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INTERFAX-UKRAINE
Kyiv. October 13, 2011

Following the changes recently adopted in the legislation, when signing a loan agreement a borrower will immediately get to know whether an interest rate is to be varied and what a rate movement procedure is. This will make an interest rate more foreseeable for borrowers.
This comment on Law “On changes introduced into certain laws of Ukraine as regards the protection of the rights of lenders and financial services consumers” No. 7351 adopted by the Verkhovna Rada  of Ukraine was given by Roman Drozhanskyi, Partner with Volkov&Partners.
“The Law contemplates a possible establishment of a fixed rate tied to a certain public index. As such, borrowers will chance to foresee easier an interest rate. Moreover, lawmakers determined that the index-related movement procedure of the fixed rate has to be negotiated just in the loan agreement”, the expert explained.
Furthermore, Mr. Drozhanskyi mentioned that the Law actually removed a possibility to declare a sole proprietor a bankrupt, which earlier often resulted in recognition of all its liabilities redeemed. Now a liquidation estate in a case on such sole proprietor’s bankruptcy will just include liabilities assumed by such individual as an entrepreneur.
In addition the lawyer pointed out that the Law, after all, does not stipulate a possibility to recognize an individual - non-entrepreneur a bankrupt.
“Such lacuna bears out that the Ukrainian legislation leaves much to be substantially developed and makes it impossible to apply a financial sanation procedure to individuals, which is widely envisaged by laws of many foreign states”, Mr. Drozhanskyi summed up.

INTERFAX-UKRAINE
Kyiv. October 4,  2011

The deed drafted by the Ministry of Economic Development and Trade that stipulates a year-long extension of export duties for wheat, barley and corn (until January 1, 2013) breaks the fundamentals of the Tax Code of Ukraine, an opinion of the lawyers interviewed by Interfax-Ukraine.
"Subclause 4.1.9. of clause 4.1. of Article 4 of the Tax Code determines the principle of stability of the tax legislation. Changes in any components of taxes and charges may not be introduced later than six months prior to a new budget period, within which new rules and rates will run", believes Larisa Poberezhniuk, Partner of “Pavlenko&Poberezhniuk” Law Group...
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Andrii Zablotskyi, Volkov&Partners lawyer, in his turn, feedbacked that the extension of the actual and newly introduced export duties may find an adverse response of WTO partners.
"The terms of Ukraine’s accession to the WTO do not contain an explicit ban of use of export duties. However, the Ukraine’s Working Party Report (IV Section) reads that export duties could create obstacles to international trade and so must be lowered,” emphasized Mr. Zablotskyi.
He assumes that export duties introduction has less distorting effect for trade than export quotation or licensing, but duties themselves do not favour an upward performance of the agricultural market.

INTERFAX-UKRAINE
Kyiv. April 8, 2011

If the certificate of state registration of the legal entities and individual entrepreneurs is cancelled the life is not suddenly better for entrepreneurs, what will really make it easier is Internet access to the Unified State Register of Legal Entities and Individual Entrepreneurs, considers Taras Rozputenko, an associate with Volkov and Partners Law Firm.
"At present, an information database can be accessed via any computer connected to the Internet. In Great Britain, the Internet is the way to access the documents similar to those kept in the Unified State Register, in particular, right at the web-site of the relative state agency," commented Mr. Rozputenko to "Interfax-Ukraine" Agency concerning the law adopted by the government and canceling the certificate of state registration.
The Lawyer believes, the entrepreneurs have to prove their registration only electronically via the Internet, instead of obtaining the extract from the Unified State Register.
"It would be logical to exclude an entrepreneur from the chain of data exchange between the Unified State Register, entrepreneur and any state agency that requires a confirmation of such entrepreneur’s registration, and to entrust the said state agency to obtain the information from the Unified State Register,” Mr. Rozputenko noted.
In turn, Senior Associate with AstapovLawyers International Law Group Volodymyr Yakubovskyy emphasized that in case of cancellation of the state registration certification and simplification of licensing system to obtain corporate seals, articles of association becomes a key corporate attribute needed to be closely watched out to manage a company.
Reportedly, the Law “On Abolition of the Certification of Business Entity Registration” adopted by the Parliament on Thursday waives such certification and prescribes to use directly the data excerpted from Unified State Register of Legal Entities and Individual Entrepreneurs to confirm such registration. Such excerpt is given for free.
If a status of a person needs to be certified by some document, such person may use an excerpt of the Unified State Register of Legal Entities and Individual Entrepreneurs or its copy. Alongside, a notarization of such copy is offered to be waived as the criminal legislation imposes the responsibility for consistency of the provided data on a person that submitted such data.

