 days. The proof of Comments: The start of construction activities must be reported to the municipality ownership (cadastre extract) can be obtained in 1 day from the Republic Geodesy at least 8 days before commencement. The notification must be accompanied by all Institute and this extract costs RSD 1,300 ­ RSD 1,700 (the price depends on the necessary documentation described in Procedures 1­10 above, including the main number of pages). In the case considered here, only proof of ownership from the construction project design and description of the equipment to be used, to be certi- municipal court is needed. fied by the municipality within 8 days of submission. After this certification has been obtained, construction may commence. The company must pay the land usage tax Procedure: 3. Request and obtain main construction project that is charged by the City Building Directorate and varies from EUR 50 to EUR 60 per clearance from the electric energy authority square meter of the building plot. Construction activities cannot begin before this Time: 30 days fee is paid. Proof of payment of this fee (if not agreed otherwise with the City Build- ing Directorate) is submitted to the municipality along with the other documents Cost: RSD 10,000 mentioned above, which are submitted as attachments to the notification to the municipality. The cost depends on the city suburb in which the facility is built. Land Procedure: 4*. Request and obtain main construction project taxes differ from one suburb to the other. clearance from the water and sewerage authority Time: 30 days Procedure: 12. Hire and nominate expert supervisor of the Cost: RSD 150,000 construction work Time: 3 days Procedure: 5*. Request and obtain main construction clearance Cost: RSD 450,000 from the labor inspection department for safety at work Comments: Expert supervision of the construction must be secured during the Time: 1 day entire period of construction. Such expert supervision must be done by a licensed Cost: RSD 15,000 independent engineer. This person cannot be affiliated with BuildCo. The expert supervisor comes on average once a week. Procedure: 6*. Request and obtain main construction project clearance from the heating authority Procedure: 13. Request and obtain consent regarding the Time: 15 days connection of the plot of land to the nearest public road Cost: RSD 300,000 Time: 30 days Comments: The building authority will not approve the project without a clearance Cost: RSD 500,000 from the heating authority. Comments: BuildCo needs to undertake this procedure should it require access/use of the nearest public road. Procedure: 7*. Request and obtain main construction project clearance from the telecommunication authority Procedure: 14*. Request and obtain consent regarding Time: 15 days regulations on environmental protection Cost: RSD 20,000 Time: 30 days Comments: The telecom authority makes a list of conditions within 10 days from the Cost: RSD 40,000 time the application was submitted. After that the company prepares the relevant set of drawings and designs according to their norms. Procedure: 15*. Request and obtain water and sewerage connection Time: 10 days Cost: RSD 100,000 LIST OF PROCEDURES · DEALING WITH LICENSES 63 Procedure: 16*. Request and obtain electricity connection Procedure: 2*. Request and obtain proof of ownership of the Time: 15 days construction land Cost: RSD 150,000 Time: 7 days Cost: RSD 400 Procedure: 17*. Request and obtain phone connection Comments: The proof of ownership is granted by either the competent munici- Time: 10 days pal court (land register extract) or Republic Geodesy Institute (newly established Cost: RSD 17,000 cadastre's extract). The proof of ownership (the land register extract) is granted by the competent municipal court and it can be obtained within 10 days. The proof of Procedure: 18. Request and obtain usage permit ownership (cadastre extract) can be obtained in 1 day from the Republic Geodesy Time: 60 days Institute and this extract costs RSD 1,300 ­ RSD 1,700 (the price depends on the number of pages). In the case considered here, only proof of ownership from the Cost: RSD 150 municipal court is needed. Comments: After all construction activities have been completed, a municipal commission examines if the constructed building complies with the issued building Procedure: 3. Request and obtain main construction project permit, all laws and technical standards. The municipality issues the usage permit clearance from the electric energy authority within 7 days after the commission has conducted the technical examination and reports that the building is suitable for use. The municipality commission shall not Time: 60 days issue the usage permit if the building is not in compliance with the technical stan- Cost: RSD 10,000 dards and the technical documentation. It shall order to the company to eliminate all the irregularities and again examine the building and then issue the usage permit. If Procedure: 4*. Request and obtain main construction project the irregularities cannot be fixed and the usage of the building would be dangerous, clearance from the water and sewerage authority the municipality commission shall order the demolition of the building. Time: 10 days Procedure: 19*. Receive technical examination of the building Cost: RSD 50,000 from municipality commission Procedure: 5*. Request and obtain main construction project Time: 1 day clearance from the labor inspection department for safety at Cost: RSD 200,000 work Comments: BuildCo must submit a formal request along with the building and Time: 10 days usage permits. If there is a cadastral register in the area where the warehouse is Cost: RSD 2,000 constructed, the company should register the building at the cadastral registry. Otherwise, the building should be registered in the land books. Procedure: 6*. Request and obtain main construction project Procedure: 20. Register the building with the land or cadastral clearance from the heating authority register Time: 60 days Time: 30 days Cost: RSD 80,000 Cost: RSD 7,000 Comments: The building authority will not approve without a clearance from the heating authority. Comments: BuildCo must submit a formal request along with the building and usage permits. If there is a cadastral register in the area where the warehouse was Procedure: 7*. Request and obtain main construction project constructed, the company should register the building in the cadastral registry. clearance from the telecommunication authority Otherwise, the building should be registered in the land books. Time: 20 days * This procedure can be completed simultaneously with previous procedures Cost: RSD 20,000 Comments: The telecom authority makes a list of conditions within 10 days from the dEALING WITH LIcENSES time the application was submitted. After that the company prepares the relevant Zrenjanin, Serbia set of drawings and designs according to their norms. Procedures to build a warehouse Procedure: 8*. Request and obtain main construction project Warehouse Value: USD 650,300 = RSD 43,201,055 clearance from the traffic authority Date as of: January 2008 Time: 15 days Procedure: 1. Request and obtain extract from the urban plan or Cost: RSD 5,900 act on zoning conditions Comments: According to oral information provided by the traffic authority, this Time: 15 days clearance can be obtained within 30 days at a cost of RSD 5,900. Cost: RSD 30,000 Procedure: 9. Request and obtain building permit Comments: Request for either of these documents should be submitted to the Time: 10 days municipality on which territory the building plot is situated. The extract from the urban plan could be obtained only if an urban plan for the respective site exists. An Cost: RSD 450 excerpt from an urban plan contains all the conditions and data necessary for the Comments: A request for obtaining a building permit should be submitted to the development of a conceptual project and, in particular, the regulations (set-back), Secretariat for Urbanism and Construction Affairs of the municipality on whose terri- construction line and height restrictions and conditions. When constructing in an tory the building plot is situated, with the following documentation: area for which an urban plan is not envisaged and upon the request of an interested a. Extracts from the urban plan issued within 6 months prior to the filing of the company, the competent municipality will issue an act on zoning conditions in request for a building permit; accordance with the space plan. However, if the construction site is located within b. Preliminary design project that has to be in conformity with the urban plan men- an area for which an urban plan exists (adopted on the basis of old laws), the act on tioned above; and zoning conditions shall be issued in conformity with such an urban plan, until the deadline for adopting the new urban plan expires. The required plans and docu- c. Evidence of the ownership status or rental status on the building plot. ments for connecting to roads and other communal infrastructure shall be obtained, at the investor's expense, ex officio by the municipality competent for issuing a building permit regarding the warehouse. 64 DOING BUSINESS IN SOUTH EAST EUROPE 2008 LIST OF PROCEDURES · REGISTERING PROPERTY 64 Procedure: 10*. Request and obtain technical review of the main issue the usage permit if the building is not in compliance with the technical stan- project dards and the technical documentation. It shall order to the company to eliminate all Time: 5 days the irregularities and again examine the building and then issue the usage permit. If the irregularities cannot be fixed and the usage of the building would be dangerous, Cost: RSD 20,000 the municipality commission shall order the demolition of the building. Comments: A duly licensed company other than the one that furnished the main construction project plan must verify whether the main construction project has Procedure: 19*. Receive technical examination of the building been made in accordance with the law and with the technical standards, and wheth- from municipality commission er it has all necessary clearances described in Procedures 3­9. The main construction project must be certified and stamped to that effect. Time: 1 day Cost: RSD 20,000 Procedure: 11. Notify and obtain approval for the start of Comments: BuildCo must submit a formal request along with the building and construction from the municipality and pay city building land tax usage permits. If there is a cadastral register in the area where the warehouse is Time: 10 days constructed, the company should register the building at the cadastral registry. Otherwise, the building should be registered in the land books. Cost: RSD 5,200,000 Comments: The start of construction activities must be reported to the municipality Procedure: 20. Register the building with the land or cadastral at least 8 days before commencement. The notification must be accompanied by all register necessary documentation described in Procedures 1­10 above, including the main construction project design and description of the equipment to be used, to be certi- Time: 20 days fied by the municipality within 8 days of submission. After this certification has been Cost: RSD 6,000 obtained, construction may commence. The company must pay the land usage tax Comments: BuildCo must submit a formal request along with the building and that is charged by the City Building Directorate and varies from EUR 50 to EUR 60 per usage permits. If there is a cadastral register in the area where the warehouse was square meter of the building plot. Construction activities cannot begin before this constructed, the company should register the building in the cadastral registry. fee is paid. Proof of payment of this fee (if not agreed otherwise with the City Build- Otherwise, the