Russian-Ukrainian Legal Group, P.A.
Kiev, Ukraine; Washington, D.C., USA
Chronicle
of Recent Developments in Ukrainian Legislation
JUNE 2004
Administrative Law
Customs
Land
Money
Laundering
Corporate
Registration
Non-Banking Financial Services
Taxes
Use of Subsoil
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.
Administrative Law
1) State Committee
of Ukraine for Land Resources ("Land
Committee") Order No. 147 "On Approving the Instructions on
Execution of Materials on Administrative Violations by Bodies of the State
Committee of Ukraine for Land Resources" dated 18 May 2004. The Procedure for Bodies of the Land Committee
Considering Cases of Administrative Violations of the Land Legislation has been
cancelled. The following regulations have been approved to replace the former
Procedure: (1) Instructions on Execution
of Materials on Administrative Violations by Bodies of the State Committee of
Ukraine for Land Resources, which clarifies the procedure for
formalizing said materials when land legislation violations are revealed, the procedure for keeping records
thereof and the procedure for filing appeals and (2) the forms of procedural
documents (case consideration notice, resolutions concerning imposition of
administrative penalties, remedies, etc.). The Order took effect on 20 June 2004.
Customs
2) Cabinet of Ministers of Ukraine ("Cabinet of Ministers") Resolution No. 810 "On Amending Cabinet of Ministers of Ukraine Resolution No. 593 dated 14
April 1999" dated 29
June 2004. The State Customs Service of
Ukraine ("Customs Service")
is authorized to establish a simplified customs clearance procedure for certain
Ukrainian resident enterprises that carry out foreign-economic activity. The
Customs Service was instructed to approve criteria for evaluation and a procedure for identifying Ukrainian resident
enterprises, for which the simplified customs clearance procedure can be
established. The Resolution took effect on 29 June 2004.
3) Customs Service,
Ministry of Transport of Ukraine Order No. 399/442 "On Amending the
Procedure of Interaction of the Customs and Railways of Ukraine As Goods and Other
Items Are Transported Across the Customs Border in Freight Trains" dated
28 May 2004. The Order sets
forth a restated version of the Procedure
of Interaction of the Customs and Railways of Ukraine as Goods and Other Items
Are Transported Across the Customs Border in Freight
Trains. According to the new version of the Order, railways transport
goods (cargoes) between customs houses as customs carriers and guarantee
delivery of goods (cargoes) that are subject to customs control, to the
destination customs house. The railways are responsible for the safety of the
cargoes from the moment of their acceptance for carriage until they are issued
to a consignee or transferred to another entity. The Order has not been
published yet, but will take effect
ten days after its official publication).
4) Customs Service Order
No. 445 "On Amending Order No. 363 of the State Customs Service of Ukraine dated 23 June 1998" dated
17 June 2004. The Procedure for Collecting the Customs Charges
Calculated under a Cargo Customs Declaration ("CCD") has been amended. In
particular, customs charges will not be collected for keeping items under
customs control when processing goods either inside or outside the customs territory of Ukraine . The Order also clarifies that customs charges for
keeping items under customs control are collected until the moment of
formalizing a CCD with respect to goods which will be treated as duty-free shop
items, bonded warehouse items, transit items, temporarily imported items,
special customs zone items, re-imported items, items to be processed in the
customs territory of Ukraine or items to be destroyed. The Order has not been
published yet, but will take effect
five days after its official publication.
5) Customs Service Order
No. 470 "On Approving Procedural Recommendations Concerning Verifying the
Correctness of Identification of the Country of Origin of Goods Imported Into
the Customs Territory of Ukraine on the Terms and Conditions of Free Trade
Agreements" dated 25 June 2004.
The approved recommendations are used to identify the country of origin of
goods imported into the customs territory of Ukraine on the terms and conditions of free trade agreements made by and
between Ukraine and Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kirghizia, Moldova, Russia, Tajikistan, Turkmenistan and Uzbekistan. The recommendations describe the existing
requirements concerning certificates of origin, the use of which is required by
law; and the rules for identifying the country of origin of disassembled or unassembled
goods that are delivered in several batches. The Order took effect on 25 June 2004.
