Business news from Ukraine

LAW ON PRINCIPLES FOR ORGANIC PRODUCTS PRODUCTION AND LABELING COMES INTO EFFECT IN UKRAINE

President of Ukraine Petro Poroshenko has signed the law on basic principles and requirements for organic production, circulation and labeling of organic products, the presidential press service has said. According to the report, the implementation of the norms of the law will ensure the improvement and harmonization of the Ukrainian legislation with the legislation of the European Union in the sphere of production and circulation of organic goods and will help create transparent business conditions, reduce unfair competition, increase the competitiveness of domestic organic products and expand foreign markets for its sale.
The law establishes the basic principles and requirements for organic production, circulation and labeling of organic products, the basis for the legal regulation of organic production, the circulation of organic products and the functioning of the market of such goods. The legal basis for the activity of central executive authorities, the subjects of the organic products market and the direction of state policy in these areas are also defined.
As reported, the Verkhovna Rada on July 10 at second reading and as a whole adopted law No. 5448-d on basic principles and requirements for organic production, circulation and labeling of organic products. Some 237 people’s deputies voted for the document with the quorum being 226 votes.

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INTRODUCTION OF EXIT CAPITAL TAX WILL ATTRACT ATTENTION OF TAX AUTHORITIES TO EXPORT-IMPORT COMPANIES – EXPERT

The introduction of an exit capital tax, envisaged by the draft law on amendments to the Tax Code of Ukraine regarding the tax on exit capital (No. 8557), will draw the attention of tax authorities to companies carrying out foreign economic operations, expert for transfer pricing at Evris law firm Yekateryna Kuzmina has told Interfax-Ukraine. “Companies that carry out foreign economic operations will be under a special attention of tax authorities in case this tax is introduced. In view of the fact that the exit capital tax is focused on foreign economic transactions, the controlling authorities will pay closer attention to compliance with transfer pricing rules, since this will be one of the main instruments to ensure new tax payment,” she said.
The expert noted that since the exit capital tax will have to be paid for each specific operation, the controlling bodies will no longer need to conduct long-term tax inspections as to the correctness of determining the financial result, in theory it will be enough for them to analyze bank statements and contracts.
“Thus, it is likely that the controlling bodies will concentrate their entire attention on initiating and conducting inspections,” Kuzmina believes.
She noted a number of changes in transfer pricing that will occur after the alleged adoption of the exit capital tax, in particular, small businesses will be required to prepare reporting on transfer pricing, the accumulated losses or other costs will not be able to compensate for the need to pay the exit capital tax to the budget, in addition, control over compliance with transfer pricing rules will be tightened.
Kuzmina noted that the practice of the exit capital tax is unpopular in the world – such taxes exist only in Estonia (since 2000), Georgia (since 2017), and Latvia (since 2018). It is assumed that the introduction of this tax will stimulate Ukrainian companies to invest in the development, building up business or production.
“This is due to the fact that if companies reinvest the earned funds in the development and do not withdraw resources from the enterprise by paying dividends, irrevocable financial assistance, free transfer of goods, labor and services, royalties, interest and other operations that lead to withdrawal of capital from the company, there will be no object for exit capital tax and the companies will not pay the tax. Thus, the importance of transfer pricing rules that regulate foreign economic operations rises significantly,” the expert summed up.

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KAN DEVELOPER HAS 10.5-FOLD RISE IN PROFIT IN Q2 2018

KAN LLC, part of KAN Development Group (both based in Kyiv), saw a 10.5-fold rise in net profit in Q2 2018, to UAH 24.8 million. According to an annual report of the company posted in the information disclosure system of the National Commission for Securities and the Stock Market, net revenue in H1 2018 grew 1.6-fold, to UAH 79.4 million, and uncovered loss fell by 6%, to UAH 385.9 million.
Noncurrent liabilities fell by 1.6%, to UAH 579.2 million, and current liabilities decreased 32%, to UAH 277.9 million, total bills receivable narrowed by 42.4%, to UAH 39.9 million.
KAN Development LLC was established in 2001. As of July 2018, the participant of the limited liability company was Deverte Holding GmbH (Austria, 100%).

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UKRAINIAN MEDICINE PRODUCER BIOPHARMA TO ENTER INDIAN, AFRICAN PHARMA MARKET

Biopharma, a blood products maker, plans to boost suppliers of its products to the traditional markets for the company and actively develop new ones – India, African countries, Biopharma Group President Kostiantyn Yefymenko has said in an interview with Interfax-Ukraine. The group plans to boost sales in Ukraine and supplies to Belarus, Kazakhstan, Uzbekistan, Azerbaijan, Armenia, Tajikistan, Kyrgyzstan and Georgia.
“At the same time, the most promising for us is the Indian market, and after it – Africa, where we will intensively increase our presence,” Yefymenko said.
Commenting on plans for expansion of activities in foreign pharmaceutical markets, he said that currently Biopharma “does not strongly focus on the EU countries” because of the conservatism of this market, although it delivers its drugs, in particular probiotics, to some European countries – Slovakia and the Czech Republic.
Biopharma is one of the ten largest Ukrainian producers of medicines. It produces more than 20 immunobiological preparations from donor blood, preparations obtained by recombinant DNA technology and probiotics.

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POLTAVA AIRPORT SERVICES FIRST FLIGHT AFTER RECONSTRUCTION

The Poltava international airport has serviced the first flight after reconstruction, First Deputy Head of Poltava Regional Administration Andriy Pesotsky has written on his Facebook page. “We have serviced the first flight after the reconstruction of the airport. Citizens of the United States, Canada, China and Europe arrived. They are not simply tourists, but bloggers and all those interested in aviation… I am proud that we have set the airport in order and now we can service flights both from other cities, and foreign flights,” he said.
According to the regional news portal Poltava News, the first flight of the airport is domestic, and a few dozen of foreign tourists flew from Zaporizhia by Yak-40 plane. As reported, on January 31, 2017, Poltava Regional Council adopted a program to develop and support the Poltava airport for 2017-2020 with the total cost of UAH 351 million. On December 20, 2017, the Cabinet of Ministers of Ukraine granted the status of the international airport to the Poltava airport.

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UKRAINIAN BIOPHARMA PLANS TO BRING TIG TO MARKET IN 2019

Biopharma, a blood products maker, plans to bring tetanus immune globulin (TIG) to the market by the end of 2019, Biopharma Group President Kostiantyn Yefymenko has said in an interview with Interfax-Ukraine. “Taking into account the country’s needs, we are working on the specific tetanus immune globulin. We hope that we would be able to bring it to the market by late 2019,” he said.
Biopharma is one of the ten largest Ukrainian producers of medicines. It produces more than 20 immunobiological preparations from donor blood, preparations obtained by recombinant DNA technology and probiotics.

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