building should be registered in the land books. ing Directorate) is submitted to the municipality along with the other documents mentioned above, which are submitted as attachments to the notification to the * This procedure can be completed simultaneously with previous procedures municipality. The cost depends on the city suburb in which the facility is built. Prices of land tax differ from one suburb to the other. LIST OF PROcEdURES Procedure: 12. Hire and nominate expert supervisor of the construction work Registering property Time: 5 days Cost: RSD 648,016 Comments: Expert supervision of the construction must be secured during the Shkodra, Albania entire period of construction. Such expert supervision must be done by a licensed independent engineer. This person cannot be affiliated with BuildCo. The expert Property value: USD 148,000 = ALL 14,574,685 supervisor comes on average once a week. Date as of: January 2008 Procedure: 13. Request and obtain consent regarding the Procedure: 1. The seller obtains an ownership title certificate connection of the plot of land to the nearest public road Time: 7 days Time: 30 days Cost: ALL 950 (ALL 500 is for the Property Certificate and ALL 450 is for the Relevant Cost: RSD 15,000 Map) Comments: BuildCo needs to undertake this procedure should it require access/use Comments: The seller files with the Real Estate Registry Office the required docu- of the nearest public road. ments to obtain an updated certificate of title with a layout or a record file. It con- tains the property number, land registry area, name of co-owner(s), and the descrip- Procedure: 14*. Request and obtain consent regarding tion of the surface of the property in square meters, the site and/or building data, if regulations on environmental protection any, and a specific section certifying that the real estate property is or is not subject to any dispute, lien, encumbrance, mortgage or any other real property rights. Time: 10 days Cost: RSD 80,000 Procedure: 2*. Verification of property certificate and relevant map at the Real Estate Property Registry Procedure: 15*. Request and obtain water and sewerage Time: 5 days connection Cost: ALL 1,400 (ALL 550 for an updated record file and ALL 950 for an updated Time: 10 days certificate of title with a layout) Cost: RSD 100,000 Comments: The legal status of the real estate property is checked by means of prior filing of an application by the seller with the relevant Real Estate Registry Office in Procedure: 16*. Request and obtain electricity connection order to obtain an updated certificate of title with a layout or an updated record file Time: 10 days to be submitted to the notary. It is mandatory that this step be followed by the seller Cost: RSD 500,000 in case of execution of a sale and purchase contract on the real estate property. Procedure: 17*. Request and obtain phone connection Procedure: 3*. Comparison of indicative property map with the real situation and position of the land Time: 10 days Cost: RSD 150 Time: 3 days Cost: ALL 41,805 (557.4 square meters X 75 average fee per square meter) Procedure: 18. Request and obtain usage permit Comments: This procedure aims at preventing any dispute arising from overlapping Time: 30 days borders and other land surface misfit. It is not mandatory, but it is advisable to carry it out for high-priced transaction. The verification should be done by a licensed to- Cost: RSD 120 pographer at the expense of the buyer. The official fee to be paid is ALL 40 per square Comments: After all construction activities have been completed, a municipal meter, but in reality the fee is between ALL 50 and 100 per square meter of land. It is commission examines if the constructed building complies with the issued building assumed that the area of land in this case is 557.4 square meters. permit, all laws and technical standards. The municipality issues the usage permit For a rural land, it is also required to obtain a certificate from the local authorities within 7 days after the commission has conducted the technical examination and certifying that the seller is the sole owner and is allowed to sell the land. The time to reports that the building is suitable for use. The municipality commission shall not obtain this certificate is about 5 days and the cost is ALL 10 per square meter of land. LIST OF PROCEDURES · STARTING A BUSINESS 65 Procedure: 4. Notarization of the sale and purchase contract by a tion of the surface of the property in square meters, the site and/or building data, if notary public any, and a specific section certifying that the real estate property is or is not subject Time: 1 day to any dispute, lien, encumbrance, mortgage or any other real property rights.. Cost: ALL 22,575 (the fees are calculated according to the following schedule: Procedure: 2*. Verification of property certificate and relevant Value of real estate property: Notary fees: map at the Real Estate Property Registry From 100,000 up to 3,000,000. . . . . . . . .3,500 to 7,000 (estimated proportionally) Time: 5 days Over 3,000,000 up to 4,000,000 . . . . . . .7,000 up to 8,500 Cost: ALL 1,400 (ALL 550 for an updated record file and ALL 950 for an updated Over 4,000,000 up to 6,000,000 . . . . . . .8,500 up to 10,000 certificate of title with a layout) Over 6,000,000 up to 8,000,000 . . . . . . .10,000 up to 15,000 Comments: The legal status of the real estate property is checked by means of prior Over 8,000,000 up to 10,000,000 . . . . . .15,000 up to 18,000 filing of an application by the seller with the relevant Real Estate Registry Office in Over 10,000,000 up to 15,000,000. . . . .18,000 up to 23,000 order to obtain an updated certificate of title with a layout or an updated record file to be submitted to the notary. It is mandatory that this step be followed by the seller Over 15,000,000 up to 25,000,000. . . . .23,000 up to 30,000 in case of execution of a sale and purchase contract on the real estate property. Over 25,000,000 up to 40,000,000. . . . .30,000 up to 35,000 Over 40,000,000 up to 50,000,000. . . . .35,000 up to 40,000 Procedure: 3*. Comparison of indicative property map with the Over 50,000,000 up to 70,000,000. . . . .40,000 up to 50,000 real situation and position of the land Over 70,000,000 up to 100,000,000. . . .50,000 up to 100,000 Time: 3 days Over 100,000,000 . . . . . . . . . . . . . . . . . . . .Up to 150,000 ALL) Cost: ALL 41,805 (557.4 square meters X 75 average fee per square meter) Comments: The sale and purchase contract must be notarized by a notary public. Comments: This proceedure aims at preventing any dispute arising from overlap- The contract must be drafted by a notary public, lawyer, attorney at law, legal ping borders and other land surface misfit. It is not mandatory, but it is advisable consultant or the parties themselves. Albanian law does not put any restrictions on to carry it out for high-priced transactions. The verification should be done by a their issue. In case the sale and the purchase contract are not drafted by a lawyer, licensed topographer at the expense of the buyer. The official fee to be paid is ALL 40 the notary public is held responsible for the terms and conditions provided therein. per square meter, but in reality the fee is between ALL 50 and 100 per square meter An updated certificate of title of the property with a layout or an updated record file of land. It is assumed that the area of land in this case is 557.4 m2. issued by the relevant Real Estate Registry Office is attached to and is an integral part For a rural land, it is also required to obtain a certificate from the local authorities of the sale and purchase contract. certifying that the seller is the sole owner and is allowed to sell the land. The time to obtain this certificate is about 5 days and the cost is ALL 10 per square meter of land. Procedure: 5. Payment of tax at a second-tier bank Time: 1 day Procedure: 4. Notarization of the sale and purchase contract by a Cost: ALL 437,241 (3% of the property value of ALL 14,574,685 notary public 0.5% - 3% of the property value determined by the Order of the Ministry of Finance Time: 1 day No. 5, dated January 30, 2006 with the following schedule: Cost: ALL 33,575 (the fees are calculated according to the following schedule: Property value Tax Value of real estate property: Notary fees: From 0 up to 2,000,000 . . . . . . . . . . . . . . .0.5% of the property value From 100,000 up to 3,000,000. . . . . . . . .3,500 to 7,000 (estimated proportionally) Over 2,000,000 up to 4,000,000 . . . . . . .1% of the property value Over 3,000,000 up to 4,000,000 . . . . . . .7,000 up to 8,500 Over 4,000,000 up to 6,000,000 . . . . . . .2% of the property value Over 4,000,000 up to 6,000,000 . . . . . . .8,500 up to 10,000 Over 6,000,000 and up . . . . . . . . . . . . . . .3% of the property value) Over 6,000,000 up to 8,000,000 . . . . . . .10,000 up to 15,000 Comments: The seller is subject to the tax due for the transfer of the title of owner- Over 8,000,000 up to 10,000,000 . . . . . .15,000 up to 18,000 ship on the real estate property. Such tax is paid at a bank, with whom the relevant Over 10,000,000 up to 15,000,000. . . . .18,000 up to 23,000 Real Estate Registry Office maintains a banking account, and the seller obtains a Over 15,000,000 up to 25,000,000. . . . .23,000 up to 30,000 receipt. The alienation of a real estate property from one legal entity to another is also subject to capital gains tax, at a rate of 20% of the transaction value. Over 25,000,000 up to 40,000,000. . . . .30,000 up to 35,000 Over 40,000,000 up to 50,000,000. . . . .35,000 up to 40,000 Procedure: 6. Application for the registration of the real estate Over 50,000,000 up to 70,000,000 . . . . 40,000 up to 50,000 property with the relevant Real Estate Registry Office under the Over 70,000,000 up to 100,000,000. . . .50,000 up to 100,000 name of the buyer Over 100,000,000 . . . . . . . . . . . . . . . . . . . .Up to 150,000 ALL) Time: 15 days Comments: The sale and purchase contract must be notarized by a notary public. Cost: ALL 2,750 (ALL 1,350 for the Registration request, ALL 500 for the Property The contract must be drafted by a notary public, lawyer, attorney at law, legal Certificate, ALL 450 for the Relevant Map and ALL 450 for a Copy of Property Card) consultant or the parties themselves. Albanian law does not put any restrictions on Comments: The buyer submits the original version of the sale and purchase their issue. In case the sale and the purchase contract are not drafted by a lawyer, contract together with the bank receipt for payment of income tax, to the relevant the notary public is held responsible for the terms and conditions provided therein. Real Estate Registry Office for the registration of the real estate property under the An updated certificate of title of the property with a layout or an updated record file buyer's name. The Shkodra Real Estate Registry handles the registration of the real issued by the relevant Real Estate Registry Office is attached to and is an integral part estate properties mainly by means of a computerized system. of the sale and purchase contract. * This procedure can be completed simultaneously with previous procedures Procedure: 5. Payment of tax at a second-tier bank Time: 1 day REGISTERING PROPERTY Cost: ALL 437,241 (3% of the property value of ALL 14,574,685 Vlora, Albania 0.5% - 3% of the property value determined by the Order of the Ministry of Finance No. 5, dated January 30, 2006 with the following schedule: Property value: USD 148,000 = ALL 14,574,685 Property value Tax Date as of: January 2008 From 0 up to 2,000,000 . . . . . . . . . . . . . . .0.5% of the property value Procedure: 1. The seller obtains an ownership title certificate Over 2,000,000 up to 4,000,000 . . . . . . .1% of the property value Time: 14 days Over 4,000,000 up to 6,000,000 . . . . . . .2% of the property value Cost: ALL 950 (ALL 500 is for the Property Certificate and ALL 450 is for the Relevant Over 6,000,000 and up . . . . . . . . . . . . . . .3% of the property value) Map) Comments: The seller is subject to the tax due for the transfer of the title. Such tax is Comments: The seller files with the Real Estate Registry Office the required docu- paid at a bank, with whom the Real Estate Registry Office maintains an account, and ments to obtain an updated certificate of title with a layout or a record file. It con- the seller obtains a receipt. The alienation of a real estate property from one legal tains the property number, land registry area, name of co-owner(s), and the descrip- entity to another is also subject to capital gains tax of 20% of the transaction value. 