News (#01-02 January-February 2020)

Law digest

Cabinet of Ministers approved list of enterprises that cannot be privatized

The Cabinet of Ministers has approved the list of strategic enterprises not subject to privatization.

The list of enterprises, whose authorized capital includes the share of corporate rights owned by the state of no less than 50% +1 shares, and which are not subject to privatization, includes: Naftogaz Ukraine, Magistralni Provody of Ukraine, Ukrtransgaz, Ukrnafta, Ukrgazvydobuvannya, Ukrtransnafta, Chornomornaftogaz, JSC Artem, Feodosia shipbuilding company More, UkrPoshta. The list of enterprises, whose authorized capital includes 100% share of corporate rights owned by the state, state unitary and state-owned enterprises, which are not subject to privatization, in particular, include: Ukrnerego, Ukrhydroenergo, Energoatom, Antonov, Kharkiv Morozov Machine-Building Design Bureau.

Parliament adopted law on regulating amber extraction

The Ukrainian Parliamentadopted in full Draft Law No. 2240 in its second reading, which envisages the introduction of unified permits for geological exploration of amber, followed by amber extraction for 5 years on land plots of up to 10 hectares in size.

The Draft, in particular, regulates land issues related to access to amber deposits, it also introduces responsibility for non-compliance with land rehabilitation requirements and the obligation to indemnify any damages caused.

According to the document, the initial auction price of a special permit for amber extraction will be two hundred tax-free minimum incomes per hectare of land (UAH 34,000).

Amendments to the Criminal Code of Ukraine are also envisaged, establishing fines and criminal liability for the illegal extraction, sale, purchase, storage, transfer, transit, transportation, processing of mineral resources and for avoiding carrying out land rehabilitation. In particular, for extraction of mineral resources using non-certified equipment, the following fine is set: for citizens from 100 to 200 tax-free minimum incomes of an individual, and for officials from 200 to 300 tax-free minimum incomes. For repeat violation, the fine for both citizens and officials will range from 300 to 600 tax-free minimum incomes of an individual.

The Verkhovna Rada also adopted in its first reading government Draft No. 2241, including amendments to the Tax Code related to reducing the rent rate for amber extraction from 25% to 10%.

Verkhovna Rada adopted law on excise taxes on fuel and alcohol

In the second reading, the Verkhovna Rada approved Draft Law No. 2317 on improving the administration of excise tax. The law improves the system of electronic administration of fuel and ethanol sales and simplifies licensing conditions for economic entities. The law, in particular:

- revised the terms and procedure for applying penalties for violation of accounting, production and sale rules for fuel or ethanol in excise warehouses;

- set out cases where consolidated excise tax invoices are drawn, also changed the term for their registration in up to 15 calendar days;

- provided retailers with an opportunity to independently choose the way to draw excise tax invoices in the event of sale through stations (daily or consolidated ones), canceled the requirement to equip tanks used for production of fuel when purifying coke oven gas with fluid level gages and meters.

For industrial consumers, the term for form 2 submission was extended by up to 15 calendar days; the number and types of excise tax invoice features were clarified to facilitate accounting and systematization of fuel volumes used. Moreover, the law envisages the possibility of executing bills of exchange for aviation fuels with a maturity of up to 270 days.

Last law required for industrial visa-free regime with EU now adopted

The Verkhovna Rada has adopted Law No. 2172 OnAmendmentstoCertain Legislative Actsof Ukraine RegardingReducing PressureuponBusinessesbyMarket Surveillance Authorities.

Adoption of the relevant law is one of the last conditions to be fulfilled by Ukraine to start negotiations with the EU related to signing of the first agreements on simplified export of industrial goods without additional certification from Ukraine to the EU.

The law establishes standards aimed at reducing corruption risks related to public officials activities during inspections, strengthening consumer protection and other public interest in the event of discovery on the market of non-food products that are hazardous, posing a risk and/or not meeting the set requirements.

The law also brings Ukraines market surveillance legislation into line with EU legislative requirements to fulfill Ukraines obligations in the field of European integration as set in the Association Agreement signed between Ukraine and the EU.

As is known, the Association Agreement between Ukraine and the EU establishes the prospect of concluding the Agreement on Conformity Assessment and Acceptance of Industrial Goods (ACAA or the so-called industrial visa-free regime).

At first the ACAA may cover one or more industries and then be gradually extended to all 27 industries identified in the Agreement. The ACAA can potentially cover up to one fifth of Ukrainian exports to the EU, primarily machine-building products, thereby facilitating trade and improving the image of Ukrainian products in global markets.

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