Intellectual Property

International Organizations

International Treaties

Labor Law

Land

Oil and Gas

Real Estate

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.

Customs

1) Presidential Decree No. 1209/2003 "On Measures to Improve the Performance of the Customs Service of Ukraine" dated 24 October 2003. The Customs Service must decide how to handle electronic declarations of goods. It must also consider creating, within the Customs service, a specialized state enterprise dedicated to providing services related to declaring, guarding and shipping goods, consulting on customs clearance issues and organizing customs auctions.

Intellectual property

2) Ministry of Education and Science of Ukraine ("МES") Order No. 677 "On Approval of the Regulations on the Commission Coordinating Questions on Including a Symbol Containing the Official Name of the State of ‘Ukraine’ in a Trademark" dated 7 October 2003. The Commission is a permanent body of MES. The Commission considers the petitions of persons who wish to incorporate the Ukrainian state symbol into their trademarks. The Regulations require the Commission to decide on a petition within three months after accepting it for consideration. The Order entered into force on 25 October 2003.

International Organizations

3) Cabinet of Ministers of Ukraine (“CMU”) Resolution No. 1661 "On Measures Concerning the Accession of Ukraine to the Food and Agriculture Organization of the United Nations (FAO)" dated 24 October 2003. In order to accelerate Ukraine’s accession to the World Trade Organization, the CMU has decided that Ukraine will accede to the Food and Agriculture Organization of the United Nations (FAO) in 2003. The Decree has already entered into force.

International Treaties

4) CMU Resolution No. 1572 "On Approval of the Agreement between the Cabinet of Ministers of Ukraine and the Government of the Republic of Poland on Conditions of Trips by Citizens" dated 2 October 2003. The Resolution approves an Agreement signed on 30 July 2003 in Kiev, to the effect that Polish citizens can enter and stay in Ukraine without obtaining visas for 90 days within six months after first crossing the border into Ukraine. Ukrainian citizens can enter and stay in Poland only if they have valid travel documents and visas. Ukrainian citizens still need visas to enter Poland, but Polish consulates must issue visas to Ukrainian citizens without requiring payment of any fees and without presentation of any invitation letters, regardless of the purpose of the Ukrainian citizen’s trip.

5) Ministry of Foreign Affairs of Ukraine ("MFA") Letter No. 72/17-612/1-3370 "On the List of Countries with which Ukraine Has Signed Agreements on Avoiding Double Taxation and which Agreements have Entered into Force" dated 15 September 2003. The list includes the dates of signing and of entry into force of 46 different anti-double-taxation treaties that Ukraine has signed.

Labor Law

6) CMU Resolution No. 1732 "On Amending CMU Resolution No. 663 dated 23 April 1999" dated 5 November 2003. When Ukrainian employers send their employees on business trips, the employers must now advance funds for business trips both within Ukraine and abroad. Previously, this rule applied only to business trips abroad. The Resolution also states that, if employees who are on business trips within Ukraine for negotiations, conferences or symposia, are provided with free meals by the organizers of such events, the following percentage of the employee’s usual per diem allowance should be paid by the employer: 80% if the event provider provides one meal a day; 55% if two meals a day; and 35% if three meals a day.

Land

7) Law of Ukraine No. 1211-IV "On Amending the Law of Ukraine ‘On Land Lease’” dated 2 October 2003. Annual rental payments for land plots located on state or communal property cannot exceed 10% of the value of the land. A land lease agreement shall be terminated if the land is condemned by eminent domain, if a lessor and a lessee become the same person, if a lessee dies or is sentenced to imprisonment or if a lessee that is a legal entity is liquidated. The Law enters into force on 5 November 2003.

Oil and Gas

8) Ministry of Economy and European Integration Issues of Ukraine Order No. 263 "On the Procedure for Registration (Record Keeping) of Foreign Economic Contracts (Agreements) for Conducting Export Operations with Oil and Oil Products" dated 29 September 2003. The Order approves the Procedure for registration of foreign economic contracts for conducting export operations with oil and oil products. The Department of Non-Tariff Regulation has been assigned responsibility for registering foreign economic contracts and issuing the appropriate registration cards. The Order was issued pursuant to CMU Decree No. 1457, which was discussed in the September issue of this Chronicle.