66 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 6. Application for the registration of the real estate mandatory according to the local legislation, although it is common. property with the relevant Real Estate Registry Office under the Lawyer's fees depend on the value of the property and are set in the BiH Federation name of the buyer Official Gazette No. 22/04 as follows: Time: 21 days Value of Property (in BAM) Lawyer fees (in BAM) Cost: ALL 2,750 (ALL 1,350 is for the Registration request, ALL 500 is for the Property Under 5,000 . . . . . . . . . . . . . . . . . . . . . . . . .240 Certificate, ALL 450 is for the Relevant Map and ALL 450 is for a Copy of Property From 5,001 to 10,000. . . . . . . . . . . . . . . . .360 Card) From 10,001 to 30,000. . . . . . . . . . . . . . . .720 Comments: The buyer submits the original version of the sale and purchase From 30,001 to 50,000. . . . . . . . . . . . . . . .1,080 contract together with the bank receipt for payment of income tax, to the relevant Real Estate Registry Office for the registration of the real estate property under the From 50,001 to 75,000. . . . . . . . . . . . . . . .1,440 buyer's name. From 75,001 to 100,000 . . . . . . . . . . . . . .1,800 From 100,001 to 1,000,000. . . . . . . . . . . .1,800 + 1.2% of excess over 100,000 * This procedure can be completed simultaneously with previous procedures From 1,000.001 to 5,000,000 . . . . . . . . . .4,400 + 0.6% of excess over 1,000,000 Over 5,000,000. . . . . . . . . . . . . . . . . . . . . . .12,400 + 0.3% of excess over 5,000,000. REGISTERING PROPERTY Banja Luka, Bosnia and Herzegovina Procedure: 7. Submit a request for evaluation of the property Property value: USD 149,000 = BAM 232,291 regarding tax payments Date as of: January 2008 Time: 3 days Cost: BAM 80 (lawyer's fee) Procedure: 1. Obtain a land registry extract as proof of ownership Comments: Parties file the request for the evaluation of the real estate regarding Time: 6 days the payment of the tax for the transfer of the ownership on real estate at the compe- Cost: BAM 65 tent municipal tax authority. The deadline for filing the request is 15 days from the Comments: The seller requests and obtains the land registry extract from a compe- verification of signatures on the sale agreement. This procedure can be done by a tent court land registry office as a proof of ownership. In practice, the extract must lawyer or by the buyer and/or the seller. The documentation shall include a copy of be obtained by the seller before starting the transaction formally. The seller may hire the sale contract. a lawyer to perform this task. Procedure: 8. On-site inspection of the property Procedure: 2*. Buyer and seller obtain the court extract certifying Time: 5 days the person authorized to act on behalf of each company Cost: No cost Time: 7 days Comments: Upon submission of the purchase agreement the tax office commission Cost: BAM 65 (BAM 5 is the court certificate fee and BAM 60 is the lawyer fee) performs on-site inspection of the real estate and takes minutes during that inspec- Comments: Both the seller and the buyer submit the request for obtaining the tion. Based on the minutes, the tax office makes an official decision on which party will pay the tax (in practice it is usually the buyer). court extract certifying the person authorized to act on behalf of each company to the court that keeps the Registry of Commercial Companies. It is common for them to hire a lawyer to perform this task. The parties have to provide the set of Procedure: 9. Payment of the transfer tax at a commercial bank registration documents, which prove that the person who will sign on behalf of the Time: 1 day company is authorized to do so. Cost: BAM 6,968.7 (3% of the property value of BAM 232,291) Comments: The transfer tax is paid, usually by the buyer, at a commercial bank in Procedure: 3. Obtain the copy of the plan favor of the municipal budget. The tax has to be paid according to the tax author- Time: 9 days ity's instructions within 15 days from receiving payment instructions from the tax Cost: BAM 27 authority. Comments: The copy of the plan is obtained from the Cadastre. Procedure: 10. Apply for registration at the Land Registry Procedure: 4. Offer the property to the municipality Time: 1 day Time: 8 days Cost: BAM 55 (land registry fee) Cost: BAM 5 (municipality fee) Comments: Parties submit the application and other documentation for the trans- Comments: The seller needs to verify with the municipality that the property is not fer of the ownership to the competent court land registry office. The documentation shall include the purchase agreement and certificate of tax payment. The registration part of any municipality construction plans. of the transfer of ownership is handled by an authorized court officer. Procedure: 5. Obtain the tax clearance from local tax authorities Procedure: 11. Register at the Cadastre for both companies Time: 144 days Time: 10 days Cost: BAM 14 Cost: BAM 10 Comments: The tax clearance certifies that the seller and the buyer do not owe any * This procedure can be completed simultaneously with previous procedures property tax to the municipality. Procedure: 6. Verification of the signatures of both parties at the REGISTERING PROPERTY Court Mostar, Bosnia and Herzegovina Time: 1 day Property value: USD 149,000 = BAM 232,291 Cost: BAM 505 (BAM 105 is the verification fee and BAM 400 the lawyers fee) Date as of: January 2008 Comments: For signing of the purchase agreement and verification of the Procedure: 1. Obtain a land registry extract as proof of ownership signatures by the competent court, the presence of both parties is necessary or verification should be based on the special power of attorney. Five copies must be Time: 14 days verified at the court, one copy for the court and two for each party. An attorney-at- Cost: BAM 10 law prepares the purchase agreement based on the extract (obtained in Procedure 1) Comments: The seller requests and obtains the land registry extract from a compe- and other documentation provided by the seller who is responsible for gathering all tent court land registry office as a proof of ownership. In practice, the extract must documentation to be presented to the lawyer. The lawyer will verify the ownership be obtained by the seller before starting the transaction formally. The seller may hire situation of the property in the court's Land Registry Office before signing the agree- a lawyer to perform this task. Due to a large number of cases this procedure lasts 14 ment. Participation of a lawyer in the preparation of the purchase agreement is not days. LIST OFOF PROCEDURESREGISTERINGAPROPERTY LIST PROCEDURES · · STARTING BUSINESS 67 Procedure: 2*. Buyer and seller obtain the court extract certifying shall include the purchase agreement and certificate of tax payment. The registration the person authorized to act on behalf of each company of the transfer of ownership is handled by an authorized court officer. Time: 12 days Procedure: 8. Register at the Cadastre Cost: BAM 16 (BAM 8 for each request and BAM 2 per page) Comments: Both the seller and the buyer submit the request for obtaining the Time: 104 days court extract certifying the person authorized to act on behalf of each company to Cost: BAM 10 the court that keeps the Registry of Commercial Companies. It is common for them to hire a lawyer to perform this task. The parties have to provide a set of registration * This procedure can be completed simultaneously with previous procedures documents, which prove that the person who will sign on behalf of the company is authorized to do so. The court tax is BAM 8 for the request and BAM 2 per page for REGISTERING PROPERTY the court extract. Each court extract contains approximately 4-5 pages. The lawyer's Osijek, Croatia fee is about BAM 90. Property value: USD 466,500 = HRK 2,723,287 Procedure: 3. Notaries verifiy the signatures of both parties Date as of: January 2008 Time: 1 day Procedure: 1. Obtain a land registry extract from the competent Cost: BAM 180 Land Registry Court Comments: For signing of the purchase agreement and verification of the Time: 1 day signatures by the competent court, the presence of both parties is necessary or verification should be based on the special power of attorney. Five copies must be Cost: HRK 20 (per extract) verified at the court, one copy for the court and two for each party. An attorney-at- Comments: Obtaining a land registry extract has become a crucial part of the law prepares the purchase agreement based on the extract (obtained in Procedure 1) preparation process for the purchase of real estate, since the land registry extract and other documentation provided by the seller who is responsible for gathering all generally enjoys public trust. Due diligence requires that the buyer knows the status documentation to be presented to the lawyer. The lawyer will verify the ownership of the land registry. If not, it can also result in adverse material consequences with situation of the property in the court's Land Registry Office before signing the agree- respect to statutory warranty claims. The extract must be stamped by the Land ment. Participation of a lawyer in the preparation of the purchase agreement is not Registry Court in order to be verified. This usually does not take more than one day. mandatory according to the local legislation, although it is common. In the last couple of years, Croatia has been in the process of computerizing the Reg- Lawyer's fees depend on the value of the property and are set in the BiH Federation istry. It is now possible to obtain an unofficial extract (if available) online at any time Official Gazette No. 22/04 as follows: and at no cost. This process is still in its early stages. However, it is possible to search Value of Property (in BAM) Lawyer fees (in BAM) some of the Land Registry books online and obtain an electronic land registry ex- tract for a property that has been entered in the electronic database. The digital Land Under 5,000 . . . . . . . . . . . . . . . . . . . . . . . . .240 Registry can be accessed through: http://e-izvadak.pravosudje.hr/mpweb/main.jsp. From 5,001 to 10,000. . . . . . . . . . . . . . . . .360 E-Cadastre also enables online insight into the status of possession of properties in From 10,001 to 30,000. . . . . . . . . . . . . . . .720 Croatia, according to the number of land plot and cadastral municipality data (http:// From 30,001 to 50,000. . . . . . . . . . . . . . . .1,080 katastar.hr/dgu/ind.php). From 50,001 to 75,000. . . . . . . . . . . . . . . .1,440 Procedure: 2*. Notarization of sale contract by public notary From 75,001 to 100,000 . . . . . . . . . . . . . .1,800 Time: 1 day From 100,001 to 1,000,000. . . . . . . . . . . .1,800 + 1.2% of excess over 100,000 Cost: HRK 68.8 (to verify signature) From 1,000.001 to 5,000,000 . . . . . . . . . .4,400 + 0.6% of excess over 1,000,000 Comments: The contract of sale that contains a clausula intabulandi (i.e. the decla- Over 