INTERFAX-UKRAINE
Kiev. April 7, 2011

Possible cancellation of the decision of the Interdepartmental Commission on International Trade (Commission) on initiation and conduct of safeguard investigation as regards imports to Ukraine of certain oil derivatives by the District Administrative Court of Kiev threatens to create a precedent. This is the common view of lawyers polled by Interfax-Ukraine.
"If the court overturns the decision of the Commission, it will set a precedent, which will allow foreign manufacturers, exporters and importers of products to Ukraine to take advantage of it," says Associate with Volkov & Partners Law Firm, Andrii Zablotskyi.
Head of West Ukrainian Branch of Arzinger Law Firm, attorney Markian Malskyy also admits chances a precedent to be set, however, adds that challenging of the Commission’s decision cannot in any way mean that it strips its power.
Lawyers agreed that it would be extremely difficult to challenge the decision on initiation and conduct of the investigation. They explained that it would be virtually impossible to prove that there were no formal reasons for its initiation, in particular, due to the fact that the decision contains many subjective components, as it was noted by M. Malskyy.
Reportedly, the Association of Operators on the Ukrainian Market of Petroleum Products has filed a lawsuit demanding cancellation of the safeguard investigation that was launched by the Interdepartmental Commission on International Trade concerning importation of certain types of oil products. The court hearing will take place on April 7.
The safeguard investigation concerning import of certain oil derivatives to Ukraine regardless of country of origin and export was initiated at the end of January 2011. Notably, the Ministry of Energy and Coal Industry of Ukraine called for introduction of import duties of EUR 80 per ton of diesel fuel and EUR 130 per ton of gasoline.
However, on March 14 the Minister of Energy and Coal Industry Yuriy Boyko stated that Ukraine was not going to impose any duties on imports of oil products.
Experts argue that import quotas may be introduced instead of taxes. Ukrainian oil refineries numerously claimed that they buy oil products at world prices, while the member countries of the Customs Union, in particular, Belarus, which is the major exporter of oil to Ukraine, buy crude oil which is not levied by taxes. Local plants are of the view that imposition of taxes will allow to boost the volumes of oil refinery and conduct modernization of production.
Major petrol filling stations that predominantly import oil products criticized the possibility of import taxes imposition, as it may lead to the market monopolization. In addition, the embassies of Lithuania, Romania and Poland expressed their concerns on the situation in their joint letter to the Prime-Minister of Ukraine.

INTERFAX-UKRAINE
Kyiv. April 6, 2011

On April 1, 2011 Tax Code regulations came into force, among others, those regulating application of profit tax relief. The State Tax Service of Ukraine (STSU) explained them. But the explanations contradict to the Tax Code regulations, believes Taras Rozputenko, an attorney at law with Volkov and Partners Law Firm.
The abovementioned was his comment to the Interfax-Ukraine Agency concerning the regulations coming into force, as well as the STSU’s letter No. 6286/7/16-1517 dated March 4, 2011. Under the letter tax/duty exemption benefit should be applied not to separate taxpayers but to certain transactions, determined in Article 197 of Section V and separate clauses of subsection 2 of Section ХХ of the Tax Code.
"Further, the STSU’s letter presents interesting and illogical conclusion: the taxpayer can either wave a tax relief or stop applying it for one or several tax periods only in case if such tax relief is applied directly to the taxpayer, but it cannot if the tax relief applies to certain goods and services delivery transactions. And it cannot wave lower tax rate as well,” explained Taras Rozputenko.
At the same time, Mr. Rozputenko made an admission that Tax Code reads nothing of conditions making the wave of tax relief impossible. Moreover, a benefit is in essence an advantage, which must be granted to the subjects set out in the law.
In addition, Mr. Rozputenko considers, the ambiguous approach of the STSU’s letter can be applied to the profit taxation matters and other issues regarding tax and duties, confusing business representatives still further.
The lawyer also explained that the STSU’s letters are not binding and likely to be of recommendative or informative nature, aiming to outline the STSU agency’s legal views on a certain issue. “But that is not to say such legal views are necessarily true. One should first carefully read the provisions of laws and bylaws and, afterwards, pay regard to opinions of certain public agencies,” emphasizes Mr. Rozputenko.
The expert, thus, points out that the Tax Code stipulates a tax relief may be used, waived, or suspended.
“If the Tax Service concludes in writing to apply the Tax Code’s provisions in a different way, such conclusion may be surely claimed in the superior tax body or in the court to protect taxpayer’s interests,” summed up Mr. Rozputenko.
Pursuant to clause 30.1 of Article 30 of the Code a tax relief is taxpayer’s immunity from accrual and payment of tax and charges, which is provided by the tax and customs legislation; payment of tax and charges at lower rate provided there arise grounds set out in the Tax Code.
Simultaneously, clause 30.4 of Article 30 of the Code entitles a taxpayer to waive a tax relief or suspend it for one or several periods, unless otherwise prescribed in the Tax Code.
Reportedly, since April 1, 2011 certain provisions of the Tax Code lowering income tax from 25 percent to 23 percent, introducing tax relieves for certain industries and “tax holidays” for enterprises with annual income below UAH 3 mln have become effective. In addition, the whole part ІІІ regulating taxation of corporate profit has come into force as well.

