Russian-Ukrainian Legal Group, P.A.

Kiev, Ukraine; Washington, D.C., USA

 

 

Chronicle of Recent Developments in Ukrainian Legislation

 

 
april 2005

 

Currency Control

Customs

Intellectual Property

Investment

Land

Oil and Gas

Non-Banking Financial Services

Taxes

Specific Sectors of the Economy/Miscellaneous

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The “Chronicle of Recent Developments in Ukrainian Legislation” is a monthly summary of the most important legislative developments in Ukraine in the area of business and corporate law, and is prepared, published and distributed by the Russian-Ukrainian Legal Group as a free service to our clients. The Chronicle will be distributed only via e-mail, in English and Russian, by the middle of each month, and will summarize the legislative developments of the previous month. The Chronicle is prepared in an effort to capture news of greatest interest to the widest cross-section of our firm’s clientele, without restating all legislation published and drowning our readers in too much information. Due to the winnowing process necessary when preparing the Chronicle, we cannot and do not guarantee that it contains a comprehensive list of all Ukrainian legislation relevant to your business. Finally, please bear in mind that this summary does not constitute legal advice; it is an informational service only.  Should you wish to receive further information or actual legal advice, please do not hesitate email us at chronicle@rulg.com

 

Currency Control

 

1) National Bank of Ukraine ("National Bank") Resolution No. 57 "On Approving Amendments to the Regulations on the Procedure for Residents' Obtaining Foreign Currency Credits and Loans From Non-Residents and Residents' Granting Foreign Currency Loans to Non-Residents" dated 22 February 2005. The Resolution requires residents to register with the National Bank contracts for the repayment of debts denominated in non-convertible currencies to non-residents. Previously, registration of loan agreements was only necessary for agreements denominated in freely convertible currencies. The Resolution took effect on 29 April 2005.

 

2) National Bank Resolution No. 100 "On Approving Amendments to the Rules for Carrying Out Operations on the Inter-Bank Currency Market of Ukraine" dated 31 March 2005. The procedure for residents purchasing foreign currency for settlements with non-residents has been simplified. Among other things, the Resolution released residents from the responsibility to file with the tax authority information about their foreign currency purchases. The Resolution took effect on 24 April 2005.

 

Customs

 

3) State Customs Service of Ukraine ("Customs Service") Order No. 314 "On Approving the Procedure for Customs Control and Customs Clearance of Goods with the Use of a Cargo Customs Declaration" dated 20 April 2005. The new Procedure for Customs Clearance of Goods has been approved, and as a result, the Procedure that was effective in 2002 has lost effect. The new Procedure simplifies customs clearance of goods and stipulates which documents are required for customs clearance of goods; the control procedure; the procedure for amending or adding information to cargo customs declarations ("CCD"), etc. The new Procedure stipulates, among other things, that a CCD that was submitted to Customs but that has not been accepted for clearance (lacks the stamp "Under customs control" or a registration number) can be withdrawn by a declarant with Customs' approval. The Order took effect on 30 April 2005.

 

Intellectual Property

 

4) Ministry of Education and Science of Ukraine Order No. 200 "On Approving Amendments to the Instructions on the Procedure for Extending the Term of a Patent for an Invention the Object of Which is a Device the Use of Which Requires the Approval of a Competent Authority" dated 4 April 2005. When filing a petition for an extension of a patent's term, the patent holder must pay a fee in accordance with the requirements set forth in the Procedure for Paying Fees for the Actions Associated with Protection of Rights to Objects of Intellectual Property (please see the December 2004 issue of this Chronicle). The fee must be paid not later than six months before expiration of the patent's term. The Order took effect on 25 April 2005.

 

Investment

 

5) National Bank Resolution No. 154 "On Nullifying Resolution No. 482 of the Board of the National Bank of Ukraine dated 14.10.2004" dated 29 April 2005. Resolution No. 482 will become null and void on 22 May 2005. This Resolution required that investment activity by non-resident investors be carried out through special investment accounts (please see the October 2004, January 2005 and February 2005 issues of this Chronicle, as well as our memorandum "Legislative Alert: NBU Resolution No. 482" distributed to Chronicle subscribers on 18 November 2004). Resolution No. 154 will take effect on 22 May 2005.