6) Customs Service Letter
No. 25/4-14-35/7434-ЕP "On the Conditions for Applying the
Provisions of the Effective Free Trade Agreements During Export From Ukraine of
the Goods with Respect to Which an Export Duty Has Been Established by the
Legislation of Ukraine" dated 11 June 2004. According to the clarifications of the Customs Service, goods,
for which an export duty has been
established, can be delivered on free trade conditions (unless otherwise
stipulated by the provisions of the relevant agreement), provided that: (1) the
origin of the goods is certified by a certificate; (2) the "direct
shipment" rule is observed; (3) the goods are exported on the basis of a
contract between residents of the states party to an agreement; (4) a
"re-export clause" is present in the foreign-economic contract; and
(5) the agreements for export of goods stipulate the buyer's obligation to
provide the Ukrainian resident seller with information about resale of goods
identifying the country of destination.
Land
7) Cabinet of Ministers Resolution No.
763 "On an Addendum to the Annex to Resolution No.
1548 of the Cabinet of Ministers of Ukraine dated 25 December 1996" dated 16 June 2004. The Land Committee has the right, upon receiving the
approval of the Ministry of Finance and the Ministry of Economy: (1) to establish
the prices (tariffs) for drafting land management documentation and performing
land appraisals works; and (2) to determine the range of the fees to be charged
for the performance of land management work when land plots are transferred to
Ukrainian citizens free of charge pursuant to law. The Resolution
took effect on 16 June 2004.
Money Laundering
8) Law of Ukraine No.
1726-IV "On Incorporating an Amendment into Article 4 of the Law of
Ukraine "On Preventing and Counteracting Legalization (Laundering) of Income Received by Criminal
Means" dated 18 May 2004. The State
Department of Financial Monitoring ("Financial Monitoring Department")
is removed from subordination to the Ministry of Finance and is redefined as a
special-status central body of executive power. The Law will take effect on 1 January 2005.
9) Cabinet of Ministers Resolution No. 728 "On Amending the Regulations of
the State Department of Financial Monitoring" dated 2 June 2004. The Financial Monitoring Department has been defined
as a special-status central body of executive power in financial monitoring
matters. The activity of the Financial Monitoring Department will be governed inter
alia by such documents as Ukraine's international agreements. The Resolution also clarifies specific tasks,
responsibilities and powers of the Financial Monitoring Department, in
particular that it has the right to demand information (including bank secrecy
or commercial classified data), necessary for the performance of its
responsibilities, from executive branch agencies, local self-government bodies,
enterprises, institutions and organizations; and to access databases maintained
by subjects of state financial monitoring and executive branch agencies. The Resolution took effect on 2 June 2004.
Corporate Registration
10) State Committee of
Ukraine for Regulatory Policy and Entrepreneurship ("Entrepreneurship
Committee") Order No. 59 "On Approving the Forms of an Excerpt
and a Reference from the Uniform State Register of Legal Entities and
Individual Entrepreneurs" dated 2 June 2004. In observance of the rules of the Law "On the State
Registration of Legal Entities and
Individual Entrepreneurs" (please see the June 2003 issue of this
Chronicle), which took effect on 1 July 2004, the forms of an excerpt and a reference from the Uniform
State Register of Legal Entities and Individual Entrepreneurs have been
approved. Such excerpts/references
will be issued for a fee. The Order took effect on 22 June 2004.
11) Entrepreneurship
Committee Order No. 65 "On Approving the Requirements Concerning the
Spelling of a Name of a Legal Entity or its Separate Subdivision" dated 9
June 2004. According to the
newly approved requirements concerning
the spelling of a name of a legal entity: (1) the designation of a legal
entity must indicate its corporate form and name; (2) the spelling of a name of
a legal entity can include capital letters of the Ukrainian alphabet, an
apostrophe ('), a hyphen (-), a dash (--), an "N" mark and, if
necessary, Arabic and Roman numerals (from 1 to 10). Other symbols and
punctuation marks are forbidden to be used in names of legal entities; (3) a
legal entity's name cannot contain a reference to its corporate form (with some
exceptions); (4) a legal entity's name cannot be identical to a name of another
legal entity; (5) a legal entity's full name must not exceed 182 characters in
length; its abbreviated name must not exceed 38 characters in length. The Requirements have not resolved any
issues concerning what is to be done about already-registered legal entities,
the names of which do not meet the Requirements.
