Russian-Ukrainian
Legal Group, P.A.
Kiev, Ukraine; Washington, D.C., USA
Chronicle
of Recent Developments in Ukrainian Legislation
|
NOVEMBER - DECEMBER 2006
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Accession to the World Trade Organization
Consumer Protection
Corporate Registration
Customs
Intellectual Property
Permits System
Use of Subsoil, Oil and Gas
Taxes
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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
1) List of bills intended to harmonize national
Ukrainian legislation with standards and principles of the World Trade
Organization (“WTO”). All
laws required for Ukraine to accede to the WTO have been adopted. As a
reminder, some of these laws were adopted as early as mid-2005 (see the August
2005 edition of this Chronicle). In November 2006, the following laws were
adopted by Ukraine's Parliament and signed by the President:
- Law of Ukraine No. 316-V "On Amending
Article 8 of the Law of Ukraine ‘On Protecting Rights
to Indicate the Origin of Goods’"
dated 2 November 2006. Please see item 7 of this Chronicle. The Law
took effect on 24 November 2006;
- Law of Ukraine No. 374-V
"On Amending Certain Laws of Ukraine Concerning Fees for Licenses and
Excise Duties on the Production of Alcohol, Alcoholic Beverages and
Tobacco Products" dated 17 November 2006. Effective 2007,
the fees for said licenses have been decreased and the rates of the excise
duties have been increased. The Law took effect on 1 January 2007;
- Law of Ukraine No. 357-V "On Amending the Law of Ukraine ‘On Insurance’" dated 16 November 2006. The Law regulates specific aspects of
non-resident insurers’ activity in Ukraine. In particular, it
stipulates that non-resident insurers are allowed to insure large risks (sea and air carriage, space rocket launches,
etc.) in the territory of Ukraine in cases stipulated by law, after Ukraine accedes to the WTO. The Law will take effect after Ukraine accedes to the WTO;
- Law of Ukraine No. 356-V "On Amending the Law of Ukraine ‘On the Export Duties on Live Cattle and
Rawhide’" dated 16 November 2006. The revised Law establishes the rates of the
export duties on live cattle and rawhide. Effective 1 January of the year following Ukraine’s accession to the WTO, such rates will decrease
annually until they reach a certain amount. The Law will take effect after
Ukraine accedes to the WTO;
- Law of Ukraine No. 362-V "On Amending Article 9 of the Law
of Ukraine ‘On Pharmaceuticals’" dated 16 November 2006. The Law stipulates that for five years after
registration of a pharmaceutical in Ukraine, the registration data used in
filing the application for State registration cannot be used to file an
application for another pharmaceutical, except for in cases when the right
to refer to or use such data is obtained in the procedure prescribed by
law. It is stipulated that state registration of pharmaceuticals may be
rejected if, as a result of such registration, the effective proprietary
rights to intellectual property protected by the patent are violated,
including in the process of production, use, and sale of pharmaceuticals.
