Law digest

Ministry extends list of cases when fee for excess aircraft parking not paid

The Ministry of Infrastructure has extended the list of cases when the airport fee for above-limit parking is not charged.
Relevant changes are established by Order No. 267 of 12 June 2018, which will come into force from the date of its official publication.

It established that the fee for above-limit parking is not charged:

— if a flight delay occurred due to the fault of the airport or airfield operator;

— if the aircraft is located on the territory of the airport on the basis of an agreement on provision of services for use of apron parking places during a certain period, concluded between the airline company and the airport or airfield operator.

The fee for above-limit parking is currently not charged if the flight delay occurred due to the fault of airport employees.

 

Control over international carriers

According to the State Service of Ukraine for Transport Safety, following the stepping up of controls over the activities of economic entities regarding compliance with requirements for conduct of licensed types of economic activities, until
27 July 2018, the execution and issuing of permits to travel across the territory of foreign countries when performing passenger and cargo transportation via international traffic by road will only be available to licensees who possess valid licenses to perform economic activities under permitted types of works regarding international transportation of passengers and/or goods and exclusively to vehicles included in the information system of the State Service of Ukraine for Transport Safety as means of carrying out economic activities.

The Ministry of Infrastructure draws attention to the need for advance updating of information on the vehicles owned by the licensee in the information system of the State Service of Ukraine for Transport Safety.

 

Law on Currency adopted

On 21 June 2018 the Ukrainian Parliament adopted the Law of Ukraine On Currency and Currency Transactions (Law On Currency), which will be put into effect seven months after its entry into force.

Instead, the Law On Currency will provide for general freedom to carry out currency transactions. Among other things, pursuant to the Law:

— residents of Ukraine (both individuals and legal entities) can open accounts in foreign banks and carry out transactions using these accounts, purchase foreign currency abroad, and also carry out cross-border foreign currency transfers;

— non-residents can open accounts in Ukrainian banks and use these accounts for both cross-border currency transactions and foreign exchange transactions within Ukraine;

— cross-border foreign currency transfers shall be made through banks, non-bank financial institutions or postal operators granted appropriate National Bank of Ukraine licenses in accordance with the procedure established by the NBU;

— for certain types of transactions, it is expressly permitted to conduct settlements in foreign currency in the territory of Ukraine/

General freedom to carry out foreign exchange transactions, as established in the Law On Currency, may be limited:

— by temporary protective measures introduced by the NBU,

— the laws of Ukraine in the area of ensuring national security or anti-money laundering and prevention of money laundering,

— international treaties, the consent for whose binding power is provided by the Verkhovna Rada.

Protective measures may include, inter alia:

— mandatory sale of foreign currency receipts

— establishment of deadlines for payments under transactions on export and import of goods

— establishment of specific characteristics of conduct of transactions related to capital movements

— introduction of special permits or limits to carry out specific currency transactions, etc.

 

Procedure for establishing joint-stock companies during privatization of state enterprises

Resolution of the Cabinet of Ministers of Ukraine No. 552 of 11 July 2018 determines the procedure for establishing joint-stock companies and transforming state enterprises into joint-stock companies during the privatization process.

State enterprises of strategic importance for the state economy and security will be transformed by agreement with the Cabinet of Ministers.

In case of establishing joint-stock companies and transforming state enterprises into joint-stock companies, only ordinary registered shares can be issued.

Transformation of state enterprises into joint-stock companies provides for the following stages:

— adoption of the decision on transformation and on formation of a commission by the state body responsible for privatization;

— carrying out appraisal of the company’s integral property complex;

— preparation of the property appraisal act, act of property transfer to the authorized capital of the joint-stock company by the transformation commission;

— approval of the property’s appraisal act by the state body responsible for privatization;

— adoption of decisions on approval of the joint-stock company charter, act of property transfer to the authorized capital of the joint-stock company, and on issuance of shares by the state body responsible for privatization;

— state registration of the enterprise termination and state registration of the established joint-stock company;

— registration of issuance of shares;

— approval of the share placement plan.