5,000,000. . . . . . . . . . . . . . . . . . . . . . .12,400 + 0.3% of excess over 5,000,000. ration by the seller that the buyer may be entered in the Land Register) is prepared by the parties or by a lawyer and the signatures of the seller (the party whose right Procedure: 4. Submit a request for evaluation of the property will be limited by contract) are verified by a notary public. Standard sale contract regarding tax payments forms can be purchased at office supply stores. If a lawyer prepares the sale contract, Time: 1 day it will cost about 1.25% of the property price (plus 22% VAT) for properties with a Cost: BAM 680 value above HRK 500,000. Comments: Parties request the evaluation of the real estate regarding the payment Procedure: 3. Submit the sale contract to the tax administration of the tax for the transfer of the ownership on real estate at the competent municipal tax authority. The deadline for filing the request is 15 days from the verification of on the municipal level for payment of land transfer taxes signatures on the sale agreement. This procedure can be done by a lawyer or by the Time: 30 days buyer and/or the seller. The documentation shall include a copy of the sale contract. Cost: No cost Comments: The buyer shall submit the sale agreement to the tax administration at Procedure: 5. On-site inspection of the property the city/municipality level for payment of land transfer taxes. The tax administration Time: 23 days makes a decision on the amount of taxes payable within 30 days and sends this deci- Cost: BAM 100 (commission fee) sion to the address of the person who submitted the sale agreement. Along with this Comments: Upon submission of the purchase agreement the tax office commission decision of the tax administration, a payment slip is attached, with the exact amount of the tax due, and with the exact bank account number indicated on which the pay- performs on-site inspection of the real estate and takes minutes during that inspec- ment of the tax should be exercised. This procedure is no precondition for registering tion. Based on the minutes, the tax office makes an official decision on which party the sale agreement in the Land Register. will pay the tax (in practice it is usually the buyer). The notary public shall also report the sale agreement to the tax administration at Procedure: 6. Payment of the transfer tax at a commercial bank the city/municipality level for payment of land transfer taxes. While the buyer has the legal obligation to deliver the sale contract to the tax authority within 30 days Time: 1 day of the conclusion of the sale agreement, the notary is obliged to deliver the sale Cost: BAM 11,615 (5% of the property value of BAM 232,291) agreement to the tax authority within 15 days of the expiry of the month in which Comments: The transfer tax is paid, usually by the buyer, to the municipal budget the certification of signatures took place. at a commercial bank. The tax has to be paid according to the tax authority's instruc- tions within 15 days from receiving payment instructions from the tax authority. Procedure: 4*. Payment of stamp duty and registration fees at a commercial bank or post office Procedure: 7. Apply for registration at the Land Registry Time: 1 day Time: 1 day Cost: HRK 250 (HRK 50 stamp duty + HRK 200 registration fee) Cost: BAM 55 (land registry fee) Comments: Before applying for registration the stamp duty and registration fee Comments: Parties submit the application and other documentation for the trans- must be paid. The registration fee and the stamp duty can be paid in post offices or fer of the ownership to the competent court land registry office. The documentation commercial banks, but always only to the indicated bank account number (which is the account number of the State's budget). 68 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 5. Register title transfer at Land Registry Court Procedure: 3. Submit the sale contract to the tax administration Time: 30 days on the municipal level for payment of land transfer taxes Cost: No cost (already paid in procedure 4) Time: 30 days Comments: The request for the property registration must be submitted to the Regis- Cost: No cost try by the parties on the appropriate registration form approved by the Ministry of Jus- Comments: The buyer shall submit the sale agreement to the tax administration at tice. However, the request shall not be rejected just because it was not submitted on the city/municipality level for payment of land transfer taxes. The tax administration the prescribed registration form. The time it takes depends on the complexity of the makes a decision on the amount of taxes payable within 30 days and sends this deci- case and the qualifications of the registry staff. The participation of an attorney is not sion to the address of the person who submitted the sale agreement. Along with this mandatory, but if one is involved, the fees will be about 0.5% of the property value. decision of the tax administration, a payment slip is attached, with the exact amount The Registry conducts the registration procedure and renders the decision issuing of the tax due, and with the exact bank account number indicated on which the pay- the property title. Only the final decision, the one allowing the registration, produces ment of the tax should be exercised. This procedure is no precondition for registering the legal effect. However, regardless of the time when the final decision is rendered, the sale agreement in the Land Register. the date of the registration application will be the date marked in the Registry as the The notary public shall also report the sale agreement to the tax administration at moment of transferring the ownership title. Since 2004, the court has not accepted the city/municipality level for payment of land transfer taxes. While the buyer has incomplete applications. If the registration form contains certain deficiencies, the the legal obligation to deliver the sale contract to the tax authority within 30 days court will not invite the applicant to correct the request but will immediately dismiss of the conclusion of the sale agreement, the notary is obliged to deliver the sale the application. The applicant may submit a new request, which will then have a agreement to the tax authority within 15 days of the expiry of the month in which lower rank. Recent changes in 2005 entrust the Land Registry clerks with the author- the certification of signatures took place. ity to decide on applications, with judges deciding on appeals. The documentation shall include the notarized sale agreement, the application form and a certified copy Procedure: 4*. Payment of stamp duty and registration fees at a of an identification card or a passport. commercial bank or post office Procedure: 6. Payment of land transfer tax Time: 1 day Time: 1 day Cost: HRK 250 (HRK 50 stamp duty + HRK 200 registration fee) Cost: HRK 136,164.6 (5% of the value of the property of HRK 2,723,287) Comments: Before applying for registration the stamp duty and registration fee must be paid. The registration fee and the stamp duty can be paid in post offices or Comments: Within 15 days of the receipt of the tax assessment notice, the buyer commercial banks, but always only to the indicated bank account number (which is shall pay the real property transfer tax. In the event of a default by the buyer, the tax the account number of the State's budget). authority can hold the seller jointly liable for the payment of this tax, provided that the seller assumed the contractual obligation to pay the tax. If the buyer does not Procedure: 5. Register title transfer at Land Registry Court properly notify the taxation office of all circumstances regarding the real property transaction that are relevant for the proper assessment of the tax, he shall be subject Time: 120 days to penalties in an amount ranging from HRK 500 up to HRK 200,000. If the buyer Cost: No cost (already paid in procedure 4) does not pay the tax, it will not stop his/her right to register the ownership. Comments: The request for the property registration must be submitted to the Registry by the parties on the appropriate registration form approved by the Ministry * This procedure can be completed simultaneously with previous procedures of Justice. However, the request shall not be rejected just because it was not submit- ted on the prescribed registration form. The time depends on the complexity of the REGISTERING PROPERTY case and the qualifications of the registry staff. The participation of an attorney is not Sibenik, Croatia mandatory, but if one is involved, the fees will be about 0.5% of the property value. The Registry conducts the registration procedure and renders the decision issuing Property value: USD 466,500 = HRK 2,723,287 the property title. Only the final decision, the one allowing the registration, produces Date as of: January 2008 the legal effect. However, regardless of the time when the final decision is rendered, the date of the registration application will be the date marked in the Registry as the Procedure: 1. Obtain a land registry extract from the competent moment of transferring the ownership title. Since 2004, the court has not accepted Land Registry Court incomplete applications. If the registration form contains certain deficiencies, the Time: 1 day court will not invite the applicant to correct the request but will immediately dismiss Cost: HRK 20 (per extract) the application. The applicant may submit a new request, which will then have a lower rank. Recent changes in 2005 entrust the Land Registry clerks with the author- Comments: Obtaining a land registry extract has become a crucial part of the ity to decide on applications, with judges deciding on appeals. The documentation preparation process for the purchase of real estate, since the land registry extract shall include the notarized sale agreement, the application form and a certified copy generally enjoys public trust. Due diligence requires that the buyer knows the status of an identification card or a passport. of the land registry. If not, it can also result in adverse material consequences with respect to statutory warranty claims. The extract must be stamped by the Land Procedure: 6. Payment of land transfer tax Registry Court in order to be verified. This usually does not take more than one day. In the last couple of years, Croatia has been in the process of computerizing the Reg- Time: 1 day istry. It is now possible to obtain an unofficial extract (if available) online at any time Cost: HRK 136,164.6 (5% of the value of the property of HRK 2,723,287) and at no cost. This process is still in its early stages. However, it is possible to search Comments: Within 15 days of the receipt of the tax assessment notice, the buyer some of the Land Registry books online and obtain an electronic land registry ex- shall pay the real property transfer tax. In the event of a default by the buyer, the tax tract for a property that has been entered in the electronic database. The digital Land authority can hold the seller jointly liable for the payment of this tax, provided that Registry can be accessed through: http://e-izvadak.pravosudje.hr/mpweb/main.jsp. the seller assumed the contractual obligation to pay the tax. If the buyer does not E-Cadastre also enables online insight into the status of possession of properties in properly notify the taxation office of all circumstances regarding the real property Croatia, according to the number of land plot and cadastral municipality data (http:// transaction that are relevant for the proper assessment of the real property transfer katastar.hr/dgu/ind.php). tax, he shall be subject to penalties in an amount ranging from HRK 500 up to HRK 200,000. If the buyer does not pay the tax, it will not stop his/her right to register the Procedure: 