The Law took effect on 12 December 2006;
- Law of Ukraine No. 360-V "On Amending the Law of Ukraine ‘On Foreign Economic Activity’" dated 16 November 2006. The
Law defines the legal regimes for goods imported from WTO member states
(national treatment and most favored nation status) and specifies the
procedures for automatic and non-automatic licensing of foreign economic
operations. The list of grounds for introducing the licensing regime
includes measures to protect domestic manufacturers in the event of acute
fluctuations of the volumes of export-import operations, as well as the
liability of subjects of foreign economic activity for violating the
licensing regime. Additionally, the Law prohibits the export from Ukraine (import into Ukraine) of exhaustible natural resources and the export
of goods in the context of executing the UN Security Council’s
resolutions. The Law alters the functions of agencies responsible for
state control over foreign economic activity. The Law took effect on 9 December 2006;
- Law of Ukraine No. 358-V "On Amending the
Law of Ukraine ‘On Banks and Banking’" dated 16 November 2006. The Law grants foreign banks the right to open
branches in the territory of Ukraine. It contains an exhaustive list of the
conditions under which a foreign bank shall be entitled to open its branch
in Ukraine, and describes the procedure for accrediting
foreign banks’ branches and representative offices in the territory of Ukraine and the rules for such branches performing
banking activity. Certain
provisions of this Law took effect on 8 December 2006; the remainder will take effect after Ukraine accedes to the WTO;
- Law of Ukraine No. 401-V "On Amending the Law of Ukraine ‘On State Support of the Agricultural Sector of Ukraine’" dated 30 November 2006. The Law repeals provisions of the effective
Law “On State Support of the Agricultural Sector of Ukraine” concerning
the setting of minimum / maximum import prices and the establishing of
non-tariff restrictions (quotas) with regard to importing or exporting agricultural
goods included on the list of goods subject to state price control. Moreover, the Law
cancels the rules for performing export-import operations through the
regulatory mechanism for defining the customs value of goods subject to
their established maximum or minimum purchase prices. The Law took effect
on 16 December 2006;
- Law of Ukraine No. 402-V "On Amending the Law of Ukraine ‘On Milk and Dairy Products’" dated 30 November 2006. The
Law cancels export subsidies granted to producers of dairy products, the
quota on output and sale of milk to processing enterprises, the
requirements for supplying dairy products to the national material
reserve, the minimum purchase prices of milk and dairy raw materials and
the limits on retail mark-ups for dairy products. Additionally, the Law
specifies the mechanisms for extending state support to the producers of
milk and dairy raw materials. The
Law will take effect after Ukraine accedes to the WTO;
- Law of Ukraine No. 335-V "On Amending Article 7 of the Law
of Ukraine ‘On Pesticides and Agrochemicals" dated 14 November 2006. The Law states that,
for the first 10 years after a company registers a pesticide or
agrochemical in Ukraine, no one is permitted
to use the information contained in the documents, that describe the rules
for safe application of said substances, absent the permission of the
company that registered said substances. The Law took effect on 14 December 2006;
- Law of Ukraine No. 403-V "On Amending the Law of Ukraine ‘On Controlling the
Production and Sale of Sugar by the State’" dated 30 November 2006. The
Law simplifies the control mechanism in the sphere of production and sale
of sugar. The "Â" quota (on delivering sugar under international
agreements) and "Ñ" quota (on owners selling sugar exclusively
abroad) are cancelled. The Law also repeals the requirement for the
mandatory export of sugar produced from imported raw materials. The Law will take effect after Ukraine accedes to the WTO;
- Law of Ukraine No. 404-V “On Establishing a Tariff
Quota on Importing Raw Cane Sugar into Ukraine" dated 30 November 2006. Effective
1 January of the year following the year Ukraine accedes to the WTO, regulations will go into
effect establishing an annual tariff quota on raw cane sugar imported into
Ukraine. Specifically, the first 260,000 tons imported
will enjoy an import duty of 2% of their customs value. The Law will take effect on 1 January
of the year following the year Ukraine accedes to the WTO;
- Law of Ukraine No. 441-V
“On Establishing Export Duty Rates for Ferrous
Scrap, Non-Ferrous Scrap and Semi-Finished Products Produced Using Same”
dated 13 December 2006. The Law states the export duty rates for
alloyed ferrous scrap, non-ferrous scrap and semi-finished products using
same and stipulates that
after Ukraine accedes to the WTO such rates will decrease
every year until they reach a certain amount. The Law will take effect on 1 January of the year following the
year Ukraine accedes to the WTO;
- Law of Ukraine No. 400-V "On Amending the Law of Ukraine ‘On the Export Duty on
Iron-and-Steel Waste and Scrap’
dated 30 November 2006. The
Law restates Law of Ukraine "On the Export
Duty on Iron-and-Steel Waste and Scrap" and will take effect after Ukraine accedes to the WTO.
