News (#04 April 2019)

Law digest

Draft Law On Authorized Economic Operator at Customs approved

On 28 February the Ukrainian Parliament adopted Draft Law No. 7473 On Amendments to the Customs Code in the first reading, which, among other things, establishes the introduction of an authorized economic operator at customs similar to the one existing in the EU.

The explanatory note states that its adoption will result in simplification of customs procedures when companies with a high degree of credibility passes through a customs check. This is expected to increase the competitiveness of Ukrainian companies on foreign and domestic markets.

Parliament ratified MLI Convention on Taxation

The Ukrainian Parliament has approved presidential Draft Law No. 0216 On Ratification of the Multilateral Convention to Implement Tax Treaties Related Measures to Prevent Base Erosion and Profit Shifting.

Thus, the necessity to conclude and ratify the Multilateral Convention is due to the fact that on 1 January 2017, Ukraine joined the enhanced cooperation program within the framework of the OECD and undertook to implement the minimum standard of the Action Plan to combat base erosion and profit shifting (BEPS). Ratification of the Multilateral Convention will ensure UkraineТs fulfillment of steps 6 and 14 of the minimum standard of the BEPS Action Plan, which are mandatory, and the introduction of necessary changes to all existing international treaties of Ukraine on avoidance of double taxation at the same time.

NBU decided not to cut discount rate

The Board of the National Bank of Ukraine adopted a decision to keep the discount rate at 18% per annum. At the same time, the regulator notes that the NBU Board does see ways for cutting the rate in future. As the National Bank explains, future discount rate dynamics will be based on the updated macroeconomic forecast compiled by the NBU, which is planned for publication in April.

Pursuant to the January forecast, inflation will fall to 6.3% in 2019, and will get back to its target range of 5% +/Ч 1 p.p. at the beginning of 2020.

However, the NBU noted that the risks of an inflation decline, which the regulator highlighted in its January macroeconomic forecast, still existed.

Parliament approved anti-offshore agreement with Qatar

The Ukrainian Parliament has ratified the Agreement between the Governments of Ukraine and the State of Qatar on avoidance of double taxation and prevention of tax evasion with respect to taxes on income, and protocol thereto.

The provisions of the adopted documents comply with the Model Tax Convention on Income and on Capital of the Organization for Economic Cooperation and Development (OECD), which established:

Ч taxation of dividends at the total rate of 10%; 5% Ч for dividends received by a company owning at least 10% in the equity capital of a company paying such dividends;

Ч taxation of interest and royalties with a total rate of 10%; 5% if otherwise;

Ч the Article on information exchange establishing a significant increase in the possibilities of the contracting states to exchange tax information without reservations related to the requirements of national taxation interest or banking secrecy.

EU adopted new copyright law

The European Parliament upheld controversial copyright laws that could change the nature of the Internet in view of the critics. New rules include technology companiesТ liabilities for posting materials without proper copyright authorization.

The Copyright Directive was upheld by 348 members of the European Parliament, as 278 voted against it.

The copyright laws were last amended in 2001.

Now, EU Member States should decide on the implementation of changes. When they decide, they will have two years to implement the new law following its official publication.

Two clauses causing the most controversy are known as Article 11 and Article 13.

Article 11 states that search engines and news aggregate platforms shall pay for the use of links to news sites.

Article 13 imposes liability for posting materials without a copyright license on large technology companies.

It means such companies will have to apply filters to their content prior to its download.

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