News (#03 March 2019)

Draft

There are proposals to increase the maximum income limit received by private entrepreneurs of groups 1-3

Draft Law No. 9533 of 4 February 2019 On Amendments to Clause 291.4 Article 291 of the Tax Code of Ukraine (on development of small and medium business) was registered with the Verkhovna Rada of Ukraine.

Draft Law No. 9533 provides for a rise in the maximum limit of income received by private entrepreneurs that are payers of the single tax:

1st group Ч from UAH 300,000 to UAH 1,500,000;

2nd group Ч from UAH 1,500,000 to UAH 10,000,000;

3rd group Ч from UAH 5,000,000 to UAH 40,000,000;

It should be noted that the maximum limit of income for private entrepreneurs that are single tax payers under the first two groups was last raised in 2014, and for private entrepreneurs that are single tax payers under the 3rd group this was back in 2016.

The Draft will promote the creation of new jobs, development of small and medium business, which in its turn will provide the opportunity to attract wage earners, to increase the competitiveness and quality of goods and services, and will raise the investment attractiveness of Ukraine.

Ukraine likely to withdraw from treaty establishing economic space with Belarus, Russia

The Draft Law On Withdrawal of Ukraine from the Treaty Establishing the Single Economic Space Entered into with Russia and Belarus has been registered with Parliament.

The main objective of this Draft is to renew the complete political and economic sovereignty of Ukraine. Withdrawal of Ukraine from the Treaty establishing the Single Economic Space (hereinafter Ч SES Treaty) is substantiated by:

Ч political background, since one of the members of the SES Treaty, Russia, is the country acknowledged as the invader (aggressor) against Ukraine, and also it includes other countries that are in economic and military alliances with this country-invader (aggressor);

Ч economic background, since the provisions of the SES Treaty are inconsistent with the economic interests of citizens and companies of Ukraine and its international commitments made within the framework of the World Trade Organization (WTO) and the Association Agreement signed between Ukraine and the European Union and its member states;

Ч legal circumstances, since the provisions of the SES Treaty restrict the constitutional competence of the Verkhovna Rada of Ukraine, the President of Ukraine and the Cabinet of Ministers of Ukraine.

Government supported Draft Law On Common Transit Regime

The Draft Law, developed by the Ministry of Finance, is intended to bring Ukrainian customs legislation closer to EU customs legislation via implementation of the provisions of the Convention on the common transit procedure and the Convention on Trade in Goods Facilitation.

The Draft Law stipulates adoption of a separate Law On the Common Transit Regime, which establishes:

Ч the basic principles of organization and implementation of the common transit regime for goods passing through the customs territory of Ukraine;

Ч the procedure and terms for transit of such goods through the customs territory of Ukraine within the common transit regime, the execution of customs formalities, the application of a mechanism to ensure customs debt payment, the use of special transit facilitations.

It is believed that adoption of the law will reduce the number of customs formalities required to exercise control over transit traffic. The Customs Service of Ukraine will receive preliminary information on cargo from the customs offices of other countries prior to it crossing the Ukrainian border, which will enable the Customs Service to analyze risk exposure of transactions prior to arrival of goods to Ukraine.

Law aiming to create conditions for foreign trade development by Ukrainian companies

On 13 February the Draft Law On Amendments to Certain Legislative Acts of Ukraine was registered with the intention of creating the conditions for Ukrainian companies to develop foreign trade and increase exports.

The explanatory note provides that due to quite a few administrative barriers in foreign economic activity and the high level of administrative costs, the export potential of national commodity manufacturers is being poorly fulfilled. This is especially true for companies representing the SME sector, which is the most dynamic and innovative by its nature, but which is also the most vulnerable to unfavorable regulatory environment.

In the opinion of the authors of the Draft Law, itТs intended to achieve the following positive effects and results:

Ч to eliminate outdated and economically unreasonable administrative barriers in the field of foreign economic activity, and, as a result, to reduce the administrative expenses of economic entities spent on conducting export and import transactions conduct and execution of related administrative procedures;

Ч to bring quotas and licensing procedures in the field of foreign economic activity into line with the provisions of agreements entered into within the framework of the WTO (in particular, GATT, 1994, the Agreement On Import Licensing Procedures, the Agreement On Trade Facilitation, the Agreement On Safeguards), as well as with obligations undertaken by Ukraine under the Association Agreement signed with the EU in relation to trade development and improving trade legislation;

Ч to facilitate and increase the transparency of quotas and licensing procedures in the field of foreign economic activity and to eliminate the grounds for corruption and violations of rights and legitimate interests of business entities;

Ч to improve the conditions for promoting the export-oriented activity of Ukrainian business entities (especially within the SME sector) and for access to foreign markets by domestic commodity producers.

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