News (#06 June 2016)

Draft

Simplification of export of services

Changes to some laws on removal of administrative barriers for export of services are proposed by Draft No. 4496. The main objective of the Draft is to simplify procedures for conclusion of foreign trade agreements (contracts), for accounting and financial reporting, as well as for abolition of foreign exchange control over export of services transactions.

It provides, inter alia, the possibility of concluding agreements via exchange of letters or simply by invoicing, as well as abolition of exchange control over export of services and the like.

It is planned to eliminate a provision regarding control over return of foreign exchange earnings during export of works (services), intellectual property rights. Thus, control over return of foreign exchange earnings shall be carried out exclusively over the export of products.

Moreover, it is proposed to prohibit banks to require translation of documents into the Ukrainian language, if they are drawn up in English. This should contribute to intensification of transaction conclusion by residents, as ability of commercial banks to provide documents’ translation is much wider than that of small and medium-sized businesses.

Also, the Act establishes alternative ways for joint stock companies to pay dividends — through the depository system of Ukraine or directly to shareholders. The exact method for payment of dividends shall be determined by the appropriate decision of a general meeting of shareholders and payment itself shall be carried out in a manner prescribed by the National Commission on Securities and Stock Market.

 

State registration of foreign investments cancellation

Parliament supported Draft Act No. 2763, which proposes to cancel state registration of foreign investments. It is proposed to delete provisions on compulsory state registration of foreign investment from the Commercial Code and On the Regime of Foreign Investments Act of Ukraine.

The main purpose of the document is to create a modern environment for attracting investment through introduction of the application principle for state registration of foreign investments. Also, the legislative initiative is aimed at eliminating signs of corruption during state registration of investments and on introduction of certain codification changes to existing legislation.

The Draft Act is submitted to the President for approval.

 

Changes to the Criminal Procedure Code

The Verkhovna Rada registered Draft Act No.3719 On Amendments to the Criminal Procedural Code of Ukraine on Separate Issues of Investigative Actions in Order to Provide Additional Guarantees for Legality of their Conduct.

The main objective of this regulation is to reduce the number of searches that are not directed at actual investigation of crime, termination of groundless withdrawal of electronic information systems or parts thereof, protection of the rights of their owners, termination or prevention of further facts of seizure of company property, which have no relation to the objectives of investigation, as well as termination of cases of unjustified refusal to admit lawyers during searches.

The main innovation of the Draft would be prohibition against temporary withdrawal of electronic information systems or parts thereof, of mobile communication system terminals if the information can be copied during the search.

Also, the Draft proposes to give lawyers the right to be present during the entire process of inspections and searches, and to prohibit use of less-lethal weapons and equipment and involvement of Special Forces if there is no direct threat of terrorism.

 

Ukrainian aircraft industry may be exempted from tax

On April 20 the Parliamentary Committee for Tax and Customs Policy supported two Draft Acts aimed at developing the aircraft industry in Ukraine.

Draft Act No.3457 On Introduction of Amendments to the Transitional Provisions of the Tax Code, which proposes by 1 January 2025:

— To extend the duration of provision on exemption from VAT payment for operations of import into the customs territory of Ukraine under the customs regime of import of goods (except for excisable goods), which are used for the needs of aircraft industry, and delivery to the customs territory of Ukraine of the results of research and development work, which are carried out for the needs of the aircraft industry;

— To establish that transactions of sale of products (services) produced by the specified companies at the expense of the State Budget of Ukraine were subject to VAT at the rate of zero;

— To exempt from taxation profits of aircraft industry enterprises, subject to provisions of Article 2 of the On Development of Aircraft Building Industry and Engaged in Development and/or Production and Assembly of Aircraft and Aircraft Engines Act;

— To exempt from the land tax aircraft subjects covered by provisions of Article 2 of the On Development of Aircraft Building Industry and Engaged in Development and/or Production and Assembly of Aircraft and Aircraft Engines Act, except for land plots where there are facilities of social, commercial, agricultural purpose and non-industrial constructions.

The Committee also recommends to take as the basis Draft No.3458 on amendments to the Customs Code, which proposes:

— To remove planes with Basic Operational Weight of more than 10,000 kg, but not more than 35,000 kg and with passenger capacity of 44 to 110 seats, which are imported into the customs territory of Ukraine by Ukrainian airlines under operational lease agreement, from the list of goods imported into the customs territory of Ukraine and placed in the customs regime of temporary import with full conditional exemption from customs duties;

— To prolong till 1 January 2025 exemption from import duty during import into the customs territory of Ukraine and placing in the customs import regime of goods used in design, manufacture, repair, modification, maintenance of aircraft industry equipment, with simultaneous adjustment of product codes according to the Ukrainian Commodity Classification for Foreign Economic Activity, subject to preferential tax treatment, in order to bring them into line with the requirements of the customs tariff, and to update the list of such preferential products.

 

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