2*. Notarization of sale contract by public notary ownership. Time: 1 day Cost: HRK 46.6 (to verify signature) * This procedure can be completed simultaneously with previous procedures Comments: The contract of sale that contains a clausula intabulandi (i.e. the decla- ration by the seller that the buyer may be entered in the Land Register) is prepared by the parties or by a lawyer and the signatures of the seller (the party whose right will be limited by contract) are verified by a notary public. Standard sale contract forms can be purchased at office supply stores. If a lawyer prepares the sale contract, it will cost about 1.25% of the property price (plus 22% VAT) for properties with a value above HRK 500,000. LIST OFOF PROCEDURESREGISTERINGAPROPERTY LIST PROCEDURES · · STARTING BUSINESS 69 REGISTERING PROPERTY mandatory, but if one is involved, the fees will be about 0.5% of the property value. Varazdin, Croatia The Registry conducts the registration procedure and renders the decision issuing Property value: USD 466,500 = HRK 2,723,287 the property title. Only the final decision, the one allowing the registration, produces the legal effect. However, regardless of the time when the final decision is rendered, Date as of: January 2008 the date of the registration application will be the date marked in the Registry as the Procedure: 1. Obtain a land registry extract from the competent moment of transferring the ownership title. Since 2004, the court has not accepted Land Registry Court incomplete applications. If the registration form contains certain deficiencies, the court will not invite the applicant to correct the request but will immediately dismiss Time: 1 day the application. The applicant may submit a new request, which will then have a Cost: HRK 20 (per extract) lower rank. Recent changes in 2005 entrust the Land Registry clerks with the author- Comments: Obtaining a land registry extract has become a crucial part of the ity to decide on applications, with judges deciding on appeals. The documentation preparation process for the purchase of real estate, since the land registry extract shall include the notarized sale agreement, the application form and a certified copy generally enjoys public trust. Due diligence requires that the buyer knows the status of an identification card or a passport. of the land registry. If not, it can also result in adverse material consequences with respect to statutory warranty claims. The extract must be stamped by the Land Procedure: 6. Payment of land transfer tax Registry Court in order to be verified. This usually does not take more than one day. Time: 1 day In the last couple of years, Croatia has been in the process of computerizing the Reg- Cost: HRK 136,164.6 (5% of the value of the property of HRK 2,723,287) istry. It is now possible to obtain an unofficial extract (if available) online at any time Comments: Within 15 days of the receipt of the tax assessment notice, the buyer and at no cost. This process is still in its early stages. However, it is possible to search shall pay the real property transfer tax. In the event of a default by the buyer, the tax some of the Land Registry books online and obtain an electronic land registry ex- authority can hold the seller jointly liable for the payment of this tax, provided that tract for a property that has been entered in the electronic database. The digital Land the seller assumed the contractual obligation to pay the tax. If the buyer does not Registry can be accessed through: http://e-izvadak.pravosudje.hr/mpweb/main.jsp. properly notify the taxation office of all circumstances regarding the real property E-Cadastre also enables online insight into the status of possession of properties in transaction that are relevant for the assessment of the transfer tax, he shall be sub- Croatia, according to the number of land plot and cadastral municipality data (http:// ject to penalties in an amount ranging from HRK 500 up to HRK 200,000. If the buyer katastar.hr/dgu/ind.php). does not pay the tax, it will not stop his/her right to register the ownership. Procedure: 2*. Notarization of sale contract by public notary * This procedure can be completed simultaneously with previous procedures Time: 1 day Cost: HRK 68.8 (to verify signature) REGISTERING PROPERTY Comments: The contract of sale that contains a clausula intabulandi (i.e. the decla- Pristina, Kosovo ration by the seller that the buyer may be entered in the Land Register) is prepared by the parties or by a lawyer and the signatures of the seller (the party whose right Property value: USD 87,094 = EUR 69,440 will be limited by contract) are verified by a notary public. Standard sale contract Date as of: January 2008 forms can be purchased at office supply stores. If a lawyer prepares the sale contract, it will cost about 1.25% of the property price (plus 22% VAT) for properties with a Procedure: 1. Request and obtain the property certificate and value above HRK 500,000. lot plan copy from the Municipality Geodesic and Cadastral Directorate Procedure: 3. Submit the sale contract to the tax administration Time: 2 days on the municipal level for payment of land transfer taxes Cost: EUR 8 (EUR 4 for the property certificate and EUR 4 for the lot plant copy) Time: 30 days Comments: Property certificate and lot plan copy are valid for 180 days each. Cost: No cost Comments: The buyer shall submit the sale agreement to the tax administration at Procedure: 2*. Request and obtain confirmation letters from the the city/municipality level for payment of land transfer taxes. The tax administration Municipality Finance and Property Directorate proving that the makes a decision on the amount of taxes payable within 30 days and sends this deci- property can be sold and there are no tax obligations sion to the address of the person who submitted the sale agreement. Along with this Time: 2 days decision of the tax administration, a payment slip is attached, with the exact amount Cost: EUR 4 of the tax due, and with the exact bank account number indicated on which the pay- ment of the tax should be exercised. This procedure is no precondition for registering Comments: The confirmation letter is one letter issued to both buyer and seller. For the sale agreement in the Land Register. a construction on agricultural land, the confirmation letter needs to be obtained from the Agricultural Institution and costs EUR 30. The notary public shall also report the sale agreement to the tax administration at the city/municipality level for payment of land transfer taxes. While the buyer has the legal obligation to deliver the sale contract to the tax authority within 30 days Procedure: 3. Lawyer drafts sale-purchase agreement of the conclusion of the sale agreement, the notary is obliged to deliver the sale Time: 2 days agreement to the tax authority within 15 days of the expiry of the month in which Cost: EUR 200 the certification of signatures took place. Comments: The fee that lawyers charge depends on the value of the contract. It varies from EUR 100 to EUR 300 and is subject to bargaining. Procedure: 4*. Payment of stamp duty and registration fees at a commercial bank or post office Procedure: 4. Confirmation of the transaction contract by Time: 1 day municipality court Cost: HRK 250 (HRK 50 stamp duty + HRK 200 registration fee) Time: 2 days Comments: Before applying for registration the stamp duty and registration fee Cost: EUR 56 (EUR 50 is the court confirmation fee, EUR 1 is the request fee and EUR must be paid. The registration fee and the stamp duty can be paid in post offices or 5 is the authorization) commercial banks, but always only to the indicated bank account number (which is Comments: The practice is to hire lawyers to draft the transaction contract and the account number of the State's budget). obtain the court confirmation. The lawyer needs to have an authorization in order to be able to confirm the contract in the court. Authorization for the lawyer needs to be Procedure: 5. Register title transfer at Land Registry Court confirmed by the municipality court and costs EUR 5. Time: 8 days Cost: No cost (already paid in procedure 4) Procedure: 5. Seller pays transaction tax at a commercial bank Comments: The request for the property registration must be submitted to the Time: 1 day Registry by the parties on the appropriate registration form approved by the Ministry Cost: EUR 150 of Justice. However, the request shall not be rejected just because it was not submit- Comments: Previously, the transaction tax was a fixed percentage charged on the ted on the prescribed registration form. The time depends on the complexity of the property value. Currently, transaction tax is EUR 150 per lot. We assume that the case and the qualifications of the registry staff. The participation of an attorney is not property sold represents one lot due to its size. 70 DOING BUSINESS IN SOUTH EAST EUROPE 2008 Procedure: 6. Register property title transfer with the Real Estate Procedure: 7*. Payment of application fee at a bank Registry of the municipal Geodesic and Cadastral Directorate Time: 1 day Time: 30 days Cost: EUR 80 Cost: EUR 5 (application fee) Comments: Payments of up to EUR 20 can be made at the Cadastral Offices. Pay- Comments: The new owner needs to request and obtain an approval in order to ments above this value need to be made at a bank. reflect the changes in ownership and obtain a new title certificate. * This procedure can be completed simultaneously with previous procedures Procedure: 7*. Payment of application fee at a bank Time: 1 day REGISTERING PROPERTY Cost: EUR 200 Bitola, Macedonia, FYR Comments: Payments of up to EUR 20 can be made at the Cadastral Offices. Pay- Property value: USD 153,000 = MKD 7,464,166 ments above this value need to be made at a bank. Date as of: January 2008 * This procedure can be completed simultaneously with previous procedures Procedure: 1. Obtain a non-encumbrance certificate on the property Time: 2 days REGISTERING PROPERTY Cost: MKD 400 Prizren, Kosovo Comments: Check in the First Instance Court (Bitola) whether there are any mort- Property value: USD 87,094 = EUR 69,440 gages on the land and obtain a non­encumbrance certificate from that court. This Date as of: January 2008 information could also be found in the title deed of the seller. Procedure: 1. Request and obtain the property certificate and Procedure: 2*. Obtain copy of the title deed from the Cadastre lot plan copy from the Municipality Geodesic and Cadastral Time: 1 day Directorate Cost: MKD 175 (MKD 125 for title deed + MKD 50 for stamp duty) Time: 2 days Comments: The seller should obtain a copy of the title deed from the Cadastre Cost: EUR 9 (EUR 5 for the property certificate and EUR 4 for the lot plant copy) before starting the transaction formally. The cost of obtaining the title deed was Comments: Property certificate and lot plan copy are valid for 180 days each. decreased in October 2007 following the Government decision published in the Official Gazette No. 119/07. Procedure: 2*. Request and obtain confirmation letters from the Municipality Finance and Property Directorate proving that the Procedure: 3. A lawyer prepares the sale contract property can be sold and there are no tax obligations Time: 1 day Time: 2 days Cost: MKD 2,000 Cost: EUR 5 Comments: According to practice the Revenue Office requests that an attorney- Comments: The confirmation letter is one letter issued to both buyer and seller. at-law prepares the sale agreement. While in Skopje, clients usually hire the lawyer For a construction on agricultural land, the confirmation letter needs to be obtained to complete the registration, clients in Bitola prefer to complete the process them- from the Agricultural Institution and costs EUR 30. selves; hence the cost in Bitola is lower. Procedure: 3. Lawyer drafts