News (#9 September 2020)

Draft

Special taxation regime for IT industry

Draft Law No. 3979 On Measures to Stimulate the Development of the IT Industry in Ukraine has been registered in the Ukrainian Parliament. Among other things it proposes to introduce a special tax regime for IT companies. The document also defines the possibility of choosing a contract form of an employment contract when labor relations between IT companies and their employees are registered. At the same time, it is assumed that the right to apply these measures will be granted to companies that meet the requirements stipulated by legislation and are included in a special register, which will be maintained by the authorized bodythe central executive body that ensures the formation and implementation of state policy in the field of IT industry development.

The Draft defines the procedural issues of including IT companies in the register.

Parliament supported draft law on localization in the first reading

The Verkhovna Rada of Ukraine has adopted in the first reading Draft Law No. 3739, which provides preferences for domestic engineering, but which contradicts the Association Agreement with the EU.

The Draft sets out the obligation to have a local component in certain types of cars that are purchased at the expense of the state or local authorities.

The document contains a requirement for a minimum degree of localization at the level of 25-45% from 2021 and 40-60% from 2024. This does not apply to all purchases, but rather to a relatively narrow group of engineering products for the needs of energy, housing, and utilities and transport. But this Draft is not compatible with Ukraines international obligations. The Association Agreement has a separate Chapter dedicated to public procurement. One of the principles is non-discrimination. Separately, it is specified that the description of works, goods, and services must not contain a specific place of origin (except in cases where it is justified by the subject of the contract), the grounds and conditions of bidders in the same country as the customer.

Limiting the number of participants is permitted, but only on the basis of competitive principles and only on the basis of objective factorsexperience in the market, the scale of the participants activities, the availability of appropriate infrastructure, technical capacity, etc.

Parliament supported draft law on mediation

The Ukrainian Parliament has adopted Draft Law No. 3504 On Mediation, which provides for the following changes:

The mediation procedure will be applied in any conflicts (disputes) that arise, particularly in civil, family, labour, economic, administrative legal relations, as well as in criminal proceedings when concluding reconciliation agreements between a victim and suspect or accused;

Individuals and legal entities will be able to apply to a mediator for mediation both before applying to a court, arbitration court, or international commercial arbitration, as well as during court, arbitration, or arbitration proceedings, or when executing a court decision, arbitration court, or international commercial arbitration;

The mediation will be conducted by mutual consent of the parties to the mediation;

Any individual with a higher education who has completed basic training in mediation in Ukraine or abroad can acquire the status of a mediator.

Changes are also defined for courts:

During the preparatory session, the court will find out whether the parties wish to conduct an out-of-court settlement of the dispute through mediation;

It provides for the right of the court to adjourn the preparatory session if the parties have decided to conduct an out-of-court settlement of the dispute through mediation;

It introduces the right of the court to suspend proceedings in a case if both parties apply for the suspension of proceedings in connection with the mediation;

The term of such suspension is for the duration of mediation, but no more than thirty days from the date of the courts ruling;

the possibility to suspend proceedings on the case at the stage of its consideration on the merits.

In the event of successful mediation of a dispute that is the subject of consideration by the court, the court will return 60% of the paid court fee to the relevant party in the proceedings.

Parliament adopts draft on investor support in first reading

The Verkhovna Rada adopted Draft Law No. 3760 On State Support of Investment Projects with Significant Investments in the first reading.

The document will establish the status of a state institution that includes investment managers and is authorized by the Cabinet of Ministers of Ukraine to support investors in the process of preparing and implementing investment projects with significant investments the so-called investment nannies.

The forms in which state support will be provided to an investor include:

Tax benefits (exemption from corporate income tax and duties when importing new equipment to the customs territory of Ukraine);

Granting the right to use a land plot for the fulfillment of an investment project with payment of rent on special conditions;

Provision of related infrastructure facilities (roads, communication lines, heat, gas, water and electricity supply facilities, engineering communications, etc.) through the construction/reconstruction of such infrastructure at the states expense.

At the same time, the total amount of state support must not exceed 30% of the amount invested in the project.

Requirements for investors set out in the draft law:

The amount of investment in the project must come to at least the equivalent of EUR 30 million;

The project shall be implemented on the territory of Ukraine in the areas of processing industry, infrastructure and logistics, household waste management, tourism, health, education, sports (exceptions include renewable energy, mining, crop production and finance);

The project must create at least 150 new jobs with an average salary that is at least 15% higher than the average salary in the relevant industry in the region in the previous calendar year;

The projects implementation period must not exceed 5 years.

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