Business news from Ukraine

UKRAINIAN PRESIDENT: CAPITAL AMNESTY BILL READY

Ukrainian President Volodymyr Zelensky expects that capital amnesty will be introduced in 2020, and the respective legislative initiative will be registered in the Verkhovna Rada soon. “We will introduce amnesty this year. We have to do it, we agreed on it and promised people. But now there were offers for the percent – 5% both for money and real estate… I think today the situation in the country is difficult, we need to think about these percent. If a person has any real estate or other facilities, this percentage should be relaxed,” the president said at a press conference on Wednesday.
“Perhaps real estate can be amnestied at a lower percentage or even at zero,” he added.
”We need to turn this page of history so that all Ukrainians would like to be taxpayers,” the head of state said.
Earlier, tax amnesty bill No. 1232 proposed a mechanism for individuals to declare hidden income, the tax rates of 5% and 10%, as well as a lowered 2.5% rate when investing in government domestic loan bonds.

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BILL CANCELLING STATE ALCOHOL PRODUCTION MONOPOLY IN UKRAINE PASSES SECOND READING

Presidential bill No. 2300 on the abolition of a government monopoly on alcohol production from July 1, 2020, has passed its second reading and has been adopted as a whole. It was backed by 284 lawmakers, namely 229 MPs from the Servant of the People parliamentary faction, three from Batkivschyna, 19 from the Holos (Voice) Party, 14 from the For Future parliamentary group, and 19 independent lawmakers. Bill No. 2300 on amendments to the law on state regulation of the production and sale of ethyl, cognac and fruit alcohol, alcoholic beverages, tobacco and fuels provides for the abolition of a government monopoly on the production of alcohol from July 1, 2020.
In addition, the bill allows business entities – regardless of their form of ownership – to produce alcohol with an appropriate license, and also provides for the full liberalization of alcohol exports from Ukraine.
A license for the production of ethyl alcohol is issued to enterprises with established round-the-clock video surveillance systems for the production and distribution of products. Disabling video surveillance systems is the basis for the refusal to issue a license or its recall, the document says.
At the same time, to protect the local commodity producer, the bill provides that only state-owned enterprises authorized by the Cabinet of Ministers will be able to import ethyl alcohol until January 1, 2024.
In addition, the bill provides for a ban on commissioning new alcohol production facilities before July 1, 2021. It also introduces an obligation to maintain jobs at privatized enterprises at 70% of the total number of employees for this period.
The bill also introduces mandatory denaturation of bioethanol with petrol from 1-10% for use in the domestic market.

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UKRAINE’S PARLIAMENT PASSES AT FIRST READING BILL REGULATING AMBER PRODUCTION

Ukraine’s parliament on November 12 passed at first reading bill No. 2240 settling the issue of amber production, which envisages the introduction of unified licenses for exploration with the right to produce amber during the period of five years for the sites up to 10 ha sold at electronic auctions on the ProZorro platform.
A total of 342 MPs backed the document.
According to the bill, access to amber deposits will be regulated by establishing the right of land easements and the definition of separate Article 971 of the Land Code for the exploration and mining of amber deposits on disturbed lands.
In addition, the document introduces criminal liability for illegal mining and administrative liability for violation of mining requirements, as well as toughens liability for non-compliance with land reclamation requirements and the obligation to compensate for losses incurred.
According to the Ministry of Energy and Environment Protection, the bill also removes a number of duplicate and archaic approvals for amber deposits (in particular, mineral titles and permission to remove the fertile layer) and introduces the filing of all documents in electronic form through an electronic account.

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UKRAINIAN PRESIDENT SIGNS BILL STIMULATING INVESTMENT ACTIVITIES

Ukrainian President Volodymyr Zelensky has signed law No. 132-IX amending some Ukrainian laws stimulating investment activities in Ukraine approved by the Verkhovna Rada on September 20, according to a posting on the official website of the head of state. “The law aims to improve the investment climate in our country in certain areas, selected as a result of a comprehensive assessment of compliance of Ukrainian legislation with the best world practices described by the World Bank Group in the Doing Business rating methodology. The document amends a number of legislative acts that contain outdated and ineffective regulation. In particular, it is aimed at filling legal gaps, as well as introducing innovative legal instruments into the legal system of Ukraine.”
The main provisions of the law outline, among other things, liability of persons with an interest and officials of a joint-stock company for losses caused by an interested-party transaction concluded on non-market terms, the consent to which was granted by the majority shareholder or persons appointed by him; expanding the list of transactions that are considered related-party transactions.
The law abolishes the obligation to pay a contribution for the development of the infrastructure of a settlement. The law provides that contracts for the payment of contribution agreements concluded before January 1, 2020 are valid and continue to be valid until they are fully executed. During 2020, companies that ordered construction projects on a land parcel transfer funds to the appropriate local budget for the creation and development of the infrastructure of the settlement: for nonresidential buildings and structures – 4% of the total estimated cost of construction of the facility; for residential buildings – 2% of the construction cost of the facility. The law also defines facilities for the construction of which contribution is not paid.
In the field of land pledge agreements, the law abolishes the obligation to conduct an expert pecuniary valuation of private property land transferred as collateral.
In the field of activity of limited liability companies, the specifics of the creation and activity of limited liability companies operating on the basis of the model charter are determined.

The law enters into force on the day following the day of its publication.

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UKRAINIAN PARLIAMENT PASSES BILL ON LENDING STATE-OWNED PROPERTY

Ukraine’s Verkhovna Rada has passed at first reading bill No. 1055-1 on lending state-owned and municipal property, envisaging the lending of this type of property via the e-auction system.
An Interfax-Ukraine correspondent has reported that the bill was backed by 263 MPs on Thursday.
“The Verkhovna Rada today adopted bill No. 1055-1, which will finally allow creating fair competition and fully opening up this market. Perhaps the story is familiar to many city dwellers: no one knows who and for what money, what “matchmakers” and “godfathers” rent premises in the middle of the city for UAH 1, to whom the high-rise complex of a plant is rented. All this is now a thing of the past,” First Deputy Minister of Economic Development, Trade and Agriculture Pavlo Kukhta said on his Facebook page, commenting on the adoption of the bill.
He said that according to the document, state-owned and municipal property should be leased according to the results of electronic auctions to those who offered the highest price.
In addition, a unified database of state-owned and municipal property leased will be created.
“By October 1, 2020, all existing lease contracts, even those that were concluded under the old law, will be entered to the electronic trading system @ProZorro.Sales with free access to data,” he added.

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UKRAINIAN GOVERNMENT APPROVES GAMBLING BILL

A bill which legalizes gambling in Ukraine was approved by the national government on September 29, according to a statement posted on the government’s website.
According to the bill, “gambling will be allowed exclusively on hotel premises through use of gambling equipment and software that comply with international standards.”
Seeking “de-criminalization of the economy,” Ukrainian President Volodymyr Zelensky tasked the government and the parliamentary majority with elaborating and adopting before December 1, 2019, laws legitimizing the gambling industry and amber production.

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