sale-purchase agreement Procedure: 4. Calculation and payment of the land transfer tax at the local Public Revenue Department Time: 2 days Time: 8 days Cost: EUR 175 Cost: MKD 224,175 (MKD 250 is the administrative tax + 3% of the value of the Comments: The fee that lawyers charge depends on the value of the contract. It property of MKD 7,464,166 for land transfer tax) varies from EUR 50 to EUR 300 and is subject to bargaining. Comments: Tax liability is incurred on the date of conclusion of the agreement on Procedure: 4. Confirmation of the transaction contract by the transfer of ownership. The base for the land transfer tax is the market value of the municipality court real estate at the moment of the tax liability. Previously paid to the Public Revenue Authority, the payment of this tax moved from the Revenue Authority to the munici- Time: 2 days palities in 2005. According to the Law on Property Taxes (Official Gazette of RoM, No. Cost: EUR 56 (EUR 50 is the court confirmation fee, EUR 1 is the request fee and EUR 61, dated September 13th 2004), the tax rates are determined by each municipality, 5 is the authorization) and the municipal administration is authorized to calculate and collect the property Comments: The practice is to hire lawyers to draft the transaction contract and taxes as per the location of the property. The mayor should pass and deliver the obtain the court confirmation. The lawyer needs to have an authorization in order to decision on the amount of the property tax within 30 days from the submission of be able to confirm the contract in the court. Authorization for the lawyer needs to be the application by the taxpayer. The rate of the land transfer tax equals 3% of the confirmed by the municipality court and costs EUR 5. determined market value of the property. Procedure: 5. Seller pays transaction tax at a commercial bank Procedure: 5. Authenticate sale contract at public notary office Time: 1 day Time: 1 day Cost: EUR 200 Cost: MKD 10,000 (notary fees (with a maximum of MKD 10,000), are determined in accordance with the Tariff for Notary Services adopted in 2002: Comments: Previously, the transaction tax was a fixed percentage charged on the property value. Currently, transaction tax is EUR 150 per lot. We assume that the Property value (MKD) Notary's fees property sold represents one lot due to its size. Up to 100,000 . . . . . . . . . . . . . . . . . . 1,000 From 100,000 to 200,000. . . . . . . . 1,500 Procedure: 6. Register property title transfer with the Real Estate From 200,000 to 300,000. . . . . . . . 2,500 Registry of the municipal Geodesic and Cadastral Directorate Above 300,000 . . . . . . . . . . . . . . . . . 1% of the property value (max. 10,000 MKD)) Time: 28 days Comments: The agreement is authenticated before a notary by the seller and buyer. Cost: EUR 5 (application fee) The notary will not authenticate the agreement if the land transfer tax has not been Comments: The new owner needs to request and obtain an approval in order to paid to the Revenue Authority. If the tax is not paid when the agreement is signed reflect the changes in ownership and obtain a new title certificate. before a notary, the seller must pay the tax after signing and to submit a copy of the tax receipt to the notary, who will then authenticate the agreement. According to the Law on Notary Public, a notary is obliged to submit these documents to the Cadastre in order to inform the Cadastre about the change in ownership. LIST OFOF PROCEDURESREGISTERINGAPROPERTY LIST PROCEDURES · · STARTING BUSINESS 71 Procedure: 6. Register change of ownership at the Cadastre Procedure: 7. Request inscription of the new owner at the Agency Time: 10 days for Real Estate Cost: MKD 425 (250 MKD for change of ownership + 125 MKD for new title deed + Time: 23 days 50 MKD for stamp duty) Cost: EUR 18 (The request is EUR 5 and the inscription is EUR 13) Comments: A request for changing the title is submitted to the Cadastre. The buyer Comments: The request takes 1 day and the inscription 15-30 days. Parties fill in a will obtain from the Cadastre a new title deed on which the new owner will be standard form or make a simple written request at the local branch of the Agency for registered. The right of ownership over the property is established at the moment Real Estate for the name on the property to be changed to the buyer's name. After of registration of that right in the Public Book at the Cadastre. On March 10, 2005, the Agency inscribes the name, the transfer is considered final. The parties are noti- amendments to the Law on Survey, Cadastre and Registration of the Rights over real fied in writing that the inscription has taken place. There is no mandatory document property (Official Gazette of RoM, No. 84) provided for the possibility of conduct- at the end of this period, though the buyer can request a copy of the inscription. ing electronic transactions through the Cadastre. These amendments took effect in November 2005. However, they have not yet been put into practice. The documenta- tion shall include a sale contract authenticated by the public notary (obtained in REGISTERING PROPERTY Procedure 6). Pljevlje, Montenegro The cost of changing the ownership and obtaining the title deed was decreased in October 2007 following the Government decision published in the Official Gazette Property value: USD 193,000 = EUR 153,879 No. 119/07. Date as of: January 2008 Procedure: 1. Obtain property excerpt from Agency for Real Estate * This procedure can be completed simultaneously with previous procedures Time: 1 day REGISTERING PROPERTY Cost: EUR 8 (EUR 5 Republic Administrative Tax and EUR 8 Agency for Real Estate fee) Niksic, Montenegro Comments: The buyer goes to the local branch of the Agency for Real Estate to obtain an excerpt on the property, proving the seller's ownership. Property value: USD 193,000 = EUR 153,879 Date as of: January 2008 Procedure: 2. Lawyer drafts sale-purchase agreement Procedure: 1. Obtain property excerpt from Agency for Real Time: 1 day Estate Cost: EUR 150 Time: 1 day Comments: For some transactions, a party may choose to hire a lawyer to check the Cost: EUR 8 (EUR 5 Republic Administrative Tax and EUR 8 Agency for Real Estate fee) boundaries and limitations of the property against the excerpt. The fee that lawyers charge depends on the value of the contract. The fee ranges from EUR 100 to 200. Comments: The buyer goes to the local branch of the Agency for Real Estate to obtain an excerpt on the property, proving the seller's ownership. Procedure: 3. Sign and notarize the sale-purchase agreement at Procedure: 2. Lawyer drafts sale-purchase agreement the Municipal Court Time: 1 day Time: 1 day Cost: EUR 300 (EUR 30 for any agreement over EUR 5,000 + 0.25% of the amount Cost: EUR 150 exceeding EUR 5,000, not to exceed EUR 300.) Comments: For some transactions, a party may choose to hire a lawyer to check the Comments: It is mandatory that the sale-purchase agreement be notarized. boundaries and limitations of the property against the excerpt. The fee that lawyers charge depends on the value of the contract. The fee ranges from EUR 100 to 200. Procedure: 4. Obtain tax clearance from tax authorities Procedure: 3. Sign and notarize the sale-purchase agreement at Time: 2 days the Municipal Court Cost: EUR 5 Time: 1 day Comments: The seller should obtain a document from the tax authorities saying Cost: EUR 300 (EUR 30 for any agreement over EUR 5,000 + 0.25% of the amount that he has paid any taxes related to the property. exceeding EUR 5,000, not to exceed EUR 300. The total in this case is EUR 300) Procedure: 5. Tax authorities assess the amount of transfer tax to Comments: It is mandatory that the sale-purchase agreement be notarized. be paid by the buyer Procedure: 4. Obtain tax clearance from tax authorities Time: 5 days Time: 2 days Cost: No cost Cost: EUR 10 Comments: During this period the tax authorities will compare their valuation of the property with the sale-purchase agreement price. They will assess how much Comments: The seller should obtain a document from the tax authorities saying the buyer should pay as transfer tax (3% of the property value) and assign a bank at that he has paid any taxes related to the property. which to pay. This assessment may take from 4 to 10 days. Procedure: 5. Tax authorities assess the amount of transfer tax to Procedure: 6. Buyer pays transfer tax at a commercial bank be paid by the buyer Time: 1 day Time: 7 days Cost: EUR 4,616.4 (3% of the property value of EUR 153,879) Cost: No cost Comments: The buyer will deposit the amount assessed by the tax authorities to be Comments: During this period the tax authorities will compare their valuation of paid as transfer tax into the bank account assigned by the tax authorities. the property with the sale-purchase agreement price. They will assess how much the buyer should pay as transfer tax (3% of the property value) and assign a bank at Procedure: 7. Request inscription of the new owner at the Agency which to pay. This assessment may take from 4 to 10 days. for Real Estate Procedure: 6. Buyer pays transfer tax at a commercial bank Time: 6 days Time: 1 day Cost: EUR 18 (The request is EUR 5 and the inscription is EUR 13) Cost: EUR 4,616.4 (3% of the property value of EUR 153,879) Comments: The request lasts 1 day and the inscription 3-7 days. Parties fill in a standard form or make a simple written request at the local branch of the Agency for Comments: The buyer will deposit the amount assessed by the tax authorities to Real Estate in order for the name on the property to be changed to the buyer's name. be paid as transfer tax into the bank account assigned by the tax authorities in their After the Agency inscribes the name, the transfer is considered final. The parties are account. The tax was recently increased from 2 to 3% of the property value. notified in writing that the inscription has taken place. There is no mandatory docu- ment to pick up at the end of this period, though the buyer can request a copy of the inscription if he wishes. 72 DOING BUSINESS IN SOUTH EAST EUROPE 2008 REGISTERING PROPERTY REGISTERING PROPERTY Krusevac, Serbia Uzice, Serbia Property value: USD 195,500 = RSD 12,987,554 Property value: USD 195,500 = RSD 12,987,554 Date as of: January 2008 Date as of: January 2008 Procedure: 1. Obtain an extract from the Register of Companies Procedure: 1. Obtain an extract from the Register of Companies Time: 3 days Time: 3 days Cost: RSD 3,120 (RSD 1,560 per extract for each party) Cost: RSD 3,120 (RSD 1,560 per extract for each party) Comments: Because there are two parties involved, they must obtain the extract Comments: Because there are two parties involved, they must obtain the extract from the Register of Companies confirming that the persons signing the contract are from the Register of Companies confirming that the persons signing the contract are authorized to sign on behalf of the companies. authorized to sign on behalf of the companies. Procedure: 2. Verification of the sale purchase agreement before Procedure: 2. Verification of the sale purchase agreement before the court the court Time: 1 day Time: 1 day Cost: RSD 41,000 (court fees, depending on the property value and according to the Cost: RSD 41,000 (court fees, depending on the property value and according to the following schedule (with a maximum of RSD 26,000): following schedule (with a maximum of RSD 26,000): Property Value (in RSD): Court Fees (in RSD): Property Value (in RSD): Court Fees (in RSD): Up to 10,000 . . . . . . . . . . . . . . . . . . . 650 Up to 10,000. . . . . . . . . . . . . . . . . . . . . . . . .650 From 10,000 to 100,000 . . . . . . . . . 650 + 1% of the property value From 10,000 to 100,000 . . . . . . . . . . . . . .650 + 1% of the property value From 100,000 to 1,000,000 . . . . . . 