Russian-Ukrainian Legal Group, P.A.

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

 

Chronicle of Recent Developments in Ukrainian Legislation

 

 
January 2004

 

Advertising

Currency Control

Customs

Intellectual Property

International Treaties

Land

Money Laundering

Financial Services

Taxes

Telecommunications

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.

 

Advertising

 

1)        Cabinet of Ministers of Ukraine ("Cabinet of Ministers") Resolution No. 2067 "On Approving Standard Rules for Placing External Advertising" dated 29 December 2003. The Rules regulate relations arising in connection with the placement of external advertising in inhabited areas and prescribe the procedure for authorizing external advertising. Following the adoption of the Rules, the 1998 Standard Rules for Placing External Advertising lost force. The Resolution entered into force on 21 January 2004.

 

Currency Control

 

2)        State Tax Administration of Ukraine ("Tax Administration") Order No. 641 "On Approving the Summary Tax Clarifications Concerning the Application of the Rules of Article 4 of Law of Ukraine No. 185/94-VR 'On the Procedure for Making Foreign Currency Payments'" dated 30 December 2003. The Tax Administration reiterated that, when tax authorities discover a termination of obligations by way of a non-cash offset of similar counterclaims under foreign-economic sale-and-purchase contracts, the sanction indicated in Article 4 of the Law of Ukraine "On the Procedure for Making Foreign Currency Payments" must be imposed. Thus, a per-day penalty for each day of delayed tax payment, at the rate of 0.3% of the outstanding foreign currency proceeds (customs value of undelivered products), must be paid in Ukrainian currency at the exchange rate of the National Bank of Ukraine as of the date on which the tax debt arose. The Order entered into force on 19 January 2004.

 

Customs

 

3)        State Customs Service of Ukraine ("State Customs") Order No. 907 "On Incorporating Amendments and Addenda into the Regulations on Opening and Operating Bonded Warehouses" dated 24 December 2003. The Order stipulates that whenever goods, transported under a long-term contract, are regularly subject to the customs treatment of being placed in a bonded warehouse, an application for such customs treatment should be filed when the first batch of goods is warehoused. Based on the application, goods transported under the contract can be subject to this customs treatment for a term that does not exceed the term of the contract, or for one calendar year. The Order entered into force on 28 January 2004.

 

4)        State Customs Order No. 918 "On Amending the Procedure for Applying the Temporary Importation (Exportation) Customs Treatment" dated 26 December 2003. The Order sets forth a re-stated procedure for applying the temporary importation (exportation) customs treatment. Customs clearance of temporarily imported (exported) goods against guaranteed observance of this treatment is carried out by the Customs authorities with respect to goods that are: (i) classified in UKTVED groups 1 - 24; (ii) subject to excise duty; or (iii) subject to export duty. The Order entered into force on 27 January 2004.

 

5)        State Customs Order No. 932 "On Approving the Procedure for Using a Temporary Declaration and an Incomplete Declaration Under Import Customs Treatment (During Clearance for Free Circulation)" dated 30 December 2003. The new Customs Code provides for simplified customs clearance for imported goods, which can be cleared for free circulation against presentation to Customs authorities of a temporary declaration or an incomplete declaration. The approved Procedure defines a list of the reasons and conditions for submitting a temporary declaration or an incomplete declaration, and stipulates a decision-making procedure to be followed by Customs authorities when they clear goods for free circulation with the use of these declarations, as well as a procedure for filling out the declarations. The Order entered into force on 28 January 2004.

 

6)        State Customs Letter No. 11/4-15-990-ЕP "On Using Temporary Declarations and Incomplete Declarations" dated 31 January 2004. The State Customs letter clarifies the use of temporary declarations and incomplete declarations. When these declarations are used, the obligation to pay taxes and fees arises at the moment of their execution, and at the moment of execution of a cargo customs declaration such a tax obligation is adjusted against a change in the customs value, codes of goods or other circumstances. Also, State Customs emphasizes that if goods are cleared based on a temporary declaration or incomplete declaration, a tax bill cannot be presented for the payment of VAT.

 

Intellectual Property

 

7)        Cabinet of Ministers Resolution No. 8 "On Approving the Procedure for Granting by the Cabinet of Ministers of Ukraine of Authorization to Use a Patented Invention (Useful Model) or a Registered Chip Topography" dated 14 January 2004. The Procedure stipulates the steps to be followed in considering a petition asking the  Cabinet of Ministers to grant authorization to use a patented invention (useful model) or a registered chip topography without the approval of the holder of the relevant patent, but with payment of compensation to the holder. The Resolution entered into force on 7 February 2004.

