Russian-Ukrainian Legal Group, P.A.

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

 

 

Chronicle of Recent Developments in Ukrainian Legislation

 

 
march 2005

 

Corporate Registration

Currency Control

Customs

Intellectual Property

Labor Law

Use of Subsoil, Oil and Gas

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

 

Corporate Registration

 

1)        Law of Ukraine No. 2505-IV "On Incorporating Amendments into the Law of Ukraine 'On the State Budget of Ukraine in 2005' and Certain Other Legislative Acts of Ukraine" dated 25 March 2005 (the "2005 Budget Amendments Law"). The 2005 Budget Amendments Law stipulates a graduated increase in Ukraine's monthly minimum wage: on 1 April 2005, the minimum wage increases to 290 UAH; on 1 July 2005, to 310 UAH; and on 1 September 2005, to 332 UAH. Prior to 1 April 2005, the minimum wage stood at 262 UAH. Please recall that the minimum size of a company's authorized capital, among other things, is tied to the size of the minimum wage. So for example, until 1 July 2005, the authorized capital of an LLC cannot be less than 100 times the new minimum wage of 290 UAH. This provision of the 2005 Budget Amendments Law took effect on 31 March 2005.

 

2)        Law of Ukraine No. 2452-IV "On Incorporating Amendments into Certain Legislative Acts of Ukraine" dated 3 March 2005. Law No. 2452-IV amends the Civil Code to eliminate the requirement that a company list its seat (address) in its charter. The Law also contains a new definition of "seat", which term now means the address of the body/person which/who acts on the company's behalf pursuant to either the company's founding documents or to a law. Law No. 2452-IV also amends the Commercial Code and the Law "On the State Registration of Legal Entities and Individual Entrepreneurs". Whenever a company's seat is changed, information about the change must be recorded in the Uniform State Register and reflected in a new registration certificate for the legal entity. The Law took effect on 1 April 2005.

 

Currency Control

 

3)        Cabinet of Ministers of Ukraine and National Bank of Ukraine ("National Bank") Resolution No. 215 "On Incorporating Amendments into the Anti-Crisis Financial Stability Measures" dated 30 March 2005. The requirement for mandatory sale of 50% of foreign currency proceeds from export operations has been cancelled. The Resolution took effect on 30 March 2005.

 

4)        National Bank Resolution No. 101 "On Canceling the Mandatory Sale of Foreign Currency Proceeds for the Benefit of Residents" dated 31 March 2005. Following the joint Resolution mentioned in point 3 hereof, the National Bank has cancelled the mandatory sale of 50% of foreign currency proceeds for the benefit of residents of Ukraine (including both legal entities and individual entrepreneurs). Such "subjects of foreign-economic activity" now can dispose of their foreign currency proceeds at their discretion. The Resolution will take effect on 16 April 2005.

 

5)        State Tax Administration of Ukraine ("STA") Letter No. 2045/6/23-5315 "On Considering a Letter" dated 11 March 2005. In this Letter, the STA points out that when an agreement is made by and between residents of Ukraine, obligations described in that agreement may be stated as UAH equivalents of a sum denominated in foreign currency; however, the actual payments between such residents can generally only be made in UAH. To effect payment in foreign currency requires the issuance of a license by the National Bank of Ukraine.

 

Customs

 

6)        Law of Ukraine No. 2470-IV "On Incorporating Amendments into the Customs Tariffs of Ukraine" dated 15 March 2005. Import duty rates for some goods, in particular those that are not manufactured in Ukraine, have been reduced. The procedure for calculating such duties has been changed for some goods, e.g., in some cases, the duty is to be calculated as a percentage of the customs value of the goods, rather than as a monetary amount to be charged per unit of measurement of the goods. The Law took effect on 25 March 2005.

 

Intellectual Property

 

7)        Ministry of Education and Science of Ukraine Order No. 167 "On Nullifying the Order of the Inter-Departmental Commission for the Approval of Legal Protection of Trademarks for Goods and Services dated 16.01.96 No. 1" dated 21 March 2005. The rules for approving petitions for the use of state symbols of Ukraine in designations of goods and services have been annulled. The Order will take effect on 11 April 2005.

