Russian-Ukrainian Legal Group, P.A.
Kiev, Ukraine; Washington, DC, USA
MAY 2003
BankingCriminal Law and Criminal ProcedureInvestment Regime GovernmentIntellectual PropertyLandMoney LaunderingSecuritiesTaxesSpecific Sectors of the Economy/Miscellaneous
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Chronicle of Recent Developments in Ukrainian Legislation
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.
1) Resolution of the Cabinet of Ministers of Ukraine No. 655 of 5 May 2003 "Certain Problems in the Development of an Innovation Infrastructure in Ukraine and Directions for the Activity of the Ukrainian State Innovation Company in 2003". A Ukrainian Bank for Reconstruction and Development (UBRD) is being set up to provide financial support for innovation activity by subjects of business activity. The Ukrainian State Innovation Company will be the founder of this new “UBRD”. The Resolution took effect on 5 May 2003.
2) Decree of the President of Ukraine No. 402/2003 of 13 May 2003 "On Enhancing the Efficiency of the Operation of the Coordinating Committee for Combating Corruption and Organized Crime". The Committee is empowered to collect information and documents relating to corruption and organized crime from both state agencies and enterprises; to order law-enforcement and regulatory bodies to open investigations into state agencies’ and enterprises’ full compliance with Ukraine’s tax laws; and to propose sanctions for officials who have improperly failed to prevent corruption and organized crime at enterprises. The Decree took effect on 1 June 2003.
Investment Regime
3) Resolution of the Cabinet of Ministers of Ukraine No. 704 of 15 May 2003 "On Amending the Model Agreement (Contract) for the Implementation of an Investment Project in a Priority Development Territory, in a Special (Free) Economic Zone". A new wording of the model agreement for the implementation of an investment project is attached to this Resolution. However, agreements executed prior to the entry into force of this Resolution do not need to be re-signed or amended to accord with the new model agreement. The Resolution took effect on 15 May 2003.
4) Decree of the President of Ukraine No. 434/2003 of 26 May 2003 "On Certain Measures Concerning the Optimization of Management in the System of Central Bodies of Executive Power". The Decree eliminated the positions of “State Secretaries”, “First Deputy State Secretaries” and “Deputy State Secretaries”, and restored the previous titles for the latter two positions: “First Deputy Ministers” and “Deputy Ministers”. The State Secretaries of the various ministries, their First Deputies and Deputies appointed before the entry into force of this Decree, will remain in their positions until the respective First Deputy Ministers and Deputy Ministers are appointed, and the number of such persons will be determined by the President. The President will appoint and dismiss such officials based upon the recommendations of the Prime Minister. The Prime Minister has been instructed to submit, within two months, proposals concerning persons to be appointed First Deputy Ministers and Deputy Ministers. The Decree took effect on 8 June 2003.
5) Ordinance of the Cabinet of Ministers of Ukraine No. 258-r of 5 May 2003 "On Defining the Authorized Bodies Responsible for the Implementation of the Agreement for Cooperation in Terminating Intellectual Property Infringements". The following authorized bodies are responsible for the implementation of said Agreement, signed in Moscow on 6 March 1998 by the Member Countries of the Commonwealth of Independent States and ratified in Ukraine pursuant to the Law of Ukraine of 21 September 2000: the Ministry of Science and Education, the Ministry of Foreign Affairs, the Ministry of Internal Affairs, the Ministry of Justice, the Ministry of the Economy and European Integration, the Ministry of Culture and the Arts, the Security Service, the State Customs Committee, the State Tax Administration, the Antimonopoly Committee and the State Committee for Technical Regulation and Consumer Policy. The Ordinance took effect on 5 May 2003.