 

8)        Cabinet of Ministers Resolution No. 9 "On Amending the Procedure for Submitting, Storing and Issuing Examples of Laser-Readable Discs" dated 14 January 2004. The procedure for submitting examples of discs to the depositary has been revised. Previously, the manufacturer had to submit discs to the depositary within 10 days after the date of manufacture of each batch of the discs; now the manufacturer must submit the examples before the 10th day of each month.  Examples to be submitted must be taken from each batch of discs manufactured in the accounting period. Disc manufacturers are responsible for the reliability of the information on disc examples filed with the State Committee of Ukraine for Regulatory Policy and Entrepreneurship. If incomplete information or incomplete sets of discs, registration cards and/or information are presented to the depositary, the submitted disc examples and the documents are to be returned to the manufacturer without registration. The Resolution entered into force on 16 January 2004.

 

9)        Ministry of Education and Science of Ukraine ("Ministry of Education") Order No. 25 "On Approving the Procedure for Coordinating the Issuance of Licenses for the Export and Import in 2004 of Optical-Grade Polycarbonate for the Manufacture of Laser-Readable Discs" dated 16 January 2004. The Procedure for Coordinating the Issuance of Licenses for the Export and Import in 2004 of Optical-Grade Polycarbonate for the Manufacture of Laser-Readable Discs has been approved. Responsibility for coordination was assigned to the State Department of Intellectual Property of the Ministry of Education, which Department will make decisions based on applications from subjects of business activity. The Order entered into force on 13 February 2004.

 

International Treaties

 

10)      Ministry of Education Order No. 21 "On the Amount of, and Procedure for Paying, the Fee Charged for Apostilling Services" dated 16 January 2004. Following the Ministry of Justice of Ukraine and the Ministry of Foreign Affairs of Ukraine, the Ministry of Education, as the body authorized to apostille official documents issued by educational institutions, government authorities, enterprises, institutions and organizations in the spheres of education and science, has established the fee to be charged for the apostilling of official documents which will be used in other states for: Ukrainian individuals, foreigners and stateless persons -- at three minimum tax-free incomes ("mtfi"); and for legal entities -- at five mtfi. Therefore, all three bodies will collect the same amount of the fee for apostilling services. The Order entered into force on 7 February 2004.

 

11)      Tax Administration Letter No. 362/7/12-0117 "On the Application of International Agreements for the Avoidance of Double Taxation" dated 13 January 2004. The Tax Administration Letter is based on information prepared by the Ministry of Foreign Affairs of Ukraine concerning international agreements for the avoidance of double taxation, which came into force for Ukraine on 1 January 2004. The letter indicates that Ukraine will apply the USSR's agreements for the avoidance of double taxation, which remain in force, until new agreements with Spain, Cyprus, Malaysia, Mongolia and Japan come into force.

 

Land

 

12)      Cabinet of Ministers Resolution No. 21 "On Amending the Procedure for Calculating and Reimbursing Damage to Owners and Users of Land" dated 14 January 2004. The Procedure for Calculating and Reimbursing Damage to Owners and Users of Land, in addition to already-existing provisions on reimbursement of damage resulting from withdrawal (purchase) or temporary occupation of land plots, encumbrances on their use, deterioration of the quality of soil and other useful properties of land plots or their becoming unsuitable for use, now also requires reimbursement of income lost due to temporary non-use of the land plots. The Resolution entered into force on 7 February 2004.

 

Money Laundering

 

13)      Cabinet of Ministers and National Bank of Ukraine Resolution No. 45 "On Approving the 2004 Program for Counteraction of Legalization (Money Laundering) of Profits Obtained by Criminal Means" dated 16 January 2004. The main purpose of the Program is to ensure the implementation of the 40 Recommendations of the Financial Action Task Force on Money Laundering (FATF). It stipulates drafting amendments to existing legislation on financial monitoring to add more indicia, the presence of which will cause financial transactions to become subject to financial monitoring. Additionally, in the Law "On the Foreign Investment Regime" a procedure for preventing foreign investments with cash, the origin of which cannot be confirmed, will be established. And in the legislation on privatization, procedures are to be set up to prevent payment of such funds for the privatization of state-owned enterprises in attractive industries. The Resolution entered into force on 16 January 2004.

 

14)      Order No. 163/557 of the Ministry of Finance of Ukraine, State Department of Financial Monitoring ("Financial Monitoring Department") and Security Service of Ukraine ("Security Service") "On Approving the Procedure for the State Department of Financial Monitoring Providing the Security Service of Ukraine with Summary Materials Concerning Financial Transactions Which Can Be Associated with Legalization (Money Laundering) of Profits or Financing of Terrorism" dated 22 December 2003. The approved Procedure defines a mechanism for the Financial Monitoring Department providing Summary Materials to the Security Service whenever there are good reasons to believe that a financial operation may be related to money laundering or financing of terrorism, as well as for the Financial Monitoring Department receiving information about the processing of said Materials. The Order entered into force on 25 January 2004.

