9 e-points

Dear colleagues, partners, friends!

We at Evris value your time, so we have developed a unified monthly online newsletter 9 E-points.

9 E-points is monthly e-digest from Evris:

  • 9 legislative novels which business community should be aware of, to react in proper time
  • 9 business and legal events worth attending, to get new ideas
  • 9 points of interest from Evris lawyers who do their job in a talented and passionate way

Additional excise for fuel. New price increase is expected?

The matter of amendments

The Supreme Court ruled that any sale of fuel via fuel dispensers at gas stations is subject to the 5% excise tax, irrespective of whether the fuel was sold to a consumer or a business entity (regarding transactions carried out in 2015)

The ruling of the Supreme Court sitting as the Cassation Administrative Court is delivered on 13 February 2018 in case No. 820/1120/17.

Whom it will affect

Gas station businesses

Consequences

In 2015, the 5% excise tax was due on the sale of, in particular, fuel for motor vehicles “directly to citizens and other consumers for personal non-commercial use”.

The Supreme Court concluded that only retail sale of fuel may be carried out via fuel dispensers at gas stations (which triggers the application of the excise tax), thus ruling out the option of selling fuel, via gas station dispensers, for commercial use (not subject to the excise tax). Therefore, the tax authorities were not even required to investigate whether the taxpayer sold fuel to consumers or for commercial use.

The Supreme Court thus cancelled the taxpayer-favourable rulings of the court of first instance and the appellate court and ruled to dismiss the taxpayer’s complaint.

How to prepare / mechanism of the amendments introduction

Given the Supreme Court’s fiscal legal position, businesses that have not yet resolved tax disputes in respect of the 5% excise tax (regarding transactions carried out in 2015) should seek additional arguments to protect their taxpayer rights.

We think that the abovementioned fiscal legal position lacks in proper substantiation as it, for instance, relies on the retail sale of fuel regulations that should not apply to the sale of fuel to business entities.

To pay VAT by installments? Yes, if you import equipment for your own manufacture

The matter of amendments

The Cabinet of Ministers of Ukraine has adopted the procedure for VAT instalment payment regime applicable to business machinery imports

The Procedure was approved by the regulation of the Cabinet of Ministers of Ukraine No. 85 dated 07 February 2018.

The abovementioned regulation entered into force on 21 February 2018.

Whom it will affect

Manufacturing businesses

Consequences

Starting from 2018, the Tax Code of Ukraine stipulates that temporarily, before 01 January 2020, the tax authorities, based on the taxpayer’s application, grant the VAT instalment payment regime that is applicable to business machinery imports. The instalment regime could be granted for up to 24 calendar months. The instalment regime applies to business machinery that the taxpayer intends to use in their own manufacturing processes. The list of eligible commodity codes for business machinery is indicated in the Tax Code of Ukraine.

The adoption of the regulation No. 85 of 07 February 2018 paves the way for launching the procedure of granting the instalment payment regime for taxpayers that opt to utilize the abovementioned tax incentive

How to prepare / mechanism of the amendments introduction

To apply for the VAT instalment payment regime, a taxpayer must file an application along with the standard customs documents and the following documents:

  • business-plan or another document featuring the manufacturing process, economic calculation and expected results of the activities;
  • certificates from state authorities, expert institutions; state standards and enterprise standards, engineering (technical) specifications and documents; documents proving the enterprise has production facilities and premises.

It should be noted that the VAT instalment payment regime is subject to several conditions and taxpayer’s obligations. In particular, the taxpayer must be in a no tax debt position to apply for the instalment payment regime. After such regime is granted, the taxpayer must procure a bank guarantee or secure the performance of the obligations via other means specified in the Customs Code of Ukraine, as well as submit monthly reports confirming the intended use of the machinery.

From now on it will be easier to choose a reliable bank

The matter of amendments

A list of information to be published on pages of the official Internet representation of the NBU and on corporate websites of banks is specified

Resolution of the NBU “On establishing a list of information subject to publishing by the banks of Ukraine”, dated 15 February 2018, No. 11 comes into force on 21 February 2018.

Whom it will affect

Banks

Consequences

The following information is subject to publication: about trade and credit balance; distribution of credits granted to individuals and legal entities, according to the debtor’s classes; credits granted to economic entities by types of economic activity, classified by sections; economic norms and limits of the open currency position; norms and components of the calculation of regulatory capital.