 

Labor Law

 

8)        Law of Ukraine No. 2429-IV "On Incorporating Amendments into Certain Laws of Ukraine Concerning Youth Employment Guarantees" dated 1 March 2005. This Law expands the applicability of the 5% quota for hiring certain classes of workers (e.g. women with young children, recent graduates, and senior citizens) in companies with over 20 employees, such that it now covers employees of all professions. Previously, the 5% quota applied only to "working class" professions. The Law took effect on 19 March 2005.

 

Use of Subsoil, Oil and Gas

 

9)        2005 Budget Amendments Law. In addition to the changes described in point 1, hereof, the 2005 Budget Amendments Law has also increased the rents payable by entrepreneurs to the State Budget of Ukraine: for condensed gas (from 104.4 to 300 UAH per ton of extracted condensed gas); and for transportation of ammonia (from 0.39 to 1 USD per ton per 100 kilometers). The Law also stipulates a rent for natural gas: (1) extracted from deposits fully located at depths over 5000 meters - 10 UAH per 1000 cubic meters); and (2) extracted from marine deposits - 7.8 UAH per 1000 cubic meters. The rate of the export duty charged on exported gasiform (including natural) gas, natural liquefied gas and liquefied gases (except for natural gas) has been increased from 10 to 25 USD per 1000 cubic meters (for gasiform gas) and per ton (for liquefied gas). The Law has renewed the "zero VAT rate" rule that was effective in 2004 with respect to sales of imported natural gas within Ukraine (except for sales of such gas to persons who are not VAT payers). These provisions of the 2005 Budget Amendments Law took effect on 31 March 2005.

 

10)      Ministry of Economy and European Integration of Ukraine Resolution No. 5 "On Approving the Regulations and Requirements for Holding a Specialized Tender to Identify an Exchange to Be Used for Auctions for Sales of Oil and Condensed Gas" dated 12 January 2005. According to the approved Regulations, a decision to hold a tender must be promulgated in the mass media within three working days after the Ministry of Economy issues a decision to this effect. The applicant, whose bid meets the tender task conditions and is regarded as the most effective, will win the tender. Tender results must be published within three working days in the "Uriadovy Courier" newspaper. The Resolution took effect on 12 January 2005, but did not appear in Ukrainian electronic legal databases until the middle of March of 2005.

 

Taxes

 

11)      2005 Budget Amendments Law. In addition to the changes described in points 1 and 9 above, the 2005 Budget Amendments Law amends numerous taxation regulations. For instance, the Law "On Value-Added Tax" has been substantially amended. It now specifies the procedure for determining the basis for levying VAT; the list of items subject to VAT has been expanded and now includes: (1) the cost of delivering goods and rendering services (including transfer of an object of financial leasing for use to the lessee); and (2) the cost of importing (or re-importing) and exporting goods, including transfer of capital assets to the authorized fund of a legal entity, etc. "VAT payer" is defined, among other persons, a person whose total proceeds from deliveries of taxable goods exceed 300,000 UAH (VAT exclusive) irrespective of which taxation treatment is used for this person. A 5-year moratorium on granting new and expanding existing VAT exemptions has also been established. The Law "On the Tax Levied on Individuals' Incomes" has also been amended: payers of the uniform or fixed tax are now treated as hired persons, and their incomes are now taxed as salaries in cases stipulated by the law. Also, the list of persons entitled to use the simplified taxation system will be reduced, effective 1 July 2005. These provisions of the 2005 Budget Amendments Law took effect on 31 March 2005.

 

Specific Sectors of the Economy/Miscellaneous

 

12)      State Committee of Ukraine for Construction and Architecture Order No. 41 "On Approving the Regulations on a Fund of Standard-Setting Documents in the Sphere of City Construction, Construction and Construction Materials Industry" dated 25 February 2005. A Ukrainian "Fund of Standard-Setting Documents in the Sphere of City Construction, Construction and Construction Materials Industry" is being created. Information about such standard-setting documents (which codify the rules applicable to construction projects), official publications which will be placed in the Fund, amendments to the effective regulations, cancellation thereof and approvals of new standard-setting documents will be issued to users of the "Fund" through a "Herald of the Fund of Standard-Setting Documents in the Sphere of City Construction, Construction and Construction Materials Industry." This will be done on the basis of agreements with enterprises of all forms of ownership, individuals and associations. The Order took effect on 27 March 2005.