The Order took effect on 10 July 2004.
12) Entrepreneurship
Committee Order No. 66 "On Approving Forms of
Applications and Notices to Be Presented (Sent) to the State Registrar"
dated 9 June 2004. The following application forms have been approved:
(1) concerning reservation of a name of a legal entity (founders of a legal
entity can generally reserve the name of a legal entity for two months, but for
open joint-stock companies they can reserve a name for nine months); (2) for
the replacement of a state registration certificate of a legal entity or
individual entrepreneur (to be filed if the State registration certificate is
lost or damaged); (3) for the closing of a separate subdivision (the executive
body of a legal entity must file with the legal entity's local State Registrar
a notice, made in accordance with the prescribed form, concerning the closing
of the separated subdivision). The Order took effect on 10 July 2004.
Non-Banking Financial Services
13) Financial Monitoring Department Order No. 56 "On
Amendments to Financial Monitoring Department Order No. 48 dated 13 May 2003" dated 18 June 2004. Due to government authorities' current inability to
sign documents with electronic digital signatures, and with the aim of ensuring
that the primary subjects of financial monitoring provide information on
relevant financial transactions, documents on such transactions can be
presented as hard copies until 1 January 2005. After said date, information on
such transactions must be presented in electronic form though communications
channels or on magnetic media. The Order took effect on 11 July 2004.
Taxes
14) Presidential Ordinance
No. 146/2004-rp "On Some of the Measures Relating to the Enhancement of
the Fight Against Corruption in the Bodies of the State Tax Service" dated
21 June 2004. The Security
Service of Ukraine, the Ministry of Internal Affairs and the General
Prosecutor's Office have been instructed: (1) to establish, as of 1 July 2004,
special telephone hotlines that businesses can use to promptly inform the
authorities of legal violations or attempts to hinder economic activities on
the part of tax authorities, and to receive necessary assistance; and (2) to
exercise special supervision over proceedings concerning crimes relating to
corruption by tax authorities. The Ordinance has not been published but will
take effect ten days after its
official publication.
15) Presidential Decree No.
671/2004 "On Immediate Measures Concerning the Improvement of the
Efficiency of Collecting Value-Added Taxes" dated 23 June 2004. The Cabinet of Ministers has been instructed to
draft and present to the Rada a re-stated Law "On Value-Added Tax"
which would stipulate: (1) a reduction of VAT down to 15%; (2) fewer tax
exemptions and a moratorium on new tax exemptions; (3) the introduction of
temporary registration of taxpayers whose activity is not permanent; (4)
prevention of budget reimbursements in the case of artificial understatement
(overestimation) of prices and sham sales of goods (works, services); (5) the
introduction of a special system for reporting by newly set-up entities during
the first year of their operation, to prevent the use of these entities for VAT
evasion and profit concealment; and (6) limited use of tax promissory notes
during importation (sending) of goods (works, services) to Ukraine. The Decree
took effect on 6 July 2004.
16) State Tax Administration
of Ukraine ("Tax Administration") Letter No.
10013/7/25-0017 "On Applying the Procedural Recommendations Concerning the
Procedure for Submitting and Considering Taxpayers' Complaints (Applications)
by the Bodies of the State Tax Service" dated 3 June 2004. Tax authorities are now forbidden to refuse to
accept a taxpayer's complaint (application) with respect to tax authorities'
decisions; complaints (applications) must be considered by senior executive
officers of tax authorities without delay. Complaints (applications) that have
been made out improperly (e.g., not being signed) or that have been filed with
the wrong tax body will be returned to the sender or forwarded by the tax
authorities to the proper authority, and tax authorities will serve the
relevant notice to the applicant.
17) Entrepreneurship
Committee Letter No. 2557 "On Entering Into
Contracts for Performance of Work by Individuals Who Are Subjects of Business
Activity" dated 19 April
2004. According to the Entrepreneurship Committee, when an
individual entrepreneur enters into a civil-law agreement obliging another individual
to perform work for him, the individual entrepreneur acts as an insurer for the
other individual and, when paying remuneration to the other individual, must
also calculate and pay pension fees for the other individual in compliance with
the procedure and in the amounts established by law.