How to prepare / mechanism of the amendments introduction

Information about trade and credit balance and distribution of credits shall be published by the 25th day of the month following the reporting year, while the data on the structure of credits to economic entities shall be published annually by 1 February of the year.

Not only IFOs credits and loans become available for banks  

The matter of amendments

Now the NBU has enabled the authorized borrowing banks to attract “synthetic” credits and loans in UAH from any non-resident lenders, not just from the IFOs

Resolution of the NBU No. 12″On the implementation of foreign exchange transactions under credits, loans borrowed from non-residents under certain conditions”, dated 15 February 2018, entered into force on 16 February 2018

Whom it will affect

Banks and non-resident lenders

Consequences

The funds received by Ukrainian banks will be used to lend Ukrainian borrowers in UAH, while avoiding currency risk, as currency risk will be borne by a non-resident lender of the Ukrainian bank.

How to prepare / mechanism of the amendments introduction

Cross-border operations under such credit and loan agreements will be carried out without registration or an individual license with the NBU

Modernization and simplification of transactions with foreign currencies

The matter of amendments

A new version of the Regulation on the procedure for banks to carry out guarantee operations in national and foreign currencies (hereinafter referred to as the Regulations) entered into force.

The Resolution of the NBU came into force on 3 February 2018, except for the provision on fulfilling the requirements for the provision of a tender offer.

Whom it will affect

Banks

Consequences

The new version of the Regulation for the execution of transactions with guarantees in national and foreign currencies by the authorized banks and their clients includes:

  • reduction in the number of paper documents;
  • use of electronic documents at all stages;
  • reduction in the number of formal instructions in the work with guarantees;

How to prepare / mechanism of the amendments introduction

Phase-out of paper documents and modernization of the regulation of transactions during the execution of transactions under guarantees in national and foreign currencies.

The list of state bodies that can carry out inspections is expanded

The matter of amendments

The moratorium on inspections for 24 government agencies was withdrawn.

On 23 February 2018, the Resolution of the Cabinet of Ministers of Ukraine dated 18 December  2017 “On approval of the list of state supervision authorities (controls), which are not covered by the Law of Ukraine “On Temporary Peculiarities of the Implementation of State Supervision (Control) in the Sphere of Economic Activity” came into force, which withdrew the moratorium on inspections for 24 government agencies.

Whom it will affect

All economic entities

Consequences

The list of state supervision (control) bodies, which may carry out unscheduled state supervision (control), is expanded. Such bodies include, in particular: the National Bank, the NERC and its territorial offices, the NSSMC and its territorial offices, the Antimonopoly Committee and its territorial departments, the State Labor Organization and its territorial offices, the SFS and its territorial offices and other 18 agencies.

How to prepare / mechanism of the amendments introduction

The aforementioned agencies may carry out unscheduled measures of state control: 1) by a court decision; 2) in the event of an emergency or an accident at the enterprise; 3) upon the written request of the economic entity about the implementation of the measure of state supervision on its own; 4) in the event of an incident that has a significant negative impact in accordance with the criteria approved by the Cabinet of Ministers of Ukraine, on the rights, legitimate interests, life and health of people, protection of the environment and security of the state.

New rules of play  for LLCs

The matter of amendments

The Law of Ukraine “On Limited Liability Companies and Additional Liability Companies” was adopted by Ukrainian Parliament.

On 6 February 2018, the Law of Ukraine “On Limited and Additional Liability Companies” was adopted. The Law comes into force three months after being published, except for its one provision.

Whom it will affect

All legal entities operating as limited liability companies

Consequences

The Law provides for different amendments and novelties for limited liability companies (LLCs). In particular, the Law provides for opportunity for shareholders to enter into corporate agreements, as well as issue irrevocable power of attorney. In addition, the Law excludes the quorum concept and cancels limits of the number of LLC shareholders, cancels the prohibition to converting debt into a share (debt-to-equity swap).

Important novelty of the Law is the change of the voting procedure at the general meeting. Namely, the Law provides for three categories of issues, deciding on which requires different number of votes: 50%+1 of votes from the total amount of votes of all shareholders; ¾ of votes from the total amount of votes of all shareholders; unanimous voting. Shareholders shall be also entitled to establish the number of votes concerning specific issues (however, no less than the established majority and except for the issues requiring unanimous voting). Additionally, the Law provides for opportunity for the general meeting to decide on issues not included into the agenda.