1,950 + 0.5% of the property value From 100,000 to 1,000,000. . . . . . . . . . . .1,950 + 0.5% of the property value Over 1,000,000 . . . . . . . . . . . . . . . . . 8,450 + 0.25% of the property value) Over 1,000,000. . . . . . . . . . . . . . . . . . . . . . .8,450 + 0.25% of the property value) Comments: Usually, a lawyer prepares the sale purchase agreement (charging Comments: Usually, a lawyer prepares the sale purchase agreement (charging additional RSD 15,000). The sale and purchase agreement is verified before the court. additional RSD 15,000). The sale and purchase agreement is verified before the court. The court verifies the documentation, as the notaries do in other countries. In Serbia, The court verifies the documentation, as the notaries do in other countries. In Serbia, the procedure of establishing the notary instead of court verifications is under way. the procedure of establishing the notary instead of court verifications is under way. According to the Law on the Transfer of Real Estate, it is obligatory for the agreement According to the Law on the Transfer of Real Estate, it is obligatory for the agreement on the purchase and sale of the real estate to be verified before the court. on the purchase and sale of the real estate to be verified before the court. Procedure: 3. The request for registration is submitted to the Procedure: 3. The request for registration is submitted to the Municipal Court Land Register or to the Cadastre Municipal Court Land Register or to the Cadastre Time: 2 days Time: 1 day Cost: RSD 4,212.6 (RSD 2,600 is the fee at Land Registry or RSD 4,212.6 at the Cost: RSD 4,212.6 (RSD 2,600 is the fee at Land Registry or RDS 4,212.6 at the Cadastre) Cadastre) Comments: There is a transition in progress from registration performed by the Comments: There is a transition in progress from registration performed by the Land Register (a court) to a system where it is handled entirely by the Cadastre Land Register (a court) to a system where it is handled entirely by the Cadastre (administrative procedure). The new system will join legal record keeping (Land (administrative procedure). The new system will join legal record keeping (Land Register) with factual record keeping (old Cadastre) providing a unified system of Register) with factual record keeping (old Cadastre) providing a unified system of registration. The new Cadastre is maintained by the Republic Geodesy Institute registration. The new Cadastre is maintained by the Republic Geodesy Institute through units organized regionally. The urban regions are still covered primarily by through units organized regionally. The urban regions are still covered primarily by the court-led registry. The Real Estate Cadastre and Registration Project aims to cre- the court-led registry. The Real Estate Cadastre and Registration Project aims to cre- ate a process entirely administered by the Cadastre by 2010 (see www.rgz.sr.gov.yu). ate a process entirely administered by the Cadastre by 2010 (see www.rgz.sr.gov.yu). Procedure: 4. Submit an application to the tax authorities to Procedure: 4. Submit an application to the tax authorities to approve the transaction value and authorize payment of the approve the transaction value and authorize payment of the transfer tax transfer tax Time: 90 days Time: 7 days Cost: No cost Cost: No cost Comments: The parties shall submit an application to the local tax authorities to Comments: The parties shall submit an application to the local tax authorities to get an approval of the sale price that will be used to calculate the transfer tax. The get an approval of the sale price that will be used to calculate the transfer tax. The parties have 10 days after the sale contract has been verified by the court to submit parties have 10 days after the sale contract has been verified by the court to submit the application. The request will be approved in a few days and the parties then have the application. The request will be approved in a few days and the parties then have 15 days to pay the transfer tax. 15 days to pay the transfer tax. Procedure: 5. Payment of the transfer tax Procedure: 5. Payment of the transfer tax Time: 1 day Time: 1 day Cost: RSD 324,688.9 (2.5% X Property Value of RSD 12,987,554) Cost: RSD 324,688.9 (2.5% X property value of RSD 12,987,554) Comments: Payment of the tax on transfer of absolute rights (2.5% of the value of Comments: Payment of the tax on transfer of absolute rights (2.5% of the value of the property as estimated by the tax authority) is made to the account of the local the property as estimated by the tax authority) is made to the account of the local tax authority at a commercial bank. tax authority at a commercial bank. Procedure: 6. The Cadastre/Land Registry makes a decision on Procedure: 6. The Cadastre/Land Registry makes a decision on the title the title Time: 75 days Time: 75 days Cost: No cost (already paid in Procedure 3) Cost: No cost (already paid in Procedure 3) Comments: The time depends on the agency in charge of the registration. The Comments: The time depends on the agency in charge of the registration. The Cadastre takes longer due to a backlog from previous years. When the transition to a Cadastre takes longer due to a backlog from previous years. When the transition to a new Cadastre is complete, the Land Registry ceases to exist. new Cadastre is complete, the Land Registry ceases to exist. 73 DOING BUSINESS IN SOUTH EAST EUROPE 2008 REGISTERING PROPERTY REGISTERING PROPERTY Vranje, Serbia Zrenjanin, Serbia Property value: USD 195,500 = RSD 12,987,554 Property value: USD 195,500 = RSD 12,987,554 Date as of: January 2008 Date as of: January 2008 Procedure: 1. Obtain an extract from the Register of Companies Procedure: 1. Obtain an extract from the Register of Companies Time: 7 days Time: 7 days Cost: RSD 3,120 (RSD 1,560 per extract for each party) Cost: RSD 3,120 (RSD 1,560 per extract for each party) Comments: Because there are two parties involved, they must obtain the extract Comments: Because there are two parties involved, they must obtain the extract from the Register of Companies confirming that the persons signing the contract are from the Register of Companies confirming that the persons signing the contract are authorized to sign on behalf of the companies. authorized to sign on behalf of the companies. Procedure: 2. Verification of the sale purchase agreement before Procedure: 2. Verification of the sale purchase agreement before the court the court Time: 8 days Time: 1 day Cost: RSD 41,000 (court fees, depending on the property value and according to the Cost: RSD 41,000 (court fees, depending on the property value and according to the following schedule (with a maximum of RSD 26,000): following schedule (with a maximum of RSD 26,000): Property Value (in RSD): Court Fees (in RSD): Property Value (in RSD): Court Fees (in RSD): Up to 10,000. . . . . . . . . . . . . . . . . . . . . . . . .650 Up to 10,000. . . . . . . . . . . . . . . . . . . . . . . . .650 From 10,000 to 100,000 . . . . . . . . . . . . . .650 + 1% of the property value From 10,000 to 100,000 . . . . . . . . . . . . . .650 + 1% of the property value From 100,000 to 1,000,000. . . . . . . . . . . .1,950 + 0.5% of the property value From 100,000 to 1,000,000. . . . . . . . . . . .1,950 + 0.5% of the property value Over 1,000,000. . . . . . . . . . . . . . . . . . . . . . .8,450 + 0.25% of the property value) Over 1,000,000. . . . . . . . . . . . . . . . . . . . . . .8,450 + 0.25% of the property value) Comments: The court is located in Leskovac and covers Vranje. Usually, a lawyer Comments: Usually, a lawyer prepares the sale purchase agreement (charging prepares the sale purchase agreement (charging additional RSD 15,000). The sale additional RSD 15,000). The sale and purchase agreement is verified before the court. and purchase agreement is verified before the court. The court verifies the documen- The court verifies the documentation, as the notaries do in other countries. In Serbia, tation, as the notaries do in other countries. In Serbia, the procedure of establishing the procedure of establishing the notary instead of court verifications is under way. the notary instead of court verifications is under way. According to the Law on the According to the Law on the Transfer of Real Estate, it is obligatory for the agreement Transfer of Real Estate, it is obligatory for the agreement on the purchase and sale of on the purchase and sale of the real estate to be verified before the court. the real estate to be verified before the court. Procedure: 3. The request for registration is submitted to the Procedure: 3. The request for registration is submitted to the Municipal Court Land Register or to the Cadastre Municipal Court Land Register or to the Cadastre Time: 1 day Time: 30 days Cost: RSD 4,212.6 (RSD 2,600 is the fee at Land Registry or RSD 4,212.6 at the Cost: RSD 4,212.6 (RSD 2,600 is the fee at Land Registry or RSD 4,212.6 at the Cadastre) Cadastre) Comments: There is a transition in progress from registration performed by the Comments: In Vranje, the system of tapija, by which the land owner posses a Land Register (a court) to a system where it is handled entirely by the Cadastre document that confirms his ownership of the land, is used. Land registry books do (administrative procedure). The new system will join legal record keeping (Land not exist. There is a transition from a system where the registration is performed by Register) with factual record keeping (old Cadastre) providing a unified system of the Land Register (a court) to a system where it is handled entirely by the Cadastre registration. The new Cadastre is maintained by the Republic Geodesy Institute (administrative procedure). The new concept is to join legal record keeping (Land through units organized regionally. The urban regions are still covered primarily by Register) with factual record keeping (old Cadastre) providing a unified system for the court-led registry. The Real Estate Cadastre and Registration Project aims to cre- registration of the real property. The new real Property Cadastre is maintained by the ate a process entirely administered by the Cadastre by 2010 (see www.rgz.sr.gov.yu). Republic Geodesy Institute through its units organized on the territorial principle. The urban regions are still covered primarily by the court-led registry. The Real Estate Procedure: 4. Submit an application to the tax authorities to Cadastre and Registration Project, which is currently under way, aims to create a approve the transaction value and authorize payment of the process entirely administered by the Cadastre by 2010 (see www.rgz.sr.gov.yu). transfer tax Procedure: 4. Submit an application to the tax authorities to Time: 15 days approve the transaction value and authorize payment of the tax Cost: No cost Time: 20 days Comments: The parties shall submit an application to the local tax authorities to get an approval of the sale price that will be used to calculate the transfer tax. The Cost: No cost parties have 10 days after the sale contract has been verified by the court to submit Comments: Tax authorities are located in Leskovac and it takes longer to receive the application. The request will be approved in a few days and the parties then have their approval and authorization. The parties shall submit an application to the local 15 days to pay the transfer tax. tax authorities for approval of the sale price used to calculate the transfer tax. The parties have 10 days after the sale contract has been verified by the court to submit Procedure: 5. Payment of the transfer tax the application. The request will be approved in a few days and the parties then have 15 days to pay the transfer tax. Time: 1 day Cost: RSD 324,688.9 (2.5% X Property Value of RSD 12,987,554) Procedure: 5. Payment of the transfer tax Comments: Payment of the tax on transfer of absolute rights (2.5% of the value of Time: 1 day the property as estimated by the tax authority) is made to the account of the local tax authority at a commercial bank. Cost: RSD 324,688.9 (2.5% X Property Value of RSD 12,987,554) Comments: Payment of the transfer tax (2.5% of the property value) is made to the Procedure: 6. The Cadastre/Land Registry makes a decision on account of the local tax authority at a commercial bank. the title Procedure: 6. The Cadastre/Land Registry makes a decision on Time: 75 days the title Cost: No cost (already paid in Procedure 3) Time: 75 days Comments: The time depends on the agency in charge of the registration. The Cadastre takes longer due to a backlog from previous years. When the transition to a Cost: No cost (already paid in Procedure 3) new Cadastre is complete, the Land Registry ceases to exist. Comments: The time depends on the agency in charge of the registration. The Cadastre takes longer due to a backlog from previous years. When the transition to a new Cadastre is complete, the Land Registry ceases to exist. * This procedure can be completed simultaneously with previous procedures. 