Arrangement of the state enterprise transformation is carried out by the commission, which includes at least two representatives of the state body responsible for privatization, one representative of the management entity of the state property object and head of the state enterprise.
In the event of a strategic state enterprise’s transformation, one representative of the Ministry of Economic Development is included in the commission, and in the event that the state enterprise in question has a monopoly (dominant) position on the commodity market, one representative of the Antimonopoly Committee is also included.

The commission may also involve experts, auditors, consultants and other specialists in a consultative capacity for its work.

Information on the joint-stock company is entered in the Unified Registry of the State Property Objects. From the moment of state registration, joint-stock company becomes the successor company regarding property, rights and obligations.

Before the general meeting of shareholders is convened, the state body responsible for privatization assigns the head of the enterprise to perform the duties of the chairman of the joint-stock company’s executive body.

 

Ukraine signed MLI Convention

On 23 July Acting Minister of Finance of Ukraine, Oksana Markarova, signed the convention on implementation of measures related to taxation agreements to counter base erosion and profit shifting (Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Multilateral Instrument or MLI) in London.

Due to gaps and inconsistencies in national and international tax legislation, international companies reduce tax obligations or fail to fulfill their obligations to pay tax on income. To avoid this, on 1 January 2017 Ukraine joined the Enhanced Cooperation Program within the framework of the Organization for Economic Co-operation and Development (OECD) initiative.

OECD member countries have developed the Action Plan to counter base erosion and profits shifting (BEPS Action Plan).

BEPS Action Plan includes 15 steps covering various areas of counteraction to aggressive tax planning. The following four steps are mandatory for their implementation by Ukraine (minimum standard of BEPS Action Plan):

— Action 5: Countering harmful tax practices more effectively, taking into account transparency and substance;

— Action 6 Preventing the granting of treaty benefits in inappropriate circumstances;

— Action 13: Transfer Pricing Documentation and Country-by-Country Reporting;

— Action 14: Making dispute resolution mechanisms more effective.

Review of conventions by each country individually, further signing of protocols and their ratification in Parliament is a very complex and lengthy process that can last for years. It was with the aim of enabling more rapid revision of international conventions that the 15th step of BEPS-MLI Action Plan was developed.

It is now the task of the Ukrainian Parliament to gives its consent to ratification of the MLI Convention.

 

Law on Assistance in Attracting Foreign Investments signed

The Law On Amendments to Certain Legislative Acts of Ukraine Concerning Assistance in Attracting Foreign Investments, No. 2418-VIII was signed by the President Petro
Poroshenko on 20 July 2018.

The procedure for foreign investment in Ukraine is simplified by introducing a legal regime for recording title to securities of clients of global custodians or other financial intermediaries.

Ukrainian depositary institutions are given the opportunity to open nominal holder securities accounts for foreign depositary institutions.

Thus, the Law On the Depository System of Ukraine introduced the concept of a “nominal holder” — a foreign credit organization incorporated in the European Union Member State, or a member of the Financial Action Task Force on Money Laundering (FATF) or of the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), which complies with requirements set by the National Securities and Stock Market Commission, and, in accordance with the legislation of the state where the financial institution is incorporated, has the right to provide its clients with services for securities accounting and registration of transfer of title to securities, including in other states on the basis of relevant agreements with foreign financial institutions.

It is established that a nominal holder securities account is to be opened by a depositary institution for a foreign financial institution on the basis of an agreement on provision of services for servicing a nominal holder securities account.

The depositary institution keeps records of securities, the rights to securities owned by clients of the nominal holder, and also those owned by clients of the nominal holder's client. Securities, rights to which are recorded in the nominal holder account, cannot be levied under liabilities of the nominal holder.

A foreign financial institution may open several securities accounts of a nominal holder for custodian accounting of its clients' securities.

The nominal holder shall disclose information about owners and securities owned by them, transactions with them in cases prescribed by the law.