Russian-Ukrainian Legal Group, P.A.
Kiev, Ukraine; Washington, D.C., USA
Chronicle
of Recent Developments in Ukrainian Legislation
august 2004
Banking
Corporate
Registration
Money
Laundering
Real Estate
Customs
Taxes
Use of Subsoil, Oil and Gas
Privatization
Telecommunications
Specific Sectors of the Economy/Miscellaneous
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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
Banking
1) National Bank of Ukraine ("National
Bank") Resolution No. 319
"On Approving Amendments to Certain Regulations of the National Bank of Ukraine" dated 12 July 2004. The
maximum amount of Ukrainian currency, foreign currency, payment documents, or
"bank metals" that an individual license can authorize for
exportation or importation from or into Ukraine, as well as the maximum amount
of foreign currency, payment documents or "bank metals" that a
special permit issued by a local office of the National Bank (as opposed to the
National Bank's General Department of Bank Supervision) can authorize for
importation into Ukraine has been increased. For individuals (residents and
non-residents), the amount has been increased from 25,000 to 50,000 US dollars
(USD); for resident legal entities (except for authorized banks of Ukraine) it has been increased from 25,000 to 100,000 USD.
When importing "bank metals", resident legal entities must receive,
irrespective of the amount, a special permit from the General Department of
Bank Supervision. The General Department of Bank Supervision also reserves the
right to issue individual licenses and special permits irrespective of the
amount. The Resolution took effect on 16 August 2004.
2) National Bank Resolution No. 363 "On Establishing Interest
Rates with Respect to Residents' Foreign Borrowings" 3 August 2004. The Resolution establishes the maximum interest rates
(including commissions, penalties and other charges stipulated by relevant
agreements) with respect to short-term, intermediate term and long-term loans
whereby residents carry out foreign borrowings as foreign currency credits and
loans. The Resolution took effect on 3 September 2004.
Corporate Registration
3) State Committee of Ukraine for Regulatory Policy and Entrepreneurship ("State
Entrepreneurship Committee") Letter No. 4568 "On Granting a
Clarification [Concerning the State Registration of Subjects of Business
Activity]" dated 7 July 2004.
According to the Law of Ukraine "On the State Registration of Legal
Entities and Individual Entrepreneurs" the State registrar must replace in
2004 - 2005 all previously issued State Registration Certificates with State
Registration Certificates made out in accordance with a standard form. In its
letter, the State Entrepreneurship Committee noted that in 2004 - 2005 no
registration fee will be collected for the replacement of the old State
Registration Certificates.
4) Bill No. 6058 "On
Introducing a Moratorium with Respect to the Setting Up of Subjects of Economic
Activity by Legal Entities and Individuals if Their Associated Subjects of
Economic Activity Have Overdue Salary Debts" dated 26 August 2004. The
Bill proposes that a moratorium be imposed, as of 1 October 2004, on setting up new businesses by legal entities and
individual entrepreneurs if their associated subjects of economic activity have
wage arrears. Even if the Bill becomes law, the moratorium would not apply to
readjustment (pre-trial readjustment) or restructuring of existing legal
entities.
Money Laundering
5) Cabinet of Ministers of Ukraine ("Cabinet of Ministers")
Ordinance No. 598-r "On Incorporating Amendments into the Annex to Cabinet
of Ministers Ordinance dated 17 July 2003 No. 419" dated 25 August 2004. Pursuant
to the Ordinance, Guatemala has been deleted from the List of the countries
(territories) that are not involved in international cooperation in the
sphere of the prevention of and combat against money laundering of funds
derived by criminal methods and involved in financing terrorism. The Ordinance
took effect on 25 August 2004.
Real Estate
6) Ministry of Justice of Ukraine ("Ministry of Justice") Order No.
85/5 "On Incorporating Amendments and Addenda into Certain Regulations of
the Ministry of Justice of Ukraine" dated 18 August 2004. The
Ministry of Justice has set forth re-stated Regulations about the Uniform
Register of Prohibitions of Alienation of Real Estate and has approved
instructions concerning the procedure for filling out and maintaining the
Uniform Register of Prohibitions of Alienation of Real Estate. The Order also
stipulates transferring information from the database of the previously created
software for the Uniform Register of Prohibitions of Alienation of Real Estate
to a new software database, as well as imposing new fees for the issuance of
excerpts from the Uniform Register of Prohibitions of Alienation of Real
Estate. The Order took effect on 29 August 2004.