Besides, the Law amends the procedure of charter capital formation and change of its amount. The term of charter capital formation becomes two times shorter and amounts to 6 months following the state registration date, unless otherwise provided in the charter. In case of charter capital increase, the term of additional contribution making shall be 1 year (for shareholders) and 6 months (for the third parties). Additionally, the Law establishes the preemptive shareholders right to make additional contributions. In case of charter capital decrease, the Law provides for new term of the creditors appeal towards the company (30 days instead of 3 months).

One more novelty of the Law is the detailed procedure of withdrawal and exclusion of the shareholder from LLC. From now on the shareholder shall be entitled to withdraw from the LLC without the other shareholders’ consent (if the withdrawing shareholder holds less than 50% in charter capital of LLC). As for the exclusion of the shareholder from the LLC, the Law provides for such possibility in case of failure to make contribution into the charter capital by the shareholder, as well as in case of death / termination of the shareholder, if such shareholder holds less than 50% in the share capital of LLC, subject to failure of its heirs / successors to apply to LLC within the established term.

How to prepare / mechanism of the amendments introduction

The Law requires all charters of LLCs to be brought into compliance with the Law, as well as provides for possibility to restate a lot or provisions in the charter upon shareholders’ own discretion. In addition, shareholders shall be also able separately to agree upon LLC governance via corporate agreements execution. Besides, cancellation of limits of the number of shareholders provides for new opportunities for transformation of joint stock companies into LLCs.

Once again about state language policy  

The matter of amendments

The law of Ukraine  “On Principles of the State Language Policy” adopted in 2012, was cancelled

On 28 February, the Constitutional Court of Ukraine adopted a decision, according to which the Law “On Principles of the State Language Policy” adopted in 2012 is recognized as not in line with the Constitution of Ukraine.

Whom it will affect

Civil servants, instructors/teachers of educational establishments, citizens and business entities when interacting with state authorities

Consequences

Provisions, according to which a regional language may be used equally with the state language in the work of local authorities and local self-governments, state and municipal educational institutions, have been invalidated.

How to prepare / mechanism of the amendments introduction

It is too late to prepare — decisions of the Constitutional Court of Ukraine are valid from the moment of their announcement. In any case, if you do not speak Ukrainian, you have to learn it.

How to resist armed aggression

The matter of amendments

For the first time Russia is recognized as an aggressor and occupier in the Ukrainian legislation in relation with the actions of the Russian Federation in the Crimea and Donbass. The ATO will change its status to “measures to ensure national security and defense, resistance to armed aggression of Russia in Donetsk and Luhansk regions.”

The command of the military operation is transferred from the Security Service of Ukraine to the Armed Forces of Ukraine

On 20 February President of Ukraine signed the Lay of Ukraine “On special aspects of state policy on ensuring the state sovereignty of Ukraine in temporarily occupied territories in the Donetsk and Luhansk regions”

Whom it will affect

«Occupied territory» of Ukraine – Donetsk and Luhansk regions, citizents of Donetsk and Luhansk regions , National Guards, army, Security Service of Ukraine, intelligence service etc

Consequences

Russia is responsible for violating the rights of the civilian population until the withdrawal of occupation troops from the territory of Donbass. The responsibility for material damage caused by armed aggression is also entirely entrusted to the Russian Federation.

Ukraine’s goal is to protect the rights, freedoms and legitimate interests of Ukrainian citizens who “suffered as a result of Russian aggression”.

The head of the Joint Staff of the Armed Forces, appointed by the President on the proposal of the Chief of Staff of the Armed Forces, was announced by the head of the military operation. In “security zones” (government-controlled areas along the line of demarcation), in the interests of national security, law enforcers will be able to penetrate into the premises of citizens and organizations, as well as with the consent of citizens to use their vehicles and communication facilities.

Summary
Evris newsletter #6 in English
Article Name
Evris newsletter #6 in English
Description
Monthly Digest by Evris. Here you will find the 9 most important changes in the legislation of Ukraine for the current month.
Author
Publisher Name
Evris
Publisher Logo