9) CMU Resolution No. 1604 "On Amending CMU Decree No. 256 dated 22 March 2001" dated 15 October 2003. The additional rental payments for petroleum, natural gas and gas condensates charged in connection with the entry into force of the Law of Ukraine "On Amending the Law of Ukraine ‘On the State Budget of Ukraine for 2003’" are to be included in the tax obligation of month in which this Resolution enters into force. The Resolution came into force on 29 October 2003.

Real Estate

10) CMU Resolution No. 1692 "On Approval of the Model Notification of Notarization of a Lease Agreement for Real Estate" dated 29 October 2003. State and private notaries must send a notification of notarization of a real estate lease agreement, on the day of such notarization, to the tax authority at the place of residence of the taxpayers (lessees). The Resolution will enter into force on 1 January 2004.

Taxes

11) Law of Ukraine No. 1218-IV "On Amending Article 11 of the Law of Ukraine ‘On Value Added Tax’" dated 2 October 2003. According to Article 11.5 of the Law of Ukraine "On Value Added Tax", when importing goods into Ukraine, taxpayers may issue a promissory note to the customs bodies for the amount of the VAT. The amendment states that this option is no longer available to importers of excisable goods and goods that fall within Groups 1 - 24 of the Ukrainian Classification of Goods of Foreign Economic Activity; nor is it available to importers that are enterprises with foreign investment, regardless of the form and time of making the investment. The Law will enter into force on 1 January 2004.

12) Law of Ukraine No. 12450-IV "On Amending Certain Laws of Ukraine on Issues of Taxation of Grain Products" dated 23 October 2003. The phrase "as well as goods imported by an enterprise with foreign investment regardless of form and time of making the investment" has been added to Article 11.5 of the Law of Ukraine "On Value Added Tax". Law No. 12450-IV entered into force on 11 November 2003 and shall remain valid until 1 July 2004.

13) State Tax Administration of Ukraine ("STA") Order No. 466 "On Approval of Changes in Tax Reporting on Value-Added Tax" dated 30 September 2003. The form of the Value Added Tax Declaration approved by STA Order No. 166 dated 30 May 1997, as well as the short form for Value Added Tax Declaration approved by the STA Order No. 499 dated 23 October 1998, have both been amended.

Specific Sectors of the Economy/Miscellaneous

14) Law of Ukraine No. 1160-IV "On Principles of State Regulatory Policy in the Sphere of Economic Activities" dated 11 September 2003. The state regulatory policy is defined as the direction of state policy aimed at improving state regulation of legal relationships. Regulatory agencies must approve plans of activity for drafting regulatory acts for the next year not later than 15 December of the current year. The drafter of each regulatory act must prepare an analysis of the expected impact of the regulation. The Law requires that the effectiveness of regulatory acts be monitored. The Law does not apply to Resolutions of the Supreme Rada, certain acts of the National Bank of Ukraine, international agreements of Ukraine and certain other normative acts. The majority of provisions of this Law will enter into force on 15 January 2004.

15) CMU Resolution No. 1625 "On Amending the Procedure for Coordinating the Execution of Field Checks of Financial and Economic Activity of Subjects of Entrepreneurial Activity by Controlling Agencies" dated 15 October 2003. All controlling bodies enumerated in Presidential Decree No. 817 of 23 July 1998 must begin making field checks of the financial and economic activity of subjects of economic activities simultaneously, on the day established by the state tax service. The State Taxation Service must inform a subject of entrepreneurial activity and all controlling agencies about the established date for field checks 10 days prior to the beginning of the check.

16) STA Letter No. 14160/7/15-0117 "On the List of Payments for which Fines for Delayed Payment Are Not Applicable" dated 10 September 2003. If Ukrainian law does not require a subject of entrepreneurial activity, which is a legal entity, to declare (calculate) its tax obligation to a tax authority, the tax obligation is not agreed and thus financial sanctions for delayed payment of an agreed tax obligation do not apply and cannot be levied automatically. Among the obligations affected are the following: payments for trade patents for certain types of entrepreneurial activity, payments received for services related to the official registration of documents for travel abroad, lease payments for complete property complexes and other state property, amounts collected from guilty parties for harm caused to the state, an enterprise, establishment, or an organization, port (administrative) charges and payments received from the State Fund of Precious Metals and Jewels.