7) Ministry of Justice Order
No. 86/5 "On Approving the Instructions on Maintaining the State Register
of Transactions" dated 18 August 2004. The
Instructions on Maintaining the State Register of Transactions stipulate in
detail the Temporary Procedure for Registering Transactions, approved pursuant
to Cabinet of Ministers Resolution No. 671 dated 26 May 2004 (please see the May
2004 issue of this Chronicle). The Instructions prescribe a procedure for
having transactions registered by those notaries who do not have access to a
computer database, the specifics of entering real estate descriptions, the
rules of registering transaction duplicates and the granting of Register
excerpts. The Order took effect on 29 August 2004.
Customs
8) State Customs Service,
Ministry of Economy and State Tax Administration Order No. 590/296/468 "On
Approving the Criteria for Evaluating Resident Enterprises, the Goods of Which
Can be Subject to Simplified Customs Clearance" dated 11 August 2004.
The Order approves the criteria for evaluating enterprises that are resident in
Ukraine, with respect to which a simplified procedure for
customs clearance can be established. The right of such enterprises to enjoy
the simplified customs clearance procedure in the course of their
foreign-economic activity was stipulated by Cabinet of Ministers Resolution No.
810 "On Incorporating Amendments into Cabinet of Ministers Resolution No.
593 dated 14 April 1999" dated 29 June 2004 (please see the June 2004
issue of this Chronicle). The Order took effect on 1 September 2004.
9) State Customs Service
Order No. 607 "On Approving the Procedure for Identifying Resident
Enterprises, the Goods of Which Can be Subject to Simplified Customs
Clearance" dated 19 August 2004. The Order approves the Procedure for
identifying resident enterprises, the goods of which can be processed through
the simplified customs clearance procedures (please also see item 10, above).
The Order will take effect on 21 September 2004.
10) Cabinet of Ministers
Resolution No. 1099 "On Prohibiting Importation Into the Customs Territory
of Ukraine of Non-Denaturated Ethyl Alcohol of Ukrainian Origin and Realization
of Finished Products in Transactions with Give-and-Take Raw Materials"
dated 25 August 2004. The Resolution prohibits importation into Ukraine of non-denatured ethyl alcohol of Ukrainian origin
as give-and-take raw materials, and realization in Ukraine of products made from give-and-take non-denatured
ethyl alcohol raw materials purchased by foreign customers in Ukraine. The prohibition does not apply to the realization
in Ukraine of products that were made of said raw materials,
but which had been purchased by foreign customers in Ukraine before the Resolution took effect. The Resolution
took effect on 28 August 2004.
Taxes
11) Verkhovna Rada of Ukraine
Finance and Banking Committee Letter No. 06-10/10-641 "Concerning the
Payment of Value-Added Tax During Importation of Goods Into the Customs
Territory of Ukraine under Consignment Contracts" dated 24 May 2004.
The Letter clarifies that, subject to observance of the laws on documenting and
formalizing the importation of goods into Ukraine under consignment contracts
and the provisions of the agreements made by the parties, a Ukrainian legal
entity (consignee under a consignment contract) can include in its tax credit
the VAT it pays under an import customs declaration when importing goods into
Ukraine under consignment contracts. However, this is only true if the
consignee subsequently exports such goods from Ukraine under a purchase-and-sale contract with a
non-resident buyer.
12) Ministry of Finance of
Ukraine Order No. 367 "On Approving a Procedure for Confirming Involvement
of Goods in International Financial Organizations' Investment Projects for the
Implementation of Which a Tax Promissory Note with a Maturity Before the End of
the Current Fiscal Year Can Be Issued During Importation (Sending) of the Goods
Into the Customs Territory of Ukraine " dated 2 June 2004. The Order
prescribes the procedure for confirming associating goods with an investment
project within the framework of which the tax promissory note can be issued.
The Order took effect on 29 August 2004.
13) Ministry of Economy and
European Integration of Ukraine ("Ministry of Economy") and
State Tax Administration Order No. 292/458 "On Incorporating Amendments
into the Joint Order of the National Agency of Ukraine for Development and
European Integration and the State Tax Administration of Ukraine dated 29.12.98
No. 41/654" dated 6 August 2004. The Order amends the Regulations on
the procedure for exempting from value-added tax ("VAT") goods
(works, services) that are purchased in the customs territory of Ukraine by
organizations that implement international technical assistance programs and
projects in Ukraine under the Agreement between the Government of Ukraine and
the Government of the United States of America for Humanitarian and
Technological Cooperation dated 7 May 1992. The rules of said Regulations now
apply to other (besides the Agreement dated 7 May 1992) agreements between the Government of Ukraine and
the US Government for technological cooperation. According to the Order, VAT
exemption is granted on the basis of a confirmation issued by the Ministry of
Economy. The confirmation is issued against the presentation, inter alia,
of a statement of acceptance, signed by a recipient, to the Ministry of Economy
within 10 days after the transfer of the goods (accomplished works, rendered
services) in question. The Order took effect on 28 August 2004.