The Law stipulates that the export duty rates on iron-and-steel waste and
scrap will decrease every year following Ukraine’s accession to the
WTO. After the seventh year following Ukraine’s accession to the
WTO, the export duty rates will hold steady at the same rates reached in
the seventh year. The Law will take effect after Ukraine accedes to the WTO.
2) State Committee of Ukraine for Technical Control and
Consumer Policy Order No. 331 "On Approving the Procedure for
Conducing Inspections of Subjects of Economic Activity in the Sphere of Trade
and Services, Including the Restaurant Business, the Quality of Goods,
Compliance with the Mandatory Requirements for Safety of Goods and Observance
of the Rules of Trade and Services Rendering" dated 25 October 2006. The
Procedure defines the mechanism for maintaining state control in the sphere of
consumer protection. Control will be
effected by means of performing inspections according to a special working plan
prepared by the agencies responsible for consumer protection. Unscheduled
inspections will be conducted by officials exclusively on the basis of
consumers' applications (complaints) concerning enterprises’ violations of the
law. The Order took effect on 2 December 2006.
3) Law of Ukraine No. 489-V "On the
State Budget of Ukraine for 2007"
dated 19 December 2006 ("Law on
the 2007 State Budget"). Effective 1 January 2007, Ukraine's minimum salary
has been set at 400 UAH. Therefore,
the legislated minimum amount of charter capital for limited liability
companies (no less than 100 minimum salaries) amounts to 40,000 UAH.
Moreover, effective 1 July 2007, the minimum salary will increase to 420 UAH,
and effective 1 December 2007, to 450 UAH. The
Law took effect on 1 January 2007.
4) Cabinet
of Ministers of Ukraine Resolution No. 1654
"On Approving the Procedure for Issuing À.Ò.À. Books (Carnets)" dated
29 November 2006. The Procedure has
been approved in connection with Ukraine’s accession in
April 2004 to the Convention on
Temporary Admission adopted on 26
June 1990 in Istanbul ("Convention").
As we previously informed in the April 2004 edition of this Chronicle, an
À.Ò.À. book (carnet) is a document used for the temporary importation of goods,
except for transport vehicles. The use of the book facilitates the procedure of
temporary importation. The Chamber of Commerce and Industry will issue these
books in the territory of Ukraine on the basis of
applications from Ukrainian-resident individuals and legal entities. Together
with the application, it is also necessary to file certain documents, the list
and requirements for the execution of which will be defined by the Chamber of
Commerce and Industry. The term of a book’s validity cannot exceed one year.
The Resolution took effect on 22 December 2006.
5) Cabinet
of Ministers of Ukraine Resolution No. 1766 "On Approving the Procedure
for Declaring the Customs Value of Goods Moved through the Customs Territory of
Ukraine and Submission of Data to Prove this Value” dated 20 December 2006. A
new Procedure defining the conditions of and mechanism for declaring the
customs value of goods moved through the customs territory of Ukraine and submission of a
declarant’s data proving this value has been approved. The 2003 Procedure, about which we informed in the August 2003
edition of the Chronicle, will terminate after the new Procedure takes effect.
The Resolution has not yet been published, but will take effect 30 days after
its official publication.
6) Law of Ukraine No. 311-V "On Amending the Law
of Ukraine ‘On Protecting Rights to Plant
Varieties’" dated 2 November
2006. The concepts expressed in the Law “On Protecting Rights to Plant
Varieties” has been amended. In
particular, such concepts as “patent” and “variety’s author” have been
reinterpreted; the concept of an “owner of proprietary intellectual property's
right to spread a variety” is defined, etc. The Law specifies the sphere of its
application and defines holders of intellectual property rights to a plant
variety. It also introduces essential amendments to the procedure for
acquiring, terminating and invalidating intellectual property rights to a plant
variety. The Law took effect on 29 November 2006.
7) Law of Ukraine No. 316-V "On Amending Article
8 of the Law of Ukraine ‘On Protecting Rights to Indicate
the Origin of Goods’" dated 2 November 2006. According to the amendments, legal
protection will not be granted for a qualified indication of goods’ origin
related to a geographical place in a foreign state, if such right is not
protected in this state. The Law took
effect on 24
November 2006.