18) Entrepreneurship
Committee Letter No. 2217 "On Granting a Clarification" dated 6 April 2004. Regarding the simplified tax system for small
businesses, the Entrepreneurship
Committee explains that: (1) legal entities and individuals, which/who
pay the uniform tax and are not VAT payers, must sell goods (works, services)
without charging VAT and have no right to issue tax bills and indicate VAT
amounts therein; (2) when shipping goods, payments for which were received when
the goods were subject to the simplified tax system with the payment of the
uniform tax at the rate of 10%, VAT payers have no right to issue tax bills and
to indicate VAT amounts therein.
19) Entrepreneurship
Committee Letter No. 1699 "On Using a Facsimile Signature" dated 19 March 2004. A facsimile reproduction of a signature can only be
used in certain documents. For instance, all copies of a tax bill must bear an
original handwritten signature; analogues of a person's signature (e.g., a facsimile
signature) are not permitted.
Use of Subsoil
20) Cabinet of Ministers Resolution No. 792 "On Amending and Nullifying
Certain Acts of the Cabinet of Ministers of Ukraine" dated
21 June 2004. The State Committee of Natural Resources of Ukraine
("Natural Resources Committee") has the right: to issue
approvals authorizing special use of mineral resources; to exercise State
geological supervision over works relating to the geological study of subsoils;
to implement State monitoring of waters and the environment; and to issue
licenses authorizing prospecting (exploration) of mineral resources, extraction
of uranium ores, topographic, geodesic, cartographical works, etc. The Resolution has not been published but will take
effect upon its official publication.
21) Natural Resources Committee Order No. 29 "On Approving
a Procedure for Renewing and Issuing Duplicates of Special Authorizations to
Use Subsoils" dated 14 May 2004. Succession, or a change of the last and/or first
name and/or patronymic of an individual entrepreneur (subsoil user) are bases
for renewing a special authorization to use subsoils. Subsoil users, who have
submitted their applications and the relevant documents for the
renewal/issuance of duplicate special authorizations, can carry out their
activities associated with the use of subsoils on the basis of references
certifying the acceptance of the applications for renewal/issuance of a special
authorization duplicate. The Order took effect on 29 June 2004.
22) Natural Resources Committee Order No. 33 "On Approving a List of the Documents That Must Be
Enclosed With an Application for a Special Authorizations to Use
Subsoils" dated 17 May 2004.
The List of the documents to be submitted by an applicant to the Natural
Resources Committee in order to obtain a special authorization to use subsoils
has been approved pursuant to the Order. The documents on the List vary
depending on the type of subsoil use that the applicant seeks to engage in. The
Order took effect on 29 June 2004.
Specific Sectors of the
Economy/Miscellaneous
23) Presidential Decree No. 696/2004 "On
Amending the Regulations of the State Committee of Ukraine for
Television and Radio Broadcasting" dated 30 June 2004. The amendments are incorporated in connection with
the adoption of the Law "On Protecting Public Morals" (please see the
December 2003 issue of this Chronicle). The following responsibilities have
been assigned to the TV Committee: (1) to implement State policy in the sphere
of protecting public morals; (2) to carry out, within the scope of its powers,
State supervision over the observance of the legislation in the sphere of
protecting public morals; and (3) to issue licenses to and register specialized
mass media of a sexual or erotic nature, to ensure that subjects of economic
activity have licenses and comply with their licensing conditions. The Decree
has not been published but will take effect ten days after its official publication.
24) Ministry of Industrial
Policy of Ukraine Order No. 311 "On Approving a Procedure for Determining
and Approving the Quantities of Goods (Including Kits) to Be Imported Into the
Customs Territory of Ukraine, the Composition of Kits to Be Used for
Construction and Manufacturing Activity of Automobile-Making Enterprises and
Their Components" dated 24 June 2004. The Procedure was drafted in observance of the legislation on
State support of the automobile industry
of Ukraine. It contains a detailed description of how to
determine and approve the quantities
of imported goods (including kits) to be used for the construction and
manufacturing activities of automobile-making enterprises (their components),
which are tax exempt when imported (sent) into
the customs territory of Ukraine. The Order took effect on 6 July 2004.