74 Acknowledgements Contact details of local partners are available on the Doing Business website at http://subnational.doingbusiness.org Doing Business in South East Europe 2008 was prepared Kosovo Ministry of Trade and Industry, especially by a team led by Luis Aldo Sánchez-Ortega and Tarik Naser Grajcevci and Ibrahim Krasniqi Sahovic. The team comprised Artan Ajazaj, Fernanda Macedonia, FYR Cabinet of the Deputy Prime Mi- Almeida, Dijana Despodova-Pajkovski, Iva Ilieva Hamel, nister for Economic Affairs, especially Igor Dimitrov; Jana Malinska, Madalina Papahagi and Ana Plecas. Irina Montenegro Ministry for Economic Development, Astrakhan, Mierta Capaul, Simeon Djankov, Wim Douw especially Dragan Kujovic and Margo Thomas reviewed the text. Valuable assis- Serbia Ministry of Economy and Regional Develop- tance was received from Svetlana Bagaudinova, Karim ment, especially Marija Stevanovic and Velimir Gavri- Ouled Belayachi, Diego Borrero-Magaña, Philip Con- lovic don, Claudia Contreras, Roger Coma Cunill, Manuel Enrique García-Huitrón, Jamal Ibrahim Haidar, Sabine The United States Agency for International Develop- Hertveldt, Sladjana Kocevic, Bartol Letica, Oliver Lo- ment (USAID), under the coordination of Cory O'Hara, renz, Katarina Milanovic, Dana Omran, Rita Ramalho, provided support. Yara Salem, Umar Tulanbaevich Shavurov, and Sylvia Solf. The report was edited by Linda Moll and designed Almost 90 lawyers and construction specialists partici- by Gerry Quinn and Thomas McCarthy. pated in the analysis found in this report. Data collection was coordinated by Renata Leka from the law firm Boga This project was made possible thanks to the support of & Associates in Albania; Branko Maric from Maric Law officials and institutions in all benchmarked economies: Office in Bosnia and Herzegovina; Josip Marohnic from Albania Ministry of Economy, Trade and Energy, es- the law firm Divjak, Topic & Bahtijarevic in Croatia; pecially Pranvera Kastrati and Eda Terezi, and Albinvest, Gail Warrander from the law firm GW Legal LLC in Ko- in particular Edlira Lloha sovo; Tatjana Popovski Buloski from Polenak Law Firm Bosnia and Herzegovina High Judicial and Pro- in Macedonia, FYR; Dragana Radevic from the Cen- secutorial Council, in particular Arben Murtezic; Minis- ter for Entrepreneurship and Economic Development try of Foreign Trade and Economic Relations, especially in Montenegro; and Ognjen Colic from the law firm Branislav Zugic; Ministry of Finance in the Federation, Karanovic& Nikolic in Serbia. The team also wants to especially Filip Ujevi; Ministry for Economic Relations extend its special gratitude to the more than 120 public and Coordination in Republika Srpska, especially Gor- officials and judges who participated in the project and dana Opacic-Zecevic who made valuable comments during the consultation Croatia Ministry of Finance, especially Hrvoje period. Their names are listed on the following pages. Mrsic; Trade and Investment Promotion Agency, in par- ticular Mirela Mrvelj and Tonko Dolezal ACKNOWLEDGEMENTS 75 PUBLIC OFFICIALS ALBAnIA Republika Srpska Ministry of Local Government USAID country mission Administration Central level Ministry for Economic Relations Filip Blazeski Aqim Koshi ALBINVEST (Albanian Agency for and Coordination, Republika Meri Cuculoska Foreign Investments) Srpska Ministry of Trade and Industry Michael Eddy Sladjana Srbinoska Edlira Lloha Gordana Opacic-Zecevic Remzi Ahmeti Artan Samara John Clifford Martin Serreqi Banja Luka Naser Grajcevci MOntenegRO Ministry of Economy Trade and Banja Luka Development Agency Central level Energy Vladimir Damjanovic Prishtina Pranvera Kastrati Slavica Kovacevic Prishtina district Directorate for Small and Medium Kustime Stefani Nenad Racic Sokol Krasniqi Enterprises Bashkim Sykja Ratka Stjepovic Eda Terezi USAID country mission USAID country mission Pavle Banjac Ministry of Economic Development Shkodra Michael Blackman Flora Arifi Maja Jokanovic Zoltan Milic Jennifer Tikka Dragan Kujovic Deputy Mayor Nada Medenica Ridvan Troshani Lidija Medigovic CROAtIA RePUBLIC OF Goran Nikolic Income Directorate MACedOnIA, FYR Nexhat Grezda Central level Central level Niksic Orjola Selhani Hitrorez unit Cabinet of the Deputy Prime Billing Local Public Revenues, Urbanistic Department Vedran Antoljak Minister for Economic Affairs Municipality of Niksic Aida Qirjoe Ministry of Finance Igor Dimitrov Dragana Vucurovic Hrvoje Mrsic Natasa Stojmanovska Municipality of Niksic Vlora Gordana Susuleska Trade & Investment Promotion Jordan Trajkovski Ana Josipovic Mayor's office Agency Perica Vrboski Slobodan Bajovic Arjan Lamcaj Tonko Dolezal Marija Nikolic Valbona Sulcaj Derhemi Mirela Mrvelj Central Cadastre Office Ivan Perunovic Ivana Vlajcic Jakup Fetai Nesa Petrusevska Secretariat for Economy and USAID country mission Nikola Vrdoljak Finances, Municipality of Niksic Sokol Aliko Osijek Central Registry Office Ivana Jovovic Bruce Kay Kosta Gligorievski Mitar Matijasevic Son Nguyen Agency for Development of Osijek- Urban Maintenance, Municipality Baranja County Customs Administration of Niksic Domagoj Cavar Saso Rusovski BOSnIA And Milica Zoric Sandra Filipovic MacInvest (Macedonian Agency HeRzegOvInA Ivana Katavic for Foreign Investments) Pljevlje Central level Slavonia & Baranja Development Igor Cuckov Agency Ministry of Economy Municipality of Pljevlje High Judicial and Prosecutorial Slavica Krstajic Council Slavko Tusek Anastasija Jovanovska Beti Popova Slavka Milinkovic Arben Murtezic Sibenik Jasmina Trajanoska Admir Suljagic USAID country mission Ministry of Justice Ministry of Economy and Regional Entrepreneurial incubator - Vesna Brajovic Development Sibenik Free Zone Juliana Georgievska Joseph Taggert Zehra Selimovic Ivana Vudrag Ministry of Transport and Communications Ministry of Foreign Trade and Regional Development Agency of SeRBIA Economic Relations Sibenik-Kninske county Liljana Popovic Central level Zorislav Zadric Drago Matic Marica Taseva Branislav Zugic State Authority for Geodezic Ministry of Economy and Regional Dragisa Mekic Varazdin Works Development Agency for Development of Tatjana Vasic Velimir Gavrilovic Federation of Bosnia and Varazdin County (AZRA) Zeljko Kljun Herzegovina Barbara Marcius Plaftak Bitola Tatjana Marinkovic Ministry of Finance, Federation of Sanja Popijac Ivana Stankovic Bosnia and Herzegovina Andrea Vugrinovic Central Cadastre Office - Marija Stevanovic Municipality of Bitola Mr. Filip Ujevic Jelena Zrinski Berger Olgica Nasevska Vojvodina Province level Mostar Borce Stojanovski KOSOvO Secretariat for Economy Communication Department - City of Mostar Sinisa Lazic Central level Municipality of Bitola Ajka Hadjic Milan Ceran Zora Simjanovska Josip Jakovac Cadastrer Agency Maid Ljubovic Hajzer Bublaku Local Economic Development Zrenjanin Ivana Maric Sector - Municipality of Bitola Deputy Prime Minister Office Trajan Kotevsk Department for Construction Arban Abrashi Milan Jovanov Urbanism Sector - Municipality Economic Policy Office ­ UNMIK of Bitola Deputy Mayor Pillar IV Vesna Jurak Predrag Stankov Elinor Bajraktari Ljudco Stojcev Liridon Mavriqi Andreas Wittkowski 76 DOiNG BuSiNESS iN SOuTH EAST EuROPE 2008 Local Economic Development Serbian Business Registration Department of Urbanism, City of office, City of Zrenjanin Agency, City of Krusevac Vranje Ljupka Bojovic Cvejic Vesna Andjelic Vecija Kostic Olivera Gligorijevic Local Economic Development Mayor Uzice Office Goran Knezevic Local Economic Development Jasmina Petrovic office, City of Uzice Krusevac Nemanja Nesic Mayor Projevic Slavisa Miroljub Stojcic Department of Economy, City of Krusevac Mayor Municipal Office Ljubica Jovic Tihomir Petkovic Stojan Tomic Local Economic Development Public Relations, City of Uzice office, City of Krusevac Ljiljana Rsumovic USAID country mission Dragana Stepanovic Sanja Nikolin Mayor Vranje National Alliance for Local Dragan Azdejkovic Department of Economy, City of Economic Development program (NALED), Municipal Economic Municipal Office Vranje Growth Activity (MEGA) Miroljub Cosic Boban Stankovic Violeta Jovanovic PRIvAte PROFeSSIOnALS ALBAnIA CROAtIA RePUBLIC OF Budimka Mickovic Center for Entrepreneurship and Gjergji Gjika Marko Bencic MACedOnIA, FYR Economic Development Boga & Associates Porobija i Spoljaric Law firm Zoran Andonovski Dragana Radevic Valbona Gjoncari Jasminka Bilos Polenak Law Firm Center for Entrepreneurship and Boga & Associates Danira Grcic Jasmina Bosevska Economic Development Bashkim Guri Mitko Bosevski Savo Robovic Boga & Associates Margareta Krivic Nikola Dabic Kvatro Projekt Ermal Hamzaj Zorana Lauric Milojica Tesovic Albanian Italian Bank Sh.A. Vukov & Lauric Law Office Sotir Glavince Dule Harizaj Josip Marohnic Emil Glavince SeRBIA Association of Albanian Divjak, Topic & Bahtijarevic Slobodan Hristovski Constructors Hrvoje Matic Polenak Law Firm Slavica Avramov Luan Heta Koegl & Plavec Design and Koco Hristovski Bojan Bjelanovic Association of Albanian consulting Ltd. Geoprogect Export-Import Dooel Constructors Hrvoje Petric Vujica Bogdanovic Jove Kamberovski Renata Leka Zajednicki odvjetnicki ured Petric Geo J&S Doo Ognjen Colic Boga & Associates - Mihalic - Kljaic Karanovic & Nikolic Law Firm Aleksandar Kcev Silva Velaj Oleg Uskokovic Polenak Law Firm Snezana Cvetic Albanian Italian Bank Sh.A. Korusic, Hrg & Uskokovic Dragan Divac Branka Vukov Ljupco Lazarovski BOSnIA And Vukov & Lauric Law Office Space planning office Bitola Patricia Gannon HeRzegOvInA Karanovic & Nikolic Law Firm Damir Zagorscak Tatjana Popovski Buloski Polenak Law Firm Dragan Milivojevic Stevan Dimitrijevic Karanovic & Nikolic Law Firm KOSOvO Marijana Stefanovski Petar Mitic Arhinova Dooel Mensud Djonko Rastko Petakovic Agron Beka Vasko Stojkov Karanovic & Nikolic Law Firm Edin Durakovic Immobilia Gordana Petkovic Vitomir Gajic Ruzhdi Berisha Radisa Petric Semir Guzin Bejtush Isufi MOntenegRO Kebo&Guzin Law Firm Leka Company Sh.A. Milorad Adzic Slavko Radosavljev Veljko Jaric Arben Kelmendi BAST Bojan Stanivuk AragostaInvest Ltd GW Legal LLC Zdravko Bajic Dragan Stojanov Miro Kebo Besim Kocinaj UNIJA Ltd Law Faculty Union Kebo&Guzin Law Firm Hajrip Krasniqi Nikola Bulajic Sanjin Kosic Byroja e Sherbimeve Juridike Ural Mont Ltd. Goran Maric Dispozita Milan Dragovic Maric Law Office Driton Krasniqi Dragan Draskovic Branko Maric GW Legal LLC Sonja Kasalica Maric Law Office Bilgaip Maznikar Milijana Komar Josip Muselimovic Bajram Morina Center for Entrepreneurship and Muselimovic Law Firm Agron Selimaj Economic Development Miljkan Pucar ProLaw Kosova Danilo Kovacevic Pucar Law Firm Gail Warrander Vera Markovic Branislav Rakic GW Legal LLC Bilans Agency Stojanka Sajic Josif Mickovic Ruzica Topic