Use of Subsoil, Oil and Gas
14) Cabinet of Ministers
Ordinance No. 572-r "On Authorizing Bodies to Make a List and Prescribe a
Procedure for Determining the Standard Losses and Production-Technological
Expenditures of Oil, Natural Gas and Condensed Gas During Their Production,
Preparation for Transportation and Transportation, as Well as Determining the
Average Market Prices of Oil, Natural Gas and Condensed Gas" dated 10
August 2004. The Ordinance lays out which government agencies are
authorized to develop and adopt the regulations stipulated by the Law of
Ukraine "On Rent Payments for Oil, Natural and Condensed Gas" (please
see the February 2004 issue of this Chronicle). The Ministry for Fuel and
Energy, upon the approval of several government agencies, is authorized to, by 1 October 2004, draw up a list of and prescribe the procedure for
determining the standard losses and production-technological expenditures for
oil, natural gas and condensed gas during their production, preparation for
transportation and transportation. The Ministry of Economy is authorized to
prescribe, before 1 September 2004, the procedure for determining the average market
prices of oil, natural gas and condensed gas. The developed list and procedures
will take effect as of 1 January 2005.
15) Cabinet of Ministers
Resolution No. 1012 "On the Procedure for Applying in 2004 a Zero
Value-Added Tax Rate with Respect to Sales on the Domestic Market of Natural
Gas Imported Into the Customs Territory of Ukraine under Foreign-Economic
Contracts Made in Observance of International Treaties of Ukraine" dated
10 August 2004. The zero rate was prescribed pursuant to Cabinet of
Ministers Resolution No. 480 "On Approving the Procedure for Applying a
Zero Value-Added Tax Rate with Respect to Sales on the Domestic Market of
Natural Gas Imported Into the Customs Territory of Ukraine under
Foreign-Economic Contracts Made in Observance of International Treaties of
Ukraine" dated 7 April 2003. The Resolution sets forth corrected rules for
NJSC "Naftogaz Ukrayiny" reporting on the obtained and distributed
natural gas taxed at the zero rate. The Resolution
took effect on 10 August 2004.
Privatization
16) State Property Fund Order
No. 1294 "On Incorporating Amendments into the Regulations on the
Procedure for Determining and Applying Privatization Methods with Respect to
Small-Scale Privatization Facilities" dated 30 June 2004. The Order
stipulates that a contract for the purchase and sale of an object of
privatization (at an auction, tender, or through redemption) is subject not
only to registration by the local Council of People's Deputies, but also to
State registration. The Order took effect on 6 September 2004.
17) Cabinet of Ministers
Resolution No. 1076 "On Incorporating Amendments into the Regulations on
the Procedure for Setting Up Open Joint-Stock Companies on the Basis of the
Property of Unfinished Construction Objects" dated 25 August 2004. The
Resolution stipulates that foreign legal entities can be founders of open
joint-stock companies set up on the basis of the property of unfinished
construction objects. The Resolution has not been published and will only take
effect upon being published in an official publication.
Telecommunications
18) Presidential Decree No.
943/2004 "On the National Commission for Regulation of Communications in Ukraine" dated 21 August 2004. The
Presidential Decree stipulates the setting up of a National Commission for
Regulation of Communications in Ukraine ("NCRC") and approves the
Regulations concerning its activity. The NCRC will start exercising the
telecommunications regulation powers, stipulated in the Regulations, as of 1 January 2005. The Decree has not been published and will only
take effect ten days after being published in an official publication.
Specific Sectors of the Economy/Miscellaneous
19) State Entrepreneurship
Committee Letter No. 4355 "On an Entrepreneur's Working Under
an Employment Agreement" dated 29 June 2004. The
State Entrepreneurship Committee has explained that an individual entrepreneur
can carry out not only commercial activity, but can also be simultaneously
employed under an employment agreement, because the effective legislation of Ukraine does not prohibit such activity.
20) Ministry of Justice
Letter No. 26120 "On the Procedure for Releasing Information Concerning an
Accomplished Notarial Action" dated 3 August 2004. In this
Letter, the Ministry of Justice explained that information concerning notarial
actions that have been completed, and the relevant documents as well, can only
be released by a notary within the scope prescribed by the Law of Ukraine
"On Notaries".