Interfax-Ukraine
Kyiv. 1 April, 2011
 
Legal entities that purchase goods and services from private entrepreneurs benefiting from the flat tax will no longer be able to account such payments as gross expenses. In other words, these payments will be subject to corporate profit tax. This rule is introduced by the new Tax Code and becomes effective from April 1, 2011. Alongside, it does not applied to expenses related to information technologies (IT), commented Attorney-at-law with Volkov and Partners Taras Rozputenko to Interfax-Ukraine on certain provisions stipulating, inter alia, the aforesaid restrictions and introduced from April 1 within the new Tax Code.
“It is obvious that IT businesses today are much luckier than many others,” added Mr. Rozputenko.
The Attorney-at-law explained that such restrictions do not apply to enterprises if goods, services and works purchased from private entrepreneurs benefiting from the flat tax relate to informatization field.
He also pointed out that the term “informatization” and those notions relative to it are interpreted by the Law “On National Informatization Program” and р. 72 “Activity in Informatization Field” of the National Classifier of Ukraine “Classification of Types of Economic Activity".
Reportedly, Chapter III of the new Tax Code dealing with the corporate profit tax became effective on April 1, 2011. It exactly prohibits legal entities to account purchases of goods and services from private entrepreneurs benefiting from the flat tax as gross expenses, i.e. they being chargeable with corporate profit tax.
In addition, since April 1, 2011 the legal instrument has introduced tax relieves for certain industries and “tax holidays” for enterprises with annual income below UAH 3 mln.
The Tax Code came into force from January 1, 2011.
At the same time, unless relevant amendments to the Tax Code concerning system’s simplicity are introduced, the President’s Decree “On Simplified System of Taxation, Accounting and Reporting of Small Businesses” No. 727/98 of July 3, 1998 continues to have effect.