8) Law of
Ukraine No. 359-V "On Amending
the Customs Code of Ukraine (Concerning Assistance in Protection of
Intellectual Property Rights During Goods’ Movement through the Customs Territory
of Ukraine)" dated 16 November 2006. The Law grants customs bodies the
right to suspend the customs clearance of goods on their own initiative in the
event of discovering the movement through the Ukrainian customs territory of
goods, for which an application for protecting intellectual property rights has
not been presented, if there are reasonable grounds to suspect the violation of
intellectual property rights. Herewith the Law introduces an innovation: a
person holding a proprietary right to an object of intellectual property
rights, in compliance with Ukrainian legislation, shall reimburse the customs
bodies or owners of temporary storage warehouses for the costs connected with
storage of goods, with respect to which a decision to suspend the customs
clearance was adopted, and for any damage caused by such suspension. The Law
also describes the sanctions that may be imposed on citizens who move goods
through the customs territory of Ukraine in violation of intellectual
property rights. Finally, the Law describes how assistance may be rendered in
protecting the rights of persons holding proprietary rights to an object of
intellectual property in compliance with Ukrainian law. The Law will take
effect on 10 February 2007.
9) State Committee of Ukraine for Regulatory Policy and Entrepreneurship Order No. 101 "On Approving the Form and Technical Description of a Reference
from the Register of Permit Documents" dated 9 November 2006. References from the register
of permit documents will be issued in accordance with the form approved by the
Order on the basis of any individual’s or legal entity’s request. The Order took effect on 1
January 2007.
10) Law on the 2007 State Budget. In addition to the
information provided in item 3, above, the Law suspends for 2007 a number of regulations contained in
normative documents (60 regulations in all), among which several relate to the
use of subsoil. For instance, as has happened in previous years, the Subsoil
Code of Ukraine's regulations concerning deduction of funds for
exploration performed at the expense of the state budget for the development of
mineral resources base has been suspended. The regulation stipulating that the
amount of the duty for the issuance of special permits to use certain subsoil
plots shall be defined by the Cabinet of Ministers of Ukraine on the basis of
costs entailed by the examination of applications, materials and grounds to use
subsoil, organizational and other expenses related to the issuance of special
permits has been suspended once again. The Law also suspends the regulations
contained in the Law of Ukraine “On the State Geological
Service of Ukraine”, in particular with respect to the conditions for granting
special permits to use subsoil. The issuance of estimated tax bills for gaseous hydrocarbons to be
imported into Ukraine has also been suspended.
The Law took effect on 1 January 2007.
11) Law of Ukraine
No. 398-V "On
Amending Certain Legal Acts of Ukraine Concerning Taxes" dated 30 November 2006. The Law defines the
basic norms of payment for using subsoil to extract minerals. Previously, such norms
had been defined in laws on the State Budget. Except for certain provisions,
the Law took effect on 1 January 2007.
12) Law on the 2007 State Budget. In addition to the
information provided in items 3 and 10 above, the Law states that in the event
of a taxpayer’s change of legal address, after the taxpayer's re-registration,
all taxes and duties shall continue to be paid at the place of previous
registration until the expiration of the then-current budget period. The
Law also increases the amount of duty for mandatory state pension insurance
from 31.8% up to 33.2%, which duty employers must pay directly to the budget.
The Law took effect on 1 January 2007.
13) Cabinet of Ministers of Ukraine Ordinance No. 565-r "On Measures Aimed at Reducing the Tax
Debt" dated 15 November 2006. The Cabinet of Ministers obliged state enterprises to reduce their
overdue debt to the State budget. The measures aimed at reducing the tax debt
stipulate, in particular, developing a bill on canceling the moratorium on the
compulsory sale of property of state enterprises and economic societies when
the State’s share in their charter capital constitutes at least 25%. The
Ordinance took effect on 15
November 2006.