 

Financial Services

 

15)      Ordinance No. 26 of the State Committee on Regulation of the Financial Services Market of Ukraine ("Financial Services Committee") "On Entering Into Agreements Aimed at Continuous Prompt Coverage of the Activity of the Financial Services Committee" dated 27 January 2004. The financial and economic weeklies "Ukraine-Business", "Invest Newspaper" and "Pension Courier" have been recognized the official Financial Services Committee publications.

 

Taxes

 

16)      Tax Administration Order No. 633 "On Approving Tax Clarifications Concerning the Application of the Provisions of Clause 1.8 of Article 1 and Clause 9.12 of Article 9 of the Law of Ukraine "On the Tax Levied on the Income of Individuals" dated 29 December 2003. According to the approved tax clarifications, the rule set forth in paragraph two of clause 1.8 of Article 1 of the Law of Ukraine "On the Tax Levied on the Income of Individuals", pursuant to which an individual subject of business activity's income is taxable based on the same rules that are applied to salaries he provides services under a civil contract for a period of more than one month, does not apply to payers of the uniform tax. The Order entered into force on 19 January 2004.

 

17)      Tax Administration Order No. 50 "On Approving Tax Clarifications Concerning the Application of Certain Rules of the Law of Ukraine 'On the Tax Levied on the Income of Individuals' Regarding the Taxation of Foreigners and Non-Residents" dated 29 January 2004. The Tax Clarifications contain the official opinions of the Tax Administration concerning: the procedure for a foreigner to determine his resident status; the rates of the tax to be levied on the income of individuals for the purposes of taxation of the salaries of hired employees who are non-residents and who work in Ukraine; inclusion in the total taxable income of a reimbursement of the cost of residential premises; the specifics a non-resident renting out real estate and making such rental payments subject to the individual income tax. The Order entered into force on 9 February 2004.

 

 

Telecommunications

 

18)      Cabinet of Ministers Resolution No. 58 "On Incorporating Amendments into the Rules for Using Inter-City and International Telephone Communications" dated 21 January 2004. The purpose of said amendments is to revise the rates of the tariffs charged for inter-city and international phone calls based on the technical possibilities of keeping records of such calls. In particular, "per minute" rates have been replaced with rates stipulated by the effective legislation, which is based on various time units (one second, 5 seconds, 15 seconds, one minute). The Resolution entered into force on 9 February 2004.

 

Specific Sectors of the Economy/Miscellaneous

 

19)      Decree of the President of Ukraine No. 60/2004 "On the State Statistics Committee of Ukraine" dated 19 January 2004. New Regulations for the State Statistics Committee of Ukraine ("Statistics Committee") have been approved. The Statistics Committee now has a new status as a central body of executive power with the special status of securing state policy in the sphere of statistics. Previously, it was a central body of executive power with the status of a Committee. Its activity is to be directed and coordinated by the  Cabinet of Ministers. The powers of  Statistics Committee have been specified: in addition to its right to receive statistical information from subjects of business activity and to use such information, it is now also authorized to receive and use "restricted access" information. The Decree entered into force on 8 February 2004.

 

20)      Cabinet of Ministers Resolution No. 95 "On Incorporating Amendments into Cabinet of Ministers of Ukraine Resolution No. 1611 of dated 15 October 2003 and Canceling Resolution No. 1869 of the Cabinet of Ministers of Ukraine dated 28 November 2003" dated 29 January 2004. The terms of validity of copies of certificates of conformity and of copies of certificates of recognition of conformity made on forms not protected by holographic elements, obtained by subjects of business activity with respect to batches of goods, is prolonged until 1 January 2005. Copies will remain effective until the respective batch of goods has been disposed of. After 1 January 2005, goods that are subject to mandatory certification can be kept by subjects of business activity if they have copies of said documents made on forms protected by holographic elements; the procedure for ordering, formalizing and obtaining such forms was recently prescribed in a Temporary Procedure, the adoption of which was covered in the December 2003 issue of this Chronicle. The Resolution entered into force on 14 February 2004.

 

21)      Ministry of Internal Affairs of Ukraine Order No. 15 "On Canceling Chapter 3 of the Instructions approved pursuant to Ministry of Internal Affairs of Ukraine Order No. 1217 dated 22 October 2003" dated 10 January 2004. The rules authorizing inspectors of the State Automobile Inspectorate to detain vehicles and seize documents in cases of violations of the Traffic Rules, punishable by fines or seizures of driver licenses, has been cancelled because it contradicts Ukrainian law. The Order entered into force on 7 February 2004.