6) Resolution of the Cabinet of Ministers of Ukraine No. 689 of 15 May 2003 "On the Measures Aimed at the Creation of a Single System of State Registration of Land Plots, Real Estate and Rights thereto within the State Land Cadastre". A State Register of Rights to Land and Real Estate is being created on the basis of the State Register of Lands and the State Register of Titles to Real Estate. The registration of land plots, real estate and rights thereto within the State Land Cadastre is to be carried out by making entries in the State Register of Rights to Land and Real Estate. The State Committee for Land Resources will keep the State Register of Rights to Land and Real Estate. The Resolution took effect on 15 May 2003.
7) Letter of the Department for Currency Control and Licensing of the National Bank of Ukraine (hereinafter - NBU) No. 28-111/2563-3707 of 23 May 2003 "On Documents in Foreign Languages". This NBU letter clarifies the application of NBU Order No. 58 of 12 February 2003 "On Remitting National and Foreign Currency as Payment for Non-Residents' Works and Services" to Russian language documents. (For more information on this Order, please see the February and March issues of this Chronicle). NBU Order No. 58 stipulates that certain documents must be translated into Ukrainian and notarized. Based on the provisions of the Law of Ukraine "On Languages in the Ukrainian SSR", the NBU’s letter clarifies that Russian language documents do not need to be translated into Ukrainian and notarized.
8) Decision of the State Committee for Securities and the Stock Market No. 181 of 6 May 2003 "On Approving the Procedure for Forming, Maintaining and Using Information from the Register of Stock Exchanges and Trade-Information Systems". The Register records and organizes information about stock exchanges and trade-information systems. The Register is made and maintained by the State Committee for Securities and the Stock Market. Government agencies, legal entities and natural persons all have access to and may use the information kept by the Register.
Taxes
9) The Law "On the Tax Levied on the Incomes of Natural Persons". On 22 May 2003, the Rada, Ukraine’s parliament, adopted this Law in third reading. The principal novelty of the adopted Law is its creation of a fixed income tax rate. After 1 January 2004, this rate, in most cases, will be 13%. After 1 January 2007, a 15% rate will be effective. Many articles of the new Law will be implemented step-by-step over the period from 2005 - 2007. If signed by the President, the Law will take effect on 1 January 2004. The Law should be submitted to the President for signing shortly.
10) Decree of the President of Ukraine No. 388/2003 of 3 May 2003 "On the Regulations for the National Council on the Stable Development of Ukraine, and its Members". The Regulations for a new advisory-consultative body that will operate under the auspices of the President of Ukraine – the National Council for the Steady Development of Ukraine – as well as the persons who will comprise this Council, have been approved. The powers of the National Council include, inter alia, providing expert evaluations of drafts of laws and other regulations concerning the organized use of natural resources, state policy in the sphere of material production, as well as analyses of drafts of national and state scientific and technical programs. The Decree took effect on 3 June 2003.
11) Resolution of the Cabinet of Ministers of Ukraine No. 695 of 15 May 2003 "On Determining the Criteria for Treating Enterprises (Organizations) as Being of Strategic Importance for the Economy and State Security". Enterprises that meet one or several of the 10 criteria stipulated by this Resolution are classified as being of strategic importance for the economy and State security. One criterion is the fact of being a major taxpayer, i.e., an entity with an annual gross income exceeding 100 million Hryvnias. The Resolution took effect on 15 May 2003.
12) Letter of the State Committee of Ukraine for Regulatory Policy and Entrepreneurship (hereinafter - State Committee for Entrepreneurship) No. 3-221/2850 of 12 May 2003 "On Considering a Letter Concerning the Notarization of Natural Persons' Signatures in Foundation Agreements". Based on the State Committee for Entrepreneurship’s letter, the State Tax Administration of Ukraine (hereinafter - STA) has revoked its letters No. 6699/5/17-0516 of 23 August 2002 and No. 10808/5/17-0516 of 26 December 2002, which prescribed that the State fee for notarizing foundation agreements must be set at 1% of the value of the agreement (but in any case, no less than one minimum tax-free income). According to the State Committee for Entrepreneurship’s letter, this fee must be levied at the rate of 0.02 of the minimum tax-free income.