News (#09 September 2017)

Law digest

Monitoring and control system of state assistance to business

The corresponding Law On State Assistance to Economic Entities No.1555-VII was adopted in July 2014 and came into force on 2 August 2017.

It determines the legal basis for monitoring state assistance provided to economic entities and exercising control over the admissibility of such assistance for competition.

State assistance can be provided in the form of subsidies, grants, allowances, tax benefits, debt cancellation, compensation for losses, etc.

Such assistance can be provided by government bodies, bodies of local self-government, administrative management and control bodies, and also by legal entities acting on their behalf, authorized to manage state or local resources.

It is established that state assistance can be provided only after obtaining the appropriate decision from the Antimonopoly Committee of Ukraine.


New regulations on implementation of activities in telecoms field

The Draft Regulations on implementation of activities in the telecommunications field was made public by the National Commission for the State Regulation of Communications and Informatization (NCCIR) for public discussion.

The Draft contains a list of organizational, qualifying, technological (special) requirements that are mandatory for execution during implementation of activities in the telecoms field.

In particular, it is established that economic entity has the right to implement such activities subject to its entering to the Register of Telecommunications Operators and Providers, and if the activity provides for use of a radio frequency resource — subject to its obtaining appropriate license and permits; if activity involves the number resource — subject to its obtaining a permit to use the number resource.

The telecommunications service provider must hire qualified employees possessing at least a vocational education in the field of electronics and telecommunications and/or practical experience in telecommunications for at least one year.


Enterprises of aircraft industry exempt from import duties and VAT

On 9 August the Cabinet of Ministers adopted a resolution On Approval of Procedure and Volumes of Import of Goods, Exempt from Payment of Import Duties and Value Added Tax, into the Customs Territory of Ukraine by Aircraft Manufacturers.

According to this Resolution, the Government reduced the financial burden on enterprises of the aircraft industry, in particular, releasing aircraft manufacturers from payment of import duties and VAT on goods imported till 1 January 2025, subject to compliance with requirements for volumes of importation and targeted use of goods.

The list of goods with an indication of their quantity is attached to the resolution.


Banks can use electronic signature

The Regulation On the Use of Electronic Signature in the Banking System of Ukraine was approved by NBU Resolution No. 78 of 14 August 2017, which came into force on 17 August.

Introduction of EDS creates the regulatory and legal framework for use of paperless technologies in the provision of banking services and continues implementation of the Paperless project, whose concept is the maximum possible refusal of paper documents when providing services to banks’ clients.

The Regulation determines types of electronic signatures used in the banking system of Ukraine, establishes the requirements for use of each type of electronic signature, requirements for creation and storage of electronic documents in the banking system.

Use of simple electronic signature and of electronic digital signature can be based on a written agreement between a bank and a client.

A legal entity will be able to use a EDS when providing services in electronic form or during information exchange.


Changes in transfer pricing

On 27 July of this year the Resolution of the Cabinet of Ministers of Ukraine No. 480 On Approval of the List of Organizational and Legal Forms of Non-Residents that do not Pay Income Tax (Corporate Tax), Including Tax on Income Received Outside the State of Incorporation of Such Non-Residents, and/or are not Tax Residents of the State, in Which They are Incorporated as Legal Entities of 4 July 2017, came into force.

From that day, tax legislation provides another criterion for recognizing transactions as controlled ones, namely: starting from 27 July 2017, all business transactions carried out with non-resident counterparties of organizational and legal forms specified in the Resolution, are recognized as controlled ones if the cost criteria specified in sub-clause Article 39 of the Tax Code of Ukraine are met. At the same time, the cost criteria for such transactions are calculated for the entire reporting (calendar) year.

On 14 August 2017, the State Fiscal Service of Ukraine published Letter No. 21674/7/99-99-14-01-02-17 On Resolution No. 480 of the Cabinet of Ministers of Ukraine of 4 July 2017, which contains explanations regarding the procedure for the Resolution’s application. In particular, the Letter states that if a non-resident, whose organizational and legal form is included in the List, paid income tax (corporate tax) in the reporting year, the taxpayer’s business transactions with it are recognized as uncontrolled ones subject to the absence of other criteria specified in sub-paragraphs “a” — “c” sub-clause Article 39 of the Tax Code of Ukraine. At the same time, SFS recommends receiving a document confirming payment of income tax (corporate tax) from a non-resident counterparty.

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