Interfax-Ukraine
Kyiv. 1 April, 2011

Taras Rozputenko, attorney-at-law with Volkov & Partners Law Firm believes that narrowness of criteria provided by the Tax Code, which is effective from April 1, 2011, and used for applicability of tax benefits and tax holidays for small and medium-sized enterprises, puts in question applicability of such benefits for majority of entrepreneurs.
He commented to “Interfax-Ukraine” Agency regarding separate provisions of the new Tax Code that came into force on April 1 and which itself envisage reduction of corporate profit tax rate from 25% to 23%, introduction of tax benefits for certain industries, and tax holidays for enterprises with annual profit not exceeding UAH3 millions; as well as regarding Chapter III in full, which regulates corporate profits tax.
”Very narrow criteria for applicability of tax benefits in corporate profit tax, which makes impossible for majority of entrepreneurs to use it, could not be recognised as “tax benefits” or “tax holidays”. Such reality also puts in question government declarations with regard to tax breaks for small and medium-sized businesses,” said the expert.
Mr. Rozputenko believes that for straightforward understanding of tax code provisions regarding sound application of tax benefits by entrepreneurs it would be better to envisage clear requirements and specify industries to enable entrepreneurs to use mentioned tax benefits, rather than provide exclusive clauses.
"Moreover, if the structure and rough writing of regulations is anything to go by, it seems that law-maker develops laws for itself rather than for its people," emphasized Mr. Rozputenko.
According to him, for example, if to consider tax holidays prescribed for enterprises with annual profit up to UAH 3 million, only individual companies will be able to put it into a practice.
As the lawyer explained, the Tax Code sets forth zero rate of profit tax, effective during the period from April 1, 2011 to January 1, 2016, for taxpayers, whose annual profit does not exceed UAH3 million, and monthly salary of each employee amounts to at least two floor wages. In addition, a company must meet one of the following criteria: 1) it is established after April 1, 2011; or 2) a number of its employees is equal or less that 20 and annual profit for the last three years amounts up to UAH3 million; or 3) it has been registered as a flat tax payer before the Tax Code came into force, its profit for the previous year amounts up to a million hryvnias, and average number of employees is less than 50.
Mr. Rozputenko wonders how many Ukrainian companies comply with the foregoing criteria.
At the same time, he adds that not only all criteria and restrictions, but also supplementary terms must be complied with, in particular, tax exemption will not be applied, among others, to entertainment companies, companies involved with production, wholesale, and export/import of excisable goods or fuels and lubricants; financial, law, accounting, engineering and provision of services activities.
In addition, on April 1, 2011 Article 154 of the Tax Code reads to exempt from profit tax enterprises that were established by social organization of disabled people; receive their proceeds selling baby food products of in-house production – moreover, such income must be purposed to increase production volumes and reduce prices – but the list of baby food products to be determined by the Cabinet of Ministers Of Ukraine; as well as Chernobyl NPP; state enterprises, namely, Artek ICC and Molodaya Gvardiya (the Young Guards) UCC; and enterprises of power industry.
Another fact is that the Tax Code set forth to exempt from income tax enterprises producing biofuel and biofuel appliances before January 1, 2020. Within the following ten years, beginning from April 1, 2011 and until January 1, 2015, some enterprises are exempt from the tax in question, in particular, hotels of the 4-star category and higher, enterprises of light industry, shipbuilding and aircraft construction industries and agricultural engineering industry, companies producing renewable energy, and those involved with printing and publishing activity. If a film or cartoon production company places received funds or property to produce national films, than amounts of funds and cost of property will not be accounted as profits until January 1, 2016.
At the same time, under the Government’s decree No. 229 dated February 28, 2011, “On approval of procedure of application of funds, which are exempt from taxation due to corporate profit tax benefits applied in compliance with clauses 15, 17-19 of section 4 of Chapter XX "Transitional Provisions" of the Tax Code of Ukraine” (the Government’s decree), enterprises eligible for corporate profit tax benefits undertake to invest funds, to which tax benefits are applied, in production development or repayment of production development loans.
Also, under the document, if a taxpayer fails to apply exempted balance until April 1 of the year following the tax benefit introduction, its relative tax liabilities for the 1Q of such year will be increased by amount of such balance.
Exempted funds must be duly reflected in bookkeeping documents as the separate subaccount of “Target financing and receipts” account for reporting and taxation purposes.
Based on results of each fiscal (tax) period, the taxpayer reports on application of funds exempted from tax. Such report is presented on form approved by the State Tax Service of Ukraine (STSU). Then the report and corporate profit tax declaration are filed with the STSU.
The Government’s decree comes into force from its publication date and is in effect until April 1, 2021...

Text of the article is available in Ukrainian/Russian only

ИНТЕРФАКС-УКРАИНА
Киев. 29 марта, 2011

Возмещение налога на добавленную стоимость (НДС), осуществляемое с помощью специализированного программного обеспечения, не исключает влияния человеческого фактора на отбор кандидатов на такое возмещение.
Такое мнение высказал адвокат Адвокатского объединения "Волков и Партнеры" Тарас Розпутенко на пресс-конференции в агентстве "Интерфакс-Украина" во вторник.
"Программа обеспечения (возмещения НДС – ИФ) действительно работает в автоматическом режиме, оно (программное обеспечение – ИФ) автоматически определяет кому, отвечает или не отвечает предприятие этим критериям, но (…) данные, которые заносятся в эту программу, они заносятся в ручном режиме (…) тут никто не застрахован от человеческого фактора", - сказал Т.Розпутенко.
Он пояснил, что ответственность за неточности при занесении упомянутых данных не предусмотрена ни в Налоговом кодексе, ни в других нормативно-правовых актах, что может привести к непрозрачности данной системы.
В свою очередь, первый вице-президент Украинского союза промышленников и предпринимателей (УСПП) Сергей Прохоров отметил, что, не имея в государстве совершенной системы возмещения НДС, оно идет в ручном режиме и поэтому качество его остается низким.
"Принцип ручного управления выявляет недостатки и дает сбои относительно того же возмещения НДС в автоматическом режиме", - отметил С.Прохоров.
Так, одно из требований Налогового кодекса, дающее право на автоматическое возмещение НДС, это то, что предприятие должно иметь высший показатель, чем средний по отрасли уплаты налога на прибыль.
"А кто знает, какой показатель налога на прибыль уплачивает отрасль? Никто не знает кроме налоговиков. И поэтому выходит, что от налоговика будет зависеть, откроет он этот ящик, или нет", - пояснил С.Прохоров.
Он отметил, о том кто как работает, знает только налоговик и только он может сравнить условия, "и выходит, что автоматическое возмещение зависит от конкретного лица, которое будет смотреть: отвечает или не отвечает (лицо упомянутым критериям – ИФ)".
Помимо того, С.Прохоров добавил, что промышленность и предпринимательство взволнованы тем, что определенные положения Налогового кодекса ухудшают инвестиционную привлекательность предприятий, в частности, норма, устанавливающая 12-месячный срок, который предприятие должно проработать на общей системе налогообложения, чтобы соответствовать критериям для автоматического возмещения НДС.
"Понятно, что никакой инвестор не будет ждать 12 месяцев своей прибыли, при том, что он и так в сложных условиях находится, т.к. он должен оплатить НДС на границе при ввозе своего нового оборудования (…). А далее, зарегистрировав предприятие в Украине, он должен ждать еще 12 месяцев, пока получит возможность этот НДС возмещать", - пояснил С.Прохоров.
Как сообщалось, Государственная казначейская служба Украины провела первые операции по возмещению НДС в автоматическом режиме на сумму 456,5 млн грн.
По данным Государственной налоговой службы, автоматическое возмещение НДС получат 24 предприятия, из них 12 - крупные налогоплательщики.
Поступления от НДС в марте ожидаются на уровне 6,6 млрд грн при запланированных в бюджете 5,9 млрд грн, тогда как на возмещение НДС планируется направить 3,1 млрд грн.