 

Land

 

6) State Committee of Ukraine for Land Resources ("Land Resources Committee") Letter No. 14-17-7/2992 "On Clarifying the Lease Agreement Form" dated 6 April 2005. The Land Resources Committee has clarified that all land lease agreements must be in writing, but that notarization is not mandatory.

 

Oil and Gas

 

7) Cabinet of Ministers of Ukraine Ordinance No. 97-r "On Incorporating Amendments into the Cabinet of Ministers of Ukraine Ordinance No. 38-r dated 16 February 2005" dated 13 April 2005. Important changes have been made to the Ordinance "On Suspending Oil Re-Export Operations" (please see the February 2005 issue of this Chronicle), and its title and contents have been changed completely. The title of the updated Ordinance is "On Re-Export Operations with Goods of Foreign Origin". In particular, the Ministry of Economics is authorized to issue approvals with respect to re-export of goods of foreign origin, previously imported under free trade agreements. The Ministry of Economics can also issue approvals, and the Customs can perform customs clearance, of said goods when they are imported into Ukraine in amounts larger than the maximum amounts stipulated by the relevant international treaties of Ukraine, provided that the relevant taxes and charges are paid. The Ordinance took effect on 13 April 2005.

 

Non-Banking Financial Services

 

8) State Commission for Regulation of the Financial Services Markets of Ukraine Ordinance No. 3978 "On Approving the List of Services Which Can be Indicated in the Annex to the Registration Certificate of a Financial Institution Issued to a Financial Company" dated 26 April 2005. The Annex to the Registration Certificate of a Financial Institution can indicate the following financial services: granting financial credits with the use of attracted and internal funds; granting loans; money transfers; granting sureties; attracting individuals' and legal entities' financial assets with the obligation to subsequently return them by entering into property management agreements; financial leasing; granting guarantees; factoring; trust management of financial assets; clearing; servicing traveler's cheques; currency exchange activities. The Ordinance took effect on 26 April 2005.

 

Taxes

 

9) State Tax Administration of Ukraine ("STA") Telegram No. 7240/7/17-2517 "On Whether It Is Necessary to Register as a VAT Payer" dated 15 April 2005. Following the adoption of the Law on Amendments to the Law on the State Budget for 2005 (please see the March 2005 issue of this Chronicle), which changed the definition of and procedure for registration by VAT payers, in particular uniform tax payers, the STA informs that beginning on 1 April 2004, uniform tax payers with turnover exceeding 300,000 Hryvnias must apply for registration as VAT payers before 20 April 2005.

 

10) STA Telegram No. 7538/7/15-2417 "Concerning Changes in the Conditions of Voluntary and Mandatory Registration of Subjects of Business Activity as Payers of Value-Added Tax" dated 19 April 2005. Further to the information mentioned above in item 9, pending issuance of relevant clarifications, the STA will require that tax inspectorates not impose financial penalties on uniform tax payers in the course of registering them as VAT payers.

 

11) STA Telegram No. 7548/7/17-3218 "Concerning the Clarification of clause 1.8 of the Law 'On the Tax Levied on Individuals' Incomes'" dated 19 April 2005. As we informed in the March 2005 issue of this Chronicle, uniform or fixed tax payers are treated as hired persons and their incomes are taxable as salaries in the cases stipulated by law. According to the STA's clarifications, said rule applies only to those incomes of uniform or fixed tax payers, which they derived outside the scope of their immediate business activity and which can be classified as "salaries".

 

Specific Sectors of the Economy/Miscellaneous

 

12) State Committee of Ukraine for Regulatory Policy and Entrepreneurship ("Entrepreneurship Committee") Letter No. 605 "On Paying Fines for Non-Compliance with Invalids Employment Rates" dated 4 February 2005. The Entrepreneurship Committee has considered the issue of imposing fines for non-compliance with invalid (disabled person) employment rates on enterprises subject to the simplified taxation system. Despite the clarifications of the Fund for Social Protection of Invalids, which state that all enterprises must pay such fines, the Entrepreneurship Committee has a different opinion. Based on the laws regulating the simplified taxation system, the Entrepreneurship Committee insists that the enterprises, which apply the simplified taxation system, are exempt from these fines, because they are not payers of fees to the Fund for Social Protection of Invalids.