Informative Note on the Licensing of Economic Activities Amendment
Presidency of the Council of Ministers
Eighth Constitutional Government
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Press Release
Informative Note on the Licensing of Economic Activities Amendment
Through Decree-Law No. 83/2022, of November 23rd, the government made the first amendment to Decree-Law No. 34/2017, of September 27th, regarding the licensing of economic activities, with the primary objective of making the licensing process more predictable, transparent and straightforward.
This amendment resulted from a survey of existing practices and the work done since 2019 to consolidate the reform of the licencing of economic activities, clarify procedures, shorten deadlines and reduce the burden of opening businesses in the country.
Among the amendments foreseen in the diploma is the replacement of the previous authorisation system by a system of prior communication, which represents a more significant simplification and guarantee of the freedom of enterprise, given that a system of prior communication is, by definition, a more straightforward administrative system and less restrictive of the freedom of enterprise than the authorisation system.
Now, companies can start their economic activities immediately after making the prior notification without depending on an administrative act issued by an administrative entity.
Regarding the centralisation of procedures in SERVE, everything has remained the same. SERVE continues to be responsible for facilitating the obtaining of sectorial licenses according to the corresponding laws in each case.
The “one-stop-shop” procedural system has not been undermined. Under the previous legal regime, SERVE issued authorisation and facilitated obtaining sectoral licenses as determined by the corresponding law, while under the current regime, SERVE receives the prior declaration of commencement of activity instead of issuing authorisation and continues to facilitate obtaining sectoral licenses, also as determined by the corresponding law in each case.
It should also be noted that both in the previous version of this legal regime and with the current amendment, there is no mention of the requirement to issue opinions for granting licenses.
Companies' undertaking of economic activities depends only on their prior declaration and does not imply any authorisation procedure, let alone the issuing of opinions for this purpose.
As for the requirement for a prior declaration form, it is essential to clarify that Decree-Law no. 83/2022 of November 23rd provides for its approval through a regulatory diploma, as foreseen in the previous version. However, until such a diploma enters into force, the existing authorisation system applies, thus ensuring a clear and simple transition between the regimes.
It is also worth noting that this new regime does not reduce the control of risky activities. The distinction between low, medium and high-risk activities has been eliminated, as it has proven ineffective in controlling risky activities. In the previous regime, the control of risky activities was ensured through sectorial licencing laws. In the current regime, regardless of the low, medium or high-risk qualification, the management of risky activities continues to be secured by sectorial licencing laws. On the other hand, the new regime eliminates discretion in issuing authorisations by SERVE, ensuring greater legal certainty.
Regarding the use of digital tools, which was already foreseen in the previous legal regime, it is now intended to broaden and deepen its scope with the creation of an electronic one-stop-shop, a task to be carried out by SERVE within the scope of its autonomy and implementation capacity.
Lastly, it is expected that the amendments introduced by Decree-Law No. 83/2022, if duly implemented, due to procedural simplification, elimination of discretionary powers, greater legal certainty and corresponding guarantee of freedom of enterprise, will lead to improved perception and assessment of the business environment in Timor-Leste, in light of the ASEAN, World Trade Organization and World Bank parameters. END