INTERFAX-UKRAINE
Kyiv. February 24, 2011

“Abolishment by the Ministry of Internal Affairs of Ukraine (MIA) of permits for seals and stamps manufacturing might lead to abuses as now the manufacturing process would not ensure the control over validity of data or information specified in a sample illustration of seal,” believes Associate with Volkov and Partners, Taras Rozputenko, commenting on the respective MIA’s Order No. 5 of January 11, 2011 “On Recognition of MIA’s Order No. 17 Dated January 11, 1999 Such as Ceased to Be Effective”, effective since February 21, 2011.
Specifically, this Order revoked the requirement to obtain permits for seals and stamps manufacturing.
“In other words, from now on any individual or legal entity may go to an appropriate enterprise manufacturing seals and order at own discretion a seal of either a different business entity, a government body, a local self-government body or a notary public, and so on indefinitely,” emphasized Mr. Rozputenko.
According to the Associate, the manufacturing enterprise will not be obliged to verify data or information set forth in the sample illustration of seal.
In addition, Mr. Rozputenko pointed out that the fact of order for a corporate seal by any person other than a company itself will not be now subject to a criminal liability. Instead, the subsequent use of such seal by the company will be qualified as a criminally punishable act.
“Simple abolishment of the requirement to obtain a special permit for seal manufacturing might result in unfair practices and, consequently, lead to disputes likely settled in a judicial proceeding with, thus, further burden laid on judicial authorities,” summed up Mr. Rozputenko.

INTERFAX-UKRAINE
Kyiv. February 11, 2011

“Adoption of the Draft Law providing for export of objects of state price regulation exclusively by agri-producers and state agent will lead to monopolization of the agricultural market,” considers president of Ukrainian Grain Association (UGA), Volodymyr Klymenko.
“The issue concerns (in the Draft Law – IF) monopolization of the market, which may devastate the agricultural market and throw the market back to 90’s,” said he during the press-conference on Friday, at the Interfax-Ukraine Agency, Kyiv.
Head of the Association reminded that Ukrainian deputies Vitaliy Bort (Party of Regions), Maryna Perestenko (CPU), Serhiy Tereshchuk (Litvin Block) and Ivan Sydelnyk (BYT) registered the draft law, by which they propose to provide permission to export the objects of state price regulation within in-house volumes only to agri-producers and the state agent.
Mr. Klimenko emphasized that agri-producers have never lost their right to export their products, but the proposed deed is likely to restrict agrarians’ export capabilities merely by the output yield. “As for traders”, the export says, “the draft law adoption means they would be able to operate Ukrainian grain on FOB terms only. And we must remember that grain traders are owners of linear and port granaries, as well as facilities on grain transshipment, with huge investments tied up into them. If traders are deprived of the title to export, one can talk about no investments at all.”
In addition, he assumed that the Draft Law adoption would affect adversely Ukrainian agrarian sector’s investment attractiveness. “In case where such draft is enacted, our agrarian operators will have nothing to do at world stock markets”, said Mr. Klimenko.
Oleksiy Volkov, Managing Partner and Attorney at Law with Volkov & Partners, believes the Draft Law, registered with the Parliament, contravenes the effective legislation and, more specifically, the Constitution of Ukraine, Economic Code, Laws "On Foreign Economic Activity” and “On Protection of Economic Competition”...